Attorneys Fail to Get Judge Disqualified in Oil-Price Suit : Courts: Attorneys for Long Beach and state fail in attempt to disqualify jurist from 15-year-old conspiracy suit.

A federal court judge in Los Angeles will continue to preside over a massive price-fixing suit against six major oil companies, even though attorneys in the case questioned his impartiality because he accepted free trips to Florida to attend seminars partly funded by the same oil companies named in the lawsuit.

The attorneys for the state and city of Long Beach, who had sought to have U.S. District Judge William P. Gray disqualified from the multimillion-dollar lawsuit, also had claimed that the judge neglected to report his wife’s financial ties to two of the companies.

In an opinion last week, however, U.S. District Judge Robert M. Tagasuki refused to remove his colleague from the case, ruling that the free trips were not improper and that the judge’s impartiality was not compromised.

“It has relieved me greatly,” Gray said Wednesday. “It is a relief that the matter is over.”

But attorneys for the city and state said they were considering an appeal.

“It’s a hard thing to do to get one judge to disqualify another when they are in the same courthouse, in the same building. Most of these cases are decided in the appellate courts,” said Gary Halling, one of a team of attorneys representing the city of Long Beach in the 15-year-old case.

The city and the state claim that oil companies conspired to hold down the price of crude pumped from a local field between 1971 and 1977, depriving the city and state of millions of dollars in taxes.

Gray, claiming no bias, refused to remove himself from the case after a team of government attorneys confronted him April 16 with evidence gathered by a private detective they hired to investigate the financial dealings of the 78-year-old judge and his wife.

The lawyers argue that the “appearance of impartiality is lost” because Gray accepted three expense-paid trips between 1978 and 1982 to attend seminars at the University of Miami’s Law and Economics Center in Coral Gables, Fla.

The seminars were funded in part by the same six oil companies named in the lawsuit--Chevron Corp., Exxon Corp., Mobil Oil Corp., Shell Oil Co., Texaco Inc. and Union Oil Co. of California, court records show.

The seminars, started in the 1970s to teach federal judges about complex economic issues, have generated considerable national debate. As many as 350 federal judges have attended the courses, which have since been moved to George Mason University in Fairfax, Va., a spokesman there said.

Critics say the seminars were designed to encourage judges to deal more leniently with big corporations in antitrust suits. Law professors questioned whether it was proper for judges to accept free air tickets, hotel rooms--even golf fees--from corporations that regularly appeared before them in court.

So controversial were the seminars that an advisory committee to the Judicial Conference of the United States--an agency of the U.S. Supreme Court set up to advise judges on ethics--issued an opinion that said all-expense-paid trips constitute a gift and should not be accepted by a judge if the source of the gift is involved or likely to become involved in litigation.

In 1985, three years after attending his last seminar, Gray decided that the city of Long Beach had presented no evidence of price-fixing and threw out the case against the oil companies. His ruling was later reversed by the U.S. 9th Circuit Court of Appeals, which said the oil companies appeared to have acted “in conscious parallel,” and sent the case back to Gray for a jury trial.

Lawyers for the city and state now argue that the Florida seminars helped shape the judge’s opinion by giving the oil giants an unfair opportunity to lobby him outside of court. Indeed, three of Gray’s instructors were ultimately hired by the oil companies to assist in the case, according to an affidavit filed by Long Beach Deputy City Atty. James N. McCabe.

“Acceptance of these expense-paid Florida seminars constituted gifts which the court should not have accepted while this case was pending,” according to documents signed by state Atty. Gen. John Van de Kamp, one of several lawyers who want Gray removed.

They say Gray’s mind is closed in favor of the oil companies, as shown by a remark that his view of the city’s case has “not changed one whit,” despite the appellate court’s ruling.

Also at issue are the financial dealings of the judge’s wife, who owns 10 shares of Chevron stock and once leased land in San Luis Obispo to Texaco for oil exploration.

Judicial canons and a federal statute preclude a judge or a judge’s spouse from having “legal or equitable interest, however small” in matters before the court.

Gray, in a recent interview from a judicial conference in Alaska, acknowledged his wife’s financial dealings and his attendance at the seminars, but said they were either irrelevant or had not compromised his objectivity as a judge.

“I have no particular desire to try that case. I am sick of it,” he said. “But I just don’t think it’s fair to foist it on one of my colleagues. It would take them hundreds of hours to come up to speed.”

Filed in 1975 by the city of Long Beach and the state of California, the suit accuses the six oil companies of conspiring to hold down the price of crude pumped from an oil field extending from Wilmington to Long Beach Harbor. Such price controls robbed taxpayers of hundreds of millions of dollars marked for education and other public services, the city and state contend.

After years of legal wrangling, it appeared last spring that the case was finally on the road to trial when the U.S. Supreme Court let stand the appellate ruling that overturned Gray’s decision.

Then details of the seminars and other oil ties surfaced, almost by happenstance, placing the case in legal limbo once again.

According to court documents, an attorney working for the city of Long Beach recognized the maiden name of the judge’s wife, Elizabeth Polin Gray, as that of a wealthy family of landowners in oil-rich San Luis Obispo County.

John R. Shaffer, a retired bank executive turned private detective, was hired last summer by Long Beach and the state to investigate the financial dealings of the judge and his wife.

The detective’s 10-month search of newspaper files, tax records, death records and other public documents revealed that Elizabeth Gray signed a lease in 1982 allowing Texaco to look for oil on nearly 1,000 acres of ranch land she inherited from her parents in San Luis Obispo County. She received rent totaling more than $1,200 from Texaco during four of the years her husband presided over the case in which Texaco was named, court records said.

Several more leases dating from 1955 to 1986 were discovered between various oil companies and Elizabeth Gray’s brothers, who own land occupied by service stations in the San Luis Obispo area.

Attorneys for the city and state presented that evidence and their knowledge of the seminars to Gray in the April 16 meeting in his chambers. The judge then revealed that his wife recently learned that she had inherited 10 shares of Chevron stock.

The attorneys asked Gray to remove himself from the case. The judge refused, and the attorneys took the relatively unusual step of seeking his removal in a motion before Tagasuki.

In a 12-page ruling, Tagasuki held that Elizabeth Gray’s Texaco oil lease had expired and would not have been affected by the outcome of the lawsuit. Her brothers’ dealings were similarly irrelevant, he said.

Tagasuki also ruled that the Florida trips were not gifts because--even though the oil companies contribute money to the Law and Economics Center that sponsored the seminars--the center itself paid for the trips.

Elizabeth Gray’s 10 shares of Chevron stock constituted the only conflict, and would have to be sold if her husband remained on the case, Tagasuki ruled. Judge Gray said his wife sold the stock on Monday, one day before the ruling came down.

Tagasuki said the fact that Gray openly views the case in the oil companies’ favor does not preclude him from conducting a fair jury trial.

“The mere fact that a judge has reached conclusions based on the evidence placed before him does not prevent him from affording parties a fair and impartial trial . . .” Tagasuki wrote.

Gray agreed.

“If anyone thought I was trying to hide something I would be very much upset,” Gray said. “If I thought there was any proper basis for me to disqualify myself, I would have done it and I am grateful that Judge Tagasuki agreed.

“I don’t blame them for wanting to get rid of me. I granted a summary judgment (in the oil companies’ favor) and I said I don’t think much of their ability to recover (damages).

“But I will try the case.” the judge said. “I will give them as fair a hearing as I can.”