US judge steps aside in dispute over Hawaii energy settlement

By Mike Scarcella

Sept 23 (Reuters) - A federal judge in Hawaii has disqualified himself from hearing a dispute over whether a decades-old price-fixing settlement bars the state from suing Chevron and other energy companies over climate change, concluding that he has a potential conflict of interest as a Hawaiian resident.

In an order on Tuesday, US District Judge Micah Smith withdrew from further participation in the litigation, leading the court's chief judge to assign Oregon-based US District Judge Michael Mosman to take over.

Smith, who joined the bench in 2023, said he and members of his family lived in Hawaii during the 1990s and might qualify as parties covered by the statewide settlement.

“This conflict almost certainly extends, in one way or another, to all other district judges in the District of Hawai'i,” Smith wrote.

Smith did not immediately respond to a request for comment left with his office. Chevron did not immediately respond to a request for comment, and Hawaii referred to its court submissions. In court filings, Chevron and Hawaii said they saw no need for Smith to recuse himself.

The underlying lawsuit, filed by the state in 1998 on behalf of Hawaii residents, accused a group of energy companies of price-fixing and deceptive marketing. The case later settled for $35 million. Chevron and the other defendants denied wrongdoing.

Earlier this year, Chevron and the other defendants asked Smith to enforce the settlement by blocking Hawaii from pursuing certain climate-related claims alleging the deceptive manufacturing, marketing and sale of petroleum products. The companies contend the settlement bars the related litigation that Hawaii is pursuing in state court.

Before issuing his recusal ruling, Smith asked the Judicial Conference of the United States' Committee on Codes of Conduct for ethics guidance.

The committee told Smith that because the case was brought on behalf of Hawaii residents under a federal antitrust statute, the judge and his wife have a "financial interest in the subject matter" of the action. But the committee said there were steps he could take to avoid recusal.

Smith said he could not avoid the conflict of interest because he had already spent a substantial amount of time on the matter and because obtaining ethics waivers would be impractical.

The case is Anzai v. Chevron Corp, US District Court for the District of Hawaii, No. 1:98-cv-00792.

For plaintiffs: Vic Sher and Matthew Edling of Sher Edling

For Chevron: Theodore Boutrous Jr of Gibson, Dunn & Crutcher; Anthony Dick of Jones Day; and Andrea Smith of Paul Weiss

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