By Shelby Sebens
PORTLAND, Ore. (Reuters) - A federal magistrate in Oregon has ruled that KBR Inc cannot recoup legal fees from 12 Oregon Army National Guardsmen who accused the defense contractor of failing to protect them from cancer-causing chemicals when they served in Iraq, attorneys said on Thursday.
KBR had sought to recoup $850,000 in legal fees from the guardsmen after the 9th U.S. Circuit Court of Appeals in May overturned a verdict by an Oregon jury in 2012 that awarded $85 million to the soldiers.
The jury awarded each guardsman $850,000 in non-economic damages and another $6.25 million in punitive damages for "reckless and outrageous indifference" to their health. The soldiers had been guarding civilian workers restoring an Iraq oil industry water treatment plant after the U.S.-led invasion.
In Wednesday's ruling, U.S. Magistrate Judge Paul Papak said KBR had missed a deadline to seek to recoup its legal fees and that a bill of costs it filed "referenced no items corresponding to any of the costs defendants now seek in this court."
In May, the appeals court agreed with KBR's argument that the U.S. District Court in Portland did not have jurisdiction in the proceedings. The case will be retried in Houston, Texas, where similar cases are being heard.
More than 100 soldiers have sued KBR for exposing them to cancer-causing toxins after the plant was contaminated with sodium dichromate, a chemical used to fight corrosion.
Sodium dichromate contains hexavalent chromium, another toxin that became notorious due to the movie "Erin Brockovich."
The trial date for the Oregon national guardsmen's case has not been set yet, the soldiers' attorney Mike Doyle said.
The Oregon decision comes after a ruling last month by U.S. Army officials that taxpayers will pay more than $30 million to cover KBR's defense fees.
KBR, which has dismissed the soldiers' contentions, filed an appeal to the Portland magistrate's ruling on Wednesday.
An attorney for the contractor, Geoffrey Harrison, said KBR has a legal obligation to the Army to recoup costs from the legal battle.
"KBR believes that it is wrong for the plaintiffs' lawyers to try to avoid paying the costs of court and, instead, trying to shift the cost to the taxpayers," Harrison said in a statement sent to Reuters.
"In his latest ruling, the magistrate judge got it wrong again. This is yet another in a long series of factually and legally incorrect rulings from this judge," Harrison said.
(Reporting by Shelby Sebens; Editing by Daniel Wallis and Eric Beech)