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Louisiana

When last year’s Judicial Hellholes report listed the Pelican State at the bottom of its Watch List, there were problems, of course, but reason for optimism. The legislature in 2012 finally passed, and Governor Bobby Jindal signed, a law aimed at reducing the number of often fraudulent “legacy” lawsuits that have stunted Louisiana’s critically important onshore oil and gas industry for decades. And lawmakers, eager to shake off their state’s economy-stifling reputation for biased “bayou justice,” also took a modest step to address forum shopping in connection with class actions.

But what a difference a year can make. Thanks to the continuingly
brazen antics of the state attorney general, a horrendous state supreme court decision, shamelessly avaricious personal injury lawyers, and even parish-level politicians now trying to get their own piece of the lawsuit pie, a flood of costly and sometimes meritless litigation again threatens to swamp Louisiana’s economic future.

THE ‘BUDDY SYSTEM’

Louisiana’s ethically-challenged Attorney General James “Buddy” Caldwell continues to hire his political patrons among the plaintiffs’ bar to sue – supposedly on behalf of
the state – hapless out-of-state corporations with deep pockets, whether they be energy producers, prescription drug makers or other easy marks. In addition to his office’s controversial authorization of a levee board’s no-bid hiring of contingency-fee lawyers to sue 100 or so oil, gas and pipeline companies in what may prove to be the mother of all legacy lawsuits (see details below), Caldwell routinely skirts state law that precludes him and other state officials from entering contingency-fee agreements.

An investigative report in May 2013 by a New Orleans television station turned
up the heat on Caldwell and his so-called “Buddy System.” WWL-TV’s David Hammer
interviewed ATRA ally Melissa Landry, executive director of Louisiana Lawsuit Abuse Watch, and relied on her extensive research into Caldwell’s cozy practices. When confronted with a court transcript showing that one of his high-priced hired guns had fallen asleep during proceedings in the ongoing litigation against BP (formerly British Petroleum), Caldwell said he was not bothered by it and falsely suggested the judge catches quick naps, too.

Speaking of the BP litigation, the Associated Press reported in January 2013 that Caldwell had by then already “spent nearly $24 million building the state’s legal case against BP . . . , with much of the money paid to outside law firms that have contributed to his campaigns.” Caldwell chose those lawyers himself, explains the AP, “under a state law that allows contracts for professional services to be awarded without a competitive process.”

Refusing to be interviewed by the AP, Caldwell none- theless tried to defend his seemingly self-serving actions in an email, noting there is no legal impediment to hiring firms or lawyers who were generous to his election bids.

“Properly handling this case requires expertise and experience in areas of mass tort and complex litigation, as well as class action and environmental law,” Caldwell wrote, calling the case one of the largest and most com- plicated in history. “Few attorneys have this experience, and we have no staff attorneys who could fulfill this role without contract counsel.”

Then the obvious question that Louisiana lawmakers, voters and taxpayers ought to be asking of AG Caldwell is this: Why, sir, doesn’t your office have such experienced attorneys on staff? With so much of the state’s economy dependent on the oil and gas industry, there simply can be no excuse for the Louisiana attorney general’s office not being sufficiently staffed with attorneys who are well versed in related law.

Equally obvious is the need for Louisiana lawmakers to enact legislation that eliminates or severely limits no-bid contracts for legal work. If the state would not undertake a highway project without asking for competitive bids, it certainly should not undertake lawsuits without the same, good-government safeguard in place.

HIGH COURT EFFECTIVELY GUTS LEGACY LAWSUIT REFORM

The ink of Governor Jindal’s signature on the June 2012 legacy lawsuit reform law had barely dried when a January 30 decision handed down by the Supreme Court of Louisiana invited a pernicious and even more robust continua- tion of such suits, threatening to kill altogether what was left of onshore oil and gas production there.

The high court’s decision in Vermillion Parish School Board v. Louisiana Land & Exploration allows surface owners to collect settlements or awards for damages from oil and gas producers that far exceed remediation costs and any amount contemplated in original land-use contracts. And since the law doesn’t even require successful plaintiffs to spend a dime of their lawsuit winnings on actual remediation, this long-running racket is surely to rev up once again. Louisiana Lawsuit Abuse Watch’s Melissa Landry said, “The decision raises serious questions about the current
posture of the high court and the impact its future decisions may have on businesses, as well as Louisiana workers and their families.”

As the governor and lawmakers struggle to balance the state’s budget, they will need to craft a new reform statute that can effectively overturn the high court’s decision if they want to boost both the production of and tax revenues provided by the onshore oil and gas industry. Otherwise they too will share the blame for killing one of the state’s most promising economic golden geese.

FLOOD OF ADDITIONAL LAWSUITS FURTHER THREATENS ENERGY INDUSTRY

If hundreds of individual legacy lawsuits are not enough to swamp Louisiana’s oil and gas industry, the levee board more technically known as the Southeast Louisiana Flood Protection Authority-East is prepared to do its part. In July 2013 it filed a lawsuit against roughly 100 energy companies that have operated along, and allegedly contrib- uted to the erosion of, the state’s fragile coast. Seeking a multibillion-dollar award for damages, the lawsuit suggests the businesses were at least partially responsible for the severity of 2005’s Hurricane Katrina.

But even editorial writers at The Advocate newspaper in Baton Rouge, who are generally sympathetic to the idea that the energy companies should chip in considerably for shoreline and wetlands restoration, are not happy about the levee board’s opaque approach.

Citing a violation of “the spirit if not the letter of the Louisiana Open Meetings Law,” The Advocate noted that the “board did not publicly debate its decision to file the suit, a troubling move given the potentially sweeping consequences of the litigation. The board didn’t vote publicly to file the suit, although it did vote to hire attorneys who are now representing it in the litigation.”

In what may be another violation of state law, the board hired on a generous contingency-fee basis and without an open bidding process personal injury lawyers to conduct the lawsuit on its behalf. To make this oily wicket stickier still, Attorney General Caldwell, already mired in other pay-to-play scandals (see above), reportedly authorized the board’s hiring of outside lawyers. Caldwell has since blamed that authorization on his staff.

Though Governor Jindal has enjoyed fairly cozy relations of his own with the plaintiffs’ bar, he has, to his credit, denounced the levee board’s lawsuit as a disruption of state efforts to implement its Master Plan for coastal restoration. And state Senator Robert Adley has been even more blunt, writing that, “The public can forgive a mistake but not a cover-up. Hence, the question that begs an answer is, why does the AG allow this contingency fee arrangement to remain in effect, knowing it violated laws?”

And apparently unwilling to let the levee board and its outside counsel sop up all
the gravy, Jefferson and Plaquemines parishes in November 2013 collectively filed in state courts 28 lawsuits of their own against many of the same oil, gas and pipeline companies named as defendants by the levee board. As reported by the New Orleans Times-Picayune, the parish lawsuits at first glance do not appear tainted by unlawful
contingency-fee arrangements or shadowy no-bid hiring of outside counsel. But
curiously enough, both parishes’ bidding processes for the legal work resulted in the
selection of the same lead lawyer, Vic Marcello of Talbot, Carmouche and Marcello. This is a law firm that has enriched its partners by filing scores of legacy lawsuits during the past decade, and its hiring by the parishes in this instance only furthers a sordid storyline about the incestuous nature of Louisiana’s litigious political culture.

BP IS MAD AS HELL AND ISN’T GOING TO TAKE IT ANYMORE

“Until this year,” began an enlightening and game-changing article by Bloomberg Businessweek legal correspondent Paul Barrett in late June of 2013, Gulf Coast personal injury lawyer “Kevin McLean specialized in suing nursing homes . . . .” But McLean has now “switched the focus of his practice to a fund BP established to compensate business losses from the 2010 oil spill in the Gulf of Mexico. In its attempt to dilute a legal and public-relations mess of epic proportions, BP began paying claims within weeks of the disaster and has so far spent more than $25 billion for cleanup and compensation. That hasn’t stemmed demands for more.”

In fact, a federal judge’s installation last year of Patrick Juneau, a well-connected New Orleans lawyer, as claims administrator “prompted scores of additional plaintiffs’ attorneys to swarm onto the scene, signing up a new wave of clients, many located far from the once-sullied shoreline,” Barrett continued. And shortly after his pivot away from nursing home litigation, lawyer McLean began soliciting new clients for his oil gusher of a racket with a letter that read in part: “The craziest thing about the [BP] settlement is that you can be compensated for losses that are UNRELATED to the spill.”

Crazy indeed. So crazy, reported New York Times columnist Joe Nocera, that “BP finally said ‘enough.’” But when it “complained to [U.S. District] Judge Carl Barbier, who is overseeing all of the multibillion-dollar litigation against BP in New Orleans, it got nowhere.” And suggesting that BP lawyers should have known what to expect from Judge Barbier, Nocera pointed out that the judge is “a former Louisiana plaintiffs’ lawyer” who was “once the president of the Louisiana Trial Lawyers Association. How cozy is that?”

Exasperated with both Judge Barbier’s April dismissal of its lawsuit against Juneau and otherwise nonchalant acceptance of the subsequently continuing feeding frenzy, BP took its pleas for relief to the U.S. Court of Appeals for the Fifth Circuit. In October the appellate court ordered Judge Barbier to reevaluate complex accounting issues underlying some settlement claims and to halt payments for claims that were plainly “fictitious” until that review is complete. But Barbier continued to vigorously defend his appointee, Juneau, and the administration of claims. So in the week before Thanksgiving, BP went back to the Fifth Circuit with what it called an “emergency motion,” arguing “The district court has refused to enjoin payments to claimants that suffered no harm traceable to the oil spill.” On December 2, the Fifth Circuit again, more forcefully, opined that Barbier “erred by not considering arguments of causation” and reordered his “expeditious consideration” thereof.

Even before that December 2 slap-down, Judge Barbier was unhappy with the Fifth Circuit’s scrutiny and issued an unusual November 25 opinion, describing as “deeply disappointing” BP’s efforts to “rewrite” the history of the claims agreement. But if the judge were to be more candid, he might confess that he is really upset with BP lawyers for trying to make such a big deal out of the Gulf Coast personal injury bar’s craven willingness to seek settlement money their clients do not deserve. If BP is to be fairly criticized for anything, it should be for having foolishly assumed a minimum level of integrity among the shady bayou lawyers in New Orleans who, like southern sheriffs with speed traps before the interstate highways were built, never hesitated to fleece fancy car-driving city slickers from up north.

Meanwhile, the Times’ Nocera put things in broader context: “I realize that many people don’t much care that a multinational corporation responsible for a huge oil spill is being fleeced in Louisiana. But they should” because, “although BP’s negligence was unquestionably a significant reason for the spill, its response has been the opposite of the unfeeling corporation. . . . Yet its efforts to do right by the Gulf region have only emboldened those who view it as a cash machine. The next time a big company has an industrial accident, its board of directors is likely to ques- tion whether it really makes sense to ‘do the right thing’ the way BP has tried to.”

Nocera added that Americans also should care about the rule of law, which “gives businesses the confidence they need to make investments” and “both parties [in a lawsuit] faith that disputes will be settled fairly. . . . [B]ut the truth is that what is going on in Louisiana today is not all that different than when a corrupt Russian official creates a fake tax liability to line his pockets at the expense of some hapless company . . . .”

OTHER TROUBLING ASPECTS OF LOUISIANA’S LITIGATION LANDSCAPE

This report could go on, page after page, with additionally troubling tales of civil injustice from the Pelican State, but that would be unfair to the other Judicial Hellholes. So here in short form, are a few more stories we will watch until next year’s report:

  • The state’s Third Circuit Court of Appeal was the subject of an extensive fall 2013 report issued by the Louisiana Lawsuit Abuse Watch, criticizing the “activist” court for among other things, its “inconsistent appli- cation of a well-established legal statute in an apparent attempt to manipulate the law to achieve a preferred outcome – namely higher award[s] for the plaintiff[s].
  • According to CNN Money, the Louisiana Municipal Police Employees’ Retirement System (LMPERS, or locally pronounced as “lampers”) has become a “[securities] litigation machine,” “suing companies with abandon.” In one 10-day period in February, for example, “the fund sued Dell, US Airways, Hewlett-Packard, Heinz, and EnergySolutions, America’s largest nuclear-waste company,” and it has been described in a legal brief by an attorney who once worked for it as “the most prolific filer of shareholder litigation in U.S. history.” Since Louisiana is as self-destructively litigious as it is, other retirement funds are greedily following LMPERS’ meritless lead.
  • Last but not least is a recent rise in exceptionally large asbestos-exposure verdicts for individual plaintiffs. No one begrudges mesothelioma victims and their families just compensation. But when judges withhold exculpatory and mitigating evidence from jurors, the resulting verdicts can be unjust and leave fewer funds to go around for future claimants.
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