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February 15th, 2013

Breaking Bad on the Bayou: Supreme Court and Attorney General Giving Louisiana a Bad Name

Regular Judicial Hellholes readers know that Louisiana has managed to make the Watch List for three years in a row.  But despite ongoing legislative reform efforts, it may be headed for a full-blown Hellholes ranking this year thanks to a recently horrendous state supreme court decision and a continuing pay-to-play shakedown racket known as the “Buddy System.”

High Court Offers New Motivation for ‘Legacy’ Lawsuits

Though Baton Rouge lawmakers passed and Gov. Bobby Jindal last June signed into law a long overdue reform measure to reduce the economic toll that often fraudulent “legacy” lawsuits take on the Pelican State, a January 30 decision handed down by the Supreme Court of Louisiana will motivate a continuation of such suits and threatens 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, et al.  will allow surface owners to claim damages in excess of the cost of remediation performed under Act 312, as amended.  In other words, plaintiffs can now hope to collect settlements or awards for damages from the critically important oil and gas industry that far exceed remediation costs.  And since the law doesn’t even require successful landowner plaintiffs to spend a dime of their lawsuit winnings on remediation, this long-running parasitic racket is now likely to rev up once again.

One of the state’s most promising economic golden geese will be killed unless Gov. Jindal and lawmakers get busy in crafting a reform statute that can essentially overturn the high court.  Louisiana faces a billion-dollar budget deficit — yes, that’s billion with a B — and tax revenues from a healthy and thriving onshore energy sector would certainly help reduce that deficit.  If the governor and the legislature need any more motivation than that to undo the high court’s illogic, then they’re looking out for someone other than their constituents.

The “Buddy System” 

Speaking of looking out for someone other than constituents, Judicial Hellholes reporting in the past has frequently covered Louisiana Attorney General Buddy Caldwell‘s troublingly self-serving shenanigans with certain personal injury lawyers from whom he receives generous political support (see here, here and here, for example).

So the Buddy System’s latest squeeze-play — wherein Caldwell hires private sector plaintiffs’ lawyers to pursue out-of-state corporate defendants with potentially lucrative lawsuits on behalf of the state — is hardly news.  But what’s different this time is that a recent federal court decision in U.S. v. Caronia indicates that the First Amendment protects the commercial speech of prescription drug manufacturers when they engage in off-label marketing of their products to doctors.  And the Buddy System’s latest lawsuit targets GlaxoSmithKline LLC for supposedly doing just that.

But the AG and his merry band of Backwoods Bayou Buddies seem less interested in pesky precedent than they do in revenge.  That’s right, GSK had the temerity to turn the tables and sue Caldwell & Company last year, claiming the AG’s pay-to-play racket ran afoul of the state constitution.  As that litigation proceeds, it’s not unreasonable to think that a vendetta factor is at play in this new lawsuit against the drugmaker.

* * *

As soon as lawmakers and Gov. Jindal enact a reform to undo the Supreme Court’s legacy lawsuits-boosting Vermillion decision, perhaps they should turn to reform legislation that will end the corruption of pay-to-play hiring of private sector personal injury lawyers by the state.  At the very least, taxpayers have a right to know how these contracts for legal services are being let and ultimately divvied up.  Transparency is long overdue, and no one should expect Caldwell to come clean on his own.