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Get The Facts On The Louisiana Lawsuit Scam

So-called “legacy lawsuits” are enriching some plaintiff lawyers; destroying jobs and ignoring the environment

The landscape of Louisiana – like Texas, Mississippi and other “oil patch” states – has been dotted with drilling rigs for decades. To most folks, these rigs are a symbol of income for landowners, tax revenues for local governments, jobs for citizens, and growth for main street businesses.

But not in Louisiana: Most onshore conventional oil rigs in the Pelican State are idle or in rapid decline. Why? Because a booming industry in so-called “legacy” lawsuits has devastated onshore energy exploration and production there.

The plaintiff lawyers promoting these lawsuits claim they want environmental clean-up for so-called legacy sites. But the facts show that the only ones cleaning up are a few politically-connected law firms.

Here’s how it works: Ambitious lawyers scour property records and connect parcels of land to any and all “deep pocket” defendants they can find. A lawsuit filed in a rural parish courthouse then seeks millions, even billions, for environmental damage from drilling activity.

No actual damages are necessary of course. With no evidence of environmental damage and no plan for clean-up presented, these lawsuits can hang over a company for a decade or more.

Louisiana Lawsuit Scam in Their Own Words
Watch this expert give lawyers a how-to lesson.

We all know the scam: Rather than risk a runaway verdict in a rural parish, many companies settle out of court to protect their business. But here’s the joke: a 2006 reform law requires that a portion of any monies paid from these lawsuits go toward actual environmental clean-up. Instead, well-connected plaintiffs’ lawyers, with the help of local judges, are managing to line their own pockets with those funds.

Table #1: Legacy Lawsuits –  The Numbers

$33 million Amount awarded in 2002 Corbello case for cleanup
$0 Amount the state Supreme Court determined must be spent by landowner on cleanup
$110,000 Approximate value of the land at issue in Corbello case
271 Number of Act 312 cases filed
1 Number of the 271 cases that have gone through the complete Office of Conservation hearing process
64 Number of cases settled
55% Percent of settled cases with no further action required to meet applicable state environmental standards
78% Percent of the 271 cases that have not submitted environmental sample test data in accordance with the Louisiana Department of Natural Resources’ laboratory manual

Source: Louisiana Department of Natural Resources report to House and Senate committees on natural resources, February 1, 2012

The bottom line: plaintiff lawyers clean up, legacy drilling sites don’t.

Today, over half of the oil produced in Louisiana is pumped by a company being sued by plaintiffs’ lawyers. Companies of all sizes – about 1,500 in all – have been ensnared by some 250 lawsuits. And, according to state data, approximately half of these suits have been filed by one plaintiff firm: Talbot Carmouche & Marcello.

The pain caused by the legacy lawsuits is felt in many ways.  The Louisiana State University Center for Energy Studies (PDF) determined that legacy lawsuits strongly impact conventional drilling in Louisiana. Over the past eight years, more than 30,000 job opportunities and $1.5 billion in potential wages have been foregone.  The state’s economic output would have increased by more than $10 billion without the lawsuits.

Louisiana politicians could end this scam on one of the state’s most important industries. But will they?

Table #2: Legacy Lawsuits –  Wild Initial Damage Claims Are Unrelated to Actual Costs
Plaintiffs’ Initial Damage Claims and Final Remediation Plan Cost Agreed To By All Parties

Site:

Initial Claimed Damages:

Cost of Plan Approved by all Parties:

East White Lake

$189,000,000

$5,000,000

Big Creek

$223,000,000

$1,400,000

Delhi

$339,000,000

$2,000,000

Tensas Poppadoc

$115,000,000

$2,500,000

Germany

$71,000,000

$750,000

Black River

$27,000,000

$3,500,000

White Castle

$52,000,000

$850,000

Data provided by Louisiana Oil and Gas Association

The Next Legacy Lawsuit Target?

As the plaintiffs’ consultant notes in the video, pesticides used over the years in cane fields can leave residues that may be fodder for legacy lawsuits.

The presentation by the plaintiffs’ consultant, W.D. Griffin, references a commonly used pesticide, MSMA, which has been used in south Louisiana since the 1930s and can contain more than 20 percent arsenic. A finding of arsenic residue in soil, even though it may have come from farming practices, may be used in legacy lawsuits, unfairly claiming that oil companies are responsible for the contamination.

However, might agricultural interests become the next target of the legacy lawsuit lawyers? Experience over the last several decades shows that the plaintiffs’ bar moves from industry to industry seeking big payoffs from lawsuits. A focus on asbestos and tobacco lawsuits moved over to a focus on other types of lawsuits, such as paint and electronics and then moved on to other topics, including fast food. Discovery of arsenic residue on a property might ensnare former landowners and other entities that had previously farmed on the property. Stay tuned…

Media inquiries: dmckinney@atra.org