The latest chapter on trial lawyer greed exploded onto headlines in newspapers across the country this summer, when a New Orleans based levee board filed suit against scores of energy companies that operate along Louisiana’s coast.
Under the direction of John Barry, a well-known author who serves as Vice President of the authority, officially known as the Southeast Louisiana Flood Protection Authority—East or SLFPAE, the lawsuit reads like an elaborate science fiction novel. In an apparent attempt to create an easy villain, the suit alleges oil and gas operators are responsible for creating a “mercilessly efficient, continuously expanding system of ecological destruction.”
Many questions surround the legality of the suit and whether or not it will be able to proceed in court—Governor Bobby Jindal says it won’t—but one thing is clear, this is not about saving Louisiana’s coast, such as Barry’s narrative may suggest.
This is about money.
Gladstone N. Jones III, a lawyer representing the authority who has dedicated his entire career to suing oil and gas companies, says the plaintiffs are seeking damages equal to “many billions of dollars. Many, many billions of dollars.”
Indeed, I’m sure Mr. Jones hopes it is “many, many billions”—as the contingency fee contract that the board approved to hire Jones and several other trial firms would allow them to recover 32.5 percent of any money collected from the litigation up to $300 million and 22.5 percent of any money above that amount.
The board’s unconscionable arrangement—which was approved by state Attorney General Buddy Caldwell—also includes a “poison pill” provision that obligates the SLFPAE to pay these attorneys an unlimited amount of fees to cancel the contract.
Essentially, the board has moved to unilaterally appropriate what could be millions of dollars to a select group of well-connected trial attorneys. And all this took place without much public discussion. The board did not publicly debate its decision to file the lawsuit, and the attorneys they hired were not selected through a public Request-For-Proposal (RFP) process in which professionals are allowed to submit bids for services in an open, competitive forum.
A recent editorial in the Baton Rouge Advocate correctly points out that the Board’s actions “seem to violate the spirit if not the letter of the Louisiana Open Meetings Law.”
Governor Jindal, Garret Graves, Chairman of the Coastal Protection and Restoration Authority, and numerous state legislators have also harshly criticized the suit.
In an immediate reaction, Governor Jindal issued a statement saying in part, “This is nothing but a windfall for a handful of trial lawyers. It boils down to trial lawyers who see dollar signs in their future and who are taking advantage of people who want to restore Louisiana’s coast. These trial lawyers are taking this action at the expense of our coast and thousands of hardworking Louisianians who help fuel America by working in the energy industry.”
Referring to the “poison pill” provision of the trial lawyers’ contract, Graves said, “The SLFPAE has chosen to confer a monetary benefit, seemingly without any limitation, to the attorneys that it chose and hired without any public notice or comment. In light of the staggering amounts of attorney fees being discussed in the media, the members’ decision to obligate itself to the attorneys’ costs calls into question their sense of fiduciary duty to SLFPAE.”
In addition, lawmakers on both sides of the aisle expressed concerns that the lawsuit simultaneously threatens the future of coastal restoration efforts and energy operations in the state. Sen. A.G. Crowe (R-Slidell) said, “I’m concerned about the timing and how it might jeopardize the other initiatives that we’re working on regarding funding to rebuild our coasts. It could have an adverse effect on our ability to get the funding for our long-term sustainability. And I hope there will be an immediate meeting of the minds to work together with all of the state and federal agencies to approach this situation in unison.” Meanwhile Rep. Sam Jones (D-Franklin) said, “(The suit) has the potential to virtually shut down the oil and gas exploration and production industry. We just can’t do that.”
Indeed, the implications of this lawsuit are far ranging. Regardless of whether or not it is allowed to proceed in court, a certain level of damage has already been done in that it sends another strong message to the world that Louisiana’s poor legal climate makes the Pelican state a risky place to do business.
Over the last decade, hundreds of companies have been hit with lawsuits claiming environmental harm caused by oil and gas exploration and production activities conducted decades and sometimes centuries ago. Meanwhile a system of “jackpot justice” is unfolding in the aftermath of the BP settlement (with the court’s misguided blessing) as hordes of trial lawyers actively recruit businesses to make claims against BP even if they weren’t impacted by it.
Taken together, all of these legal actions reflect an unrelenting assault by plaintiffs’ lawyers on businesses that provide many thousands of high-paying jobs for Louisianans and contribute billions in the form of local, state and federal tax revenues. I wonder, if those businesses decide to leave, what will happen to the folks who now have those jobs and the local governments and taxpayers that depend on those revenues? We may soon find out.