[StBernard] Class actions point up shortcoming in Louisiana court system

[Westley Annis]

Class actions point up shortcoming in Louisiana court system
by Rebecca Mowbray, The Times-Picayune 
Sunday February 01, 2009, 2:00 AM
Tension between attorneys in two rival class action lawsuits against
Louisiana Citizens Property Insurance Corp. runs so high that proceedings
recently descended into a courtroom fistfight. 

The class action suits are nearly identical in theme. Both seek damages from
Citizens for tardy payout of insurance claims after Hurricanes Katrina and
Rita. Their primary difference is geographic: One was filed in Orleans
Parish and the other in Jefferson Parish, and their respective attorneys
have waged an acrimonious battle to recruit plaintiffs and win the first
judgment, which will bring lucrative legal fees to the victorious team. 

While the feud has garnered attention mostly for the sensational courtroom
brawl it spawned, lawyers and judges say it highlights a shortcoming of the
Louisiana legal system. Unlike the federal courts and at least 15 state
court systems, Louisiana has no provision for combining similar class action
lawsuits filed in different parishes. 

The situation is a loser for all involved in the Citizens litigation. Two
courts and two judges are plugging away at essentially the same issues.
Citizens is forced to defend itself in two parishes, placing a burden on
taxpayers, who pick up the bill if the insurer goes broke. Plaintiffs lose
because they are unlikely to receive a payout any time soon, as any award
will likely be challenged by those in the rival suit. 

Even the judge overseeing the litigation in Orleans Parish said the system
needs to be reformed. Judge Kern Reese of the Orleans Parish Civil District
Court called on the Legislature to change the law to allow for a merger of
competing suits. 

"Unfortunately where we don't have that, you can have a situation where two
cases essentially sue for the same cause of action at the same time," Reese
said. Since 1968, the federal court system has consolidated similar class
actions from around the country before a single judge. A panel of judges
appointed by the U.S. Supreme Court determines which cases will be handled
in this way, and then picks the venue and the judge to manage it. This
practice of merging similar suits helps clear gridlock from the courts and
ensure that all parties have access to expert testimony. 

The example most familiar to locals might be the Vioxx liability litigation,
in which patients sued Merck after the pharmaceutical company pulled the
painkiller off the market in 2004 after research showed it increased the
risk of heart attacks and strokes. Suits filed all over the country were
consolidated before Judge Eldon Fallon of the U.S. District Court in New
Orleans. 

The federal judiciary's ability to coordinate litigation also was crucial
after Hurricane Katrina, when storm victims heaped dozens of class action
suits upon the courts. Class action claims over the levee breaches and
against insurance companies were consolidated before Judge Stanwood Duval of
the U.S. District Court in New Orleans. Fallon is meanwhile handling class
actions over the Murphy Oil spill in Chalmette. 

Joe Bruno, the court-appointed plaintiffs liaison in the levee breach and
insurance cases, said the court would not have been able to handle the 25
class actions and thousands of individual suits if key storm questions had
not been centralized before one judge. 

Bruno said the situation with the Citizens class action is a little bit
unusual. He said most class action cases that end up in the state courts are
tied to explosions or other disasters that take place in a limited
geographic area. The Citizens class action suits stem from Katrina and Rita
claims and thus involve plaintiffs from multiple parishes across south
Louisiana. 

"It's not something that going to happen very often, but when it does, it's
a mess," Bruno said, echoing Reese's call for a state multi-district
litigation law. 

Fifteen states have adopted procedures for coordinating litigation,
according to the National Center for State Courts. 

Not everyone is in favor of such a practice. Some argue that coordinated
litigation puts too many important cases in front of a single judge.
Politics can also influence which venue is chosen. 

Fred Herman, an attorney working on the Citizens class action in Jefferson
Parish, said Louisiana does not need a multi-district litigation statute to
consolidate competing suits. 

He said Louisiana law speaks plainly on the subject in section 594A1 of the
code of civil procedure, which says, "An action previously certified as a
class action shall not be dismissed or compromised without the approval of
the court exercising jurisdiction over the action." 

He said problems arose between the Jefferson and Orleans suits only because
of a misinterpretation of that law. "That's what created the war of venues.
594A1 is sufficient to handle this particular situation," Herman said. 

Reese disagrees. He said it is important for Louisiana to have laws on the
books that give the judicial system the appropriate range of choices to
handle whatever litigation comes its way. 

"Who knows what the future holds. I'd rather have a multi-district
litigation statute and not need it, rather than need it and not have one,"
Reese said. 

Judge Henry Sullivan, who is overseeing the suit in Jefferson Parish,
declined to be interviewed for this story. 

State Sen. Julie Quinn, R-Metairie, an attorney who chairs the committee
that would handle changes to the judicial system, said she requested that
Senate staff prepare a bill asking the Louisiana Law Institute to study the
feasibility of enacting a multi-district litigation statute in Louisiana. 

She said a bill will be introduced this spring that will ask the law
institute -- essentially a brain trust of law professors and lawyers from a
variety of backgrounds -- to report back in time for the spring 2010
legislative session. 

For now, the intertwined Citizens class actions remain unsolved. 

Attorneys in the Orleans case, Toni Swain Orrill v. Louisiana Citizens, have
asked Reese to approve a $35 million settlement with the insurance company.
But lawyers in the Jefferson case, Geraldine Oubre v. Louisiana Citizens,
say the Orrill case is unfairly stealing their plaintiffs. They have pledged
to appeal if the settlement is approved. 

The Oubre lawyers are meanwhile proceeding with their case in Jefferson
Parish, and they have argued that Citizens should pay their class members
$90 million for not adjusting claims on time. 

Meanwhile, Citizens policyholders who had to wait for their claims to be
handled now have to wait for their class actions to be resolved.

Rebecca Mowbray can be reached at rmowbray at timespicayune.com or
504.826.3417.