Alleged Damages in Hurricane Katrina from Dredging Operations Not Forseeable

A court of appeals has affirmed the dismissal of multiple claims alleging that negligent dredging operations before Hurricane Katrina led to the failure of levee systems in Louisiana.  See In Re: In the Matter of the Complaint of Great Lakes Dredge & Dock Co. LLC, No. 08-30738 (5th Cir. Oct. 14, 2010). Claimants were Hurricane Katrina flood victims who filed claims alleging negligence on the part of operators of dredging vessels along the Mississippi River Gulf Outlet. Plaintiffs argued that they suffered damages from the flooding of Orleans and St. Bernard Parishes when several levee systems failed as a result of the erosion of protective wetlands allegedly caused by the defendants’ negligent dredging operations.

The Mississippi River Gulf Outlet  (“MRGO”) is a 76-mile navigational channel that connects the Gulf of Mexico with the Industrial Canal in New Orleans, bisecting the marshy wetlands of St. Bernard Parish and Chandeleur Sound. It was built between 1958 and 1965 by the United States Army Corps of Engineers.  Beginning in 1993, the Corps of Engineers contracted with numerous private dredging companies, including the defendants, to assist the Corps of Engineers in maintenance dredging along the MRGO. From 1999 to 2004, the Corps of Engineers awarded more than 150
contracts to private dredging companies to dredge the length of the MRGO channel.

Plaintiffs, who numbered in the tens of thousands, were individuals, businesses, and other entities who owned property that was damaged due to flooding after Hurricane Katrina made landfall on August 29, 2005. (BTW, for readers, there is a fascinating new exhibit at the Newseum in Washington, DC, on the media coverage of Katrina.)  Plaintiffs contend that the defendants'  maintenance dredging operations caused severe damage to the Louisiana wetlands, which had been providing a natural barrier against tidal surge from storms and hurricanes. This damage to the wetlands allegedly caused an amplification of the storm surge in the New Orleans region
during Hurricane Katrina, which increased the pressure on the levees and flood walls along the MRGO, leading eventually, they alleged, to levee breaches and the subsequent flooding of St. Bernard Parish and Orleans Parish.

These allegations were different from some earlier Katrina claims, adding that their injuries resulted from the erosion to the wetlands caused by the negligent dredging, performed in breach of the standards set out in their Corps of Engineers contracts and various rules and regulations
alleged to apply to their operations, to try to defeat the dredgers’ government contractor immunity defenses, as well as the dredgers’ entitlement to exoneration from or limitation of liability under the Limitation of Liability Act.

Defendants moved to dismiss.  The district court dismissed the claims, and plaintiffs appealed. The 5th Circuit noted that to avoid dismissal, a complaint must contain sufficient factual matter,
accepted as true, to state a claim to relief that is plausible on its face.  Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 554, 570 (2007)). To be plausible, the complaint’s factual allegations must be enough to raise a right to relief above the speculative level. In deciding whether the complaint states a valid claim for relief, we accept all well-pleaded facts as true and construe the complaint in the light most favorable to the plaintiff.

Defendants argued that they could not have foreseen that discrete acts of negligent dredging could have resulted in the absolutely devastating and cataclysmic damages that occurred to St.
Bernard and Orleans Parishes.  Plaintiffs asserted that it is well known, as a matter of general knowledge, that the wetlands provide storm surge mitigation; that the levees protecting cities and towns in the coastal areas were designed with the assumption that the buffering action provided by the wetlands would remain intact; and that dredging activities cause damage to the wetlands.

Duty and forseeability were the key concepts here, and maritime law on this issue mirrored general negligence law.  Determination of the tortfeasor’s duty is a question of law.  A duty may be owed only with respect to the interest that is forseeably jeopardized by the negligent conduct. Thus, if the injuries suffered allegedly as a result of the negligent dredging were not foreseeable, the defendants owed no duty; to show a duty, plaintiffs had to show that each dredger reasonably should have foreseen that the sequence of events leading to their damages—the amplification of the storm surge during Hurricane Katrina, the failure of the levee systems, and the subsequent flooding of Orleans and St. Bernard Parishes—would be a probable result of its negligent acts and the marginal erosion to the wetlands caused thereby.

The 5th Circuit agreed with the trial court that the defendants in this case had no knowledge of an immediate and pending natural disaster that would affect how they conducted their dredging operations. Furthermore, it cannot be said that any dredger could have foreseen that performing its dredging activities negligently—as opposed to in conformity with the Corps of Engineers’ specifications— would probably result in the series of events culminating in the catastrophic damages that occurred during Hurricane Katrina. No reasonable dredger could have anticipated that its negligence would make the difference between the levee systems holding or failing in the event of a hurricane. The damages alleged here were beyond the pale of general harm which reasonably might have been anticipated by negligent dredgers.

The court cautioned that that was not to say that it could never be foreseen that dredging could create conditions that would result in flooding after a hurricane. Rather, it was not foreseeable that the marginal erosion caused by any act of negligence by a defendant here would substantially affect the impact of the hurricane such that the failure of the levee systems and subsequent flooding would be the probable result. The causal sequence alleged in the present case was just far too attenuated.

 

Drywall Litigation Update

The Georgia Superior Court has preliminarily approved a $6.5 million settlement between the Lowe's home improvement stores and a nationwide proposed class of drywall purchasers. Vereen v. Lowe's Home Centers Inc., SU10-CV-2267B (Ga. Super. Ct., Muscogee Cty.).

The proposed resolution of this piece of the drywall litigation would provide Lowe's gift certificates ranging from $50 to $2,000 to any consumer who purchased drywall (not just from China), as well as cash awards of up to $2,500, if the claimant can provide documentation of damages and proof of purchase. That is, plaintiffs who provide proof of purchase of drywall from Lowe's but have no proof of actual damages would receive gift cards valued up to $250. Class members unable to provide a proof of purchase would receive $50 gift cards.

Under the settlement, Lowe's also agreed to pay attorneys' fees and expenses up to 30% of the class fund, as well as $1 million to the plaintiff attorneys for administration of claims. The settlement purports to release Lowe's from all drywall claims.The Georgia court conditionally certified a settlement class and set a final fairness hearing for November 19th.

But the proposed settlement has apparently drawn objections from participants in the federal Chinese drywall multidistrict litigation, who are arguing that the settlement fund is too small and that the settlement would interfere with federal jurisdiction.  The plaintiffs' steering committee for the Chinese drywall multidistrict litigation in the Eastern District of Louisiana went so far as to move to enjoin the state court from moving ahead with the settlement, arguing that the benefit to the class is too small, and the attorneys' fees too large. Ironically, these plaintiff attorneys assert that the form of the class benefit, i.e.,  a gift card, is also improper.

The MDL lawyers assert that the parties involved in the MDL have been negotiating towards a global settlement, and allowing the state court, one-defendant settlement to go forward would simply undermine those efforts.  They called on the federal court, pursuant to the Anti-Injunction Act, to enjoin state court proceedings where, as here, it is allegedly necessary in aid of its jurisdiction or to protect or effectuate its judgments.

Readers will recall that after Hurricanes Katrina and Rita in 2005, drywall was imported from China to address a shortage of drywall required for repairs and new construction. After the drywall was installed, homeowners began to complain of smells, gas emanations, corrosion of appliances and electrical fixtures, and other alleged property damage. The lawsuits typically allege that sulfur compound levels in the drywall are too high, causing issues with air conditioning systems, electrical appliances, internal wiring, and other electrical systems in homes. Plaintiffs also allege the drywall produces a rotten egg-like stench and causes a variety of respiratory and other health problems for those who live in the affected homes.

So far, a few bench or jury bellwether trials have been completed, with mixed results.
 
 

Fifth Circuit Grants Rehearing En Banc In Climate Change Case

We have posted on the climate change litigation, including inexplicable decisions such as the putative class action alleging that -- follow the chain -- dozens of oil and chemical companies emitted greenhouse gasses which contributed to an impact on the atmosphere which contributed to a rise in temperature of some parts of the ocean which contributed to making Hurricane Katrina stronger which contributed to additional damages to plaintiffs' property. Such decisions represent a clear and dangerous trend within certain courts to usurp Congress, warp the traditional nuisance doctrine, and plunge the federal courts into what are essentially political questions.
 

Now comes the welcome news that the Fifth Circuit has ordered en banc rehearing of the case. Comer et al. v. Murphy Oil USA et al., No. 07-60756 (5th Cir.). The court issued an order last week granting the defendants' petition for a rehearing en banc, vacating the panel decision from last Fall. The Fifth Circuit panel had ruled that private property owners under Mississippi law may have standing to bring climate change-related nuisance and trespass claims for both property and punitive damages.

The defendants will re-brief the issues by the end of this month, and oral argument appears to be set for the end of May.

"Global Warming" Litigation Update (Part II)

Part two of our update on recent climate change litigation.  In our last post, we discussed the well reasoned decision in Native Village of Kivalina v. ExxonMobil Corp., 2009 WL 3326113 (N.D.Cal. 9/30/09).  We contrasted it with the somewhat startling (2-judge) Second Circuit panel decision in Connecticut v. American Electric Power Co., allowing a group of states and land trusts to proceed with a so-called global warming tort suit.

In another noteworthy recent case, the Fifth Circuit recently held that a group of property owners in Mississippi can proceed with global warming-related claims. See Comer v. Murphy Oil Co., 2009 WL 3321493 (5th Cir. 10/16/09).  A proposed class of thousands of property owners alleged that damage to their Mississippi coastal properties from Hurricane Katrina would not have been as serious had not defendants' climate change conduct intensified the storm. Along with the Second Circuit decision, this opinion represents a clear and dangerous trend within the court of appeals to usurp Congress, warp the traditional nuisance doctrine, and plunge the federal courts into what are essentially political questions.

In Comer, the district court correctly held that tort suits against electric power companies and other alleged large greenhouse gas emitters should not proceed in federal court because climate change, and tort claims based on alleged climate change, is fraught with national political and policy considerations.  The Fifth Circuit reversed, asserting that until Congress, the executive branch, or a federal agency acts more directly on global warming, Mississippi common law tort rules questions posed by the case are justiciable because there is no commitment of those issues exclusively to the political branches of the federal government.  Thus, plaintiffs had demonstrated standing for public and private nuisance, trespass, and negligence claims; the claims were justiciable and did not present a political question. 

The Fifth Circuit in some ways went  further than the Second Circuit, ruling in essence that climate change-related claims are not limited to injunctions being brought by governmental entities or even quasi-public groups like nonprofit land trusts. The Fifth Circuit ruled that private property owners under Mississippi law also may have standing to bring climate change-related nuisance and trespass claims for both property and punitive damages. That holding may propel additional climate change litigation -- if the ruling stands following likely rehearing motions.

The causation allegation here was arguably even more attenuated than the long, convoluted causation chain in other global warming cases; plaintiffs asserted that defendants' greenhouse gases didn't cause but contributed to global warming, which made the waters in the Gulf of Mexico warmer, which didn't create but then made Hurricane Katrina more intense, which then caused their alleged property damage to be worse.  That stands as perhaps the most attenuated, least supportable, causal link in tort history -- the absence of proximate cause as a matter of law.  The concurrence noted this issue, and would have affirmed a dismissal on this basis.  With class certification, expert discovery, Daubert, and summary judgment hurdles to be crossed, it is clear that this causation issue will not soon disappear.

Ironically, the rash of global warming opinions in cases that had been argued long ago may reflect a recognition of the new administration and a changing emissions policy... in turn, reflecting the political nature of the issues. All readers ought to have profound reservations about the notion, inherent in all private climate change litigation, that the tort system is capable of adjudicating rights and responsibilities on the subject of global warming.

The decisions potentially present business interests with difficult choices: proposed regulations from the administration may be onerous and not grounded in good science; but absent federal action, defendants may risk public nuisance liability in the courts on issues that juries cannot begin to handle well.