Articles Posted in Industry Spill

In April 2010, an offshore drilling rig, the Deepwater Horizon, exploded and sank into the Gulf of Mexico. Eleven workers died and crude oil from the well spilled into the Gulf for months after the accident. The result was a mass of litigation involving multiple defendants. In order to deal with the extensive facts and individuals involved in this case, like many other cases, the parties can appeal just one issue of the case if the lower court denies or grants a judgment on that particular issue.

Normally, a decision must be a final one in order to be appealed. That generally means that the case has concluded and the lower court has rendered a judgment. That way, the appeals court considers all of the facts involved, but can still allow the lower court to do most of the fact analysis. However, there are some occasions where an appeal on just one issue is allowed. This is known as an interlocutory appeal, and it falls under the collateral order doctrine. The collateral order doctrine assumes that some decisions are “final in effect although they do not dispose of the litigation.”

In order to use the collateral order doctrine, the lower court must have 1) conclusively determined the disputed question, 2) resolved an important issue that is completely separate from the final decision in the case, and 3) the issue must also be effectively unreviewable on appeal in a final judgment. “Effectively unreviewable” means that the court of appeals will have no way to review the decision of the lower court once the lower court makes a decision on this particular issue. Generally, if the decision could be appealed in some other way than the interlocutory appeal, then the court will not use the interlocutory appeal.

In the oil spill case, parties assumed that one worker in particular held a great deal of information because he was the BP Well Site Leader on duty aboard the rig at the time of the accident. However, the Site Leader had an undisclosed medical condition that prohibited him from testifying or answering written questions. The Site Leader explained his medical condition to the judge on two separate occasions, but did not disclose the information to the parties.

Since the parties believed that he was such a valuable witness, they really wanted to obtain information from him. As such, another judge ordered an independent doctor to examine him and ordered the Site Leader to produce his medical records to the independent doctor. The Site Leader protested because he was concerned about sharing his personal information. This order is a discovery decision, and discovery decisions are appealable after the final decision of the court based on the use of inadmissible evidence.

One of the Site Leader’s major arguments, however, was that releasing his personal medical information would cause a great deal of harm to him personally, and there is no method on appeal to reverse that type of harm. Nonetheless, the court determined that district courts can “burden litigants in ways that are only imperfectly reparable by appellate reversal of the final district court judgment.” Therefore, even though there may be harm that cannot be reversed for the Site Leader, the court will still allow the medical information to come in because the final verdict could change on appeal if the information is removed later. To use another example, the court explains that even if the information is privileged, that does not make it appropriate for an interlocutory appeal.

The court only briefly considered the rights of the Site Leader and his concern about protecting his personal information. In that discussion, they explain that they weighed the costs of sharing his information with the benefits of having his testimony at trial and determined that the benefits outweighed the costs.

As result, the court determined that it could not use the collateral order doctrine and that the interlocutory appeal was inappropriate. Therefore, the court dismissed the appeal and allowed the bulk of the case to continue in the lower court.

Civil procedure issues can be a delicate balance between protecting the case and protecting the individuals involved in the case.

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La. R.S. 30:29 (“Act 312”) was in enacted in 2006 and became effective in June of that year. Act 312 provides a procedure for the remediation of oil field sites as well as oil exploration and production sites. Generally, remediation is “the action of remedying something, in particular of reversing or stopping environmental change.” Before the Louisiana legislature enacted Act 312, most remediation requirements were through private party contracts; therefore, Act 312 did not change the normal trial procedures established by the Louisiana Code of Civil Procedure.

The Louisiana Supreme Court recently discussed Act 312 at length, explaining what it did change, in a case involving the Vermilion Parish School Board. The Court explained that Act 312 was enacted because of serious concerns with the state of the land and ground water after an area was used for oil exploration and production. Parties would use the land and ground water under a mineral lease for several years, and leave the property in terrible shape by the time that they were done. Mineral leases allow the parties to contract for only the minerals or the potential oil that is located on that property. The party with the mineral lease, then, does not rent the entire property, but just the ability to find minerals or oil within or upon that property.

Before Act 312, parties could still sue if one party left the land in terrible shape. Occasionally, however, it does not make sense economically to force a party to fix the land they damaged. Instead, the renting party would have to give the “landlord” the difference between the value of the land when they received it and the value of the land when it was returned after the lease, under a tort law theory. However, the person who owned the land, the “landlord,” was not required to use the funds to fix damage done to the land. As a result, property that had serious environmental problems often went without remediation because the landlord was not required to fix it. This creates health and safety concerns for the general public.

In January, the Louisiana Supreme Court considered an appeal from the Vermilion Parish School Board. The appeal centered on environmental damage to land that was subject to a mineral lease. The mineral lease allowed those leasing the land to look for and remove any mineral, including oil, that they found on the land. However, once they did this, they left the land in a state that was environmentally hazardous.

Louisiana has special procedures for dealing with restoring land so that we do not harm the environment, specifically when removing oil. The remediation of the land, this restoring process, was one of the major issues in the Vermilion Parish case. The defendants included Union Oil Company of California, Union Exploration Partners, Carrollton Resources, LLC, Chevron USA, Inc., and Chevron Midcontinent, L.P.

The Court faced two major issues in this case. The first was whether the parties could receive damages in excess of the amount it would take to restore the property, thereby correcting the environmental damage. The Court determined that the language of the legislation (La. R.S. 30:29) was clear and that the parties could receive a larger amount.

Under Louisiana law, when a case arises where a party is required to correct an environmental wrong, the funds are deposited into the court’s registry. The court will then disperse the funds to repair the land. This is a relatively new development because this act was put into effect in 2006. The legislature was concerned that parties who received funds to help correct the damage done to their land would not use it for that purpose if they were not so required. Leaving property that is damaged could create serious issues for the health, safety, and welfare of the surrounding population.

The legislation focuses on the role of the fact finder in determining whether there was environmental damage, and how much that environmental damage will cost to fix. As such, the court determined that the case should continue so that the fact finder could make those determinations.

The second issue was whether Chevron should be dismissed from the case. According to the facts, Union Oil had the mineral lease first, but Chevron subsequently acquired Union Oil and all of their assets, including the lease. As such, Chevron became responsible for any environmental damage that Union Oil may have caused. Chevron admitted responsibility initially, but then denied that they should be legally responsible later.

Chevron explained that while Chevron Corp. owns both Chevron USA and Union Oil Company of California, the two sections do not overlap. That is, Union Oil had $18 billion in assets, and should they be found liable for environmental damage, the amount that they will pay will come from their assets and not Chevron’s. Chevron explained that those assets were never transferred out of Union Oil, so Union Oil remained somewhat independent even after Chevron acquired them.

Therefore, Chevron argued that Chevron USA should be removed from the case so that those assets are not adversely affected. Nonetheless, Frank Soler, the senior liaison in the subsidiary governance unit of the corporate governance department for Chevron Corp. admitted that Union Oil does not have any employees and there may be service agreements between the two sections for day-to-day activities.

The Plaintiffs in the case were only allowed to discover a very limited amount of information from Chevron regarding this case. The court restricted the information until they determined whether or not Chevron should remain in the case a defendant. As such, many facts remained unknown regarding the relationship between Chevron and Union Oil. Therefore, the court determined that Plaintiffs should be allowed to gather more information and the case should continue.

Both of these issues failed the summary judgment test. The test is whether there is an absence of material facts in the case. If there is such an absence, then the court will only determine the questions of law and one side will receive a summary judgment. In this case, however, the court determined that there may be facts in dispute because they did not have enough information; therefore, the case continued.

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The Louisiana Supreme Court has recently undertaken a case deciding whether arbitration clauses in attorney-client retainer agreements are appropriate. In the past, Louisiana has favored the enforcement of arbitration clauses in written contracts. Arbitration avoids taking a case to trial and is a thrifty and efficient way to conduct the resolution of disputes outside of the courts. During arbitration, each party refers its dispute to an arbitrator, who then imposes a decision that is legally binding for both sides. However, Louisiana law also imposes a fiduciary duty requiring attorneys to act with the utmost fidelity and forthrightness in their dealings with clients and any contractual clause, which may limit the client’s rights against the attorney is subject to the upmost scrutiny.

According to the Louisiana Supreme Court in Hodges v. Reasonover, there is no per se rule against such binding arbitration clauses, provided that they are fair and reasonable to the client. In Hodges v. Reasonover, Jacqueline Hodges, the founder, sole shareholder, and CEO of Med-Data Management, Inc., hired Kirk Reasonover of the law firm of Reasonover & Olinde to sue a company known as MedAssets, Inc. in federal court in Atlanta, Georgia. In the retainer agreement between Hodges and Reasonover there was an arbitration clause, which essentially provided that any dispute shall be submitted to arbitration in New Orleans, Louisiana and that such arbitration shall be submitted to the American Arbitration Association (AAA).

Hodges was ultimately unsuccessful on her suit against MedAssets, Inc., which led her to file suit for legal malpractice against Reasonover. According to the Louisiana Supreme Court, Courts must closely scrutinize attorney-client agreements for signs of unfairness or overreaching by the attorney. Further, Louisiana Rule of Professional Conduct 1.8(h)(1) prohibits a lawyer from “prospectively limiting the lawyer’s liability to a client for malpractice unless the client is independently represented in making the agreement.”

Licensed attorneys in New Orleans were asked which attorney they would recommend to residents in the New Orleans area. Attorney Jeffrey Berniard, of the New Orleans-based Berniard Law Firm, LLC, was named one of the best mass litigation and class action attorneys in New Orleans in the November 2012 issue of the magazine. Propelled into success by holding insurance companies accountable in the wake of Hurricane Katrina, Berniard has built the Berniard Law Firm into one of the premiere personal injury law practices in not only New Orleans, but the entire state of Louisiana. Since Hurricane Katrina, Berniard Law Firm has focused on insurance disputes and class action litigation.

Jeffrey Berniard has been involved in several high-profile cases, solidifying his expertise in complex high risk litigation. He worked on the highly publicized Deep Water Horizon oil rig case in the Gulf Coast, representing a very large group of individuals affected by the sinking oil rig. In 2008, Berniard Law Firm secured a $35 million dollar settlement for a class of 70,000 members seeking bad faith penalties for tardy payments by a Louisiana insurance company in the wake of Hurricane Katrina and Hurricane Rita. In 2009, the Berniard Law Firm participated in five class actions against insurance companies and corporations. In the process of these major claims, the firm also helped many residents of the Gulf Coast with their personal injury concerns, insurance claims and business disputes.

– What is Mass Tort Litigation? –

In Jane Doe v. Southern Gyms, LLC arising out of Baton Rouge, Louisiana, a class action suit was filed involving a local branch of the national gym, Anytime Fitness, was accused of taking pictures of 250-300 women changing in a locker room. The plaintiffs filed on behalf of all women who’d used the gym during the time period and the class was certified to proceed to trial.

To understand what “the class was certified” means, it is important to understand what a class action suit is the reasons why we allow class actions in the first place. Class action suits are a useful tool in litigation in that it can bring together large numbers of substantially similar or identical claims into a single proceeding. This contributes to judicial efficiency as often times the type of cases litigated as class actions can have as many as thousands of plaintiffs. Assuming each of these cases was large enough to be worth bringing to court individually, there would be substantial amounts of duplicated effort by each party. However, the real value of class actions is in allowing cases that normally would be too small to litigate individually to have their day in court. If a case involves a real injustice to thousands of people, but the actual per person damages is relatively small it would be too costly to vindicate their claims.

In this case, the class proposed was:

all females who physically entered the women’s restroom/locker room/ changing room at Anytime Fitness, 200 Government Street, Baton Rouge, LA 70802 from November 1, 2009, through and including April 5 2010.

The rules that govern class actions require that several hurdles be met before a class can be certified (allowed) to proceed: there must be enough members that litigating separately is impractical; the questions of law and facts in the case common to the parties; the class representative’s claims must be typical of the claims of the class; they are able to protect the interests of the entire class, and finally the class must be able to be adequately defined so the court can be satisfied that the suit will end the dispute.

This case is noteworthy because the actual size of the class is fairly small. The gym operator admitted to videotaping on only 10-15 occasions. While any number of women may have been victims during these periods, the class itself was certified for any woman using the gym during a nearly 6 month period. There is no rule that states the minimum number of plaintiffs required for a class action, but the appeals court did not give a rousing endorsement for the “numerosity” (size) of the class in this case, they merely deferred to the trial court judgment on the matter. What was particularly noteworthy was the court weighed concerns beyond just the actual numbers of women involved. An additional factor was evidence that the gym allowed members from around the country to use it and thus the plaintiffs might not all have been locals which would have substantially increased the burden to litigate separately. Had all the women been locals, it is possible the court would have required “joinder” or just combining separate cases rather than allowing a representative in a class action suit.

Most people have been involved in a class action suit and may not have even been aware of it. Generally, each member of the class is required to be notified to give them the opportunity to opt-out of (or into) the class. This will typically be done via a postcard by mail. Thousands of these cards are thrown away without being read yearly but they can entitle plaintiffs to small to moderate cash settlements without ever setting foot in a courtroom, as you are being represented by the person bringing the suit!

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Settlements are an important part of the legal process. They save time, money, allow the parties to negotiate their own terms, and, above all, they keep the parties from having to go to court to litigate their claims. In the case of settling with insurance companies, the companies like to avoid court because it not only costs them time and money, but also may negatively affect their reputation in the community. As such, it is common practice for an injured person to sign a release form after they receive settlement money. This release form bars the person injured from any future claims against the insurance company. Both parties usually end up happy in this situation because the person who was injured gets some compensation and the insurance company avoids the negative effects of going to court.

What happens if an injured person settles and signs a release form before they realize how badly they are injured? For example, perhaps an individual thinks they only bruised their ribs, but actually suffered from more long term effects such as kidney injuries. In that case, the injuries are likely to be much more expensive than both parties originally anticipated. Then, the injured individual does not have enough money to cover medical expenses and the insurance company gets out of paying for the extra expenses.

In Louisiana, a general release will not necessarily bar recovery for aspects of the claim that the release was not intended to cover. However, most releases are very broad in that they cover any existing injuries and injuries that may occur because of the accident in the future. Louisiana law only allows settlements to be set aside if there was an error when the settlement was signed. Two major mistakes could set aside a settlement: 1) the injured party was mistaken as to what he or she was signing even if there was no fraud involved, or 2) the injured party did not fully understand the nature of the rights being released or that they did not intend to release certain rights. A settlement can also be set aside if there is fraud or misrepresentation involved.

Louisiana Civil Code Article 1953 defines fraud as “. . . misrepresentation or a suppression of the truth made with the intention either to obtain an unjust advantage for one party or to cause a loss of inconvenience to the other. Fraud may also result from silence or inaction.” In order to determine if there is fraud involving a release, which is also a contract, the court will only look to the document itself to determine if fraud is evident. Evidence of fraud in this situation could include any intentionally incorrect statement of material fact, such as stating items that are not covered by the insurance company when those items are actually covered.

A recent case gives an excellent example of a settlement with an insurance company. In that case, an individual fell off a tractor and injured himself. Two insurance companies provided compensation for injuries relating to his fall. Once each insurance company provided compensation, they each had the injured party sign a release form to keep him from filing claims against them in the future should the injuries be worse than originally anticipated.

The injured individual did have complications with his injuries and tried to get the settlements set aside so that he could get more money based on the coverage, but because he signed the release forms and there was no evidence of fraud, the court would not set aside the settlement agreements. The court stated that the injured individual knew exactly what he was releasing and there was no mistake in the settlement. The insurance companies both provided clear statements of what they did and did not cover and provided compensation for the things they did cover. The release statements specifically said that the injured party could not sue again for the same fall even if the injuries got worse, so he could not file claims again.

One lesson to take away from this example is that it might be helpful to find out the extent of your injuries before you enter into any settlements or sign any release forms.

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Recently, in the State of Louisiana Court of Appeal for the Third Circuit, a case was decided that effectively laid out the requirements of a settlement agreement. These requirements are especially important because many cases are settled before they get to court. In fact, settlement is often preferable because it saves a significant amount of time, money, and it allows the parties to reach a compromise that they not only come up with themselves, but that is also acceptable to both parties. That way, the parties share the benefits instead of there being a clear-cut loser and clear-cut winner as is usually the situation should a case go to trial.

In this case, an individual was seeking to enforce a settlement agreement with an insurance company regarding a life insurance policy. The life insurance policy involved three beneficiaries; however, it was unclear as to when the money should go to each beneficiary. There may have been a contingent beneficiary. That is, the policy was set up so that if one of the beneficiaries had passed away prior to the money dispersion, then it would go to a different beneficiary. However, the insurance company was unsure of this stipulation, so they did not give out any money at all.

As a result of all of this confusion, one of the beneficiaries entered into negotiations with the insurance company in order to get at least some money out of the life insurance policy. Louisiana Civil Code, Article 3071, defines compromise as “a contract whereby the parties, through concession made by one or more of them, settle a dispute or an uncertainty concerning an obligation or other legal relationship.” Therefore, the parties in this case sought to compromise regarding the payment of the insurance policy.

In addition to defining compromise, the Court also points out that the settlement agreement must be in writing and signed by both parties as required by Louisiana Civil Code Article 3072. In this case, there was an oral agreement, but when the parties attempted to put the terms in writing, there was still dispute regarding the agreeability of quite a few of the terms of the settlement. They created drafts and sent them back and forth, but nothing was ever finalized by way of a signature from either party. The Court recognizes that there are no other cases where a settlement was validated even though neither party signed the final settlement agreement.

The Court also goes on to explain that contracts, which are the basis of a compromise, require that there be a “meeting of the minds.” That is, both parties should completely understand and agree to the terms in the contract. The contract embodies the intention of both parties and if the intention of both sides is not fully included in the settlement, then that settlement cannot be valid. In this case, both sides described other terms that were either not included in the agreement or that appeared, but they did not approve of their inclusion in the settlement. The Court notes that there was no “acceptance and acquiescent from both parties” in this case.

Although the settlement agreement can be included in more than one document, it is apparent that there was no such agreement. It based this conclusion on the testimony of both parties, lack of signature on the settlement agreement, and other communications between the parties at the negotiation stages in this case (such as letters between the attorneys that expressed displeasure with terms in the agreement). Therefore, the Court concluded that a settlement agreement did not actually exist and that it could not enforce a settlement agreement that does not actually exist.

Obtaining settlement agreements can be somewhat complicated because they involve getting both sides to agree to many different terms. However, they are very valuable because they allow the parties to avoid trial and get their conflicts resolved quickly. The Berniard Law Firm is always interested in solving our clients’ problems quickly and effectively.

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Contractor company employees working at a British Petroleum (BP) refinery sued the oil company for negligence. Workers at the refinery reported a “weird” gas smell while they were employed at the factory. None of the gas monitors about the refinery sounded an alarm. About 100 employees went to the hospital but none showed any injury due to gas exposure.

The employees claim that the substance was carbon disulfide gas. The mask of one of the plaintiffs tested positive for traces of carbon disulfide gas but the lab technician who took charge of the mask noted that the mask had not been well maintained enough to be tested properly. When the district court found for the plaintiffs, BP appealed the verdict. BP argues that it was wrong for the trial judge to have instructed the jury on res ipsa loquitur and that without that instruction, the plaintiffs could not have shown that the company to be negligent.

Res ipsa loquitur is a doctrine used in certain types of cases when the circumstances surrounding the accident constitute sufficient evidence of the defendant’s negligence to support such a finding. Basically translated, the doctrine concludes that if an accident could not have come about by any other method than the one claimed, then the fact that the event happened is proof enough that it happened in the manner claimed; in other words, “the thing speaks for itself”. Res ipsa loquitur is applicable only when: (1) the character of the accident is such that it would not ordinarily occur in the absence of negligence; and (2) the cause of the injury is shown to have been under the management and control of the defendant. Using res ipsa loquitur, negligence can be inferred by the jury without evidence of wrongdoing.

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