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Tuesday, September 20, 2005

Katrina: Potential litigation interfering with repair and clean up?

From this CNN story, those who wonder about the impact the litigation system on getting things done whould take note - it has a major effect:
The Washington Post reports that a trade group for contractors is drafting legislation to seek such protection from lawsuits over work to repair levees in New Orleans, pump water out of the city and other emergency repairs. The newspaper reports that the Army Corps of Engineers and the Federal Emergency Management Agency have relied on contractors, including several who started the emergency work without a contract.

But the Post reports the contractors are worried about a repeat of lawsuits filed against construction firms that helped clean up the World Trade Center after the Sept. 11, 2001, terrorist attacks.

"We're asking for some reasonable limits for going into the Gulf Coast and dealing with unknowns," Michael Kennedy, general counsel for the Associated General Contractors of America, told the newspaper after a meeting of the trade group in Washington. "A contractor goes into an unknown situation to remove debris or fix a utility line, and three years from now someone decides they did it improperly."...The trade group's proposed legislation would limit contractors' liabilities but still hold them responsible for following government regulations, Kennedy told the newspaper. It would be similar to regulations the Homeland Security Department unveiled last year that protect companies selling security technology from lawsuits triggered by a terrorist act.
Asking any business to take on a set of unknown (perhaps unknowable) risks creates a certain level of instability in pricing the jobs and may limit the number of companies willing to undertake a job with potentially large downside...and what kind of premiums will insurance companies demand under the circumstances?

For a related article on potential class action suits that could be filed on behalf of uninsured or underinsured homeowners see here. With billions of dollars at stake, there are a lot of lawyers who will be thinking creatively about how to get their share--I mean-- to help their clients.
"From the viewpoint of mass tort law firms, this is a gift from heaven: a huge number of people who have suffered terrible losses, with 24X7 media exposure," said Donald Light, senior analyst at Celent, a global research and consulting firm.
Laissez les bon temps rouler!

UPDATE: And more food for thought here. What is the obligation of a hospital or even an employer in face of a foreseeable natural or terrorist attack? What are the limits of preparation that can be economically justified? And is the best place to find out in a courtroom - after the fact? And look at the last sentence in this quote to see if prospective litigation might make a difference in future planning:
At least some people who died in the hospital probably would be alive if not for the conditions inside, said Richards, an expert in public health and emergency preparedness.

"Is that the hospital's fault for not getting them out? Or is that an act of God, and the hospital did admirable job under the circumstances?"

Tenet was drawn into the spotlight this week because one of its hospitals, Memorial Medical Center, was among the first to have bodies removed since its harried post-Katrina evacuation.

The 45 bodies were taken Sunday to the St. Gabriel morgue to await autopsies. The Louisiana attorney general's office plans to investigate the deaths, but has taken no other action.

Experts say that criminal action against the company may be unlikely due to its efforts to rescue the patients, their families and staff who were left stranded inside when government responders failed to materialize in force. Tenet hired a fleet of private helicopters to help extract the thousands of people stuck inside Memorial and other area hospitals.

But experts still anticipate civil lawsuits. Tenet may be a particularly rich target because it has been the subject of unrelated suits and government probes in recent years.

Any litigation could ultimately define the extent to which hospital owners rebuild their facilities in the region and residents' ability to receive medical care in a disaster-prone area.

Some Louisiana homeowners sued 16 insurance companies Thursday, asking a state district court in the 19th Judicial District Court to rule that neglect and wind damage caused the flood that inundated thousands of homes in Orleans and Jefferson parishes.
The lawsuit is different from those filed in Mississippi. That lawsuit contends that standard insurance polices led homeowners to believe they were covered for all hurricane damage, including that from high water.(source)
And a press release from the US Chamber of Commerce:
The U.S. Chamber Institute for Legal Reform (ILR) is warning that the financial devastation caused by Hurricane Katrina could be made worse by a rash of lawsuits that will delay and complicate recovery efforts for hundreds of thousands of the storms' victims. ILR urged citizens and government officials to work together to help the Gulf Coast region recover from this disaster, and not rush to the courthouse.

"We're concerned about the growing number of lawsuits that have been filed in the wake of Katrina," said Lisa A. Rickard, President of ILR. "For example, last week's filing by Mississippi Attorney General Jim Hood against the insurance industry will not help victims' long-term recovery, and will further burden the state's already fragile economy."

In addition to the Mississippi AG lawsuit, other Katrina- related litigation has already been filed or is being contemplated across the region. Just last week a class action lawsuit was filed in Louisiana blaming various companies for the environmental destruction caused by the hurricane. More lawsuits are expected to be filed in the coming weeks.

"Hurricane Katrina is one of the worst natural disasters in American history and an added tragedy is the fact that many of the storms' victims are uninsured or underinsured," Rickard said. "The business community is united behind all efforts to quickly and effectively help our fellow citizens recover from this catastrophe, but more lawsuits are not the solution."

The mission of the Institute for Legal Reform is to make America's legal system simpler, fairer and faster for everyone. The U.S. Chamber of Commerce is the world's largest business federation, representing more than three million businesses and organizations of every size, sector and region.
Why are suits being filed so fast? In my experience, the lead lawyers in a class action suit are likely to gain financially from being in charge. Therefore, they race to the courthouse to be the first to file so they can be deisgnated as the "attorneys for the class." And, since one of the the things looked at by courts in determining who should be representing the "class' is the ability of a law firm to handle a massive case, some of the large mass tort firms have a major advantage in arguing that they, not a small town solo attorney should keep the job. As they say, follow the money...

UPDATE 3: Fishermen sue BIG OIL as reported here:
A group of commercial fishermen filed suit Monday over suspected fisheries damage caused by millions of gallons of oil that spilled into coastal waters after Hurricane Katrina.

The class-action lawsuit is among at least five filed in federal District Court against oil companies in hurricane-related cases.

Three of the suits seek damages from Murphy Oil for a massive spill in St. Bernard Parish. Another blames a long list of oil companies for loss of wetlands that plaintiffs attorneys say could have buffered the state from Katrina's devastation.

The fisheries case, filed Monday in federal court in Houma, seeks unspecified damages from Shell Pipeline Co., Chevron Corp., Bass Enterprises Production Co. and Sundown Energy.

Hurricane damage to the companies' facilities resulted in more than 5 million gallons of oil spilling into coastal waters, according to the suit.

It alleges the companies "did not design their facilities to withstand the known hazards posed by … hurricanes or to protect the environmentally sensitive estuaries which surrounded their facilities."
See my earlier posts here and here on this sort of suit. We're just getting started, too.

UPDATE 4: Interesting to ponder this Class Action Lawsuit website with convenient fill-in-the=blank form for submitting a potential claim to whatever law firm (Mentz Law, LLC is the copyright holder) the page.

Also, notes some of the cases already filed.

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