Two energy companies that were among 97 defendants named in the Southeast Louisiana Flood Protection Authority-East’s (SLFPA-E) landmark environmental lawsuit have settled with the flood authority, according to documents filed in federal court. Terms of the settlement were not immediately disclosed, but they will be disclosed soon, according to one attorney on the case. (This story previously stated, erroneously, that a confidentiality provision applied.)
Attorneys for the levee authority and for the two settling defendants filed a “Joint Motion for Order of Dismissal With Prejudice,” which parties typically file when they have reached an out-of-court settlement.
The fact that two of the defendants — White Oak Operating Co., L.L.C. and Chroma Operating, Inc. — settled the lawsuit is a very significant development, even if those two Texas companies are relatively small players compared to some of the other defendants.
A statement was released by attorneys for the flood authority. It reads: “Given that (the flood protection authority) named White Oak and Chroma for the same relatively limited footprint, and that at this early point in the litigation the parties had clear and simple positions, we are pleased to have come to what all sides feel are reasonable, responsible terms.”
Two decades ago, when a group of big-time plaintiff lawyers and the State of Louisiana sued the major tobacco companies, Big Tobacco initially took a “no prisoners” position — until one of the smaller companies settled. That crack in the defendants’ wall was all it took to bring the rest of them to the negotiating table. The end result was a multi-billion-dollar settlement for the state.
It’s too early to tell if that scenario will play out with the energy defendants in the SLFPA-E lawsuit, but the other defendants cannot possibly welcome news that two of their number are cutting their losses already and settling. It would not be surprising to see additional defendants — small and not so small — reaching out-of-court settlements in the weeks and months ahead.
It also will be interesting to see how this development plays out politically. At a minimum, the decision by some energy defendants to settle with SLFPA-E completely undercuts, if not outright disproves, the “frivolous lawsuit” meme that Gov. Bobby Jindal, former coastal “czar” Garret Graves (who is now a candidate for Congress in the 6th District) and legislative foes of the lawsuit have parroted ever since the suit was filed in July 2013. If the suit were truly “frivolous,” as Jindal continues to claim, defendants in the energy industry (who are accustomed to environmental litigation) would not have settled — particularly when a lawsuit breaks new legal and environmental ground, as the SLFPA-E suit clearly does.
It is also significant, from a legal and political standpoint, that these two settlements have come relatively early in the litigation. Both sides are still arguing technical legal points, including whether recent anti-lawsuit legislation even applies to this case (and, if it does, whether the new law is constitutional). Neither side has taken the first deposition. That signals a genuine concern, if not fear, among some defendants that the lawsuit represents a serious legal threat.