Professional Documents
Culture Documents
v.
-AND-
ii
NO. _
v.
persons and entities have an interest in the outcome of this case. These
representations are made in order that the Judges of this Court may
iii
5, Joseph N. Mole, Attorney for Murphy Oil USA, Inc.
Joseph N. Mole
Attorney for Murphy Oil USA, Inc.
Defendant -Appellant
Dated:
IV
CORPORATE DISCLOSURE STATEMENT
JOSEPH N. MOLE
ATTORNEY FOR MURPHY OIL
USA, INC.
v
STATEMENT REGARDING ORAL ARGUMENT
were unclaimed settlement funds, found that the defendant, who had spent
million from another phase of the settlement. After specifically finding that
the class has been fully paid, and can be paid no more, because that would
designed to find a donee to whom the rest of the defendant's money can be
given.
vi
TABLE OF CONTENTS
TABLE OF AUTHORITIES ix
V. STANDARD OF REViEW 13
VI. ARGUMENT 14
VII
C. The Non-Reversion Clause does not prevent
reallocation ~ 18
VII. CONCLUSION 29
viii
TABLE OF AUTHORITIES
FEDERAL CASES
Catlin v. United States, 324 U.S. 229, 65 S. Ct. 631 (1945) xii
Muncy v. City of Dallas, Texas, 123 Fed. Appx. 601 (C.A. Tex.
2005) xii
Powell v. Georgia Pacific Corp., 199 F.3d 703, 706 (8th Cir. 1997) 14
Sixth District Building & Loan Assn., 181 So. 618 (La. App.
Orleans 1938) 24
Turner v. Murphy Oil U.S.A'I Inc., 234 F.R.D. 597 (E.D. La. 2006) 4
IX
STATE CASES
Castano v. Bellina, 503 SO.2d 195 (La. App. 4 Cir. 1998), writ
denieq, 506 SO.2d 1226 (La. 1987) 23
Pittman v. Pittman, 836 SO.2d 369, 372 (La. App. 1 Cir. 2002),
writ denied, 853 SO.2d 642 (La. 2003) 24
FEDERAL STATUTES
STATE STATUTES
x
LA. CI\!. CODE art. 2317 (Westlaw 2009) 26
FEDERAL RULES
OTHER AUTHORITIES
MISELLANEOUS
xi
STATEMENT OF JURISDICTION
This is a class action resulting from the crude oil spill that occurred
residents of S1. Bernard Parish, and well over $5 million was at issue.
brought, in part under the Oil Pollution Act, 33 U.S.C. §2701, et seq.
U.S. 229, 65 S. Ct. 631 (1945); Muncy v. City of Dallas, Texas, 123 Fed.
xii
ISSUES PRESENTED FOR REVIEW
xiii
I. STATEMENT OF THE CASE
crude oil spill that occurred in its refinery in S1. Bernard Parish, Louisiana
affected by the spill. Prior to the Settlement Agreement, and even prior to
residence. Murphy and the PSC used average occupancy and square
Settlement Program.
funds. The Court recognized that Murphy had already voluntarily spent $52
million for remediation. The $20 million for remaining remediation efforts
was an estimate. Murphy agreed to pay whatever was required above that
1
number, regardless of the estimate. As of the date of the Order appealed
from, Murphy had spent $95 million in remediation, or $23 million more
returning residents and rebuilding efforts, and the escalating costs of labor
million less than allocated to the program. As a result, on August 20, 200B,
Program; (2) reallocation of the $5 million to partially offset the $23 million
Order dated February 13, 2009, the District Court denied Murphy's motion
pres distribution .... " Rec. Doc. 2736. Murphy appeals from that Order.
2
("PSC") appointed by the District Court on January 30, 2006 to represent
the interests of the class certified by the Court on January 30, 2006,
consisting or residents and property owners who were affected by the spill
flooding of St. Bernard Parish during and after Hurricane Katrina, which
one of the crude oil storage tanks on Murphy's refinery to lift off its
foundation and to spill crude oil onto the surrounding property. The crude
its refinery.
suits were consolidated into a single class action before the United States
District Court for the Eastern District of Louisiana. Under the management
of the District Court, Murphy negotiated with the Class Action Plaintiffs
3
through their executive committee and their liaison counsel. Following
2006, the Court held a two day class certification hearing and certified the
23(b)(3). See Turn~r v. Mur~hy Oil U.S.A., Inc., 234 F.R.D. 597 (E.D. La.
and it provided a procedure to permit class members to opt out of the class
action litigation.
On September 25, 2006, Murphy and the PSC notified the District
Court that they had come to an amicable resolution of the case, and on
the District Court by Order and Reasons dated January 30,2007. The total
follows:
4
Compensation Program $120 million
noted that the Agreement creates an allocation plan that divides the class
29. Murphy was required to spend $55 million on purchasing homes and
property in the "Buyout" Zone, at the approved price of $40 per square foot.
Id.
member depended first on the zone in which his or her property was
persons who resided at the property, and the commercial loss. The
Settlement Agreement sets a price per square foot and per person in each
zone (eJ1. $19.25 per square foot and $3,375 per occupant in Zone One).
The District Court found that the compensation formula was "within the
5
Murphy also agreed to remediate the entire area certified as
of governmental regulators and this Court .... " Rec. Doc. 1072 at pp. 31-
32. The cost of this element of the Settlement Agreement was only
estimated at $52 million, and Murphy agreed to pay the full cost of
health and safety of the community and places it at the highest level of
priority." kL at 32.
undertal<en by Murphy.
specifically found that as a whole the Settlement was fair, reasonable and
adequate, and "squarely falls within the reasonable range of relief for
6
property damage and fully addresses the Plaintiff class members' claims."
were set aside, segregated, or pre-paid by Murphy into any sort of separate
account, or into the custody of the Plaintiffs or the PSC or any third party.
Rather, the parties agreed upon a payment Agent, and Murphy forwarded
as claims were settled. All "unpaid" settlement amounts are still part of
under the Buyout and Compensation Programs will be spent for the
It is uncontested that Murphy has spent far more than $330 million
$72 million, has actually cost $95 million, or $23 million more than the
parties' best estimate in January, 2007. This was largely due to the added
7
The Compensation Program, estimated at $120 million by both
parties, has cost only $115 million. The principal reason is that the $120
was that each household contained an average of 2.9 residents and was
than 2.9 persons per household and the average actual residence was
Compensation Program
Settlement Payments $114 million
Buyout Program $ 55 million
the District Court ordered, and Murphy has paid, a total of $33,746,241 in
8
the Class Members' attorneys' fees and costs. Ree. Doc. 2545. Thus,
been paid the full amount due to him or her, based on the geographic
location and size of his or her residence in each zone defined in the District
Court's class certification order. The remediation program has been fully
funded and has been completely successful. In total, Murphy has spent
million less than estimated to fund the Compensation Program. There are
the Settlement on August 20, 2008. Rec. Doc. 2453. Murphy sought a
1. All Class Members and Class Counsel have been fully paid;
9
3. Murphy has a good equitable claim to these funds; and
on error.
and suggested a cy pres distribution. Rec. Doc. 2472. The District Court
light of the Non-Reversion Clause. It noted that the intent of that clause is
that ail compensation funds be spent for the benefit of the class. It then
noted Rule 23( d) of the Federal Rules of Civil Procedure gives the court
unclaimed funds, and that Federal Courts have listed five possible
The District Court ruled out escheat, as neither party sought it. It also
held that neither party has a legal claim to the remaining balance of the
10
fund and that "all class members who presented their claims received full
While the District Court held that it would be inappropriate to give the
money to the claimants who had already been compensated "because that
would give them a windfall", and that class counsel have already been fully
claimants' suit, the Settlement Agreement reflects the intent of the parties
that all funds would be used for the benefit of the class, and the purpose of
redressing the destruction of the community for the benefit of the class has
not been fully consummated," Rec. Doc. 2736 at pp. 11-12, In light of
these factors, the District Court held it was appropriate to distribute the
which will benefit the community devastated by the incident giving rise to
the "intent of the Recovery Program [is] to compensate Class Members for
11
crude oil related damage only," The words of the Non-Reversion Clause
are also impossible to implement under the District Court's ruling. The
Buyout and Compensation Programs will be spent for the benefit of Class
Members." The District Court itself recognized that it could not spend the
such funds for the indirect benefit of non-class members who have not
excess of the amount estimated in the Agreement would be the use most
consistent with the parties' expressed intent. Such a use would represent
The District Court was wrong in its conclusion that Murphy could
component of the legislative policy underlying the claimants' suit. ... " To
the contrary, the code provisions and statutes that underlie the Class
12
Action are not punitive in nature, but have as their purpose the
others, and provide only for remediation of these damages. The District
Court was wrong when it based its denial of Murphy's motion on the
redress "the destruction of the community for the benefit of the class" and
that Murphy has not yet done that. Murphy is not responsible for the
Agreement recognizes that its purpose is to offer redress only to those who
suffered physical damages due to a crude oil spill that was caused by the
relation to this catastrophe, such redress is owed only to those whom the
Court defined in a precise geographical area that was damaged by the spill.
V. STANDARD OF REVIEW
The District Court has "broad supervisory powers" with respect to the
13
Holocaust Victim Assets Litigation, 424 F.3d 158, 165 (2d Cir. 2005);
Powell v. G.eorgia Pacific Corp., 199 F.3d 703, 706 (8th Cir. 1997); Wilson
v. Southwest Airlines. Inc., 880 F.2d 807, 811 (C.A. 5 1989). A District
VI. ARGUMENT
settlement funds that had been paid into an escrow or other separate
account, and which were no longer in the custody and control of the
defendant. The funds in those cases were unclaimed because there were
"silent" members of the class who could not be found or who failed to make
There are two facts that make this case unique. First, there are no
funds that are unclaimed by "silent" class members who failed to participate
in the claims process. All eligible class members in the Buyout Zone have
14
the parties made a mistake in estimating the amount necessary to satisfy
The second fact unique to this case is that the settling defendant,
Murphy, was not ordered and did not deposit the $330 million Settlement
payments that had been agreed upon and liquidated as of that date.
Thereafter, and up to the present, Murphy has paid from its own general
operating funds the amount of each claim as that claim emerges from the
Proof of Claim Process. See Rec. Doc. 742-1 at p. 17,11 V1.7. Thus, if the
approved, Murphy will issue a check or wire transfer for $5 million from its
424 F.2d 158 (2d Cir. 2005), the court created a discrete $1.25 billion
15
settlement fund, $100 million of the fund was allocated to class members
2007447 (D,D.C. July 10, 2007), the district court approved a cy pres
format" Id. In this case, there are no individuals whose claims were "not
harmed by the spill were identified and included in the class. There is no
payment to a charity for the indirect benefit either of the class or of non-
16
class members, that will violate two other principles: First, such a forced
which reads: "It is the intent of the Recovery Program to compensate class
members for crude oil related damages only." Rec. Doc. 742-1 at p. 14.
Murphy has fully paid all remediation costs due to the crude oil spill, and it
has fully paid all compensation claims. There are no further crude oil
would violate the District Court's own holding that "[i]t would be
been compensated because that would give them a windfall." Ree. Doc.
any more direct or indirect benefits. There are no "silent" class members
The District Court found that Murphy has no legal right to the
'17
Airlines, Inc., sUQr~, at 880 F.2d 811. However, as noted in NEWBERG, that
has been the ruling in some class actions "because the defendant, who
paid the judgment, was not the rightful owner of the unclaimed portion of
§10:24. That was the case in Wilson, where the defendant, Southwest
880 F.2d at 810. In this case, by contrast, Murphy does not seek
to prevent payment of $5 million more of its own funds, when it has already
paid out $23 million more than contemplated by the Agreement. Murphy
clearly has standing to contest the spending of more of its money than
needed to satisfy the Settlement Agreement, and it has the legal right to
claim money in its own possession and control. It seeks to resist payment
18
The "Non-Reversion" Clause simply states: "All future payments
under the Buyout and Compensation Programs will be spent for the benefit
of Class Members." Clause VI. 7 provides that Murphy only pays claims
Recovery Program that only class members will be paid, and only for
damages caused by the crude oil spill. Since all compensation payments
have been or will be made to class members, and there is no "fund" in the
control of a third party that has not been distributed, there is nothing to
"revert" to Murphy. Since all class members have been paid, there are no
Louisiana law. Rec. Doc. 741-1 at p. 29. Louisiana Civil Code Article 2050
the other provisions so that each is given the meaning suggested by the
F.Supp. 654 (W.O. La. 1944), aff'd 150 F.2d 49 (5th Cir. 1944). Clause VI,
which limits recovery to class members for crude oil damage only, comes
19
first in the Settlement Agreement. Notwithstanding this rule, it is possible to
Murphy does not spend all of the $55 million allocated for buyouts on
the "class area". Rec. Doc. 742-1, Clause VI.1.b, p. 15. There is no similar
Court to utilize any residual or unclaimed portion as it sees fit, the best way
a partial offset of the excess $23 million already expended above the
20
Section VI, entitled Recovery Program. This section gives the details of
and the sums allocated to each part of the overall program. These are the
Agreement states that "All future payments under the Buyout and
which clearly state the intent and condition that such funds can be spent
only for crude oil related damages suffered by Class Members. Louisiana
21
When a fortuitous event has made a party's performance
impossible in part, the court may reduce the other party's
counterperformance proportionally, or, according to the
circumstances, may declare the contract dissolved.
CODE art. 1966 (Westlaw 2009). In this case, Murphy has no lawful
obligation to pay what has turned out to be $5 million more than it owed for
(La. App. 4 eir. 1998), writ deniec!, 506 SO.2d 1226 (La. 1987). An
obligation that does not exist cannot be the lawful cause of an agreement
error. LA. CIV. CODEart. 1949 (Westlaw 2009). Murphy's calculation of the
22
amount needed to fully fund its compensation obligations was based on the
of each payment, the amount of each payment and the address to which
be slightly less than the corresponding averages for the residences subject
Program information was available to and used by both sides, and is the
of the Agreement. Certainly, the size and occupancy of the residences are
facts entirely within the control of and imputable to the Class Members who
"Consent to a contract may be vitiated by error. ... " LA. CIV. CODE
art. 1948 (Westlaw 2009). When consent is lacking, the contract may be
annulled. LA. CIV. CODE art. 1952 (Westlaw 2009). In the case of a
23
error that bears upon a principal cause of the contract, and if the other
party knew or should have "known that the erroneous facts within their
immaterial. "A compromise may be rescinded for error, fraud, and other
grounds for the annulment of contracts .... " LA. CIV. CODE art. 3082
settlement Sixth District Building & Loan Assn~, 181 So. 618 (La. App.
836 SO.2d 369, 372 (La. App. 1 Cir. 2002), writ denied, 853 SO.2d 642 (La.
2003); Durbin v. Cockerham, 442 SO.2d 634 (La. App. 1 eir. 1983).
The District Court based its denial partly on the reasoning that the
24
victims." Ree. Doc. 2736 at p. 11. Accordingly, the District Court held that
the destruction of the community for the benefit of the class has not been
Chemicals B.V., 517 F.Supp. 2d 212 (D.D.C. May 14, 2007), which
25
517 F.Supp. 2d at 219. The Sherman Act is literally punitive, since it
mandates treble private damages. In some sense, all statutes that impose
liability for damages based on fault have a deterrent effect and intent, but
intent on the one hand and causes of action that are compensatory or
remedial on the other. If Title VII of the civil rights act is compensatory and
not inconsistent with a reversion, then so are the legal bases for this suit.
The District Court certified the class under specific causes of action
Louisiana Civil Code articles 2315, 667, 2317 and 2322 and LSA-R.S.
30:2015.1 Rec. Doc. 226 at pp.12-1 9. The listed code articles all speak in
remedial, and procedural.. "2003 La. Acts. No. 1166 §1, eff. July 2,
2003.
community," the District Court has gone beyond the express purpose the
26
Settlement Agreement it approved, and it blurred the distinction between
the crude oil spill caused by Hurricane Katrina and Hurricane Katrina itself.
There is no evidence that the spill caused any damages outside the class
oil spill, and there is no portion of either the underlying statutory scheme or
connection with the Hurricane Katrina disaster. As the District Court noted
Since the spill, Defendant Murphy Oil has worked with the
Environmental Protection Agency (EPA) and Louisiana
Department of Environmental Quality (LDEQ) to assess the
scope of the damage and to recover the oil that was spilled.
Additionally, Murphy has developed a "settlement zone" and
has undertaken a massive settlement program with residents of
the area near the spill. Murphy has also begun cleanup and
remediation efforts in public areas and for homeowners who
have settled their claims with Murphy.
Rec. Doc. 226 at p. 2. All this happened before a class was certified.
Since then, Murphy has voluntarily paid more than was estimated, and has
paid every compensation and buy-out claim without the District Court's
intervention. In order to settle, Murphy abandoned its defenses that but for
27
the hurricane and the negligence of the Corps of Engineers, there would
have been no spill, and that the class members' considerable losses were
due to the storm surge and not crude oil, since all of their homes were well
under water at the time of the spill. The money Murphy has poured into St.
Bernard Parish through its payments to the class members and to the
the parish.
Wilson y. Southwest Airlines, Inc., supra. This Court held that Southwest
clause and a judgment of liability, and the fact that Southwest sought
reversion from a separate escrow fund to which it had no legal claim. This
28
purpose of compensating the class, its equitable claim to any
money remaining after the accomplishment of that purpose is
compelling.
funds, and here, the PSC has already been fully paid, and can receive no
surrender its property rights to its own money for the indirect benefit of
either class members who have been paid, or non-class members who
suffered no harm. See In re Tarrer, 273 B.R. 724, 738 (Bankr. N.D. Ga.
2002).
VII. CONCLUSION
vacated, and that any further obligation of Murphy to fund the Remediation
29
Respectfully submitted,
-AND-
30
CERTIFICATE OF COMPLIANCE
I ceriify that this brief complies with the type-volume limitation of Fed.
Fed. R. App. P. 32(a)(7), may result in the Court's striking the brief and
JOSEPH N. MOLE
ATTORNEY FOR DEFENDANT-APPELLANT
31
CERTIFICATE OF SERVICE
the forgoing pleading have been served on the following persons via United
States Mail, properly addressed and First Class postage prepaid, at the
addresses below:
JOSEPH N. MOLE
32