Judge Approves Deal Over Katrina-Related Urban Oil Spill in La.

February 1, 2007

A federal judge on Jan. 30 approved a settlement between Murphy Oil Corp. and about 6,000 St. Bernard Parish, La., homeowners over an oil spill that happened during Hurricane Katrina.

In a three-page ruling, U.S. District Judge Eldon Fallon called the $330 million settlement “fair, reasonable and adequate.” He also approved more than $36 million in attorney fees and costs to be paid by Murphy.

The settlement puts to rest the vast majority of lawsuits filed after a huge oil-storage tank at Murphy’s flooded refinery near New Orleans floated off its foundation and broke in 2005, unleashing about 25,000 barrels of oil in the surrounding neighborhoods.

“I think it’s a victory for the people of St. Bernard that this matter was resolved so quickly,” said Scott Bickford, lead attorney for the plaintiffs.

If Murphy accepts the settlement, people could get checks within 60 days, he said.

George A. Frilot III, lead attorney for Murphy, said the company and its insurers were deciding on a possible appeal of the attorneys’ fees aspect of the ruling, but said “the settlement’s a done deal.”

“Without an appeal, we could be cutting checks around the first of March,” he said.

An estimated 200 to 500 people who live outside the class action boundaries but claim oil damage are not affected by the settlement, Bickford said. “They still have a lawsuit. Their claims are not settled,” he said.

Bickford said the same is true for the few people who live within those boundaries but chose to opt out. He did not have a guess at their number.

The settlement spells out four levels of compensation, from a flat $15,000 for damages to homes farthest from the tank to buyouts of the closest houses: $40 per square foot of living space, plus $19.25 per square foot in damages, plus $3,375 per occupant.

The company’s attorneys said Jan. 4, when the settlement offer was made public, that Murphy hoped to buy about 570 homes on the four streets next to the refinery and tank as a buffer zone.

Daniel Bourgeois, who lived on the closest block and is now staying in LaPlace, said he expects to take the buyout. He doesn’t know whether he will remain in LaPlace, or where else he might go. But he was very pleased that the lawsuits hadn’t dragged out.

“A lot of people thought this would go on for five years. To be able to complete this, and reach a settlement within a year, I think is very important,” Bourgeois said.

He didn’t want to give the square footage of his own house, which included a rental unit, or his rental home three houses down, but said a total of 12 people were living in them when Hurricane Katrina hit on Aug. 29, 2005.

Attorneys take most damage suits under contracts in which the clients agree to give one-quarter to one-third of any damages awarded to them, and the attorneys agree not to charge anything if they lose.

Bickford said his company had a 25 percent contingency fee agreement, but is waiving that and will just take its share of the $33.7 million set by the judge for Murphy to pay. That total works out to about 10 percent of the total damages, with another $2.7 million for shared expenses.

Thirty-two law firms participated in the settlement, Bickford said.

“Most plaintiffs’ attorneys had lower (contingency) fees because it was a disaster,” he said.

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