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"Looking Under the Hood" of the State Farm Katrina Settlement

Via Rossmiller, Randy Maniloff has a lengthy article on Judge Senter's rejection of the Katrina settlement (Jan. 27; see also Jan. 23 and earlier Katrina coverage). Highlights plus my comments:

  • The settlement leaves open 200 non-Scruggs Mississippi claims pending in court, as well as those of any opt-outs, meaning State Farm's liability wasn't even being capped by the settlement. Maniloff doesn't mention it, but previous mass tort settlements have started a feeding frenzy where lawyers will have an incentive to encourage further opt outs. (Maniloff does not discuss where the statute of limitations fits in to opt-outs: however, if a class is certified, it might imply American Pipe tolling, which could mean that State Farm ends up buying more claims for its trouble than it's settling.)
  • The settlement has put pressure on Louisiana Attorney General to match the price achieved in Mississippi. I note that Jim Donelon hasn't brought the same sort of extortionate illegitimate criminal investigation that Jim Hood did, but State Farm is creating the perverse incentive to do so.
  • Senter denied class certification in Woullard, just as he did in Guice. While settlement class certifications are easier, this is still a hurdle for the parties that probably was not fully contemplated in the drafting of the settlement papers.
  • Maniloff correctly singles out Judge Senter's statement that "I will never approve a procedure that would allow the resolution of claims under standards that are, or may be, different from or contrary to this Court�s prior rulings" as especially problematic. It simply is not the case that parties are required to disregard the possibility of appellate reversal when reaching settlement. One hopes that Senter was simply sloppily referring to the disparate treatment of the Scruggs clients from the unrepresented class members (a not implausible interpretation, given the fact that Senter granted interlocutory appeal in Tuepker), but if Senter is demanding that his decisions be treated as immutable law for any settlement framework, it is difficult to see how the parties can settle until the Fifth Circuit resolves at least some appeals of Senter rulings.
  • Speaking of likely reversals, Maniloff is justifiably critical of the Broussard directed verdict (Jan. 12).



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.