Special master in Bayou Corne sinkhole case has deep connections to plaintiff’s attorney, possible conflicts of interest

By Louisiana Record reports | Mar 16, 2015

NEW ORLEANS – The special master handling the settlement in the Bayou Corne sinkhole class action lawsuit has served as a lawyer for Calvin Fayard, the lead plaintiff attorney in the matter.

Last April, U.S. District Judge Jay Zainey appointed Alton Shelby Easterly III to serve as the special master handling the settlement in the Bayou Corne sinkhole case.

In the case, Texas Brine agreed to a $48.1 million settlement after an underground salt dome collapsed creating a still growing sinkhole that threatens to swallow up Bayou Corne, the lake community constructed over it. Under the settlement, Texas Brine, which had been running the brine mining operation in the area that led to the collapse, essentially agreed to buy out all homeowners in the affected area.

Court records show that Easterly, who like Fayard is from the tiny community of Denham Springs, served as attorney for Calvin Fayard in a 2005 civil suit.  The law offices of the two men are about a half-mile from each other.

Zainey appointed Easterly without acknowledgement of the potential conflict of interest.

As special master, Easterly has been in charge of administering the Bayou Corne settlement, a task that includes making recommendations regarding the percentage of the award that will go to Fayard and the three other attorneys who led the class action.

According to the Federal Rules of Civil Procedure, special masters should be held to the same standard of impartiality as judges.

“A master must not have a relationship to the parties, attorneys, action, or court that would require disqualification of a judge...unless the parties, with the court’s approval, consent to the appointment after the master discloses any potential grounds for disqualification,” federal rules state.

Court records show that Easterly represented Fayard and his law partner D. Blayne Honeycutt, also a plaintiff’s attorney in the Bayou Corne case, when they were sued in Orleans Parish Civil District Court in 2005. In that case, a former law associate of theirs accused the two of withholding pay in a class action lawsuit involving the diet drug Fen-Phen.

Fayard said while he remembers the case involving his former law associate, he does not remember that Easterly was his defense lawyer.

“If you were to ask me to comment on whether Mr. Easterly had ever represented me as a attorney in a lawsuit I would have had to say no, or certainly not to my recollection,” he said.

Fayard downplayed the relationship. He said that any potential conflict of interest would be up to Zainey and the attorneys for Texas Brine to determine.

“[Easterly] serves at the pleasure of the court. So I don’t appoint him, I don’t dictate his work,” Fayard said.  “I think the defendants would have looked at his credentials and examined his potential conflicts or anything else. I don’t see this as a conflict.”

Nothing in the court record indicates whether the other attorneys involved in the case or even the judge knew that Easterly and Fayard have had a longstanding relationship.

Last week, Easterly recommended that Fayard and three other lead plaintiffs’ lawyers receive $12 million in legal fees, plus expenses for their role in handling the suit. That figure, which comes on top of the 35-40 percent contingency fees lawyers already set to receive for representing individual class members, comprises 28 percent of the total damage award, causing some observers and class members to criticize it as excessive.

In a brief to Zainey, Easterly justified his fee recommendation.

“[I]t is my observation that Class Counsel were confronted with an extraordinary dynamic—the Bayou Corne Sinkhole—which caused evacuation of the Class Area, uprooting families from each other and their community, with an overwhelming set of ‘unknowns,’ not the least of which was the uncertain future of their homes,” Easterly wrote. “Class Counsel undertook the equivalent of four plus years effort and incurred enormous expense with no guarantee of return. They had to coalesce and come together, almost as if forming a new law firm, agree on a plan, divide the work, and get it done.”

According to workload figures cited by Easterly, the $12 million fee works out to a rate of about $1,300 an hour for Fayard and the three other supervising lawyers.

As special master, Easterly will eventually make a recommendation on his own pay, for which he has earmarked about $1.4 million for in addition to associated expenses. Traditionally, the decision on how much to pay the special master in a mass tort case must be ratified by the supervising attorneys.

Zainey has set today as the deadline for objecting to the $12 million fee recommendation.

(Editorial note: An earlier version of this story erroneously stated that Texas Brine is a subsidiary of Occidental Petroleum whereas the two are actually separate, unrelated entities. Also, Texas Brine was operating a brine mine, not storing petrochemical prooducts in the salt dome. The errors have been corrected in the text.)

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