Judge Zainey disregards Bayou Corne class complaints, grants class counsel $12 million in legal fees; Residents consider asking Bar for reprimand

NEW ORLEANS – A federal judge overseeing the Bayou Corne sinkhole case has approved $12 million in legal fees, just weeks after the plaintiffs said their lawyers "mistreated and manipulated'' them into accepting a subpar settlement.

Despite complaints from class members and a legal watchdog, U.S. District Judge Jay Zainey granted the full amount of legal fees to the Bayou Corne legal team for their work on the case. While critics said the compensation was outrageous – a court watcher estimated the lawyers made about $1,300 an hour – Zainey said the compensation request was fair.

The seven attorneys who oversaw the case will earn about a quarter of the total settlement in a matter that never went to trial and was concluded in about two and a half years.

“I note the task at hand is not solely a matter of counting hours (this effort was reported previously), but rather assigning a weight to each person or entity’s input in the product achieved as a result of the collective effort of the group,” Zainey wrote in his decision to grant the legal fees. “Stated another way, while an hour is sixty (60) minutes, all hours are not equal.”

The Bayou Corne case involved the formation of a sinkhole that essentially swallowed a southern Louisiana community. The sinkhole was the result of a collapsed salt dome owned by Occidental Petroleum where Texas Brine was undertaking brine mining operations.

As part of the settlement, Texas Brine essentially agreed to buy out all homeowners in the affected area.

In March, after the settlement deal was struck, the Louisiana Record published a story showing that the special master in the case Shelby Easterly III had a previous working relationship with lead class counsel attorney Calvin Fayard Jr. Easterly once served as an attorney for Fayard and his law partner, Blayne Honeycutt. Because special masters have authority over settlements and recommend what senior lawyers in the case should be paid, some critics said the settlement was tainted by conflicts.

Easterly later filed a motion in the case admitting he had previously served as Fayard's attorney.

Meanwhile, several plaintiffs spoke out saying they believed they had been pressured into accepting an inadequate settlement. In a hastily called grievance hearing held on April 8, many of them told Zainey they wanted the settlement either dissolved or recalculated.

Bayou Corne resident Michael Schaff, who led the charge against Easterly and class counsel, said he was told by his lawyer that if he didn't accept the settlement, he ran a high risk of receiving nothing for his losses. Schaff said his lawyer told him that Easterly could potentially "zero out'' plaintiffs who didn't take the settlement offer.

“This was not done in an efficient, fair manner,” Schaff said.

At the hearing, Zainey told plaintiffs that while he sympathized with them, his “hands were tied” and that he planned to let the settlement stand and approve the lawyer fees.

“I feel they earned that,'' Zainey said. "I feel that you were treated fairly.”

Schaff said Bayou Corne residents are now weighing whether to report Easterly and Fayard’s conduct, as well as that of other class counsel attorneys, to the Louisiana State Bar Association for potential discipline.

“The only recourse we have is go before the Bar and get a reprimand,” he said. “We expected [Judge Zainey] to do that, but he just praised them.”

In his order, Zainey granted the following amounts to class counsel:

Fayard & Honeycutt (APC)                       $2,500,000
Martzell & Bickford                                    $2,000,000
Becnel Law Firm, L.L.C.                            $750,000
Law Office of Richard Perque, L.L.C.     $500,000
Lana O. Chaney                                           $900,000
Heidi M. Gould                                           $900,000
Koury & Hill                                                $45,000