Levee Districts Pay $20.2 Million to Settle Katrina Flood Class Action

When Hurricane Katrina made landfall in August 2005, the failure of the New Orleans-area levee system left entire neighborhoods submerged for days. While most public attention focused on the Army Corps of Engineers, attorneys representing flood victims also turned to the local levee districts that had been responsible for inspecting and maintaining those same structures for decades.

The class action consolidated in U.S. District Court for the Eastern District of Louisiana named three Southeast Louisiana levee districts as defendants: the Orleans Levee District, the East Jefferson Levee District, and the Lake Borgne Basin Levee District, along with their respective Boards of Commissioners. Plaintiffs alleged that the districts failed to properly design, inspect, and maintain the levees and flood control structures under their authority. The districts disputed the allegations, arguing the failures resulted from circumstances beyond their control.

Joseph Bruno of Bruno & Bruno served as Liaison Counsel for the Levee-Plaintiff Subgroup, coordinating the sprawling litigation involving hundreds of thousands of potential claimants across Jefferson, Orleans, and St. Bernard parishes. The three levee districts collectively carried insurance with St. Paul Fire and Marine Insurance Company, and settlement negotiations centered on extracting the full available insurance proceeds before those funds were exhausted or disputed away.

U.S. District Judge Stanwood R. Duval Jr. granted final approval to the class action settlement on September 8-9, 2009, in what was described as the first recovery against a governmental body held to bear liability arising from Hurricanes Katrina and Rita. Because the settlement fund represented the total insurance money available to the three defendants, the court certified it as a limited fund under Federal Rule of Civil Procedure 23(b)(1)(B), binding all class members without an opt-out option.

The settlement fund totaled $20,208,957.20, composed of insurance proceeds from each district plus accumulated interest. The Orleans Levee District's insurer contributed $10 million, the East Jefferson Levee District's insurer contributed $5 million, and the Lake Borgne Basin Levee District's insurer contributed $2 million. Distribution to the hundreds of thousands of eligible claimants was subject to a court-supervised allocation process that took several years to finalize, with attorney fees capped at $3.5 million in common benefit compensation.