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Depending on who’s asked, Louisiana oysters are producing either pearls or sand. A group of oystermen who hold leases on underwater reefs in the Breton Sound and Lake Borgne regions stand to reap $2.2 billion in verdicts and judgments against the state over claims that their leases were unconstitutionally taken by an environmental project intended to restore marshlands. But fearing that the state’s bond rating may be in peril, the Louisiana Legislature responded with a constitutional amendment to retroactively cap the awards, approved by voters on Oct. 6. Louisiana already has a cap on tort damages, but Amendment 3 is a pre-emptive exception to limit the type of damages that can be recovered for claims involving coastal restoration. The oyster cases are not tort cases, but takings cases. The state asserts that Amendment 3 is modeled on federal law, and limits plaintiffs to actual damages. But plaintiffs’ attorneys charge that the state is trying to cheat the plaintiffs by finding a back door out of a bad situation that it created. And the bad situation could get worse. The two key plaintiffs’ suits have resulted in awards that will cost the state $2.2 billion, if they survive appeals. The payout could cripple Louisiana’s coffers, which are already being emptied to fund a coastal restoration project estimated at $14 billion to repair hurricane and erosion damage. In all, 10 lawsuits have been filed, some dealing with the state’s indemnity clauses in the lease contracts. The legal ramifications of the constitutional amendment will be taken up by the Louisiana Supreme Court in Avenal v. State, No. 2001-CA-0843 (La. Ct. App.), which was the first class action won by the oyster leaseholders in 2001. “There is a long line of Louisiana precedent that says the Legislature can’t go in and gut a case it doesn’t like,” said Scott LaBarre of Gauthier Downing LaBarre Dean & Sulzer in Metairie, La., the plaintiffs’ attorney in Avenal. The state’s attorney, Andrew Wilson of Burke & Mayer in New Orleans, said that the effect of the amendment would be to limit the plaintiffs’ awards to what they would be entitled to under federal law. Eight amicus briefs have been filed in support of the state, he said. The action was filed in 1994 and resulted in a jury award of $1.2 billion-the largest ever in a takings case, according to the state’s lawyers. Last October, the Louisiana 4th Circuit Court of Appeal upheld the award to oyster leaseholders who claimed their leases were unconstitutionally taken without just compensation by the state. “If you take private property for the public good, then the public has to pay,” LaBarre asserted. But some legal scholars are not convinced. John Costonis, the chancellor of Louisiana State University Law Center and an expert on takings law, said the question of whether Avenal is a taking has not been fully considered by the lower courts. Costonis said the leading opinion in Louisiana favors the state’s argument that economic injury alone does not amount to a taking. Two federal courts agree with him. Avenal was also filed in federal court but did not survive the U.S. Court of Appeals for the Federal Circuit’s test of what constitutes a taking. Plaintiffs’ lawyers say Louisiana offers higher protection for property rights. The Louisiana 4th Circuit upheld their assertion, noting that there is “no question” that this is a takings case. The crux of the litigation stems from the Caernarvon freshwater diversion project that was introduced by the Louisiana Department of Natural Resources in 1991. The goal of the project was to enhance freshwater sea growth into public sea grounds. The influx of freshwater was intended to force predators-who prefer saltwater-off the resources. The project is working and the marshes are booming, according to plaintiffs’ attorney David Vidrine, a solo practitioner in Chalmette, La.-to the detriment of commercial oyster fishing, he alleges. Vidrine and his brother, Daniel, represented oyster leaseholders in a separate case that resulted in a combined judgment of $661 million in 2002 and 2003 for plaintiffs in Alonzo v. State, nos. 2003-CA-553 and 2002-CA-527. Unlike Avenal, which involved a plaintiffs’ class of about 100 leaseholders who were situated immediately southeast of the state’s project in Breton Sound, the Alonzo plaintiffs were further northeast in neighboring Lake Borgne. Vidrine had to prove that the migration of the freshwater reached his plaintiffs’ leases and ruined their trade. In Jan. 8 arguments before the state’s 4th Circuit Court of Appeal, he told the court an explosion in the hooked mussel population had destroyed his plaintiffs’ livelihood. A tale of two cases Also unlike Avenal, the Alonzo case was a bench trial that involved combined litigation, not a class action. Some of the Alonzo plaintiffs were those who “opted out” of the Avenal lawsuit before the boundaries of class certification had been determined. Those plaintiffs were awarded a $291 million summary judgment based on Avenal. The remainder of the plaintiffs were awarded $226 million and $143 million, respectively. The state’s attorneys and several officials have criticized the size of the awards to the plaintiffs. “These are statutory lease agreements between the leaseholder and the state for $2 per acre and they are recovering $21,345 per acre,” Wilson said. Plaintiffs’ attorneys bristle at the suggestion that the awards aren’t justified. “It’s a 15-year lease, and there are requirements,” said LaBarre. “You have to survey the area and continue to lay culch [the material to which oysters adhere]. You add more value per acre per year.” One possibility, according to Costonis, is that the state Supreme Court could find a taking, but limit the damages to the residual value of the term lease. McAree’s e-mail address is [email protected].

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