UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

NEW ORLEANS

PATRICK JOSEPH TURNER : CIVIL ACTION 05-4206

: SECTION "L"
VERSUS :
: New Orleans, Louisiana
MURPHY OIL USA, INC. : May 18, 2009
: 9:30 a.m.
: : : : : : : : : : : : : : : :

HEARING ON OBJECTIONS OF OPT-OUT CLAIMANTS

TO THE PROPOSAL
TAKEN BEFORE THE HONORABLE ELDON E. FALLON
UNITED STATES DISTRICT JUDGE
APPEARANCES:

For the Plaintiff: Law Offices of Sidney D. Torres

BY: SIDNEY D. TORRES, ESQUIRE
ROBERTA L. BURNS, ESQUIRE
8301 W. Judge Perez Drive, Suite 303
New Orleans, Louisiana 70043

and

JERALD N. LANDRY, JR., ESQUIRE

Attorney at Law
710 Carondelet Street, 1st Floor
New Orleans, Louisiana

and

ROBERT MCMILLIN, ESQUIRE

Attorney at Law

For JP Morgan Chase: McGlinchey Stafford, PLLC

BY: KYLE FERACHI, ESQUIRE
301 Main Street, 14th Floor
Baton Rouge, Louisiana 70825

For Murphy Oil: Frilot L.L.C.

BY: KERRY J. MILLER, ESQUIRE
KYLE A. SPAULDING, ESQUIRE
JOSEPH N. MOLE, ESQUIRE
Energy Centre
1100 Poydras Street, Suite 3700
New Orleans, Louisiana 70163
 2

APPEARANCES (Continued)

and

Dysart & Tabary

BY: DANIEL L. DYSART, ESQUIRE
Three Courthouse Square
Chalmette, Louisiana 70043

Reported By: Arlene Movahed, CCR

OFFICIAL COURT REPORTER
500 Poydras Street, Room 406
New Orleans, Louisiana 70130
(504) 589-7777

Proceedings recorded by mechanical stenography;

transcript produced by dictation.
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1 P R O C E E D I N G S
2 MORNING SESSION

3 (May 18, 2009)

4 (The following is a transcript of the Hearing on

5 Objections of Opt-Out claimants to the Proposal taken on May

6 18, 2009.)

7 (Open court.)

8 THE COURT: Be seated, please. Good morning,

9 ladies and gentlemen. Make your appearances for the record,

10 please.

11 MR. TORRES: Sidney Torres, Roberta Burns and Jay

12 Landry for the plaintiffs.

13 MR. MILLER: Your Honor, Kerry Miller, Joe Mole,

14 Kyle Spaulding and Danny Dysart for Murphy.

15 THE COURT: I understand we have several

16 individuals.
17 MR. FERACHI: Kyle Ferachi on behalf of JP Morgan

18 Chase.

19 MR. MCMILLIN: Robert McMillin on behalf of

20 plaintiffs.

21 THE COURT: We're here today to discuss, or to

22 deal with the cy pres matter. Let me set the matter in

23 context for a moment.

24 As we all know now on August 29th, 2005, Hurricane

25 Katrina made landfall in the Mississippi-Louisiana region.

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1 And as the storm passed over Louisiana, some 20-foot storm

2 surges rolled into the Mississippi River Gulf Outlet and

3 swept over and breached some 14 miles of levee system

4 intended to protect St. Bernard Parish and inundated nearly

5 all the homes in that Parish causing tremendous damage.

6 Two days after the storm, the flood waters built in

7 and around Murphy's facility and one of the tanks floated or

8 was raised, dislodged and a substantial amount of crude oil

9 flowed from the tank and floated on top of the water. And

10 the water drained out of the Parish and the oil remained.

11 And a number of cases were filed, number of class actions

12 were filed.

13 I took evidence and based on the evidence that I

14 heard I drew boundaries that were substantiated by the

15 evidence that I heard and I declared a class. I set the

16 matter for trial and I set the liability aspect of the case

17 first intending to get to the damage aspect of the case later

18 on, if necessary.

19 The attorneys proceeded to take a substantial

20 number of depositions and hired experts and prepared for the

21 trial. A day or two before, or at least the week before the

22 trial, a settlement was arrived at settling the case for the

23 class members inside the class. The total amount of the

24 settlement was upwards to $330 million based upon what was

25 already paid, plus what was additional amounts of money.

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1 At that point, the focus was on distributing the

2 sum and the amounts were paid, settling checks were issued.

3 All of the litigants, all of the class members were paid. Or

4 at least were put into the Registry of the Court.

5 Notwithstanding that, there was some $5 million

6 remaining after. And so I put that in the Registry of the

7 Court and decided that it would be used for cy pres.

8 Cy pres is a phrase used to describe funds that no

9 one has claimed or is not entitled to, but they are used for

10 the benefit of the individuals who were damaged, or for the

11 institution that was damaged, or for the idea that was

12 damaged. Historically it's used for various reasons. There

13 are some cases in which it is used to give a grant to a

14 university to study disease because that was the issue in

15 that particular matter. It's used in some instances to study

16 safety measures because that was the issue of that particular

17 case. And there are various reasons all focused, in my

18 judgment, on taking into consideration the damage sustained,

19 the reason the damage was sustained, the people who were

20 damaged, the issues both in terms of the culture as well as

21 the philosophy involved in the damage.

22 In this particular case, I felt that this Parish

23 was just devastated and that rather than give it to an

24 institution outside the Parish to study the issues of oil

25 distribution or to study the issues of cleanup or to study

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1 the issues of that sort, all of which would have been

2 helpful, I felt that it ought to be used and directed inside

3 the Parish for the people inside the Parish. It was so badly

4 damaged, badly injured. And the $5 million was the figure.

5 The people outside the class were also damaged. As

6 I said, 85, 95, maybe 100 percent of the Parish. Just a

7 handful of homes survived this terrible flood, terrible

8 disaster. So people outside of that class were badly

9 damaged. Their homes were inundated. But I felt that the

10 evidence did not support that the damage that they sustained

11 was due to the Murphy Oil intrusion. There were some

12 instances where those homes had some oil on them, but they

13 were next or in the vicinity of a service station. And the

14 service station had flooded and their tanks were damaged. So

15 the issue was whose oil was it. I was only dealing with the

16 Murphy case and the evidence did not support the intrusion of

17 oil, in my opinion, outside of the Murphy class.

18 But notwithstanding that, as I mentioned, a number

19 of homes, a large number of homes were devastated by

20 flooding. So the attorneys went to work to see whether or

21 not these cases could be resolved. And a time or two, a

22 meeting or two before this one, Murphy made a proposal to use

23 a portion, not the $5 million, but a portion of that, namely,

24 $2 million to try to remedy some of the damage sustained by

25 those individuals.
 7

1 Now I might say that when I decided that the $5

2 million was to be used for that purpose, the purpose of

3 assisting the people in the Parish, Murphy's view of it was

4 different. Murphy's view of it was that that amount of money

5 should then revert to Murphy, should go back to Murphy. That

6 they put up the money to settle with the people who came

7 forward and they got the money and some people didn't come

8 forward. So they looked upon it as being sort of their money

9 that wasn't used and they wanted it back.

10 I heard from the Plaintiffs' Committee who felt

11 differently. The Plaintiffs' Committee took the position

12 that the money was just unused and, therefore, it should be

13 used for the purposes of the individuals who were damaged. I

14 heard arguments from both sides. Both sides had legitimate

15 issues. Both sides were in good faith when they argued it.

16 And both sides wrote very fine briefs on it. So the issue

17 was sharp and I considered it. And I held against Murphy. I

18 held that the money would be used for cy pres purposes. The

19 $5 million would be used for cy pres purposes.

20 So the question is how do you use it at this point.

21 The thing that I see in this particular case, it's a little

22 different than others. And that is that the area of the

23 class is inside of the Parish. Before you get to the class

24 crossover, the boundary of the class, you have to come

25 through a substantial portion of St. Bernard Parish. The

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1 Parish was devastated. That area, that entrance of the class

2 boundary is still in bad shape. Still homes are destroyed,

3 unused, vacant lots, pools are vacant, weeds are growing up.

4 So the issue is whether or not assisting those individuals

5 assists also the Parish as a whole and whether or not a

6 portion of the funds should be used for that purpose to

7 satisfy the cy pres requirements.

8 I felt that it was important for everybody to have

9 a voice in this so I put the matter on the website and I made

10 certain that notices were given throughout the Parish so that

11 people could come to discuss the matter and give me the

12 benefit of their views. And so we're here today for that

13 purpose. Anything from the parties? From Murphy? Anything?

14 MR. MILLER: Not at this time, Your Honor. We

15 will wait.

16 MR. TORRES: Not at this time.

17 THE COURT: Chase, the bank?

18 MR. FERACHI: Nothing.

19 THE COURT: I notice we have some people in the

20 audience. Anybody have any questions of me? Anybody want to

21 make any statements that you support or differ from it?

22 Ma'am, you can go first. Why don't you come

23 forward and give us your name.

24 MS. KNEALE: My name is Suzanne Kneale. I live at

25 2114 Corinne Drive in Chalmette, St. Bernard Parish,

 9

1 Louisiana.

2 Your Honor, my letter to the Court dated May 6,

3 2009 objecting to the distribution of excess class settlement

4 funds for out of class cases and to a particular proposal of

5 the cy pres project. With regards to the excess class

6 settlement funds, it is a deviation from the original intent

7 and the provisions of the class settlement. It does not

8 protect the class going forward and rewards the defendant.

9 I object because the defendant, Murphy Oil,

10 benefits and it is against the principles of cy pres.

11 Although the nature of the settlement is that not all members

12 are fully compensated, the buy-out is not completed and

13 Murphy Oil has not fulfilled its obligation towards the green

14 space buffer. It is unclear which funds would be used to

15 close future Road Home transactions in the buy-out zone and

16 how the class is protected if those transactions are not

17 pursuant to Turner versus Murphy.
18 My letter to the Court petitioned the Court to

19 preserve the settlement agreement for green space buffer for

20 voluntary buy-outs as initiated in the Fairness Hearing.

21 This will buffer the adjacent neighborhoods from the refinery

22 and protect the health and safety of the residents who chose

23 to revitalize their community.

24 The letter also suggests some cy pres projects for

25 the community's consideration. And I have included some

 10

1 language and documents which continue on why some proposals

2 or projects would be better suited to be around our

3 residential neighborhoods as compared to others.

4 Referring back to my letter in particular I object

5 to a cy pres proposal, Item Number E as it was presented to

6 the residents. I object because it is not a part of the

7 original purpose to restore and revitalize the neighborhoods

8 and return the quality of life which has been lowered by the

9 oil spill. It neither compensates nor benefits the class.

10 It does not protect the class going forward. Nor does it

11 make a better buffer than the empty green space which exists

12 now. In fact, it results in lowering the buffer benefitting

13 the defendant and causes further damage to class members'

14 restored homes and revitalize neighborhoods. Potentially it

15 brings the next explosion that much closer to us all.

16 And if I may, Your Honor, in conclusion, I have a

17 request of the Court. I should like the Court to have an

18 understanding of how troublesome it has been for our

19 neighborhood to hear this term green space. For residents to

20 hear the phrase green space, okay, that is what we agreed on

21 and then to hear it misused or to hear it twisted with other

22 points or perhaps at times to make other points when suited.

23 And it is my belief that residents are looking towards the

24 Court for some sort of clarification on this term and perhaps

25 to see it enacted as the original intent because it is what

 11

1 everyone thought it was. People made decisions and

2 agreements on this term and yet it was never documented that

3 it is this green space that is to act as a true buffer

4 between the heavy industry and residents or the residential

5 district. Thank you, sir.

6 THE COURT: Thank you very much. I appreciate it.

7 Why don't you give that to me and I will make it a part of

8 the record.

9 MS. KNEALE: Thank you.

10 THE COURT: Thank you. Any response from Murphy?

11 MR. MILLER: Yes, Your Honor. Briefly. Your

12 Honor, Kerry Miller on behalf of Murphy Oil. Initially we

13 would like to state for the record that we think Ms. Kneale's

14 objection, as she phrased it in the manner in which it was

15 presented by a class member, is improper under Devlin versus
16 Scardelletti, 536, U.S. 1, 2002, a U.S. Supreme Court case.

17 In that case, the U.S. Supreme Court held that class members
18 who object to provisions or to issues with respect to a class

19 settlement need to intervene before coming in and making an

20 objection. Ms. Kneale has not intervened in this lawsuit so

21 we would like to preserve the record on that issue, Your

22 Honor. The issue of Devlin, I think, and its prodigy has

23 been recognized by the Fifth Circuit with respect to the

24 requirement of a formal intervention.

25 Secondly, Your Honor, we think many of Ms. Kneale's

 12

1 issues are cross-contaminated, so to speak. She's concerned

2 about the Clean Air Act issues surrounding the refinery. Ms.

3 Kneale has a case against Murphy in another division of this

4 Court. That case is pending before Judge Vance. Murphy is a

5 defendant. Ms. Kneale and her group are the plaintiffs.

6 It's U.S. D.C., Number 8-4986. And issues with respect to

7 what appears in her May 6th letter are being addressed in

8 that litigation; air monitoring and things of that issue.

9 In essence, Your Honor, we appreciate her comments

10 as far as comments go. I am sure if the proposal does go

11 forward and a big chunk of the money, $3 million plus is used

12 for the benefit of the community and the class that due

13 consideration will be given to Ms. Kneale's comments. Thank

14 you.

15 THE COURT: Any response to Ms. Kneale? The

16 gentleman to your left, yes.

17 MR. HARTMAN: Your Honor, my name is George

18 Hartman.

19 THE COURT: Mr. Hartman.

20 MR. HARTMAN: 2609 Ventura Drive in Chalmette,

21 Louisiana. I have been in my house since 1965. The only

22 owner of the house.

23 And I agree with everything Ms. Kneale said. I can

24 almost just ditto that. I just wanted to state like it is.

25 THE COURT: Were you within the class, Mr.

 13

1 Hartman?

2 MR. HARTMAN: Yes, sir, very much so.

3 THE COURT: You got paid?

4 MR. HARTMAN: Yes, sir, very much so in the class.

5 I am right close to the refinery. And I don't plan -- I

6 don't want to leave.

7 THE COURT: I hope you don't.

8 MR. HARTMAN: Thank you. That's all. I just

9 agree with everything Ms. Kneale said.

10 THE COURT: Thank you very much. We will put you

11 down as supporting her position. Anyone else? I think I see

12 Mr. Duchmann. I know there is some issue as to whether he

13 has standing. But I will let him speak today.

14 MR. DUCHMANN: Your Honor, I request clarification

15 on the issue if I am a class member or not. If I am not a

16 class member, I don't belong in your Court and I will

17 probably leave at this point. If I am a class member, I

18 wanted it stated for the record.

19 THE COURT: Yes, Mr. Miller.

20 MR. MILLER: I think the rulings make it clear

21 that Mr. Duchmann is not a class member. This Court in its

22 January 2007 order and reasons approving the class action

23 settlement and addressing the objections contains a section

24 in which it holds that Mr. Duchmann did not have standing as

25 a class member to present an objection in connection with the

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1 Fairness Hearing. That ruling has been affirmed by the U.S.

2 Fifth Circuit Court of Appeals.

3 Additionally, Mr. Duchmann took a writ certiorari

4 from the Fifth Circuit affirmance of Your Honor's ruling.

5 That writ was denied. Therefore, there is a final judgment

6 in place finding that Mr. Duchmann does not have standing as

7 a class member.

8 And any subsequent attempts by Mr. Duchmann to

9 address the Court as a class member, or to influence relief

10 as a class member is improper because of the pending final

11 judgment.

12 THE COURT: Mr. Duchmann, you have any documents

13 that you were planning on filing?

14 MR. DUCHMANN: Yes, sir. In Patrick Joseph Turner
15 versus Murphy Oil, I have a document right here that Patrick

16 Joseph Turner is not even a class member right here. Comes

17 off their court website, Your Honor. That is the issue like
18 myself that Mr. Kerry Miller brought up that I am not a class

19 member, therefore, I cannot oppose the settlement or have

20 anything to do with this case.

21 Now I ask for clarification from Your Honor that if

22 I am a class member that I can present evidence in

23 consideration and have rulings on it? As you well know I am

24 kind of lost at least right now standing here because --

25 THE COURT: Let me tell you Mr. Duchmann, you know

 15

1 we have dealt with this issue on several occasions. I wrote

2 an opinion on it and you appealed it to the Fifth Circuit.

3 The Fifth Circuit affirmed me. You took a writ to the United

4 States Supreme Court and they denied your writ. So you

5 really are not a member of the class.

6 I recognize that you're a member of the community

7 of St. Bernard so I have allowed you to sit through these

8 hearings because not only are you a member of the public but

9 you're a member of the Parish that was badly damaged and I

10 respect that. So I allowed you to come and sit here.

11 Now in other instances also when you have had any

12 documents I have let you put that in the record, and I will

13 do so now. I will exclude that from the standpoint of the

14 class. But I will put it in as a proffer that if you had

15 been a class member this is what you would have introduced

16 into evidence. So I will take whatever documents you have

17 and I will put it as Duchmann Number 1 and I will make that a

18 proffer so that any interested parties or any appellate court

19 will have an opportunity to review your material.

20 MR. DUCHMANN: All right. First, Your Honor,

21 Exhibit B, Court designated class boundary shows Landry Court

22 right here, 2.4 miles outside the class zone. He is not a

23 class member neither.

24 Your Honor, for clarity purpose only, if I am not a

25 class member I have remedies in another jurisdiction in

 16

1 another court, is that correct?

2 THE COURT: Well, you may or may not. I don't

3 want to speak for another Court.

4 MR. DUCHMANN: No, I have to speak for your Court.

5 If I am not a class member, I don't want to be filing any

6 more motions in your Court. But I need clarification on this

7 issue. And I expect to show up. I do have pending motions,

8 as you're well aware, that was considered to be an emergency

9 motion that was filed early as February and the Court has

10 failed yet to rule on that motion.

11 THE COURT: Thank you, Mr. Duchmann.

12 MR. DUCHMANN: So I won't be able to find out

13 today if I am a class member or not?

14 THE COURT: No, you're not.

15 MR. DUCHMANN: I'm not? For the record, I will

16 take my other issues into another jurisdiction. Thank you,

17 Your Honor.

18 THE COURT: Thank you very much. I will take this

19 paper from him. Anyone else have any comments?

20 MR. MILLER: One additional comment to Miss

21 Kneale, and I think it was Mr. Hartman. Your Honor, I think

22 they had an issue with respect to the proposal, Sub Item E on

23 the first page, if I heard right, buy-out zone neighborhood

24 landscaping, beautification. If that's something that they

25 have an issue with, Murphy, I think, would be fine with

 17

1 removing that from what is under consideration for cy pres

2 donations if they think that has some purpose and offends

3 them. We would just take it out.

4 With respect to Mr. Hartman, there's going to be no

5 attempt to evict any individuals who are currently living in

6 the spill area or buy-out zone or whatever.

7 THE COURT: Thank you. Did you have something?

8 MR. TORRES: Yes, Your Honor. Sidney Torres.

9 First of all, Your Honor, let me say to Ms. Kneale and Mr.

10 Hartman, it's always nice to see citizens come here who are

11 committed to staying in St. Bernard. And I have always

12 expressed that thought to Ms. Kneale about these issues and

13 told her that this Court has been extremely sensitive to the

14 feelings and the desires and how people are doing in St.

15 Bernard Parish. And explained to her, as I said last time,

16 and I would like to reiterate to the Court, that the

17 attorneys who represented the plaintiffs in this case have

18 virtually unanimously accepted the proposal that is being

19 made.

20 And the reason being, Number 1, it brings certainty

21 to the issue because the 5 million, even though we feel

22 confident and we argued vigorously to this Court that the

23 money should not be returned to the defendant, the fact of

24 the matter is if it goes to the Fifth Circuit there is

25 uncertainty. So it brings certainty to the issue of the

 18

1 funds remaining available for cy pres purposes.

2 And, additionally, we feel that the proposal as it

3 stands does benefit the community of St. Bernard Parish. If

4 the $2 million is used for purposes that are stated. And

5 ultimately the disposition of those funds are committed to

6 the discretion of this Court under Federal Rule of Civil

7 Procedure 23. And one of the purposes of the settlement was

8 not only to resolve the claims of the people who had been

9 injured so that they would receive compensation for their

10 injuries, but also to conclude this litigation which was

11 detrimental to the future growth of St. Bernard Parish.

12 If this litigation had gone on in the class action

13 context even, it would have gone on for years. Likewise,

14 this is sort of the tip of the tail of the litigation, so to

15 speak, and this could go on for a long time. And we're at a

16 point in the rebuilding and regrowth of St. Bernard Parish

17 where we need to move forward, not go backwards.

18 So for those reasons, Your Honor, I stand here, we

19 took a tally of all the plaintiffs' attorneys, I submitted

20 that to the Court, and to say that it's being recommended by

21 those attorneys as being fair and reasonable. We feel that

22 it serves the purpose of the overall settlement in this case

23 and for those reasons we recommend it.

24 THE COURT: Anyone else? The issue that I see,

25 and I have the discretion to deal it, and as I see the issue
 19

1 of the cy pres I felt that it was for the benefit of the

2 community as I mentioned.

3 Murphy wrote a brief in opposition and made some

4 significant arguments. I ruled against them and they

5 appealed. The appeal is presently pending in the Fifth

6 Circuit. Depending upon what the Fifth Circuit rules, if

7 Murphy wins, then the entire $5 million will revert to

8 Murphy. Now, of course, the people can take writs from that

9 to the United States Supreme Court. And then the Supreme

10 Court will either accept the writs or deny the writs and the

11 judgment will be final. If Murphy loses, then it's cy pres

12 and I have the discretion to decide what the cy pres is to be

13 used for.

14 It seems to me that in this peculiar situation

15 anything that benefits anyone in the Parish benefits all in

16 the Parish. I would not be in favor of using the entire $5

17 million for beautification outside of the district, outside

18 of the class certification. But I do feel that some portion

19 of the funds could be used outside of the area if it helps

20 those inside of the area. And as I say, it's the gateway to

21 that area. And I don't see how it can hurt them. And I feel

22 it would also be of benefit to them.

23 With regards to the $3 million, I am going to

24 appoint a committee to make some recommendations to me on the

25 $3 million. I will issue a written opinion on this today or

 20

1 tomorrow setting forth more of those matters and then I will

2 set a status conference and I will tell the parties about the

3 committee.

4 And I want to move forward on this. This issue has

5 troubled me for some time. Not only this issue, but the

6 whole issue that this situation has brought. All of us in

7 this courtroom know, at least the lawyers know and the

8 litigants should know, that the history of class actions are

9 that they go on for a long period of time. We had one

10 recently with a train derailment that took over 10 years, 15

11 years to resolve itself. I was adamant about this from the

12 very beginning that I did not want this to last a long time.

13 I felt that if we put this on a usual track then this case

14 would get resolved in 10, 15, 20 years down the road and it

15 wouldn't matter at that point because we would have no one in

16 the Parish. We wouldn't have a parish to deal with. So I

17 put this on an extremely fast track. And with the

18 cooperation of the attorneys and the litigants themselves we

19 were able to resolve this case in one year's time.

20 This you should know from the audience standpoint

21 is a record for resolving class actions. And it was due to

22 the hard work of the lawyers, due to the cooperation of the

23 litigants involved in this particular case. But it was

24 resolved. And the Parish has benefitted from it. I am

25 delighted to see new houses and new developments and new

 21

1 hospitals and other areas that are springing up in the

2 Parish. And it's a new day for St. Bernard.

3 And, likewise, I need to get this over so that we

4 can move forward in this great Parish and bring the people

5 together. As long as there's controversy, people are

6 divided. And a divided parish is like a divided country. It

7 doesn't work. So I need to move this on.

8 But I appreciate the citizens coming. I've tried

9 my best to keep you advised. I have shown you great respect

10 because you're entitled to it. And I appreciate all of the

11 efforts that you have made to bring to the Court your views.

12 And I have taken them very seriously. And I thank you for

13 that.

14 Court stands in recess.

15 (End of proceedings.)

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REPORTER'S CERTIFICATE
 I, Arlene Movahed, Official Court Reporter, for the

United States District Court for the Eastern District of

Louisiana, appointed pursuant to the provisions of Title 28,

United States Code, Section 753, do hereby certify that the

foregoing is a full, true and correct transcript of

proceedings had in the within-entitled and numbered cause on

the date herein before set forth and I do further certify

that the foregoing transcript has been prepared by me or

under my direction.

s/ Arlene Movahed
ARLENE MOVAHED, CCR
Official Court Reporter
United States District Court
Eastern District of Louisiana