Class Actions

5th Circuit Nixes $21M Katrina Pact, Worried That Legal Fees and Other Costs Could 'Cannibalize' It

A federal district court judge erred by approving a $21 million settlement of Hurricane Katrina damage claims, a federal appeals court ruled yesterday, because attorney’s fees and administrative costs could “cannibalize” most or all of the money.

Absent a showing that the more than 500,000 residents and businesses concerned will receive a benefit from the settlement, held a three-judge panel of the 5th U.S. Circuit Court of Appeals, the settlement isn’t fair, reports the Associated Press.

The settlement was made by the Orleans Parish, East Jefferson and Lake Borgne Basin levee districts and their insurance company. It concerned more than 500,000 residents and businesses in the greater New Orleans area that arguably could have gotten as little as $40 each from the pact.

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