Court to Hear Appeal in Former Louisiana AG’s Katrina Antitrust Suit

May 14, 2008

A federal appeals court in New Orleans agreed to consider whether an antitrust lawsuit that former Louisiana Attorney General Charles Foti filed against some of the nation’s largest insurance companies belongs in state or federal court.

Foti teamed up with private lawyers last year to file the suit, which accuses insurers of engaging in an elaborate price-fixing scheme and conspiring to shortchange policyholders after Hurricane Katrina.

In April, U.S. District Judge Jay Zainey rejected a bid by the plaintiffs to transfer the case to state court, where Foti originally filed it only days after he was voted out of office.

Attorney General James “Buddy” Caldwell, who inherited the case from Foti, is appealing Zainey’s ruling. The 5th U.S. Circuit Court of Appeals agreed to hear the appeal during the first week of June.

Caldwell spokeswoman Tammi Arender Herring said the new attorney general hasn’t passed judgment on the merits of the case or decided whether his office will proceed with it.

“This is still strictly on the procedural issue of where it would be heard,” she said of the appeal.

Lawyers for insurers say the case is a class action that belongs in federal court. Plaintiffs attorneys claim the suit doesn’t qualify as a class action because policyholders aren’t a party and may not be entitled to recover any money if the case is successful.

Allstate Insurance Co. and State Farm Fire and Casualty Co. are among the companies named as defendants in the suit.

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