Katrina Canal Breaches Litigation v. Board of Commissioners, 628 F.3d 185

Hurricanes Katrina/Rita litigation consolidated in the Eastern District of Louisiana; Levee/MRGO categories involved.
Putative class sought certification of a Rule 23(b)(1)(B) limited fund mandatory class and a settlement with levee districts and insurer.
Class comprised claimants in the Katrina-affected area with losses tied to levee/floodwall failures; three geographic subclasses aligned to each levee defendant.
Settlement fund about $21 million (insurance proceeds plus interest) in exchange for releasing claims; distributions would be administered by a special master; counsel would waive fees but could seek enhanced costs.
District court certified the class and approved the settlement after a fairness hearing, relying on Ortiz standards and Reed v. General Motors.
Appellants challenged certification and fairness, arguing lack of intra-class equity procedures and potential benefit to the class.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Rule 23(b)(1)(B) certification was appropriate	Appellants contend Ortiz requires procedures ensuring intra-class equity and identifiable fund insufficiency evidence.	District court held limited fund rationale appropriate under Ortiz and that subclasses and structure cured equity concerns.	No; certification reversed for lack of intra-class equity procedures.
Whether the settlement is fair, reasonable, and adequate under Rule 23(e)	Appellants argue the fund provides no guaranteed monetary benefit and costs could erode the fund; cy pres not adequately addressed.	District court found six Reed factors favored approval based on litigation complexity and lack of better alternatives.	No; settlement not fair, reasonable, or adequate due to potential cannibalization of the fund and lack of assured class benefit.
Whether notice to the class satisfied due process	Notice failed to inform about possible cy pres and the absence of guaranteed benefits or attorneys’ fees details.	Notice was sufficient under due process and limited disclosure requirements for settlement notices.	No; notice inadequately apprised class members of cy pres possibility and fee implications, undermining due process.

Ortiz v. Fibreboard Corp., 527 U.S. 815 (U.S. 1999) (mandatory limited fund concerns; need for procedures to treat claimants fairly)
Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (U.S. 1997) (class action settlement constraints in mass torts)
In re Agent Orange Prod. Liab. Litig., 818 F.2d 179 (2d Cir. 1987) (cy pres and distribution considerations in settlements)
Reed v. General Motors Corp., 703 F.2d 170 (5th Cir. 1983) (six-factor test for settlement fairness and adequacy)
Newby v. Enron Corp., 394 F.3d 296 (5th Cir. 2004) (need to show money remains for class benefits when approving settlements)