There are, of course, some big policy issues that could be discussed with regard to the release yesterday of the Louisiana Supreme Court’s decision in Sher v. Lafayette Ins. Co.. There are the big policy (as in public policy, not insurance policy) questions concerning efficacy of the insurance industry in southern Louisiana versus the ability of New Orleans Katrina victims to achieve some measure of being made whole following the failure of the federal levees. Wrapped up in that question is, under the given and admitted intervening cause that New Orleans flooded only because the levees failed, who will be assigned the financial responsibility for that failure?

There is also the pronouncement by Justice Traylor in the Sher opinion that the New Orleans Katrina flood was not caused by man (read: by the levee failures), but that the levee failures only failed to prevent the flood. From a legal analytical view, this appears to at least give short shrift to the legal principle of intervening cause.But those conversations will be plentiful throughout the public discourse on the decision. The part of Sher I want to emphasize is the possible mis-comprehension by the Court of the proper flow of Erie analysis. In discussing the meaning of “flood,” the Louisiana Supreme Court turned to the U.S. Fifth Circuit’s decision in In re: Katrina Canal Breaches Litigation for analysis of the proper meaning of “flood.” The U.S. Fifth Circuit, in Canal Breaches, was acting in an Erie capacity, attempting to divine what the Louisiana Supreme Court would decide if presented with the same facts, when it came to its conclusion that “a flood is a flood.” Now, when the Louisiana Supreme Court actually has this question and these facts in front of it, it turns to the U.S. Fifth Circuit’s Erie-guess as to what it would decide to support what it has decided. Looks like that tail is wagging that dog; what do you think?