Tuesday, September 4, 2007

September 11 Lawsuits Heading to Trial

Today's New York Times contains a front-page article about the 9/11 tort litigation, offering an interesting description of the plaintiffs as well as news about upcoming trials before Judge Alvin Hellerstein in the Southern District of New York.

Perhaps the most striking feature of the 9/11 litigation is the self-selected nature of the plaintiff group.  Each of these plaintiffs, in contrast to the vast majority of 9/11 victims' families, declined the compensation offered by the federal September 11th Victim Compensation Fund.  By passing up guaranteed and generous compensation and electing to sue defendants such as American Airlines, United Airlines, Boeing, and airline security companies, these plaintiffs demonstrated an uncommonly strong desire to impose accountability through a public process.

The nature of these plaintiffs -- reporter Anemona Hartocollis calls them an "angry, stubborn, sorrowful and stalwart group" -- makes the court's procedural choice about the upcoming trials particularly surprising.  Judge Hellerstein has set a first trial date of Sept. 24, and the Times describes the trial process as follows:

In a reversal of the usual legal procedure, Judge Hellerstein has ordered six trials for damages to take place before any trial for liability, in the hope, he said, that both sides may use those figures as a road map toward settlement.

In other words, the court plans to conduct bellwether trials using reverse bifurcation.  It is not uncommon in mass torts for judges to use bellwether trials to provide the parties sufficient information about likely outcomes to enable settlement.  Nor is reverse bifurcation rare in mass torts.  "Reverse bifurcation" refers to phased trials in which damages are tried before liability.  They have proved useful in asbestos litigation where liability was not seriously contested and where verdicts on individual damages could produce settlements.  Reverse bifurcation also was used in the Prempro litigation.

I have to wonder, however, whether either bellwether trials or reverse bifurcation makes sense for lawsuits involving the September 11 tragedy.  If these plaintiffs were looking for compensation, the Victim Compensation Fund offered a more appealing option than litigation with its risks, costs, and delays.  Although the Times article emphasizes that many of these plaintiffs would have received awards at the lower end of the fund's payout scale, the fund nonetheless offered guaranteed payments in sharp contrast with the uncertainties of litigation.  Those who opted for litigation presumably are seeking something more.  If they are seeking their day in court, the majority of the plaintiffs may be left unsatisfied by bellwether trials that allow only the bellwether plaintiffs to tell their stories in a public forum.  Moreover, even the bellwether plaintiffs may be unsatisfied by a reverse-bifurcated phased trial process that allows them to describe their own grief but gives them no opportunity to hold the defendants accountable.  If I am correct about what distinguishes these plaintiffs from the vast majority of the victims' families, then Judge Hellerstein may find that phased bellwether trials -- often effective devices for encouraging mass tort settlements -- do less to promote settlement in the uncommon context of the 9/11 litigation.



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I think that for at least some of these it is a question of money, but they want what they think is the right amount. In his opinion, Judge Hellerstein discusses your concern and he thinks the barrier to settlement in at least some of the cases is a disagreement over what a jury will do with these hard cases. So it's not about information forcing or day in court (at least for some), but about a statement from the defendants or a jury (and perhaps they don't care which) that these lives are worth more than Feinberg thought they were. I wonder whether its better from a settlement perspective to have reverse bifurcation in a case like this. Anyway, it will be interesting to see what the juries do (if it comes to that).

Posted by: Alexandra Lahav | Sep 5, 2007 9:17:31 AM

That's a good point, and to the extent the plaintiffs opted out of the Fund because they thought the dollar amounts were paltry, I can see why Judge Hellerstein might think reverse bifurcation would work. The thing that made the Fund a generous compensation offer, however, was the fact that it was guaranteed money. To figure out what these plaintiffs should expect in litigation as a basis for comparison with the Fund, you have to take the damages amount (i.e., the verdict of Hellerstein's first trial phase), discount it by the likelihood that plaintiffs will be unable to establish liability (and it seems to me that these cases are far from slam dunks on liability), perhaps discount it further by the wrongdoing of non-party tortfeasors (depending on the approach to joint and several liability), and then subtract a third or more as attorneys' fees. Add to that the time value of money and possible differences in tax treatment, and I find it hard to believe that any plaintiff could rationally choose litigation over the Fund if the goal was to maximize net recovery. That, of course, assumes rational decision-making. I understand that you and Judge Hellerstein might be making a different point: even if these plaintiffs made irrational decisions, they were based on dissatisfaction with the dollar amounts offered by the Fund, so perhaps a phase one damages finding can set them straight. My concern is that phase one may result in high damages figures, but will not yield settlements because the defendants expect to prevail on liability.

Posted by: Howard Erichson | Sep 5, 2007 9:24:54 AM

If you're thinking in terms of economic analysis, some people obtain utility not just from the actual amount of money they receive, but from the jury's statement that the life was "worth" the "correct" amount (the law calls this pain and suffering damages, but that's not how the plaintiffs talk about it in the article or in my experience -- it's popularly understood as hedonic damages). So even if, at the end of the day, when you add up the dollar costs of time, lawyer's fees, and costs, you calculate that the plaintiffs will obtain less in dollars through litigation than they would have through the administrative process, they may still perfer a trial. The fact that a jury awards more than Feinberg is also relevant to these plaintiffs' utility calculus. As for the point regarding liability, I was thinking What Would Weinstein Do? He'd try liability first, for the reasons you state.

Posted by: Alexandra Lahav | Sep 5, 2007 9:37:12 AM

The 9/11 Victim's Compensation Fund is basically a Hush Money Fund, designed to prevent families desirous of suing the government and/or airlines to go forward and find justice, truth, and not just a pile of money. The quid pro quo of receiving the money was/is to forfeit your right to sue. If you take but one dollar you loose your constitutional right to courtroom justice. To date, no family has found that justice in the form of a court trial. I've written four articles on them, focusing on that kangaroo court, and seen Mrs. Ellen Mariani, who first brought a RICO action suit against George Bush and his administration, slowly be pushed off her own case and her name replaced by her wayward stepdaughter, Lauren Peters, a victim of food, alcohol and drug abuse. This was the perfect way for the Judge, the plaintiff lawyers, et al, to finally put a gag order on Mrs. Mariani and her lawyer Bruce Leichty in a New Hampshire court, in which state Mrs. Mariani originally lived with her victim husband Neil Mariani. Justice to date has not only been blind but silenced. And, as you know, justice delayed is justice denied.
Sincerely yours,
Jerry Mazza,
Associate Editor, onlinejournal.com

Posted by: Jerry Mazza | Jun 19, 2008 5:50:37 PM

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