Editor’s note: This article has been modified since its original online publication.
Crowell & Moring has been hit with a second malpractice lawsuit related to the law firm’s representation of victims of a 1986 Pan Am Flight 73 hijacking in Pakistan.
The lawsuit, filed on Aug. 13 in Los Angeles County, Calif., Superior Court, alleges that Crowell & Moring unlawfully withheld millions in settlement money from family members of a man killed during the botched takeover of a Boeing 747 in Karachi. The plaintiffs claim legal malpractice, breach of fiduciary duty and violations of California’s unfair business practices law. The lawsuit seeks injunctive relief and unspecified actual and punitive damages.
The lawsuit is similar to one filed in January against the Washington-based firm. In both malpractice actions, the plaintiffs were among the 185 victims and family members killed or injured during the hijacking.
On Sept. 5, 1986, Libyan-backed hijackers seized control of Frankfurt-bound Pan Am Flight 73 while it was still on the ground, with a plan to detonate explosives in mid-flight above Israel. The pilot and co-pilots escaped, which left the plane without a crew to fly it. The terrorists shot and killed one U.S. national at point blank range and threatened to kill the other 378 passengers. They eventually fired automatic weapons at the passengers, killing 20, including two more from the United States, and injuring about 100 passengers.
In 2006, Crowell & Moring filed a lawsuit in the U.S. District Court for the District of Columbia against Libya on behalf of 185 plaintiffs. Among them was the family of Surendra Manubhai Patel, one of the Americans killed. The plaintiff consisted of 42 U.S. nationals and 143 non-U.S. nationals. The plaintiffs signed a joint prosecution agreement requiring them to waive any potential conflicts with other plaintiffs and to share recovery based on a formula in the agreement. The plaintiffs also agreed to pay Crowell & Moring a 35 percent retainer from any amounts recovered from judgment, award or settlement. Any recovery from the lawsuit was to be divided among the group based on degree of injury.
While the lawsuit was pending, the U.S. government sought to improve relations with Libya. In 2008, the U.S. Congress passed and President Bush signed the Libyan Claims Resolution Act, which provided for a fund for passengers injured or killed on Flight 73 or from other acts of Libyan-sponsored terrorism. The amounts of compensation ranged from $200,000 to several million dollars. The fund did not include recovery for non-U.S. nationals, and it allowed for only a 10 percent contingency fee for attorneys, the lawsuit alleges.
The Patel family, which received about $13.5 million in compensation, allege in their lawsuit that Crowell & Moring instructed the U.S. Department of State to wire the award to the law firm rather than to them directly. It alleges that the firm took more than 10 percent from the amount and has demanded a 25 percent contingency fee.
In addition, the complaint asserts that the law firm had a conflict of interest when it represented U.S. nationals and non-U.S. nationals at the same time. It claims that the law firm knew that the prospects for recovery — because of the likelihood government-directed settlement — were much better for U.S. nationals than non-U.S. nationals but failed to disclose that information to the plaintiffs. “C&M’s conduct was motivated by its desire to maximize the possibility that it would receive fees under the C&M retainer,” the complaint alleges.
Stuart Newberger, the lead Crowell & Moring attorney representing the plaintiffs in the underlying case, said that the current lawsuit is a result of in-fighting by plaintiffs who signed the joint prosecution agreement.
Representing the Patels is Maxwell Blecher of Blecher & Collins in Los Angeles. The firm said in a written statement that it was “confident that our clients, who have already been severely victimized by the conduct of others, will see justice prevail through this lawsuit.”
The Patel lawsuit follows another filed by former Crowell & Moring clients submitted in the same court on Jan. 4. In that case, two sisters injured during the attack challenged the legitimacy of the retainer agreement and the joint prosecution agreement. The case initially was removed to federal court but was sent back to state court because of its state-based claims.