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If the geopolitical world was turned upside down on Sept. 11, the world of American tort law underwent a scarcely less radical jolt 11 days later. That’s when the president signed into law a bill encouraging the victims of the terrorist attacks to seek compensation through a no-fault administrative process rather than through the tort system. The law was designed to prevent the airlines whose planes were hijacked from being driven into bankruptcy by tort liability, and to buffer other air carriers from the shocks of skyrocketing insurance premiums and plummeting air traffic. The Association of Trial Lawyers of America — realizing that their members would attract national opprobrium if they were seen to be exploiting the murderous attacks by ambulance-chasing — acquiesced in the creation of the September 11 Victims Compensation Fund. To the group’s credit, it has even offered free legal services to victims’ families who opt to use the fund. But now that the dust is settling, some traditional plaintiffs’ lawyers are horrified by what their trade group has consecrated. Mary Schiavo, a former inspector general of the U.S. Department of Transportation, termed the statute not just unconstitutional, but “despicable,” in a speech delivered on Sept. 29. Schiavo, now with Los Angeles’s Baum, Hedlund, Aristei, Guildford & Schiavo, implored families to use the tort system rather than be “bulldozed into taking a cheap payout from the government.” She has filed four suits on behalf of six victims’ families. Leading aviation plaintiffs attorney Lee Kreindler, of New York’s Kreindler & Kreindler, initially took a wait-and-see stance. But after the fund published tables of “presumed recoveries” in December, Kreindler, too, concluded that it was “grossly unfair” and that the settlements being offered “were so harsh as to be confiscatory,” as he wrote to fund special master Kenneth Feinberg. The legislation creates a taxpayer-financed fund to provide victims’ families with “fair, predictable, and consistent” compensation within about 120 days after filing a claim. If a claimant opts for this swift, sure-thing administrative payment, he or she loses the right to sue anyone else (except the terrorists or their sponsors). What could be wrong with that? Kreindler, whose firm represents families of about 100 victims, takes great exception to the way the fund would allegedly shortchange families of the wealthiest decedents. In critiques published in The New York Law Journal, he complains about fund rules that decline to consider wages above $231,000 a year (representing the ninety-eighth percentile of earnings in the country) when computing a decedent’s lost earnings. Families of the many highly paid victims from the World Trade Center — whose awards in the tort system might well have reached $20 million — are likely to get a maximum of $3-4 million from the fund. In addition, Kreindler argues, the proposed noneconomic damages — $250,000 for a decedent, plus $50,000 for each dependent — are “unconscionably low.” He recommends a minimum of $1 million per decedent. But since dissatisfied victims are still free to take their chances in the tort system if they prefer, how can they complain? Kreindler and others protest that other provisions of the law cripple the traditional tort alternative by, for instance, capping the airlines’ potential liability at the limits of their insurance. (Each hijacked plane carries about $1.5 billion in insurance.) Of course, if the victims’ lawsuits drive the defendants into bankruptcy, victims won’t receive much more than their pro rata share of the insurance anyway. That’s true, Kreindler acknowledges. In fact, he explains, that’s just one of many reasons that, as a practical matter, most attorneys will advise their clients to choose the sure-thing fund rather than chancing the tort system. After all, he observes, it is not even clear that the plastic and ceramic knives and box-cutters used by the terrorists violated Federal Aviation Administration regulations in effect at the time. In addition, he writes, a judge or jury might find the injuries to the victims on the ground (as opposed to the passengers) too remote and unforeseeable to justify imposing liability on the airlines. Yet here, Kreindler’s reasoning is puzzling. If the victims may have no viable claim in the tort system after all, because no one was really at fault for their deaths other than the terrorists, then why must a compassion-driven, taxpayer-financed fund pay what the tort system might theoretically have extracted from a totally hypothetical, deep-pocketed, unambiguously guilty defendant? (Typically, wealthy people protect their families from catastrophe by buying insurance. Obviously, most of the people Kreindler is talking about did just that, which is one reason Feinberg plans to restrict upper-end recoveries.) While Kreindler’s critiques raise valid concerns about the fund’s rules, they also demonstrate the otherworldly sense of entitlement that the tort system now fosters. For some perspective, consider the families of the 168 victims who died in the terrorist bombing of the Alfred P. Murrah Federal Building in Oklahoma City in 1995. Though lawyers sued every conceivable defendant on their behalf, no matter how tenuous or theoretical the blame (the federal agency managing the building, the law enforcement supervisers on duty, the manufacturer of the fertilizer used to make the explosives, the operator of the day care center), those suits appear to be going nowhere. Some already have been dismissed, evidently too weak to meet even today’s hair-trigger standards for liability. Yet for Oklahoma’s victims, Congress never provided any compassion-driven, surefire compensation option. They were left, instead, to charity and their very limited rights under the Oklahoma Crime Victims Compensation Board. Under that board’s rules, only 110 claimants qualified for any payment at all, according to its administrator, Suzanne Breedlove, and those individuals took away an average of less than $3,200 each. Against that background, the alternative being afforded by the Sept. 11 fund does not seem “unconscionable.” In any event, all the haggling misses the forest for the trees. For the plaintiffs’ bar, the principal peril presented by the new system is not that it won’t work, but that it will work too well. If a fund really can be devised that will dispense meaningful compensation in a fair and consistent manner, and do so within just 120 days of a claim’s having been filed, and without the claimant having to share one-third to one-half of the award with a lawyer, then it is hard to believe that such a system won’t also become a template for resolving tort liability claims in any number of other single-event catastrophes or mass torts. And any movement away from the tort system model threatens the long-term interests of the plaintiffs’ bar. In the case of the Sept. 11 fund, the United States government is volunteering to pay the awards itself — an unusual situation that will not frequently be duplicated. But if the fund works reasonably well, many future plane crash or mass tort defendants, rather than facing years of wasteful, unpredictable litigation, might gladly waive liability defenses in exchange for an opportunity to set up a system of predictable settlements premised on the fund’s model. Many victims might prefer the 120-day option, too, notwithstanding the druthers of their conflicted attorneys. Though defendants would have more incentive to create such options if Congress, in exchange, offered to cap their tort liability, such programs might prove so attractive to victims that defendants would offer them unilaterally. By the same token, if the fund fails — if victims feel hoodwinked, if the fund fails to meet its ambitious timetables, if discord and litigation reign after all — the plaintiffs’ bar will have a powerful rebuttal exhibit to present the next time corporate interests raise a hue and cry for tort reform in Congress. To appreciate the scope of the experiment Congress has commenced, compare it to Congress’ response to 30 years of asbestos litigation. Though some 55 asbestos defendants have now sought bankruptcy protection, and at least two dozen state and federal courts — including the U.S. Supreme Court, twice — have begged Congress to enact some more rational, extrajudicial alternative to asbestos personal injury litigation, Congress has so far done zilch. Ironically, most of the plaintiffs’ bar has no objection to replacing asbestos litigation with an administrative claims process — so long as that goal isn’t achieved legislatively. Most of the largest asbestos plaintiffs’ firms agreed to just such a scheme in 1993 — the so-called Georgine settlement — which was framed as a highly unusual class action settlement. But when that mechanism was struck down by the U.S. Supreme Court in 1997, the year in which the Court found that the class action rules didn’t authorize that sort of comprehensive, prospective remedy, the two sides could never agree upon legislation that would have accomplished the very same goals. (Bills at least superficially resembling Georgine were introduced in 1999, but were savagely opposed by the very same lawyers who had supported the settlement.) One problem was that any legislation acknowledges something is wrong with our tort system, at least when it is asked to address huge numbers of injured claimants. The Georgine settlement was — formally, at least — a resolution within the existing tort system; legislation creating an identical administrative structure, by contrast, could be seen as a repudiation of the tort system. But now, the cataclysmic events of Sept. 11 have spurred Congress to do in 11 days what it had refused to do throughout 30 years of asbestos litigation. In setting up an alternative to the tort system, Congress made an admission that cannot be retracted. Both parties revealed what they really thought about our tort system in their heart of hearts. What they said, in essence, was this: In all probability, skilled plaintiffs’ lawyers representing sympathetic victims would convince juries that the airlines were responsible for what happened. That’s because plaintiffs’ lawyers have become expert at redirecting blame from judgment-proof targets toward minimally blameworthy, solvent targets. We all know that such “fault” is, to some degree, a fiction. It’s just a compassionate way to ensure that grievously injured, inadequately insured people get taken care of. The trouble is, when catastrophes get big enough, not even corporate entities are sufficiently deep-pocketed to pay without other innocent human beings suffering as a result. In blaming and bankrupting the airlines — or the private security firms, or the airports, or the municipalities that operate them, or Boeing Corporation, or any of the other usual suspects — we will obviously be scapegoating minimally blameworthy corporations for the nation’s universal unpreparedness. In so doing, we will be creating new waves of innocent victims: airline employee-shareholders who, like Enron’s, see their retirement funds vaporize; public and private employees who are thrown out of work; local residents whose public services deteriorate and whose taxes rise when their local municipal authorities in New York, New Jersey, or Boston go broke. The legislators were right. Four teams of suicidal terrorists, armed with little more than box-cutters, went unintercepted at three different airports, passing through security systems operated by at least two different federally regulated security companies, boarding aircraft run by two different airlines. Few non-plaintiffs’ lawyers seriously believe that those terrorists would have been caught if only they had encountered some other airline, airport, or security outfit that day. On Sept. 12, maybe. But not on Sept. 11. Accordingly, Congress found that the tort model may not serve us well in this context. We are about to find out whether its bold, new alternative really works. The stakes could not be higher.

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