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Southern District of New York Judge Alvin K. Hellerstein gave a cool initial reception Monday to arguments that Special Master Kenneth R. Feinberg has improperly limited payments to the families of high-income workers who were killed in the Sept. 11 attack on the World Trade Center. But Hellerstein also complimented one of the lawyers arguing in three separate cases challenging the way Feinberg has administered the no-fault Victim Compensation Fund, and echoed the attorney’s key argument in pressing the U.S. Justice Department lawyer defending the special master. Monday’s arguments focused almost exclusively on claims that Feinberg is impermissibly imposing a cap on the compensation he is willing to award high-income families. The families’ lawyers pointed to remarks he has made in explaining the fund’s rules that in most cases an award of more than $3 million or $4 million would be inappropriate. They also said that several times in meetings with lawyers about individual cases, Feinberg had indicated that he would not approve an award of more than $6 million. The families’ lawyers also said their argument that a “cap” is being imposed is bolstered by Feinberg’s approach of defining presumptive awards for people with incomes of less than $231,000, but requiring individuals with incomes over that amount to justify their awards with a individualized presentation. Ninety-eight percent of American workers earn less than $231,000 in a year. Slightly more than 3,000 people were killed in the Sept. 11 attacks. As of April 11, 1,581 families of those killed or injured have submitted claims. The fund has issued 358 awards, of which 224 have been accepted. The average award to the families of those killed has been $1.5 million, with the largest individual award being $6 million. The fund, however, has approved an award of $6.7 million to someone injured in the attacks. The provision of the law setting up the federal September 11th Victim Compensation Fund, which was at the crux of Monday’s argument, mandates several factors to be considered in calculating awards. They require Feinberg to determine economic and non-economic losses and “the individual circumstances of the claimant.” In his rule-making, Feinberg stated that he could look to the needs and resources of the dependents and beneficiaries of those who died in the attacks under the rubric of “individual circumstances of the claimant.” The lawyers for the families charge that he has looked to those needs and resources, and determined that when they are ample a “de facto” limit should be imposed on an award no matter what a straight mathematical computation of economic losses might yield. Feinberg has also limited non-economic losses to $250,000 for each person killed and $100,000 for each family member, but those limits were not challenged in the three suits before Hellerstein. The families of several people killed in the World Trade Center were in the ceremonial courtroom of the Pearl Street courthouse. All of the lawyers took note of their attendance, and Judge Hellerstein also said their presence is important because “this is not a theoretical exercise. We are dealing with pain and unique and irreparable losses.” The first of the lawsuits was filed as a class action on behalf of the 2,800 people killed in the towers. Arguing for the seven named plaintiffs in that case, Colaio v. Feinberg, 03–0558, all of them families of Cantor Fitzgerald employees, was John F. Cambria of Salans. Mark S. Moller of Kreindler & Kreindler argued for the plaintiffs in Smith v. Ashcroft, 03-1040, and Jonathan C. Reiter of Broder & Reiter argued in Schneider v. Feinberg, 03-1129. Arguing for Feinberg was Assistant Attorney General Robert D. McCallum Jr., one of several lawyers from the Justice Department in Washington, D.C., introduced to Judge Hellerstein Monday by Southern District U.S. Attorney James B. Comey. Both sides had brought dispositive motions: summary judgment motions by the families and a motion to dismiss by the government. In pressing their cases, the families’ lawyers were questioned closely by Judge Hellerstein to show how Feinberg had acted improperly in taking the families’ needs and resources into account. Judge Hellerstein questioned Cambria about whether Feinberg had acted “arbitrarily and capriciously” in viewing “individual circumstances” as justifying taking survivors needs and resources into consideration. Similarly, in questioning Moller, Hellerstein suggested that Feinberg had done his “best” in construing “individual circumstances,” an admittedly ambiguous phrase. “Who am I to say it’s arbitrary and capricious,” he interjected. It “looks reasonable to me.” But several times Hellerstein told Moller that he had made a strong presentation when he had argued that Feinberg’s rules for the consideration of family members resources were so open-ended as to be an invitation for arbitrariness. “Without guidance, predictability or necessary fairness,” Moller had argued, Feinberg’s interpretation of “individual circumstances could trump everything else.” Cambria had called Feinberg’s approach the “tail that wags the dog.” Judge Hellerstein picked up on those themes when he questioned McCallum, who began his argument after the lunch break. He asked McCallum whether the “loosening” of individual circumstances did not create a “quality of arbitrariness that threatens to envelop” the other factors. McCallum held his ground, arguing that Feinberg was trying to steer a middle course between giving everyone the same award, a course some in Congress had urged, and creating unacceptable differences in the way victims’ lives are valued. Those types of differences emerge, he explained, when a straight economic formula is used because victims with high salaries will receive much higher awards than those with lower salaries. Hellerstein said he would rule soon on the matters before him.

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