Diane Welsh and Jerry Roscoe, JAMS mediators and arbitrators Diane Welsh and Jerry Roscoe, JAMS mediators and arbitrators.

In the past year, each of us performed a damages allocation arising from a horrific accident—the May 2015 derailment of Amtrak Train 188 in Philadelphia, a crash that killed eight and seriously injured 200 people, and the June 2013 collapse of the Salvation Army Thrift Store in Center City, which killed seven and severely injured 12. A significant feature of both allocations was that the assessment of damages was based on the relative injuries to the victims.

That undertaking—unlike the process of “cold” choices that frequently arise in claims administration, e.g., cutoff dates, number of shares, etc.—could not be done without empathy and emotional commitment. There was also an acute sense of responsibility in that we were the only ones who had—and likely ever would—hear from all the victims in our respective cases. In both cases, procedural fairness, together with a combination of empathy and efficiency, resulted in justice for the victims.

Judge Diane Welsh on the 2015 Amtrak Derailment

Amtrak Train 188 departed Washington, D.C., and was bound for New York City. But shortly after pulling out of 30th Street Station, it derailed near Port Richmond, resulting in fatalities and devastating injuries. While Amtrak accepted liability, negotiating and allocating damages were major challenges.

As to damages, the main obstacle was a 1997 law capping liability for railroads at $200 million, an amount clearly insufficient to compensate more than 200 victims. After pressure resulting from the derailment, Congress increased the cap to $295 million. And in October 2016, U.S. District Judge Legrome D. Davis of the Eastern District of Pennsylvania approved a settlement providing for a $265 million fund and a comprehensive settlement program, including the appointment of two special masters under Rule 53 of the Federal Rules of Civil Procedure to assist with the allocation of damages.

The court selected me and Judge William J. Manfredi, a retired Pennsylvania state court judge, as the masters. Since claims under $100,000 could be settled by Amtrak outside of the program, the program ended up with 150 participants. Fifteen of these victims elected to forgo a hearing and proceed on the papers, which left us with the daunting task of conducting 135 hearings, together with a mandate from the court to complete the process on an accelerated basis. We held a preliminary conference with the 45 plaintiffs lawyers and established procedures for the hearings. We asked them to select either one, two or four hours for the presentation of their case, and to provide detailed prehearing memos; in the death and most severe cases, they also provided extensive videos, including statements from witnesses. Manfredi and I read all the submissions and watched the videos before the hearings which allowed counsel to concentrate their presentations on the plaintiff’s testimony.

We held four weeks of hearings in Philadelphia, two in New York, and one in Washington, D.C. Working nearly nonstop, we completed all 135 hearings and our final report within seven weeks. We could not have accomplished this assignment without the infrastructure provided by JAMS, which maintains resolution centers in all three cities, and provided a dedicated case manager and other support staff to process the submissions and schedule the hearings.

In addition to applying traditional elements of damages under Pennsylvania law, we also called on our experiences as judges and ADR professionals, and considered additional factors to ensure that allocations were consistent and fair. We considered unique factors in this crash. For example, whether the claimant sat in one of the first three cars of the train, where the conditions were particularly horrific. Additional factors included how they escaped, as some people were trapped and others could walk out; as well as initial medical issues, later treatment and permanence of injuries. Notably, the PTSD described during the hearings was the worst we had ever heard.

When finished, the report was not filed on the docket but instead given directly to Davis for a de novo review. In conducting that review, he met with us in person and discussed each case with us. There was clear value in having three sets of judicial eyes, over 90 years of judicial experience, review these cases. Each plaintiff was sent a final award informing them of our determination of their full compensatory damages and their pro rata adjusted award. It was important for the injured plaintiffs to know that their damages were fully considered and to understand the effect of the cap, which resulted in a nearly 50 percent reduction. The plaintiffs were only given their individual awards and not told what other plaintiffs received.

As Davis made clear, the injured parties were let down by Amtrak and then by the cap Congress placed on available damages, and, of course, they were already traumatized by their injuries. It was therefore imperative that the justice system not let them down. Everyone involved did their best with the limited funds available to provide just compensation. We also did our best proceeding with our schedule notwithstanding the trying emotional content of the hearings. But as a result of the accelerated schedule, and the efficiency of the process, the victims were able to receive a check in hand just 26 months after the derailment.

Jerry Roscoe on the 2013 Salvation Army Building Collapse

In June 2013, a brick wall from a demolition site collapsed onto the Salvation Army Thrift Store in Center City, crushing the store. The collapse killed seven people and injured 12. The resulting litigation in the Common Pleas Court was contentious and protracted. It took several weeks to empanel a jury, and the trial continued for months.

During that time, presiding Judge M. Teresa Sarmina suggested the parties mediate, and I was selected as mediator. With the mediation and the trial running concurrently, it was important to establish an efficient process that allowed for all parties to be present at each session. The court carved out time for mediation sessions, and on trial days, we mediated at night.

After a 17-week trial, the jury found liability against two individuals and two entities, including the Salvation Army. The parties agreed to settle for $227 million, and then agreed to convert the process to a formal arbitration—with hearings—to allocate damages among the parties. Since this was not a mastership, the process was done without court supervision, except that in the cases resulting in death, settlement had to be approved by an Orphans’ Court judge. Recognizing the need to move quickly, I asked all parties to waive any conflicts and enter into an arbitration agreement. I then set procedures for the arbitration, allowed the parties to comment on those procedures, and made necessary changes.

In setting hearing schedules, I established a general guideline of a minimum of four hours and a maximum of eight hours of testimony, to be construed liberally. A court reporter was present at each hearing so that the parties could have access to the transcripts. Because this was not a court proceeding, the transcripts were not public.

In making the allocations, I looked to Pennsylvania law and relied on my 30 years of settlement experience. As with Judge Welsh and the Amtrak derailment, I took into account all the information available, including circumstances of injury or death. However, I was not bound to strict application of the law. As I was not appointed by a court, I acted entirely as an arbitrator, subject to the arbitration agreement executed by all parties. And because I had not played a role in the trial, I based my allocation findings solely on the parties’ submissions and testimony, without influence from the trial proceedings. Significantly, my task was to allocate rather than value. Thus, awards were based on relative, rather than absolute value. To protect the parties, awards were disclosed only to the parties and their counsel.

The testimony was compelling and emotional. Trial counsel reported that the opportunity to be heard in a formal, respectful and meaningful process was important to the parties. Where families were involved, it seemed to help clarify intrafamily experiences relative to the tragedy. I tried to be well-prepared so that I could validate their experience. The testimony played an indispensable part in the process of balancing the relative experiences and harms. Finally, I am informed that rendering the awards quickly, less than two weeks after the hearings concluded, added to the sense of justice felt by the participants.

Conclusion

ADR professionals have long been called on to assist with the allocation of damages in complex tort cases. As a general matter, the reason the assistance of ADR professionals is sought—whether as masters or otherwise—is clear: allocations present complex factual, legal and administrative issues and are not only time-consuming but cry out for expeditious resolution so that the victims can receive their just compensation.

Our experience with the two allocations described here underscores these benefits, as well as the value of giving claimants the opportunity to be heard and having their experiences received with empathy.  We’d like to stress two reasons for this. The first is that we each received feedback that the process can be cathartic. The second is that providing a forum to receive testimony and then delivering quick results validates the legitimacy of the process, and with such legitimacy comes the feeling, felt by the participants and the neutrals alike, that justice has been served.

Retired Judge Diane Welsh is a JAMS panelist based in Philadelphia. She has successfully resolved more than 5,000 matters. She can be reached at dwelsh@jamsadr.com. Jerry Roscoe is a JAMS panelist based in Philadelphia. He serves exclusively as a mediator and arbitrator, with more than 30 years of experience. He can be reached at jroscoe@jamsadr.com.