In re September 11 Litigation

• Decision Date: 24 July 2008
• Docket Number: No. 21 MC 101 (formerly,No. 21 MC 97) (AKH).,21 MC 101 (formerly,21 MC 97) (AKH).
• Citation: 567 F.Supp.2d 611
• Parties: In re SEPTEMBER 11 LITIGATION.
• Court: U.S. District Court — Southern District of New York

567 F.Supp.2d 611

In re SEPTEMBER 11 LITIGATION.

No. 21 MC 101 (formerly

No. 21 MC 97) (AKH).

United States District Court, S.D. New York.

July 24, 2008.

Douglas J. Pepe, Gregory P. Joseph, Gregory P. Joseph Law Offices, LLC, Zafer Adem Akin, Akin & Smith, LLC, David Jaroslawicz, Jaroslawicz & Jaros, LLC, Robert Joseph Tolchin, Robert J. Tolchin, Esq., Frank H. Granito, Jr., Speiser, Krause, Nolan & Granito, Bruce M. Friedman, Paul Fredric Kovner, Rubin, Fiorella & Friedman, L.L.P., Charles Edward Joseph, Joseph and Herzfeld, Christopher Bruce Hitchcock, Hitchcock & Cummings LLC, Stephen Mortimer Marcusa, Bigham Englar Jones & Houston, Dale Christian Christensen, Jr., Seward & Kissel LLP, Marina Ann Spinner, Nicoletti, Gonson & Bielat, L.L.P., Frank M. Nicoletti, Nicoletti, Gonson & Spinner L.L.P., Gregg Herbert Kanter, Jason Todd Cohen, Flemming Zulack Williamson Zauderer, LLP, New York, NY, Jennifer E. Shafer, Kristopher E. Kuehn, Timothy W. Triplett, James M. Warden, Warden Triplett Grier, Overland Park, KS, Robert J. Bates, Robert J. Bates, Esq., Westwood, NJ, Thaniel James Beinert, The Law Office of Thaniel J. Beinert and Associates, Brooklyn, NY, Carol M. Rooney, Paul B. Butler, Butler Pappas Weihmuller Katz Craig, LLP, Scott S. Katz, Tampa, FL, Kimberly M. Collins, Robert A. Clifford, Timothy S. Tomasik, Clifford Law Offices, P.C., Chicago, IL, H. Jerome Gette, M. Anthony Parsons, II, Steven J. Badger, Zelle Hofmann Voelbel Mason & Gette LLP, Dallas, TX, James S. Reece, Zelle Hofmann Voelbel Mason & Gette LLP, Minneapolis, MN, Michael Joseph Kuckelman, Pleasantville, NY, Franklin Michael Sachs, Greenbaum, Rowe, Smith & Davis LLP, Woodbridge, NJ, Mark Leigh Antin, Stanley Walter Kallmann, Gennet, Kallmann, Antin & Robinson, P.C., Parsippany, NJ, Judson Howard Lipowitz, Azrael, Gann & Franz, LLP, Baltimore, MD, Michael Edward Eisner, Motley Rice LLC, Mount Pleasant, SC, for Plaintiffs.

7 World Trade Company, L.P., pro se.

Desmond Thomas Barry, Jr., Condon and Forsyth LLP, Brian V. Otero, Michelle R. Parker, Hunton & Williams, LLP, James Patrick Connors, Jones Hirsch Connors and Bull, P.C., Jon Paul Robbins, McLaughlin and Stern, LLP, Peter James Gallagher, Derek Adam McNally, Kennedy Johnson Gallagher, LLC, Jacqueline Keller, Rubin, Fiorella & Friedman, L.L.P., Kevin J. O'Neill, Stephen Paul Schreckinger, Gogick, Byrne & O'Neill, L.L.P., Christopher H. Lunding, Cleary Gottlieb Steen & Hamilton, LLP, John J. McDonough, Cozen, O'Connor, Timothy Joseph Keane, Brian Patrick Sexton, Jeffrey J. Ellis, Loretta Anne Redmond, Quirk and Bakalor, P.C., Jeffrey W. Moryan, Connell, Foley, L.L.P., Willard Mark Wood, John L. Altieri, Jr., O'Melveny & Myers LLP, Beth. D. Jacob, Donald Allen Klein, Schiff Hardin LLP, M. Bradford Stein, Richard Arthur Williamson, Flemming Zulack Williamson Zauderer, LLP, H. Christopher Boehning, Robert A. Atkins, Douglas M. Pravda, Paul, Weiss, Rifkind, Wharton & Garrison LLP, Katherine Lindsay Pringle, Eric Jonathan Seiler, Heather Jo Windt, Friedman Kaplan Seiler & Adelman LLP, Melissa Tabako Billig, Robert Alan Banner, Ingram Yuzek Gainen Carroll & Bertolotti, LLP, David Moore Lindsey, James Milton Hosking, Clifford Chance US, LLP, Daniel John McNamara, DeCicco, Gibbons & McNamara, P.C., Carol A. Sigmond, Dunnington, Bartholow & Miller, LLP, Michael T. Rogers, Vashali Maria Aggarwal, Wasserman Grubin & Rogers LLP, Chad Everette Sjoquist, Zetlin & De Chiara, LLP, Thomas V. Giordano, Zeynel Karcioglu, Esq., Mark Joseph Weber, Mound Cotton Wollan & Greengrass, New York, NY, Gary William Westerberg, Robert P. Conlon, Lord, Bissell & Brook, L.L.P., Adam Randall Sorkin Shiff Hardin LLP, Chicago, IL, Johnathan Jeffrey Ross, H. Lee Godfrey, Laurie Gallun, Max Tribble, Susman Godfrey LLP, Houston, TX, Bruce Richard Wildermuth, Alexis M. Dougherty, Edward James McMurrer, Ralph Vincent Pagano, Mendes & Mount, LLP, Newark, NJ, Dennis M. O'Hara, Jason A. Glusman, Robert C. Bauroth, Wicker, Smith, O'Hara, McCoy, Graham & Ford, P.A., Ft. Lauderdale, FL, Veronica Spicer, Jeffrey W. Moryan, Connell Foley LLP, Roseland, NJ, Kathleen Marie Guilfoyle, Kurt Bernard Gerstner, Richard P. Campbell, Campbell, Campbell, Edwards & Conroy, P.C., Boston, MA, Sarah D. Youngblood, Schiff Hardin LLP, San Francisco, CA, Mack H. Shultz, Jr., Steven C. Minson, Thomas Jeffrey McLaughlin, Todd W. Rosencrans, Perkins Coie LLP, Seattle, WA, David A. Harrison, L'Abbate, Balkan, Colavita & Contini, LLP, Garden City, NY, Daniel W. Morrison, III, Michael P. Benenati, Bleakley Piatt & Schmidt, LLP, White Plains, NY, for Defendants.

James A. Gallagher, Jr., Gallagher, Gosseen, Faller & Crowley, Garden City, NY, Michael J. Crowley, Gallagher Harnett & Lagalante LLP, New York, NY, for Movant.

OPINION AND ORDER REGULATING FEE ALLOWANCES AND DISAPPROVING SETTLEMENTS

ALVIN K. HELLERSTEIN, District Judge:

Four of the last remaining plaintiff's in the wrongful death actions against the airlines and other aviation defendants of 9/11 seek judicial approval to distribute the proceeds of their settlements. The law firm that represents them, Azrael, Gann & Franz, seeks a higher percentage of the settlement amounts as a contingent fee award than were received by all other law firms in all previous cases (but for three approved-exceptions). As I now have learned from considering the issues relating to the four settlements, the settlement amounts in these four cases are substantially higher than those of similarly situated plaintiffs in previous settlements. The issue that I have to decide is the fairness of the settlements and fee awards of these four cases, in relation to claimants in the remaining cases against these same defendants, and in relation to the lesser awards of previous settlements. For the reasons discussed in this opinion, I decline to approve the fee awards and settlements because they are unfair and unreasonable in material respects, and I will vacate, by separate order, earlier orders approving the settlements.

The Air Transportation Safety and System Stabilization Act ("ATSSSA", or the "Act") was enacted within weeks of the terrorist-related aircraft crashes into Towers One and Two of the World Trade Center, the Pentagon, and a field in Shanksville, Pennsylvania. The Act limits the liability of the airlines and other aviation defendants to their insurance coverages. ATSSSA, Section 408(a)(1), 49 U.S.C. § 49101. This limit, imposed by the ATSSSA, is considerably less than the aggregate of wrongful death, personal injury and property damage claims against these defendants. Reports submitted to the Court indicate that, even after accounting for all of the settlements that have been approved thus far, the claims against the airlines and other aviation defendants exceed permissible recoveries from insurance proceeds by much more than a billion dollars.

The excess of claims over permissible recoveries presented a unique and potentially disabling problem to Court and counsel. Could settlements occur in individual cases and settlement proceeds be distributed if settling parties had to wait until all cases were resolved to ascertain their aliquot shares of a limited recoverable amount? Could there be a differentiation between wrongful death and personal injury claims, and property-damage claims, if in law they had equal status? Could settlement discussions be encouraged, even among the wrongful death and personal injury claimants, where there were 95 of them, killed and injured from crashes in three different states, represented by 15 different firms, as well as one self-represented plaintiff, with each claimant and each law firm resolved to obtain the highest possible recovery for each plaintiff? ¹

Several claimants made it known that they wished to settle. For various reasons, they had not filed claims with the Victim Compensation Fund (see ATSSSA, Section 401 et seq., 49 U.S.C. § 40101),² but preferred to settle their claims rather than undergo the further agonies of a difficult litigation. The interests of justice required that the litigants and court develop procedures to make such settlements possible and, indeed that settlements be encouraged, for the problems of the ongoing litigation of the several categories of post-9/11 claims were daunting, and their number, eventually reaching well over 10,000 cases, threatened to swamp the limited capacities of the judicial system.³

A special protocol was developed to resolve the dilemmas that were presented. Despite the fear that payments of earlier settlers would leave inadequate funds for later verdicts and settlements, the property-damage claimants agreed to defer progress on their claims in order to allow wrongful death and personal injury settlers to settle and be paid, provided that such settlements would be approved by the Court as fair and reasonable. It was also important to assure equality of status to all plaintiffs', and all defendants', counsel, and prevent the timing of settlements to work to the advantage, or disadvantage, of counsel or clients, and these considerations also were incorporated into the protocol. The special protocol, developed over several case management conferences, had the following features:

1. Judicial approval to certify fairness and reasonableness would be required for each settlement. See Nov. 18, 2005 conf. tr., at 10.

2. The desire of all plaintiffs to maintain confidentiality of their separate recoveries would be respected. See March 3, 2006 conf. tr., at 13, 21. Thus, the approval process would be split. The participants to the initial approval process would be limited to counsel for the paying aviation defendants and counsel for the settling plaintiff. Following approval, up to five settlements would be grouped, and the fairness and reasonableness of the grouped settlements would be reviewed by all other affected defendants' counsel for acquiescence or objection. Stipulation and Order Regarding Settlements, dated April...