9/11 Claimants Reach Successful Mediated Settlement with Airlines

It is a rare thing indeed to find a published mediation decision involving a matter of such profound importance as the settlement of 9/11 litigation. Last month, Judge Hellerstein of the Southern District of New York published an order accepting the mediated settlement of 95 claims against the airlines for approximately $500 million. The order and accompanying mediator report are important examples of one area of international litigation that is sorely neglected. Among the issues resolved by the mediator, Sheila Birnbaum, was how to settle international claims covered by the Warsaw Convention and related protocols. She also raises an extremely interesting question of whether traditional litigation, mediation, or a “victim’s compensation fund” is good policy in the event of some future tragedy. Here is an excerpt from the mediator’s report:

We decided that if the mediations were to have a better chance of succeeding, the families would have to be present and have an opportunity to express themselves. Mediation sessions were then scheduled and held involving representative of the defendant airlines and security companies and the individual families of those killed or injured in the attacks…. Needless to say, the meetings with the families were a heart-wrenching and emotionally draining experience for all involved. These meetings with the families provided a confidential mechanism to meet some of the needs of the families involved as well as providing an appropriately focused environment within which to resolve cases. Families were able to convey to the mediator and to representatives of the airlines and security companies-both legal counsel and company officers-personal details about their loss and the difficulties they have faced subsequently. Families also were able to personally hear from the mediator and representatives of the airlines and security companies sincere expressions of condolences for their loss on both an official and personal level. In addition, these sessions provided an opportunity for me as the mediator to explain the limitations of our imperfect tort system and how the system of monetary recovery in wrongful death cases does not even try to value a person’s life because that simply cannot be done. These lengthy and emotionally draining meetings were critical in being able to reach settlements in many of the cases.

Furthermore, several cases involved victims who were traveling on tickets for international passage and therefore were covered by International Treaty (i.e., the Warsaw Convention and related protocols). Coverage under Treaty provisions raised other issues that affected the value of cases, including strict liability and pre-judgment interest issues…. Therefore, cases could legitimately be viewed differently for settlement as a result of the presence of one or more of these factors. This is why each case had to be looked at and negotiated individually in the mediation. However, these individual factors notwithstanding, the age, income and family situation of the decedent provided a basis to make a rough comparison of the range of settlements of decedents who were in a general sense similarly situated as well as permitting the identification of settlements that might seem outside of that range.

The settlements arrived at in this process are confidential. Without disclosing actual numbers, but in order to give some sense of scale of these efforts, the aggregate total of the settlements, both those made previously (as advised by the court) and those reached directly due to the mediation efforts, were approximately $500 million. As indicated previously, some of these cases involved decedents with extremely high earnings and/or other exceptional circumstances, life insurance and other collateral source payments did not have to be (and were not) deducted, and many different aspects of law played significant roles. Therefore, a straight per case average of this amount would be misleading. Furthermore, and ever more importantly, no figure can affect the personal loss and painful anguish suffered by the families who lost loved ones in this national tragedy.

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These mediated settlements occurred years after the recoveries were obtained from the Fund and with a great deal of uncertainty along the way. Further, the recoveries here were subject to the payment of attorneys fees. The families of decedents with very high incomes probably achieved settlements that would have been unlikely achievable through the Fund because of the rules governing the Fund, including deductions for collateral sources of recovery such as life insurance policies. These deductions typically are not made in traditional litigation cases. Therefore, given the lengthier passage of time for these settlements to be negotiated, approved and paid, the added physical burden and emotional toll of the prolonged and uncertain litigation and settlement process, and the delay in achieving some measure of closure and financial security because of the ongoing litigation, it is impossible to judge whether people similarly situated who pursued the traditional litigation track and settled their cases pursuant to mediation did better overall than those who participated in the Fund, regardless of any differences in gross settlement amounts.

This situation nonetheless picks up on a question raised by the Special Master of the Fund. In the event of a future tragic event like that of September 11, 2001, does it make good public policy to have a fund similar to the Fund in this instance?