Court Approves World Trade Center Settlement

(CN) - The 2nd Circuit has approved a $1.2 billion property damage settlement stemming from the Sept. 11 terrorist attacks on the World Trade Center.

The federal appeals court rejected arguments from WTC developers that the deal will limit the amount of money they would receive from the airlines and insurers, and that it violated the Air Transportation Safety and Stabilization Act.

After the 2001 terrorist attacks, in which American Airlines Flight 11 and United Air Lines Flight 175 struck Towers One and Two of the World Trade Center, a slew of property-damage claims were spawned.

The many insurers blamed the two airlines, as well as Globe Airport Security and Huntleigh, which screened passengers boarding the ill-fated flights. They claimed those companies' negligence allowed the terrorists to board Flights 11 and 175.

A lengthy mediation process concluded with the proposed $1.2 billion settlement, which represented just 28 percent of the plaintiffs' total claimed damage of $4.4 billion, according to the ruling.

The settlement, which was previously approved by U.S. District Judge Alvin Hellerstein in Manhattan, resolves 18 of the 21 property-damage claims stemming from the most deadly attack ever on American soil. A majority of 9/11-related cases were consolidated before the federal judge.

In the deal approved by the 2nd Circuit, American Airlines and Globe are to pay 60 percent of the settlement, while United and Huntleigh will pay the remaining 40 percent.

The three-judge panel decided the WTC developers failed to show evidence that the settlement was reached in bad faith. The settling plaintiffs had taken issue with the deal because it is a lump sum that applies to all the plaintiffs, as opposed to a claim-by-claim assessment of potential liability.

Claims against other defendants, including Boeing and Colgan Air, were dropped from the suit.

American and Untied agreed to the release of the other defendants, claiming they did not want to further complicate negotiations. The allegations against the other defendants were also considered to be weaker than those against the two airlines and their checkpoint security companies.

"The aviation defendants were also concerned about setting an undesirable precedent for future disasters if non-carrier airlines (which might in the future include American and United) contributed to the settlement," Judge Debra Ann Livingston wrote for the court. "In addition, the aviation defendants contributing to the settlement did not want to face potential indemnification claims by other aviation defendants not released."

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