LOS ANGELES (CN) – Six people who were aboard Pan Am Flight 73, which was hijacked by Libyans in 1986, claim the Crowell and Moring law firm paid itself a contingency fee of more than 10 percent, in violation of federal law. The plaintiffs claim the law firm also failed to notify them about a conflict of interest between its citizen and non-citizen plaintiffs, and gave settlement money to non-citizen clients, who were not entitled to it.
The six plaintiffs say they were aboard Pan Am Flight 73, which hijacked by Libyan government-backed terrorists in Karachi, Pakistan, on Sept. 5, 1986. Of the 379 passengers who were held hostage for 16 hours, “numerous passengers were killed and over 100 passengers were wounded,” according to the Superior Court complaint.
As soon as the hijackers took control, they separated the passengers into U.S. and non-U.S. citizens, the plaintiffs say.
“The hijackers singled out a U.S. national by summoning him to the front of the plane, shooting him point blank in the head, and then pushing his lifeless body out of the plane onto the tarmac. The hijackers eventually sprayed the passengers with automatic weapons and threw hand grenades into the group,” according to the complaint.
The hijacking was one of several terrorist acts for which Libya eventually admitted culpability, the plaintiffs say, including “the bombing of the La Belle Discotheque in West Berlin, Germany, the bombing of Pan Am Flight 103 over Lockerbie, Scotland, and the bombing of UTA Flight 772.”
The United States and United Nations imposed economic sanctions on Libya, and lifted them after extended negotiations in exchange for Libya’s promise “to make major financial restitution to all U.S. nationals,” according to the complaint.
The U.S. Foreign Claims Settlement Commission, a part of the Department of Justice, administers the Libyan-supplied settlement fund, “and oversees the processing of claims made by U.S. nationals for compensation.”
Non-U.S. citizens were not entitled to compensation under the fund, according to the complaint.
The plaintiffs claim that Crowell and Moring contacted the Flight 73 hijack victims and “advised the victims who were non-U.S. nationals that it would undertake litigation concerning the Pan Am hijacking only if a substantial number of the U.S. nationals also participated.”
The six plaintiffs say they were among the ones that Crowell and Moring (C&M) solicited as clients. The plaintiffs say they signed the Joint Prosecution Agreement (JPA) under which they “agreed to share any monetary recovery resulting from the contemplated civil lawsuit with the other parties to the JPA.”
They claim the U.S. Foreign Claims Settlement Commission (FCSC) set a 10 percent cap on contingency fee arrangement, but that “C&M never disclosed and explained to the plaintiffs the 10 percent statutory cap on contingency fee arrangements”.
Crowell and Moring’s retainer agreement called for the law firm to get 35 percent of the money C&M recovered “whether by judgment, award, or settlement,” though the amount would be reduced to 20 percent “if the case settles before the complaint is filed” and 25 percent “if the case settles any time after the filing of the complaint before trial,” according to the six plaintiffs’ complaint (paragraph 65, p. 12).
One plaintiff in this class says the FCSC awarded her $10 million. One was awarded $3 million, and a third plaintiff was awarded $500,000. Four of the plaintiffs say they have claims for another $15.2 million still pending before the FCSC.
The three whose claims have been settled claim that Crowell and Moring “instructed the Department of State to wire the compensation awarded to (them) to C&M, rather than to the three plaintiffs directly.”
Thus, Crowell & Moring “unilaterally deducted and paid itself a contingency fee of more than 10 percent of their purported compensation from the FCSC,” in violation of the 10 percent cap, according to the complaint.
Plaintiffs claim Crowell and Moring also, “contrary to their best interests, sided with the position taken by the non-U.S. national clients,” and that “its non-U.S. national clients had an unqualified and absolute right to share in any fund compensation.”
The three plaintiffs who settled their claims, for a total of $13.5 million, add that after taking more than 10 percent as a contingency fee, Crowell and Moring sent the balance of their award to a Liaison Group, “for the purpose of having its non-U.S. clients share in the remainder of the three plaintiffs’ compensation.”
Plaintiffs seek declaratory judgment, restitution and punitive damages for legal malpractice, breach of contract, breach of fiduciary duty and violations of California business and professional
They are represented by Maxwell Blecher with Blecher & Collins.