Most Sept. 11 Lawsuits Settled for $500 Million

(CN) - Nearly all of the 95 wrongful death and personal injury lawsuits stemming from the Sept. 11, 2001, terrorist attacks that "seared the nation" have been settled for a total of $500 million, a mediator said on Thursday. A federal judge in Manhattan entered an order approving the mediator's report on March 5, more than seven years after the attacks.

Of the 3,000-plus people killed or hurt as a result of the attacks, around 97 percent routed their claims through the Victim Compensation Fund, established by the Air Transportation Safety and System Stabilization Act passed by Congress just 11 days after the tragedy. The fund distributed more than $7 billion within 33 months, under strict rules that also laid out a path for those wishing to litigate.

Families not participating in the fund - due to restrictions such as a requirement to deduct life insurance payouts from the settlement, or the high earning capacity of the dead or injured - had to bring suit in New York's Southern District.

U.S. District Judge Alvin Hellerstein wrote that discovery under the cases proceeded extremely slowly due to safety concerns brought by the Transportation Security Administration. The court encouraged settlement negotiations, and the parties selected as their mediator Sheila Birnbaum of the international firm Skadden, Arps, Slate, Meagher & Flom.

Each case was negotiated individually considering the age, income and family situation of the victims as a starting point. Birnbaum noted that state law was applied depending on the location of the crash, with the Pentagon crash for example bringing forth an element of uncertainty due to Virginia law's emphasis on grief damages.

Birnbaum wrote in her report regarding the settlements that "the personal stories ... were compelling on personal level."

Birnbaum also wrote that an obstacle to settlements arose as families were never presented with the opportunity to express their stories of grief and loss in court. Mediators set up sessions with airline and security company personnel, which Birnbaum described as "heart-wrenching and emotionally draining" for all.

Of the 95 cases, 13 were settled before Birnbaum's mediation efforts began. Birnbaum wrote that 12 cases were settled from March to May of 2006, just months after her appointment as mediator in February. Over 19 months, 53 more cases were resolved.

Six cases were settled based on limited damages-only discovery ordered by Judge Hellerstein. Four settlements had to be renegotiated when Judge Hellerstein disapproved them based on attorney fees deemed to be too high.

One case was dismissed, and three are still pending.

Birnbaum's "extraordinary work" resolved a total of 72 cases, Hellerstein wrote.

Concluding her report, Birnbaum wrote that it was "impossible to judge" whether litigants did better than fund recipients, noting that an aggregate $500 million couldn't be averaged among the 95 cases due to unique circumstances around each. She also reflected upon whether a similar fund should be set up for future events, and posed the rhetorical question of whether such a fund should stand as an exclusive remedy. Such setup would guarantee consistency among the outcomes, Birnbaum concluded.

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