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Who pays the damages for Sept. 11?

Lawyers grapple with one of history's most complex liability cases

By Seth SternStaff writer of The Christian Science Monitor / September 27, 2001



This time, the lawyers ran away from the ambulances.

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One day after planes first hit the World Trade Center, the Association of Trial Lawyers of America urged attorneys to avoid bringing lawsuits related to the attacks.

But with thousands of casualties and tens of billions in damages at stake, neither victims nor lawyers who specialize in "mass torts" are likely to hold back for long.

"It won't continue," says Federal District Court Judge Jack Weinstein of the Eastern District of New York. "There's too much money."

Victims' families are already retaining attorneys who handled previous disasters, including the Pan Am Flight 103 explosion over Lockerbie, Scotland, and the 1993 World Trade Center bombing.

This attack - with defendants ranging from airlines to a trail of terror suspects around the globe - promises to fuel some of the most complex litigation ever brought in the United States.

The first World Trade Center bombing killed six people, yet resulted in 500 lawsuits by 700 individuals, businesses, and insurance companies, asking for $500 million in damages, says Blair Fensterstock, lead attorney in the case. Eight years later, the case is still not finished.

In this instance, legal experts say the government must fashion faster recovery methods that ensure victims' families can collect quickly and the courts don't get clogged.

Last week, Congress voted to give victims or their families the choice of recovering from a pool of private insurance and government money administered by the Department of Justice or by suing in federal court in Manhattan.

Capping airlines' liability

American and United Airlines each had its liability capped at the level of insurance coverage held on the day the planes were hijacked. Taxpayers will pay the rest of the money paid out of the Department of Justice fund.

Families who opt for the fund will probably get money faster but will likely receive money under an undetermined formula based on each victim's income and insurance. Victims who go to court could recover more, but risk getting nothing if the airlines run out of insurance money or go bankrupt.

Even after the airlines' money is exhausted, a lengthy roster of potential defendants remains. Osama bin Laden and countries that support his network top the list. Federal law allows terrorist victims to recover from countries that support the terrorists. Provisions of the law provide for huge money judgments designed to deter future terrorist attacks.

Former hostages in Lebanon and the families of terrorist victims have won judgments totaling more than $1 billion against Iran. Former Beirut hostage Terry Anderson was awarded $340 million last year.

The US government gives plaintiffs cash for the compensatory damages while holding assets of terrorist sponsors as a deposit until the country actually pays up. Anderson collected $40 million from the US Treasury, which now holds the claim against Iran. The US now has the rights to the other $300 million. It is holding Iranian assets as a security deposit until it recovers funds from the government of Iran, but hasn't actually seized the assets.

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