World Events: Litigation Arising from the 9/11 Terrorist Attacks Concludes
The litigation against airlines, security companies and other aviation-related defendants following the September 11, 2001 terrorist attacks against the United States finally was concluded in December 2017.
Following the terrorist attacks, wrongful death, personal injury, property damage, and business interruption claims exceeding $30 billion were filed in federal court in New York. The liability theories against the defendants were alleged negligent pre-board passenger screening.
The majority of the wrongful death and personal injury claims were filed with the 9/11 Victim Compensation Fund created by the U.S. Congress 10 days after 9/11. Only 95 death and injury claims were litigated and all were resolved by settlement without a trial.
The subrogated and uninsured property damage claims, valued in excess of $4 billion, were settled at mediation in 2010 based on a liability discount of approximately 75 percent. A similarly discounted 2014 settlement was reached with the brokerage firm Cantor Fitzgerald, which lost 658 employees that day.
THE FINAL SETTLEMENT in 2017 involved claims by World Trade Center Properties (WTCP), the owner of a 99-year lease on the five WTC buildings that were destroyed or severely damaged on 9/11. The federal judge overseeing the litigation ruled that WTCP’s uninsured damage claims for destruction of its leasehold were completely offset by the insurance payments received by WTCP. The final settlement represented less than one percent of WTCP’s overall claims.
More than $30 billion in third-party liability claims originally asserted against the aviation defendants were either settled or dismissed without a liability trial. The total indemnity payments by the aviation insurance market for all third-party liability claims arising from the 9/11 attacks were less than $2 billion.
Global Aerospace was the lead underwriter for American Airlines on September 11, 2001 and supervised the defense of its insured in this 16-year litigation. In the process, we were reminded that there are a number of keys to the successful resolution of complex, multi-party litigation: a close working relationship among insurers, insureds and counsel; if possible, an allocation agreement among contributing insurers; continuous risk analysis during the process; and use of mediation rather than jury trial.
Author Desmond T. Barry, Jr., Condon & Forsyth LLP