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Judge's Rejection of 9/11 Settlement Raises

Questions About His Asserted 'Power of
Review'
Mark Hamblett

03-24-2010

Judge Alvin K. Hellerstein's rejection of a settlement

between New York City and some 10,000 plaintiffs who
claimed to have suffered respiratory ailments during the
World Trade Center response and cleanup has left the
lawyers for the plaintiffs, the city and its contractors who
had spent almost two years negotiating the settlement
wondering what to do next.

The judge, addressing a courtroom packed with attorneys

and plaintiffs last Friday, called the $575 million to $657
million settlement inadequate and potentially confusing to
plaintiffs.

He acknowledged that "most settlements are private" and

"the judge has no part."

"This is different," Hellerstein said. "This is 9/11. This is a

case that has dominated my docket, and because of that,
I have the power of review."

The legal teams are now considering their options. They

can go back to the bargaining table; proceed at full speed
to trial on 12 "bellwether" cases selected by the parties
and the judge; or possibly file a petition for a writ of
mandamus with the 2nd U.S. Circuit Court of Appeals,
hoping a panel will order Hellerstein to accept the
settlement.

The last option is problematic, as it could tie up the

already marathon litigation even longer. Moreover, legal
analysts on Monday said there is no precedent on point for
appellate review of a judge's refusal to accept what he believes to be an inadequate settlement in mass tort
litigation.

Howard Erichson, who teaches complex litigation at Fordham University School of Law, said only certain types of
settlements require judicial approval, such as class actions, settlements involving minors and consent judgments
where there is ongoing judicial supervision.

"Outside of those special situations where you need a judge's power to make it happen, I simply don't understand
what gives the judge the authority here," Erichson said.

Geoffrey P. Miller of New York University School of Law compares the World Trade Center cases to the Vioxx
product liability litigation in New Orleans and the Zyprexa litigation before Eastern District of New York Judge Jack
B. Weinstein, which some observers have called "quasi-class actions."

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"The judge's authority to exercise this kind of review of the settlement to protect the plaintiffs that you would see
in a class action, it's very controversial," Miller said. "I'm sure the judge was acting out of the very best of
intentions and protecting the very vulnerable people who can't protect themselves. However, the legal basis for
the judge exercising that kind of powerful equitable authority is questionable."

Hellerstein acknowledged Friday that he cannot force the city and its contractors to settle.

"That's a matter of private conviction," he said. "All I can do is schedule trials and rule according to the merits."

However, the judge made it clear last week he was going to take a much more aggressive role in overseeing the
settlement talks.

The first indication came March 15, four days before Friday's hearing, when he issued an order saying the
agreement "does not provide for judicial supervision or appointment of the allocation neutral (who will make the
decision on what category individual plaintiffs belong to for purposes of compensation) and the firm and panel of
physicians that will assist it."

The judge instructed the parties not to engage, or continue to engage, people or firms for those positions without
his approval.

Then, at Friday's hearing, Hellerstein said he wanted "judicial control over the process, because that's what's fair."

"If I'm the judge, I can be reversed," he said. "If the parties appoint someone, he's the dictator. We don't have
dictators."

ATTORNEY FEES

The judge also said Friday he intended to cap plaintiffs attorneys' fees below the 33 percent called for in
contingency contracts and said the fees "will" be paid out of the $1.1 billion World Trade Center captive insurance
fund, the same fund that will be paying the settlement.

There is little dispute that judges have broader authority in the realm of attorney fees in mass tort cases.

Judge Eldon Fallon of the Eastern District of Louisiana capped fees in the $4.85 billion Vioxx settlement at 32
percent, and Judge Weinstein capped most fees at 35 percent in the $700 million Zyprexa settlement in Brooklyn.

Erichson said both Weinstein and Fallon "reviewed" the settlements even though they were not class actions.

"I wondered how they could approve the settlements if they didn't have the power to approve them, but I guess, if
they are approving them, it didn't seem to be a problem," he said. "Getting the judge's blessing gave the lawyers
some comfort they weren't doing anything wrong."

While it is unclear whether Hellerstein has the authority to reject the settlement, absent an appeal he still wields
the gavel and influence over a settlement with many moving parts, including a short, 90-day window for plaintiffs
to decide whether they want to be included.

There is also the requirement that 95 percent of plaintiffs approve the settlement in In re World Trade Center
Disaster Site Litigation, 21 MC 100, and the judge now has before him a series of defense motions to dismiss
many of the cases based on the immunity granted to those acting in response to civic disasters.

Lead lawyers Paul Napoli, of Worby Groner & Napoli, Bern for the plaintiffs, and James Tyrrell Jr., of Patton Boggs
for the city, declined comment Monday.

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