The opinion of the court was delivered by: Alvin K. Hellerstein, United States District Judge
OPINION AND ORDER DISMISSING COMPLAINTS
More than 3,000 people died on September 11, 2001 from the terrorist-related aircraft crashes into the World Trade Center towers, the Pentagon, and the field in Shanksville, Pennsylvania. Those who died, in the airplanes and at the crash sites, were rich and poor, young and old, citizens and non-citizens, and in varied professions and occupations, united only in the unlucky coincidence of time and place.
Eleven days later, Congress and the President, reflecting the sentiments of a shocked and grieving nation, enacted the September 11th Victim Compensation Fund of 2001 ("the Fund") to provide compensation to the bereaved. Soon after, pursuant to the enacting legislation, a Special Master of the Fund was appointed, regulations were promulgated, and the Fund began to function. Now, a year-and-a-half later, the deadline by which all claims must be filed, December 22, 2003, is fast approaching.
Inevitably, interpretive issues have arisen, and lawsuits have been filed. In the three suits involved in this decision, the plaintiffs, who are eligible to file claims with the Victim Compensation Fund but have not yet done so, allege that the regulations promulgated by the Department of Justice and the interpretive policies of the Special Master, Kenneth R. Feinberg, are arbitrary and capricious, violate the Air Transportation Safety and System Stabilization Act, 49 U.S.C. § 40101 ("the Act"), and unconstitutionally discriminate against them. Their central allegation is that the Special Master's proposed awards fail to reflect that many who died in the World Trade Center were earning, and would have continued to earn, much more than the Special Master is prepared to recognize.
All parties have agreed to a procedure that has brought these cases on for accelerated hearing and determination on an agreed record. Having heard the parties, I now deny plaintiffs' motions for summary judgment, and grant defendants' motions for judgment on the pleadings. Fed.R.Civ.P. 12(c), 56.
A. The September 11th Victim Compensation Fund of 2001
i. Statutory Authorization
The events of September 11, 2001 caused Congress to take immediate action to address the financial crisis in the airline industry and the losses suffered by the victims and their families. On September 22, 2001, President Bush signed into law the Air Transportation Safety and System Stabilization Act of 2001, Pub.L. No. 107-42, 115 Stat. 230 (2001) (codified at 49 U.S.C. § 40101). The Act was subsequently amended on November 19, 2001 and Jan. 23, 2002. See Pub.L. No. 107-71, 115 Stat. 631 (2001); Pub.L. No. 107-134, 115 Stat. 2435 (2002).
Title IV of the Act, captioned "Victim Compensation," creates the September 11th Victim Compensation Fund of 2001. Section 403 of the Act states that the purpose of Title IV is "to provide compensation to any individual (or relatives of a deceased individual) who was physically injured or killed as a result of the terrorist-related aircraft crashes of September 11, 2001." A Special Master appointed by the Attorney General administers the Fund, see Act § 404(a), and his tasks include promulgating rules and regulations for the Fund, generating application forms for claimants, and being the sole decision-maker with regard to individual compensation awards, see Act §§ 404(a), 405(a)(2), 405(b). The claimant may be represented by counsel, present evidence, and exercise "any other due process rights determined appropriate by the Special Master." Act § 405(b)(4). The Special Master's compensation determinations are "final and not subject to judicial review," and must be rendered within 120 days of the filing of the claim. Act § 405(b)(3).
By electing to file a claim with the Fund, a claimant waives all rights to bring a civil action regarding the September 11 crashes, except to recover collateral source obligations or to sue knowing participants in the hijacking conspiracy. See Act § 405(c)(3)(B)(i). If victims pursue the litigation route, the amounts they potentially may recover are limited, by section 408 of the Act, to the insurance coverage of the airlines, aircraft manufacturers, airport sponsors, or persons with a property interest in the World Trade Center. The United States District Court for the Southern District of New York is given exclusive jurisdiction over such lawsuits. See Act § 408(b)(3).
In order to qualify as an "eligible individual" for compensation from the Fund, the claimant must be a victim or the personal representative of a victim who: (i) was present on one of the hijacked planes or at the World Trade Center (New York, New York), the Pentagon (Arlington, Virginia), or the site of the aircraft crash at Shanksville, Pennsylvania at the time, or in the immediate aftermath, of the terrorist-related aircraft crashes of September 11, 2001; and (ii) suffered physical harm or death as a result of such an air crash. See Act § 405(c). Section 405(b)(1) provides that the Special Master shall review submitted claims according to three factors: harm to the claimant, the facts of the claim, and the individual circumstances of the claimant. The Special Master shall determine: "(A) whether the claimant is an eligible individual under subsection (c); (B) with respect to a claimant determined to be an eligible individual — (i) the extent of the harm to the claimant, including any economic and noneconomic losses; and (ii) the amount of compensation to which the claimant is entitled based on the harm to the claimant, the facts of the claim, and the individual circumstances of the claimant." Act § 405(b)(1). The Special Master is to make his award determinations without regard to "negligence or any other theory of liability." Act § 405(b)(2). His awards are not to include amounts for punitive damages and are to be offset by amounts of collateral source compensation the claimant has received or is entitled to receive as a result of the events of September 11. Act §§ 405(b)(5) and (6). The Act makes no mention of dollar limitations on the amount of an individual claimant's compensation award.
A few of the key terms are defined in section 402. "Economic loss" is "any pecuniary loss resulting from harm (including the loss of earnings or other benefits related to employment, medical expense loss, replacement services loss, loss due to death, burial costs, and loss of business or employment opportunities) to the extent recovery for such loss is allowed under applicable State law." Act § 402(7). Section 402(9) defines "noneconomic losses" as "losses for physical and emotional pain, suffering, inconvenience, physical impairment, mental anguish, disfigurement, loss of enjoyment of life, loss of society and companionship, loss of consortium (other than loss of domestic service), hedonic damages, injury to reputation, and all other nonpecuniary losses of any kind or nature."*fn1 "Collateral source" is defined in section 402(6) as "all collateral sources, including life insurance, pension funds, death benefit programs, and payments by Federal, State, or local governments related to the terrorist-related aircraft crashes of September 11, 2001." The "claimant" is the "individual filing a claim for compensation under section 405(a)(1)." Act § 402(5).
Not all of the key terms contained in the Act are defined. The Act provides that claimants are entitled to compensation awards based on "the facts of the claim, and the individual circumstances of the claimant," as well as on the "extent of harm," a term which includes "any economic and noneconomic losses." Act § 405(b)(1)(B)(ii). However, the Act does not define these two additional criteria — "the facts of the claim" or "the individual circumstances of the claimant."
ii. Promulgation of Rules, Regulations and Methodologies
On November 5, 2001, the Department of Justice ("DOJ"), through the Attorney General, published a Notice of Inquiry and Advance Notice of Rulemaking, pursuant to section 407 of the Act. See 66 Fed. Reg. 55,901 (Nov. 5, 2001). This Notice of Inquiry initiated the process of rule-making under the Act. Attorney General John Ashcroft appointed defendant Kenneth R. Feinberg to administer the Fund as the Special Master on November 26, 2001, a selection supported by congressional leaders of the two major political parties. On December 21, 2001, the DOJ published its "Interim Final Rule" governing implementation of the Fund. See 66 Fed. Reg. 66,274 (Dec. 21, 2001). Accompanying the Interim Final Rule was a "Statement by the Special Master." Id. After receiving thousands of comments, the DOJ published its "Final Rule" for implementation of the Fund on March 13, 2002, modifying some provisions in the Interim Final Rule but otherwise leaving the Interim Final Rule in full force as the law governing the administration of the Fund (hereinafter, the "regulations"). See 67 Fed. Reg. 11,233 (Mar. 13, 2002) (codified at 28 C.F.R. pt. 104). A "Statement by the Special Master" accompanied the publication of the Final Rule. Id.
Pursuant to the regulations and in some respects expanding on them, the Special Master provided a methodology for determining awards. As mandated by 28 C.F.R. § 104.43, the Special Master published schedules, tables, and charts to permit prospective claimants to estimate economic loss determinations for annual incomes up to but not beyond the 98th percentile of individual income in the United States for the year 2000; the tables do not project awards for incomes above the 98th percentile, or $231,000. The award amounts listed in the tables, or "presumed awards," are "based upon individual circumstances of the deceased victim, including: the age of the decedent as of September 11, 2001; the number of dependents who survive the decedent; whether the decedent is survived by a spouse; and the amount and nature of the decedent's income for recent years." 28 C.F.R. § 104.43 (2003). In order to determine a decedent's income, an average of the "decedent's salary/income in 1998-2000" is used, with discretion in the Special Master to take other years into account and make evaluations "in a manner that the Special Master deems appropriate." Id. As to non-economic losses, the presumed non-economic loss for decedents is $250,000, plus an additional $100,000 for a spouse and each dependent of the deceased victim.*fn2 28 C.F.R. § 104.44 (2003). With respect to the "individual circumstances of the claimant," a criterion provided by the Act for compensation awards, the Special Master was authorized to take into consideration "the financial needs or financial resources of the claimant or the victim's dependents and beneficiaries." 28 C.F.R. § 104.41 (2003).
Claimants may choose between two tracks in pursuing awards. Under Track A, the claims evaluator notifies the claimant within 45 days of his or her eligibility and of the amount of the presumed award. 28 C.F.R. § 104.31(b)(1) (2003). The claimant may then either accept the presumed award as the final determination or seek a hearing under 28 C.F.R. § 104.33. Under Track B, the claims evaluator notifies the claimant about eligibility within 45 days, and the claimant then proceeds to a hearing. 28 C.F.R. § 104.31(b)(2) (2003). The Special Master or his designee may adhere to the presumptive award methodology, or modify the award if the claimant presents "extraordinary circumstances not adequately addressed by the presumptive award methodology." Id.
The Special Master has adopted additional procedures, not set out in the regulations, but which are contained in a number of documents available to the public.*fn3 The main document that reflects these procedures, "Explanation of Process for Computing Presumed Economic Loss" (amended on August 27, 2002) ("Explanation of Process"),*fn4 includes the presumed award charts, outlines the use of post-tax income for determining lost earnings, and sets consumption rates for decedents according to marital status and the number of dependent children.
The methodology established by the Special Master, pursuant to the regulations and his further implementing policies and explanations, are intended to provide a speedy and efficient alternative to normal tort litigation. Through the tables of presumptive awards, those who suffered irreparable loss from the terrorist-related aircraft crashes of September 11, 2001 are enabled to predict the awards for which they are eligible, and which they will be entitled to receive within a 120-day period.*fn5 They then can decide among three options: 1) to enter the process and accept the presumed award; 2) to obtain a hearing before the Special Master and seek to prove entitlement to a higher amount, also within a relatively short period; or 3) to pursue the normal tort litigation process, with all its risks of contested liability, discovery, lengthy pre-trial and trial proceedings, appellate review, and substantial litigation expense, but with the potential for larger economic recovery.
Three lawsuits have been filed against defendants Kenneth R. Feinberg, John Ashcroft, and the Department of Justice. All involve plaintiffs who are legal representatives of people who died in the World Trade Center on September 11, 2001. None of the plaintiffs has submitted a formal claim to the Fund, but several, and perhaps all, have met with the Special Master for the purpose of evaluating what a possible award might be.
In Colaio v. Feinberg, 03 Civ. 0558, seven named plaintiffs bring suit as estate administrators on behalf of themselves and a class of similarly situated "eligible individuals." The complaint alleges that the defendants' promulgation and adoption of certain rules, regulations, and methodologies governing the Special Master's administration of the Fund violate Title IV of the Act and are arbitrary and capricious, particularly in four areas: 1) basing economic loss calculations on after-tax earnings; 2) applying arbitrary and unreasonable consumption rates for single decedents; 3) using a base earnings level formula that does not reflect their economic or financial reality, and which does not consider the higher earnings level that claimants anticipated for the year 2001; and 4) failing to compensate economic loss for decedents whose average level earnings exceeded the 98th percentile for individual income according to the United States 2000 Census, by imposing a de facto, arbitrary, and unreasonable cap through adoption of an unauthorized and undefined "needs" test. Plaintiffs seek to represent a class of all personal representatives of decedents who died at the World Trade Center site on September 11, 2001.
In Smith v. Ashcroft, 03 Civ. 1040, the two plaintiffs are administrators of the estates of people whose annual earnings for the three years prior to their deaths substantially exceeded $231,000. The Smith complaint seeks a judgment declaring that 1) the imposition of a "needs" test by the Special Master violates the Act and is arbitrary and capricious; 2) the burden of proof to establish economic loss shall be the same for all claimants, and those claimants whose decedents earned more than $231,000 annually should not be required to meet the heavier burden of "extraordinary circumstances" to obtain an award higher than the maximum presumptive awards; and 3) economic loss shall be based on gross pre-tax income as required by New York state law, rather than post-tax income.
The third case, Schneider v. Feinberg, 03 Civ. 1129, involves similar claims as those in Colaio and Smith. The plaintiff, Cheryl Schneider, sues for a judgment requiring the Special Master 1) to award all claimants their economic losses subject only to reduction for collateral source compensation, without consideration for financial need or proof of extraordinary circumstances, and based on pre-tax earnings of the decedent; 2) to disclose the reports of economic loss created by Price Waterhouse, a firm retained by the Special Master; and 3) to determine the plaintiff's claim in accordance with the evidence of economic loss submitted in compliance with the Fifth Amendment's due process and equal protection guarantees.
Read together, the plaintiffs' complaints challenge numerous aspects of the regulations and the Special Master's interpretive methodologies and policies as violations of the Administrative Procedure Act ("APA"), 5 U.S.C. § 706 (2003): (1) the Special Master's alleged imposition of a cap on awards; (2) the provision that the "individual circumstances of the claimant" "may include the financial needs or financial resources of the claimant or the victim's dependents and beneficiaries," 28 C.F.R. § 104.41; (3) the Special Master's limited application of state law as provided by 28 C.F.R. § 104.42; (4) the publication of a methodology for determining presumed economic loss "up to but not beyond the 98th percentile of individual income in the United States for the year 2000," and the focus on the "Decedent's salary/income in 1998-2000 (or for other years the Special Master deems relevant)" in determining economic loss, 28 C.F.R. § 104.43; (5) the requirement that the claimant present "extraordinary circumstances not adequately addressed by the presumptive award methodology" in order to obtain an adjustment in the presumed award, 28 C.F.R. § 104.31(b)(2) and 104.33(f)(2); (6) the Special Master's use of post-tax income as the basis for calculating economic loss; (7) the Special Master's use of a consumption rate for single decedents that is higher than the consumption rate for decedents who were married or had children in determining economic loss; and (8) the alleged violation of equal protection and due process rights in making award determinations.
Shortly after the Colaio complaint was filed, I held a conference on February 6, 2003. The parties agreed that no factual issues were in dispute and that the lawsuits could be decided by motion.*fn6 In order to facilitate appellate review before the looming deadlines for filing lawsuits and claims with the Fund,*fn7 I ordered, with the consent of the parties, the compilation and submission of factual without the customary discovery process, and issued an expedited briefing schedule. I denied the Colaio plaintiffs' request to depose the Special Master because of the absence of factual dispute as to any material issue, and because the proceeding was not to be a review of any specific award determination.
Plaintiffs issued subpoenas for two documents: 1) a report created by Price Waterhouse, an accounting firm retained by the Special Master, regarding the economic losses of plaintiff Cheryl Schneider; and 2) a report provided by the Special Master to Cantor Fitzgerald and its counsel Skadden Arps, laying out economic and noneconomic losses for decedents with annual incomes up to $1 million. After hearing the parties, I quashed the subpoena for production of the Price Waterhouse report, because no material issue was presented, but required that the government disclose its contents by category; the government made this disclosure. I ordered the production of the report provided to Cantor Fitzgerald because attorney-client privilege had been waived.
Oral argument on the motions was held on the morning and afternoon of April 14, 2003. I ...