The opinion of the court was delivered by: ALVIN HELLERSTEIN, District Judge
OPINION AND ORDER PARTIALLY GRANTING AND PARTIALLY DENYING
DEFENDANTS' MOTIONS TO DISMISS PURSUANT TO THE WAIVER PROVISION OF
THE AIR TRANSPORTATION SAFETY AND SYSTEM STABILIZATION ACT
Congress gave the victims of the terrorist-related aircraft
crashes of September 11, 2001 and their families a choice of
remedy: the Victim Compensation Fund or a traditional lawsuit,
and required claimants to choose between them. The motions that I
now decide relate to the choice that Congress required.
Special Master Kenneth R. Feinberg, in the context of the
extraordinary aftermath of September 11 and reflecting the
generosity manifested in the Congressional will, expended a
substantial effort in educating the public as to how the Victim
Compensation Fund would work. He and his staff were completely
accessible, to the point of inviting informal inquiries and
submissions, and making informal determinations of probable
recoveries. Many claimants responded to the Special Master's
efforts, and presented him with substantial elements of their
potential claims. An appreciable number decided, however, for
good and sufficient reasons, not to proceed with their claims to
the Victim Compensation Fund and to withdraw from it, in order to
pursue a lawsuit in this court. The issue presented by defendants' motions to dismiss such
plaintiffs' claims on the ground of waiver requires me to
evaluate if the actions and submissions of various plaintiffs,
grouped into three categories, constituted a waiver of suit
pursuant to section 405(c)(3)(B) of the Air Transportation Safety
and System Stabilization Act.
I. Statutory and Regulatory Background
On September 11, 2001, terrorists hijacked airplanes and
deliberately flew them into the twin towers of the World Trade
Center in New York City and the Pentagon in Virginia. Another
hijacked airplane crashed near Shanksville, Pennsylvania after
passengers attempted to recapture the aircraft. Nearly 3,000
people in the airplanes and on the ground died, and many others
were injured. In the weeks following September 11, Congress
passed 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) to protect the
airlines against exposure to financial ruin, and to provide
victims and their family members with an expedient method of
recovery. The Act was subsequently amended on November 19, 2001
and January 23, 2002. See Pub.L. No. 107-71, 115 Stat. 631
(2001); Pub.L. No. 107-134, 115 Stat. 2435 (2002).
The Act provides alternative modes of recovery to those who
were injured and to the legal representatives of those who died
as a result of the terrorist-related aircraft crashes of
September 11, 2001. One alternative is a traditional lawsuit.
Section 408(b)(1) of Title IV provides for a federal cause of
action "for damages arising out of the hijacking and subsequent
crashes." Such actions are to be brought in the United States
District Court for the Southern District of New York, as a matter
of its "original and exclusive jurisdiction over all actions
brought for any claim (including any claim for loss of property,
personal injury, or death) resulting from or relating to the terrorist-related aircraft crashes of
September 11, 2001." The Act § 408(b)(3). The governing law for
suits brought under the Act is to be "derived from the law,
including choice of law principles, of the State in which the
crash occurred unless such law is inconsistent with or preempted
by Federal law." The Act § 408(b)(2).
The other mode of recovery is for eligible claimants to apply
to the Victim Compensation Fund (VCF) for compensation awards.
The Act, Title IV. The Act limits eligible claimants to a victim
or the personal representative(s) 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. The Act
§ 405(c). A claimant must waive his right to file a civil action
(or to be a party to an action) in any federal or state court,
except for a suit to recover "collateral source obligations" (for
example, insurance or other such items which, under the Act, are
deducted from VCF awards), and except for suits against those
knowingly involved in the hijackings. The Act §§ 405(c)(3)(B)(i),
To administer the VCF, the Attorney General appointed Kenneth
R. Feinberg as Special Master. The Act grants the Special Master
the power to make all "procedural and substantive rules for the
Act's implementation." § 404(a). In order to implement the VCF,
the Department of Justice (DOJ), in consultation with the Special
Master, published procedural rules. An "Interim Final Rule" was
published on December 21, 2001, and a "Final Rule" (the
regulations) was published on March 13, 2002. See 66 Fed. Reg.
66,274 (Dec. 21, 2001); and 67 Fed. Reg. 11,233 (Mar. 13, 2002)
(codified at 28 C.F.R. pt. 104). The Act specifies that only "one claim may be submitted" by a
victim or personal representative on behalf of a deceased
victim's injuries or death. § 405(c)(3)(A). The regulations
define "personal representative" as "an individual appointed by a
court of competent jurisdiction as the personal representative of
the decedent or as the executor or administrator of the
decedent's will or estate." 66 Fed. Reg. at 66,277. If no
personal representative is appointed by a court or if the
personal representative is disputed, the Special Master may
determine who is the personal representative based on the
decedent's will or the intestacy laws of the decedent's state.
28 C.F.R. § 104.4(a)(2) (2003). Reliance on state law insured that
different personal representatives for the same decedent would
not be able both to file a claim with the VCF and sue at law.
See 66 Fed. Reg. at 66,277.
The personal representative acts on behalf of the decedent's
estate in matters before the VCF. Prior to filing a claim, the
personal representative must provide notice of a claim to the
decedent's family and any potential heirs. 28 C.F.R. § 104.4(b).
Upon receipt of a VCF award, the personal representative is
required to distribute it "in a manner consistent with the law of
the decedent's domicile or any applicable rulings made by a court
of competent jurisdiction." 28 C.F.R. § 104.52. Before an award
is paid, the personal representative must provide a distribution
plan to the Special Master. Id. If the Special Master concludes
that the plan does not adequately compensate the victim's family,
he is given authority to redirect distribution of all or part of
the award. Id.
To file for compensation, a claimant must submit, as developed
by the Special Master, an eligibility form and a compensation
form for either a personal injury or a death, or for immediate
advanced benefits. 28 C.F.R. § 104.21 and 104.22. The forms
developed by the Special Master contain four parts. Part I identifies the victim,
establishes eligibility and provides for election of advanced
benefits. Part II specifies the information required to calculate
an award and includes the personal representative's plan to
distribute an award. Part III encompasses the notification the
personal representative must provide to the family and potential
heirs of the victim, authorization for release of information and
certification that information provided is accurate and complete.
Part IV provides a supporting documentation checklist,
identifying documentation that must be submitted. Parts I and III
also require an acknowledgment that "by submitting a
substantially complete Compensation Form for Deceased Victims"
the claimant waives the right to maintain a civil action. The
Special Master also developed a form to permit individuals to
object to the authority of the personal representative or to
provide a statement of interest in a victim's award.
Once a claim is filed, the Special Master is to review the file
and make a determination within 120 days. The Act § 404(b)(3).
Pursuant to the regulations, a claim is "filed" when a Claims
Evaluator determines that both the eligibility form and either a
personal injury compensation form or a death compensation form
are substantially complete." 28 C.F.R. § 104.21(a). See In re
September 11 Litigation, 2003 U.S. Dist. LEXIS 23561, at *3-4
(S.D.N.Y. Dec. 19, 2003).
The VCF under Special Master Kenneth R. Feinberg's superb and
sensitive administration has proven to be a great success. The
Fund will have processed more than 7,300 death and personal
injury claims by its closing on June 15, 2004, accounting for
claims on behalf of more than 98 percent of those who lost their
lives on September 11, 2001. The median award for deceased victims, after offsets, is $1.6 million. The Special
Master and his staff have worked tirelessly to process these
claims fairly and expeditiously.
II. Procedural Background
Victims of September 11 and family members of those who were
killed in the attacks faced difficult decisions choosing between
the VCF and pursing litigation, while coping with the tremendous
losses and the resulting emotional and physical turmoil they
suffered. There were also different deadlines to consider.
Congress provided two years from the promulgation of the
regulations to submit claims to the VCF, or to December 22, 2003.
The Act § 405(a)(3). Yet, often, the time to sue was shorter, and
sometimes inflexibly jurisdictional, as for example, claims and
lawsuits against the Port Authority of New York and New Jersey
(the Port Authority), the City of New York and other defendants.
In order that claimants would have the full two-year span
provided by Congress to consider their choice of forum, yet
satisfy state laws, I allowed lawsuits to be brought, thus
tolling the statutes of limitations. I also created a suspense
docket for such suits to avoid waiver of the right to make claim
to the VCF, as provided by my Order of July 22, 2003. Initially,
the suspense docket was to end on December 23, 2003; however, I
extended it to February 6, 2004 to coincide with action taken by
the VCF to enlarge to January 22, 2004 the period by which
claimants could make their submissions substantially complete.
See In re September 11 Litigation, 2003 U.S. Dist. LEXIS
23561, at *8 (S.D.N.Y. Dec. 19, 2003).
In December of 2003, plaintiffs, by order to show cause, moved
for a ruling that a VCF submission to meet the December 22, 2003
statutory deadline, but which had not been deemed substantially
complete, did not constitute an election of remedies under the
Act. I held that "a claimant who satisfies the statutory and
regulatory definition of filing or submitting a claim, will have waived his right to sue, or to maintain his suit when
that filing, or submission, is substantially complete as
determined by the Special Master's Claims Evaluator or January
22, 2004, whichever is earlier, and not before then." In re
September 11 Litigation, 2003 U.S. Dist. LEXIS 23561, at *9
(S.D.N.Y. Dec. 19, 2003).
The suspense docket ended on February 6, 2004 and, by Order of
February 19, 2004, I dismissed cases that plaintiffs had not
activated. On February 25, 2004, I ordered the VCF to produce
under seal a list of active plaintiffs who also had claims
pending before the VCF. Using this list, and information provided
by plaintiffs' counsel, I generated a schedule of those
plaintiffs with applications pending before the VCF and ordered
them to show cause why their cases should not be dismissed
pursuant to the waiver provision. By Order of March 18, 2004, I
dismissed cases in which plaintiffs had gone into the VCF, and
identified those that could proceed with their lawsuits, subject
to defendants' motions to dismiss.*fn1 By Order of April 9,
2004, I identified additional cases that were subject to the
defendants' motions and established an expedited briefing
schedule, keeping in mind the ...