1 54E9ZURC Conference 1 UNITED STATES DISTRICT COURT 1 SOUTHERN DISTRICT OF NEW YORK 2 ------------------------------x 2 3 ZURICH AMERICAN INSURANCE 3 COMPANY, 4 4 Plaintiff, 5 5 v. 03 CV 332 (AKH) 6 6 WORLD TRADE CENTER PROPERTIES, 7 LLC, et al., 7 8 Defendants. 8 9 ------------------------------x 9 New York, N.Y. 10 April 14, 2005 10 11:30 a.m. 11 11 Before: 12 12 HON. ALVIN K. HELLERSTEIN, 13 13 District Judge 14 14 APPEARANCES 15 15 COUGHLIN, DUFFY, KELLY, LISOVICZ, MIDLIGE & WOLFF, LLP 16 Attorneys for Plaintiff 16 BY: KEVIN T. COUGHLIN 17 ROBERT J. KELLY 17 18 HOWREY, SIMON, ARNOLD & WHITE 18 Attorneys for Defendant World Trade Center Properties, LLC 19 BY: TYRONE R. CHILDRESS 19 DAVID W. STEUBER 20 20 LONDON FISCHER LLP 21 Attorney for Defendant Gulf & Great American 21 BY: DANIEL ZENMANN, JR. 22 22 LATHAM & WATKINS 23 Attorneys for Defendant Westfield 23 BY: PETER K. ROSEN 24 BLAIR G. CONNELLY 25 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 2 54E9ZURC Conference 1 2 3 APPEARANCES 4 THE PORT AUTHORITY OF NY & NJ 4 Attorneys for Port Authority 5 BY: DONALD F. BURKE 5 KEITH HARRIS 6 6 EDWARDS & ANGELL LLP 7 Attorney for Defendant Lexington & New Hampshire 7 BY: CHRISTOPHER W. HEALY 8 8 RIVKIN RADLER LLP 9 BY: WILLIAM M. SAVINO 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 3 54E9ZURC Conference 1 (Case called) 2 (In open court) 3 THE COURT: I trust everyone has an agenda. 4 MR. COUGHLIN: We do, your Honor. 5 THE COURT: As with our previous meeting, if anyone 6 has anything else to bring up, I expect that person would do 7 so. I met with some of the parties yesterday and Mr. Coughlin 8 at that point put on the record a settlement that had been 9 reached with the various Silverstein interests, and I'll call 10 upon him to repeat that for everyone here. 11 The negotiations are ongoing now with the Port 12 Authority, and I would expect that that settlement would 13 follow. And of course there are the Westfield interests, and 14 there are the Port Authority's separate insurers. 15 There also, of course, are the excess carriers on the 16 Zurich program, and it's those issues with the excess carriers 17 that I'd like to focus on after Mr. Coughlin does his report. 18 Mr. Coughlin please. 19 MR. COUGHLIN: Thank you, your Honor. Your Honor, as 20 we -- 21 THE COURT: I think it might be good if you use the 22 speaker or the microphone so everyone can hear. 23 MR. COUGHLIN: Thank you, your Honor. 24 As we discussed at length yesterday, after many months 25 of negotiations, the Zurich Organization reached a resolution SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 4 54E9ZURC Conference 1 of a number of very significant issues in our declaratory 2 action with the WTCP interests which we presented to your Honor 3 yesterday for approval by way of a stipulation and order. 4 That resolution resolved outstanding questions 5 concerning the status of a number of the, what I'll call the 6 Silverstein and/or WTCP interests in terms of affiliates, 7 subsidiaries, etc., all of which had a relationship to 8 Buildings One, Two, Four, Five at the complex. As a result of 9 extensive back and forth with the other side, we have reached 10 an agreement where Zurich has recognized, based on 11 representation and warranties from WTCP, additional entities 12 which are going to be recognized as having a status under both 13 the Zurich primary and the Zurich umbrella policies. 14 THE COURT: Those representations have to do with the 15 corporate alignments of the Silverstein interests? 16 MR. COUGHLIN: That is correct, your Honor. And not 17 only the alignments but their relationship to the site by way 18 of either a -- an ownership interest in the leasehold itself or 19 the various leaseholds, management service relationships 20 through those kinds of organizations, and with respect to 21 Mr. Silverstein personally, his status as an officer of a 22 number of those organizations. 23 In addition, and we think quite significantly, we've 24 also come to resolution with WTCP with respect to what we've 25 characterized as claims cooperation through the cooperation SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 5 54E9ZURC Conference 1 clauses of the policies and that is, we believe, a very 2 significant development, especially in light of your Honor's 3 intention to move forward both on the underlying cases but also 4 the declaratory judgment litigation, and the terms of the 5 cooperation are outlined in the various exhibits which we 6 submitted to your Honor yesterday, but it will allow for the 7 first time -- 8 THE COURT: And for everyone's benefit, they are part 9 of the file in the court records, and they're available for 10 inspection, but I would ask Mr. Coughlin to have them available 11 for distribution to those who want to receive them. 12 MR. COUGHLIN: Your Honor, pursuant to your 13 instruction yesterday, we did, via Email, distribute all of 14 them yesterday to the parties in our litigation. 15 THE COURT: If anyone else in related litigations 16 would like to see those papers, for their convenience and to 17 avoid inspections in the court files, I would ask you to make 18 those available as well. 19 MR. COUGHLIN: Your Honor, I think that, in a general 20 way, describes the outline of the various resolutions that we 21 put before your Honor yesterday. 22 THE COURT: It might be useful to summarize what is 23 not covered. What is not covered is the status of additional 24 insureds. Those would primarily been the focus, I take it, of 25 the discussions with Mr. Burke and Mr. Harris, representing SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 6 54E9ZURC Conference 1 Port Authority. 2 MR. COUGHLIN: That is correct, your Honor. 3 MR. BURKE: They've acknowledged that Path is an 4 additional insured under the endorsement of where required by 5 contract or agreement. 6 THE COURT: Thank you, Mr. Burke. 7 There are allocation issues which -- by which one is 8 to infer, I think that -- since it's not clear, what the scope 9 of the claims are and what the scope of the liabilities might 10 be. It's also difficult to describe exactly what is and what 11 is not covered in the insurance, in the Zurich program. 12 MR. COUGHLIN: That's correct, your Honor. I think 13 yesterday we discussed at length the fact that we have both 14 what we've come to characterize as the scope issue and the 15 allocation issue, which are two of the three larger issues that 16 remain existent, notwithstanding the developments of Monday and 17 yesterday; and scope, as we discussed, deals with the scope of 18 coverage afforded to the Port Authority as an additional 19 insured under the Zurich policy; and allocation deals with the 20 legal issues of the relationships between the Zurich tower of 21 coverage and the Port Authority's own tower of coverage, as 22 well as the Westfield cover, and frankly, potentially, EIL 23 cover, environmental impairment cover that's out there, and 24 which may or may not be called upon at some point in the 25 future, and I believe that was issued by commerce and industry SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 7 54E9ZURC Conference 1 in favor of WTCP and others. 2 THE COURT: These are all complex issues. They 3 require examination of indemnity features of the leases, 4 insurance covering the indemnities, and the issues that 5 Mr. Coughlin just mentioned. 6 Yes, Mr. Burke. 7 MR. BURKE: I just want to clarify something. The 8 scope of the Port Authority's coverage has been acknowledged 9 under that additional insured managers/lessors endorsement to 10 include all claims of liability arising out of the ownership, 11 maintenance, or use of the lease premises. 12 THE COURT: Those are the words in the endorsement 13 itself. 14 MR. BURKE: Yes, sir. 15 THE COURT: And since the claims made by the 16 plaintiffs in the underlying lawsuits are broader than 17 ownership, maintenance and use. 18 MR. BURKE: Perhaps. 19 THE COURT: Perhaps so. We don't know. We don't know 20 how they will be fleshed out to be, but those are part of the 21 problem that still need to be resolved. 22 MR. COUGHLIN: Your Honor, if I may, just following up 23 on Mr. Burke's comments and a comment from your Honor in terms 24 of outstanding issues and the complexities, I think that with 25 respect to scope and allocation, they are two very good SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 8 54E9ZURC Conference 1 examples of issues that cry out for clarification from the 2 underlying cases because it is the development of facts from 3 the underlying cases, the underlying plaintiff, bodily injury, 4 and the death claimants, and the property damage claimants 5 against the underlying defendants which will define ultimately 6 issues related to allocation and scope. 7 THE COURT: The discussion yesterday was, I think 8 around the question of mine, whether that might or might not 9 happen. We discussed indemnity features of the lease. I was 10 advised, and I'd like -- I think it would be useful to file the 11 lease itself so that others could examine the scope of the 12 indemnity features of the lease. 13 It was described as a belts and suspenders approach, 14 but it would be better to see the exact terms. 15 There's insurance by the same program, as I understand 16 it, of that indemnity feature as well, so that the contract 17 indemnities are also insured. 18 The other aspect of it is that there's going to be a 19 dynamic in the lawsuits. There may or may not be a dynamic in 20 the lawsuits that would give better definition. It's not easy 21 to know now what are the gravamen of the claims in relationship 22 to what happened on 911. 23 Do the issues arise from the original design of the 24 building, the repairs of the building, the use of the building? 25 Whether any subtenants in the building had access to SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 9 54E9ZURC Conference 1 various features of exit, the stairwells themselves, all these 2 things raise complexities. If the litigations continue in the 3 discovery, there may be discovery that may help in 4 clarification of these issues. There may also be settlements 5 that would make it very difficult to analyze just what gave 6 rise to the settlements. And all those problems I think are 7 being thought through by Mr. Coughlin for Zurich and 8 Mr. Steuber and Mr. Childress for the Silverstein interests, 9 and Mr. Burke and Mr. Harris and colleagues of all of them with 10 regard to the Port Authority. And Westfield interests are also 11 potentially involved as well. 12 I think that sketches out the discussion that was held 13 yesterday. 14 MR. COUGHLIN: If I just may, your Honor, just to 15 complete the issues of outstanding legal issues, we do have the 16 issue on duty to defend, which is not part of any of the 17 resolutions. It's been the leading issue that has been before 18 your Honor, and that one certainly is going to have to be 19 addressed. 20 THE COURT: That's not been resolved? 21 MR. COUGHLIN: That is correct, your Honor, and if I 22 could just make one additional comment, turn it over to 23 Mr. Steuber, the comments your Honor made about the challenges 24 and the difficulties with respect to scope and allocation and 25 the fact that right now we are dealing with them in somewhat of SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 10 54E9ZURC Conference 1 an abstract way because of the lack of development. 2 There's another issue in there that I don't think we 3 can forget about, and that is the underlying exposure issues 4 and the fact that it is, as your Honor knows from recent 5 submissions, it is the view of all of the participants in this 6 proceeding today the WTC people, the Port Authority people, the 7 Westfield and all of the insurers, and I throw the Port 8 insurers in that group, that we think that the underlying 9 insured's here have virtually no exposure in those underlying 10 cases, and that that's an issue that cries out for development 11 because we're dealing with a declaratory action that's somewhat 12 abstract now. We're assuming things, and when we first started 13 on -- 14 THE COURT: Declaratory action is the action by the 15 defendants to other lawsuits, the underlying lawsuits, against 16 their insurers; is that right? 17 MR. COUGHLIN: The declaratory action that I'm 18 referring to is the one we're here on today. 19 THE COURT: This is the action by Zurich -- tell me 20 what it is. 21 MR. COUGHLIN: The declaratory action that Zurich has 22 filed against WTCP and others, and that we have been sued on by 23 WTCP and others, and it is one that is dealing with what may 24 ultimately happen below, but because that record is as of yet 25 undeveloped, we are dealing with some issues in the abstract, SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 11 54E9ZURC Conference 1 serious issues, nonetheless abstract, because we don't have a 2 foundation. And I think its troubling if we get too far down 3 that road in our case without realizing that the fundamental 4 trigger is going to have to be what's the exposure of WTCP and 5 the Port Authority in those underlying cases. And your Honor 6 invited submissions on that issue and others in advance of 7 today, and you mentioned to us yesterday that you've reviewed 8 those. I think it's important, as we approach what we're 9 dealing with on the agenda today and what's coming many months 10 ahead, that we not lose sight of the fact that it's the 11 underlying case that will drive this, not our coverage case. 12 THE COURT: The point I made yesterday is that there's 13 a dynamic in the underlying cases, like many such cases, that 14 they may be resolved in a way that doesn't provide information 15 that the insurers consider important, and the insurers will 16 have to deal possibly with a situation of settlement, and large 17 payments reflected in those settlements, without knowing very 18 many details concerning the causes that the settling parties 19 believed proximately drove those settlements. That's really 20 what I had in mind when inviting the submissions. 21 The submissions themselves, I think, reflected your 22 comment that you just made, that there might be circumstances 23 where the insurers thought they might not have responsibility, 24 perhaps because, if I extend your words, it may not come out of 25 the ownership, maintenance, or use of the premises in terms of SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 12 54E9ZURC Conference 1 what they were being used for on 911. That's my projection. I 2 don't know. 3 All I'm saying is that the planning has to allow for 4 the possibility: A. There may be settlements that don't 5 provide much information; and B. Litigation that may provide a 6 great deal of information, or something in between. 7 But those, I think, are issues that need to be thought 8 through, and I think they ought to be thought through on an 9 early stage. 10 Mr. Steuber. 11 MR. STEUBER: Thank you, your Honor. I'd like to 12 comment, if I may, on a couple of different things. 13 THE COURT: Take the podium, Mr. Steuber. It would be 14 easier for everyone to hear. 15 MR. STEUBER: Thank you, your Honor. 16 With respect to the resolution that Mr. Coughlin has 17 referenced, I want to emphasize that that resolution is 18 grounded upon and based upon and by way of a clarification and 19 acknowledgement by Zurich as to certain provisions that were 20 referenced in the respective primary and umbrella binder issues 21 back in July of 2001 and were intended to form a part of the 22 Zurich primary and umbrella policies. 23 Based upon that clarification and acknowledgement, 24 there is then further an acknowledgement with respect to which 25 WTCP entities and others were intended to be and are entitled SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 13 54E9ZURC Conference 1 to coverage under those Zurich policies. So, I just wanted to 2 focus the resolution, if I may, just to that extent. 3 Secondly, with respect to the underlying claims, I 4 concur with Mr. Coughlin with respect to the issue of, quote 5 unquote, liability of the WTCP entities. We believe, as we've 6 said in our materials, and I believe has been said by our 7 underlying counsel in connection with the underlying claims, 8 that there is no liability with respect to any one of the 9 groups of cases that your Honor has referenced in your order 10 and as we identified and explained in our submission. There 11 are certainly a number of threshold determinations, whether 12 they are legal determinations, factual determinations or a 13 combination of both, that really need to be resolved before -- 14 before we believe that we can proceed meaningful with a 15 settlement dialogue in those underlying claims -- 16 THE COURT: Mr. Steuber's point was that there has 17 been no appellate review of my decision that there exists a 18 duty on the part of the defendants to the underlying 19 plaintiffs. And he's invited me to reconsider my view that the 20 decision should be the subject of interlocutory review under 28 21 U.S.C. Section 1892(b), I think that's the number, that 22 provides for review by the Second Circuit of a District Court's 23 nonfinal decision. I wrote a decision that I declined to 24 certify the case for review. 25 There's nothing that's happened that's changed my SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 14 54E9ZURC Conference 1 mind, Mr. Steuber. I'm not going to certify the case. You're 2 going to have to deal with the issue as it is. 3 MR. STEUBER: Your Honor, if I may also, and that 4 applies both to the wrongful death, personal injury cases and 5 it also applies to the -- 6 THE COURT: I'm not -- I've not seen anything that 7 would cause me to change my mind. 8 MR. STEUBER: Your Honor, with respect to the wrongful 9 death and personal injury cases, another factor that we believe 10 is important to be taken into account is the fact that as 11 against the World Trade Center entities, there are only nine 12 remaining wrongful death cases and there are four remaining 13 personal injury or emotional distress cases, however -- 14 THE COURT: We've had various statistical 15 representations made to us; one, there were 30 cases. I'm glad 16 to hear that there are only nine. 17 MR. STEUBER: As against us, your Honor. I'm not 18 speaking for everyone. When I say us, I mean the WTCP 19 entities, nine wrongful death and four personal injury, 20 emotional distress claims. And however you would slice that, 21 and getting over the -- what we believe, the tremendous initial 22 hurdle, that we don't believe there's any liability. To the 23 extent there would be any liability, it would not be in any 24 kind of large sum that we believe, and I'm sure our excess 25 would be happy to hear this, that we believe would even SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 15 54E9ZURC Conference 1 implicate any of the excess coverage in Missouri -- 2 THE COURT: Are there claims against the Port 3 Authority that are not included in the 13 that you mentioned? 4 MR. STEUBER: I believe there are, yes. I think there 5 are a few, but again it's a handful. 6 MR. BURKE: We're talking only a handful. I think 7 it's five. 8 THE COURT: That have not been alleged against WTCP? 9 MR. BURKE: I think three of those have been. Two 10 have not. 11 MR. STEUBER: Right. 12 THE COURT: So plus two more. 13 MR. STEUBER: Of course, your Honor, when we talk 14 about these -- 15 THE COURT: We like to get a size of that. It's hard 16 for us to grapple with all the statistical information, we just 17 don't have the staff, but if we could get some help in defining 18 those, we'd like it. 19 MR. BURKE: Judge, in the submission that you called 20 for last week or so, we outlined the cases against the Port 21 Authority. 22 THE COURT: Thank you. 23 MR. BURKE: I think we also indicated the ones that 24 were filed against Silverstein that were not against the Port 25 Authority. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 16 54E9ZURC Conference 1 THE COURT: Good. Thank you. But the point 2 Mr. Steuber is making was a point that I think all of you 3 representing the excess would like to hear; namely, that there 4 are few cases. We need to recognize the extraordinary work 5 that the Special Master has done and how that work makes it so 6 much easier for us to deal with the cases that remain. Imagine 7 if there had not been a fund. Imagine if Congress had not 8 created the fund. And imagine then the numbers of cases that 9 we'd be dealing with and the aggregates of liability that would 10 be confronting us. 11 The fact that the Special Master has done the 12 extraordinary work that he has done, and resolved well over 13 90 percent of those who made claim on the day, is 14 extraordinary. It's -- I mean it in the tactical sense. There 15 is no precedent. 16 The previous precedent was a failure, was a precedent 17 that arose after the War of 1812. But the fund that was then 18 created by Congress, and it wasn't really a fund, it was -- as 19 I remember it, a commitment -- took so long to evaluate and so 20 long to carry out that by the time it came to pay, there were 21 different people involved, there was much recrimination 22 involved. It was considered a failure. 23 And what the Special Master has done in the short 24 space of a year was resolve -- I can't remember the thousands 25 of claims and the high percentage that was involved in the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 17 54E9ZURC Conference 1 settlements and the satisfaction that people derived from that 2 is -- out of which, is a phenomenon that makes things a lot 3 easier for us. And it's important for us to appreciate how 4 much benefit we all obtained from that work. 5 Sorry, Mr. Steuber. 6 MR. STEUBER: That's all right, because we fully 7 concur with that. And we believe that Congress set up that 8 procedure very effectively. And the Special Master implemented 9 it very effectively, as well. And we believe that those who 10 elected not to go into the fund should not be somehow rewarded 11 for their actions in having done so, or not having done so. 12 And as Congress predicted, it seems to me that those who did 13 not go into the fund must now have their claims scrutinized 14 both legally and factually much more carefully. That was one 15 of the intents behind the congressional fund that was created, 16 and one of the intents behind it was to avoid this protraction, 17 this protracted legal and factual type of analysis and scrutiny 18 and that was effectively done, and I fully concur, and I think 19 all of us in this room would concur that it was done well, 20 effectively, and we thank Congress, and we thank the Special 21 Master, but as to those very few who remain, now their claims, 22 as Congress predicted and as Congress advised, if they didn't 23 want to go into the fund, they should not be rewarded for not 24 having done so, number one. Number two, their claims are going 25 to be subject to greater scrutiny, factual and legal, and I SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 18 54E9ZURC Conference 1 think it's incumbent upon all of us to do so. 2 THE COURT: I want to tell you, Mr. Steuber, that I do 3 not agree with you. People who chose to sue, chose the remedy 4 that Congress provided as well. Congress did not foreclose the 5 right to sue. Congress provided an alternative. 6 These claims before me, before us, are entitled to the 7 same entitlements that would exist for a suit or anywhere in 8 America, at any time in America, no greater, but no lesser 9 scrutiny than any such claim, the same entitlements to recovery 10 as any other lawsuit. 11 People had lots of reasons for deciding not to enter 12 the compensation fund. It's not for us to pry into those 13 reasons. 14 I've heard some of those reasons in statements made in 15 various proceedings that I've conducted. It's not my job to 16 give awards because of pity or any other nonlegal reason. By 17 the same token, the people who decided to sue are entitled to 18 the same respect as anyone else. And I don't want to let 19 anyone come away from this meeting with a feeling that they're 20 going to be penalized in a fashion for not having gone into the 21 fund. It's their right to do what they wanted to do. 22 It's our job to conduct these proceedings in an 23 efficient, economical way that is reflective of justice, and 24 that's what I'm going to do as the judge in these proceedings. 25 You've made the point that you've expressed in your SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 19 54E9ZURC Conference 1 papers, Mr. Steuber, and I want to make, just take this 2 occasion to express my view on that. There will be no penalty. 3 It will be the same due process that exists in any other case. 4 MR. STEUBER: And, of course, your Honor, on the flip 5 side of that is that much as they have the right to sue and 6 pursue their claims, so too do we, as the defendants, to claim, 7 as we do, and as we firmly believe, there is no liability as 8 to -- as to any of us, but certainly as to the World Trade 9 Center Properties on a legal basis or as a factual basis, and 10 we have the right, hopefully, to prove that, and to force -- 11 THE COURT: You have a right to defend, but these 12 proceedings will not be stretched out. I envision that these 13 cases will be handled with dispatch, and that's the way I have 14 been conducting these proceedings. That's why I have been 15 pressuring all of you, and the same pressure is being exerted 16 in all the other cases. 17 Thank you, Mr. Steuber. I don't mean to cut you off. 18 MR. STEUBER: That's fine. Thank you. 19 THE COURT: Anyone else wish to speak? Are there any 20 questions that anyone has about settlement? 21 (No response) 22 THE COURT: Let's go on to the second item on the 23 agenda which has to do with the implications of the recent 24 resolution, and really we're down to 2(c), the excess carriers 25 and various statements made to me accepted for themselves a SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 20 54E9ZURC Conference 1 status of onlooker, and we are to be called upon to speak. 2 I've written to disabuse them of those attitudes. I did not 3 create a spectators stand for the excess carriers. They are 4 parties. They have the same obligations of all other parties. 5 And I intend to resolve the issues that are presented in these 6 proceedings in a prompt way. It was to that end that I 7 addressed the issue of protracted discovery and made the 8 rulings that were expressed in my recent rulings. I will not 9 preside on wasteful proceedings or proceedings that I believe 10 effect delay. These cases will resolved. 11 Various of the parties expressed the desire to take 12 depositions that they claimed they had not the opportunity to 13 take. Well, I found that they had the opportunity to take 14 them, they just didn't. 15 However, it was very difficult, and I thought it would 16 be arbitrary to try to make extensive rulings on what would be 17 relevant and what would not be relevant, and instead of that I 18 created a discovery program that was quite limited. 19 The depositions, the parties desired to begin on 20 April 11, that was this Monday, and end on May 9, with as many 21 trials as would be necessary to accommodate everyone's desires. 22 Yesterday it was suggested to me that the excess carriers might 23 need time to absorb the impact of the settlement and to decide 24 how to proceed, whether to follow the follow-the-leader clauses 25 that are typical of excess coverage, or the very definition of SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 21 54E9ZURC Conference 1 excess, that which is excess on someone else's primary 2 coverage, to play a role and to abide by the determinations 3 made by Zurich or to litigate those issues. 4 If the issues are to be litigated, then Zurich, of 5 course, has to litigate some other issues, primarily a duty to 6 defend issue. 7 I've set out a motions program to accomplish that, 8 with motions to be made by June 6, opposition papers due 9 July 8, reply papers due July 25, and August 15 date for oral 10 argument. The close of the briefing on July 25 and the oral 11 argument date of August 15 are immutable. Any other date will 12 reflect whatever all the parties want, but in default of 13 unanimous consent, these are the dates. If parties wish to 14 relax the first week of discovery or the first ten days of 15 discovery, and add them on to the end, that would be all right. 16 And they could adjust the dates that motions are filed and the 17 dates for oppositions and the like. But the July 25 date and 18 the August 15 date are immutable dates. They will not be 19 changed. 20 In the agenda I suggested possible variations to make 21 it easy to agree on an alternative. 22 Does anybody wish to speak? 23 Mr. Childress, please, yes. 24 MR. CHILDRESS: Your Honor, Ty Childress for World 25 Trade Center Entities. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 22 54E9ZURC Conference 1 We appreciate the courts flexibility in discovery. 2 One additional thing the World Trade Center Entities would ask 3 would be a fixed date by which the excess carriers would inform 4 the insureds as to whether they do indeed agree to follow 5 Zurich's decision on the status, or if they're not, so that we 6 can begin to schedule those depositions. There is probably 14 7 or 15 depositions of excess carriers of which many may or may 8 not be necessary if they do agree they follow form. 9 THE COURT: What are you suggesting. 10 MR. CHILDRESS: Seven days from today's date. 11 THE COURT: Any objection? 12 (No response) 13 THE COURT: So ordered. 14 MR. CHILDRESS: Thank you, your Honor. 15 MR. ZEMANN: Your Honor, I have a question. Daniel 16 Zemann on behalf of Gulf Great American excess insurance on the 17 WTC line of coverage. 18 I would just ask in response to Mr. Childress' 19 question that if the carriers, the excess carriers agreed to 20 follow form, that that will obviate the need for their 21 depositions. 22 THE COURT: Mr. Childress. 23 MR. CHILDRESS: Your Honor, as is typical in this 24 case, it's both a yes and no answer. 25 Yes, certainly as to the status issue, I believe if we SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 23 54E9ZURC Conference 1 resolve status. Obviously, Westfield still has an open status 2 issue, so they have theirs. With respect to the World Trade 3 Center's on the status, we would agree that we would not take 4 depositions on that issue. 5 Certain excess carriers have raised other issues, for 6 example, one excess carrier claims that despite the 7 underwriting submission, that they only insure Buildings One 8 and Two and not the entire complex -- 9 THE COURT: Anything that's not resolved would be 10 open. 11 MR. CHILDRESS: But I agree with the comment that to 12 the extent the status question is open, World Trade Center 13 Entities would have no interest in taking depositions. 14 THE COURT: And if it's clear from the document, I 15 don't think you need very much deposition. 16 MR. CHILDRESS: It may be, as a matter of law, some 17 things wouldn't be at issue. 18 THE COURT: I've expressed myself on more than one 19 occasion that the objective expectations of the insureds is the 20 criterion by which to judge the relevance of the depositions. 21 If the language isn't clear, then you can go into the 22 negotiations. But what was privately done, the insurers, does 23 not seem to me to be relevant, but I don't want to make a final 24 view of that, final decision on that until the matters are 25 tendered to me as requests for rulings. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 24 54E9ZURC Conference 1 Does that give you an answer, sir? 2 MR. ZEMANN: Yes. 3 THE COURT: So by April 21, 7 days from today, the 4 excess carriers must declare themselves if they do not follow 5 the leader. If they wish to disaffirm for themselves the 6 resolutions made by Zurich, each of you that's received the 7 settlement agreements, you know exactly what it is, there are 8 questions you can ask them, if there are questions, you can ask 9 them now, but anyone who doesn't speak, anyone who wants to 10 disaffirm must speak. Silence means you accept. 11 (No response) 12 THE COURT: So ordered. 13 Anything else that needs to be addressed? 14 MR. COUGHLIN: Your Honor, just one point of 15 clarification, if I may. 16 Did your Honor indicate earlier today that you want 17 all the lease documents submitted to the Court? 18 THE COURT: Well, I said that, but do I really mean 19 it? 20 MR. COUGHLIN: I would suggest you don't. They are 21 quite extensive, and once you get into it, you get into 22 management services agreements, and there's a lot of paper. 23 THE COURT: How should I handled that issue? 24 MR. CHILDRESS: Your Honor, there's several hundred 25 pages, and there's a separate one for each building that are SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 25 54E9ZURC Conference 1 relatively identical. My suggestion would be to give you the 2 relevant insurance procurement, indemnity provisions of the 3 lease, just reference which lease it's from. 4 They're basically the same language in multiple 5 leases. 6 MR. HARRIS: Give you a joint submission on that. We 7 can agree with the relevant provisions and give you a joint 8 submission. 9 THE COURT: I'd like that filed. 10 MR. HARRIS: Okay. 11 MR. COUGHLIN: Thank you, your Honor. We have nothing 12 further. 13 THE COURT: When you file the document, recite that 14 it's pursuant to my order of today so the clerk will have a -- 15 there's a better chance the clerk will accept it. 16 Anybody else have anything else they -- he or she 17 wishes to bring up? 18 The only other point is to have another date. Do we 19 need a date before August 15, the oral argument date? 20 MR. COUGHLIN: I think with where we are, your Honor, 21 with the lineup of depositions, and then we're right into 22 briefing, I would suggest that we don't. 23 THE COURT: I don't think we do, but I'm available. 24 If there's any group of you who wishes to have a conference, 25 call Ms. Effron and we'll set one up. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 26 54E9ZURC Conference 1 MR. COUGHLIN: Thank you, your Honor. 2 THE COURT: Thank you all. Have -- Easter is past, 3 hope you had a good Easter and have a good Passover. 4 Be seated everyone, just a minute. Folks, just a 5 minute. 6 MR. SAVINO: William Savino, Rivkin Radler. 7 In your order of March 30, you reference the captive 8 insurer that was formed to address certain liability issues 9 formed by the City of New York. We do not have a copy of the 10 contract of insurance. If any of the parties, do we would ask 11 for its production. 12 THE COURT: I haven't seen it. 13 MR. SAVINO: We have not seen it either. And if 14 anyone here has it, we would ask that it be produced, be made 15 available to the parties in litigation. 16 THE COURT: One minute. I'm advised that McDermott 17 Will and Emery is still in the process of preparing that 18 agreement and, therefore, it has not been filed. It will be a 19 very interesting document, particularly as it relates to all 20 the respiratory cases, they are the largest in number, and I, 21 too, am anxious to see it because I'm anxious to know the 22 coverage of that in terms of the parties that are indemnified 23 or covered by the agreement. 24 One of the large managing problems in the respiratory 25 cases are the numbers of transacting parties that are involved, SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 27 54E9ZURC Conference 1 and to the extent that the captive is going to be the primary 2 focus of the lawsuits and the potential liabilities, that makes 3 everything a lot simpler. 4 MR. SAVINO: Just though, clarify, did you say that 5 policy has not been -- 6 THE COURT: The agreement has not been -- 7 MR. SAVINO: The agreement -- that's where I lost the 8 Court. Is the policy formed and completed? 9 THE COURT: I don't know. I don't know the answer. 10 MR. SAVINO: Do any of the parties here know that? 11 And if they have a copy of it, in whatever form, its 12 production, I think, would be useful in light of the directions 13 given by the Court. 14 THE COURT: Does anybody know? 15 MR. COUGHLIN: We have tried, your Honor, to get a 16 copy of that policy, as well, without success so far, and we've 17 been talking to McDermott directly on that. 18 THE LAW CLERK: We see them on Monday, the respiratory 19 people, and the McDermott firm will be there. 20 MR. COUGHLIN: Might we respectfully suggest that go 21 on an agenda topic, to see if we could get a copy of that? 22 THE COURT: I agree. I agree. Of course, you're all 23 invited. These are all public. I hold these conferences for 24 various reasons, as a management tool to move cases a long, but 25 also as an education tool. It's a way that everyone can be SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 28 54E9ZURC Conference 1 educated as to what's going on. 2 So, all these dates are posted on the web page for 3 911, and you are, and they are invited to all these 4 conferences. They are public, and as I've explained on more 5 than one occasion, to the greatest extent possible, what I do 6 is intended to be transparent. I want to let everyone know 7 what's influencing me, what's causing me to do things, and what 8 my orders are so that everyone in all these cases will be able 9 to keep current. 10 Okay. Thanks all. 11 MR. COUGHLIN: Thank you, your Honor. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300