1 6cbz911c Conference 1 UNITED STATES DISTRICT COURT 1 SOUTHERN DISTRICT OF NEW YORK 2 ------------------------------x 2 3 In Re: 9/11 Property Damage 3 and Business Loss Litigation 4 4 5 21 MC 101 (AKH) 5 6 6 ------------------------------x 7 7 December 11, 2006 8 3:00 p.m. 8 9 Before: 9 10 HON. ALVIN K. HELLERSTEIN, 10 11 District Judge 11 12 APPEARANCES 12 13 KEITH S. FRANZ 14 BETH D. JACOB 15 ROBERT A. CLIFFORD 15 TIMOTHY J. TOMASIK 16 17 LEE GODFREY 18 MARC S. MULLER 18 BRYAN ALEXANDER 19 19 BETH GOLDMAN 20 SARAH NORMAN 20 JENNETTE VARGAS 21 22 ROGER PODESTA 23 ROBERT T. HAEFELE 24 DOUGLAS J. PEPE 25 DONALD MIGLIORI SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 2 6cbz911c Conference 1 APPEARANCES: (continued) 2 JEFFREY ELLIS 3 DESMOND BARRY 4 RICHARD A. WILLIAMSON 4 M. BRADFORD STEIN 5 6 FRANKLIN M. SACHS 7 CHRISTOPHER MOORE 8 PAUL KELLY 9 TIMOTHY KEANE 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 6cbz911c Conference 1 THE DEPUTY CLERK: All rise. 2 THE COURT: Good afternoon, everyone. Are there any 3 further questions with regard to the ECF presentation? 4 You all have agendas, I take it, so let me go to item 5 three, the status of settlements. 6 Mr. Barry, could you report on that? 7 MR. BARRY: Yes, your Honor. 8 THE COURT: And everyone when, before they speak, 9 please announce who you are for the benefit of the Reporter and 10 everyone else. 11 MR. BARRY: Desmond Barry. We have 37 wrongful death 12 cases settled, your Honor. 58 remain unsettled. This is 13 unchanged from the last report to you. 14 We have -- I believe I had a conversation with Miss 15 Birnbaum on Friday and she was going to check on the schedule, 16 but it would appear that we have mediation scheduled for the 17 third week in January. 18 THE COURT: I want to talk more about that. 19 I think it would be beneficial for everyone, and we're 20 going to endeavor to put these statistical pieces of 21 information on the web, let me give it to you. 95 wrongful 22 death and personal injury cases were filed. Those are the 23 cases arising from the terrible events of September 11th, 2001. 24 These are the cases that opted out or did not opt in to the 25 victim compensation fund. Of the 95, as Mr. Barry reports, 37 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 4 6cbz911c Conference 1 have settled. 2 And before I go on, I want to take note of those 3 settlements. They've not been easy. They've been delicate and 4 sensitive, and often difficult. And those who have been 5 responsible for the settlements Mr. Muller and several of his 6 colleagues, Mr. Barry, his colleagues and mediator Sheila 7 Birnbaum, have the respect and congratulations not only of me, 8 but of the public. There is an extraordinary public benefit in 9 having these cases resolved and not allowing through them the 10 wounds of 9/11 suffered by our entire society to keep 11 festering. This goes beyond the normal value in resolving 12 litigation. The events of 9/11 needs no support to argue, were 13 extraordinary in the horrific quality of the events themselves, 14 and of the blow they reflect on our society, upsetting so much 15 of what we considered normal in our way of life, and the fact 16 that 37 have settled is a positive benefit, of which those who 17 helped that be achieved should take enormous pride. 18 Of the 58 that remain pending, they could be broken 19 into various categories. Let me do it in this way: Of the 20 total of 95 cases, 72 of those died in the four airplanes, 23 21 of those died or injured on the ground. Of the 72 cases 22 reflecting plaintiffs who died in the airplanes or their 23 survivors, 29 have settled and 43 remain pending, and of those 24 most are in active mediation. 25 Of the 23 ground plaintiffs, eight have settled and 15 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 5 6cbz911c Conference 1 remain pending. And of those 23, 15 are World Trade Center 2 plaintiffs and eight are Pentagon plaintiffs. 3 Of the 15 World Trade Center plaintiffs, eight have 4 settled and seven remain pending. Of the seven World Trade 5 Center cases that remain pending, one is a wrongful death 6 action and six are personal injury actions. 7 I think at the last conference or one before that, 8 Mr. Barry and Mr. Williamson, I expressed some concern as to 9 whether or not the personal injury plaintiffs were moving their 10 cases along, and I think the result of that was that I 11 dismissed one case, or there was some proceedings. Are all of 12 the others actively involved in the proceedings here? 13 MR. BARRY: Yes, your Honor. They're actively 14 involved in the discovery at the moment. None of them has yet 15 been put forth in mediation because they're not quite ready for 16 that, but we are actively pursuing medical records and other 17 records necessary for us to evaluate. 18 THE COURT: All right. I also have the statistics per 19 flight. 20 Flight 11, which one was that again, Mr. Barry? 21 MR. BARRY: American Flight 11 into The World Trade 22 Center. 23 THE COURT: Into The World Trade Center. 24 MR. BARRY: World Trade Center One. 25 THE COURT: There were 15 pending claims. Of those, SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 6 6cbz911c Conference 1 12 have settled. 2 Flight 77, which one was that? 3 MR. BARRY: Flight 77 is the Pentagon, your Honor. 4 THE COURT: And that's -- 5 MR. BARRY: I think, your Honor, on the Flight 11 6 claims there are 15 current pending claims and 12 have settled. 7 THE COURT: In addition to the 15, you mean? 8 MR. BARRY: The 12 settlements and 15 pending claims. 9 THE COURT: Totalling 27. 10 MR. BARRY: Correct. 11 THE COURT: Flight 77 is? 12 MR. BARRY: Pentagon. 13 THE COURT: Is American. 14 MR. BARRY: American Flight 77 into the Pentagon. 15 THE COURT: There are 18 pending claims and 17 16 lawsuits, plus 13 claims that were settled. 18 remain. 17 MR. BARRY: Correct. 18 THE COURT: Flight 175 was the United Flight into the 19 World Trade Center. 20 MR. BARRY: Correct, your Honor. 21 THE COURT: There are 12 pending claims and, in 22 addition, seven claims were settled. 23 United Flight 93 which fell in Shanksville, 24 Pennsylvania. 25 MR. BARRY: Correct. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 7 6cbz911c Conference 1 THE COURT: There are nine pending claims, plus five 2 that were settled. 3 In addition, there are four pending claims reflecting 4 personal injury claimants in the World Trade Center, and of 5 those four I dismissed one for non-prosecution. 6 MR. BARRY: That's right. And there is an issue of 7 location in respect of those four, where they actually were 8 located -- 9 THE COURT: In the World Trade Center. 10 MR. BARRY: -- in the World Trade Center when they 11 were injured. 12 THE COURT: Yes. Any questions? We'll post these 13 statistics on the web page. 14 I've had various conversations with Miss Birnbaum as 15 to the progress of the mediation. It seems that they've 16 reached an impasse. 17 Miss Birnbaum's colleague -- well, let me back up. 18 Miss Birnbaum and I discussed the advisability of having one 19 last session involved either with me or in this courtroom in a 20 final effort to see if mediation will work, and her colleague 21 Thomas Fox has suggested these dates, I take it after 22 discussion with the lawyer protagonists: Wednesday, January 24 23 for United Flight No. 175 cases, that's a World Trade Center 24 issue. These are cases -- I don't know how many of the 12 25 involved that are still pending, the Motley Rice firm SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 8 6cbz911c Conference 1 represents; Thursday, January 25 for United 93 flight to the 2 Shanksville flights. There are nine potential claims here, 3 also represented by Motley Rice; Friday, January 26th for the 4 American No. 77 cases, of which all but one are represented by 5 Motley Rice. There are 18 claimants and 17 lawsuits 6 potentially involved, and there's one case with the Azrael, 7 Gann and Franz firm. On Wednesday, January 31 for American No. 8 11 World Trade Center set of cases, and there are 15 potential 9 claims there, also represented by Motley Rice; Thursday, 10 February 1, also for those American Airlines cases where Motley 11 Rice is not involved where the lawyers are the Kreindler firm 12 and the Azrael firm. These dates are acceptable to me. I have 13 a calendar on most of those days, but there's substantial time 14 available. Friday will be a shortened day for me, but I'll be 15 available in the morning and for the early part of the 16 afternoon. 17 Mr. Barry, has there been a discussion with Motley 18 Rice, Azreal and Kreindler with regard to those dates? 19 MR. BARRY: Not by me, your Honor. I'm not sure if 20 Ms. Birnbaum provided those dates to them. 21 MR. MIGLIORI: Good morning, your Honor. Donald 22 Migliori from Motley Rice. We did in fact have conversations 23 with Mr. Fox about those dates, and I'm pretty sure those are 24 acceptable. With a number of clients we have, though, we're 25 still trying to make sure that it's acceptable to each of the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 9 6cbz911c Conference 1 40 some odd clients. 2 THE COURT: I'd like to just separate that part of the 3 discussion for a moment. Who represents Azrael? 4 MR. FRANZ: Your Honor, Keith Franz. Good afternoon. 5 THE COURT: And it's acceptable to you, the dates? 6 MR. FRANZ: Yes, those dates are fine. 7 THE COURT: And Mr. Muller, Mr. Alexander? 8 MR. ALEXANDER: Your Honor, Brian Alexander for 9 Kreindler. Those dates are acceptable to Kreindler. 10 THE COURT: All right. Let me make a point. 11 In my opinion, if the mediation does not work on those 12 days, I've proposed to inform Miss Birnbaum that we have great 13 gratitude for the work that she's done, and to terminate her 14 services. There's no point in continuing the mediation if they 15 don't work. In my opinion, there will not be another time for 16 mediation. Personally, I will not involve myself in any 17 further mediation, nor will I send it to a magistrate, nor will 18 I appoint any special master. This is the last chance. If 19 there is a trial in this matter, it will not be delayed or 20 deferred or adjusted in any way to accommodate mediation. And 21 if there are expenses involved, I will tax those expenses. If 22 the cases are to be settled, every piece of information 23 relevant to settlement is available now. And the only reason 24 that settlements will be postponed is to try to get leverage 25 either out of the business of the trial date or the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 10 6cbz911c Conference 1 availability of a trial date or the imminence of trial. I will 2 not be party to any of those tactics. This is the last 3 opportunity to settle. This and any adjourned date, adjourned 4 because there is more work than the Court can handle. I want 5 that clearly understood. 6 I said earlier that this case does not allow for 7 leveraging by reason of the lateness of settlement seeking to 8 take advantage of earlier settlements. I told you I would not 9 be party to that, nor is it a case that will allow leveraging 10 in relationship to the imminence of a trial date or the delay 11 of a trial date. Again, I want that clearly understood. 12 We're now through A and B of subparagraph three, 13 unless there is some comment. I do want to take up the point 14 with Mr. Migliori of what will be the mechanics -- I can turn 15 to you, Mr. Migliori, because you just raised the issue -- what 16 would be the mechanics of the discussions of, will people be 17 asked to come at staggered times during the course of the day? 18 Will everybody be present? Is it appropriate for everyone to 19 be present? The cases, after all, differ from one another, and 20 having everybody present at the same time may create 21 obstructions to settlement. I don't know. I haven't thought 22 about it. 23 MR. MIGLIORI: And we haven't exactly thought out 24 those issues either. We wanted to make sure that we had firm 25 dates, which we understand the Court -- SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 11 6cbz911c Conference 1 THE COURT: You do. 2 MR. MIGLIORI: -- to have accepted now. And I think a 3 lot will be determined by the availability of people from 4 probably a dozen different states to come in to meet those 5 schedules. 6 I don't think anything productive would come -- 7 different claims being here at the same time. I do think it 8 would have to be a staggered program. And I know that one of 9 the things that we requested is that if our clients are in fact 10 compelled to be here by Court, and we weren't quite sure if 11 that was one of the messages that we were receiving by Mr. Fox. 12 THE COURT: Well, let me express myself on that point. 13 Having participated in many settlement discussions as a lawyer, 14 I came to learn of the acute dilemma of a lawyer engaged in 15 settlement discussions without a client. The lawyer becomes 16 vested with a very difficult responsibility. The lawyer may be 17 delegated a certain scope of authority by a client, but we all 18 know that a successful mediator will push us into territory 19 that has been other than planned for. And how is the lawyer to 20 act in that connection? The authority is wanting, making a 21 telephone call is artificial, it's very hard to create the 22 climate of the meeting, and it's very difficult for the lawyer 23 either to be obdurate or to be amenable to adjustment. 24 The presence of a client engaged in the same 25 settlement dynamic as the lawyer allows the most meaningful SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 12 6cbz911c Conference 1 type of interchange between client and lawyer. And the lawyer 2 can't be braver than the client wants, nor weaker than the 3 client will accept. And I think the dynamic that's created 4 with the client is extremely important. Therefore, not for any 5 artificial reason, I think it crucial that both lawyer and 6 client be present; that there be complete authority within the 7 settlement room to meet every demand and offer, and that 8 without the presence of both the lawyer in charge and the 9 client, the mediation should not go forward. That's my view. 10 MR. MIGLIORI: And we anticipated that that might be, 11 and we had asked Mr. Fox, I think on Thursday or Friday of next 12 week so that this can be most productive, especially given the 13 admonition that it will be our last effort at it, that 14 defendants have with them as well their money people from the 15 insurance side. Our clients will be coming, to the extent that 16 those dates work for each and everyone. 17 THE COURT: Money people on Mr. Barry's side. 18 MR. MIGLIORI: That's correct, your Honor, not just -- 19 THE COURT: I'm going to ask Mr. Barry in a moment 20 about that because it's a very good point. 21 MR. MIGLIORI: But subject to somebody having a 22 commitment where they're out of the state or the country on one 23 of those dates, which we'll gladly work with defense counsel to 24 hopefully reschedule or work out. 25 THE COURT: It's clear to me I will not be able to SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 13 6cbz911c Conference 1 finish the work on one day -- 2 MR. MIGLIORI: Right. 3 THE COURT: -- for each particular subject, so I will 4 adjust for that. I also do not wish to issue an order 5 compelling appearance. I think it unseemly. I know that 6 judges do that. I don't, because the decision whether to 7 settle is a voluntary decision. And having it expressed in an 8 order, who has to come and who doesn't have to come, I think 9 compromises that. So I'm not going to issue an order, but the 10 understanding should be there. 11 So let me ask you, Mr. Barry, how do you feel about 12 Mr. Migliori's point? 13 MR. BARRY: About someone with ultimate authority -- 14 THE COURT: Yes. 15 MR. BARRY: -- being present? I think it's essential 16 on both sides. 17 THE COURT: You have multiple authority, though, how 18 do you -- 19 MR. BARRY: We have multiple parties and multiple -- 20 and different insurers, and the insurers and representatives of 21 those parties have told me that they will comply with your 22 directive that someone be there with ultimate absolute 23 authority. 24 THE COURT: All right. So, Mr. Barry, I want this 25 clearly understood. The person with you or persons with you SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 14 6cbz911c Conference 1 have to have authority up to the last demand by the plaintiffs. 2 They don't have to accept that demand, but they cannot tell me 3 or Mr. Migliori or his partners, that I have to make a 4 telephone call. 5 MR. BARRY: I understand. 6 THE COURT: All the authority must be in the room. 7 MR. BARRY: I've that had conversation with Miss 8 Birnbaum and I've transmitted it to counsel for the -- 9 THE COURT: So I'm not going to issue an order as long 10 as it's clearly understood. 11 All right. Is that satisfactory Mr. Migliori? 12 MR. MIGLIORI: It is. I just want to, just so it's 13 clear, I do want to -- there, in good faith, when there is a 14 conflict with one of the multiple clients, I guess the best 15 thing if we have a client that cannot make February 1st, for 16 example, is the best thing to try to reach out to Mr. Barry now 17 and see, or should we just wait and let the process happen? 18 THE COURT: No. Don't let it happen. Speak in 19 advance. 20 MR. MIGLIORI: Okay. Thank you. 21 THE COURT: If you can not make that date, I'll adjust 22 to the date. 23 MR. MIGLIORI: Thank you, your Honor. 24 THE COURT: But there is no point in having a 25 frustration because someone is not present. I'm not expecting SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 15 6cbz911c Conference 1 clients to come back again. It's too much emotion that will be 2 expended. So this is one and last opportunity. 3 MR. MIGLIORI: Thank you. 4 THE COURT: Anybody else have any comment? Yes, sir 5 Mr -- 6 MR. FRANZ: Keith Franz. Your Honor, am I to 7 understand that, for example, on January 26th, the day which 8 you, I believe said would be a shortened day for you, we are to 9 mediate 18 -- 10 THE COURT: No, we're not go to be able to accomplish 11 18, not on Friday and not on any other day. If we can do four 12 in a day, I think that will be a lot. I think you need and Mr. 13 Migliori needs and Mr. Barry needs, Miss Birnbaum needs to line 14 these up. So how many do you think I can do in a day or she 15 can do in a day? I think not more than four. 16 MR. FRANZ: I would think not. So are these just 17 initial dates? 18 THE COURT: These are initial dates. 19 MR. FRANZ: Okay. 20 THE COURT: But these are committed dates. Those that 21 will be there for those dates will not again be rescheduled. 22 MR. FRANZ: Thank you, your Honor. 23 THE COURT: All right. Everybody clear on this? 24 All right. So, Mr. Barry, let me assign this to you. 25 Have Miss Birnbaum, with consent of the parties, provide a more SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 16 6cbz911c Conference 1 specific schedule of the cases that will be mediated and the 2 times they will be mediated on each of these items. 3 MR. BARRY: I agree, your Honor. We'll have to work 4 with Mr. Migliori. 5 THE COURT: I don't know if four is the right number. 6 MR. BARRY: I think that's about right. It all 7 depends how much progress we might be able to make between now 8 and then too. 9 THE COURT: I think there is a lot of emotional 10 involvement that will have to be expressed, and the parties 11 will probably want to express on these days, and each one has 12 to be fresh. 13 Okay. Let's talk about 3C. I had a conversation with 14 Mr. Barry. I called him. I hope Mr. Clifford will forgive me. 15 MR. CLIFFORD: No problem, Judge. 16 THE COURT: But I called Mr. Barry. I said, what 17 about the property damage cases? Mr. Clifford has wanted these 18 mediated for some time. You've told me, I told Mr. Barry, that 19 the London Insurers do not wish to mediate the property damage 20 cases. I said that Mr. Clifford has agreed to subordinate his 21 interest for a time, but that time is rapidly closing, and 22 discovery is going forward and we need to deal with the 23 property damage actions. 24 There's no legal basis, of which I'm aware, ranking 25 one type of legal right in comparison to another. And if we SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 17 6cbz911c Conference 1 don't mediate these now, we'll either be involving ourselves in 2 a much more complicated situation as we approach trial, and 3 perhaps not taking advantage of a willingness on the part of 4 the property damage plaintiffs to offer appreciable discounts. 5 Mr. Barry told me that he would consult with his clients and 6 make clear my desire to begin these mediations at a very near 7 term. 8 I also suggested a potential mediator, my former 9 partner, Charles Moerdler, whom I know very well and know him 10 to be very effective. I want to disclose that I receive a 11 pension from my firm by reason of the years I worked there. It 12 is fixed, except for cost of living adjustments. So I don't 13 profit by whatever fee Mr. Moerdler would receive were he to be 14 chosen. In fact, I think he probably will receive more fees 15 and better fees if he did get involved in this kind of work. 16 But all of this is irrelevant. 17 I only mention his name to get the process started, 18 because the most effective mediator will be the one that you, 19 yourself, choose. I wanted to make that clear. 20 Mr. Barry, you want to report? 21 MR. BARRY: Well, your Honor, I did make your desires 22 known to all the settling defendants and they, of course, have 23 taken it with the spirit with which you directed. 24 THE COURT: Don't express that further. 25 MR. BARRY: Yeah, okay. I will say this, that exactly SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 18 6cbz911c Conference 1 what I told you that this, this case, while we are going and 2 proceeding with settling the wrongful death cases, for obvious 3 reasons it's the right thing to do, there aren't that many of 4 them, but to have the property cases pending against these 5 defendants resulting from an attack against the United States 6 of America, I must tell you sticks right in the crawl of not 7 only the insurers, but the insureds. And their position has 8 been, and continues to be, that they are not going to settle 9 these cases. 10 Now I've said the obvious thing: The Judge wants us 11 to mediate these cases, so what do you want to do? I've had 12 mixed reactions to that, but I can report that they are of the 13 unanimous view that to do it now would be premature. And 14 they're also of the unanimous view that any such discussions 15 would have to necessarily involve extensive discussions of the 16 issue of legal liability. Because there is not one defendant 17 in this room, Judge, who thinks they're liable for property 18 damage as a result of these attacks. So I don't want to give 19 the impression that we think it's going to be productive, but I 20 will state to you now that I don't think that now is the time 21 to do it. 22 THE COURT: When will be the time? 23 MR. BARRY: I knew you were going to ask that 24 question. 25 I think we've got to make this last-ditch effort on SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 19 6cbz911c Conference 1 behalf of the wrongful death and personal injury cases. We 2 have an enormous amount of discovery to conduct before we would 3 have anywhere near the full record that you have said you want 4 before you can decide what are going to be, we filed 5 dispositive motions. So I think we've got to direct our 6 attention to trying to dispose of every single one of these 7 wrongful death cases and personal injury cases. We've got to 8 devote our time to getting discovery moving. 9 We've just started discovery. We've taken 23 10 depositions since September. We've got six more scheduled this 11 month, but it's the tip of the iceberg, your Honor. We're 12 still -- the major evidence in this case that we, the 13 defendants, believe is essential to our defense is in the hands 14 of the government. We have started the process of getting that 15 evidence from them in terms of documents, but more importantly, 16 depositions. And I have to go through a whole series of Touhy 17 requests under United States, Touhy, and this is going to take 18 time. 19 THE COURT: Spell that case. 20 MR. BARRY: T-o-u-h-y, I believe. That's going to 21 take time. So, you know, I can understand -- 22 THE COURT: There's a value -- there's a value of 23 settlements before discovery because of the amount of money 24 they save, and there is a value after discovery. If, as a 25 matter of principle the insurance companies and the insureds SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 20 6cbz911c Conference 1 are saying we will never settle the property claimants, well 2 we'll just have to posture them for motions or for trial -- 3 probably for trial. If there is a disposition at some point of 4 time to settle, the earlier the better. And the values may be 5 more interesting. Often the degree of commitment to principle 6 is compromised by the flexibility of settlement demands. 7 I think this, Mr. Clifford: I think the cases need to 8 be valued, each case. I don't know if the parties have engaged 9 in that kind of quantification of damages and identification of 10 locations and nature of damage, as I wanted earlier. But if 11 they have, it seems to me that you could start spending your 12 time with your clients creating a schedule of those damages and 13 other pertinent details that go into the recovery of the case, 14 and perhaps making Mr. Barry an offer that it would be hard for 15 him to reject. 16 MR. CLIFFORD: May I speak? 17 THE COURT: Yes. 18 MR. CLIFFORD: Thank you, your Honor. Robert Clifford 19 for plaintiff. 20 By the way, Judge, if you like I can give to 21 Mr. Southerland the cite for Touhy. I happen to have it right 22 here. 23 But, as Mr. Barry says that his clients wish to oppose 24 the claims of the property damage -- 25 THE COURT: Can Mr. Clifford be heard? I think if you SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 21 6cbz911c Conference 1 stood on the side, Mr. Clifford. Okay, good. 2 MR. CLIFFORD: As Mr. Barry and his clients oppose the 3 property damage claims, our clients, who are no less 4 responsible in their devotion to our country and devotion to 5 their position in business, just as strongly believe that their 6 claims were avoidable and foreseeable. 7 Having said that, we've always made it known that 8 we're prepared to talk about this. And I must say that I've 9 been even criticized in our private circles for letting that 10 message be known because of some perceived view of weakness on 11 our -- the strength of our claim. 12 I was in town a couple of weeks ago and had the 13 opportunity to discuss this matter directly with Mr. Barry -- 14 and I'm sure he'll agree, that he shared with me the views he's 15 expressed today. And I came here today fully expecting to say 16 to your Honor, we will certainly participate in any process 17 that the Court thinks would be helpful. But I'm kind of done 18 talking to him about it because he's made it abundantly clear 19 that they have no interest. 20 THE COURT: Well, what about my idea, Mr. Clifford? 21 You know, it's often easy to say I'm not going to discuss 22 settlement with someone who doesn't make offers, but -- 23 MR. CLIFFORD: Right. You can't settle with yourself. 24 I've said that before. 25 THE COURT: But when you make a set of proposals, the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 22 6cbz911c Conference 1 lawyer has to give them to his client. And when the lawyer 2 gives them to the client, there is a dynamic that's created 3 measuring the settlement value of the case. 4 MR. CLIFFORD: Your Honor, just so -- 5 THE COURT: You could start a process. 6 MR. CLIFFORD: Just so it's clear to the Court, not 7 only have we made, the property damage claimants, made full and 8 complete damage disclosures, initial ones, to put a face on 9 this for the defendants, I have, in fact more than a year ago, 10 floated a starting point that I would recommend to the property 11 damage claimants to which the response was, have a nice day. I 12 mean, I don't know what more I could do other than to bid 13 against a position that's not being responded to. 14 THE COURT: I think if you were to make a set of 15 schedules regarding as many cases as you wanted to try to 16 resolve, and create what you think is a proper measure of 17 damages and a proposed discount and give them to Mr. Barry, I 18 think Mr. Barry would have to go over those with his clients. 19 MR. CLIFFORD: Then we shall proceed with that post 20 haste. 21 THE COURT: And I further think that if you were to do 22 that, you would have put yourself in a position of advancing 23 the -- perhaps shortening a great deal of the discovery 24 process. 25 MR. CLIFFORD: I agree with that completely, Judge. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 23 6cbz911c Conference 1 We also have some ideas to plaintiff -- we didn't 2 know, of course, how your Honor wanted to approach this today, 3 but, you know, we have some ideas about shortening the 4 discovery process, particularly as it relates to maintaining 5 the March 31 cutoff that could serve for both purposes. 6 THE COURT: I want to tell you, Mr. Clifford, Mr. 7 Barry, I don't know how I'm going to try these cases if I have 8 to try these cases, and I don't know which cases will come 9 first and which second, or the sequences after that. But I 10 would not accept as inevitable, that all of the personal injury 11 cases and wrongful death cases will come first and the property 12 damage cases later. I don't know. 13 MR. CLIFFORD: All right. 14 THE COURT: It may be a mixture of some type. So if 15 there's going to be trial, there's going to be a trial. 16 MR. CLIFFORD: Right. 17 THE COURT: And what I said before with the wrongful 18 death cases is going to apply here. I'm not going to get 19 involved in the last minute settlements and I'm not going to 20 defer a trial schedule. If the cases are to be settled, now is 21 the time. And that applies first to the wrongful death and 22 personal injury cases, but quickly following, the property 23 injury cases as well. It's up to you whether to have a 24 mediator or not. There's no mediator going to be appointed 25 unless you both want it, and then I'll appoint the one you both SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 24 6cbz911c Conference 1 want. I'm not going to impose any mediation on anyone. 2 MR. CLIFFORD: Well, just so it is clear, the property 3 damage plaintiffs would accept the appointment of the mediator 4 you mentioned, by the way. 5 THE COURT: I don't know if you know that, because it 6 wouldn't do you any good. 7 MR. CLIFFORD: I'm sending him a message, frankly. 8 THE COURT: You talk to him privately. 9 MR. CLIFFORD: Okay. 10 THE COURT: He'll answer your call. 11 MR. CLIFFORD: Okay. 12 MR. BARRY: Your Honor. 13 THE COURT: Mr. Barry. 14 MR. BARRY: There is one other rather large property 15 claim and business interruption claim. It's represented by 16 Mr. Williamson. 17 THE COURT: Yes, you mentioned that. 18 MR. BARRY: And that is something that's very much in 19 the mix here as well, so. 20 THE COURT: You know, Mr. Barry -- 21 MR. BARRY: I don't think Mr. Clifford was speaking 22 for him, but maybe he was. 23 THE COURT: Let me say this. 24 MR. CLIFFORD: No. 25 THE COURT: No, he's not. But let me say this. I SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 25 6cbz911c Conference 1 went into these statistics because I wanted to know how many of 2 the remaining cases involve World Trade Center plaintiffs. So 3 we have 23 ground plaintiffs, of which 15 are World Trade 4 Center plaintiffs. So the 95 reduced to 15. Of the 15, eight 5 have settled, so there's seven pending cases that remain. And 6 of those seven, only one is a wrongful death case. The others 7 allege personal jury. I don't know what they are. And then in 8 the statistical information, they break down some more. I 9 don't really have a good reliable base of information. 10 MR. BARRY: My point -- 11 THE COURT: Hold on. 12 MR. BARRY: I'm sorry. 13 THE COURT: Hold on. There are very few involved, and 14 I think the risk here is manageable. 15 The second part of the issue is to understand other 16 tracks of cases. And the track that is most relevant and most 17 interesting is the track dealing with the respiratory injury 18 cases, for which there can be as many as 11,000 cases. They're 19 gathered in 21 MC 100, and there are activities that are 20 pending in those cases that I should tell you about. For 21 reasons that are obvious, the ability to manage 11,000 cases is 22 probably well beyond any district judge. The prospect of 23 concluding those cases within the lifetime of a judge or 24 younger lawyers, or children of those younger lawyers, and 25 perhaps the grandchildren of the younger lawyers is SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 26 6cbz911c Conference 1 speculative. 2 Since plaintiffs' counsel don't get paid until cases 3 are resolved, I told plaintiffs' lawyers that unless we find 4 some mechanism for early resolution, they will have so much 5 work to do on these cases, with so little prospect of immediate 6 payment, that they will become prisoners of their practices. 7 There are two things working in these cases that give 8 me some hope of being able to get them resolved quickly, 9 relatively quickly. One is I propose the appointment of two 10 special masters who work together very closely, Dean Aaron 11 Twerski of Hofstra law school, and Professor James Henderson of 12 Cornell law school, both extremely experienced academics in the 13 fields of mass torts. 14 As you can understand, both sides have rejected. Both 15 sides agree that special masters may be useful. The plaintiffs 16 feel that these particular special masters and their writings 17 have evidenced a pro defendant bias. The plaintiffs -- the 18 defendants wish to have an immediate appeal of my order, in 19 effect deferring the issue of immunity. That issue is being 20 briefed. It's unlikely it will be granted. 21 The case will remain, I believe, with me without 22 delay. I am studying the objections. An order will probably 23 issue tomorrow, which will take some of the objections into 24 consideration. But these special masters are not going to be 25 doing substantive work. I envision their role, with the aid of SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 27 6cbz911c Conference 1 other experts, is to create a reliable data base of information 2 from the case -- from the cases so that we will not need to go 3 through pretrial discovery and will be able to have a data base 4 that all can access enabling all to value the case. That's all 5 one set of factors. 6 A second set of the factors is to assess whether or 7 not there is a ceiling on liability in the case, a much more 8 difficult legal issue. The ATSSA, the Air Transport Safety 9 System Stabilization Act, provides that the City can't be 10 liable for more than 350 million dollars or its insurance, 11 whichever is higher. 12 FEMA appropriated a billion dollars and created a 13 captive insurance company for the City's defense and liability. 14 And without going into the public law 107-71 issued 15 November 19, 2001, there is a respectable argument that there 16 is a liability cap of a billion dollars, which I've expressed 17 in meetings of 21 MC 100. 18 The issue is being briefed. It's a complicated issue. 19 The issue is whether possible insurance by contractors and 20 issues of indemnification by the City are additive to that 21 billion dollars or subsumed within that billion dollars. And 22 part of the need to create a reliable data base is to see what 23 is the real factual involvement of any of these contractors who 24 may have had insurance, and I don't mean workmen's compensation 25 insurance either. The issue's rather complicated. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 28 6cbz911c Conference 1 Depending on how these issues are resolved, both the 2 special master issue and the liability and cap issue, and how 3 issues are applied thereafter, we may have the ability to 4 create an administrative type of procedure for these 5 respiratory injury cases. I don't want to preside on any case 6 of just awarding money. If I preside over a tort case, the 7 tort rules of liability will be applied with all their rights 8 and with all their limitations and liabilities. So the road is 9 complicated. 10 Now, why do I mention it here? I mention it here 11 because, as I understand from Mr. Williamson in many 12 presentations, there are two thrusts of cross liability by the 13 Port Authority. One is, to the extent that they suffer a loss, 14 they have a right, they claim, to sue over against the 15 airlines. And the same way as Mr. Clifford's clients do and 16 Mr. Muller's and Mr. Migliori's and Mr. Franz's clients do. 17 Second is because they lost their buildings, and there 18 are possible issues of insurance subrogation there as well. 19 In my conversation with Mr. Barry, which I mentioned 20 before, I received the impression that with the potential of a 21 huge exposure to the Port Authority in the wings, the airlines 22 find it, and their insurers find it very difficult -- by 23 airlines I mean the aircraft companies and security companies 24 and the like -- find it very difficult to create any kind of a 25 reasonable matrix of potential exposures, because the potential SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 29 6cbz911c Conference 1 exposure of the Port Authority is so large, theoretically, as 2 to paralyze all other thinking. I think I have it right, 3 Mr. Barry. You'll clarify what we discussed, if necessary. 4 I pointed out to Mr. Barry that you can't allow the 5 idea to prevent the application of the good. Resolving the 6 lesser property damage actions and eliminating those cases for 7 reasonable value, and perhaps liberally discounted values, is a 8 good. Whether the Port Authority ever sues, whether there is 9 anything remaining of the cap to recover, whether they will 10 recover, whether you will resist that or settle that, at this 11 point is speculative. And, indeed, if we were to try the 12 property damage cases without the Port Authority, and even if 13 the Port Authority were waiting in the wings, you'd still have 14 to deal with the issue of the liability potential to 15 Mr. Clifford's clients. 16 This is a longer conversation in the telling than it 17 actually was. I think we had a two minute -- two minute 18 conversation. But the point I wish to make is that 19 notwithstanding what the Port Authority eventually will do -- I 20 suspect Mr. Williamson and his client don't know that either -- 21 it's not a reason to delay coming to grips with it, certainly 22 not with wrongful death and personal injury cases, nor with the 23 property damage cases. 24 Mr. Barry. 25 MR. BARRY: It's not what they may do. It's what SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 30 6cbz911c Conference 1 they've already done. And it's not just the Port Authority, 2 it's World Trade Center Properties, the Silverstein interests 3 that Mr. Williamson represents. They've already filed a cross 4 claim against us for property damage and business interruption 5 costs that, in a conversation in your robing room a year and a 6 half ago or whatever, Mr. Williamson quantified at being 7 approximately ten billion dollars. 8 THE COURT: Mr. Williamson. 9 MR. BARRY: So that is the issue to which I really 10 referred, as opposed to the issue of what they may do in the 11 future in terms of impleadings. I just raise it in terms of 12 Mr. Clifford was talking about his subrogated interest, but 13 there's a rather large elephant in the middle of the living 14 room as well. 15 THE COURT: The most that you could lose is your 16 insurance, no matter how large Mr. Williamson's claim. 17 MR. BARRY: Not a small amount of money. 18 THE COURT: No. But eventually you'll have to deal 19 with it. 20 MR. BARRY: Oh, yeah. 21 THE COURT: It makes no difference, in my thinking, 22 whether you have resolved or not resolved the other claims. 23 Indeed, it's complicated by the other claims. I don't see 24 there's a reason to delay. 25 Look, I've said as much as I can say. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 31 6cbz911c Conference 1 Mr. Clifford, my advice to you, Mr. Clifford, is to 2 create that document and give it to Mr. Barry without involving 3 me in it, and we'll see what time brings. 4 MR. CLIFFORD: Yes, sir, your Honor. 5 MR. ELLIS: Your Honor, Jeffrey Ellis on behalf of 6 United. And not that I have been involved with the intricate 7 details of the damage discovery from the property damage 8 plaintiffs. 9 THE COURT: But you've kept closely involved. 10 MR. ELLIS: One of my partners has, and I think one of 11 Mr. Clifford's colleagues has as well, and I understand from my 12 partner Tim Keen, who I think has been speaking to Steve 13 Badger, that there is a volume of documents that would be 14 responsive to one of your Honor's earlier orders that would be 15 necessary. I know Mr. Clifford may have misspoke when he said 16 that every document had been provided. I think that there is a 17 volume of documents that is still out there, that would be 18 relevant to even putting together a number that we could even 19 look at. 20 THE COURT: Which has not been produced? 21 MR. ELLIS: I think they're in the process of 22 producing it, your Honor. I think there's already an agreement 23 and there have been discussions. I don't want to speak for 24 Mr. Badger or Mr. Keen even, who knows more about it than I. 25 THE COURT: All of this goes to, argue for the rapid SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 32 6cbz911c Conference 1 completion of production. 2 MR. CLIFFORD: May I? Your Honor, Robert Clifford. 3 What I did say, I didn't quite say what Mr. Ellis thought I 4 did, we have supplied to them a damage disclosure form that was 5 created by agreement initially. They know all of the dollars 6 that we have paid out. What they do not have and what even 7 takes time to do, and there will ultimately be some delay 8 associated with the coverage case that's going on with 9 Mr. Silverstein right now, is they don't have all of the 10 underlying data. But there is no question that they know, on a 11 reliable basis, the scope of our claims and how those claims 12 bump up against or exceed their coverage. 13 THE COURT: Given the unwillingness of the airlines to 14 deal with the issues involved with your clients, I would think 15 that you would want to spend the money, make the discovery, 16 complete the process and then start pressing me for early trial 17 dates. 18 MR. CLIFFORD: We will. And we also thought, for 19 example, on that score that whenever there was a trial date and 20 whatever looked like, you could, for example, have reliable 21 proof all that individual data, because we are talking 22 literally hundreds of thousands of pages of materials, 23 substantive content. It's not simply one check and what we 24 paid out. But if you had, for example -- 25 THE COURT: Basically, it's the proofs of claim that SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 33 6cbz911c Conference 1 are made in each and every insurable item. 2 MR. CLIFFORD: Yes, yes, and all the underlying data, 3 and also then the cost of -- current cost of -- 4 THE COURT: All right. I think we've gone as far as 5 we can on the property damage actions. 6 Let's go into the status of discovery proceedings, 7 generally. Who wishes to report on that? 8 MR. TOMASIK: Judge, Tim Tomasik on behalf of the 9 property damage plaintiffs. 10 THE COURT: Yes, sir. 11 MR. TOMASIK: As Mr. Barry mentioned, we have taken 23 12 depositions. I believe there's actually five sets to go by the 13 end of the year. We've identified on the PD side, I think 14 wrongful death and personal injuries in agreement, that there 15 are potentially 60, 65 depositions that could be taken. We've 16 extrapolated those names from a list of 275 we've tendered to 17 the defense. 18 One of the issues we've been dealing with is, 19 initially the depositions were scheduled to go three out of the 20 four weeks of each month, with the plaintiffs taking two weeks 21 and the defendants taking another. We were, a few months ago 22 and are now of the mindset that depositions can and should 23 proceed every week. And if the defendants, cross plaintiffs or 24 plaintiffs don't fill a particular week, that other parties 25 should be free to do so. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 34 6cbz911c Conference 1 And we, Judge, as we discussed at the last conference, 2 are not opposed to the concept of double tracking. It's 3 apparent in the case that there's certain depositions, such as 4 securities screeners themselves, some of the hands-on people 5 that could be taken by one group of lawyers, and then perhaps 6 the airline executives and some of the other corporate types 7 could be taken by another group of lawyers. So I think in 8 terms of depositions, your Honor, that's where we stand today. 9 THE COURT: I think by mid February, after the 10 mediations, perhaps to be adjusted if we can't accomplish all 11 the mediations in the scheduled period, we will be ready for 12 double tracking. 13 But what I would like from you, Mr. Tomasik, in a 14 joint presentation with Mr. Barry, is a scheduled double track, 15 of all witnesses that either side wishes to take. That 16 includes the property damage cases of Mr. Clifford. 17 MR. TOMASIK: Your Honor, if I may, I'll work with 18 Mr. Barry to put together that joint statement. 19 One issue in terms of the discovery we've been talking 20 to the defendants and Mr. Barry about is the fact that we 21 believe, and I think there is agreement, that the damage 22 discovery should proceed after the fact discovery on liability 23 in terms of the property damage claims, only because the 24 appraisal process is still ongoing in terms of those claims and 25 the witnesses that will support those claims tend to be more SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 35 6cbz911c Conference 1 expert in nature in any event. Thank you, Judge. 2 MR. BARRY: We agree with that, your Honor. Although 3 I think there should be a process continuing now because 4 it's -- if we don't start doing something now, come that time 5 at some point in the future when liability discovery is over, 6 there's going to be a lot of work to do here. 7 THE COURT: When do you want to start? 8 MR. BARRY: Well, I mean I think there can be some 9 simultaneous coordinated damage discovery in the property cases 10 going forward, but I don't think we should be saying that 11 whatever cutoff date there's going to be applies to damage 12 discovery. That's my point. 13 I think Mr. Tomasik is right, that we shouldn't be 14 governed by the same deadlines, whatever, either by agreement 15 we impose or the Court imposes, but I do think that we can 16 continue with the process now that we already started. 17 MR. CLIFFORD: And we certainly -- your Honor, Robert 18 Clifford. We certainly agree with what Mr. Barry just 19 described. There is a defined group of cases, for example, 20 where the claims are cleaner than others or more complete than 21 others, and we could work towards that end and we'll do a 22 report about that in the joint presentation. 23 THE COURT: I leave it to you, to counsel to develop a 24 reasonable set of proposals. 25 MR. CLIFFORD: But what Mr. Barry just described, SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 36 6cbz911c Conference 1 though, was that we were -- and we assume that we were doing it 2 with your blessing -- was that the focus thus far has been on 3 the liability discovery, and we've really been deferring a lot 4 of damage discovery. 5 THE COURT: I think you need to present to me a 6 schedule that I can so order. 7 MS. JACOB: Your Honor, Beth Jacob. 8 THE COURT: This gentleman was standing. 9 MR. GODFREY: Please the Court, your Honor, Lee 10 Godfrey. I represent Hunt Leigh which had a security on Flight 11 175, Logan Airport, was one of the World Trade Center -- 12 THE COURT: You'd like to get out. 13 MR. GODFREY: I'd like to get out, yes, your Honor. 14 THE COURT: And I've been letting you. 15 MR. GODFREY: Your Honor -- 16 THE COURT: What's -- 17 MR. GODFREY: Your Honor, two quick points. We are 18 still negotiating with the TSA, but right now it's my 19 understanding the position of the TSA is we're going to have 20 one lawyer cleared per law firm to be -- have access to the 21 reading room and to deal with all the issues of what is SSI and 22 what isn't. And I just note for the record that it's going to 23 be difficult in the extreme, as we discussed at the time of our 24 last status conference, for us to do any kind of double 25 tracking when there's only one of us who's cleared. We're SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 37 6cbz911c Conference 1 still negotiating that issue with TSA. 2 Second thing -- 3 THE COURT: I thought everyone was attending these 4 depositions. 5 MR. GODFREY: Everyone is attending the depositions, 6 your Honor. But we're taking these depositions, frankly, at 7 some risk because we're taking the depositions before we get a 8 lot of the material that we desperately need access to to 9 defend the case. So, yes, we are attending deposition, but 10 it's still, as I understand it, the position of the TSA that 11 when we get down to it, only one lawyer per law firm is going 12 to have access to the material in the reading room. 13 Secondly, your Honor, just so that Mr. Barry is not 14 standing up here alone, we for Hunt Leigh, and for our insurers 15 very much share the opinion that he expressed in court that 16 these property damage cases, these World Trade Center property 17 damage cases are going to have to be tried or disposed of by 18 motion. I appreciate anything can happen and we're certainly 19 mindful of what the Court would like to see happen, but it's 20 just a very different proposition than trying to compensate 21 these wrongful death victims when we get to these property 22 claims. 23 The liability issues, which really we've settled cases 24 essentially, your Honor, without reference to liability, we've 25 looked pretty much at damages. That's going to change SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 38 6cbz911c Conference 1 dramatically when we get to these other -- these property 2 damage claims. 3 THE COURT: Mr. Godfrey, I don't care if you settle 4 them or try them. I'm here just the same. Experience teaches 5 me that from a defendant's perspective, it's a question of a 6 calculation, how much does it cost to defend, how much time is 7 involved, what are the risks, what's the offer. There's no 8 principle of -- 9 MR. GODFREY: I agree with your Honor. You never know 10 how it's going to play out. 11 THE COURT: So it's a function of how we track. 12 Mr. Clifford makes his numbers. If it's going to be 13 attractive, it'll settle. If it's not going to be attractive, 14 you won't. But you don't know until he gives you numbers, 15 right? 16 MR. GODFREY: I understand, your Honor. 17 THE COURT: Okay. 18 MR. GODFREY: Thank you. 19 THE COURT: I think he does too. 20 Miss Jacob? 21 MS. JACOB: Your Honor, Beth Jacob for the World Trade 22 Center Seven ground defendants. Just a point of clarification. 23 We are starting depositions in the World Trade Center Seven 24 part of the litigation. If our schedules are not included with 25 these schedules, we're talking about triple tracking and, with SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 39 6cbz911c Conference 1 all due respect, I don't think we can do that. So the question 2 was in so far as talking about aviation discovery, whether the 3 court intends for the parallel tracks to be included in this 4 schedule, which I would point out, for example, Mr. Clifford's 5 clients are World Trade Center Seven claimants, so at some 6 point, and I hate to bring up a complicating factor, but at 7 some point we're going to have to be put into the mix, and that 8 will probably cause -- 9 THE COURT: I'll have to make a ruling stretching you 10 out, I guess. 11 Ms. Goldman. 12 MS. GOLDMAN: Your Honor, to start with the issue of 13 depositions. TSA would not object to double tracking as long 14 as only one of the depositions has anything to do with SSI 15 issues, because TSA has been attending all the depositions 16 where SSI is at issue. 17 To the extent there are depositions that are already 18 have been some where SSI is not an issue, we have not been 19 attending them. To the extent the parties can set this up so 20 that there is a second track, you have an SSI track and a non 21 SSI track, that will take care of our problem and I think 22 Mr. Godfrey's problem. 23 It may be helpful at this point for us to outline for 24 the Court a little bit about where the parties are, because 25 we've been actively discussing where to go from here based on SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 40 6cbz911c Conference 1 the new legislation that was passed on October 4th. 2 THE COURT: Public Law 109-90. 3 MS. GOLDMAN: Correct. 4 THE COURT: The Department of Homeland Security 5 Appropriations Act, Section 537. 6 MS. GOLDMAN: Correct. Let me start by saying, in the 7 interim TSA has been engaged in ongoing document discovery, 8 which we can detail for you -- 9 THE COURT: Can you all hear Ms. Goldman? Good. 10 MS. GOLDMAN: -- if need be, meaning that there's just 11 a lot of discovery going on for the purposes of the 12 depositions. And we have honored every request, whether it's 13 come two weeks before, a week before or 24 hours before to try 14 to process the documents so they'll be available for 15 depositions. And that's been an ongoing and very time 16 consuming process for TSA. 17 But we're now shifting gears a bit. Because under the 18 new legislation there is provided for access to SSI by civil 19 litigants under certain conditions. And what we have been 20 doing since it was passed is to try to set up a procedure with 21 the parties. And we have met with the parties in person and 22 we've had discussions with the parties about this. And the 23 plan at this point, at least what we have proposed, is that TSA 24 is going to review documents in sort of a quick cut way and put 25 into a reading room documents containing SSI for review by SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 41 6cbz911c Conference 1 lawyers with clearances. And we have proposed that the number 2 of clearances will be equal to the number of law firms who 3 represent parties in the case, plus an additional five lawyers 4 per side. And what that means from our proposal is that all of 5 those lawyers can be allocated in anyway that the parties want. 6 So that, for example, if defendants have 30 firms, 29 firms, 7 they're entitled to 29 clearances, plus an additional five to 8 be allocated anyway that they want. And the thought there 9 being that there are parties who want to look at different 10 things, and there may be counsel who need more than one lawyer 11 and that the parties can work that out themselves. 12 The thought, then, is that they will go into the 13 reading room and read the documents, look at the documents and 14 see what it is from those documents that they may need to use 15 in continuing in the litigation. And we have made a proposal 16 to the parties and we have circulated a protective order for 17 everybody's consideration that would provide a mechanism for 18 this reading room, and then for a process afterwards for use of 19 the documents in a very controlled environment. And I think 20 we're still talking, and I don't know that we need to hash out 21 right here all the details of a protective order, but that is 22 an ongoing discussion. 23 The other thing is that we have made this clearance 24 proposal. There are some who aren't as happy about it than 25 others, but once we get a list from the parties we can start SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 42 6cbz911c Conference 1 that clearance process right away. It's set forth in the 2 legislation what that process involves, in part, and it will 3 involve both the questionnaire and fingerprinting that will get 4 processed by various government agencies that do these things. 5 And that once that is done, we can open the reading room and 6 we, from our perspective, we're only a matter of a few weeks 7 away from that. 8 So that's our report, but we'll be able to put quite a 9 large volume of documents into that room in short order. 10 THE COURT: Excellent. What's happening with 11 the --Ms. Goldman, what's happening with the various appellate 12 proceedings? 13 MS. GOLDMAN: Your Honor, TSA has withdrawn its final 14 orders, because those orders, under the new legislation, aren't 15 going to apply -- 16 THE COURT: They're irrelevant. 17 MS. GOLDMAN -- in this case, so they're irrelevant. 18 So the appellate proceedings are now over for the time being. 19 THE COURT: All right. So that constitutes the report 20 of 2A, one through four. 21 22 MR. HAEFELE: Your Honor? 23 THE COURT: One minute. 24 25 MR. HAEFELE: Robert Haefele. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 43 6cbz911c Conference 1 THE COURT: One moment. 2 Ms. Goldman, anything more to say under 2A one through 3 four? 4 MS. GOLDMAN: For now, yes, your Honor. 5 MR. HAEFELE: I just did want to report on with regard 6 to the -- 7 THE COURT: I'm sorry, but I don't know your name. 8 MR. HAEFELE: Robert Haefele from Motley Rice. We did 9 receive -- we have been having ongoing discussions with the TSA 10 regarding protective order. We received a draft of protective 11 order on Friday, and we haven't yet had a chance to circulate 12 it to the other parties in the case. We've looked at it with 13 one of the other plaintiffs' firms. We made some adjustments 14 to it and we'd like to circulate it among the plaintiffs and 15 the defense counsel before we get back to TSA. I just wanted 16 to update the Court on that. 17 There are some -- there are some substantial issues 18 with regard to the TSA's position, interpretation of the 19 legislation that may end up coming before your Honor, but we'd 20 like to try and work out what we can with TSA before we come to 21 your Honor. 22 THE COURT: What's the issue? 23 MR. HAEFELE: Well, I think one of the issues is their 24 interpretation of number of lawyers that are -- that will be 25 allowed to have clearances. And they have made a proposal, but SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 44 6cbz911c Conference 1 we don't believe that that's consistent necessarily with the 2 way that the legislation is to be interpreted. But we are 3 trying to work out, and if we can come to an agreement among 4 all counsel, then we can work that out. 5 There are some other issues that are -- with regard to 6 their interpretation of who has the authority to determine 7 whether or not documents are relevant to the litigation and 8 whether or not the parties have need to access the SSI. The 9 legislation certainly does address the fact that TSA has 10 authority to determine whether or not access to SSI will cause 11 a risk to the national transportation system, and that's what 12 the legislation envisions as TSA's authority. But with regard 13 to whether or not the parties have access to the SSI in terms 14 of whether or not it's relevant or whether or not they need it, 15 the Congress has indicated straight forward that that's within 16 your authority to do, and TSA's draft order is consistently 17 throughout tried to turn it on its head and take that authority 18 from you, take it upon themselves. That -- I think we're 19 trying to tinker with the language that will, that will allow 20 the TSA to have the authority that they need, but without going 21 against the legislative intent and the language of the 22 legislation. 23 THE COURT: I guess the relevant provisions, this, the 24 provision also contains a mechanism for SSI to be used in civil 25 judicial proceedings if the Judge determines that is needed. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 45 6cbz911c Conference 1 MR. HAEFELE: That's correct, your Honor. And I 2 think if you look at the commentary to that, it specifically 3 says that it's the Judge's authority to determine whether or 4 not the information is needed by the litigants. 5 THE COURT: Mr. Podesta. 6 MR. PODESTA: Roger Podesta for American Airlines. I 7 agree largely with the comments that Mr. Haefele made about 8 some of the protective order issues, and I also agree with 9 Ms. Goldman that this is perhaps not the forum today in which 10 to hash out our differences with the TSA. 11 But I do wish to put a marker down to the aviation 12 defendants that there are serious discovery issues relating to 13 the government, both as to the interpretation of the protective 14 order as to SSI, as to the fact that we have served the 15 defendant -- aviation defendants have served document requests 16 on the government and had a meet and confer in August. These 17 are TSA, FAA documents, and we've not yet received any 18 documents. And I'm not arguing whether there's been undue 19 delay today, but it's an important -- these documents that we 20 requested from the TSA and the FAA are very important to the 21 aviation, to the defendant's defense, and we need to get them 22 before we can be ready for trial and before we complete our 23 deposition discovery. 24 We've also recently started the process of serving, as 25 Mr. Barry mentioned, deposition notices, deposition requests, SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 46 6cbz911c Conference 1 through the Touhy process on the government, on the FBI in 2 Austin, and on four U.S. government agencies. We've yet to 3 receive responses. We're not necessarily complaining that the 4 government can't -- doesn't need time to evaluate these, but 5 they're going to be -- and there are going to be more of these 6 requests and they're very different agency decision making 7 processes. There may be need for judicial review of those 8 processes. And one question is whether the judicial review has 9 to take place in every district where the subpoena is served or 10 whether to get control over this litigations, the exclusive 11 forum, all those subpoenas should be brought before your Honor 12 for review. 13 THE COURT: I'd like to start --I'd like to start with 14 becoming educated on the involvement in this Court and what are 15 the jurisdiction -- sorry -- what are the jurisdictional issues 16 that I would be confronting. 17 So, Motley Rice gave me a document -- which I sent 18 back, but I kept. I kept the part that was the public law. 19 I'd like to be advised. I'd like, by joint 20 submission, what's involved. I don't have to have any 21 questions there, but perhaps you'd like to just take the 22 laboring oar, Mr. Podesta, and run it by Ms. Goldman and run it 23 by one of the plaintiffs who nominated to do this. 24 MR. PODESTA: Yes. 25 THE COURT: So I get sort of a little briefing SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 47 6cbz911c Conference 1 memorandum. 2 MR. PODESTA: We will prepare -- try to prepare as 3 consistent with our limitations as advocates, a rather neutral 4 description of the issues for your Honor, which I'm sure that 5 the other parties will even make more neutral, and we'll try to 6 get -- 7 THE COURT: No, I think you can do it. 8 MR. PODESTA: Yes, in the next couple of weeks. 9 And one other point on the reading room issue. In the 10 past, the TSA has been very careful when documents are produced 11 to designate large portions of the documents as non SSI. For 12 example, I believe that perhaps 99 percent of the COG and 13 99 percent of the ACSSP, have been designated as non SSI for 14 purposes of this litigation. And it is those constructive 15 steps by the government that have permitted these 23 16 depositions to go forward. Without those steps, we would have 17 had chaos in a deposition process. But I think all the 18 attorneys will agree that, to date, the SSI issue is only a 19 minor problem in the depositions. 20 What I'm concerned about is that this quick cut review 21 that the TSA has proposed to put documents in the reading room 22 not mean that broad categories of documents that may contain 23 some small slivers or pieces of SSI would be put in a reading 24 room, even though 98 or 95, 98 percent of the documents are not 25 SSI. That would truly be a major step backwards that would SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 48 6cbz911c Conference 1 greatly complicate discovery, and you know, make the reading 2 room of single attorney from each firm really a very 3 impractical issue. I don't think we have to resolve it today. 4 I just want to put a marker down. 5 THE COURT: Ms. Norman. 6 MS. NORMAN: Just on that issue. The point in making 7 this quick cut, your Honor, is to put as many documents into 8 the reading room as quickly as possible. And the idea then is 9 that the limited number of lawyers who are cleared will go, 10 they will review the large volume of documents and they will 11 make cuts themselves about what documents are particularly 12 relevant to them and as to which they have particular need. 13 TSA will then devote its limited resources to reviewing that 14 sub set of documents and that sub set of documents will be 15 given the redactions necessary, and hopefully a small 16 percentage will actually have SSI issues, et cetera. So I just 17 want to make clear that we don't intend to depart from that 18 general policy. We're just introducing a preliminary step so 19 that we can get the reading room up and running and we can move 20 forward and not have delays at the outset of the process. 21 And I also just like to add on the government 22 discovery point that I appreciate that you're not being 23 critical of our timeframe here. We are, as we've advised, the 24 defendants about to begin producing documents, subject to just 25 a few really housekeeping matters, and a large volume of SSI SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 49 6cbz911c Conference 1 containing documents are going to go into the reading room as 2 soon as it is up and running. And so we are really imminently 3 preparing to produce documents here. And as for the request of 4 testimony, those are under review and responses will be 5 forthcoming shortly. 6 THE COURT: Mr. Muller. 7 MR. MULLER: Your Honor, I don't want to belabor the 8 point, but I think we have made a lot of progress on the SSI 9 issue. I think the bottom line is, however, that if we can't 10 continue to make progress, continue the pace and progress and 11 resolve some of the outstanding issues that have been 12 identified from Mr. Haefele and by Roger Podesta, that the new 13 statute may well have given you the authority to step in and 14 fashion a protocol that is necessary. But I think with that, 15 with that as the possible fallback position or the bottom line, 16 if we can't reach agreement, that that will offer enough of a 17 stimulus to try and get it done. But the depositions have not 18 been impeded. I expect they will continue. I hope the meeting 19 room process works out and that discovery will not be slowed 20 down by artificial SSI issues that have obviously played more 21 of a role in delaying the litigation, and once resolved, we've 22 been moving forward quite expeditiously. But you may get a 23 motion asking you to develop a protocol if the outstanding 24 issues can't be resolved. 25 THE COURT: I know you're not shy to do that. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 50 6cbz911c Conference 1 Is there a speaker in the back? 2 MR. PEPE: Your Honor, Mr. Muller just covered the 3 point I was going to make. My suggestion was -- 4 THE COURT: What's your name, sir? 5 MR. PEPE: Doug Pepe. My suggestion would be to the 6 extent that Mr. Podesta has issues, after we've finished this 7 process with TSA, which we've undertaken over the course of 8 several weeks and has been very productive, Mr. Podesta has 9 jurisdictional points that he wants to raise, we can submit 10 competing orders to your Honor. 11 THE COURT: I think we're down to number four. I 12 don't think there is anything for me to do with regard to the 13 issues that have been framed by Ms. Goldman, Miss Norman, 14 Mr. Podesta and Mr. Haefele. 15 Motley Rice's lawyers have been pushing me to set a 16 trial date, and I've not done that because you're really not 17 ready for it. But I think perhaps at the next conference you 18 might be ready for it, or the one after that. 19 So the point I want to make now is that it's not too 20 early to start thinking of what would be tried and how. There 21 is no class in any of these cases, so they're all individual 22 actions. Presumably, what we're moving towards are actions 23 that, when resolved, would have a ripple effect on numbers of 24 others. So we should start thinking of what the first trials 25 might be. Can some things be tried together? Should each SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 51 6cbz911c Conference 1 thing be separate? What issues should be tried? Should all 2 this should be tried at the same time, and other such matters. 3 So that's something to think about for the next meeting or the 4 one after that. 5 And this brings me to set the next conference date. I 6 think March is, probably mid March is probably the right time. 7 Anybody have desire to have an earlier meeting? 8 MR. CLIFFORD: We do, your Honor. Property does, your 9 Honor. Our thinking was, with your permission, that given the 10 efforts that are going to be made in January on the mediations, 11 that at least you might want to think about the week of the 12 19th of February. 13 THE COURT: I think that's too early, Mr. Clifford, 14 because I'm optimistic that there will be mediations and that 15 they will not be concluded by February 1, and we'll be using 16 parts of February for that. I think it's also going to mark 17 the onset of the double tracking of cases. And I think what I 18 would like to have for the next conference is a declaration 19 that mediations have concluded. We'll have a response on 20 whether or not your cases are going to be mediated. I'll know 21 the progress of the double tracking, I'll know the progress of 22 the TSA, and I think it will be time to make various kinds of 23 adjustments. 24 MR. CLIFFORD: How's the week of March 5th look? 25 MR. BARRY: I don't think that's mid March by my view. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 52 6cbz911c Conference 1 MR. CLIFFORD: I just throw out ideas, Judge. 2 MR. BARRY: Saint Patrick's Day in New York, Judge, is 3 very good, we'll welcome Mr. Clifford here. 4 MR. CLIFFORD: My -- 5 THE COURT: March 22 at 3:00 o'clock. 6 MR. BARRY: Thank you, your Honor. 7 MR. CLIFFORD: I was going to say my birthday is the 8 24th, Judge. Maybe we could have Mr. Tomasik or Mr. Barry will 9 bring me cake and we can have cake and coffee or something. 10 THE COURT: Have it with your office. You'll have 11 more fun. 12 MR. CLIFFORD: March 22 at 3:00 o'clock? 13 THE COURT: I'm going ask you again at that time to 14 give me a realistic closing date for discovery or dual dates if 15 we're going to go on a later date for the property. 16 MR. CLIFFORD: Is it fair to assume that while you 17 haven't so ordered it, that the March 31 day is in place, 18 but -- 19 THE COURT: It was aspirational. 20 MR. CLIFFORD: Okay. Thank you. 21 THE COURT: Happy holidays to all of you. Merry 22 Christmas. 23 (Adjourned to March 22, 2007 at 3:00 p.m.) 24 25 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300