1 3178lLYLA 1 UNITED STATES DISTRICT COURT 1 SOUTHERN DISTRICT OF NEW YORK 2 ------------------------------x 2 LORNE LYLES, et al., 3 3 Plaintiffs, 4 4 v. 02 Cv. 7243 (AKH) 5 5 ARGENBRIGHT SECURITY, INC., et al., 6 6 Defendants. 7 ------------------------------x 7 January 7, 2003 8 2:40 p.m. 8 9 Before: 9 HON. ALVIN K. HELLERSTEIN, 10 10 District Judge 11 11 APPEARANCES 12 12 HANLY & CONROY LLP 13 Attorneys for Plaintiffs 13 BY: PAUL J. HANLY, JR. 14 14 NESS, MOTLEY, P.A. 15 Attorneys for Plaintiffs 15 BY: RONALD L. MOTLEY 16 16 MARC S. MOLLER 17 BRIAN ALEXANDER 17 JAMES KREINDLER 18 Plaintiffs' Executive Committee 18 19 THE PORT AUTHORITY OF NY & NJ 19 BY: CARLENE McINTYRE 20 KEITH HARRIS 20 EZRA BIALIK 21 21 JAMES B. COMEY 22 United States Attorney for the 22 Southern District of New York 23 BY: SARAH NORMAND 23 Assistant United States Attorney 24 25 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 2 3178lLYLA 1 (Case called) 2 THE COURT: These have been brought on by requests of 3 motions by Mr. Hanly to admit Mr. Motley pro hac vice for the 4 case and they have also been brought on by motions by the Port 5 Authority to disqualify the Ness, Motley law firm because of 6 prior representations that Ness, Motley had for the Port 7 Authority, namely, the Allied litigation. 8 The request for admission and the motion to disqualify 9 came in the first instance in connection with a lawsuit that 10 did not involve the Port Authority, except indirectly, Lyles 11 against Argenbright Security, Inc. But since I would be 12 dealing with a large number of cases of a wide variety, and 13 since Mr. Motley represented clients who were injured directly 14 as employees working with the Port Authority, and who otherwise 15 might have claims against the Port Authority, as well as other 16 defendants, I thought it appropriate to enlarge the issues to 17 cover all the litigation with which I am concerned and which I 18 am coordinating. So the issues that are posed will have to be 19 focused on the discrete case and on the overall cases. 20 I also note that Ness, Motley is one of the 21 signatories to the master complaints that allege claims against 22 airlines, security companies, the Port Authority and others for 23 property damage, for personal injury and the like. So we have 24 a wide field with which to deal. 25 I say this all by introduction to suggest to those who SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 3 3178lLYLA 1 wish to speak that they should focus their attention on the 2 specific and on the general. 3 I have had submissions from the Port Authority, from 4 Mr. Motley, Professor Green, whom I acknowledge at counsel 5 table. It's a pleasure to have you here, Professor Green, but 6 I wish you wouldn't speak in such an adversarial tone. I think 7 I might have more benefit of your remarks if presented not so 8 much as an advocate but as someone who has worked very 9 intelligently and very long in the field of professional 10 responsibility. 11 I have heard from the plaintiffs' coordinating 12 committee through Mr. Moller who has informed me that whichever 13 way I rule plaintiffs will adjust appropriately. 14 Who wishes to speak first? 15 MS. McINTYRE: The Port Authority would like to speak 16 first. If your Honor wouldn't mind my using the podium. 17 THE COURT: I would like it. 18 You are Carlene McIntyre? 19 MS. McINTYRE: My name is Carlene McIntyre. I am 20 chief of opinions and appeals of the Port Authority Law 21 Department and it's my distinct pleasure to appear before your 22 Honor this afternoon. 23 The Port Authority, as your Honor has summarized, has 24 moved to disqualify the law firm of Ness, Motley from 25 participation in all 9/11 cases, your Honor. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 4 3178lLYLA 1 As your Honor has said, we have moved on the distinct 2 ground that there is a substantial relationship between Ness, 3 Motley's prior representation of the Port Authority airline and 4 their representation here of plaintiffs before this court. 5 Your Honor, the substantial relationship test has at 6 its core several disciplinary rules and principles which have 7 been briefed fully. I simply briefly summarize for the court 8 DR 4-101 which prohibits a lawyer from revealing a confidence 9 or secret of a client to the client's disadvantage. I 10 specifically direct the court's attention to a subsection of 11 that DR which says that the lawyer may not use a confidence of 12 the client for the advantage of a third person unless the 13 client consents after full disclosure. 14 Of equal importance -- 15 THE COURT: Or the lawyer himself. 16 MS. McINTYRE: Yes. 17 THE COURT: The lawyer can't use the confidence or 18 secret for his own advantage as well as for the advantage of 19 third persons. 20 MS. McINTYRE: Yes. 21 DR 5-108, more specifically, would provide that 22 without consent of a former client, a lawyer who has 23 represented a client in a matter shall not thereafter represent 24 another person in the same or a substantially related matter in 25 which that person's interests are materially adverse to the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 5 3178lLYLA 1 interests of a former client. 2 Your Honor, much has been raised about the substantial 3 relationship between Allied which Ness, Motley undertook 4 beginning in 1989 and from 1996 on, and I just want to briefly 5 summarize that at that time Ness, Motley interviewed many, many 6 personnel at the Port Authority and key personnel involved in 7 the construction of the World Trade Center buildings, 8 specifically, Mr. Ray Monte who was at the time construction 9 manager for the World Trade Center and later chief architect 10 for the World Trade Center. Mr. Motley's name now appearing in 11 Section 132 of the D&I's of the master discovery plan as are 12 documents related to - 13 THE COURT: Did Mr. Motley himself interview the 14 construction manager and chief architect? 15 MS. McINTYRE: Mr. Motley did not. Members of 16 Mr. Motley's firm did, your Honor. It is our contention that 17 because those members of the firm were involved in that, the 18 firm is per se disqualified. That is the law of this circuit, 19 your Honor. We have cited Soloff, Cardinale, in which the 20 court of the Second Circuit makes a clear distinction, where 21 you have a firm such as Ness, Motley, which is not a large 22 firm, there is a presumptive disqualification. That 23 presumption can be overcome when you have a large firm, but 24 that is not the case here. 25 We have the affidavits of Mr. Motley, we have the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 6 3178lLYLA 1 affidavits of Mr. Westbrook, in which they attempt to explain 2 exactly their involvement. They concede that Ness, Motley 3 spent 58,000 hours on this matter. At the time Mr. Westbrook 4 tried this case, Mr. Westbrook was a partner of Mr. Motley. It 5 is the Port Authority's contention, your Honor, that the 6 presumption is quite appropriately applied in this case. There 7 is no reason to believe that a law firm of 40 or 50 individuals 8 was in a situation where Mr. Motley was not in a position to 9 know exactly what was going on in Allied and exactly discuss 10 what was going on in Allied with Mr. Westbrook before he left 11 that firm. 12 As far as the substantial relationship, your Honor, it 13 is a substantial relationship test, but in reviewing the master 14 discovery complaints here, the sets of documents that have 15 already come in to facilitate the administration of this case, 16 it is pretty clear that there is a direct relationship, your 17 Honor. 18 Let me go back to Allied. Let me start with Allied. 19 Let me start with Mr. Westbrook's opening in the trial of 20 Allied in which Mr. Westbrook told the jury that in order to 21 understand the case against the manufacturers you have to 22 understand how the World Trade Center was constructed. I am 23 referring to the opening statement, opening documents in our 24 case, page 6, exhibit C. 25 Mr. Westbrook says, Now let's talk a few minutes about SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 7 3178lLYLA 1 the construction of the World Trade Center. Because to 2 understand this case you need to understand a little bit about 3 that. He goes on and on. 4 I turn forward. Here is the heart of it and the key 5 of it. Page 10, where Mr. Westbrook says: 6 THE COURT: Let me find where you are. OK. 7 MS. McINTYRE: "Why do you fireproof steel? Steel 8 doesn't burn. Well, the evidence will show that the reason you 9 fireproof steel is because if there is a fire in the building, 10 and other things catch on fire, you want the steel to stay cool 11 enough that it won't buckle so people can get out of the 12 building and that the building can be rebuilt after the fire. 13 So that's why you fireproof steel." 14 Your Honor, I read that because when I read that, and 15 I look at the documents that are in the master discovery, it is 16 patently clear that the Second Circuit's test for substantial 17 relationship is met in this case. It could not be clearer. 18 Construction, maintenance, fireproofing, they are at the core 19 of this case, your Honor. Regrettably, but they are there. 20 In Allied, Ness, Motley defended the Port Authority. 21 They went into the Port Authority. They became knowledgeable 22 about all facts and legal relationships dealing with the 23 fireproofing, asbestos and nonasbestos, safety systems, 24 sprinkler systems, elevator systems, etc., etc. 25 Your Honor has asked us to address the particular SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 8 3178lLYLA 1 complaints and the general complaints. In that vein, your 2 Honor, I refer you to not only the master discovery complaint, 3 but also to the master liability complaint in Flight 11 which 4 also contains allegations that the Trade Center was defectively 5 designed so that it could not withstand the crash of an 6 aircraft and resulting fire. That's at page 21. 7 There are also in there very broad allegations 8 concerning the lack of an adequate and safe evacuation and 9 egress plan for building occupants, and that the Port Authority 10 failed to ensure that the building could withstand a crash of 11 an aircraft and resulting fire. Similar allegations in the 12 other master liability complaints, your Honor. 13 Moving to the Gaff complaint, which is Ness, Motley's 14 complaint, which is the subject of this court's 15 interrogatories -- 16 THE COURT: Before you move to Gaff, Ness, Motley 17 wishes to be counsel in the Lyles complaint, the Burnett 18 complaint, the Cashman complaint, the Driscoll complaint, and 19 the Powell complaint which just crossed my desk about an hour 20 ago. Of those five, four deal with the flight, I think, from 21 Newark Airport and affect the Port Authority only in its 22 capacity as owners of Newark Airport. 23 Is there any substantial relatedness between Allied 24 and those cases arising out of the flight that departed from 25 Newark? Forgetting now about the coordinating and executive SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 9 3178lLYLA 1 committee which is a separate subject. Just take the issues of 2 the lawsuit and the issues of the Allied lawsuit and discuss 3 the issue of substantial relatedness. 4 MS. McINTYRE: Discussing the issue of substantial 5 relatedness related to the aircraft, the Port Authority took 6 the position in its initial brief, your Honor, that Ness, 7 Motley was in a position, because of the extensive 8 representation in Allied, to essentially learn the, 9 quote-unquote, what has been called, I guess, in Judge Pauley's 10 decision in Mitchell as the playbook. Now, Professor Green 11 took us on in that in his affidavit and said, Well, they really 12 didn't know the playbook, or if you take that playbook analogy 13 you would have -- 14 THE COURT: Playbook, refresh my memory. 15 MS. McINTYRE: Playbook means you come in, you consult 16 with the coordinating attorney. At this counsel's table, it 17 would have to be Mr. Bialik. You talk to Mr. Bialik. You 18 prepare privilege logs. You start to understand how the Port 19 Authority gathers documents, how they gather memos. 20 THE COURT: I want to stop you. This is going to be a 21 function in the Gaff case, if the Gaff case becomes activated. 22 It will be a function in some fashion of the coordinating and 23 executive committees. 24 Looking only at Lyles, Burnett, Cashman, Driscoll and 25 Powell, Powell comes out of National Airport in Washington, it SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 10 3178lLYLA 1 was the flight that crashed into the Pentagon, American No. 77. 2 It doesn't seem to me that, just confining my interest to the 3 issues raised by the pleadings and what was involved in Allied, 4 that there is a substantial relatedness. 5 MS. McINTYRE: The substantial relatedness with the 6 core allegation that there was a security breach at Newark 7 Airport that led to the highjacking of Flight 93, your Honor, 8 is not nearly as close -- 9 THE COURT: It's not substantially related at all, I 10 think. Forgetting how we are going to deal with pretrial 11 proceedings. Looking only at the pleadings. 12 MS. McINTYRE: If you look only at the pleadings and 13 you assume that in this courtroom only those complaints had 14 been lodged against the Port Authority, your Honor, you're 15 absolutely correct. Our problem is how to isolate those from 16 that reality. 17 THE COURT: Then we have the Greene-Wotton case where 18 the plaintiffs' decedent was unlucky enough to have worked for 19 the fiduciary company and was trapped in that building and 20 died. I am going to leave out for the moment that case and 21 Gaff and agree with you for the moment that there is a 22 substantial relatedness and listen to Mr. Motley first before I 23 call upon you to comment on that point. 24 This brings up a third series of issues, and I need 25 help on how to deal with them. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 11 3178lLYLA 1 The issue arises from my effort to effect an efficient 2 coordination of these lawsuits. So that Mr. Motley has been a 3 member of the executive committee and various subcommittees, 4 and I don't know how to function. I don't know whether it's 5 practical or not to let them function in a way that walls off 6 from him information that could have a substantial relatedness 7 to what he did in Allied or not. Have you given thought to 8 that? 9 MS. McINTYRE: We have given a lot of thought to that. 10 It troubles us greatly. From a practical standpoint, knowing 11 what I know about how lawyers function, it's very difficult to 12 see how they could be walled off from that information, but I 13 am sure, your Honor, that because of this extensive 14 relationship they must be walled off. We must find a way at a 15 minimum to do that. Because when I look at that master 16 discovery document and I see information being requested of the 17 Port Authority which it no longer has, which was the same 18 information at issue in Allied, I am absolutely convinced that 19 there is that substantial relatedness. 20 Now, I don't know exactly how they could be walled off 21 from that. I think the dilemma is heightened by the fact that 22 they have proposed that they can limit their, quote-unquote, 23 evacuation claims and at some time -- 24 THE COURT: Limit their evacuation? 25 MS. McINTYRE: The Greene-Wotton type of allegation, SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 12 3178lLYLA 1 maybe with -- if you read Gaff and read Greene-Wotton, the 2 evacuation claims are a bit different. Unfortunately, 3 Greene-Wotton, the allegation appears to be that improper 4 instructions were given about the evacuation and the individual 5 returned to his desk and did not evacuate in a timely fashion. 6 But there are also evacuation claims that say that the 7 building, the evacuation routes, the evacuation stairways, I 8 believe that is in Gaff, did not facilitate evacuation. 9 THE COURT: Do Gaff and Greene-Wotton implicate the 10 same building? 11 MR. HANLY: As the court may recall, Gaff is brought 12 on behalf of some 732 plaintiffs. I believe that's the correct 13 number. So it would potentially -- 14 THE COURT: I didn't allow the class complaint. 15 MR. HANLY: It's not a class complaint. Your Honor 16 may recall, your Honor ruled that there could not be a class 17 proceeding. However, your Honor did permit a multi-plaintiff 18 filing. So to answer your Honor's initial question, Gaff 19 theoretically would involve both towers. 20 THE COURT: Greene-Wotton represents what tower? 21 MR. HANLY: Tower 2. 22 MR. HARRIS: Gaff is Tower 1. 23 THE COURT: As Mr. Hanly points out, the Gaff 24 plaintiffs, of which there are 732 in number, were in both 25 buildings, implicate both buildings. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 13 3178lLYLA 1 MR. HARRIS: Yes, your Honor. 2 THE COURT: Why don't I hear from Mr. Motley and I 3 also want to hear from Mr. Moller. 4 Mr. Hanly. 5 MR. HANLY: May I take the lead on behalf of Ness, 6 Motley? 7 THE COURT: However you wish. 8 MR. HANLY: Thank you, your Honor. 9 Should I use the lectern? 10 THE COURT: Yes. It would be easier for others to 11 follow you. 12 MR. HANLY: May I pull it up a little bit? 13 THE COURT: Yes. 14 MR. HANLY: Thank you, your Honor. 15 THE COURT: There are really three issues, maybe more. 16 Ms. McIntyre has agreed that if you look just at the 17 pleadings of the complaints dealing with the passengers and 18 crew of the flights, there is not a substantial relatedness. 19 MS. McINTYRE: Flight 93, just the isolated Flight 93. 20 THE COURT: I think all of them, because the fact that 21 the Port Authority was the owner of Newark Airport really 22 doesn't implicate what the Allied case was all about. The 23 Allied case had nothing to do with Newark Airport. So I don't 24 think there is a substantial relatedness in this case arising 25 from the pleadings themselves. There is still an issue in SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 14 3178lLYLA 1 terms of practical implementation in pretrial proceedings. 2 MS. McINTYRE: There are master pleadings in which all 3 of the allegations are compressed and its much more broad. 4 THE COURT: I understand. 5 MR. HANLY: If I may begin there, Judge. 6 THE COURT: There are also possibilities of 7 unmastering the complaint. 8 Let me put this issue very clearly. Mr. Motley is one 9 of the most significant plaintiffs' lawyers in the United 10 States. I don't mean to flatter you, Mr. Motley, but you told 11 me that yourself. 12 MR. HANLY: I did, Judge. 13 THE COURT: There are people that want you. A court 14 should not very lightly interfere with a client's choice of a 15 lawyer. However, there are significant issues that are posed 16 by the substantial relatedness issue of Section 5-108 of our 17 disciplinary rules which would bind all of us, not as statutes 18 but as guides, to proper professional conduct. 19 You have to worry about how this litigation will go 20 forward because we are dealing with the integrity of the 21 lawsuits. We have to be concerned with the kinds of 22 disclosures that are being made to clients so that they make 23 informed choices and the consequences of those choices as we go 24 along in the lawsuit, because it will be very difficult to deal 25 with changing decisions, whether we want this lawyer or that SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 15 3178lLYLA 1 lawyer, and at what point in time. We have to deal with the 2 Gaff cases. We have to deal with the Greene-Wotton cases. We 3 have to deal with the effects of what we say on the steering 4 committee. 5 There are three issues, Mr. Hanly. One is whether or 6 not Greene-Wotton and Gaff presents substantial relatedness to 7 Allied. Second, if you rely on the willingness of clients to 8 truncate their lawsuits to disclaim any claims against the Port 9 Authority, there is a way of showing a nonsubstantial 10 relatedness, do you get out of the substantial relatedness rule 11 and do you create a compromise of the integrity of the 12 proceedings that can't be tolerated? Third, with regard to the 13 overall conduct in the litigation, can protocols be developed 14 among the plaintiffs' steering committees, an executive 15 committee to assure that if there is a substantial relatedness, 16 there can be a substantial screening to avoid prejudice to the 17 Port Authority? 18 Those are the three issues that you need to address. 19 MR. HANLY: Yes, your Honor. 20 If I may, Judge, I want to address those directly and 21 comprehensively. But before I do so, I would like to say the 22 Port Authority, I believe, has conceded no substantial 23 relatedness between the Flight 93 cases, which was the flight 24 which departed from Newark Airport, and the Allied case. 25 THE COURT: They may not concede it, but they probably SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 16 3178lLYLA 1 have to. 2 MR. HANLY: I just want to say -- 3 THE COURT: I wouldn't waste time on that. 4 MR. HANLY: It follows from that if 93 is not related, 5 the other flight cases cannot be. 6 THE COURT: I don't think there is a substantial 7 relatedness with regard to any claim by a member of a crew or 8 passenger on any of the four flights. 9 MR. HANLY: Thank you, your Honor. That was the only 10 point I wanted to make that applied across the four flights 11 that are at issue. 12 THE COURT: We still have to be concerned, however, 13 how the lawsuits are managed. 14 MR. HANLY: I understand that, Judge. As your Honor 15 said, that's a separate issue, which I hope I can get to and 16 satisfy the court with respect to it. 17 With respect then to the so-called building cases or 18 the ground cases or the Gaff and the Greene-Wotton cases, we 19 disagree, Judge, that there is a substantial relationship 20 between the Allied cases and those cases. The principal reason 21 we disagree, your Honor, is, as the court well knows, the 22 substantial relationship test in this circuit has been 23 interpreted to mean "an identity of issues" between the 24 challenged litigation and the prior matter. 25 Indeed, Judge Martin in a case that we cite to your SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 17 3178lLYLA 1 Honor called the Junior Gallery case against Foreign Resources 2 Corp., cited at page 18 of our opposition memorandum, a 3 decision from Judge Martin in 1994, has interpreted the 4 identity of issues requirement, citing prior decisions from 5 within this circuit, as "a virtual congruence" of the issues in 6 the first matter and the issues in the challenged matter. 7 Well, Judge, if we look at the issues in Allied and 8 the issues in the building cases for 9/11, Greene-Wotton, Gaff, 9 etc., there is no virtual congruence, there is no identity of 10 the issues. If I could illustrate by using my left and my 11 right hand, it seems to me that virtual congruence means 12 something like, my thumb of my left hand meets the thumb of my 13 right hand, the index finger, etc., etc. Or maybe my thumb 14 meets the index finger or maybe it meets the middle finger. It 15 does not mean my thumb of my right hand touches the tip of the 16 small finger of my left hand. And that is the limit, that 17 latter example, of the relationship we submit between the 18 Allied case and the building cases in 9/11. 19 Let me explain that specifically. The Allied case was 20 not a case in which the Port Authority sued the manufacturers 21 of the asbestos products because they sold it fireproofing 22 products which didn't protect against fire. That was not the 23 basis of Allied. The basis of Allied, as set forth in the 24 attachment to Mr. Bialik's affidavit, which is the summons with 25 notice which commenced that lawsuit, and this is Exhibit A to SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 18 3178lLYLA 1 Mr. Bialik's affidavit on the initial moving papers, 2 describes -- 3 THE COURT: Did you both use letter exhibits? 4 MR. HANLY: I believe we used numbers, Judge. The 5 Port Authority used letters and we used numbers. 6 THE COURT: I have the summons with notice. You're 7 not going to find too much in the summons with notice. 8 MR. HANLY: I respectfully disagree, your Honor. It 9 summarizes -- and then I am going to turn to Mr. Bialik's 10 affidavit itself. 11 THE COURT: Mr. Hanly, I have practiced long enough in 12 New York to know that a summons with notice doesn't give you 13 much notice. 14 MR. HANLY: What it says -- 15 THE COURT: The complaint that had to be issued 20 16 days after demand would be more informative. 17 MR. HANLY: My point, your Honor, is this. 18 THE COURT: And the bills of particulars, if there 19 were any, and the interrogatories, if there were any, and the 20 discovery, which there was a massive amount, would be 21 informative. The test is not identity of issues. It's a 22 commonality with regard to the underlying facts. 23 MR. HANLY: With the utmost respect, your Honor, the 24 Circuit, of course, speaks of an identity of issues. In the 25 Junior Gallery case, Judge Martin, and I am quoting, stated SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 19 3178lLYLA 1 that disqualification is not mandated merely because some 2 matters have some factual connection to the allegations of the 3 present complaint. 4 Now, the point I want to make, Judge, is that the 5 Allied case was at bottom a case that said, the Port Authority 6 said to the 100 or so defendants they sued, you folks are 7 liable not because you sold us fireproofing that won't protect 8 against fire; you are liable because you sold us a product 9 that's going to give off dangerous asbestos which is going to 10 harm people not in the event of the fire, but instead, in the 11 ordinary course of operating and using the building. 12 THE COURT: Allied was a case that dealt with the 13 friability of asbestos and the health hazard that it posed 14 throughout the building, necessitating a change in fireproofing 15 material. But in testing the adequacy of that which was to be 16 exchanged, Ness, Motley, as I am advised, necessarily had to 17 have extensive acquaintance with the entire internals of the 18 World Trade Center. The ability to protect against the heat of 19 a fire and thereby guard the integrity of the building that is 20 constructed using steel is essential. Ness, Motley had to be 21 acquainted with substitutes for asbestos. Ness, Motley had to 22 know the supporting structures in the whole building. Ness, 23 Motley had to know everything that went on in the building in 24 terms of its design, its evacuation, its procedures and the 25 like. This is not a simple case. They logged 58,000 hours in SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 20 3178lLYLA 1 this case. That's a lot of hours. 2 MR. HANLY: It is, your Honor. All of the issues that 3 your Honor has just listed, of course, are factual matters that 4 were fully discovered and fully discoverable. It is difficult 5 to concede of something confidential or in the nature of a 6 secret concerning the structure and design of the building. 7 THE COURT: This is another aspect of a problem. Ms. 8 McIntyre talked about two sections. There are two sections 9 that are implicated. One has to do with substantial 10 relatedness, and that's 5-108. And the other one has to do 11 with the client's right to have the confidences and secrets 12 imparted to the lawyer protected, and that's 4-101. 13 Anyone involved in litigation, especially the 14 complicated nature of this nature, knows that a lawyer has to 15 have a great deal of information from which he gleans that 16 which is going to be used in discovery, and to find out exactly 17 what of the information given by a client is in confidence and 18 secret as opposed to that which has been made public is a task 19 that's impossible to perform, which, if performed, will 20 compromise the very confidences and secrets that the client 21 would be entitled to keep preserved. 22 I don't know how you can argue that point, Mr. Hanly. 23 It seems to me a point that your client is willing to concede 24 by advising us that his clients, recognizing the potential for 25 compromise, have been willing to proceed with him on the basis SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 21 3178lLYLA 1 that he won't sue the Port Authority and will define his 2 intention otherwise. 3 MR. HANLY: That is certainly the concession that 4 Ness, Motley has made for a variety of reasons. 5 THE COURT: Let's move away from 5-108 and 4-101 in 6 relationship to confidences and secrets and talk about whether 7 this is a meaningful and practical solution to the problem. 8 MR. HANLY: In the context of the consolidation, your 9 Honor? 10 THE COURT: Is this something that a client can be 11 expected rightfully to do, when there is so much uncertainty at 12 this point in time in how to proceed, to give up a right to 13 proceed against one of the major defendants in the case? 14 That's a very hard thing to do. Were it not for the potential 15 for compromise with Mr. Motley, I would venture to say there 16 would be no chance that he would give up a claim against the 17 Port Authority willy-nilly. 18 MR. HANLY: Just so the record is clear, the 19 concession that Ness, Motley has made is that it would not 20 pursue the Port Authority with respect to design or 21 construction matters. With respect to negligent evacuation 22 that is a matter that we believe -- 23 THE COURT: Without knowing the design of the building 24 and what is going to stand and what is going to fall and what 25 is reasonable or not, you can't make a claim on evacuation SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 22 3178lLYLA 1 negligence. Evacuation negligence is a choice of alternatives 2 that have presented themselves possibly in the confusion and 3 tension of a major fire. What is reasonable, what is not 4 reasonable is going to involve the whole design and 5 construction of the building and all the information that Ness, 6 Motley learned representing Allied. 7 I can't follow that distinction. If I were to follow 8 that distinction, I would be begging for trouble along the way, 9 because we would very quickly be involved in discovery fights 10 as to discovery that is going to be on the narrow parameters of 11 this lawsuit. It's not practical, Mr. Hanly. We need to ask 12 ourselves, can a client be asked reasonably by a lawyer to give 13 up a major claim? And if the lawyer is recommending that, is 14 the lawyer in a conflict because the lawyer is engaged in a 15 situation where the lawyer's major financial interests are at 16 stake? 17 MR. HANLY: Let me address -- 18 THE COURT: This is a major case for Ness, Motley. 19 It's the largest case of the year. If the price of his 20 admission into the case is to give up a part of it, he is 21 presented with a conflict, his own interests and the client's 22 interests. 23 MR. HANLY: At least two points in response to your 24 Honor's comments. 25 First, as I hope we made clear and made clear also SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 23 3178lLYLA 1 through the submissions of Professor Green, it is appropriate 2 for an attorney and a client to agree on the scope of the 3 representation. 4 THE COURT: If the client is fully advised by the 5 lawyer and if the lawyer finds it obvious that he can make a 6 disclosure in the situation. The conditions are not ripe, 7 Mr. Hanly. They just don't fit the facts. 8 MR. HANLY: I believe it does a disservice to Ness, 9 Motley and the reputation of Ness, Motley to set forth the 10 proposition that the firm would, because of financial 11 considerations, somehow color its judgment or color its advice 12 to a group of clients. The court needs to keep in mind, as we 13 tried to point out in our papers, every client of Ness, 14 Motley's in the Southern District of New York, every single 15 one, your Honor, is also a client in the action against the 16 sponsors of terrorism that is pending in the District of 17 Columbia. So it's not as if you have a situation, which the 18 courts are often confronted with, with a scramble among law 19 firms to gather clients because of -- 20 THE COURT: I don't accuse them of that. 21 Rule 5-101 provides as follows: A lawyer shall not 22 accept or continue employment if the exercise of professional 23 judgment on behalf of a client will be or reasonably may be 24 affected by the lawyer's own financial, business, property or 25 personal interests, unless a disinterested lawyer would believe SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 24 3178lLYLA 1 that the representation of the client will not be adversely 2 affected thereby and the client consents to the representation 3 after full disclosure of the implications of the lawyer's 4 interest. 5 Now, there are several factors that I have to deal 6 with here, but I think the most important one is this. Unless 7 a disinterested lawyer would believe that the representation of 8 the client will not be adversely affected. I frankly have to 9 say that I can't believe a disinterested lawyer would have an 10 opinion that it will be wise to surrender a major claim against 11 a major defendant at the very outset of litigation because the 12 lawyer can't handle that claim. 13 MR. HANLY: Your Honor, certainly those clients who 14 are already represented by Ness, Motley in connection with the 15 District of Columbia proceedings are able to acquire other 16 counsel with respect to any claim that the court were to rule 17 would be improper to bring against the Port Authority. 18 THE COURT: Exactly. Ness, Motley may be very, very 19 good, but there are others who are also very, very good. I 20 wouldn't want to compare, and I wouldn't know how to compare, 21 but this is a rich country, rich in talent. 22 MR. HANLY: The proposition that we placed before the 23 court, and I understand the court's comments, and I think I 24 understand the court's current thinking, was that the 25 representation could be limited in a fashion that building SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 25 3178lLYLA 1 claims against the Port Authority could cut out certain aspects 2 as to which Ness, Motley has conceded the court might consider 3 them problematic. 4 THE COURT: I have thought about this a lot. I have 5 thought about the issue of conflict for a long time. I don't 6 think that Ness, Motley can handle a claim against the Port 7 Authority in its capacity as operator or owner of the World 8 Trade Center buildings in any fashion, in any fashion whatever. 9 I think there is a very good argument that they should be 10 allowed to proceed with their claims against the airline 11 companies and the security companies and the Port Authority as 12 owner of Newark Airport. I am concerned, however, whether or 13 not the efficient conduct of this litigation would require such 14 a sharing of information as to compromise Ness, Motley's 15 ability to be an efficient member of the team or otherwise 16 prejudice the Port Authority's interest. 17 What kinds of protocols can be developed so that Ness, 18 Motley does not get exposed to facts dealing with discovery 19 against the Port Authority in the World Trade Center buildings? 20 MR. HANLY: Well, your Honor, the first is one that 21 Ness, Motley has already put forth, and that is that it would 22 have nothing whatever to do with the deliberations, 23 proceedings, what have you, of the buildings' subcommittee. 24 There is no necessity, in our view, that Ness, Motley cannot 25 serve on an executive committee of this litigation and simply SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 26 3178lLYLA 1 be precluded from dealing with any of the issues that arise 2 concerning the buildings and which are dealt with by the 3 building subcommittee which has been constituted, as your Honor 4 is aware. 5 THE COURT: A steering committee or an executive 6 committee needs to understand what the progress of discovery is 7 against different categories of defendants, whether the 8 discovery is proceeding to elicit useful admissions or not, 9 what sequence of witnesses might be available, and so on. 10 How would the proper sensitivities of the Port 11 Authority be protected that that kind of exchange of 12 information would not compromise its confidences and secrets? 13 How would, practically speaking, Ness Motley avoid exposure to 14 such information? How could the members of the executive 15 committee so discipline their discretions as to be able to say 16 some things when Ness Motley was not around, other things when 17 Ness, Motley was around, and yet effect the efficient 18 coordination? 19 MR. HANLY: I believe, and Mr. Moller is, of course, 20 here and can address the court, but I believe that's been done 21 already. What I mean by that is that we made this offer, I 22 believe, in the first go-around of papers concerning Ness, 23 Motley going off the buildings' committee, and from that point 24 on meetings of the executive committee, to the extent that 25 issues -- these have mostly been conference calls, your SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 27 3178lLYLA 1 Honor -- to the extent that issues have arisen concerning, A, 2 the buildings, or B, Ness, Motley's general, overall role in 3 view of the pendency of the Port Authority motion, have been 4 dealt with by Mr. Moller and his colleagues and the other 5 members of the executive committee without Ness, Motley, any 6 representative of Ness, Motley being present. And, in 7 addition, as your Honor knows, I am not Ness, Motley, I am a 8 member of my own law firm, we affirmatively took the step of 9 saying that in those instances we would not participate either, 10 because all of these issues have been up in the air. 11 Mr. Moller can correct me if I have misstated 12 anything, but I believe that has already been done. 13 THE COURT: Mr. Moller, you have a very sensitive 14 platform at this point in time. But I would feel that you have 15 the experience and the ability to help me in this issue. 16 Frankly, I am disposed not to interfere with 17 Mr. Motley's representations against the airline. People have 18 chosen him. There are different issues that implicate 19 different concerns entirely. They don't involve any of the 20 discovery that would touch upon anything in the Allied case and 21 it's not appropriate for a judge to interfere with a client's 22 interest in a particular lawsuit. 23 MR. MOLLER: Let me say that you're right. The 24 plaintiffs' committee is in a sensitive position. We have the 25 greatest respect for Mr. Motley and his skills and the skills SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 28 3178lLYLA 1 of the people that have assisted him thus far in this lawsuit. 2 We have little but praise for his effort and for the 3 contribution he could make. 4 At the same time, we don't have a dog in the fight 5 between the Port Authority and Mr. Motley. One of the things 6 that we were really waiting for is to be able to gauge your 7 response to the conflict issue. 8 THE COURT: Let's suppose I rule in the way I just 9 outlined. What kind of protocol would you give? 10 MR. MOLLER: Frankly, the first thing I would do would 11 be to sit down and discuss with Mr. Motley and Mr. Hanly a 12 protocol. I don't think I can stand here right now and decide 13 exactly what they would be in and what they would be out of. 14 It may even be that Mr. Motley would decide that the complexity 15 of the protocol was such that he would feel that he would 16 withdraw from the committee to avoid the problems. It may be 17 just more trouble for him than it is worth. 18 THE COURT: If he is taking a major role, he needs to 19 be embraced by the committee. 20 MR. MOLLER: That's right. That's a decision he would 21 make. 22 THE COURT: It's a decision that I would want. This 23 litigation has to be done efficiently, otherwise the costs, the 24 burdens, the issues would just run amuck and we will lose all 25 discipline. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 29 3178lLYLA 1 MR. MOLLER: In response to the third question that 2 you posed when you submitted the interrogatories after the 3 initial briefs were filed, I responded at the end that we would 4 find a way to structure the work to deal with your ruling. And 5 if we discovered or were presented with a real conflict that 6 inhibited the work of the committee, we would let the court 7 know, and I, frankly, would ask Mr. Motley under those 8 circumstances to resign from the committee. Because if it 9 impinged upon the orderly functioning of the committee, we 10 would not be fulfilling our fiduciary responsibility. 11 THE COURT: Ms. McIntyre, how do you feel about this 12 last aspect? 13 MS. McINTYRE: The Port Authority has thought about 14 this issue a great deal, has lost a lot of sleep over this. It 15 has troubled me greatly. It has troubled my co-counsel 16 greatly, my client greatly. I don't know that there is an easy 17 way out of this. What I do know is I do not think that Ness, 18 Motley can serve on the executive committee and efficiently 19 administer this case. I don't know how a protocol can be drawn 20 up. I don't know how that protocol can be supervised. 21 I have in my hand plaintiffs' master discovery first 22 set in which Mr. Motley's firm name appears on the first page 23 and which on page 84 the documents which we discussed in my 24 opening are requested of the Port Authority in which in 20 days 25 they have to find. We are not sure where we are going to get SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 30 3178lLYLA 1 those from, maybe Mr. Motley. So we have a real dilemma here. 2 That is why we have a dilemma even with regard to the Flight 93 3 cases, your Honor. 4 THE COURT: I don't think it needed expertise in the 5 building to know how to draft discovery that would implicate 6 these concerns. Nevertheless, there are concerns. 7 Ms. McIntyre, would it make sense to give Mr. Moller a 8 chance to draft some protocols and to examine what he comes up 9 with? 10 MS. McINTYRE: With respect to the protocols, we would 11 like to make clear, and what I am hearing here is protocols 12 would call for limitation of participation only to, as against 13 the Port Authority, the airline cases. 14 THE COURT: Right. 15 MS. McINTYRE: And would also limit their 16 participation in any design claims, even if those claims are 17 not brought against the Port Authority. Silverstein is 18 involved in this. 19 THE COURT: He could not press those claims. I don't 20 believe he can represent any claimants other than those against 21 the airlines, security companies and all those that have to do 22 with the airports, but not against the building, the owner of 23 the building, the lessee of the building, the operators of the 24 building, anything having to do with the building. 25 MR. MOLLER: May I say something in response to Ms. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 31 3178lLYLA 1 McIntyre's concerns? 2 THE COURT: Yes. 3 MR. MOLLER: My partner Brian Alexander drafted the 4 master discovery. He can tell you that we didn't need the help 5 of Mr. Motley to get ahold of the documents or identify 6 documents that are described in our pleading. 7 Mr. Alexander, why don't you -- 8 THE COURT: You don't need to prove it. 9 MR. MOLLER: Second, it may well be that the proper 10 protocol is to limit Mr. Motley's involvement in the cases 11 against the airlines. I just have to give it a little bit of 12 thought, together with Mr. Motley and his people. They may 13 decide that their contribution would be so circumscribed that 14 they don't want to participate in the executive committee. 15 It's not an invitation for them to get off because they have 16 made a significant contribution thus far, but having heard your 17 ruling -- 18 THE COURT: I haven't ruled yet, and I am not going to 19 rule today. I have given you the thoughts I have up to this 20 point, but I think the seriousness of the issue merits a 21 written decision so that anyone who feels aggrieved or feels 22 there is appellate remedy can seek it. 23 I am not suggesting it, but I do think that I should 24 write on this, and I will. 25 MR. MOLLER: May I take you up on your invitation to SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 32 3178lLYLA 1 submit a protocol? 2 THE COURT: Yes. This is what I have in mind. You 3 tell me how many days you need to develop a protocol, a 4 protocol to identify the various committees that you have set 5 up and plan to set up, you being plaintiffs' committee, which 6 one would involve Mr. Motley, which not, whether if Mr. Motley 7 is not involved Mr. Hanly could be involved. 8 I am concerned about the Arthur Andersen case. I 9 forget the name of it. It involved a litigation in 10 Philadelphia and a litigation in New York and the court 11 concluded that confidences and secrets of clients had been 12 compromised and the lawyer was disqualified from both cases. 13 Not only the lawyer but also the lawyer who was working with 14 the compromised lawyer. I have to get that case but it could 15 be found very easily. We have to do an analysis whether 16 Mr. Hanly can separate from Mr. Motley. 17 MR. MOLLER: My concern, it may be more subtle than 18 those that have been addressed specifically, if this court were 19 to find that there is a conflict and an appellate court were to 20 decide that the court was right in finding a conflict, and we 21 proceed with discovery, I don't want to run into the position 22 where the other members of the plaintiffs' committee are 23 challenged for having been tainted with the possibility of 24 exposure. Really, that's a concern. 25 THE COURT: Yes, it is. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 33 3178lLYLA 1 MS. McINTYRE: I would say that is exactly why we have 2 proceedings in this courtroom, why we have the inquiry today, 3 to remove the possibility of that taint and therefore to -- 4 THE COURT: The issues of conflicts are among the most 5 sensitive that a judge has to deal with. I am not here to 6 enforce the disciplinary rules. I am here to make sure that 7 these proceedings maintain their integrity, and I will be 8 active to enforce that. I would like to see the protocols. I 9 would like you to examine the law on conflict. 10 MR. MOLLER: I will work with Mr. Hanly and Mr. Motley 11 and the other members of the plaintiffs' committee to explore, 12 A, a protocol, if one is going to be submitted, or to advise 13 the court as to what the next step is in response to the 14 indications you have given as to your views at this time. 15 THE COURT: I would like you to take Ms. McIntyre into 16 your -- I wouldn't say confidences, but at least give her 17 disclosure along the way so she can react and you can take into 18 consideration her reactions as well. 19 MR. MOLLER: If we can have that back to you on the 20 24th or just before the 24th when we are going to meet with you 21 on the discovery issues, that will be reasonable timing for us. 22 THE COURT: I would like, if it's possible, to have a 23 few days to reflect on that which you give me before meeting. 24 MR. MOLLER: I will get it to you a few days before. 25 THE COURT: If I could have them on the 21st. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 34 3178lLYLA 1 MR. MOLLER: That's fine. 2 THE COURT: If Ms. McIntyre has objections, it might 3 be better to include her objections in the letter. 4 MR. MOLLER: I will serve her with it. We will work 5 it out. Frankly, everybody is sensitive to the issue, and I 6 think we will come up with a solution that satisfies the court, 7 the Port Authority and Mr. Motley's interest. That's all I can 8 say. 9 THE COURT: Mr. Hanly. 10 MR. HANLY: Your Honor, if I may, I just wanted to ask 11 the court's permission that with respect to the Arthur Andersen 12 issue that your Honor just raised, if I or someone on my firm's 13 behalf may independently make a submission to the court? 14 THE COURT: The case had to do with IOS. It was an 15 international mutual fund or IDS. If we find it ahead of you, 16 we will let you know. 17 MR. HANLY: Can I address the issue in a submission to 18 the court? 19 THE COURT: Yes. I will be very pleased to have that. 20 If you have not yet reached the point of exchanging 21 information that would be potentially of a confidential or 22 secret nature, I think you will have avoided the problems in 23 that case. 24 MR. HANLY: I can state on the record and under oath 25 that I know nothing about any confidences that may exist with SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 35 3178lLYLA 1 respect to the Allied case. I think it may also be noteworthy 2 for the court to know that not only was I not involved with 3 Ness, Motley in the Allied case, but I represented a defendant 4 in the Allied case. 5 THE COURT: Ms. McIntyre, I think you were standing as 6 well. Did you have anything more to say? 7 MS. McINTYRE: No, your Honor. 8 MR. MOLLER: I have one request sparked by Ms. 9 McIntyre's concern. If there are relevant factual documents, 10 not work product materials, that relate to the Allied case 11 which the Port Authority believes are in Mr. Motley's custody, 12 or which are in the Port Authority's custody, I would like to 13 be sure that those are preserved so that we can serve a 14 subpoena at some point in time and get the production; not the 15 work product but the production that the Port Authority now 16 says is not in its possession. 17 MR. HANLY: There is no issue there. Whatever Ness, 18 Motley may have is preserved. 19 THE COURT: Why don't you return it to the Port 20 Authority? 21 MR. HANLY: We made that offer, your Honor, and the 22 Port Authority in its most recent submission seems to have 23 said -- 24 THE COURT: Ms. McIntyre, I would like you to accept 25 the offer. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 36 3178lLYLA 1 MS. McINTYRE: I will consult with my colleagues, the 2 trial attorneys that are responsible for the documents, and we 3 will make sure that that is taken care of. 4 THE COURT: They should be stamped in some fashion and 5 identified so there could no dispute that they were given. 6 MR. MOLLER: Thank you, your Honor. 7 THE COURT: Could I get a glimpse of what proceedings 8 there might be on the 24th? 9 MR. MOLLER: We are talking about the discovery? 10 THE COURT: We don't know what the objections are or 11 what the issues are going to be. 12 MR. MOLLER: We have served the discovery obviously on 13 the defendants' liaison counsel. It's my expectation that 14 within the next couple of days we are going to sit down with 15 Mr. Barry and narrow those discovery requests to those which we 16 want to bring to the court's attention and see if we need your 17 help. It is not going to be more complicated than that. We 18 also may have some preview of the issues and focus of the 19 defendants' motions to dismiss which will give us a sharper 20 focus on our discovery. I think that's going to work out. 21 THE COURT: Where does the government stand on its 22 objection? 23 MS. NORMAND: Sarah Normand. The government has, of 24 course, reviewed the discovery requests that have been served 25 and the government is relying on the protocol that was SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 37 3178lLYLA 1 submitted to the court both in the form of the McHale 2 declaration and subsequent letter to the court. We have met 3 briefly with members of the defendants' committee regarding 4 what they are preparing in response, and we will be submitting 5 to the TSA for review, and we are looking forward to their 6 submissions. We are, of course, working with lawyers from both 7 sides to facilitate it. 8 THE COURT: Good. I think that's all I have at this 9 point. Thanks very much. 10 (Adjourned) 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300