1 351gInRe Motions 1 UNITED STATES DISTRICT COURT 1 SOUTHERN DISTRICT OF NEW YORK 2 ------------------------------x 2 3 IN RE: 4 SEPTEMBER 11 LITIGATION 21 MC 97 (AKH) 5 5 6 ------------------------------x 6 7 May 1, 2003 7 2:40 p.m. 8 New York, N.Y. 9 10 Before: 10 11 HON. ALVIN K. HELLERSTEIN, 11 12 District Judge 12 13 APPEARANCES 13 14 HANLY & CONROY LLP 14 Attorneys for Plaintiffs 15 BY: PAUL J. HANLY, JR. 15 16 KREINDLER & KREINDLER 16 Attorneys for plaintiffs 17 BY: MARK MOLLER 17 BRIAN ALEXANDER 18 19 19 DEBEVOISE & PLIMPTION 20 Attorneys for defendant American Airlines 20 BY: ROGER E. PODESTA 21 21 ST. JOHN & WAGNER 22 Attorneys for defendants Continental and America West 22 BY: PETER B. VAN DEVENTER JR. 23 24 25 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 2 351gInRe Motions 1 APPEARANCES (Cont'd) 2 2 REBOUL, MacMURRAY 3 Attorneys for defendant The Boeing Company 3 BY: WILLIAM SUSSMAN 4 4 5 QUIRK & BAKALOR 5 Attorneys for defendant United Airlines 6 BY: JEFFREY J. ELLIS 6 7 7 O'MELVENY & MYERS 8 Attorneys for defendant Massport and all airport operators 8 BY: MARK WOOD 9 10 FLEMMING, ZULACK & WILLIAMSON 10 Attorneys for defendant The Port Authority, et al. 11 BY: RICHARD A. WILLIAMSON 12 13 PAUL WEISS, RIFKIND 13 Attorneys for defendant Fiduciary Trust, Franklin Templeton 14 BY: LES FAGEN 14 15 DOMBROFF & GILMORE 15 Attorneys for defendant IMWAA & City of Portland 16 BY: MARK DOMBROFF 16 17 17 18 19 (In open court) 20 THE COURT: Be seated, everyone. Good afternoon. Our 21 purpose this afternoon is to hear argument in six categories of 22 motions. These motions challenge the legal sufficiency of the 23 complaints. Most of them assume that the plaintiffs will be 24 able to prove the allegations that have been set out in the 25 complaints but argue that even if everything is proved, there SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 3 351gInRe Motions 1 is no basis for liability. 2 Mainly, the arguments will go on a question of duty 3 and generally duty is an issue of law for the judge. So to 4 speak if the plaintiffs allege that certain defendants were 5 negligent or had defective products and because of those 6 deficiencies through negligence or the deficiencies in the 7 products people were injured or caused to die, the arguments 8 nevertheless proceed that there was no legal duty that was owed 9 by the defendants to the plaintiffs. And without legal duty 10 there cannot be recovery. The arguments will mainly deal with 11 that subject, whether or not there was a legal duty on the part 12 of the defendants who for this purpose only concede that they 13 may be found liable under negligence or a product warranty 14 theory. 15 Nevertheless, notwithstanding such alleged negligence, 16 or alleged breach of warranty as we would call it, and even 17 though there might be some traceable relationship between that 18 negligence and the injury that was caused to the plaintiff, 19 nevertheless the argument will go that the defendants should be 20 excused because of the absence of legal duty. 21 I thought to give that preface, it maybe somewhat 22 inaccurate and counsel will show me the inaccuracies during the 23 course of their arguments, but I thought to give that preface 24 for the benefit of the public and the press who might be here 25 so they will understand the context of the arguments that will SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 4 351gInRe Motions 1 go forward this afternoon and, to the extent we are not 2 finished, tomorrow afternoon. 3 I have distributed a sheet that sets out the order of 4 the arguments and who will be speaking and we'll try to follow 5 that sequence. So the first argument will be the aviation 6 defendants' motion to dismiss the ground damage claims. Mr. 7 Podesta and Mr. Ellis will speak for the moving parties, the 8 defendants, and Mr. Moller will speak for the plaintiff. 9 Mr. Podesta. 10 MR. PODESTA: Thank you, your Honor. Roger Podesta 11 counsel for American Airlines on behalf of the aviation 12 defendants in support of their motion to dismiss the ground 13 damage claims. 14 At the outset, your Honor, on behalf of the entire 15 aviation subcommittee, I would like to emphasize that the 16 filing of these legal motions in no way indicates a lack of 17 sympathy for the grief and suffering of the victims of the 18 terrible events of 9/11. Like all Americans, defendants share 19 a deep sense of loss at the events of that awful day. But 20 these motions raise important and often novel questions of law 21 and their resolution at an early stage of this litigation will 22 hopefully assist the 9/11 victims in making an informed 23 decision whether to seek compensation in the courts or from the 24 Victims Compensation Fund. 25 The ground damage claims arise under Section 408B1 of SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 5 351gInRe Motions 1 the Air Transportation Safety and Systems Stabilization Act 2 which creates an exclusive federal cause of action for damages 3 arising out of the hijackings and subsequently crashes of 4 American Airlines flights 11 and 77 and United Airlines flights 5 93 and 175. That Section, 408B2 of the act provides that the 6 substance of this cause of action is to be derived from the law 7 of the state where the crash occurred unless that law is 8 inconsistent with or preempted by federal law. 9 On this motion, the focus will be on New York law 10 since it is undisputed that New York provides the source law 11 for the World Trade Center claims. 12 One or two claims arise out of the crash of Flight 77 13 into the Pentagon and are derived from Virginia law. However, 14 at least on the duty issues presented by this motion to dismiss 15 neither side has identified any material differences between 16 New York and Virginia law. 17 Moreover, under the act, where mandatory and specific 18 Federal Aviation Administration regulations or directives 19 having the force of law were in effect on September 11, those 20 FAA requirements will override any common law principles 21 derived from state law. 22 This conclusion is supported both by the text of 23 Section 408B2 which expressly subordinates source state law to 24 inconsistent federal requirements and by the considerable body 25 of case law that has construed very similar statutory language SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 6 351gInRe Motions 1 in the Price Anderson Amendments Act in dealing with injuries 2 from nuclear acts. 3 Thus, under the act, specific mandatory FAA 4 requirements establish the standard of care to be followed by 5 the aviation defendants and largely to find the nature and 6 scope of their duties. 7 Turning to the merits of this motion, as the court 8 indicated, under New York law duty is a question of law for the 9 court. The New York cases analyze duty issues as two separate 10 but closely related questions. First, whether the defendant 11 owes any duty to the plaintiff under the circumstances of the 12 case; and second, if so, what is the scope of that duty. 13 Now, in the absence of controlling precedent, the 14 first of these questions is determined by an analysis of public 15 policy considerations. One objective of that analysis as the 16 New York courts have repeatedly emphasized is to limit the 17 legal consequences of wrong to a controllable degree. 18 The second, or scope of duty question, is a Pallsgraph 19 analysis focusing on the foreseeability of the risk or hazard 20 at issue. Of course under New York law, the foreseeability of 21 a risk for hazard does not operate to create a duty where none 22 would otherwise exist. Foreseeability comes into consideration 23 only to define the scope of duty when the court has previously 24 determined that there is a duty in place. 25 In my argument I'll focus on the first issue, the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 7 351gInRe Motions 1 existence of the duty. Mr. Ellis will focus on the second 2 issue, the scope of duty, with particular emphasis on the 3 relationship of the federal regulatory scheme pertaining to 4 terrorist threat assessment to the legal foreseeability of the 5 9/11 attacks. 6 The aviation defendants respectfully submit that 7 whether the issue is analyzed as existence of duty or scope of 8 duty or whether it is analyzed under state or federal law, they 9 owe no legal duty to the ground damage claimants as 10 distinguished from the passengers in the circumstances of 9/11. 11 Plaintiffs' position as I read their briefs appears to 12 be that there are no novel legal issues presented by this 13 motion, that insofar as duty is concerned, this case is little 14 different than an ordinary negligent piling or negligent 15 aircraft maintenance case in which ground damage resulted. 16 Plaintiffs basically contend that if the aviation 17 defendants negligently failed to defect concealed weapons 18 brought aboard aircraft by terrorists, those defendants become 19 liable to all the world for whatever damages the terrorists may 20 happen to inflict, even if the terrorists seize control of the 21 aircraft, navigate the planes themselves and deliberately crash 22 the planes into preselected targets hundreds of miles from 23 their intended flight paths. 24 THE COURT: Mr. Podesta, let me stop you and ask you 25 perhaps a more basic question. Let's suppose an airplane takes SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 8 351gInRe Motions 1 off from Kennedy Airport and through negligence of the carrier 2 or the manufacturer or someone the plane is not able to take 3 off and collides with residential housing in the Rockaways. Is 4 there liability? 5 MR. PODESTA: That would be -- 6 THE COURT: I'm assuming negligence. 7 MR. PODESTA: Assuming negligence and assuming there 8 is damage to houses on the ground that is the type of 9 traditional ground damage negligent maintenance cases in which 10 the courts have imposed duty. 11 THE COURT: Even though the people are not the 12 passengers and even though people may have lost their lives 13 just because they happen to live in the flight path of the 14 aircraft? 15 MR. PODESTA: That's correct, we would concede in 16 those circumstances assuming the facts of liability are proven 17 there is a legal duty. 18 THE COURT: Is it because that there is some 19 independent and supervening cause that you argue that there is 20 no legal duty in the case before us? 21 MR. PODESTA: There are two primary factors and they 22 act in combination rather than singly. 23 One of the factors is the potential for a limitless 24 liability to an indeterminate class of plaintiffs which is not 25 presented in the typical negligent piling or negligent SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 9 351gInRe Motions 1 maintenance case. 2 THE COURT: Why is that? 3 MR. PODESTA: Because, generally speaking, and all of 4 the cases that have dealt with this they really haven't dealt 5 with situations where an airplane has crashed into a stadium 6 and killed 20,000. They dealt with damages the scope of which 7 are roughly comparable to the damages ordinarily one would 8 expect from the damage to the aircraft and the passengers. 9 THE COURT: Let's take another season when the Mets 10 are going to flourish and therefore an airplane taking off from 11 LaGuardia has a disaster, explodes for some negligent reason 12 and lands on Shea Stadium and there are 50,000 people there. 13 MR. PODESTA: Well, the Mets going at great flourish 14 is kind of contrary to fact and hypothetical even after the 15 results of last night. That is a case the courts have never 16 confronted and there is case law, it is not our case law, that 17 deals with the truly extraordinary consequence, is liability to 18 be imposed in those circumstances. And it is always a matter 19 of line drawing. But here, we have not only that tremendous 20 damage -- 21 THE COURT: But there is no difference in kind really 22 between, let's say, a score of people in the Rockaways and the 23 crowd at Shea Stadium. 24 MR. PODESTA: There is no difference in kind but I 25 think the law of extraordinary consequences can sometimes draw SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 10 351gInRe Motions 1 a distinction based on degree. We are in an area of policy and 2 there are lines to be drawn that may occasionally seem 3 arbitrary. But what really distinguishes our case from Shea 4 Stadium is the intentional intervening acts of the third party 5 terrorists. 6 THE COURT: That's the crucial distinction. 7 MR. PODESTA: That is the crucial but they work in 8 combination. I think our argument would be weaker if we lacked 9 either of the two factors, and it is ultimately premised on the 10 presence of both of these factors. And it is premised on the 11 fact that, as the plaintiffs implicitly concede in their 12 papers, that no remotely similar event has ever occurred in the 13 history of aviation. 14 Basically the plaintiffs in their brief devote a lot 15 of effort to trying to analogize this to the negligent piling 16 cases and I think they use a hypothetical very similar to the 17 Shea Stadium incident although they don't incorporate the 18 implied won-lost record of the Mets. 19 The New York cases and those cases are really 20 different from what we faced on September 11. What we really 21 felt occurred were essentially acts of war against the United 22 States were being wantonly perpetrated. 23 So we have the two strains of the New York cases that 24 come together. A reluctance to expose even negligent 25 defendants to potential limitless liability to an indeterminate SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 11 351gInRe Motions 1 class of plaintiffs, and an equal reluctance to impose upon 2 defendants liability for harm brought about by intentional 3 criminal intervening acts of third parties. 4 Now, I think both sides have searched the case law and 5 they found no aviation case that is at all directly on point. 6 We are really dealing in the absence of directly controlling 7 precedent. And in those circumstances, Congress has entrusted 8 this court with making the basic policy determinations. 9 Under New York law, that public policy determination 10 has a sufficient flexibility to take into account all the 11 pertinent circumstances of the case. I think the point I would 12 like to make here is the fact that the defendants may owe a 13 duty under New York law to ground damage victims for harm 14 resulting solely from their own direct negligence, as in a 15 negligent piling case, the Shea Stadium hypothetical. Putting 16 aside the extraordinary consequences, that rule in no way 17 warrants the conclusion that a similar duty exists to that same 18 class of plaintiffs for harm resulting from intervening 19 criminal acts of third parties. 20 In every duty analysis, a critical question, your 21 Honor, is to whom, to what class of plaintiffs, is a duty 22 allegedly owed. And as emphasized in our reply brief, the 23 aviation defendants point to the New York Court of Appeals 24 decision in the Waters case as particularly illuminating of 25 that issue. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 12 351gInRe Motions 1 It is well-established under New York law that a 2 landlord is liable to its tenants and business invitees for 3 negligent security practices that permit third parties to 4 commit criminal acts on the premises. And I would analogize 5 that to the duty of the airlines in this case to the passenger 6 claimants. 7 It is also true under New York law that a landlord is 8 liable even to passersby with whom the landlord has no 9 relationship for injuries caused by its own direct negligence, 10 such as bricks falling from the façade of the building and 11 injuring a pedestrian. And that's the situation I would 12 analogize to the negligent piling cases that the plaintiffs 13 cite. 14 But in Waters, the Court of Appeals refused to impose 15 on landlords a duty to passersby for criminal acts committed on 16 the premises by third parties as a result of the landlord's 17 negligent security practices. And the Court of Appeals 18 concluded in Waters that imposing such a duty was inappropriate 19 because it created an a potential for unlimited liability on 20 the part of the landlords to an indeterminate class of 21 plaintiffs, the passersby, with whom the landlord had no 22 special relationship and because, further, any public policy 23 interest in deterrence was adequately discharged by the 24 landlord's potential liability to its tenants and business 25 invitees for the same negligent security practices. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 13 351gInRe Motions 1 And I submit that the analogy to our circumstances is 2 a close one. Indeed the landlord in Waters was accused of 3 essentially the same misconduct, negligent failure to secure 4 its premises from access by armed criminals, that is alleged in 5 the complaints against the aviation defendants. 6 So I suggest that under New York law, the negligent 7 piling cases upon which the plaintiffs rely cannot be 8 controlling. So we really turn to the public policy analysis 9 and I will deal first with plaintiffs' points and then turn to 10 the defendants'. 11 Plaintiffs attempt to distill a rule from the New York 12 cases that the courts consistently impose a duty on whichever 13 party is in the best position to prevent the occurrence of harm 14 to the plaintiff. In plaintiff's view, if I may paraphrase 15 their position a defendant has a duty if it is in a better 16 position than the plaintiff to prevent the harm. Now, that 17 sounds plausible. But no such rule is in fact contained in the 18 New York cases. 19 On the contrary, the New York courts have frequently 20 refused to find the existence of a legal duty merely because 21 the defendant is in a position to control the risk or prevent 22 the harm. 23 Waters itself is a classic example. According to the 24 allegations in that case, the landlord could have prevented the 25 passersby' injuries by installing better locks or improving the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 14 351gInRe Motions 1 lobby security system. 2 Similarly, in the Court of Appeals decision in the 3 Pulka case involving an injury to a pedestrian from cars 4 leaving a parking garage, the garage defendant was alleged to 5 have had the ability to prevent the injury simply by installing 6 speed bumps or stop or warning signs. 7 In McCarthy, the Long Island Rail Road shooting case, 8 the defendant manufacturer of black Talon bullets was alleged 9 to have had the ability to prevent the harm by selling the 10 product only to law enforcement and military personnel. 11 And I could cite numerous similar cases in our briefs 12 from New York appellate decisions that have reached a similar 13 conclusion. The simple rule of law is that in New York an 14 alleged ability to prevent the harm on the part of the 15 defendant is not a controlling public policy consideration for 16 duty analysis. 17 Indeed, if you think about it a little more deeply, if 18 a defendant were not in a better position than the plaintiff to 19 prevent the harm, there would be little reason for the court 20 even to reach the duty analysis for the case would likely fail 21 perhaps in some negligence or want of proximate cause. So I 22 don't think the plaintiffs' controlling public policy reason, 23 ability to prevent the harm is dispositive by any means here. 24 Too many cases to the contrary. 25 The aviation defendants respectfully suggest -- SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 15 351gInRe Motions 1 THE COURT: Can I be heard? 2 VOICE: No. 3 THE COURT: I don't think I said anything terribly 4 significant. 5 MR. PODESTA: I won't make the same comment, although 6 it might be true, but it might be taken as an admission. 7 THE COURT: No, I think you made a lot of significant 8 comments. 9 It is hard for me to understand, one is the issue of 10 foreseeability, and the other is this issue of public policy of 11 indefinite liability to an indeterminate class. You mentioned 12 in the preface to your remarks and both are applicable. 13 The Waters case is interesting because it could be 14 said that the landlord could reasonably know that there were 15 intruders lurking around the housing buildings and although the 16 primary obligation which the court held was to the residents in 17 securing property it would not have been so much of a great 18 burden to secure the housing against intruders. 19 Yet one pauses there because despite all the 20 protections there could be possible, intruders will get in and 21 there's not much that you would want landlords to do in that 22 kind of situation. It is very hard to impose such a liability. 23 What makes this issue before me very difficult is that 24 in a sense the airlines and those around the airlines could 25 reasonably have foreseen that planes would be hijacked. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 16 351gInRe Motions 1 Unfortunately, the history of hijacking has been with 2 us for several decades. The airlines may not have foreseen and 3 those associated with the airlines may not have foreseen that 4 the hijackers would commit suicide and cause the plane to 5 collide in such a way as to cause so many deaths, injuries. 6 But hijacking was foreseeable. 7 How should I deal with those aspects of foreseeability 8 where the risk was foreseeable, the particular outcome may not 9 have been foreseeable in an area where airlines have taken on a 10 lot of duties of protecting the public who fly and the public 11 who may be injured even though they are not passengers. 12 MR. PODESTA: A couple of comments in response to 13 that. First, foreseeability is really not a factor on the 14 question of the existence of the duty, which is the force of my 15 argument. Secondly, I believe that there is a great 16 distinction to be drawn between foreseeability in the legal 17 sense in the risk-defining sense and a mere conceivable or 18 imaginable occurrence. 19 And I think that the Third Circuit decision in the 20 first World Trade Center bombing case and the 10th circuit and 21 District of Oklahoma decisions in the Oklahoma City bombing 22 cases show that there are some consequences that are so unusual 23 that they will be considered unforeseeable as a matter of law 24 even though one can conceive that they could possibly have 25 occurred. And that's a thread that appears in a lot of the New SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 17 351gInRe Motions 1 York cases, a distinction to be drawn between reasonable 2 foreseeability and conceivability. 3 Indeed in the bombings cases, both the trade center 4 and Oklahoma City, there was evidence that these explosives had 5 in fact been used to bomb a center in Wisconsin, they had been 6 used in northern Ireland, there had been accidental explosions 7 in several places. And whereas we don't really have a 8 comparable incident ever having occurred, just speculation that 9 people in the Philippines might have planned one in 1995 and 10 some terrorists in Marseille say if they had ever gotten off 11 the ground might have crashed a plane into the Eiffel Tower. 12 But there but reasonable foreseeability requires more than 13 something being mere imaginable. There is a tougher threshold 14 than that, especially in New York. 15 Moreover, it is always important, on the first point, 16 the duty analysis to ask to whom. It is one thing to conclude, 17 as we are prepared to concede for purposes of the motion, that 18 the airlines had a duty with respect to their passengers with 19 whom they had a special relationship and for whom the federal 20 hijacking program was specifically designed. It is quite 21 another to move beyond that and to say that if the airlines 22 were negligent in failing to defect weapons that the terrorists 23 presumably went to great pains to try to conceal, that 24 negligence thereby renders the airlines liable to all the world 25 for whatever harm the terrorists may happen to do with the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 18 351gInRe Motions 1 benefit of those weapons when they take over the plane. 2 THE COURT: The problem with that formulation is that 3 it compresses the issue of negligence with the issue of duty. 4 We are not arguing whether or not the airlines were negligent 5 in terms of whom they allowed on to the airplane and to what 6 extent they did or did not inspect them and or screen them 7 adequately. We are assuming that there was negligence. And we 8 are asking whether or not there was a duty to those who in a 9 chain of circumstances lost their lives? 10 Judge Baster in the first World Trade Center case in 11 the district court distinguished between subjective 12 foreseeability and objective foreseeability. He said that you 13 had to have objective foreseeability to know that chemical 14 components and fertilizer would not be used in such a way as to 15 blow up a building. And the issue there was whether the 16 manufacturer of the fertilizer should have taken steps to 17 prevent additives from being used to a commercially appropriate 18 product to prevent people from using the fertilizer in a way 19 that was not intended. 20 The problem I have is that it is hard for me to 21 distinguish between a rule that explains a process of reasoning 22 and a rule that -- how should I put it -- it doesn't have any 23 predictive quality; it just sort of is there to make a 24 distinction without very much help to another judge in another 25 case. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 19 351gInRe Motions 1 MR. PODESTA: That I think, your Honor -- 2 THE COURT: I am not expressing myself well, I'm 3 sorry. 4 MR. PODESTA: I think you are expressing yourself very 5 well. That's the problem with public policy considerations and 6 line drawing. But I think if you want to look in a broad 7 predictability perspective you can look at a chain of 8 terrorists, World Trade Center '93 bombings, Oklahoma City, 9 Lusitania, the Colin Ferguson/Long Island shooting, the Johnson 10 Tylenol capsule tampering cases. 11 If there is an element of predictability in those 12 cases it is that the civil defendants win. They are not found 13 liable and they are not found liable most typically on a motion 14 to dismiss. And if there is a rule to be derived -- 15 THE COURT: If there is a rule it is my job to apply 16 that rule. If indeed there is no duty to be found it is I who 17 have to declare that. 18 MR. PODESTA: Congress has given that responsibility 19 to this court -- 20 THE COURT: Not only Congress, it is the common law 21 issue here starting probably well before Judge Cardozo. It is 22 the job of the judge. Judge Baster found that, and the Third 23 Circuit affirming judge Baster found that. The fertilizer 24 cases dealing with the Murrah building in Oklahoma, most 25 recently the New York Court of Appeals held that in the gun SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 20 351gInRe Motions 1 case where Judge Weinstein's decision in the Eastern District 2 of New York was reviewed by the Court of Appeals of the Second 3 Circuit and the New York Court of Appeals and the New York 4 Court of Appeals found there was no duty for much the same 5 reasons that you expressed. They are all different to some 6 degree. 7 MR. PODESTA: They are all different. If there is a 8 consistency, if you are looking for predictability of outcome I 9 think you will find it very rare that a terrorist case is found 10 to give rise to liability to a defendant in an ordinary 11 commercial defendant that is merely negligent. 12 THE COURT: The only difference I find is that the 13 airlines were experienced with hijackings, they had taken steps 14 to avoid hijackings. Analogize the two hypotheticals I gave to 15 you before, that duty could be extended not only to the 16 passengers on the airplanes but also to people on the ground. 17 The main issue here is how I should deal with that 18 aspect of foreseeability. Nobody before had experienced an 19 issue where a hijacked airplane slammed into a building on 20 purpose. The conventional wisdom was that hijackers had 21 different purposes in mind and one should cooperate, with the 22 exception of El Al. But the risk of hijacking was there. The 23 added exposure of risk to the people aboard the plane and to 24 others was there. Although the particular outcome may be 25 objective unforeseeable the added risks of hijacking were SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 21 351gInRe Motions 1 present and various steps were taken to mitigate those risks. 2 Doesn't that express the consequence of duty, the awareness of 3 duty? 4 MR. PODESTA: Well, I think I would answer that on two 5 levels, one state and one federal. 6 I think on the state level the Ultra Mares line of 7 cases from the Court of Appeals shed great light on that 8 question because the accountants in Ultra Mares, after all, 9 were very experienced in dealing with financial statements and 10 they could probably have predicted that if they come up with an 11 inaccurate financial statement it is probably going to cause 12 injury. 13 THE COURT: Well, that case was shephardized and those 14 that preceded all had to do with contract obligations. 15 MR. PODESTA: Those were tort claims, not contract 16 claims. 17 THE COURT: And the Court of Appeals was willing to 18 extend a contract liability to a tort liability. This is not 19 our situation, although the relationship between the passenger 20 in an airplane was contract. For the reasons I put before, the 21 airlines recognized a larger obligation to the public. 22 MR. PODESTA: But the Ultra Mares reasoning although 23 it may have had its origin against a backdrop of contract has 24 been extended by the Court of Appeals to straight tort cases. 25 It has been cited in Waters, in personal injury tort cases SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 22 351gInRe Motions 1 involving a finding of no duty, Ultra Mares like Credit Lyon 2 and White, were followed by the Court of Appeals in Waters 3 which I have described, in Eiserman which involved a fatal 4 assault by a former prisoner on a college student, and in 5 Strauss which involved a fall down a darkened stairway. 6 The reasoning there was that to impose liability for 7 negligent failure to detect inaccuracies in a financial 8 statement would expose accountants so potentially enormously to 9 such an indeterminate class as the to jeopardize the viability 10 of the entire profession. 11 So the court said as a matter of policy we are going 12 to limit liability to those individuals, those claimants with 13 whom the accountants had a special relationship. And the Court 14 of Appeals has followed through on that rule in tort cases. 15 And I would suggest it is as a matter of state law quite 16 applicable here. 17 There was no relationship between the defendants and 18 the ground damage plaintiffs that was in any way 19 distinguishable from the public at large or the world in its 20 entirety. And I think there are several additional 21 considerations that are here that the court should consider in 22 making its policy determination. 23 First of all, we are dealing with commercial aviation 24 which is critically important to the modern economy, both 25 American and worldwide, and no court should adopt a rule that SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 23 351gInRe Motions 1 would expose commercial aviation to such hazards of liability 2 as would threaten its continued viability. 3 Also, in duty analysis fairness is a major 4 consideration. And the court should consider in determining 5 whether it is going to impose on the airlines a duty that goes 6 beyond a duty to its passengers but to the entire world it 7 should take into account the great difficulty that would be 8 faced in devising a completely terrorist proof system of 9 aviation. 10 We have in this country thousands of flights each day 11 to and from hundreds of airports involving approximately 2 12 million passengers a day. And certainly the task of detecting 13 and preventing the activities of well financed terrorists who 14 are trying to exploit any weakness in that system is a far more 15 difficult task than was ferreting out inaccuracies of financial 16 statements in Ultra Mares or putting locks on your building 17 that the court was concerned with in Waters. 18 Finally, we should take into account that that attack 19 was really entirely unprecedented in the history of the world 20 and the perceived risk prior to 9/11 of commercial aircraft 21 being used as weapons of mass destruction against ground 22 targets whether it be technically foreseeable or merely 23 conceivable was really quite low. And those are very important 24 public policy considerations. 25 Now on the federal level, if you look at the level of SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 24 351gInRe Motions 1 federal law, I think there really is a somewhat different 2 answer. If you look at the federal statute that deals with the 3 anti-hijacking program, it requires the FAA to promulgate 4 security regulations "to protect persons and property on an 5 aircraft from acts of criminal violence or aircraft piracy." 6 And the FAA's security regulation, 14 CFR, paragraphs 7 107 and 108 provide that air carriers and aircraft security 8 programs shall provide "for the safety of persons and property 9 traveling in air transportation." So the federal regulations, 10 if you look at their text, seem to be drawing the same lines, 11 seem to be pointing in the same direction as the New York 12 common law cases. 13 A line is being drawn between the passengers, persons 14 and property traveling in air transportation with whom the 15 aviation defendants have a special relationship and for whose 16 protection the federal anti-hijacking program was primarily 17 designed, and the general public on the other hand who may be 18 incidental beneficiaries of the successful anti-hijacking 19 program but with whom the aviation defendants have no special 20 relationship and to whom they owe no special obligations. 21 The plaintiffs in their brief largely ignore the text 22 of the statute and regulations relating to the anti-hijacking 23 program and cite several different FAA regulations promulgated 24 for different purposes under different sections of the statute 25 that do refer to persons and property on the ground. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 25 351gInRe Motions 1 They cite, for example, regulations against dropping 2 solid objects from aircraft on to the ground, and they cite 3 regulations dealing with flying so low to the ground as to 4 endanger persons and property on the ground. But those 5 regulations have nothing to do with hijackings or screening of 6 passengers. 7 And the specific reference in those regulations to 8 persons and property on the ground underscores nothing so much 9 as the stark absence of similar language in the federal 10 statutory section and the federal regulations that deal with 11 anti-hijacking which talk about persons and property traveling 12 in air transportation. 13 The plaintiffs in an attempt to deal with this 14 problem, which I think is a significant one for their argument, 15 cite the catchall 9113A in the CFR which deals with operating 16 an aircraft in a manner so as to endanger persons or property. 17 But that regulation refers not to passengers screening, it is 18 an entirely different section of the regulations promulgated 19 pursuant to a different section of the FAA statute and it 20 operates only on aircraft in U.S. air space, not to screening 21 of passengers on the ground. 22 So I think if you look at the federal regulations I 23 think they gave your Honor -- 24 THE COURT: But those suggest that there is some kind 25 of duty to passengers and some kind of a duty to people on the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 26 351gInRe Motions 1 ground. 2 MR. PODESTA: And you have to define in which 3 circumstance -- 4 THE COURT: The argument, the question is, is that 5 duty cancelled because of some supervening event that you argue 6 was unforeseeable. 7 MR. PODESTA: I believe that the regulations, I think 8 the hijacking regulation would support the conclusion there is 9 a duty to the passengers. I don't think there's anything in 10 the hijacking regulations to support the conclusion that 11 there's a duty to anyone on the ground. 12 THE COURT: But there are other aspects of regulations 13 and other aspects of the air lines that deal with people on the 14 ground as well. The difference in this case is that we are 15 putting things together or not putting things together, whether 16 I agree with you or Mr. Moller, which have no true precedent. 17 MR. PODESTA: That's very true. Let me point out one 18 other aspect of the federal regulations that I think bears on 19 the policy determination, particularly as to the ground 20 victims. And that's the FAA's pre-September 11, so-called 21 common strategy for dealing with attempted hijackings. 22 The common strategy, although it is sensitive security 23 information was incorporated in each air carrier's ACSSP and 24 had the force of law. The common strategy set the standard of 25 care each air carrier was obliged to follow prior to 911 in SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 27 351gInRe Motions 1 dealing with attempted hijackings in progress. And while the 2 details are not public, the core mandate of the common strategy 3 prior to 9/11 as described in official FAA statements in the 4 Federal Register, we which cited to the court, was cooperation 5 with the hijackers. 6 This policy of cooperation was one that the airlines 7 were mandated by federal policy -- 8 THE COURT: That goes to the question of care. 9 MR. PODESTA: Well, it goes to the standard of care 10 but I think as Judge Goettel pointed out in the Elroth v. 11 Johnson & Johnson case, one of the Tylenol cases, the standard 12 of care and duty are closely interrelated. And one can infer 13 the scope of the duty, and this is the premise of my arguments, 14 that you can infer the scope of the duty from the standard of 15 care because if you have a standard of care that is not 16 designed to protect a particular class of potential plaintiffs, 17 I think you can infer from the standard of care that the 18 substantive law imposed no duty with respect to those potential 19 plaintiffs. 20 THE COURT: By arguing these federal regulations you 21 are in effect saying that is a preemption of state common law. 22 MR. PODESTA: Yes, and there is not purely preemption 23 but preemption under Section 408B2 which provides that federal 24 law other than the stabilization act controls -- 25 THE COURT: That's what Mr. Ellis is going to tell me. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 28 351gInRe Motions 1 MR. PODESTA: I believe he is most eager to tell you 2 about that, your Honor. Let me finish with my point on the 3 common strategy. The primary purpose of the common strategy 4 cooperation and protection of the passengers and crew. While 5 the strategy in some circumstances may have been cable after of 6 preventing crashes that may have caused incidental ground 7 damage, cooperation policy with hijackers was scarcely designed 8 to prevent their commandeering the airplane and intentionally 9 inflicting ground casualty as occurred on 9/11. 10 Only a policy of resistance, not cooperation, a policy 11 that provided, for example, a mandate to the airlines to defend 12 the cockpit at all costs or to crash land the plane in the 13 nearest open field if the hijackers threatened to commandeer 14 the aircraft could have dealt with the threat that we faced on 15 9/11. But the airlines from publicly available materials, from 16 the FAA's own statements in the Federal Register post 9/11 17 there were no such instructions. The instructions were to 18 cooperate. And the absence of instructions prior to 9/11 I 19 respectfully submit should assist your Honor in making your 20 policy determination. 21 The federal regulations, the common strategy as they 22 existed on 9/11 whatever they may provide today, as of 9/11 23 they contemplated no duty on protect the ground damage 24 plaintiffs from the intentional use of commercial aircraft as 25 guided missiles or bombs. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 29 351gInRe Motions 1 The plaintiffs pointed out that we had a relationship 2 with the hijackers, and they seem to infer from that that 3 because the hijackers were fare-paying passengers we thus had a 4 duty to, if we did not prevent them from getting on board the 5 plane with weapons, we undertook a liability to all the world. 6 But the New York cases don't go nearly so far. Our only 7 element of control wasn't that of an employer and employee or 8 penitentiary with the prisoner. It was simply that they were 9 negligent in failing to detect weapons in a screening process 10 that the terrorists were presumably trying quite hard to 11 conceal. That should only under New York cases give us 12 liability, if proven, to the passengers. 13 If you look at the cases we cited in our brief that 14 deal with the duties of common carriers, the Second Circuit 15 decision in Stayholl, the Court of Appeals decision in Perney, 16 they described common carriers like airlines as having a 17 special duty to protect their passengers from their fellow 18 travelers but there is no case that goes so far as to impose 19 upon common carriers or airlines a duty to protect the entire 20 world from the criminal acts of individuals who may happen to 21 have boarded their planes with weapons. 22 Even the Second Circuit in the Stanford v. Kuwitz 23 case, the Mideast Airlines where the duty was extended to 24 passengers on a connecting flight, the Second Circuit, if you 25 read that opinion, they were agonizing over how far they were SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 30 351gInRe Motions 1 extending the duty to passengers on a connecting airline and 2 they were doing that even in a situation where Mideast Airlines 3 profits from the relationship and thus had a special 4 relationship and was putting the terrorists on board the plane, 5 had a special relationship with the connecting airline within 6 the meaning I would suggest of Ultra Mares and even though that 7 flight was coming out of Beirut rather than Boston and the 8 Second Circuit stretched to the max there. 9 You can just read the opinion and see how they're 10 straining and how they regard it as a close well. Well, if 11 connecting passengers out of Beirut were a close call for the 12 Second Circuit, this case, which is more clearly focused on New 13 York law, which has always been very restrictive about the need 14 to control legal liabilities, impose controllable limits -- 15 THE COURT: Mr. Podesta, I think I have got the sense 16 of your argument. 17 MR. PODESTA: Thank you very much. 18 THE COURT: Mr. Ellis. 19 MR. ELLIS: Yes, your Honor. 20 Your Honor, Jeffrey Ellis on behalf of United 21 Airlines. My co-counsel, Mr. Fagen, ironically should have 22 been here but his flight was delayed. 23 Your Honor, I am probably most eager to advise the few 24 Mets fans that might be in this courtroom that in 1969 they 25 were in last place in August and still managed to come back. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 31 351gInRe Motions 1 So maybe some day there will be people going to Queens. 2 The aspect of the motion that I will present to your 3 Honor of course deals with the issue of scope of duty in the 4 Palsgrafian sense, the issue of foreseeability that your Honor 5 has already indicated is a concern to you. But I think it is 6 prudent to note at the beginning of this argument that there 7 are of course public policy considerations that address all 8 aspects of civil responsibility in the tort concept. 9 This aspect of the motion that we bring is independent 10 of the concepts that Mr. Podesta addressed so eloquently to the 11 court, the concept of relationship between the parties or lack 12 thereof, and the concept of whether civil parties in a case 13 like this can be held responsible for the acts of the 14 terrorists who in the name of God caused buildings to fall and 15 thousands of people to lose their lives, people who were 16 ordinary citizens, people who suffered, and that tragedy, the 17 events of that day have affected I suspect in some way or 18 another everyone that's in this courtroom. 19 But the concept of foreseeability in the risk-defining 20 sense as a limit on civil responsibility or duty was of course 21 as your Honor is I am sure well aware addressed in a 22 fundamental case that's familiar to every law student, 23 Palsgraf, of course. Palsgraf is -- 24 THE COURT: Familiar but probably not understood. 25 MR. ELLIS: Your Honor, Mr. Fagan's role here is to SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 32 351gInRe Motions 1 stop me if I get too deeply involved in the Palsgraf law, I 2 could talk about the Palsgraf children but I am going to 3 confine myself to what I think he was trying to express. 4 And I think what Judge Cardozo was trying to express 5 was a way of limiting liability by looking at the concept of 6 whether or not the conduct that was at issue, the actor who 7 performed that conduct could have or should have foreseen and 8 been able to prevent the harm that occurred. 9 THE COURT: It is a strange case, a railroad was 10 arguably negligent to a passenger trying to get on to a 11 station, to a car that was moving, pushed the passenger off the 12 car, the passenger happened to be carrying explosives, the 13 explosives exploded. Mr. Palsgraf was injured and sued the 14 railroad and Judge Cardozo held that there was this duty 15 because it couldn't be anticipated that a passenger coming on 16 to a train would be carrying explosives. 17 MR. ELLIS: There are interesting parallels there, 18 your Honor. Number one, like in the present case it is a case 19 that involves a common carrier. 20 Number two, like in the motion we present to the court 21 we must assume that there was some negligence that somehow was 22 involved in a chain of events that like in the present case 23 caused an explosion. Like in the present case, caused the 24 structure to fall. And like in the present case caused an 25 injury to a person somewhat removed from where the conduct that SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 33 351gInRe Motions 1 was allegedly negligent took place. 2 THE COURT: These are all difficult questions, but Mr. 3 Podesta's argued and I want you confine yourself to the issue 4 of prevention. Namely, what is it in federal law that would 5 prevent me from relying on New York law assuming that, and I 6 know you argue to the contrary, assuming that New York law 7 would impose a duty. That is your burden, right? 8 MR. ELLIS: Your Honor, I was also addressing the 9 foreseeability concept as well. I think that is what I was 10 going to address so I will do it and I will try and do it in as 11 concise a manner as I can possibly do that. 12 The rule of law to determine foreseeability in the 13 risk-defining sense is I think as we pointed out in our reply 14 brief not the rule of law that addresses foreseeability in the 15 proximate cause sense. 16 The plaintiffs cited to a case by the name of 17 Derdarian vs Felix Construction, which in New York law 18 addresses the issue of foreseeability in the risk defining 19 sense. The New York State Court of Appeals in interpreting 20 Palsgraf and taking that rule of law forward from 1928 up until 21 2002, for instance, in the Sanchez case, has stated that 22 foreseeability in the risk defining sense is quite different 23 from foreseeability in the proximate cause sense. 24 In the proximate cause sense, the focus is on the 25 harm. The actor or the defendant that is presumed negligent SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 34 351gInRe Motions 1 will not be able to escape civil liability by saying I didn't 2 foresee the particular manner in which that harm would occur. 3 Instead, and I will go to the most recent statement of 4 the New York State Court of Appeals, in 2002 in the Sanchez 5 case, what the New York State Court of Appeals said 6 interestingly enough in a quote where the bookends are Palsgraf 7 and DiPonzio, and these are all cases that the plaintiffs agree 8 are controlling, not disputed, these cases are controlling both 9 sides cite to them, and in 2002, and this is on page 32 of our 10 reply brief, your Honor, the New York State Court of Appeals 11 states: "Although the precise manner in which the harm occurred 12 need not be foreseeable, liability does not attach unless the 13 harm is within the class of reasonably foreseeable hazards that 14 the duty exists to prevent." 15 THE COURT: What is the hazard? Hijacking or suicide? 16 MR. ELLIS: Your Honor, I think it is quite clear that 17 the hazard that we are addressing here is not hijacking I 18 believe as Condoleeza Rice -- 19 THE COURT: Why not? Why is not the risk hijacking? 20 MR. ELLIS: Very simply because, your Honor, first of 21 all what we are talking about here is breach of a federal 22 securities scheme. 23 The plaintiffs do not set forth in their complaint the 24 breach of any state common law duty and indeed the states could 25 not possibly impose 50 different standards of regulations for SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 35 351gInRe Motions 1 security. That would be, number one, preempted, and we set 2 forth those cases in the case law. But it is also inconsistent 3 with a federal scheme that by virtue of the Aviation Security 4 Improvement Act that was passed in the aftermath of Lockerbie, 5 the concept of threat assessment, foreseeability in this case, 6 and the concept of designing counter measures to address those 7 threats, was placed squarely in the hands of the federal 8 government. Because, quite frankly, your Honor, it can't be 9 placed anywhere else. 10 Foreseeability is not an issue where we can sit around 11 here and decide for ourselves as any citizen could do possible 12 threats. Security and security counter measures, especially 13 with respect to something involving a terrorist attack, 14 requires intelligence to analyze what are the foreseeable 15 risks, what should the system be designed to prevent. 16 Our role, and this is not disputed, it is set forth by 17 the Department of Transportation to Congress every year, but 18 our role as aviation defendants is limited to implementing a 19 system that the federal government, the FAA, in conjunction 20 with the FBI, the CIA, the National Security Agency, decides is 21 appropriate to address the threats that they believe need to be 22 addressed. 23 And when we determine what the system was intended to 24 address in order to answer the question what is the class of 25 hazard, if we go to another Cardozo decision which we cite in SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 36 351gInRe Motions 1 our reply brief, the Dehane case, Justice Cardozo stated in 2 that case that if we are trying to figure out what is the 3 hazard that a particular statutory scheme or regulatory scheme 4 was intended to address we look to the thought and purpose of 5 the legislature or governmental body that enacted those 6 regulations. 7 In this case, your Honor, the governmental body that 8 enacted those regulations, the Federal Aviation Administration, 9 and quite frankly the Transportation Security Administration, 10 which was created in the aftermath of 9/11 have specifically 11 stated, and we set this forth in our brief, that no one 12 envisioned this type of event from occurring on 9/11. 13 THE COURT: What is the type of event? 14 MR. ELLIS: Suicidal crash of an instrument that is 15 supposed to take -- 16 THE COURT: Hijacking was anticipated. 17 MR. ELLIS: Yes, of course, your Honor. 18 THE COURT: And if there is a hijacking the risk to 19 everyone, passengers and people on the ground, are enormously 20 increased. It may not be a suicide but the risks are 21 increased. 22 MR. ELLIS: Your Honor, I think that where the case 23 law looks at is the defendant in the risk defining sense have 24 the tools -- I mean the reason we talk about foreseeability is 25 to figure out did they have the tools that were necessary to SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 37 351gInRe Motions 1 address the event. Pre-9/11 the court can certainly take 2 judicial notice of the fact that pre-9/11 the security system 3 that was in place is far different from the security system 4 that was implemented three days after 9/11 -- 5 THE COURT: Pre-9/11 did the airlines have a duty to 6 passengers to take reasonable measures to avoid hijacking? 7 MR. ELLIS: The duty of the airlines pre-9/11 was to 8 implement a security plan that the FAA thought would reduce 9 dangers of hijacking, yes, absolutely. 10 THE COURT: I don't think you answered my question. 11 MR. ELLIS: I'm sorry. 12 THE COURT: Pre-9/11 did the airlines have a duty to 13 their passengers to take reasonable measures to avoid 14 hijacking? 15 MR. ELLIS: I think if you define reasonable measures 16 in the context of what the federal government said was 17 reasonable the answer is yes. I don't mean to avoid the 18 question, your Honor, but I -- 19 THE COURT: You are saying that although they had 20 obligations to their passengers and perhaps to people on the 21 ground -- 22 MR. ELLIS: For purposes of this motion, your Honor, 23 you can concede they may have had that obligation. 24 THE COURT: They didn't have the obligation to prevent 25 people from being injured by suicide because it could not SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 38 351gInRe Motions 1 reasonably be foreseen there would be a suicide. And as a 2 matter of law, forgetting about proximate cause, as a matter of 3 law you would argue that there is no objective foreseeability 4 and therefore no duty because the risk of a suicide hijacking 5 was not objectively foreseeable. 6 MR. ELLIS: I would agree with that, your Honor. 7 THE COURT: OK. But the risk of a hijacking was 8 objectively foreseeable. 9 MR. ELLIS: Clearly, your Honor. 10 THE COURT: Am I right that the distinction between 11 avoiding a hijacking and avoiding a suicidal use of an airplane 12 depends on this aspect of intervening and supervening cause? 13 MR. ELLIS: I don't believe so, your Honor. It may be 14 one aspect and I know that some of the motions that are before 15 the court do address that issue. 16 THE COURT: Let me step back. The measures that were 17 reasonable to avoid a hijacking one would assume would be no 18 different than the measures that would be used to avoid an 19 appropriation of the airplane for suicidal purpose. 20 MR. ELLIS: Absolutely disagree, your Honor. 21 THE COURT: Why? 22 MR. ELLIS: Because, your Honor, the system in place 23 on 9/11 had several aspects to it that quite frankly could 24 actually facilitate a hijacking. The common strategy -- 25 THE COURT: For example? SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 39 351gInRe Motions 1 MR. ELLIS: For example, the common strategy of 2 cooperation. The plaintiffs -- 3 THE COURT: Once there's a hijacking the common 4 strategy theory comes into play. But that's after the 5 hijacking. If there is reasonable measures and they fail to 6 avoid a hijacking then cooperate, it was argued, with the 7 hijackers. 8 MR. ELLIS: Your Honor, yes in a way. But I think it 9 is important to note several things about the security system. 10 And I'll of course be very careful because we are under 11 constraints not to address all aspects of that. 12 THE COURT: We don't get into those areas. 13 MR. ELLIS: No, but I can certainly state, your Honor, 14 that, for instance, the Federal Register section, one of the 15 Federal Register sections that the plaintiffs cite to from July 16 17, 2001 involved the screening of passengers and amendments to 17 the screening of passengers getting on board an airplane. That 18 regulation talks in terms of preventing or deterring hijacks. 19 Deterrence is a very important aspect of any system 20 intended to prevent some third party intentional act where 21 there's conspiracy, where there is I believe from what I have 22 read in the papers years of planning. You need to deter. 23 The deterrence that was in place pre-9/11 and the 24 deterrence that's in place post 9/11 is far different, your 25 Honor. I can remember on the Saturday following -- SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 40 351gInRe Motions 1 THE COURT: That's an issue of what's reasonable. It 2 is not an issue of duty, I don't think. 3 MR. ELLIS: Your Honor, I think it does involve the 4 issue of duty because the New York State court in the Sanchez 5 case stated the class of hazard as reasonably foreseeable. And 6 when we determine what was reasonably foreseeable before one of 7 the ways we do it, number one, we look to the statements of the 8 FAA as I have indicated are relevant and the TSA, both of which 9 stated the events of 9/11 were never envisioned and that the 10 system was not intended to address this type of event. 11 Now, obviously, your Honor, when we also look at what 12 occurred in security post 9/11, what we see quite obviously is 13 that the deterrent aspects of the system, because it is to 14 prevent or deter, also changed. What changed, your Honor, and 15 this is not change because of what the airlines would want to 16 do. 17 I think it is relevant to know and we put this in 18 United statement of joinder that post 9/11, post 9/11 United as 19 a deterrent measure actually did go and purchase stun guns for 20 all their pilots. They had no authority to arm their pilots as 21 a deterrent measure. That had to go before Congress and 22 Congress ultimately passed the bill which is now being 23 implemented with a limited number of pilots to allow that to 24 occur. So the point -- 25 THE COURT: Mr. Ellis, the sense of your argument is SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 41 351gInRe Motions 1 that because of a common strategy notion of cooperating with 2 hijackers and because of what you say with regard to guns and 3 other measures that would be used to protect the pilots and 4 protect the airplane after the hijacking, your argument is that 5 the federal regulations focused on preventing a hijacking 6 without having a duty to protect against the consequences of a 7 hijacking, and that I should recognize that through a 8 preemption doctrine and find no duty. 9 MR. ELLIS: Yes, that is -- 10 THE COURT: Have I captured your argument? 11 MR. ELLIS: Yes, not the entirety of the argument. 12 THE COURT: Build it from there. 13 MR. ELLIS: Fine, your Honor. I think it relevant to 14 note also in the common law concept of foreseeability that the 15 court had acknowledged earlier and that we noted in our brief, 16 you also do not come to the same place. I think it is 17 important to note that when you look at the common law cases, 18 for instance, DiPonzio case -- 19 THE COURT: I think there's a lot to say. This is a 20 large field of law but there are eight motions or seven motions 21 I have to deal with and I have read the briefs and I would like 22 you to move on. 23 MR. ELLIS: I take that as a hint, your Honor. Let me 24 finish by stating that the concept of whether this falls within 25 the same class of hazards of course is an issue that the court SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 42 351gInRe Motions 1 must decide. Yes, in the preemption context we would argue 2 that when the regulatory body that puts the system in place 3 says the system wasn't intended to address the hazard that 4 caused the harm, it wasn't a traditional hijacking that caused 5 the harm, it was something quite different. 6 And we also acknowledge the fact, your Honor, that in 7 the common law concept the cases hold that remote possibilities 8 are not something you can be held liable for. 9 THE COURT: Let's leave the common law where they are. 10 Mr. Podesta really argued that no one has a final word and you 11 have to argue with reason. You are talking about preemption. 12 Tell me about 49 U.S. Code Section 1506 which provides 13 that nothing contained in this chapter shall in any way abridge 14 or alter the remedies now existing in common law or by statute 15 but the provisions of this chapter are in addition to such 16 remedies. 17 MR. ELLIS: Yes, your Honor. That statute section 18 quite frankly is addressed in great detail in the Abdullah 19 case, which was the Third Circuit case that we cited to your 20 Honor. The Abdullah case considered how do we have preemption 21 when we have a savings of remedy clause, when we have other 22 clauses that quite frankly can suggest a state standard or a 23 state damage remedy. 24 What the Third Circuit held and quite frankly what 25 Justice Rakoff and Justice Pauley followed in this court in SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 43 351gInRe Motions 1 Curtain and in the Schaffer case is that federal law 2 establishes the standards by which the claim must be judged. 3 THE COURT: Abdullah dealt with turbulence in the air, 4 how careful a pilot should be dealing with turbulence. Judge 5 Pauley held with methods of evacuating an aircraft. Those are 6 matters that are described, they are very much focused on how 7 the pilot acted. I don't think we have the same case. 8 MR. ELLIS: Your Honor, I would argue that we have 9 quite frankly a much stronger case in the area of security. We 10 have in the Aviation Security Improvement Act in Sections 44903 11 and 44904, a mandatory nondelegable duty to the FAA to decide 12 what the threats are to aviation, to decide a system that will 13 address those concerns to the maximum extent possible -- to the 14 maximum extent possible. And those statute sections which the 15 DOT acknowledges in its annual reports to Congress, clearly 16 rest with the federal government the obligation -- 17 THE COURT: As additive statements. 18 MR. ELLIS: As an additive and, quite frankly, your 19 Honor, it would be wholly inconsistent, to quote the language 20 of the statute that brings us here today -- 21 THE COURT: There's nothing in state law that deals 22 with how the pilot deals with turbulence. There is nothing in 23 state law which deals with how you evacuate an airplane that 24 crash lands. But there's everything in state law in terms of 25 how you take ordinary care in admitting dangerous people on to SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 44 351gInRe Motions 1 an airplane. 2 There may be duty, there may not be duty. That's an 3 additive that I have a concern about. What I am asking you 4 about is is it a fair reading of 49 U.S.C. Section 1506 that it 5 is not intended as a preemption statute in relationship to that 6 which can be considered to be a matter of proper care and 7 proper duty. 8 MR. ELLIS: I disagree, your Honor. Number one, I 9 also would preface my answer by stating I am very familiar with 10 Abdullah as well as Curtain and Schaffer. Those were my cases. 11 The Abdullah case did not go to the Third Circuit on the 12 question of negligent piloting per se. 13 The case went to the Third Circuit with respect to a 14 warning issue, an issue that's common to every tort and common 15 law case. The question that went before the court, the issue 16 that Judge Finch in the district court in the Virgin Islands 17 ruled on was whether or not the plaintiffs could argue that 18 prior to turbulence there was a duty to provide more than what 19 the FAA required in terms of warning to alert passengers of 20 danger and they brought in a human factors expert to provide 21 that testimony. 22 The Third Circuit held, consistent with the holding of 23 the United States Supreme Court in Burbank and prefaced earlier 24 with the holding of the Supreme Court in the 40s in the 25 Northwest case as well as Chicago and Southern cases that this SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 45 351gInRe Motions 1 entire field is inherently federalized. Abdullah, consistent 2 with Burbank and consistent with the holdings in Curtain and 3 Schaffer didn't limit the holding simply to the facts before 4 the court. They held that the entire field, the standard for 5 the entire field of aviation safety are inherently federalized 6 Security certainly is within the field of safety. But 7 more importantly, your Honor, security is by statute vested 8 with the FAA in terms and now the TSA in terms of deciding what 9 the threat is and how to address it. 10 The example I gave you with respect to the stun guns 11 that United ordered post 9/11 I think is very telling of the 12 fact that an airline -- 13 THE COURT: You made that point. It's a good point. 14 Let me hear Mr. Moller. 15 MR. ELLIS: Thank you. 16 MR. MOLLER: Good afternoon, your Honor. I would like 17 to, before I begin the substantive argument, acknowledge the 18 assistance of all of the members of the plaintiffs' executive 19 committee in developing the arguments that you are going to be 20 hearing this afternoon and tomorrow, and the members of the 21 committee, most of them, are arrayed here, and although I have 22 the privilege for being the spokesman for one piece of the 23 argument I really don't get credit for developing all of the 24 argument myself and I would like to acknowledge their efforts 25 and participation. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 46 351gInRe Motions 1 The questions that you ask are probative, on target, 2 and concern everyone. But I think it is very important in 3 laying the predicate for the analysis of duty for us all to 4 acknowledge that every American is repulsed and angry at what 5 happened at 9/11. In the immediate aftermath of the event we 6 all claimed a lack of foreseeability. Who could think that 7 somebody in a civilized society could do something like that. 8 It's a normal reaction. Civilized people don't behave this 9 way. 10 But the fact of the matter is that the airlines knew 11 that people were would hijack airplanes, would try to kill 12 passengers, would try to inflict maximum damage. 13 So while the aviation community may not have 14 appreciated precisely how death would be inflicted on the 15 maximum number of people, they knew that that was the objective 16 of the terrorists who were seeking to attack the United States. 17 It is important in analyzing -- 18 THE COURT: Such an event never occurred before. 19 MR. MOLLER: Not in this precise way, but there was 20 enough happening -- 21 THE COURT: Even though people on airlines were killed 22 during hijackings, the history of hijackings was that most of 23 the people survived. 24 MR. MOLLER: Well they didn't survive in Lockerbie. 25 The Second Circuit took Lockerbie under its wing and held there SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 47 351gInRe Motions 1 was liability. 2 There were other incidents and I will go down them for 3 you when we deal with the issue of foreseeability in a little 4 while. Aircraft were being damaged by terrorists. The 5 phenomena of suicide by terrorists by the year 2001 was nothing 6 new. So that the awareness of the aviation community, the 7 notion that people would not kill themselves in trying to 8 perpetrate a hijacking or the consequences of a hijacking by 9 the year 2001 that was history. 10 Suicide was the great fear. Because if the terrorists 11 didn't care about losing his own life he certainly didn't care 12 about inflicting damage on others and would try to lose his 13 life inflicting damage on the greatest number of people. 14 The 12(b)(6) standard here, while I know the court is 15 fully familiar with 12(b)(6), I think bears emphasis that the 16 court must determine if we are entitled to relief under any 17 reasonable interpretation of the facts and the law, that all 18 inferences must be drawn in favor of the plaintiffs, because 19 the extraordinary relief that the defendants seek of 12(b)(6) 20 says this case stops here -- 21 THE COURT: That's a proposition on factual matters. 22 But we have a legal matter. Duty is a legal matter. 23 MR. MOLLER: Duty is a legal matter, but to the extent 24 that duty is influenced by an assessment of the facts I think 25 one has to take that in mind. To the extent that SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 48 351gInRe Motions 1 foreseeability is a matter that governs duty or influences an 2 analysis of duty or scope of duty -- 3 THE COURT: Judge Bassler distinguished and the Third 4 Circuit affirmed between subjective and objective 5 foreseeability. Objective foreseeability is that which the 6 judge decides, it is foreseeable or not for purposes of finding 7 duty. Subjective foreseeablity is an issue of fact. I'm not 8 sure I am entitled to agree with you with regard to inferences 9 because where the question is duty the judge has to decide. 10 MR. MOLLER: Of course the judge has to decide. But 11 the duty issue is not resolved in a vacuum. The duty issue, 12 and let me focus on duty and foreseeability on the objective 13 assessment of duty -- 14 THE COURT: The Waters case -- 15 MR. MOLLER: The Waters case is an easy case. 16 THE COURT: I'm glad you find it easy. I don't. The 17 landlord in Waters could have foreseen that bad locks would 18 invite criminals. 19 MR. MOLLER: But Waters was decided because they 20 didn't want to impose on all landlords the obligation to 21 strangers in the streets over whom they have no control and no 22 control over the instrumentality. It goes back to 23 relationship. 24 They said, in Waters, it wouldn't have made a 25 difference to the crime if they had locks or didn't have locks, SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 49 351gInRe Motions 1 the criminal would find a different way to perpetrate that kind 2 of harm. So the lock was considered incidental. But if you 3 look at Waters, Waters is part of a line of cases which imposes 4 responsibility on the parties who have control either over the 5 instrumentality that can cause harm, the person who can cause 6 harm or control over the victims so that the victim can be 7 prevented from being harmed. 8 I think if you look at the whole body of tort law, the 9 whole, from Palsgraf on down, control lies at the heart of the 10 analysis. Who has, who is in the best position to control the 11 risk of harm and prevent it. 12 You have said in answer to, in comment on some of the 13 discussion -- 14 THE COURT: The language in Waters that you are 15 referring to is the following: "An important consideration in 16 this context is the fact that the land owner has no control 17 over either the acts or the wrongdoer or the conditions on the 18 public by Waters that make such acts all too common place." So 19 your distinction is that the airlines by our definition had 20 control over who comes before it. 21 MR. MOLLER: Not by our definition. The airlines were 22 challenged, accepted the responsibility of screening all 23 passengers, of maintaining a safe airport environment so that 24 nobody who lacked lawful authority to get into the cockpit of 25 an airplane could get there. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 50 351gInRe Motions 1 Anything that the airlines did on that would 2 constitute negligence and emergency is conceded, anything 3 whether it would be allowing a terrorist through by its 4 negligence, allowing a deranged passenger into a cockpit, 5 negligent piloting, anything the airline did which constituted 6 negligence, which enabled an unauthorized person to get into 7 the cockpit and fly that airplane makes it liable for the 8 consequences. 9 The airlines had a security apparatus in place 10 throughout the United States that cost them billions of 11 dollars. The airline security procedures were not there to 12 catch accountants or grandmothers or people going on vacation 13 Or salesmen with laptops. It was designed to catch terrorists. 14 The kinds of people who got on the four airplanes on 15 September 11 and killed 3,000 people, destroyed two buildings 16 in New York that were landmarks of American success, a corner 17 of the Pentagon and 39 some odd passengers in Shanksville who 18 luckily saved that airplane from crushing into one of America's 19 landmarks. 20 The airlines accepted the responsibility of preventing 21 those people from getting into the cockpit. And once they got 22 into the cockpit because the airline lost control over their 23 process by negligence the airlines and the other aviation 24 defendants are responsible for the consequences. 25 The reason I have this up here, I'll bring it a little SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 51 351gInRe Motions 1 closer for you -- 2 THE COURT: It is the towers, I see. 3 MR. MOLLER: May 2, 1968, an airplane is about to 4 collide in a hypothetical, thank God, with the World Trade 5 Center towers. This is when they were trying to persuade 6 people to move into the trade towers some people were saying 7 yes or no. But the fact of the matter is that the president of 8 the Allied Pilots Association who speaks for 3500 commercial 9 pilots is deeply concerned over the safety problems arising out 10 of traffic congestion in this area. "Safe navigation," he says 11 "includes not only planned flight patterns but also provisions 12 for unforeseen and uncontrolled diversions." 13 Now, who can cause an uncontrolled diversion? A 14 terrorist who gets into the front left seat of American Flight 15 11, United 175, American 77 or United 93, and does what he 16 wants with the airplane because the airlines and the airline 17 defendants were negligent. There comes the breach of duty of 18 care. 19 You correctly probed at the very beginning whether 20 there is a difference between a ground victim and a passenger. 21 There is. The ground victim has always been entitled to the 22 greatest protection in aviation. If you go back to the early 23 aviation statutes, aviation liability statutes, the airplane 24 operator was strictly liable for anything that happened on the 25 ground. Anything that happened on the ground to people on the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 52 351gInRe Motions 1 ground. Why was that? Because the people on the ground are 2 total innocents, they have absolutely no way to protect 3 themselves from the harm caused by an airplane whatever its 4 cause. 5 When aviation travel became safer and airplanes more 6 sophisticated and the risks associated with aviation 7 diminished, the courts and the legislatures retreated to a 8 negligence standard. And now in most jurisdictions you have to 9 establish negligence in order to hold an airplane operator or 10 owner liable for injury to somebody on the ground. 11 It really shouldn't make a difference what the nature 12 of the negligence is in this analysis, since negligence 13 ultimately comes down to control of the plane. The question is 14 where did the negligence occur that facilitated that 15 unauthorized operation, unauthorized unlawful control of the 16 airplane. 17 In the securities breach situation, the loss of 18 control, the negligence, begins at the beginning of the flight 19 process, i.e., when people are allowed to get on the plane. It 20 continues to them getting on the plane, and then it continues 21 further to them getting into the cockpit. 22 And it doesn't make any difference whether the person 23 in the left seat is a terrorist or some deranged nonterrorist 24 citizen. It doesn't even make a different if it's a pilot who 25 makes a terrible mistake. Once the plane is operated in an SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 53 351gInRe Motions 1 unauthorized manner because of the aviation defendants' 2 negligence, they are on the hook. It's even a greater level of 3 responsibility therefore the ground victims than to the 4 passengers who have a choice. They could have said, I'm going 5 by train. They could have said, I am going to buy some more 6 insurance. They could have done all sorts of things. But it 7 is the control principle that governs tort law. 8 THE COURT: Well, there are a number of factors that 9 go to the issue of duty. And I am looking now at the most 10 recent of the New York Court of Appeals, this is probably the 11 most thoroughly argued, Hamilton against Beretta. It's the gun 12 case. 13 "The threshold question in any negligence action is 14 does defendant owe a legally recognized duty of care to the 15 plaintiff. Court's traditionally fix the duty point by 16 balancing factors. The reasonable expectations of parties and 17 society generally, the proliferation of claims, the likelihood 18 of unlimited or insurable liability, disproportionate risk and 19 reparation allocation and public policies affecting the 20 extension or limitation of new channels of liability." 21 And the Court of Appeals went on to say "Thus, in 22 determining whether a duty exists courts must be mindful of the 23 precedential and consequence future effects of their rulings 24 and limit the legal consequences of wrongs to a controllable 25 degree." One more point: "Foreseeability alone does not define SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 54 351gInRe Motions 1 duty, it merely determines the scope of a duty once it is 2 determined to exist." 3 Let's go down the factors. I would like your argument 4 on each. The reasonable expectations of parties and society 5 generally. 6 MR. MOLLER: The reasonable expectation of the parties 7 is that the aviation defendants will do their job properly, 8 that they will screen people effectively, that they will live 9 up to the standard of care that is imposed upon them whether 10 it's federal, state or common law, and that terrorists will not 11 get into the front left seat of a cockpit. That seems to me 12 the reasonable expectation of everybody in the plane and 13 everybody on the ground. If it weren't we wouldn't have people 14 in the streets. 15 THE COURT: The proliferation of claims. 16 MR. MOLLER: Numerosity of claims is always a 17 potential, but numerosity alone is really part of the public 18 policy argument and I don't think the proliferation -- 19 THE COURT: That's what I have to deal with. 20 MR. MOLLER: I will give you the public policy that I 21 think applies to this case. First numerosity alone doesn't 22 control. If you take the Shea Stadium argument or Shea Stadium 23 analogy that you offered before, and that I think is in our 24 briefs, you would have far more than 3,000 deaths if you land 25 in the bleachers. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 55 351gInRe Motions 1 THE COURT: Perhaps there wouldn't be liability. It 2 is my hypothetical. It is your hypothetical. It is a 3 hypothetical, not a case. 4 MR. MOLLER: But I'll tell you why in this case the 5 limited liability issue is not a factor. When Congress enacted 6 the Air Transportation Safety Act, they limited the liability 7 to insurers no matter how many claims there are. That's number 8 one. So the unlimited liability is not unlimited liability in 9 a vacuum, it is financial exposure as a result. 10 THE COURT: The initial duty precedes the Air 11 Transportation Safety Act. 12 MR. MOLLER: But the public policy issue arising in 13 this case it if you allow these people to go forward on this 14 set of facts -- 15 THE COURT: You are saying what otherwise might be 16 considered a proliferation claim should not be so considered 17 because the Air Transportation System and Safety Stabilization 18 Act limited the liability. 19 MR. MOLLER: I would certainly buy that argument but 20 even if the Air Transportation Act was not around -- 21 THE COURT: To the extent Mr. Ellis is right on 22 preemption this is your count. 23 MR. MOLLER: Also his preemption argument is wrong 24 because he reads the Abdullah case wrong. But he's a friend. 25 THE COURT: The likelihood of unlimited liability. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 56 351gInRe Motions 1 MR. MOLLER: We don't have that problem because of the 2 statute. 3 THE COURT: Disproportionate risk and reparation 4 allocation. 5 MR. MOLLER: It has been done by the statute and has 6 been done by the defendants' insurance. They have insurance on 7 every plane. 8 THE COURT: Public policy, affecting the expansion of 9 liability? 10 MR. MOLLER: We are not expanding new channels of 11 liability. We are holding people responsible for the loss of 12 control of their system. 13 THE COURT: The trouble with your argument is that it 14 limits or changes what might be a rule of law by the Air 15 Transportation Safety Act. But the issue of duty preceding the 16 act, the issue of duty existed or not as of September 11, 2001 17 and not several weeks after. 18 MR. MOLLER: So they had a duty to ground victims on 19 September 11, 2001 before the act. That's no question about 20 that. 21 THE COURT: The case also speaks about the duty to the 22 plaintiff, the duty of care to the plaintiff. It is one thing 23 to have a duty of care to the passengers who come on the plane, 24 but the duty of care to the plaintiff is a more difficult one. 25 MR. MOLLER: The duty of care to the plaintiff is as SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 57 351gInRe Motions 1 much an as alternative as it is a primary basis of examining 2 liability. On the control issue, if we look at the Pulka case, 3 Pulka against Elman -- 4 THE COURT: That's the nurse's case which was injured 5 by the falling fan. 6 MR. MOLLER: I think Pulka was driving out of a 7 garage. 8 THE COURT: There is a Pulka case and a Palka. It is 9 like Manet and Monet. 10 MR. MOLLER: That's right, both could paint and both 11 were right. So I won't criticize either Pulka or Palka. But 12 in the Pulka case they talk about control which always lies at 13 the heart of these things. Commentators have pointed out that 14 the duty to control others arises only in the following 15 respects, the relationship between the defendant and the person 16 who threatens the harm to the third persons may be such as to 17 require the defendant to attempt to control the other's 18 conduct. Here, that's the airline controlling the conduct of 19 the terrorist, or there may be a relationship between the 20 defendant and the person exposed to harm, the plaintiff. 21 THE COURT: Pulka is a strange case. Someone who 22 owned a car drove it out of the garage and hit a pedestrian, 23 and the pedestrian sued the garage owner. And the trouble is 24 that it is foreseeable that if you let someone who is not 25 experienced driving cars out of the garage that that person SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 58 351gInRe Motions 1 could be more negligent and hit someone. So the garage owner 2 should have the duty to use his own employees to drive cars out 3 of the garage and thus safeguard pedestrians. Very interesting 4 argument yet the Court of Appeals held against liability. 5 MR. MOLLER: Because they went on to say the garage 6 owner did not have an obligation or even opportunity to control 7 the driver. 8 THE COURT: Sure he did, he could have said, Don't 9 drive the car. 10 MR. MOLLER: But he didn't have a statute or 11 regulatory obligation to do it, so they made a fuzzy ruling 12 that there wasn't an obligation to control. Here they have a 13 federal obligation to control these people because of the 14 enormous harm that could be caused. 15 THE COURT: They don't have an obligation to control, 16 they have an obligation to screen. 17 MR. MOLLER: But why? Why? The obligation to screen 18 is so that nobody who shouldn't get on the plane is controlled 19 from getting into of the cockpit. It is all a matter of 20 physical control. 21 But in Pulka they have another hypothetical and that 22 is yet another example, is the duty of the owner of a vehicle 23 to use care to control the conduct of the driver when the owner 24 is driving the vehicle. Pilot-terrorist. The pilot is 25 obligated to make sure that the terrorist doesn't get into the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 59 351gInRe Motions 1 front left seat of the cockpit and the pilot by extension is 2 everybody who assists him in the performance of his duty which 3 goes all the way back to the screeners and the airport, whoever 4 shared responsibility. 5 Once the airlines and the aviation defendants who have 6 a federal shared responsibility and the security companies a 7 contractual responsibility to help the airlines and the airport 8 fulfill their nondelegable duty, once they allow somebody to 9 get into the front left seat who is not supposed to be there, 10 if he's a terrorist they are responsible. 11 There are only two things a terrorist can do in the 12 front left seat. He can hold passengers for hostage and 13 release them when the plane is down safely or he can crash the 14 airplane. And when we look at the Federal Register on July 17, 15 less than two months before this terrible event occurred, we 16 find some, what I find extremely instructive comment by the 17 federal government. 18 They said and this was the aircraft operator security, 19 united and American talking to United and American "the 20 terrorist threat level in the United States over the next 21 decade will remain at least as high as it is at present and 22 indeed will probably rise." This is at Federal Register 66, 23 37330. And they give you a number of factors. 24 "First, there are numerous unresolved conflicts across 25 the globe many of which show no sign of early resolution." And SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 60 351gInRe Motions 1 I'll skip a little bit. "The status of the United States as 2 sole superpower means the party to the conflict are prone to 3 either decry either U.S. involvement or lack of involvement. 4 Second, since the United States is vicariously perceived as a 5 supporter of unpopular regimes, an enemy of Islam and any 6 number of groups view the United States interests as 7 fundamentally inimical to their own and thus the attacks 8 against U.S. interests as justifiable, even meritorious. 9 "Third, the expanding geographical range of terrorist 10 activity is increasingly evident" and then they point to 11 radical elements of the United States. "Four, the 12 vulnerabilities of the critical national infrastructure of the 13 United States may prove inviting to foreign and domestic 14 terrorists wishing to inflict damage on the U.S. economy. 15 Fifth. 16 "Although it remains to be seen what lessons 17 terrorists will draw from the World Trade Center bombing in 18 1993, and the Oklahoma City bombing in 1995, a particularly 19 worrisome development is the increasing willingness on the part 20 of various terrorists to carry out attacks intended to bring 21 about indiscriminate casualties." They are talking to American 22 and United and MassPort and the Port Authority and Washington 23 Metro Airport. "With respect specifically to the threat to 24 civil aviation in the United States, it must be seen in the 25 context of a broader threat. The events in Asia in early '95" SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 61 351gInRe Motions 1 that was, parenthetically, not quoting for the reporter, that 2 was an attempted hijacking of twelve aircraft in the Pacific, 3 "Showed that the terrorists persist in planning to attack 4 aviation even when there were other targets identifiable with 5 the United States in the area and even when they new the 6 security measures protecting aviation had been strengthened. 7 Publicity about problems with U.S. domestic civil aviation 8 security measures increases the potential for attacks here." 9 That's notice. That as close as it can get. But it gets even 10 better. 11 "Civil aviation targets may be chosen by terrorists 12 even if alternative and in their view softer targets are 13 available, especially since an attack on aviation seizes the 14 public's imagination to a degree equal by few other sources." 15 THE COURT: What is the context? 16 MR. MOLLER: The context is the foreseeability and in 17 the Palsgraf risk defines. 18 THE COURT: These are regulations? 19 MR. MOLLER: This is the introduction to regulations 20 about aviation security that were then to be implemented, I 21 believe they were to become effective in November. 22 THE COURT: So they were not yet? 23 MR. MOLLER: I don't believe they were but -- 24 THE COURT: One more question. Mr. Ellis has 25 described regulations from the perspective of avoiding SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 62 351gInRe Motions 1 hijacking rather than avoiding suicidal use of a hijacked 2 airplane and argued that deflects the question on intent, on 3 the airlines company should not have a duty that extends to 4 preventing suicidal harm. What's your take on? 5 MR. MOLLER: I reject it entirely. 6 THE COURT: I know but why? 7 MR. MOLLER: Does it come as a surprise? 8 MR. PODESTA: Not at all. 9 MR. MOLLER: The reason I reject it is because by the 10 time of September 11, 2001 every knew -- 11 THE COURT: That's foreseeablity, but the New York 12 Court of Appeals says there is a lot of factors that go into. 13 MR. MOLLER: Foreseeability assists the court in 14 analyzing the risk because if you follow the old 1920s Palsgraf 15 logic risk defines duty. 16 THE COURT: You know, it is a question, the argument, 17 the proposition in the Court of Appeals decision in Hamilton 18 against Beretta is the following "Foreseeability alone does not 19 define duty, it merely determines the scope of the duty once it 20 is determined to exist." Whether or not it exists is my job. 21 I have to deal with a whole lot of factors which we discussed 22 and will discuss some more and I don't believe that the 23 limitations that are imposed by the Air Transportation Safety 24 Act should affect my judgment because that wasn't in existence 25 on September 11. And I have to determine if a duty exists as SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 63 351gInRe Motions 1 of September 11. 2 Is there anything else you want to tell me? Because I 3 think I have gotten your argument. 4 MR. MOLLER: I would like to make one point. Even in 5 the absence of the act the issue of numerosity that you are 6 concerned about or that you articulated concern about really is 7 misplaced because the scope of liability is not to the world at 8 large, it is who they kill, who they injure, and who they hit 9 directly. 10 THE COURT: Like in Hamilton against Beretta, the 11 argument is that that's not always in their control; they don't 12 know whether suicide is going to happen, they don't. 13 MR. MOLLER: In the Derdiarian case they didn't know 14 who was going to be hit in the pit, the most Rube Goldberg kind 15 of case, and the court said you don't have to anticipate 16 precisely the harm that would be caused but that harm would be 17 caused. 18 And the July 17, 2001 statement is interesting and 19 constructive because it marries concern about the World Trade 20 Center in 1993 as an example -- 21 THE COURT: You are talking about an evolving standard 22 and the defendants are saying that the standard in terms of 23 duty did not exist at the time. 24 MR. MOLLER: No, I'm not. I'm talking about the state 25 of awareness and the magnitude of the risk which defined what SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 64 351gInRe Motions 1 they had to prevent. They had to prevent terrorists from 2 getting into the airplanes on September 11, 2001 -- 3 THE COURT: And your argument is that they had better 4 control and somebody had to step up and do the proper screening 5 and if they were negligent in doing that that as yet to be 6 proved there should be a duty. 7 I think I understand your point. If there is a very 8 brief response to something now I'll hear it, but I think I 9 have your points. Mr. Podesta and Mr. Ellis, as you can see 10 from my questioning I am not being repetitive. 11 MR. ELLIS: No, your Honor, real quick comment. 12 Number one, Mr. Moller is of course a gentleman -- 13 THE COURT: Let's be efficient here. 14 MR. ELLIS: Derdiarian is not the standard. Our brief 15 sets that forth. But the only thing I really want to comment 16 on insofar as the issue of control and getting into a cockpit, 17 quite frankly the 66 Federal Register 51, 546 that is cited in 18 our brief which regards the design of cockpit doors, and Boeing 19 will go into it, quite frankly the FAA designed cockpit doors 20 for different issues pre-9/11 than they did after and what the 21 FAA says in that Federal Register section is -- 22 THE COURT: Let me get that when it comes time to 23 argue Boeing. 24 MR. ELLIS: Yes, your Honor. 25 The other thing, so far as Mr. Moller's comment with SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 65 351gInRe Motions 1 respect to the July 17 publication of the Federal Register in 2 2001, nothing in that section says anything other than, and I 3 read from page 28 of 83 in the printout that I got from Lexis 4 "the FAA has the authority and responsibility to insure safety 5 and security of passengers." In that section they specifically 6 address the fact that the FAA not law enforcement determines 7 who can and or cannot bring a weapon on to an airplane. 8 What I am saying, your Honor, is that when you 9 consider the cockpit door issue that they redesigned to address 10 a different threat post 9/11 than they did before -- 11 THE COURT: You'll tell me that when we get to Boeing. 12 The decision is reserved. 13 I'd like to go on to the next argument without a 14 break. We'll go until 5 o'clock and then stop. 15 The next motion is by the noncarrier defendant 16 airlines, Continental, Air Canada and America West moving for 17 summary judgment with regard to Flight 93. Flight 93 is the 18 flight that was intended to go from Newark to San Francisco and 19 was diverted and it appears that there was an act of heroism on 20 board by the passengers who reasserted or attempted to reassert 21 control over the airplane and the airplane crashed in 22 Shanksville, Pennsylvania. 23 The burden of the argument is that Continental 24 Airlines, Air Canada and America West were responsible for 25 security to the extent they were on the A2 concourse of Newark, SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 66 351gInRe Motions 1 not the A1 concourse. The A1 concourse had a security 2 controlled by united which delegated that job to Argenbright. 3 Air Canada, Continental and America West delegated their 4 security to Continental. And the argument is that since the 5 hijackers presumably entered the United plane through United 6 security or through some portion of the airport which was not 7 subject to the control of the three moving airline parties, I 8 should grant a motion dismissing the case against them. 9 Plaintiffs have not opposed this other than to say 10 that a motion under Rule 56 is premature. I think unless 11 Mr. Van Deventer has got more to say on the issue, I think I 12 understand it. 13 The issue to me is why the plaintiffs need discovery. 14 Who will deal with this point? Mr. Hanly. 15 MR. HANLY: Yes, your Honor. Thank you, your Honor. 16 As the court correctly pointed out, our response is 17 that this was an inappropriate time to move for summary 18 judgment on the part of the three moving noncarrier defendants. 19 The court made quite clear at at least two conferences -- 20 THE COURT: Let's get beyond the technical. There are 21 is so much going on, and so many facts and issues. If these 22 three carriers deserve to get out they should be gotten out. 23 MR. HANLY: The short answer is that we are entitled 24 to discovery and I will speak specifically about particular 25 items as to which we simply don't know the answer. They have SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 67 351gInRe Motions 1 put in affidavits. We believe that the affidavits are not 2 entirely clear. 3 For example, Judge, the affidavits state that on 4 September 11 none of the three carriers had a contract with 5 Argenbright and they annex to their papers contracts with 6 Huntly dated I believe September 8, 2001. The affidavits 7 themselves do not state whether prior to the initiation of the 8 September 8 contracts they ever did have contracts with 9 Argenbright. 10 The brief in -- 11 THE COURT: If they are involved with A2 and we all 12 know Newark Airport that's a totally entry point to the 13 airlines. Why should they be liable? 14 MR. HANLY: Well, your Honor, one of the claims is 15 that the noncarrier defendants, all the noncarrier defendants 16 collectively have responsibility generally and collectively for 17 Newark Airport as a whole. 18 If that turns out in discovery not to be the case, 19 then summary judgment might be appropriate. But at this point 20 in time we do not know whether there was either a course of 21 conduct or some other arrangement or requirement pursuant to 22 the contracts that the airlines had with the airport operator 23 by which they may well have been responsible collectively with 24 all of the other airlines for security beyond the particular 25 single concourse A2 out of which they claim they operated SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 68 351gInRe Motions 1 solely on September 11. 2 THE COURT: What other ground? 3 MR. HANLY: The point about Argenbright, Judge, and 4 the absence in the affidavits of any statement as to whether 5 prior to September 11 they had a contract with Argenbright is 6 that if these carriers were responsible for training 7 Argenbright individuals on September 6, for example, that 8 contract then expiring on September 8, again we don't know 9 whether this is the case or not, then there may be some 10 liability with respect to the alleged negligence of Argenbright 11 individuals operating on September 11 who may have been trained 12 prior to September 11 or supervised prior to September 11 by 13 the carriers. 14 THE COURT: Mr. Van Deventer, what would be the 15 problem about having limited discovery? 16 MR. VAN DEVENTER: Let me first address, counsel makes 17 reference to the generalized possibility of liability on the 18 part of carriers who were at Newark Airport that tragic day. 19 We know already the plaintiffs don't really believe that theory 20 because some defendants who were at the airport that day had 21 received voluntary dismissals. 22 Therefore, the only thing I can conclude based upon 23 the three paragraphs in the master complaint, which I think are 24 62, 63 and 64 that relate to the noncarrier defendants that are 25 left is that their theory is limited to the security check SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 69 351gInRe Motions 1 point in question, which is the security check point at A1. 2 And we have made clear in our affidavit, your Honor, that those 3 carriers had nothing to do with that check point or 4 Argenbright. 5 THE COURT: Mr. Hanly wants to test that. 6 MR. VAN DEVENTER: Judge, if I could, respectfully. 7 Rule 56(f), your Honor, provides that if plaintiffs' counsel 8 felt they were missing something that by affidavit they should 9 have submitted that in opposition to our motion, and they did 10 not. 11 THE COURT: They told me they think the motion is 12 untimely and when we organized this effort it did not occur to 13 me that there would be summary judgments. This is all too 14 important to be reserved on technicalities. I don't like to do 15 that in any case and certainly not in this particular case. So 16 I think what needs to be done is you and Mr. Hanly should agree 17 on a limited scope of discovery and Mr. Hanly should add it. 18 If he can't prove his point I know him well enough to recognize 19 that he can't prove anything and you'll dismiss it voluntarily. 20 I believe what is appropriate now is define that discovery, do 21 it and come to the conclusion. 22 MR. VAN DEVENTER: Could we have, my concern is your 23 order of February 5 which said that any summary judgment 24 motions needed to be filed at this time or else they would be 25 reserved until the time of trial. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 70 351gInRe Motions 1 THE COURT: I'll let you move whenever you can. 2 MR. VAN DEVENTER: Your Honor, could we attempt to 3 specify if we can what discovery precisely we are to provide? 4 THE COURT: I feel confident that if you don't agree 5 I'll agree for you. 6 MR. VAN DEVENTER: Thank you, your Honor. 7 MR. HANLY: Thank you, your Honor. 8 THE COURT: The next motion is by Boeing to dismiss as 9 to Flight 77 and Flight 93. Mr. Sussman. 10 MR. SUSSMAN: Your Honor, William Sussman on behalf of 11 defendant Boeing company in support of the motions. 12 Before I begin, your Honor, I do want to echo and 13 adopt on behalf of Boeing and its counsel Mr. Podesta's initial 14 comments about the victims on 9/11 and their families. 15 Obviously there is going to be some general overlap between 16 some of the things you have been discussing and what I would 17 discuss today. 18 THE COURT: I am going to ask you not to do that, Mr. 19 Sussman except if you wanted to make sure that I understand a 20 point, do it in the briefest possible way. I allowed the first 21 argument to be as extensive as it did because I thought it was 22 rather basic. And I know you have some additional points to 23 make and some points of emphasis, but let's try as best we can 24 try not to repeat. 25 MR. SUSSMAN: I will. Boeing is situated somewhat SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 71 351gInRe Motions 1 differently in the list and I think it would be useful to the 2 court to outline what some of those differences are. 3 THE COURT: Let me sketch it out. Boeing is a 4 defendant not in anything that happened in the World Trade 5 Center but with regard to the flight that crashed into the 6 Pentagon, American number 77 and with regard to the flight that 7 crashed in Shanksville, Pennsylvania, United number 93. And we 8 are dealing with essentially four claims, really two claims. 9 There's an issue of negligence and an issue of breach 10 of warranty and both have to do with cockpit doors; there is 11 also a claim for strict tort liability in the case involving 12 the Pentagon, which is governed by Virginia law, and it is 13 rather clear in Virginia law that there is no thing as strict 14 tort liability. So we are really dealing with breach of 15 warranty and negligence and the cases hold that they are 16 different sides of the same coin. So it is the same standard. 17 Let's move from there. 18 MR. SUSSMAN: OK. You covered a lot of ground for me, 19 your Honor. I appreciate it. 20 I think the point you made though is important to just 21 emphasize briefly, which is Boeing is the only product 22 liability defendant in the cases, in the 9/11 litigation. 23 We are not alleged to have been involved in passenger 24 screening, airport security. We are not subject to federal 25 aviation and subject to the common strategy. It is pure SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 72 351gInRe Motions 1 product liability. 2 THE COURT: Can Mr. Sussman be heard throughout the 3 courtroom? 4 MR. SUSSMAN: Good. The last row said yes. 5 The plaintiffs say that in their brief that they are 6 not seeking to extend the outer boundaries of tort liability by 7 suing Boeing in this litigation. But that is in fact what they 8 want the court to do and in rather extraordinary ways that 9 neither Virginia law nor Pennsylvania law nor federal law will 10 allow. 11 This is not an case where an alleged defect in an 12 airplane led to an accidental crash. As even the plaintiff 13 finally concedes, the events of 9/11 were unprecedented not 14 just in degree but in kind. 15 What the terrorists did, as we all know, is 16 coordinated the tasks. They took control of the airplanes and 17 turned those airplanes into weapons of mass destruction, 18 weapons of mass murder and mass suicide and it is the totality 19 of that tragic reality that gives rise to the plaintiffs' 20 claims in this case. It is a critical point because the 21 plaintiffs try to move away from what actually happened on 22 9/11. And they asked this court in their brief to decide 23 Boeing's motions, in their words, separate and apart from the 24 actual events of 9/11. But the court obviously must decide 25 these motions based on what did happen on 9/11. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 73 351gInRe Motions 1 And I highlight that point because it is particularly 2 relevant to the product liability claims against Boeing in 3 light of the directly relevant body of case law that we cite in 4 the briefs which was touched upon briefly by Mr. Podesta. The 5 Arcadian case, the Gaines-Tabb case and the KAL case of. As in 6 all of those cases, this case falls far beyond any appropriate 7 line of demarcation for which what the Third Circuit in 8 Arcadian called the outer boundaries of tort liability. Those 9 courts had no difficulty holding as a matter of law that the 10 cases before them were not properly product liability cases and 11 they did so over the objections of the plaintiffs in those 12 cases which the plaintiffs in this case echo, that the issues 13 are issues of fact, that could not be decided on motion. 14 The plaintiffs really have no answer to those three 15 cases which are really critically important we submit to the 16 disposition of the motions brought by Boeing. 17 Another very important factor just in terms of setting 18 the background here is that we have submitted to the court for 19 its review the official statements of the FAA which confirm the 20 correctness of granting Boeing's motions. And there is 21 reference earlier to one of them by Mr. Ellis. 22 On March 19, 2002, the FAA, which is the expert agency 23 that's charged with establishing airplane design and 24 performance standards, issued a final ruling and published it 25 in the Federal Register that day and the citation is in our SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 74 351gInRe Motions 1 briefs. That final rule interpreted the FAA's own cockpit door 2 design regulations that were in effect on 9/11. 3 What that final rule says is that the 9/11 hijackers' 4 conduct was, and this is a quote by the FAA "a safety and 5 security threat that was not anticipated and therefore not 6 considered in the design of transport airplanes." That's not 7 Boeing's words, that's the words of the FAA. 8 In addition, on more general -- 9 THE COURT: Wasn't that issued post 9/11? 10 MR. SUSSMAN: Yes, it was issued post 9/11. 11 THE COURT: What value does it have to me? 12 MR. SUSSMAN: Because as we point out in our reply 13 brief under the Orr and Demorrea case the agency's own 14 interpretation of its own regulations is entitled to deference 15 by this court. What the FAA -- 16 THE COURT: But it is an interpretation after the 17 fact. 18 MR. SUSSMAN: All interpretations by the agency by 19 definition are interpretations after the fact. In the Orr case 20 the Department of Labor submitted an amicus brief to the 21 Supreme Court in which it gave its interpretation of 22 pre-existing regulations. And the Supreme Court said that we 23 are to defer to that. 24 In the Second Circuit's decision in Demorrea, which 25 just came down a few months ago, the Second Circuit said the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 75 351gInRe Motions 1 same thing about an SEC interpretation by definition of 2 pre-existing regulation. 3 That body of case law necessarily speaks to a post 4 facto interpretation of the regulations and it is that post 5 facto interpretation that is entitled to deference by the 6 court. 7 So what the FAA says in this final rule is that the 8 risk, the risk of the 9/11 terrorist conduct was not something 9 that was considered by the FAA in its door design regulations. 10 And that's federal law within the meaning of the stabilization 11 act and it confirms that plaintiffs' claims against Boeing 12 cannot stand. 13 There is also a more general statement that we cite to 14 the court in a later publication by the FAA in the Federal 15 Register on January 14 of this year, where the FAA said no one 16 had envisioned what happened on 9/11 that terrorists, and again 17 the words of the FAA "would take control of a commercial air- 18 craft and successfully use that aircraft as a weapon." That's 19 the formal published position of the government in the Federal 20 Register. 21 The plaintiffs try to do away with the importance of 22 the Orr and Demorrea differential standard by saying it is not 23 really anything that's legal material but of course that's 24 precisely what the FAA statements are and they should guide the 25 court in disposing of Boeing's motions. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 76 351gInRe Motions 1 Another aspect of federal -- 2 THE COURT: Mr. Sussman, when Boeing designs a door 3 are there federal specifications that control the nature of the 4 door and its thickness, its penetrability and so on? 5 MR. SUSSMAN: There are now. Prior to 9/11, and again 6 I would just point the court to the expert on this, the FAA -- 7 THE COURT: Leave that regulation aside. Before, 8 without considering that regulation, were there specifications 9 the satisfaction of which an aircraft manufacturer had to 10 comply? 11 MR. SUSSMAN: Yes, and this final rule speaks to those 12 and discusses those. It is 67 Federal Register page -- 13 THE COURT: So you don't cite unless I forget what 14 regulation determined how Boeing would construct its doors. 15 MR. SUSSMAN: That's correct, your Honor, and the 16 reason we didn't do that is because rather than us interpret 17 the FAA's regulations, in this final rule the FAA has done it 18 for us and what they have told us is that the 9/11 terrorist 19 conduct again to quote "Was a safety and security threat that 20 was not anticipated and therefore not considered in the design 21 of transport airplanes." 22 THE COURT: This is not an interpretation of a 23 regulation. This a comment on pre-existing fact. It may be 24 said to intrude upon the court and the jury as fact finder. 25 MR. SUSSMAN: I disagree, your Honor. I think the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 77 351gInRe Motions 1 only rational interpretation of that statement by the FAA is 2 that what the FAA is saying here on March 19 of last year is 3 that the 9/11 terrorist conduct was a threat that was not 4 considered by the FAA in the design of transport airplanes. 5 And they go on to talk about the various aspects of cockpit 6 door design that were covered. 7 THE COURT: Who designed the airplane, Boeing or the 8 FAA? 9 MR. SUSSMAN: Boeing designs the airplane and it has 10 to be certificated and approved by the FAA, otherwise it's not 11 airworthy. 12 THE COURT: As air flight worthy. 13 MR. SUSSMAN: Right. 14 THE COURT: Does that mean the FAA in issuing its 15 certificate will review each and all the decisions made by 16 Boeing in the construction of aspects of the cabin? 17 MR. SUSSMAN: As I understand it, the interaction is 18 the FAA puts out the requirements, and Boeing must demonstrate 19 that it has satisfied the various requirements. There were 20 not -- let me start over. 21 The requirements that are listed in this final rule 22 from March of last year talk about various aspects of cockpit 23 door design that were considered and were mandated to be met by 24 the FAA. 25 The point of my argument with respect to this is this SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 78 351gInRe Motions 1 is something that the FAA has now said was never considered; 2 the threat that was posed, the risk that was posed by the 3 terrorists on 9/11 was something that the FAA itself did not 4 take into account. Obviously that's critical in terms of our 5 argument because it speaks to what your Honor correctly called 6 objectively reasonable foreseeability. 7 This is the FAA itself saying this was something we 8 did not take into account this was a risk that was outside the 9 scope of what we were thinking about when we were talking about 10 cockpit door design. There were many other aspects that were 11 considered by the FAA and discussed in its publication, but not 12 that. It was not reasonably foreseeable even to the FAA. 13 There's another aspect, Judge, of federal law that has 14 also been averted to in the discussions that preceded mine and 15 that's the common strategy that was in effect prior to 9/11. 16 The plaintiffs' brief, and I think it is an interesting 17 statement, they say that the common strategy that was in effect 18 was, in their words, simply irrelevant here because the 19 situation it spoke to which was instructions to the terrorist 20 did not occur in this case. But that is precisely Boeing's 21 argument. What happened on September 11 was nothing that had 22 been anticipated or foreseen even in a hijack situation. What 23 the 9/11 terrorists did was not reasonably foreseeable. 24 With this background there are four arguments that 25 I'll be making in support of the motion to dismiss and I will SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 79 351gInRe Motions 1 make them as briefly as I can. The first thing will do why all 2 the Flight 77 and Flight 93 negligence claims fail for lack of 3 duty. Second, the various requirements for tort liability and 4 flight warranty claim in Flight 93 fairly. Third, I'll explain 5 why all the claims fail for reasons separate which is lack of 6 proximate cause, and, finally, relatedly but different, I will 7 explain why all of the claims in both the Flight 77 and Flight 8 93 cases fail because the terrorist conduct was a superseding 9 cause which your Honor discussed previously. 10 With respect to duty, Boeing was under no duty to 11 design these airplanes to as to prevent the terrorist' use of 12 them as weapons of mass destruction. There are two separate 13 reasons why that is so. 14 First, there was no special relationship between 15 Boeing and either the decedents or the terrorists, and as a 16 matter of law, Boeing therefore had no duty to control the 17 conduct of the third parties who actually inflicted the harm, 18 that is the terrorists. And that is the duty that the 19 plaintiffs seek to impose on Boeing. 20 They say several times in their brief that Boeing's 21 duty was to prevent, that is their word, to prevent the events 22 of 9/11 which could only be done by controlling the conduct of 23 the terrorists. And at page 10 they say explicitly it is the 24 fact in their view that all defendants could control the risks 25 of harm caused by the terrorists that should lead to liability. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 80 351gInRe Motions 1 So plaintiffs position is clear: According to them 2 Boeing had duty to control the conduct of the terrorists that 3 only can exist as a matter of law as a special relationship. 4 The plaintiffs do not allege and the brief does not even 5 attempt to argue that there was a special relationship here 6 vis-a-vis Boeing. And on that ground alone all of the Flight 7 77 claims and the Flight 93 negligence claims should be 8 dismissed. 9 But there is a second independent reason why those 10 claims should be dismissed and that's something that has been 11 discussed and which is that however one couches the duty, 12 whatever the duty is of Boeing the scope of the duty is limited 13 by the principle of objectively reasonable foreseeability. 14 The KAL case cited in our briefs citing the Palsgraf 15 case says "Fundamental principles of tort law require that 16 there be duty before there can be liability, and before there 17 can be duty foreseeable of the consequences of one's act." KAL 18 went on to explain that to say that duty extends only to those 19 things which are objectively reasonable to expect. Not all 20 things which might conceivably occur. 21 THE COURT: Judge Robinson in that case cited various 22 protocols in international law to which the Union of Soviet 23 Socialist Republics was a party which provided for ways that 24 aircraft that strayed off course would be brought down. It did 25 not include shooting down an airplane. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 81 351gInRe Motions 1 A Soviet fighter pilot shot down a KAL flight and 2 Judge Robinson held that was not anticipated in a decision of 3 the District of Columbia district court. A judge at the same 4 level as me. The precedent is not binding, though. 5 MR. SUSSMAN: It is persuasive. It is not binding. 6 THE COURT: Mr. Moller argues that hijacking was 7 reasonably foreseeable. The history of hijacking of airplanes 8 was anticipated. Mr. Moller also argues that the history of 9 suicidal terrorism was also of sufficient notoriety by the time 10 of September 2001 to give notice, and he would argue that the 11 design of cockpit doors which would not prevent assailants from 12 breaking through those doors was therefore negligence. He 13 argues that there was reasonable foreseeability. He argues 14 that the many incidents that he cites makes it objectively 15 reasonable. How do you deal with that argument? 16 MR. SUSSMAN: I feel like I am being tag teamed, Mr. 17 Moller wasn't arguing but Mr. Hanly was. 18 MR. MOLLER: I won't take offense. You can use it any 19 way you want. 20 THE COURT: That's the issue. 21 MR. SUSSMAN: That is one issue. 22 THE COURT: Your argument is that there are many 23 reasons why doors were designed the way they were designed, 24 that there was, to use Mr. Ellis's argument, a common strategy 25 of cooperating with hijackers which possibly could have been SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 82 351gInRe Motions 1 misguided, but it was nevertheless expressed at that time, so 2 it was not unreasonable for you to design the doors that way. 3 How do you respond to that? 4 MR. SUSSMAN: First -- 5 THE COURT: It is a conundrum, but is there anything 6 more to say? 7 MR. SUSSMAN: I will try to add first of all the 8 reality is we would not be here if there were a hijacking. It 9 was only the fact that, as the plaintiffs allege the terrorists 10 on 9/11 did the unprecedented and turned the aircraft into 11 weapons of mass destruction that led to the deaths. 12 THE COURT: And the question therefore is was the 13 terrorists' taking of the airplane such an act as to be 14 unforeseeable. Your argument is that was an independent 15 supervening act which broke the chain of causation and 16 cancelled any potential duty or liability on the part of Boeing 17 the manufacturer. 18 MR. SUSSMAN: That is certainly one of our arguments. 19 That was actually going to be my final argument. I can move to 20 it right now if you'd like. But that is really the end of the 21 analysis because -- 22 THE COURT: And you cite the two decisions on the 23 fertilizer cases and you cite the KAL case. 24 MR. SUSSMAN: And I could also cite your Honor's 25 decision remanding Graybill where you also spoke of superseding SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 83 351gInRe Motions 1 causes in exactly the same terms. 2 And I will move to the end of the argument. With 3 respect to superseding cause, which defeats all the plaintiffs' 4 claims your Honor in Graybill said that when there are events 5 occurring after the original tort that so contribute to the 6 complained of harm, that they cancel out the liability of the 7 original tort feasor. This is way down the analysis, we are 8 past duty, past the cause, we are into superseding cause and I 9 don't want to concede any of the intermediate steps. 10 THE COURT: Mr. Podesta and Mr. Ellis covered those 11 points. If you want to add more go ahead. 12 MR. SUSSMAN: I will. I will deal with superseding 13 cause now since we are on it. Judge, even if Boeing could be 14 deemed negligent and have been a proximate cause under 15 supervening cause the terrorist conduct would supersede or 16 cancel out our liability. That's one reason why the plaintiff 17 assertion in their brief, that Boeing's design of the airplane 18 put into operation the terrorist attacks is misguided because 19 superseding cause presupposes an assumed original proximate 20 cause by the assumed tortfeasor. 21 The plaintiffs agree that the key is whether the 22 conduct that's the basis of the superseding cause was 23 reasonably foreseeable to the defendant and they say in their 24 brief at page 76 that the terrorist acts in Arcadia and in 25 Gaines-Tabb were not foreseeable because in the plaintiff's SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 84 351gInRe Motions 1 view the fact that fertilizer is explosive grade does not in 2 their word generally result in bombings. So they agree that 3 what generally follows, what is an expected or natural 4 consequence in your Honor's words, that's the test. But prior 5 to 9/11 and frankly since 9/11 commercial airliners have not 6 been generally used as weapons of mass murder and mass suicide. 7 What the terrorists did on 9/11 was not reasonably 8 foreseeable and the FAA statements that I have talk about make 9 that clear as do a number of concessions in the plaintiff's own 10 brief. The terrorists' conduct in Gaines-Tabb and Arcadian was 11 held to be a superseding cause as was the Soviet shoot down in 12 the KAL case. And what is interesting in those cases there 13 were allegations of prior similar occurrences in all of those 14 cases. And particularly in Arcadia and Gaines-Tabb, the 15 plaintiffs alleged there had been prior bombings using the 16 defendants' product and the defendants were on actual notice 17 that their products were being used as weapons of mass 18 destruction. 19 THE COURT: To extend Mr. Podesta's argument in almost 20 every case that arises, in New York, in Virginia, in 21 Pennsylvania, and even though there could be arguable 22 foreseeability the courts were reluctant to impose a duty where 23 there was something new in some dramatic way that caused a lot 24 of harm. 25 MR. SUSSMAN: Absolutely. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 85 351gInRe Motions 1 THE COURT: That's really the most potent argument on 2 your side. And it is something that needs to be understood. 3 It expresses a caution on the part of courts, on the part of 4 common law courts to extend liability. Against that is the 5 argument that foreseeability had risen to such of an extent 6 because of what we learned anew that it was both duty and 7 negligence. 8 MR. SUSSMAN: It is interesting, if you are taking 9 that point as I said the Arcadian and Gaines-Tabb cases in 10 particular you have express allegation, very detailed 11 allegations laid out in the opinions of multiple instances, 12 prior instances -- 13 THE COURT: One can argue that it should have been 14 known to the fertilizer manufacturers that people bent on using 15 them in improper ways were buying the fertilizer in Home Depot 16 and the like stores all over the country, going into their 17 garage, mixing in a few more elements and making a bomb. And 18 the argument went that you could prevent the fertilizer from 19 being used in that fashion by adding something. And the 20 argument against it is that fertilizer was a common product and 21 it was unreasonable to require more. 22 I am not going to be involved in the fertilizer cases. 23 They are what they are. KAL is similarly a problem. Judge 24 Robinson felt that it was not foreseeable that a plane that had 25 strayed off course would be shot down, yet he could have argued SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 86 351gInRe Motions 1 almost with equal logic that a plane that strayed off course in 2 hostile environments would so expose its passengers to undue 3 risk that there was a duty. He chose not to. And as Mr. 4 Podesta argued, that very choice of courts is resonant and I 5 have to understand it and deal with it. 6 I think to extend Mr. Podesta's argument to one more 7 point, even though I might see a reasonable foreseeability I 8 have to be very cautious in extending liability because of the 9 way the numbers of cases that one after another are not holding 10 liability. I think that's your strongest point. 11 MR. SUSSMAN: I will agree with the court that is 12 certainly a strong point to us. 13 THE COURT: But I have to say that there is equally 14 compelling argument on both foreseeability and control that 15 makes this an extremely difficult case. 16 MR. SUSSMAN: With respect to control I think that's 17 an important point because that requires a separate analysis of 18 a special relationship which even the plaintiffs don't argue 19 exists here. So that factor by itself sets us apart from the 20 aviation defendants. They have conceded the special 21 relationship. 22 THE COURT: Boeing could have designed a different 23 door. It didn't. It made a choice. Is it a reasonable choice 24 or not? That's a different issue. On the question of duty I 25 have to assume that it was an unreasonable choice and the issue SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 87 351gInRe Motions 1 is was there a duty. 2 MR. SUSSMAN: Actually, I think, again if your Honor 3 will take guidance from the courts, Third and Tenth circuits in 4 Arcadia and Gaines-Tabb they spoke exactly to that point. What 5 they said was that there are issues here that even if you do a 6 check the list analysis OK you have alleged all the elements of 7 the claim, there are fundamental principles here, and I think 8 it goes back to the policy points that your Honor was speaking 9 to Mr. Podesta about, there is a limit here where a 10 manufacturer -- there's a limit. 11 All the manufacturer cases that we cited to the court, 12 there is a limit on what particularly should be imposed on 13 manufacturers who are remote in space, remote in time from the 14 events on 9/11. And the course in those cases recognized that 15 there had been actual prior use of the products and actual 16 notice to the defendants and they nonetheless held as a matter 17 of law, 12(b)(6) motions, that those claims could not stand. 18 They did it on all the bases that we cited to the court, duty, 19 lack of proximate cause as well as superseding cause. 20 And I agree with your Honor, that even if you get past 21 the point of duty, superseding cause is an independent basis 22 for knocking out the claims against Boeing. 23 THE COURT: Let me hear Mr. Moller. 24 I'm sorry. Mr. Hanly. 25 MR. HANLY: Thank you, your Honor. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 88 351gInRe Motions 1 THE COURT: First, am I right that under Virginia law 2 any claims for strict liability must be dismissed? 3 MR. HANLY: Judge, we would concede that does not mean 4 dismissal of warranty nor the negligence claims. 5 THE COURT: So we are dealing with breach of warranty. 6 MR. HANLY: With respect to the Flight 77. The Flight 7 77 claims would involve, in addition, strict liability. 8 Judge, your Honor has touched on all of the points I 9 was going to make in my argument. 10 Firstly, with respect to the post 9/11 pronouncements 11 of the FAA, at best these would reflect minimal standards that 12 in any event the FAA did not think were not in effect prior to 13 9/11. The manufacturer of course has duties that are not 14 limited to that which the FAA indicates might have been 15 appropriate looking back at the events of 9/11. 16 In addition, your Honor, the various pronouncements 17 that my friend Mr. Sussman has called to your Honor's attention 18 concerning the FAA's statements of unforeseeability frankly are 19 simply wrong, and this court is not bound in any fashion to 20 follow what the FAA may have said about the events of 9/11, as 21 Mr. Moller has eloquently argued to your Honor. -- 22 THE COURT: They reflect that no one thought to have 23 impenetrable cockpit doors beforehand and there were reasons 24 why that was so. 25 MR. HANLY: That is what the FAA said. I agree that's SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 89 351gInRe Motions 1 what the FAA said, your Honor. 2 THE COURT: Shouldn't I treat that with respect? 3 MR. HANLY: I don't think your Honor should with 4 respect to the FAA because these are post 9/11 retrospective 5 statements concerning a sensitive area about which as is 6 well-known the FAA itself has come under substantial criticism. 7 In particular, as Mr. Moller has pointed out and as we 8 allege in the complaint, the 1995 Project Operation Bojenka was 9 an event involving the potential hijacking and explosion of 10 eleven aircraft and the separate use of aircraft crashing into 11 the CIA and Pentagon, events that came to the attention of the 12 FAA prior to 9/11. 13 So for those reasons, Judge, I don't think that a post 14 9/11 exculpatory analysis is appropriate for this court's 15 consideration. 16 Your Honor had commented a few moments ago that your 17 Honor wasn't going to get involved with the fertilizer cases. 18 I don't know whether in any event your Honor does not find the 19 fertilizer cases helpful to the court's analysis. I am 20 prepared to distinguish them in some detail. 21 THE COURT: They are easily followed and they are 22 easily distinguishable. 23 MR. HANLY: OK, Judge. Well, one way in which they 24 are easily distinguishable and I think persuasively 25 distinguishable if I may is that the fertilizer cases involved SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 90 351gInRe Motions 1 a misuse of a product, a commercial lawful product that 2 resulted directly in the harm to the individuals, an unintended 3 use of the product. And Boeing would have your Honor believe 4 that that's what is at issue here: Misuse of an airplane 5 resulting in the deaths and injuries on 9/11. But there's a 6 step that Boeing leaves out that is present in this case and 7 not present in the fertilizer cases. And that is that this 8 case involves, first, a project failure, the door, resulting in 9 a product misuse, the aircraft. 10 THE COURT: That begs the question. It is a failure 11 only if the door is supposed to be impenetrable. But if the 12 door is not supposed to be impenetrable, it is just supposed to 13 give privacy to the occupants of the cockpit and allow easy 14 entree and exit where circumstances are appropriate for that, 15 then it didn't fail. Like everything else before me, it begs 16 the question. 17 MR. HANLY: Your Honor, of course the allegation in 18 the complaints is that the cockpit door ought to have been in 19 some fashion impenetrable. 20 THE COURT: But if it is a question of duty I have to 21 decide that. It is not a question of fact for the jury. I 22 wish it were a question of fact for the jury and I wouldn't 23 have to decide the issue. But I have to decide the issue. 24 MR. HANLY: Judge, it certainly seems to us clear that 25 a manufacturer of an aircraft has a duty to manufacture a safe SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 91 351gInRe Motions 1 aircraft, and in the context of the late 1990s -- 2 THE COURT: That's your argument. In the context of 3 the late 1990s and even earlier that it was foreseeable that 4 planes would be hijacked and it was foreseeable that people who 5 did such terrible things of terrorism would be quite willing to 6 accept death themselves in order to achieve an objective that 7 was horrible. 8 MR. HANLY: And as Mr. Moller I believe correctly 9 pointed out, your Honor, it is the foreseeability which informs 10 the nature of the duty and the existence of the duty. 11 Your Honor may recall, at least I do, in the 1950s 12 flying on commercial aircraft where there weren't even any 13 doors. So certainly we allege that the duties that may have 14 existed 50 years ago are different than the duties that arise 15 now and one such duty as we allege is the duty to manufacture 16 an aircraft with such a door. 17 THE COURT: Does Virginia and Pennsylvania have the 18 force of duty that New York law has? 19 MR. HANLY: Pennsylvania has a much lengthier list of 20 such factors, but I believe that they are essentially 21 substantively quite similar, Judge. 22 THE COURT: Mr. Hanly, with respect, I think I have 23 got the points. I see the cases. They are helpful and they 24 beg the issue I have to decide and I have to get through it and 25 decide. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 92 351gInRe Motions 1 MR. HANLY: Thank you, your Honor. 2 THE COURT: It's 5 o'clock, folks, and I think what we 3 will do is start tomorrow with the fourth motion and that is 4 the motions of Massachusetts Port Authority and Metropolitan 5 Washington Airport Authority, the City of Portland, Maine, The 6 Port Authority of New York and New Jersey to dismiss the case 7 against them. 8 1 o'clock in this courtroom. See you tomorrow. 9 (Proceeding adjourned to Friday, May 2, 2003, 10 10 o'clock a.m.) 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300