1 3ase911c 1 UNITED STATES DISTRICT COURT 1 SOUTHERN DISTRICT OF NEW YORK 2 ------------------------------x 2 3 3 4 In re: SEPTEMBER 11 LITIGATION 21 MC 97 (AKH) 4 5 5 ------------------------------x 6 6 October 28, 2003 7 4:30 p.m. 7 8 Before: 8 9 HON. ALVIN K. HELLERSTEIN, 9 10 District Judge 10 11 APPEARANCES 11 12 BAUM HEDLUND 12 Attorneys for Plaintiffs PEC 13 BY: PAUL HEDLUND 13 JOHN GREAVES 14 14 KREINDLER & KREINDLER 15 Attorneys for Plaintiffs PEC 15 BY: BRIAN ALEXANDER 16 MARC MOLLER 16 JIM KREINDLER 17 JUSTIN GREEN 17 ANDREW MALONEY 18 18 BAUMEISTER & SAMUELS 19 Attorneys for Plaintiffs PEC 19 BY: DOUGLAS LATTO 20 20 HANLY & CONROY 21 Attorneys for Plaintiffs 21 BY: PAUL HANLY 22 22 MOTLEY RICE 23 Attorneys for Plaintiffs 23 BY: MARY SCHIAVO 24 RONALD MOTLEY 24 JODI WESTBROOK FLOWERS 25 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 2 3ase911c 1 A P P E A R A N C E S (Continued) 2 SPEISER KRAUSE NOLAN 2 Attorneys for Plaintiffs 3 BY: KENNETH NOLAN 3 4 CONDON & FORSYTH, LLP 4 Attorneys for Defendants 5 BY: DESMOND T. BARRY, JR. 5 6 KEITH HARRIS 6 CARLENE McINTYRE 7 Attorneys for Defendant Port Authority 7 8 JAMES B. COMEY 8 United States Attorney for the 9 Southern District of New York 9 BY: BETH GOLDMAN 10 Assistant United States Attorney 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 3 3ase911c 1 (Case called) 2 THE COURT: I called this conference in response to 3 correspondence that I received from Ronald L. Motley dated 4 October 22; from Jerald Crowley of the Port Authority on 5 October 23; from Marc S. Moller of Kreindler & Kreindler dated 6 October 27; and from Michael L. Baum of Baum, Hedlund, Aristei 7 & Guilford dated October 27th. 8 I appreciate your all coming up on very short notice. 9 I know, Mr. Motley, it represented a hardship for you to come 10 up from South Carolina because you were involved in a 11 proceedings before a state court judge. But since the issues 12 appear to me to be important and basic to the smooth running of 13 the litigation before me, I thought it important to confront 14 the issues and have them discussed immediately. 15 Before we get into the issues I want to raise one 16 thing more. I understand that Mr. Baum's letter -- where is 17 Mr. Baum? 18 MR. HEDLUND: Actually, this is Paul Hedlund. I am 19 the person on this side of the coast that prepared this letter 20 with Mr. Baum. 21 THE COURT: I understand that it was sent to me before 22 it was sent to Mr. Motley. 23 MR. HEDLUND: Mr. Who? It was sent to Marc Moller at 24 the same time it was sent to your Honor, and it was sent to the 25 Port Authority and all the people that were supposed to send SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 4 3ase911c 1 to, which I checked out. Mr. Moller was supposed to send it to 2 Mr. Motley, and then there was a call to my office and we were 3 asked to send it to Mr. Motley, which we did. 4 THE COURT: The letter affects Mr. Motley. 5 MR. HEDLUND: Pardon me? 6 THE COURT: The letter, your letter most directly 7 affects Mr. Motley. 8 MR. HEDLUND: Yes, your Honor. 9 THE COURT: Rule 1(a) of my chambers rules provides as 10 follows: Copies of letters to chambers shall simultaneously be 11 delivered to all counsel in no less speedy a manner than the 12 method of delivery to the Court. That's -- 13 MR. HEDLUND: The counsel -- 14 THE COURT: That's basic. It's basic, Mr. Hedlund. 15 You do not address anything or send anything to me before there 16 is fair notice to the other side. Otherwise, someone may think 17 that you are trying to get an unfair advantage. I'm sure 18 that's not your thought. 19 MR. HEDLUND: That's not my thought, your Honor. 20 THE COURT: Don't put yourself into a position where 21 people might think that. 22 MR. HEDLUND: I apologize. 23 THE COURT: All right. Mr. Motley, how should we 24 proceed? 25 MR. MOTLEY: May it please the Court. Thank you for SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 5 3ase911c 1 getting me out of that hearing, Judge. It was an unpleasant 2 law firm separation hearing and the judge was very 3 understanding. And I just have to be back by 9:00 in the 4 morning. 5 Your Honor, I've asked Mr. Hanly if -- with the 6 Court's permission, to address this issue that's been raised. 7 Mr. Moller originally suggested that I write your Honor when we 8 informed him of Miss Schiavo's joining our firm, which I 9 properly did. Understanding that might implicate the Port 10 Authority issue of last year, I sent a copy to the Port 11 Authority immediately, and to liaison counsel. 12 Mr. Hanly, as you know, argued that Port Authority 13 matter originally. I think Mr. Hanly is going to make a 14 suggestion to your Honor that will resolve any concerns with 15 respect to the -- 16 THE COURT: Excuse me one minute. Sorry. 17 MR. MOTLEY: Will resolve many of the Court's 18 legitimate concerns over the smooth function of the committee 19 system. 20 I would like, with the Court's permission, for 21 Mr. Hanly to address these issues. And I'm available to answer 22 any and all questions. Miss Schiavo is here also and 23 Miss Flowers, my partner who handled the transition matter, in 24 the event that your Honor would like to hear from us with 25 respect to Mr. Baum's letter, which I only received about 20 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 6 3ase911c 1 minutes ago. But I have read it and I'm familiar with the 2 attachments which he attached to it, and we're prepared at the 3 Court's pleasure to address it or address it by letter, papers 4 to give us some time to -- 5 THE COURT: Well, we'll see what's necessary. 6 MR. HANLY: Thank you, your Honor. 7 Judge, Paul Hanly speaking on behalf of the Motley 8 Rice firm. 9 Your Honor, as the Court knows, I've been a member of 10 the executive committee since early on in the litigation, 11 appointed by the Court along with my colleagues. The 12 litigation has changed very dramatically, as the Court can 13 appreciate, over the course of the year. 14 In that regard, what I mean, Judge, is, for example, 15 my firm together with Mr. Motley at the outset had something 16 like 700-plus plaintiffs consolidated in a case called Gaff, 17 which your Honor has before him. And a year ago, Judge, there 18 were significant indications, speculations, prospective views 19 that a vast number of those people might well proceed to active 20 litigation in this court, including many, many World Trade 21 Center ground victims. I raise that, of course, because that's 22 the genesis of the Port Authority's motion. 23 In my own case, in my own firm's case and Motley 24 Rice's case, we are here 14 months after the Court appointed 25 the executive committee. And it is now clear that of all of SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 7 3ase911c 1 those clients, and we now have some 1,400 who -- victims' 2 families who we're representing in the terrorism case, none of 3 the ground victims, none, zero that we represent will be 4 pursuing active claims against the Port Authority come 5 December 22nd. 6 So, in our own cases, the predicate for the 7 disqualification or the preclusion, if you will, of the Motley 8 Rice firm from an active seat on an executive committee will 9 expire, will no longer be there. 10 In that regard, Judge, we prepared the letter to your 11 Honor advising of the joinder to the Motley firm of 12 Miss Schiavo in order to indicate to the Court that we will be 13 seeking relief from the stipulation and order that relates to 14 the preclusion of the Motley Rice firm from any active role on 15 an executive committee. For that reason, for the additional 16 reason that, if I'm not mistaken, come December 22nd, Judge, 17 the active plaintiffs in this litigation -- that all the 18 consolidated litigation before your Honor, all of the active 19 human beings will be -- the majority of those people will be 20 aviation cases and not ground cases. I could be proven wrong 21 but I don't think so. 22 My own case, as I say, is probably illustrative of the 23 experience of other counsel across the cases, which is to say 24 there aren't going to be very many ground victims, World Trade 25 Center ground victims. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 8 3ase911c 1 So, Judge, if the litigation is going to take on the 2 demeanor, if you will -- 3 THE COURT: Does that mean that the Port Authority 4 has -- and the Silverstein interests will be dismissed from all 5 cases before me? 6 MR. HANLY: Certainly all the cases in which my 7 firm -- all 1,400 cases in which individuals who I represent 8 along with the Motley Rice firm, there will be no claims. 9 THE COURT: But other lawyers, you'll have claims 10 against the Port Authority and the Silverstein interests? 11 MR. HANLY: I predict, Judge, that the number of those 12 claims will be less than 50. 13 THE COURT: But there will be 50? 14 MR. HANLY: Yes, sir. However, Judge, if the 15 litigation is going to be focused in terms of number of cases 16 principally on the aviation cases, and to a lesser extent on 17 the ground victims at the Pentagon, as to whom, of course, 18 there is no conflicts issue -- 19 THE COURT: There is no conflict issue? I'm sorry, I 20 didn't hear. 21 MR. HANLY: As to which claims there is no conflict 22 issue because it does not implicate the Port Authority's 23 buildings, then it seems to us, your Honor, that the Court 24 should seriously consider either carving out the building 25 personal injury claimants and the building property damage SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 9 3ase911c 1 claimants from all the other claimants and let there be a 2 committee. 3 THE COURT: I'm not very sympathetic to that issue, 4 Mr. Hanly. The same party defendants are allowed, United 5 Airlines and American Airlines. The same issues of airport 6 security are involved, it seems to me. And from everything 7 I've come to understand, the interests of having a commonality 8 with regard to discovery and the issues of security, the 9 government issues that require extremely confidential treatment 10 and the like, all go to having a coordinated plan of attack, 11 which means that there is a need for an executive committee of 12 plaintiffs, which means that there's a need for coordination of 13 information, which means that the Port Authority's sensitivity 14 still is applicable, which means that the stipulation that went 15 on that was used at an earlier point of the case still applies, 16 as far as I'm concerned. 17 MR. HANLY: Well, I understand. And if I may address 18 that, your Honor, there's a second reason. And, again, Judge, 19 we're not moving today and we understand your Honor's 20 procedures is ordinarily to have a premotion conference -- 21 THE COURT: No, I don't require a premotion 22 conference. 23 MR. HANLY: I'm sorry. Then I read one of the other 24 district judge's rules, your Honor. 25 THE COURT: Many of the judges do, but I don't. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 10 3ase911c 1 MR. HANLY: Well, let me just address the issue of the 2 continued vitality of the stipulation to which the Court just 3 referred. 4 Your Honor, we believe that the underlying basis on 5 which the Port Authority made the initial application over a 6 year ago to disqualify the Motley Rice firm is now proved, 7 Judge, to have been made principally for, if not exclusively 8 for a tactical advantage. And I'd like to explain that very 9 briefly to your Honor because I think it's important for the 10 Court to know that. 11 THE COURT: I've gone into this at length. In my 12 thinking you are about to issue a decision in the matter when 13 it was made unnecessary by the stipulation and order dated 14 February 7th for the stipulation and February 19, 2003, for the 15 order. I'm familiar with it. I do not regard this -- I don't 16 know what the motivations may have been. It's not of any 17 concern to me. In my judgment that motion was soundly based 18 and was important for the Port Authority to make it, and I 19 think I would have granted it. 20 MR. HANLY: Yes, your Honor, but -- 21 THE COURT: I Think it's plain to everybody here I 22 would have granted it. 23 MR. HANLY: Yes, your Honor. But what's happened 24 since, if I could explain very briefly, undercuts the basis 25 under which the Port Authority made that motion. And that is, SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 11 3ase911c 1 the Court will remember, a key issue in the motion, was the 2 fact that the then Ness Motley firm, now the Motley Rice firm, 3 had hundreds of boxes of Port Authority documents left over 4 from the asbestos case. And the Port Authority wrung its 5 hands, if I may use that turn of phrase, about what a terrible 6 situation this was that a plaintiff's firm pursuing cases in 7 this court in the consolidated 9/11 litigation had all of these 8 boxes of documents -- 9 THE COURT: That was one part. 10 MR. HANLY: Excuse me, your Honor? 11 THE COURT: That was one part. The rule of 12 professional conduct is the imparting of confidences during the 13 course of a litigation, or otherwise, from client to attorney, 14 and the potential use of that information by the attorney in a 15 matter that the client can reasonably consider adverse. The 16 fact of lingering information reflected in boxes is one 17 interesting aspect, but the heart of it is the information that 18 was imparted by the client to the attorney and which the 19 attorney gained through working on the case. 20 I've gone into this at length. There was a serious 21 risk of an abuse of that rule and a violation of that rule 22 which could have affected the integrity of this lawsuit. And I 23 was ready to issue a decision on that. And if you want me to, 24 I'll be glad to return to that decision and issue it. 25 But I do not see that the stipulation and order that SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 12 3ase911c 1 was entered and to which I have just referred and which made it 2 unnecessary for me to decide is now suddenly academic. I do 3 not regard it as academic. 4 MR. HANLY: Your Honor, we don't regard it as academic 5 either, but we were seeking relief from that stipulation and 6 order for two principal reasons, one of which I was able to 7 articulate for the Court, namely the changing face of the 8 litigation, which is going to continue to change. 9 THE COURT: And the other? 10 MR. HANLY: And the other is the fact that one of the 11 principal bases was the existence of these documents. And if I 12 could read to the Court the Court's direction to the Port 13 Authority on January the 7th -- 14 THE COURT: To take back those boxes. 15 MR. HANLY: Yes. The Court says, Miss McIntyre, I 16 would like you to accept the offer. 17 Miss McIntyre: I will consult with my colleagues, the 18 trial attorneys that are responsible for the documents, and we 19 will make sure that that is taken care of. 20 The Court: They should be stamped in some fashion and 21 identified so there could be no dispute that they were given. 22 Mr. Moller, who was at the time very interested in the 23 contents of those boxes on behalf of his building clients, 24 thanks the Court for that. 25 Judge, nine months later I have yet to be contacted by SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 13 3ase911c 1 the Port Authority with respect to those boxes. That's not the 2 only place, Judge. This issue was throughout the Port 3 Authority's papers and was raised again by the Court at a 4 subsequent conference. And here we are nine months later and 5 the Port Authority obviously has no interest, including no 6 interest in boxes of privileged materials which we identified 7 existed. 8 So, your Honor, I suggest that under the circumstances 9 the original motion was not well based. The stipulation is not 10 well based in fact, and given the changes in the litigation, we 11 respectfully request that the Court consider, if not at this 12 time, then after the closure of the fund on December 22nd, some 13 modification in the structure of the plaintiff's executive 14 committee. 15 MR. MOTLEY: Your Honor, may I point out one thing if 16 I may. 17 THE COURT: Yes. 18 MR. MOTLEY: We are not seeking at this time that the 19 Court modify the plaintiff's executive committee. We have no 20 desire to create problems for the Court and the functioning of 21 the executive committee. We have not done anything to disrupt 22 the executive committee and have no such intention at this 23 time. Miss Schiavo has voluntarily -- at this time will no 24 longer participate in executive committee matters until such 25 time as after we find out what the landscape looked like, after SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 14 3ase911c 1 December the 22nd. If we decide at that time to make such a 2 motion, we will do so. 3 We do not ask, your Honor, at this time to withdraw 4 the stipulation and order. We merely were doing what we 5 thought was the right thing to do to alert the Court that 6 Miss Schiavo had joined our firm. And we alerted the Port 7 Authority and they filed the papers they did making the 8 objection they did. We didn't intend to unleash a fire storm 9 similar to what's going on in California, I assure your Honor. 10 There's a lot of work for everybody to do. We're not 11 asking you to revisit the stipulation order at this time. 12 Miss Schiavo voluntarily will not attend any executive 13 committee meetings. 14 THE COURT: She'll be off the executive committee? 15 MR. MOTLEY: That's correct. She will no longer 16 attend any of those meetings. 17 THE COURT: A lot of this would have been dealt with 18 if you and Miss Schiavo had said that in your correspondence. 19 MR. MOTLEY: Well, your Honor, I thought perhaps the 20 Port Authority, since they weren't interested in all of the 21 documents they -- 22 THE COURT: Mr. Motley, let's not play any games. 23 Paragraph six of the stipulation provides as follows: Ness 24 Motley will turn over to the Port Authority expeditiously in 25 accordance with Port Authority instructions all files in its SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 15 3ase911c 1 possession related to the Enlight litigation, etc. 2 Mr. Harris, where would you like those boxes sent? 3 MR. HARRIS: We have them, Judge. We have the boxes 4 from Ness Motley, unless there's more boxes they didn't give 5 us. 6 MR. MOTLEY: I don't know anything about it. 7 Mr. Hanly was handling that. 8 MR. HARRIS: Judge, I've got storage space in Yonkers 9 where the boxes are. 10 MR. HANLY: I don't know how they got them because 11 they were supposed to contact my office. 12 THE COURT: Well, maybe after this you and Mr. Harris 13 ought to talk to find out about this without making litigation 14 points about offers that are not accepted. 15 Paragraph seven of the stipulation says Ness Motley 16 reserves its right to move the Court for good cause shown for 17 permission to become involved in any September 11th action on 18 behalf of plaintiffs if and when claims in such actions as 19 against the Port Authority and World Trade Center properties, 20 LLC, are dismissed with prejudice in either such order of 21 dismissal to the firm, etc. 22 So whenever you want to make a motion, Mr. Motley. 23 MR. MOTLEY: Yes, sir, that I understand -- 24 THE COURT: You certainly know how to make a motion. 25 MR. MOTLEY: Yes, sir, I do. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 16 3ase911c 1 THE COURT: So what's the point of all this today? 2 MR. MOTLEY: Your Honor, I didn't ask for this hearing 3 today. I didn't ask for anything to be done. I did not file a 4 motion. I merely wrote your Honor a letter and you set this 5 motion or this conference, and I'm telling the Court that 6 Miss Schiavo will not be a member of the executive committee. 7 THE COURT: Mr. Motley, can you do me a favor and look 8 at your October 22 letter. Do you have it in your hands? 9 MR. MOTLEY: I can get it, your Honor. 10 THE COURT: Why don't you get it. 11 MR. MOTLEY: I have it now, sir. 12 THE COURT: Would you look to page two. 13 MR. MOTLEY: Yes, sir. 14 THE COURT: Would you read paragraph two, first 15 paragraph on the page. We seek relief from the stipulation and 16 order to permit Miss Schiavo to remain as an active member on 17 the plaintiff's executive committee and subcommittees. 18 You've contradicted that now, right? 19 MR. MOTLEY: Subsequent to that -- 20 THE COURT: You've contradicted that now, right, 21 Mr. Motley? 22 MR. MOTLEY: No. 23 THE COURT: You just told me Miss Schiavo does not 24 want to be on the committee, she's resigning. 25 MR. MOTLEY: The Port Authority objected and we had a SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 17 3ase911c 1 conference this morning and decided that Miss Schiavo would 2 voluntarily resign from the committee so as not to get -- 3 THE COURT: Maybe you could have saved us a bit of 4 time if you called up Mr. Harris before writing this letter to 5 me, told him the situation and asked for his position. 6 Then you go on in the next paragraph, if the Court 7 were to determine that the existing committee structure is such 8 that Miss Schiavo could no longer serve on the plaintiff's 9 executive committee or its subcommittees as a member of Motley 10 Rice, then in that event we would request that the existing 11 subcommittees be restructured. 12 Is that what you want to do? 13 MR. MOTLEY: Not until after December the 22nd when we 14 find out what the landscape looks like. If, in fact, there are 15 few or none ground -- 16 THE COURT: Mr. Motley, next time you come in court I 17 would appreciate a candid representation and not fencing with 18 me. 19 MR. MOTLEY: I'm not fencing with you. 20 THE COURT: All right. I've heard enough from you, 21 Mr. Motley. You may sit down. 22 Pending any motion that Ness Motley makes, there will 23 be no relief from the stipulation and order of February 19th. 24 Miss Schiavo is no longer on the plaintiff's executive 25 committee. I'll have an order, Mr. Moller, that will reflect SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 18 3ase911c 1 both those two provisions. 2 We don't need any restructuring, there will be none. 3 Is there any further relief that I need to address 4 today? Mr. Baum? 5 MR. HEDLUND: Paul Hedlund for Mr. Baum. No. 6 THE COURT: Your letter makes a great deal of 7 complaints against Miss Schiavo in terms of the timing of her 8 notice to you or activities with regard to clients of your firm 9 and other matters. Are these made for any particular purpose 10 here? 11 MR. HEDLUND: Your Honor, this has been a heck of a 12 month. I lost my mother, I lost my partner and I've lost 13 25 percent of my clients. And I just thought the Court would 14 want to know. Perhaps not. That's the end of it. 15 THE COURT: You know, clients have a right to choose. 16 MR. HEDLUND: Absolutely. Absolutely. 17 THE COURT: But lawyers have an obligation to be 18 upright and fair with respect to their partners and trust that 19 is interchanged with partners. To the extent that any of this 20 affects the integrity of this lawsuit, I need to know about it. 21 If it affects matters of the rights and the concerns under the 22 code of professional responsibility applicable in New York, the 23 grievance committee is the proper place, not me. 24 MR. HEDLUND: Thank you, your Honor. 25 THE COURT: But if it's integrity of the lawsuit, it's SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 19 3ase911c 1 me. 2 Miss Schiavo, are you a member of the bar of this 3 court or are you here pro hac vice? 4 MS. SCHIAVO: Pro hac vice, your Honor. 5 THE COURT: Maybe I need to address it, because the 6 comments made by Mr. Hedlund in his letter do give rise to my 7 concern. I don't mean to volunteer an activity, I'm not on the 8 grievance committee. I have no interest in being on the 9 grievance committee. We do have a committee of this Court to 10 deal with matters of professional responsibility and matters 11 that come before us. 12 I think it's premature for me to do anything or say 13 anything if we don't need to address any comments, but I don't 14 like to hear things about anybody else unless it affects the 15 carrying out of this lawsuit. And I'd appreciate since what we 16 do is hard enough and we affect many lives -- and the lives of 17 people who survived this terrible tragedy are affected in so 18 many ways that we can't measure -- that we don't need to add to 19 trouble matters that should be ironed out by frank and open 20 discussion among the lawyers. 21 I'll wait for your order, Mr. Moller. I think there's 22 nothing more that needs to be given to me. Thank you for your 23 kindness. 24 (Adjourned) 25 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300