1 598SSEPT11 1 UNITED STATES DISTRICT COURT 1 SOUTHERN DISTRICT OF NEW YORK 2 ------------------------------x 2 3 IN RE: SEPTEMBER 11TH 21 MC 97 3 4 ------------------------------x 4 5 September 8, 2005 5 4 p.m. 6 6 Before: 7 7 HON. ALVIN K. HELLERSTEIN, 8 8 District Judge 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 18 19 20 21 22 23 24 25 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 2 598SSEPT11 1 (Case called) 2 THE COURT: I had hoped when we were last together 3 sometime ago that our next meeting would have followed a large 4 number of settlements and we would be talking about how to 5 handle a remaining remnant of the case. To say that I am 6 disappointed is an understatement. I feel that we have wasted 7 a large amount of time and that very little has been 8 accomplished. This is not to say that the problems in this 9 case are formidable and unique. The censor of the United 10 States government in the form of the Transportation Security 11 Administration makes normal discovery impossible. The ability 12 of a presiding judge to regulate discovery and thereby move the 13 case is nonexistent when it comes to these critical documents 14 because it is the Court of Appeals and not the district judge 15 that determines whether and to what extent a claim of sensitive 16 security information will outweigh the needs of discovery. And 17 so the prospect of long and difficult discovery I thought, and 18 I thought many counsel thought, would argue very convincingly 19 for settlement. 20 In addition, we have conducted discovery in a way that 21 has caused each plaintiff to identify the particular aspects of 22 the claim for damages that are unique to that claimant and 23 thereby to enable the counsel of both sides to categorize 24 claims into meaningful differentiations and thereby bring about 25 settlements. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 3 598SSEPT11 1 Furthermore, the work of the Special Master, although 2 using factors that differ from factors normally used in civil 3 litigation, nevertheless provide a meaningful backdrop to help 4 assist in the evaluation of damages. Therefore, I think I, and 5 I think many of you, had a substantial degree of optimism that 6 having settlement discussions, even before discovery, would be 7 fruitful. They have been fruitful in only one case, a case in 8 Chicago. I recognize that the numbers of plaintiffs, the 9 absence of any appointed lead, and the normal competition of 10 claimants and counsel can make things sticky. But I thought 11 the public interest in bringing about settlements and the 12 strong individual motivations for settlements would override 13 that natural competitiveness and bring about responsibility to 14 the case, to the client, to the cause. I think I am wrong. 15 I asked liaison counsel to bring some decision-makers 16 to this room because I think it's important to expose them to 17 some of the concerns that will drive us. Each side has 18 logistical problems. There are many potential payers on the 19 defendants' side and each source for payment has a separate 20 potential negotiating calculus. So that there are multiple 21 layers of negotiations and it's difficult to bring a consensus 22 point of view that is other than the lowest common denominator 23 on the part of the paying side. 24 On the part of the plaintiffs everyone has to 25 negotiate with an eye out for what a competitor might do and SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 4 598SSEPT11 1 the feeling of uncertainty makes it difficult to make a 2 decision. So there are problems. 3 I think, however, there is an overriding interest from 4 many different perspectives to settle these cases. 5 I suggested that we do it with mediators. I thought 6 that mediators would be able to bring about a consensus on the 7 part of defendants from their point of view and plaintiffs from 8 their point of view and help promote settlements and to allay 9 the concerns by some that others might be driving for a better 10 deal for less than a fair share of paying obligations, for more 11 than a fair share of receiving benefits. But too many of you 12 were averse to the idea of mediators no matter how qualified 13 and have urged me not to involve mediators, and so I have not. 14 I have been told that the best thing is to leave 15 negotiating counsel alone. They know each other. They know 16 how to value the case. They have experience with each other. 17 They have substantial levels of trust. And so I did, and Mr. 18 Barry has reported to me how many, 70 meetings over the summer? 19 MR. BARRY: Yes, your Honor. 20 THE COURT: With one settlement and with major 21 complaints that he is low balling. 22 My experience as a lawyer is that people low ball when 23 they perceive that others high ball, and how to get to a level 24 of fairness without fearing that one is giving away the ship is 25 a very difficult negotiating problem. It needs a great deal of SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 5 598SSEPT11 1 trust. But the circumstances are such as not to promote trust 2 even where people have substantial trust for one another. 3 So I have brought you all together to lay out on my 4 sleeve my frustration, my disappointment, and to see if there 5 truly is a consensus to look for settlements or whether the 6 desire is to litigate. If to litigate, I remind you that I am 7 appointed for life. I am here without overtime ready to try 8 one case or another. Basically they are the same. And I, as 9 long as God's gift of health remains, will be here for life. 10 Do you want your cases to be here for my life or do 11 you want to have them accomplished in some reasonable time? Do 12 you really want to litigate? Do you want to work your way 13 through the SSI and the decisions of courts of appeals and rear 14 guard actions by the government thinking that one way or 15 another you will advance to a trial date again to contest the 16 issue of duty, again to contest the issue of proximate cause, 17 again to contest the issue of so many uncertainties? I don't 18 know. 19 If that is what you want, I will give it to you. 20 Do you want to settle or do you want to find some 21 reasonable accomodation where no one gets an edge against a 22 competitor, because there will be no edges. I cannot preside 23 over this case contemplating that one plaintiff's lawyer will 24 do better in a similar case than another plaintiff's lawyer. 25 That is not going to happen. Nor will I preside over a case SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 6 598SSEPT11 1 where some recalcitrant source of payment by obduracy will want 2 to expect a lower payment share than some other source of 3 payment. That will not happen. 4 So really the choice is yours. We are going to do the 5 personal injury cases as long as it makes sense to do the 6 personal injury cases. But it's not graven in stone that they 7 go first. I think there is an interest on the part of those 8 who complain about damaged health to their lungs to want to try 9 to get on to the settlement track. I know that Mr. Clifford 10 and others in his group would want to discuss potential 11 settlement of the property damage cases. 12 You can lose your place. 13 What is it you want to do? 14 Mr. Moller, since you are the liaison and you have to 15 present a concensus view, if there is one, what should I do? 16 MR. MOLLER: I think there is a consensus point of 17 view on behalf of the plaintiffs. Clearly the plaintiffs want 18 the settlement negotiations to continue. We don't write the 19 checks. The power and ability to make reasonable offers lies 20 with the defendants and reasonable offers will be received in 21 light of the facts of the individual case with a substantial 22 amount of happiness. That hasn't happened yet. But I think 23 that in order for this case to move forward settlement 24 discussions have to proceed against the backdrop of continued 25 discovery so that we can get this case to trial. I said so in SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 7 598SSEPT11 1 my letter to you of September 2nd. We will continue, if the 2 defendants are willing, to negotiate these cases in good faith 3 on a fast track. And I think the remarks you made a few 4 moments ago hopefully will be heard by the defendants and 5 certainly heard by the plaintiffs. But I don't think it is, 6 frankly, right or indeed fair, and I am not suggesting unfair, 7 but I think the right thing to do is to get this case moving so 8 that if the cases are not settled they can be tried. 9 THE COURT: Moving will bring about so many decision 10 points in relationship to SSI concerns. The potential problems 11 are daunting. I can see Ms. Goldman rising throughout our 12 proceedings and telling me that this is a matter for the 13 jurisdiction of the Court of Appeals, not for me. 14 MR. MOLLER: Let me beg to differ. The defendant and 15 Mr. Barry sent a letter to the court this afternoon, which I 16 got shortly before we came to the courthouse, in which he 17 forecasts that most of the questions plaintiffs likely would 18 pose to witnesses could not fairly or accurately be answered 19 without disclosure of SSI. It seems to me that the question of 20 the proper way to deal with SSI now has been answered. At 21 least in large measure it has been answered because we have 22 been told in words and in practice from TSA that we may well 23 have from the defendants as much as we are going to get. And 24 if that is the case, then we have to rely upon third-party 25 witnesses, experts, the public record, and what we now have. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 8 598SSEPT11 1 THE COURT: What makes you think that Ms. Goldman and 2 her colleagues would be any less vigilant with regard to 3 third-party witnesses than she has with regard to parties? You 4 have a letter and I have a letter and everyone has a letter 5 where TSA is complaining that some things slipped through the 6 cracks and she wants the information back. 7 MR. MULLER: I am making the assumption that TSA is 8 not only vigorous, it becomes more vigorous. 9 THE COURT: You have argued before that you have 10 benefits of various presumptions and prima facie tort theories 11 that can help the plaintiffs even if the defendants can't 12 respond in discovery. And I can understand how Mr. Barry would 13 differ with you and he and his colleagues will contest you at 14 every point, which makes me believe that any decision on the 15 part of a jury and a district judge will be tentative subjected 16 to rulings by the Court of Appeals, references over to the New 17 York Court of Appeals, references back to the Second Circuit 18 Court of Appeals. We will not only be litigating for my 19 lifetime but your grandchildren's lifetime. 20 MR. MOLLER: You may be absolutely right but we still 21 have to get started down the track for trial to insure that 22 those cases which for whatever reason are not settled get their 23 day in court and that you in your lifetime can try these cases. 24 THE COURT: How much of a discount do you think that 25 defendants are really looking for in relationship to the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 9 598SSEPT11 1 uncertainty of the result? 2 MR. MOLLER: I have no idea. That you have to ask the 3 defendants. 4 THE COURT: How would you answer that question, Mr. 5 Barry? 6 MR. MOLLER: I am glad you didn't ask me. 7 MR. BARRY: We are not looking for any discount, your 8 Honor. We are looking to dispose of these cases for reasonable 9 amounts. 10 THE COURT: Reasonable amounts -- 11 MR. BARRY: And that includes economic damages and 12 non-economic damages. 13 THE COURT: The reasonableness in these circumstances 14 is highly subjective I think without any basis that the 15 uncertainty of the result is not the cause of the lack of 16 progress. I have the belief without basis that the dynamics 17 have not been good to bring about useful discussions. I think 18 Mr. Barry is operating from too many handicaps and I think each 19 plaintiff's counsel is operating from too many handicaps. 20 There are too many uncertainties and I don't see that they can 21 be resolved or allayed -- they won't be resolved, they will be 22 allayed -- unless there is some participation by one or more 23 mediators, by me, by a colleague of mine, by a magistrate 24 judge, by somebody else you appoint, by somebody. I don't 25 think you can do it yourselves. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 10 598SSEPT11 1 MR. BARRY: Your Honor, if I can speak to that first, 2 and then I will yield to Mr. Baumeister. 3 I would ask this of the court: You asked Mr. Moller 4 what his feelings would be. I can tell you that the people 5 that I have gathered here on the defense side came here 6 specifically to hear what you had to say. And they hear it 7 loud and clear. 8 THE COURT: I am sure you told them before. 9 MR. BARRY: I did, I did. but I think the important 10 thing to recognize is that while you are disappointed, as are 11 we, with the progress of settlements so far, we haven't wasted 12 this summer. We have engaged in 70 conferences with the 13 plaintiffs' lawyers. We have made initial offers. We are 14 making counteroffers. In several instances I think we are very 15 close to settling a group of cases. 16 I would ask this of you, which is I know asking for 17 more indulgence, but I would ask for some additional time for 18 you to allow us to settle some of these cases without the use 19 of mediators. At a time, whatever it might be, two weeks, 20 three weeks, a month, if I come to you and I say, Judge, we 21 have settled ten cases or 15 cases, but I don't see the hope of 22 settling any more, then I would say to you I think we should 23 have mediators appointed and we should go full bore into that. 24 Pursuant to your direction at the last property damage 25 conference, I am meeting with Mr. Clifford on Monday and Mr. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 11 598SSEPT11 1 Moller and we are very much aware of what you said vis-a-vis 2 pushing the property cases ahead. I said at that time, and I 3 know you heard me, that we are going to face the same SSI 4 issues there as we are facing here. But I am willing to sit 5 down with them. I am ready and I have prepared an outline of 6 what has to be done step by step. As my letter to you of 7 yesterday said, to embark now willy-nilly on 30(b)(6) 8 depositions is highly impractical. Give us some time -- 9 THE COURT: When will it be practical? 10 MR. BARRY: I don't think 30(b)(6) depositions as the 11 beginning ever will be practical. We are still waiting for 12 amended complaints in the property cases, for example. You 13 have wanted discovery in both this track and -- 14 THE COURT: Waiting for pleadings is not going to be a 15 reason to delay discovery anymore. Once we start discovery 16 there is going to be full-bore discovery and either the parties 17 will meet and create an intelligent discovery plan or I will 18 impose one. 19 MR. BARRY: I have prepared that, your Honor, and I 20 intend to present it to Mr. Moller and Mr. Clifford on Monday. 21 THE COURT: I don't know if that is the right course. 22 MR. BARRY: I don't think it is at this stage. I 23 think the right course now, Judge -- 24 THE COURT: Why should I believe that letting you go 25 yourselves will be any more fruitful than up to now? SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 12 598SSEPT11 1 MR. BARRY: Only because based on my experience, 2 Judge, I know that there are several cases that are getting in 3 the range of settlement. Does that mean all the cases are 4 going to settle? No, I can't make that representation to you. 5 But I can make the representation to you that the defendants 6 are getting their act together, that the defendants believe 7 that a group of cases can be settled within a reasonable period 8 of time. That will give us a matrix, if you will, to see where 9 other cases might fit. It may be of aid to the mediator. 10 THE COURT:: It might, it might not. It might be a 11 willingness on the part of some just to end the issues and move 12 on and it might make others more obdurate. Or, it might act 13 the way you said. There is no reason to believe one way or 14 another that the settlement of a few cases will either promote 15 or dissuade other settlements. 16 Mr. Barry. 17 MR. BARRY: There is no guarantee, your Honor -- 18 THE COURT: There is no basis to reason either way. 19 Mr. Baumeister. 20 MR. BAUMEISTER: Your Honor, I rise for the limited 21 purpose of speaking to the issue of a mediator or allowing the 22 lawyers to go forward on their own. I would also ask, and I 23 represent a number of the Flight 93 heroes. I made demands of 24 the defendants and I will state in open court their responses 25 have been reasonable. I have every reason to believe that if SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 13 598SSEPT11 1 the defendants continue along this course that my cases will 2 resolve for my clients involving Flight 93 clients within the 3 next 30 days. 4 THE COURT: So you would like to continue? 5 MR. BAUMEISTER: I speak very strongly for at least an 6 opportunity before a mediator is appointed for at least 30, 45 7 days to allow my clients to in good faith explore. And based 8 upon the representations of what Mr. Barry has said, I don't 9 want to be precluded from that opportunity. And I believe 10 there are other cases in the group, but I cannot speak for 11 them, who feel the same way. But I certainly on behalf of my 12 clients would like the opportunity over the next 30 days before 13 you appoint a mediator, which appears to be the next step, that 14 I be given that chance. 15 Thank you, your Honor. 16 THE COURT: Mr. Moller. 17 MR. MOLLER: What Mr. Barry says and what my colleague 18 Mitch Baumeister says strongly suggests that settlement 19 negotiations face to face without a mediator will be 20 productive. I think everybody in this room recognizes that 21 there are likely to be cases that will not settle. It's those 22 cases that are entitled at the very least to have discovery go 23 forward as soon as possible. And if there is one case left 24 that demands a trial that case is entitled to liability 25 discovery. There is nothing inconsistent, with all due SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 14 598SSEPT11 1 respect, to anything anybody is saying here. 2 THE COURT: There is a limit of time that people have. 3 MR. MOLLER: The plaintiffs are armed with enough 4 people, and the defendants surely, to be able to man the 5 discovery, especially in view of the fact that we now know that 6 the defendants are going to take a rather rigid view of SSI and 7 TSA is probably not going to bend. We know that as a reality. 8 THE COURT: What is the rigidity? I don't hear about 9 the rigidity of defendants. Most of the questions plaintiffs 10 likely would pose to witnesses could not fairly or accurately 11 be answered without disclosure of SSI. I don't look to see 12 that as either rigid or flexible. 13 MR. MOLLER: If we are lucky and get stuff we will 14 learn that through the earliest phase of discovery. There is 15 paper discovery and people discovery. Frankly, from my 16 perspective I don't see that we as plaintiffs really have a 17 choice but to ask for liability discovery to start. We will 18 meet with the property people on Monday because clearly we are 19 going to be asking for discovery and since we have to have 20 common discovery we will work out something with them together 21 and then get started. Nothing in that program will frustrate 22 or inhibit further negotiations with respect to settlement. If 23 anything, experience tells us that as you begin discovery and 24 get closer to a realistic trial cases settle. There is nothing 25 new about that. And so I am asking the court on behalf of the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 15 598SSEPT11 1 plaintiffs that you encourage, as you have, the continued 2 faster, more realistic dialogue with respect to settlement and 3 allow us to develop a fast track or as fast as possible track 4 on liability discovery. 5 The discovery plan will obviously be presented to your 6 Honor for consideration and I would expect modifications of 7 sorts, but maybe endorsement, and we will go forward. If a 8 case isn't going to settle it's going to be tried or it's going 9 to be thrown out of court on some basis so we might as well get 10 the record together that allows us to test the issues. If it 11 has to go up on appeal on something, okay, it goes up on 12 appeal. It's also not the first case that the Second Circuit 13 will have heard over sharply contested issues of law and fact. 14 THE COURT: Motley Rice, 30 cases, what is their point 15 of view? 16 MR. HANLY: Paul Hanly, Hanly, Conroy, Bierstein & 17 Sheridan. 18 If I may, Judge, speak on behalf of the Motley Rice 19 cases, we don't disagree with Mr. Moller. We would be willing 20 to go along with another 30 days. We believe we have made a 21 good faith effort to try to resolve the cases. As your Honor 22 knows from my letter, we do not believe that that was 23 productive to date. We, with the utmost respect to 24 Mr. Baumeister, do not share his optimism. We are glad he is 25 optimistic with respect to his cases but, as I said, I don't SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 16 598SSEPT11 1 disagree with -- 2 THE COURT: It only takes one change to make an 3 optimist out of a pessimist or vice-versa. 4 MR. HANLY: That is certainly true, Judge. 5 So to summarize, we would agree to the nonappointment 6 of a mediator at this point but as Mr. Moller said we want to 7 move quickly ahead on discovery. 8 THE COURT: What is your position with regard to 9 giving you another space of time? 30, 45 days has been 10 suggested. 11 MR. HANLY: 30 days. 12 THE COURT: To continue mediation. 13 MR. HANLY: You mean negotiation, your Honor. 14 THE COURT: Yes. 15 MR. HANLY: 30 days. We are agreeable to that. 16 THE COURT: Baum Headline I think has 9 cases. 17 MR. GOLDMAN: Ron Goldman for Baum Headline. 18 We agree the best course would be to continue the 19 negotiations. We think these are difficult negotiations and 20 both sides are, in effect, feeling each other out in many ways 21 but we think that it's important that we mount our discovery 22 effort as a dual track, a track that goes along with it. We 23 think that there can be fruitful negotiations. We think we are 24 best off negotiating without a mediator and our face-to-face 25 discussions may well bear fruit. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 17 598SSEPT11 1 THE COURT: Mr. Barry and Mr. Podesta, could you 2 practically do both? Mediate -- not mediate, but negotiate and 3 conduct discovery? 4 MR. BARRY: Not, your Honor, in the intensive way that 5 we have been conducting these conferences this summer, we can't 6 do both. It's impossible. I have done it full-time just about 7 from July 13 until last week. 8 THE COURT: Who in your firm is responsible for 9 negotiation, you? 10 MR. BARRY: Me. 11 THE COURT: Who in your firm would be responsible for 12 litigation? 13 MR. BARRY: Me. 14 THE COURT: Mr. Podesta, how does it go with your 15 firm. 16 MR. PODESTA: I represent American. I would be 17 responsible for negotiations and I would be the lead litigator. 18 I do think that in terms of depositions there are, as Mr. Barry 19 pointed out in his letter, there are enormous practical 20 difficulties raised by the SSI issues. And the concerns about 21 the TSA strictures on SSI disclosure are not limited to the 22 plaintiffs. I mean, there are many materials that we cannot 23 disclose because of SSI that the defendants believe would be 24 very helpful to their cases and as Mr. Barry indicates in his 25 letter, it's a very awkward position to put a defense counsel SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 18 598SSEPT11 1 in in a deposition to require that defense counsel in effect 2 under federal regulations to instruct the witness not to answer 3 a question when the answer would be helpful to the client's 4 case. So that is a tremendous practical difficulty that will 5 have to be worked out with the TSA. 6 THE COURT: Would you have to be present at all 7 depositions, Ms. Goldman, Ms. Norman? 8 MS. GOLDMAN: Beth Goldman. 9 The TSA is now considering the issue of a protocol for 10 depositions and whether we would attend those depositions is 11 something that hasn't be determined although that has not 12 necessarily been the practice in the past. So what we would 13 want to do on this issue would be to sit down with both sides 14 and work through a protocol sometime. 15 THE COURT: You would rely on defense counsel to raise 16 objections? 17 MS. GOLDMAN: It is the obligation of the covered 18 party under the regulations to assert the SSI -- 19 THE COURT: I would believe they would be in 20 irreconcilable conflict. 21 MS. GOLDMAN: It would be their responsibility in the 22 first instance to assert it. That does not mean that it would 23 prevent a deposition from going forward at all. What the 24 protocol would try to do would be to find a way to get 25 questions answered such that they could be reviewed later SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 19 598SSEPT11 1 possibly by TSA and the SSI redacted or something like that so 2 that questions could be answered but defense counsel still 3 preserving their concerns over SSI. 4 THE COURT: Are you suggesting that we can impose a 5 record that could go forward in all respects subject to 6 redaction later? 7 MS. GOLDMAN: It would be a record that would not be 8 distributed. It would be a record that TSA would review before 9 it was distributed to all parties. 10 THE COURT: All counsel here are qualified and they 11 have all been cleared. 12 MS. GOLDMAN: There are certain lawyers who have been 13 cleared but your Honor will remember they were cleared in 14 anticipation of a decision by TSA one way or the other about 15 what its position would be on SSI. But once the decision was 16 made by TSA that no SSI was going to be released at all, then 17 the clearance became, I have to say, somewhat irrelevant. 18 Nobody is seeing SSI in this case other than those who are 19 covered parties who have it because they have it as covered 20 parties. 21 THE COURT: Presumably most of the information that 22 qualified as SSI originated with one or more of the defendants, 23 or much of it anyhow, so defense counsel have seen it. They 24 have handled it. They have read it. They have worked with it. 25 And they may not want to prevent it from coming out into the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 20 598SSEPT11 1 record because of consequences that would flow or might flow in 2 terms of adverse inference, for example. So it seems to me 3 inevitably the government is going to have to be present at 4 every discovery. 5 MS. GOLDMAN: The government would be present but not 6 necessarily in person. There are a number of different ways of 7 trying to do this. What I mean by that obviously is that if 8 there is SSI involved TSA is going to have to review it. 9 Whether it's done there or whether it's done after the fact 10 once a transcript is created or some other way it would have to 11 be reviewed by TSA. 12 THE COURT: You think that plaintiffs' firms are going 13 to submit their questions to you in advance? 14 MS. GOLDMAN: That is one possibility. 15 THE COURT: On a scale of 1 to 10 I give it less than 16 one. On a scale of 10,000 I give it less than one. 17 MS. GOLDMAN: It is an extremely difficult question as 18 both sides in this litigation recognize. It's an enormous 19 burden on both sides and on TSA but we would try to sit down 20 with them and work out a protocol that would at least allow the 21 depositions to go forward and allow the plaintiffs to gather 22 the information that is not SSI from those depositions. 23 THE COURT: I would think since plaintiffs' counsel 24 and defense counsel have been or can be cleared that all 25 discovery can go forward under seal subject to redaction later SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 21 598SSEPT11 1 on. And if asked I might rule that way. 2 MS. GOLDMAN: Well, your Honor, it's TSA's position, 3 as it has been since the policy was announced, that any 4 discovery involving SSI cannot be disclosed to any parties 5 beyond those who already have it and they have it only because 6 they are covered parties. But SSI is not going to be disclosed 7 beyond that group. If that is an issue, this would be an issue 8 that, as your Honor recognized earlier, would go to the Court 9 of Appeals if that was something that the parties wanted to 10 challenge. 11 THE COURT: It might. But it seems to me, Mr. Moller, 12 that before we get into 30(b)(6) depositions we have to thrash 13 this out. 14 Mr. Ellis, I think you wanted to speak. 15 MR. ELLIS: I think you already addressed it. Quite 16 frankly, the procedure about defendants' attorneys regulating 17 the use of the release of SSI is a bit impractical since there 18 are criminal penalties involved with anyone that participates 19 in the release and if that is the case I suppose someone else 20 will be assigned to do depositions other than me. 21 I just -- 22 THE COURT: Try a Fifth Amendment plea at this point. 23 MR. ELLIS: I just wanted to say, Judge, it just seems 24 to me that the problems here are problems maybe a little bit 25 with respect to trust. There are problems that when there are SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 22 598SSEPT11 1 attorneys that are brought into the negotiations as to certain 2 aspects of fault we are not able to respond to those because it 3 is SSI. If the parties have 30 days and maybe with a little 4 gentle nudge from your Honor or suggested that they focus on 5 what the law that might be applicable if the cases were to 6 proceed in terms of what the value might be, I suspect that 7 both sides might find religion and might get a little closer 8 than the case is now. I agree wholeheartedly with Mr. Barry. 9 THE COURT: What conceivable state laws would be 10 involved? 11 MR. ELLIS: There are so many, Judge, quite frankly, 12 there is a question of whether these statutes in some aspects 13 should be decided as a matter of federal law, of course 14 depending upon what you rule with respect to the intent of 15 Congress. But there are numerous statutes. 16 THE COURT: Assume there is federal law. 17 MR. ELLIS: Right, what was the intent of Congress in 18 terms of some of these issues. But we can look at, for 19 instance, the law of the State of New York which certainly has 20 a big impact with respect to pre-impact pain and suffering 21 claims. Certainly the State of New York factors in the fault 22 of the terrorists. It happens with respect to Illinois law. 23 It happens with respect to the laws of New Jersey. These are 24 all issues, quite frankly, Judge, that we have tried to avoid. 25 We have tried to get to a number that everyone is comfortable SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 23 598SSEPT11 1 with. 2 THE COURT: But to the extent that anybody who wants 3 to raise any of these considerations as factors they inevitably 4 come into play. 5 MR. ELLIS: That is correct, your Honor. And 6 unfortunately it's hard to argue when two sides have a 7 different view of what the law would do when we are doing that 8 in a vacuum and/or we are told the law doesn't really matter, 9 it's all the same. I don't think that this is something that 10 has to come into play and in many cases we haven't seen it come 11 into play but there are a lot of cases where it has and I am 12 hopeful, as I think your Honor is and I think many of us are, 13 that as a result of your Honor's thoughts today that maybe we 14 will all go back and review our positions. 15 THE COURT: I doubt it, Mr. Ellis, notwithstanding the 16 extraordinary authority that I have equaled only in my 17 arguments with my wife. 18 These are all nice laudatory comments that will not 19 carry any weight. I think I have got to give another period of 20 time but I would like to see if there is another approach to 21 add to it. It depends how much you want me to be involved. 22 You all have an allergy to mediators and many of you may have 23 an allergy to anyone becoming involved, but I think somebody, 24 someone has to become involved if only as a way to try to 25 ameliorate differences. Someone here has to deal with the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 24 598SSEPT11 1 recalcitrant payer. I don't know Mr. Barry has not reported to 2 me, but I have had enough experience with multiple sources of 3 payment to know that inevitably there is going to be one or 4 more that are looking to reduce their contribution. Someone 5 has to get involved with that. Someone has to create an 6 incentive to play on a level table. And, similarly, if various 7 plaintiffs find some particular states have some kind of rule 8 that gives them an edge, an edge that others might not want to 9 grant, someone has to be able to respond to deal with it, to 10 allow the lawyer to reason with a client and show that there 11 are ways to bring about appropriate discounts for all these 12 different issues. 13 How do we resolve this issue? How do we get some kind 14 of help like this to help move these along? 15 MR. GRANITO: Frank Granito from Speiser, Krause. 16 I have been doing this for a long time. I am 74 years 17 old, your Honor. And I appreciate there might be some dynamics 18 in this air disaster litigation that are different from other 19 cases. 20 THE COURT: I was wondering why I had more hair than 21 you. 22 MR. GRANITO: But it was my experience in the 23 negotiations that there was no discussion, there was no 24 dialogue of the basis of the offer. There was just simply a 25 statement that a reasonable figure had been reached and if it SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 25 598SSEPT11 1 were viewed in the abstract without any -- 2 THE COURT: Let's give Mr. Barry a certain degree of 3 slack in having to deal with a complicated number of people who 4 have to develop a consensus. 5 MR. GRANITO: I understand that but in a particular 6 case the only way to narrow the difference between offer and 7 acceptance is to discuss, to have a genuine dialogue of what is 8 the basis of this offer, what law are you relying upon, what 9 income, what is the discount, what are you taking into 10 consideration for personal deduction, all of these things 11 should have been explained. 12 Now, in our negotiations I asked for an explanation 13 and I was told that they made a reasonable offer without 14 explanation. Now, that bars any possibility of settlement 15 regardless of what the figure is because how do you expect a 16 plaintiffs' attorney to go back to his client and explain -- 17 THE COURT: Did you give the rationale for your 18 number? 19 MR. GRANITO: I gave Mr. Barry two volumes of records 20 that measured three inches thick with documents plus an 21 economist's report. I did not expect to discuss anything but 22 economic loss. And all I got was "a reasonable offer without 23 explanation." 24 THE COURT: Let's assume that Mr. Barry and most of 25 his clients would really want to settle, and let's assume that SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 26 598SSEPT11 1 your clients, Mr. Granito, would really like to settle, what is 2 the next step? 3 MR. GRANITO: I would expect that we sit down, as we 4 have done in the past over the years, and for the defendants to 5 explain the basis of its offer and for the plaintiffs' counsel 6 to be able to take that fact to his client and explain this is 7 why the offer is not what you want it to be. 8 THE COURT: Suppose Mr. Barry's authority doesn't go 9 that far? Supposing, as I would expect, the offers of most 10 plaintiffs are at the high edge of what might be considered 11 reasonable, as I am sure a negotiation will approach a 12 difficult problem like this, and suppose he needs a nudge to 13 get more flexible, suppose he needs some objective person to 14 tell him so he can tell his clients that, Mr. Barry, your offer 15 has to move. You have got to come up. Or suppose the 16 statement to you is you are somewhat high. If you come down a 17 bit I think you would get a much more positive response from 18 defendants. You know what happens. 19 MR. GRANITO: I understand where the court is going 20 but the most effective way for this to be done, other than the 21 reasonableness of the negotiators, is the specter of a jury of 22 course. 23 THE COURT: Well, we are away from that. 24 You know, in an ordinary case I would without blinking 25 do what Mr. Moller has suggested we do. It's just that I SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 27 598SSEPT11 1 anticipate so many unique problems and such little potency on 2 the part of the district judge to cut through those problems. 3 MR. GRANITO: I have confidence in the negotiation 4 process because I have been doing it for 40 some odd years and 5 I believe that if there were truly a dialogue between Mr. Barry 6 and myself that we would agree on what ought to be the 7 settlement figure. Whether he would get authority for that is 8 another question. 9 THE COURT: Mr. Barry, I won't embarrass you. 10 MR. BARRY: Mr. Granito has already tried that, your 11 Honor. 12 THE COURT: But it's one thing for another lawyer to 13 do that. It's hard for one lawyer to embarrass another but 14 judges somehow have more power. 15 MR. BARRY: He has been doing it to me for years. 16 THE COURT: You can't really speak your mind in a 17 negotiation, I would think. You have too many forces holding 18 you back. 19 MR. BARRY: Judge, as you are aware the dynamics on 20 both sides of this case are complicated. We have a lot of 21 different insurers. We have different parties involved. I 22 would urge you to do as I have suggested and as Mr. Baumeister 23 suggested. Give us another window. Slam that window shut at 24 some point in the future in terms of letting the lawyers try 25 and work it out themselves. At that point if I come to you SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 28 598SSEPT11 1 with my hands up and say this is the best we can do, Judge, I 2 would urge you at this point to appoint a mediator or a 3 magistrate judge to supervise the negotiations and then -- 4 excuse me, Mr. Moller, let me finish -- 5 THE COURT: That guarantees though, Mr. Barry, that 6 there will not be progress in that month, that you will all 7 wait for the mediator. 8 MR. BARRY: I don't think so, your Honor, I really 9 don't. I would ask you to trust me -- I am a lawyer -- on 10 that. But I do think that if that is the case and if I am 11 wrong, and I don't think I am, you have your other alternative 12 which I think is a perfectly proper way to go. 13 THE COURT: I wonder if there will be consent to my 14 speaking individually with a small group of defendants' lawyers 15 and then a small group of plaintiffs' lawyers for the purpose 16 of allowing me to gauge where I should try to move these cases, 17 and what time frame. 18 MR. BARRY: Talking today, your Honor? 19 THE COURT: I can do it right now. 20 MR. BARRY: We have no objection. 21 MR. MOLLER: We have no objection. But I would like 22 to make one suggestion or two. 23 It seems to me that there are two things that have to 24 happen for any negotiations in this climate to be able to move 25 forward. First, there has to be an assurance of SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 29 598SSEPT11 1 confidentiality. Some attorneys have expressed concern that 2 the confidentiality assurances -- 3 THE COURT: I am not interested in hearing any 4 numbers. 5 MR. MOLLER: I am not referring to the court. I am 6 referring to parties. Confidentiality has to be maintained 7 between the defendants and the negotiating plaintiff. That is 8 critical. 9 THE COURT: Why is it critical? 10 MR. MOLLER: Because everybody wants to negotiate his 11 own case without being concerned about how it will be viewed or 12 commented on by somebody else. Everybody makes a judgment 13 about what is best for his client and that is the only thing 14 that matters. Some clients may settle for more, others settle 15 for less. 16 THE COURT: There are two dynamics clearly that may 17 conflict with that. One is the desire on the part of the 18 defendant to have some form of a matrix and the other is a 19 concern that some of the plaintiffs' counsel might feel that 20 they don't want to make a settlement that would embarrass them 21 if someone else similarly situated or perceived to be similarly 22 situated would do considerably better. 23 MR. MOLLER: Personally -- 24 THE COURT: I don't want to say personally because 25 it's not fair. You may have a higher degree of self confidence SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 30 598SSEPT11 1 than others, or less. 2 MR. MOLLER: I don't believe in this matter that a 3 matrix is a matter of concern. What we are concerned about is 4 having a direct dialogue between every plaintiff's lawyer on 5 every case with defendants who do not have a rigid view of what 6 a case should be worth. No two cases are the same. 7 The second point I was going to make is I think in 8 order for the defendants to be able to respond effectively at a 9 negotiation decision-makers, in addition to counsel, should be 10 there. Let them hear what is going on so that the defendants' 11 counsel's hands are not frozen by artificial limits of 12 authority that are sometimes fixed before we go into the room. 13 THE COURT: I have a rule -- well, first, let me tell 14 you this: I very rarely get involved in mediations. I do it 15 when the cases are important and where the lawyers want me to 16 do that, where nobody objects, and when there is a 17 representation that no matter what happens it would not be the 18 basis for a recusal. And then I have a procedure. But one of 19 my rules is that the decision-maker must have authority to the 20 extent of the last number given by the other side. The 21 decision-maker may not agree but the decision-maker cannot say 22 to me it's outside my authority. And there must be both the 23 lawyer responsible for the case and the decision-maker present 24 for both sides. Customarily the only time everyone gets 25 together is at the first discussion, then I meet separately SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 31 598SSEPT11 1 with each side. But when I meet separately with a side it's 2 with the decision-maker and the counsel. 3 What I would propose to do is not discuss numbers. I 4 would like to understand better the dynamics within each group 5 and I want to make one more comment to Mr. Moller's point. If 6 one counsel has a number of clients, that counsel knows with 7 respect to each what other clients are receiving and makes some 8 form of gradation of harm or damage perceptibility or something 9 of that nature to be able to obtain a just result for each 10 client. What Mr. Moller argues for is that each group can 11 compromise confidentiality as among clients within the group 12 but not between one group and another. I have never 13 experienced this before but intuitively I am not sure it works 14 in a case like this. But it's something we can discuss. From 15 my point I don't really care. I don't want to, however, create 16 a rule that will stand in the way of maximum effectiveness. 17 And also because you can't control your clients, because 18 clients speak, it's very hard to police that kind of a 19 restriction. 20 If there is no objection, and I would ask you not to 21 be shy if you have an objection about expressing it, I would 22 like to meet with a small group of plaintiffs in the jury room 23 and a group of the defendants, a few of them, in the robing 24 room. 25 However, I wanted to say one thing more. Ms. Normans SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 32 598SSEPT11 1 and Ms. Goldman have a point to make. Our reporter has to 2 leave. We are 5 minutes late for him. So let me jump ahead to 3 the government's problem, Ms. Normans. 4 Ms. Normans, you can speak and we will do that, and 5 come back to discuss the issues of settlement. 6 MS. NORMANS: Thank you for the opportunity. Sarah 7 Normans, your Honor. 8 Approximately two weeks ago the government became 9 aware that some documents that constitute categorical SSI under 10 TSA's regulations had been inadvertently authorized for release 11 by United and a day after they were inadvertently authorized 12 for release they were in fact released to Mr. Moller. We 13 promptly advised Mr. Moller of the problem and he advised us 14 that he had already produced the documents in CD ROM form to 15 other plaintiffs' counsel. 16 There were a series of letters back and forth in which 17 TSA through our office made multiple requests for return of the 18 documents to United or destruction of the documents in hard 19 copy and electronic copying. To date we have heard from 20 roughly half of the plaintiffs' counsel who we understand 21 received these documents or potentially received these 22 documents. Based on our discussions with Mr. Moller and with 23 others even today it's our belief that counsel will, in fact, 24 return or destroy the documents. However, we haven't been 25 notified of that despite multiple requests. And so we thought SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 33 598SSEPT11 1 this would be an appropriate opportunity to seek the court's 2 assistance in asking counsel to please respond to our request 3 in a timely manner so we can determine whether an application 4 to the court will be necessary. We don't think it will be 5 necessary but we wanted to use this opportunity now that 6 everyone is here in the room to ask counsel to please 7 essentially respond to our request. 8 THE COURT: Anybody wish to respond? 9 MR. MOLLER: I believe that from what I have heard 10 from counsel the materials are going back to TSA or will be 11 destroyed and I think it's just a matter of time for that to be 12 effected. As far as I know, you have gotten letters from 5 or 13 6 or 7 attorneys -- 14 MS. NORMANS: That is right. 15 MR. MOLLER: -- to whom this was distributed and you 16 have maybe a light number left and from the conversations that 17 I had with counsel before we joined this meeting at 4 o'clock 18 nobody has said they are not going to return them, but the 19 reason I sent letters to counsel and did not vouch for every 20 counsel doing it is because I am not going to vouch for 21 counsel's compliance. I will vouch for ours, and they are 22 speaking for themselves by writing you letters. 23 MS. NORMANS: Perhaps if the court -- 24 MR. MIGLIORI: Don Migliori from Motley Rice. The 25 court made a reference today to a procedure that may very well SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 34 598SSEPT11 1 play into this very issue and that is proceeding with this 2 discovery in a way that the court can protect information 3 through sealing or confidentiality of the SSI material and 4 moving forward. We didn't know this would be a part of today's 5 proceeding until just shortly before and what we would ask is a 6 time to respond and we will respond by the end of tomorrow to 7 the government, if the court so allows, with our position on 8 it. But we certainly think what the court proscribed in 9 suggestion a little earlier about maybe moving forward with 10 some kind of protection of the court but open disclosure among 11 the parties who are here trying to move forward with their 12 cases would be a useful process and maybe this is the context 13 in which to raise that issue. 14 MS. NORMANS: Perhaps I spoke too soon in indicating 15 we thought it likely that counsel would in fact return the 16 documents. But I certainly would await a fuller response and 17 perhaps if the court could set a deadline by the end of the day 18 tomorrow so that at least by that time we would understand what 19 the lay of the land is and if in fact an application to the 20 court is appropriate at that point we will certainly make it 21 promptly. 22 THE COURT: Does anyone object to setting tomorrow by 23 5 o'clock as the deadline for responding to Ms. Normans? 24 That is the deadline. After that the government will 25 make whatever application it sees fit. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 35 598SSEPT11 1 Is there anybody else that wishes to raise any other 2 item of business? 3 Since some of you may not be sticking around, I 4 suspect a good many will, let's talk about the following 5 meeting: It seemed to me, Mr. Barry, if we are going to go 6 forward the 30 days is not going to be sufficient. The 7 suggestion was made for 30 to 45 days. I think we probably 8 should be thinking about a 60-day period and I suggest that we 9 have our next meeting at 1 o'clock on November 18th, but I 10 would like a report weekly beginning October 14 at 2:30 and 11 every Friday thereafter. It can be by letter and the format 12 that Mr. Barry used in his last report to me would be an 13 excellent format. 14 MR. BARRY: Very well, your Honor. I will take care 15 of that. 16 MR. MOLLER: You have a conference set for 4 p.m. on 17 Monday, the 12th, which will follow the meeting that the 18 property damage people, Mr. Barry and myself -- 19 THE COURT: What day? 20 MR. MOLLER: Monday, September 12, at 4 p.m. I 21 believe. I believe that one of the issues that will be on that 22 calendar will be the discovery schedule that I anticipate we 23 are going to be working on Monday morning. 24 THE COURT: September 12 at 4. 25 MR. MOLLER: I would hope that we can address the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 36 598SSEPT11 1 discovery issue that we put before the court today at that time 2 again so that we don't necessarily have a 60-day delay in a 3 decision. 4 THE COURT:: I think it's worthwhile to create a 5 discovery program so that when and if at some point we can't go 6 forward or decide not to go forward with further settlement 7 discussions as an exclusive way of procedure we will be able to 8 go immediately into the discovery. 9 MR. MOLLER: If the court will permit I will invite 10 myself to the meeting on Monday at 4 o'clock. 11 THE COURT: There is no need to invite anyone because 12 you are all invited to all these meetings. 13 MR. MOLLER: Because I would like to address the 14 discovery issues from our perspective when they are raised with 15 the court in the property case. 16 THE COURT: All right. 17 18 19 - - - 20 21 22 23 24 25 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300