Mass Disaster —Litigating the Mass Tort Disaster Case

A Case Study of Mass Tort Litigation: Litigating The 9/11 Disaster Timothy Tomacik Clifford Law Offices Chicago, IL William Healy DecisionQuest Chicago, IL Cari Dawson Alston & Bird LLP Atlanta, GA

I. INTRODUCTION After providing a brief overview of the flights and defendants named in this action derived from public sources,1 this memorandum generally addresses the issues of duty, breach and causation related to the 9/11 disaster. As discussed more fully below, the plaintiffs’ case against the Aviation Defendants is governed by ordinary negligence principles, requiring proof of duty, breach, causation and damages. The following provides a general overview of the plaintiffs’ fundamental claims against the Aviation Defendants; some of the principal facts gathered to date in support of the elements of duty,

1 Discovery, documents and depositions “Subject to Confidentiality Protective Order In Re: September 11 Litigation” are not part of this public source summary. All of the information and documents cited to herein are public sources and/or can be accessed through PACER https://ecf.nysd.uscourts.gov/cgi-bin/login.pl or the website of the Southern District of New York (http://www1.nysd.uscourts.gov/cases.php?form=sept11)

breach, and causation; and some of the significant rulings in this litigation as an exemplar of the issues and strategies that might be confronted and pursued, respectively, in mass tort litigation more generally.

DISCUSSION

I. Overview of the Flights and Defendants

A. The Airlines

American Airlines & AMR Corporation. On 9/11, American Airlines operated a Boeing 767 aircraft as Flight 11, which departed from Logan National Airport in Boston at 7:59 a.m. with an intended destination of Los Angeles, California. Flight 11 was hijacked at approximately 8:14 a.m. by Mohamed Atta, Abdul Aziz al Omari, Waleed al Shehri, Wail al Shehri, and Satam al Suqami. Flight 11 crashed into the north tower of the World Trade Center at 8:46 a.m.

United Airlines & UAL Corporation. On 9/11, United Airlines operated a Boeing 767 aircraft as Flight 175, which departed from Logan National Airport at 8:14 a.m. with an intended destination of Los Angeles, California. Flight 175 was hijacked at approximately 8:42 a.m. by Marwan al Shehri, Mohand al Shehri, Hamza al Ghamdi, Fayez Banihammad, and Ahmed al ghamdi. Flight 175 crashed into the south tower of the World Trade Center at 9:03 a.m.

Colgan Air, Inc. & US Airways. On 9/11, Colgan Air and US Airways operated regularly scheduled flights to and from Portland (Maine) International Jetport and Logan National Airport in Boston, Massachusetts. On 9/11, Colgan Air operated a regularly scheduled passenger flight as US Airways Flight 5930. Mohamed Atta and Abdul Aziz al Omari boarded this flight and flew to Boston, where they connected to American Airlines Flight 11.

B. The Security Companies Huntleigh USA Corporation & ICTS International NV. Huntleigh USA operated the security

checkpoint at Logan National Airport that terrorists Marwan al Shehri, Mohand al Shehri, Hamza al Ghamdi, Fayez Banihammad, and Ahmed al Ghamdi passed through to board Flight 175.

Globe, Burns, Pinkerton’s, & Securitas. The sole security checkpoint at Portland International Jetport was the responsibility of Globe Aviation Services. Videotape surveillance shows that terrorists Mohamed Atta and Abdul Aziz al Omari passed through this security checkpoint at 5:45 a.m. Atta and Omari ultimately ended up on Flight 11. Globe Aviation Services also operated the security checkpoints at Logan National Airport in Boston where terrorists Mohamed Atta, Abdul Aziz al Omari, Waleed al Shehri, Wail al Shehri, and Satam al Suqami passed through to Flight 11.

C. The Manufacturer

Boeing Co. Designed and manufactured the aircraft used for Flight 11 and Flight 175, including the cockpit doors and locking mechanisms. These mechanisms were unreasonably dangerous and failed to prevent hijackers from entering the cockpit and taking over the airplane.

II. The Prima Facie Negligence Case It is well established that airlines have a duty to protect their passengers. In Stagl v. Delta

Airlines, Inc., 52 F.3d 463, 467 (2d Cir. 1995), the court held that airlines have a duty under New York law to provide security to protect passengers against foreseeable dangers associated with travel. Equally true, New York law mandates that “to the same standard of care as any other tortfeasor: [common carriers] must exercise ordinary care commensurate with the existing circumstances.” See Poaginos v. American Airlines, Inc., 912 F.2d 57, 59 (2d Cir. 1990). As more concisely described below, it is the legal responsibility of the airlines to take reasonable security measures given the risk of a terrorist attack.

In the context of the motions to dismiss filed in this case, Judge Hellerstein concluded that “the Aviation Defendants, and society generally, could reasonably have expected that the screening methods at Logan, Newark, and Dulles airports were for the protection of people on the ground as well as for those on board the airplanes that the terrorists hijacked” and that “the Aviation Defendants owed a duty of care, not only to their passengers to whom they concede they owed this duty, but also to victims on the ground.” In re September 11 Litigation, 280 F. Supp.2d 279,292-93 (S.D.N.Y. 2003).

Despite the complexity of the events surrounding 9/11, the claims against the Aviation Defendants are fundamentally negligence actions that require a classic “Palsgraff” analysis. In order to establish a prima facie case of negligence under New York law, a claimant must prove: (1) the defendant owed the plaintiff a cognizable duty of care; (2) the defendant breached that duty; and, (3) the plaintiff suffered damage as a proximate result of the breach. Stagl v. Delta Airlines, Inc., 52 F.3d 463, 467 (2d Cir. 1995).

A. Duty to Ground Victims Judge Hellerstein ruled that the Aviation Defendants’ duty extends to property damage

claimants. See In re September 11 Litig., 594 F. Supp. 2d 374, 380 (S.D.N.Y. 2009). “The duty of an air carrier [is] to provide service with the highest possible degree of safety in the public interest.” Id., citing 49 U.S.C. §§ 44701(d)(1)(A), 44702(b)(1)(A). “ The air carrier’s duty extends beyond those aboard the aircraft to ‘individuals and property on the ground.’” Id., quoting Williams v. Trans World Airlines, 509 F.2d 942, 946 (2d Cir. 1975). See also In re September 11 Litig., 280 F. Supp. 2d 279, 296 (S.D.N.Y. 2003) (holding Aviation Defendants could have foreseen that “death and destruction on the ground was a hazard that would arise should hijackers take control of a plane”), In re September 11 Litig., 2009 WL 118057 (S.D.N.Y. 2009) (“The natural and probable consequence of an aviation disaster are deaths and injuries of people in the airplane and in the area of the crash, and the injuries and destruction of property in and around the area.”). Moreover, Plaintiffs are not required to prove precisely how hijackers were able to smuggle weapons on to an aircraft in order to prove an airlines’ negligence. See Stanford v. Kuwait Airways, 89 F.3d 117 (2d Cir. 1996).

In light of the known terrorist threat that existed prior to 9/11, the Aviation Defendants owed a legal duty to people and property on the ground. This duty is to ensure that reasonable care is taken to provide an effective level of aviation security to deter and minimize risk of a successful terrorist hijacking. In Stanford, the court applied the “generally accepted tort principles” of negligence cases, and held that Middle Eastern Airlines (“MEA”) had duty to protect against terrorist hijackings given the airline’s knowledge and awareness of the pre-existing threat of terrorist hijackings four terrorists boarded MEA flight 426 in Beirut, Lebanon. The flight ended in Dubai, United Arab Emirates where the four terrorists disembarked, and connected with Kuwait Airways flight KU22 1, bound for Karachi, Pakistan. Shortly after take-off from Dubai, the terrorists hijacked the plane. The plane landed in Tehran, Iran and sat on the airport tarmac for days while the terrorists tortured the three American passengers, finally murdering two. There was no evidence relating to how the terrorists were able to get the weapons on board flight KU22 1. The estates of the two decedents brought suit alleging that MEA's negligence was a proximate cause of the injuries and deaths occurring aboard the aircraft. The court held that MEA had a duty to protect passengers on other inter-lined connecting flights from unreasonable risks of harm through the use of reasonable precautions in the face of reasonably foreseeable risks. The court further held that the plaintiffs were not required to prove proximate cause beyond a reasonable doubt. The Stanford court determined that the airline was faced with a set of circumstances in which a jury could reasonably find created a foreseeable risk, necessitating some action to protect others from the threat of hijacking.

In the 9/11 Litigation, the Aviation Defendants attempted to deflect responsibility for implementing and maintaining adequate security measures to the FAA. However, federal law does not place the responsibility of creating and implementing an adequate security program on the FAA. Rather, the law allocates the responsibility for adopting, implementing and performing the security program squarely on the air carriers. The law in place on 9/11 required carriers to:

Provide for the safety of persons and property traveling on flights provided by the aircraft operator against acts of criminal violence and air piracy, and the introduction of explosives, incendiaries, or deadly or dangerous weapons aboard an aircraft.

14 C.F.R. § 108.103(a)(1), as amended July 17, 2001. Prior to the July 17, 2001 amendment, the applicable regulations were substantially the same, requiring carriers to:

Provide for the safety of persons and property traveling on air transportation and intra-state air transportation against the acts of criminal violence and air piracy.

14 C.F.R. section 108.7(a)(1), as amended July 10, 1989 and December 3, 1996.

Further, In re September 11 Litigation, 280 F. Supp. 2d 279, 296 (S.D.N.Y. 2003), Judge Hellerstein held that the Aviation Defendants owed plaintiffs — including property plaintiffs whose buildings were destroyed on 9/11 — a duty to screen persons boarding aircraft:

[T]he aviation defendants controlled who came onto the planes and what was carried aboard. They had the obligation to take reasonable care in screening precisely because of the risk of terrorist hijackings, and the dangerous consequences that would inevitably follow. The consequences that in fact followed were within the scope of the duty that the aviation defendants undertook to carry out.

Judge Hellerstein further held:

[T]he aviation defendants could best control the boarding of airplanes, and were in the best position to provide reasonable protection against hijackings and the dangers they presented, not only to the crew and passengers, but also to ground victims. Imposing a duty on the aviation defendants best allocates the risks to ground victims posed by inadequate screening, given the aviation defendants' existing and admitted duty to screen passengers and items carried aboard.

Id. at 294. In ruling on the motions to dismiss, Judge Hellerstein found that those who suffer property damage or injury on the ground were within the zone of foreseeable victims. Id. at 296.

B. Foreseeability Under New York law, the “risk reasonably to be perceived defines the duty to be obeyed,”

Palsgraff v. Long Island R. Co., 248 N.Y. 339, 344 (1928). Based upon readily available information and documents, the airlines had actual and/or constructive notice of the risk of terrorist hijackings. One of the starting points in this “risk perceived” analysis is the fact that prior to 9/11, a multi-billion dollar security system was in place. Thus, a fundamental risk was perceived prior to the attack. The question then becomes whether the Aviation Defendants failed to exercise reasonable care in light of the perceived risk of terrorist hijackings. Did the failure of the Aviation Defendants to implement adequate procedures and the systemic weaknesses in aviation security increase the risk of harm to passengers, people and property on the ground? The historical events and trends preceding 9/11 demonstrate that the Aviation Defendants failed to exercise reasonable care in light of the perceived risks.

Foreseeability is an issue that will not be presumed — it must be proven. Thus, a key focus of this case has been in garnering proof that it was foreseeable on 9/11 that terrorists could attempt to hijack aircraft, crash them and cause catastrophic destruction on the ground. Documents from widely available public sources as well as some publicly filed in this litigation, some of which are discussed below, demonstrate that the prospect of hijackers commandeering commercial aircraft to use them as flying bombs and crash them into buildings was not only imaginable, it was imagined and had been attempted.2

III. Events and Historical Trends

History demonstrates that the threat of terrorism markedly increased between 1961 and

2000 and that the airlines had actual and/or constructive notice of the risk of terrorist hijackings:

1961: The first hijacking of an American carrier occurs in the United States.

1964: A former member of the Philippine Olympic Yachting Team boarded a Pacific Airlines plane, shoots the pilot and co-pilot, and crashes the plane.

1968: An El Al Boeing 707 flying from Rome to Tel Aviv is hijacked by three members of the Popular Front for the Liberation of Palestine (PFLP) and flown to Algeria. The hijacking establishes a historical

2 See supra note 1 and accompanying text.

precedent: the first terrorist hijacking in which political demands are met. The incident leads to a dramatic rise in politically motivated hijackings over the ensuing years.

1970: Members of the PFLP hijack Pan Am Flight 93, TWA Flight 741 and a Swissair flight, all bound for New York. The same day, the PFLP attempts to hijack El Al Flight 219 but are thwarted by air marshals during the flight.

1970: On September 9, a BOVAC VC-10 from Bombay to Beirut is hijacked by the PLFP to urge realization of their demands. The hijackers demand release of Palestinian extremists imprisoned in Germany, Switzerland, and Israel. On the Pan Am flight, two passengers with handguns and grenades order the plane to Lebanon and then Egypt. At a stop in Beirut, the plane is loaded with explosives which detonate shortly after landing, leaving little time for passengers or crew to escape. All of the passengers are held hostage until September 12, 1970, when 255 hostages from the four flights are released; however, the terrorists continue to hold 56 passengers. The terrorists also destroy the three remaining planes. The prisoners are released as a result of negotiations with Britain and several other governments. This series of events comes to be known as “Black September.”

1972: Hijackers take over a Southern Airways flight and threaten to crash it into a nuclear power facility in Oak Ridge, Tennessee.

February 1974: Samuel Byck attempted to hijack Delta Air Lines Flight 523, crash the plane into the White House, and assassinate President Nixon. Byck was able to board the plane with a gun and a bomb, enter the cockpit, shoot both pilots, killing one of them, and take control of the plane before his efforts were thwarted by local police officers who shot and killed him from outside the plane before it took off.

1985: TWA flight 847 from Athens to Rome is hijacked one half hour into the flight by two men with guns and hand grenades. The terrorists claim to be members of an Islamic Jihad and commandeer the Boeing 727 to Beirut. When Beirut refuses them permission to land, the terrorists threaten to crash the plane into the control tower or the presidential palace.

1985: National Security Decision Directive 180 is signed by President Ronald Reagan: International civil aviation is becoming a high visibility target for terrorist activities. “Numerous terrorists acts directed against U.S. and other air carriers in recent weeks pose a significant threat to international commerce and our national interests. Recent violent terrorist acts have resulted in the murder, torture and kidnapping of U.S. citizens and the death of hundreds of others. It is imperative to prevent and/or respond to subsequent terrorist acts.”

1986: Pan Am Flight 73 from India to New York is hijacked, stopping in Pakistan and Frankfurt, West Germany.

1986: The Vice President’s Task Force on Combating Terrorism issues the following recommendation: “Evaluate and strengthen airport and port security, pre-flight screening of passengers and carry on baggage is a cornerstone of our domestic security program.

1987: Forty-three people die when a Pacific Southwest Airlines Flight 1771 crashes after a disgruntled former employee shoots the pilots.

1988: Libyan terrorists blow up Pan Am Flight 103 over Lockerbie, Scotland, killing 259 people on the plane and 11 people on the ground.

1989: RAND Corporation terrorist expert Brian Jenkins publishes his important study ‘The Terrorist Threat to Commercial Aviation.’

1989: Terrorists bomb French UTA Flight 772, from Brazzaville, Congo to Paris. The plane explodes in mid-air, killing 171 people.

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1989: Latin American drug cartel terrorists bomb Columbia Avianca Flight 203 from Bogota to Cali, Columbia, claiming 107 lives.

1990: The Commission on Aviation Security and Terrorism reports that: “Minimum standards for security personnel do not exist. There is no regular onsite presence to ensure that carriers are complying with requirements or that requirements are adequate.”

1993: Terrorists plot to blow up Holland and Lincoln tunnels (Omar Abdahl Rahman, et al.)

1993: The World Trade Center is bombed by terrorists (Ramsey Yousef, et al.)

1993: Somali tribesman, with Al Qaeda support, shoot down U.S. Blackhawk helicopters, killing 18 and wounding 73.

1994: An Algerian armed Islamic group hijacks Air France Flight 8969 and threaten to crash it into the Eiffel Tower.

December 1994: Algerian terrorists hijacked an Air France flight in Algiers and threatened to crash it into the Eiffel Tower. The plot was thwarted when French authorities deceived the terrorists into thinking the plane did not have enough fuel to reach Paris and diverted it to Marseilles, and a French anti-terrorist force stormed the plane and killed all four terrorists.

December 1994: Algerian terrorists hijacked an Air France flight in Algiers and threatened to crash it into the Eiffel Tower. The plot was thwarted when French authorities deceived the terrorists into thinking the plane did not have enough fuel to reach Paris and diverted it to Marseilles, and a French anti-terrorist force stormed the plane and killed all four terrorists.

January 1995: A Phillipine National Police raid uncovered material in a Manilla apartment suggesting that Ramzi Yousef, Abdul Murad, and Khalid Shaykh Mohammad planned, among other things, to crash an airplane into CIA Headquarters. Information on the threat was passed to the FAA, which briefed U.S. and major foreign carriers.

April 1995: Issue of Time, the magazine’s cover story reported on the potential for terrorists to kill thousands in highly destructive acts. Senator Sam Nunn outlined a scenario in which terrorists destroy the U.S. Capitol Building by crashing a radio controlled plane into it. “It’s not far-fetched,” he says. His idea was taken from the popular Tom Clancy book, Debt of Honor, written in August 1994.

1995: The Bojinka Plot to blow up a dozen U.S. airliners while they are aflight over Pacific (Ramsey Yousef, et al.) is formulated.

1995: Terrorists bomb the office of the U.S. Program Manager for Saudi National Guard in Riyadh, killing 5 Americans.

1996: Bombing at Khobr Towers, killing 19 U.S. servicemen.

1996: The GAL Report: Aviation Security Urgent Issues Need To Be Addressed, citing airline security failures is published September 11, 1996.

1997: The White House Commission on Aviation and Security Recommendation advises that airlines: “Certify screening companies and improve screener performance. Better selection, training and testing of the people who work at airport x-ray machines would result in a significant boost in security. Also recommended: reduce aircraft vulnerability.

1998: Bin Laden Fatwah: In February, 1998, Osama Bin Laden and Ayman al Zawahiri published their Fatwah through Arabic newspaper in London, “calling for the murder of any American, anywhere on earth, as the core individual duty for every Muslim who can do it in any country in which it is possible to do it.”

1998: U.S. Embassies are bombed in Kenya and Tanzanea.

1999: Ahmad Rassam is arrested by U.S. Customs agents at U.S. Canadian border as he is smuggling in explosives in connection with a plot to attack the Los Angeles International Airport.

1999: Islamic terrorists hijack Indian Airlines Airbus 300

1999: On Egypt Air Flight 900, the pilot, while quietly repeating an Islamic prayer, crashes a Boeing 767 into the Atlantic Ocean, killing all aboard the plane.

1999: National Intelligence Council Report titled “The Sociology and Psychology of Terrorism: Who becomes a Terrorist and Why?” highlighted “new terrorist threats” and stated that “suicide bomber(s) belonging to Al Qaeda martyrdom battalion[s] could crash-land an aircraft packed with high explosives . . . into the pentagon . . . .”

April 6, 2000: GAO Report: Aviation Security: Vulnerabilities Still Exist In Aviation Security System: “[T]he need for strong aviation security grows every day. The threat of terrorism against the United States remains high, as evidenced by the 1995 discovery of a plot to bomb as many as 11 U.S. airliners, civil aviation is an attractive target.”

June 28, 2000: GAO Report: Aviation Security: Long-Standing Problems Impair Airport Screener’s Performance, citing system wide security failures.

October 12, 2000: Terrorist attack on the U.S.S. Cole, killing 17 American sailors. IV. The Aviation Defendants Had Notice of the Terrorist Threat

In the year preceding 9/11, the Aviation Defendants received scores of warnings regarding al Qaeda’s intent to attack American civil aviation domestically, as well as the possible use of aircraft as flying suicide bombs. The government advised the Aviation Defendants that terrorism experts were saying it was not a matter of “when” there would be an attack in the United States, but “where and when.” U.S. DEP’T. OF TRANSP. OFFICE OF INTELLIGENCE & SEC., “The Terrorist Threat Overview for the United States,” Feb. 2001. The following sampling of publically filed documents produced by the Aviation Defendants in this litigation, discussed in chronological order, provides compelling evidence of the Defendants’ knowledge of that threat:

(i) On March 5, 1999, Massport hosted an airport security meeting at Boston Logan International Airport—the airport from which American Flight 11 and United Flight 175 departed on 9/11. This meeting was attended by the air carriers, including American Airlines and United Airlines, as well as the FAA and the FBI. The prepared minutes from this meeting include a summary of a presentation given by Ted Distaso, FBI Special Agent from the Boston Office, who was assigned to a joint task force (which included the FBI, Secret Service, the ATF, and Boston State Police) to monitor terrorism in the area.3 The minutes state in pertinent part:

[Distaso] suggested complacency about airport security exists because nothing has happened in a while. He stated he knows of no immediate specific threat, but he mentioned the bin-Laden terrorists in the Middle East who have made threats against the United States, and that it is only a matter of time before terrorists attack. He stated his belief that they targeted the embassies to bomb because of their usually-compromised security, that airports have had the perception of very tight security. Ted stated he found for himself this is not true; he was able to walk unchallenged into one of Logan’s gate areas. He suggested it was in everyone’s best interest to harden security.

(ii) Each air carrier was required to have certain Customer Service Representatives

trained as Ground Security Coordinators (GSCs). GSCs were responsible for overseeing checkpoint

3 Id.

screening at airports at all times as well as being available to respond to any security issues that arose. The Aviation Defendants provided GSCs recurrent training on an annual basis. The May 2000 American Airlines Ground Security Coordinator Recurrent Training Reference Handout included a section dedicated solely to Osama bin-Laden.4 The GSCs were also shown a video entitled The Terrorist and the Super Power, and then given a written test on Osama bin-Laden. The questions included:

Q: Who does the United States Department recognize as the number one terrorist who is bankrolling events against U.S. interests?

A: Osama bin-Laden.

(iii) In October 2000 the FAA’s Office of Civil Aviation Security Intelligence released a report to air carriers entitled “World Wide Threats Against Civil Aviation.” Throughout this 31-page report there are multiple references to the threat posed by Osama bin-Laden and al-Qaeda. Specifically, this report included the following:

Q: What is the most serious terrorist threat to the United States at present?

A: The Osama bin-Laden network is considered the single most serious threat to the United States and its interests at the present time....

The report explained how Osama bin-Laden uses the multi-international ties that al-Qaeda developed, and can call on individuals and groups worldwide to prepare for, or carry out,

terrorist attacks.5

(iv) In February 2001 a report prepared by the Department of Transportation Office of Intelligence and Security (DOT) entitled “The Terrorist Threat Overview for the United States,” was disseminated to the air carriers, including American Airlines who produced it in discovery. In this report, the DOT stated that “the United States has become a more attractive target for terrorist attacks.” The report further advised:

In July 1999, the National Intelligence Community assessed that foreign terrorists probably will attempt an attack in the United States in the next year or two. The assessment highlighted the attractiveness of transportation and the transportation infrastructure such as subways, buses, trains, cruise lines, civil aviation, and pipelines - as potential targets.

This report reiterated the great concern about Osama bin-Laden:

In testimony before Congress in February, 2000, CIA Director George Tenet said the most serious threat overall terrorist threat that the United States faces worldwide comes from Islamic extremists, most notably Osama bin-Laden.

The report discussed the changing nature of the terrorist threat, citing to the 1993 bombing of the World Trade Center, concluding that Islamic extremists had crossed a threshold for more large scale terrorist attacks and raised the profile of U.S. vulnerability to a terrorist attack. According to the report, domestically, the World Trade Center bombing in 1993 was a watershed event because it demonstrated that terrorists changed the way they look at conducting attacks against the United States. In terms of targeting, this report warned:

TARGETING. The attack on the WTC also represented a change in targeting by international terrorists. The bombing makes it clear that symbols of U.S. capitalism, trade, and commerce can be considered viable terrorist targets, a point that was underscored by the planned bombings of the Lincoln and Holland tunnels, the George Washington bridge in New York City.

4 Id. 5 Id.

Consequently, it is believed that the threat within the United States has increased, as terrorists are beginning to recognize the value of attacks against targets not previously considered symbols of the United States.

This Spring 2001 report concludes by ominously stating that “counter terrorism experts are in agreement that the pressing question for the future is not whether there will be additional terrorist attacks in the U.S., but when and where.”6

(v) In March 2001 the DOT disseminated a report to air carriers entitled “Transportation, Security and Terrorism Review.” Specifically, it was a Special Edition entitled USA v. Osama bin-Laden: Technical and Tactical Insights From the Trial. The DOT discussed how the New York trial of four defendants in the 1998 bombing of U.S. embassies in Kenya and Tanzania provided revealing details on Osama bin-Laden’s al-Qaeda network, methods and thinking.

The report examined the terrorist operational cycle and advised air carriers, including American Airlines and United Airlines, that there are four groups involved in attacking a target. The first group is the Surveillance Group, which collects information on targets and sends it to the “Bosses.” The “Bosses,” who comprise the second group, decide which target to attack. Then a third, Logistical Group, provides the weapons and explosives needed to attack the target. The fourth group then arrives and carries out the attack.7 /here

In terms of target selection, this report warned air carriers that the FBI advised that the embassy bombings would pave the way for attacks inside the U.S. The report not only linked Osama bin-Laden directly to the attacks in Africa but commented on bin-Laden’s intent to utilize a suicide bomber. The report quotes terrorism expert Brian M. Jenkins, Ph.D. as stating, “They want a lot of people watching and a lot of people dead.” The report also advised air carriers that al-Qaeda is not only training terrorists in explosives and small arms, but training them in operational principles, including collecting target intelligence and communications. The report advised that al-Qaeda selected individuals to send to specialized schools for training in electronics and flying aircraft.8

(vi) In April 2001, the FAA’s Office of Civil Aviation Security Intelligence gave regional briefings to all commercial air carriers and disseminated a CD-ROM that included current threat information regarding Osama bin-Laden and the possibility of suicide hijackings. This report advised air carriers that they needed to have a better understanding of the current threat to U.S. air carriers and focused on the groups and state sponsors deemed likeliest to attack symbols of the United States. There are numerous references to the threat posed by Osama bin-Laden, including: There is significant motivation for associates of bin-Laden to conduct a terrorist hijacking. Successful intelligence and law enforcement operations around the world have led to the arrest and imprisonment of many individuals linked to his organization. . With the hijacking of Indian Aviation Defendants as a model, we’re concerned that bin-Laden’s followers may look to duplicate that success by seizing a U.S. airliner to exchange hostages for the release of these prisoners and others.

Considering everything, we assess that a terrorist attack of a U.S. airliner is more likely to occur overseas than in the United States. A domestic hijacking would likely result in a greater number of American hostages, but would be operationally more difficult to accomplish.. . . If, however, the intent of hijackers is not to exchange hostages for prisoners, but to commit suicide and a spectacular explosion, a domestic hijacking would probably be preferable. Fortunately, we have no indication that any group is currently thinking in that direction.

While the FAA considers the suicide bombing of a U.S. airliner to be a low probability, a non-suicide bombing continues to be a major concern. For example, convicted members of the Manilla plot to bomb U.S. airliners in Asia had links to bin-Laden and members of that bombing

6 Id. 7 This notice the Aviation Defendants received regarding the terrorist operational cycle is relevant because Plaintiffs have uncovered facts demonstrating that surveillance by the terrorists was taking place prior to 9/11 at Logan and other locations. For example, one American Airlines employee observed Mohammed Atta videotaping the Logan checkpoint prior to 9/11 — one of the many key facts not found in the 9/11 Commission Report. Prior to 9/11, the FAA mandated that any such surveillance be immediately reported to the FAA. American Airlines did not report this incident to the FAA. See also supra note 1. 8 See supra note 1.

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conspiracy are still at large. Also, statements attributed to bin-Laden following the U.S. missile attack on his camp specifically threatened to bring down and hijack U.S. and Israeli aircraft.

This presentation included slides that reference a 1994 Air France hijacking where an Islamic extremist planned to crash a plane into the Eiffel Tower, and a discussion regarding terrorist use of planes as “Flying Bombs.”9

(vii) Pinkerton International was a private security firm. Pinkerton provided intelligence reports on a weekly basis regarding terrorist threats worldwide. On September 7, 2001, just four days before September 11, Pinkerton reported in its weekly intelligence forecast the following:

The FAA announced on September 3 that a notice had been issued throughout the summer to U.S. airports to update their vulnerability assessments in light of a terrorist claim that U.S. airports and/or airlines were a potential target.10

As evidenced by this sampling of publically filed documents, and many, many others that have been exchanged in discovery and/or are in the public domain, the Aviation Defendants’ claim that the government failed to apprise them of the risk is simply not true and, in any event, irrelevant. The Defendants were put on notice by the government and knew from their own intelligence that a domestic hijacking was not only foreseeable, but likely to occur. Moreover, serious flaws in the airline’s security system was well known decades before 9/11. The airlines were repeatedly informed of these flaws and fined by the United States government for their failure to comply with and meet the security standards of the United States.

A. Breach On the morning of September 11th, the hijackers were allowed to board the airplanes with

items which were not allowed to pass through security. Flight attendants and passengers provided eye and ear witness accounts regarding what occurred on the airplanes via the telephone on 9/11. Their statements from the planes confirmed that there was mace on board, stabbings, and a device that appeared to be a bomb – all restricted items. For example, in a telephone call from Flight 11, flight attendant Betty Ong reported:

“...somebody is stabbed in business class and I think there is mace. We can’t breathe. I don’t know, I think we’re getting hijacked.. .the cockpit is not answering the phone and there is somebody stabbed in business class and we can’t breathe in Business Class.. .somebody’s got mace or something.. .our number one is stabbed...we can’t even get up to business class right now because no one can breathe. Our number one is stabbed right now.. .and our number five. Our galley flight attendant purser has been stabbed.” See http://www.youtube.com/watch?v=7XaCr7lgJTU, publically available recordings on You Tube.

Despite being continuously warned, fined and admonished as to vulnerabilities that existed in the security system for years prior to 9/11, the Aviation Defendants continued to look the other way. As a result, ten terrorists successfully passed through the checkpoint and boarded Flights 11 and 175 with prohibited items. The evidence has shown not only was there a systemic failure as of 9/11 but actual breaches at the checkpoint occurred in violation of industry and FAA screening procedures.11

B. Causation

The failures of the Aviation Defendants to timely implement adequate security measures to guard against terrorist activity aboard American carriers increased the risk of terrorist hijackings and

9 Id. 10 Id. 11 Discovery, documents and depositions “Subject to Confidentiality Protective Order In Re: September 11 Litigation” are not part of this public source summary. All of the information and documents cited to herein are public sources and/or can be accessed through PACER https://ecf.nysd.uscourts.gov/cgi-bin/login.pl or the website of the Southern District of New York (http://www1.nysd.uscourts.gov/cases.php?form=sept11).

were a proximate cause of the damage and destruction that occurred on 9/11. The law does not require us to prove the precise methods or weapons employed by the terrorists.

To establish proximate cause under New York law, a plaintiff must show that the defendant’s actions were a substantial factor in causing the events which produced injury. Direct evidence of precisely how the hijackers brought their weapons on board Flights 11 and 175 is not essential to establish causation under well-settled tort principles discussed below. See Stanford, 89 F.3d at 121, 126-27 (proximate causation established sufficiently in a hijacking case to present the case to the jury even where “[n]o one knew how the hijackers got their weapons on board” the airplane — held: “Plaintiffs were not required to prove causation beyond a reasonable doubt, it was sufficient to present evidence from which reasonable minds may conclude that it [was] more probable that the hijacking was caused by [the airline’s] negligence than it was not.”)

While intervening criminal acts can, in certain circumstances, break the chain of causation, New York law is settled that “[w]hen...the intervening act is a natural and foreseeable consequence of a circumstance created by the defendant, liability will subsist.” Kush v. City of Buffalo, 59 N.Y.2d 26, 33 (1983). Here, preventing terrorism was an end and aim of the entire aviation security industry, and the defendants’ negligence created the very risk — a terrorist attack — that gave rise to our injuries.

Proximate cause is always a question of fact. The issue is whether hijackings with weapons were foreseeable and the mere fact that checkpoint screening was in place gives rise to foreseeability. Plaintiffs do not need to prove that the AVSEC Defendants were the sole or even primary cause of those events. Demonstrating that the defendants’ conduct was a substantial factor in causing damages, regardless of whether there may have been other contributing causes is all that is required. PROSSER & W. PAGE KEETON, THE LAW OF TORTS, 240 (4th ed. 1971).

The intentional, heinous conduct of the 9/11 hijackers does not absolve the Aviation Defendants from their own negligence on or before September 11. Nash v. Port Auth. of N.V. & N.J., 2008 N.Y. Slip Op. 03991 (1st Dep’t 2008), provides compelling reasoning to refute the Aviation Defendants’ contention that negligent actions against third parties arising out terrorist attacks fail because the intentional heinous conduct of terrorists operates as a superseding/intervening cause that breaks the chain of causation.

Nash involved plaintiffs injured by the 1993 bombing of the public parking garage in the World Trade Center who sought to recover damages allegedly attributable to the defendant landlord’s breach of its proprietary duty to maintain its premises in a reasonably safe condition. At trial, evidence was presented that years before the bombing, consultants had advised the defendant that the World Trade Center was vulnerable to terrorist attack through its public parking garage. The jury assigned 68 percent of the fault to the defendant owner for the negligence and the circumstances under which it occurred and contributed to the bombing.

On appeal, defendants argued for a jury instruction providing for limited liability for non-economic damages for parties 50% or less at fault, arguing that the jury could not assign a negligent tortfeasor a percentage of fault higher that intentional tortfeasor (terrorists) who caused the bombing. The Second Circuit rejected the defendant’s argument, and held that the defendant’s assigned share of fault exceeded 50% and that “it does not follow that negligent tortfeasors are automatically entitled to a release from joint and several liability whenever an intentional tortfeasor is also responsible for the harm sued upon.” The Nash court stated in pertinent part:

Neither the magnitude of a defendant’s negligence, nor its moral blameworthiness, nor the closeness of its causal relation to a plaintiff’s harm necessarily diminishes to subordinate significance in the attribution of fault by reason of the circumstance that the harm was concurrently attributable to intentional conduct, even when the intentional conduct is particularly heinous. To the contrary, as this case so vividly illustrates, the blameworthiness of negligence may actually be increased by the heinousness of the wrongdoing it directly and foreseeably facilitates.

In upholding the jury’s apportionment of fault, notwithstanding the terrorists’ wanton conduct, the court Nash held:

the evidence... clearly supported the view that defendant’s negligence had been extraordinarily conducive to the terrorists’ conduct – so much so that the fulfillment of the

terrorists’ plot and the ensuing harm could with clear justification have been understood as primarily attributable to that negligence.

Further, the court stated:

...Here, the evidence overwhelmingly supported the view that the conscientious performance of the defendant’s duty reasonably to secure its premises would have prevented the harm. This civil jury had no power to decide whether the terrorists should in any meaningful sense be “absolved” of their murderous acts. What it could and did decide was rather that the acts of these terrorists, even while obviously odious in the extreme, were not a cause for the easy absolution of this defendant from its civil obligations.

Thus, the Aviation Defendants cannot successfully advance that the intentional conduct of the hijackers is the sole proximate cause of Plaintiff’s injuries under Nash. More importantly, the post-9/11 verdict in Nash demonstrates New York jurors’ willingness to hold negligent parties responsible for their conduct conducive to the terrorist’s actions.

V. Evidentiary Rulings Have Barred Speculative and Hypothetical Defenses.

Throughout this litigation, the Aviation Defendants have attempted to absolve their own negligence by blaming the government. The government’s failures to apprehend the terrorists and abort their plots did not excuse the Aviation Defendants’ alleged faults. In re September 11 Litig., 621 F. Supp. 2d 131, 141 (S.D.N.Y. 2009). The Aviation Defendants sought admissibility of the 9/11 Commission Report (hereafter “The 9/11 Report”), certain recommended findings of the 9/11 Commission staff, sections of the Moussaoui trial record, and a post-arrest statement of other Al-Qaeda members in order to demonstrate that the 9/11 attacks occurred as a result of government failure and that the government should have done more to collect and synthesize intelligence of terrorist plots and plans. Id. at 140.

Judge Hellerstein held that what the government knew, failed to pass on, and failed to learn were irrelevant. Id. at 146. The Court granted the motions to the “limited extent” that these sources could (1) provide information for an agreed narrative summary that explains to the jury the events of September 11, 2001, and (2) reveal the hijackers’ plans and preparations. Id. at 140. Otherwise, the Aviation Defendants’ motions were denied. Id. A trial against the Aviation Defendants will focus on what they knew and should have known about the terrorist threat to civil aviation and on what they should have done to protect against such threats. Id. at 146 (emphasis added). “The government’s failures to detect and abort the terrorists’ plots would not affect the Aviation Defendants’ potential liability. Id. at 141. Essentially, the Aviation Defendants couldnot inject the government as a wrongdoer to excuse or mitigate their own failures. Id.

New York law is well-settled in that if one’s negligence proximately causes a plaintiff’s injury, the fault of another tortfeasor who acts independently in causing the same harm does not eradicate the fault of the first tortfeasor, unless the second tortfeasor was a superseding cause. Skinner v. Stone, Raskill & Israel, 724 F.2d 264, 266 (2d Cir. 1983). In In re September 11 Litigation, the Court found that government’s negligence was not a superseding cause of the Aviation Defendants’ negligence relieving them from liability for their negligence; the government negligence preceded the Aviation Defendants’ negligence. Id. at 147. Thus, the Court concluded, the Aviation Defendants will be proved negligent to the extent their efforts to secure the airports and airplanes failed to conform to reasonable duties of care. Id. 147-48. Simply, the government’s failures were not relevant, according to the court. Id. at 149.

Moreover, the evidence sought by the Aviation Defendants— the 9/11 Report, certain recommended findings of the 9/11 Commission staff, sections of the Moussaoui trial record, and an interview with the terrorist, Ramzi Binalshibh—was inadmissible because of Federal Rule of Evidence 403. Id. If the probative value of the evidence “is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or delay [and] waste of time,” the court may exclude the evidence. Id. (citing Fed. R. Evid. 403.) An inquiry into what the government knew or should have known and did not tell the defendants threatened to thoroughly confuse, prejudice, and distract the jury and add to the trial’s expense and delay. Id.

A. The 9/11 Commission Report and Related Staff Reports Are Not Admissible

i. The 9/11 Commission Report The Aviation Defendants moved for the admission of The 9/11 Report as well as the Staff

Monograph and other Staff Statements written by the 9/11 Commission Staff pursuant to the public records exception to the hearsay rule (Fed. R. Evid. 803(8)(C)). Id. at 151. The Aviation Defendants argued that The 9/11 Report, Staff Monograph, and Staff Statements reflected trustworthy and reliable government-authorized investigations. Id.

First, the Court held that the Staff Monographs and Statements were inadmissible as they did not satisfy the criteria of Rule 803(8)(C), which permits only reports that “set forth . . . factual findings” by “public agencies.” Id. at 155, citing City of New York v. Pullman, 662 F.2d 910, 914 (2d Cir. 1981). As recommendations to the 9/11 Commissioners, they were interim reports, not final reports. Id. Moreover, the Monographs and Statements were findings of the Commission staff, not a public office or agency. Id.

Second, regarding the 9/11 Report, The Aviation Defendants’ evidentiary offers as to The 9/11 Report were denied, without prejudice. Id. at 156. While only “few parts of the report satisfied the rules of admissibility,” the Court found that those few parts may be useful and important as an agreed narrative. Id. In so holding, the Court was careful to explain that The 9/11 Report was in no way a flawed report—the Commissioners’ findings were carefully made and based on substantial corroborative evidence. Id. at 157. However, The Report merely did not withstand the admissibility requirements pursuant to the Federal Rules of Evidence. “Several of the Commissioners’ findings, as they themselves acknowledge, are based on sources not completely trustworthy or acceptable in American courts.” Id. at 156. For example, numerous sections were “unreliable” because they were based on information “derived from torture or otherquestionable investigative techniques.” Id. Moreover, the report contained multiple levels of hearsay; for example, the Commissioners themselves did not interview the terrorists. Id. at 157. Moreover, the sections in question had very limited, if any, relevance to the issues before the court and raised substantial dangers of bias, confusion, and undue delay. Id., citing Fed. R. Evid. 402, 403.

ii. Post-arrest Statements in the 9/11 Report Attributed to Khalid Sheikh Mohammed and Ramzi Binalshibh Were Not Admissible.

The Aviation Defendants sought to introduce the statements of terrorists Khalid Sheikh Mohammed and Ramzi Binalshibh contained in The 9/11 Report because the two men were integral to the planning and implementation of the attacks, were unavailable for depositions, and had statements attributed to them in The 9/11 Report that were sufficiently trustworthy. Id. at 157. However, a statement in a public report made by an individual with no business duty to report is considered hearsay within hearsay, and thus, must satisfy an exception to the hearsay rule. Id., citing Parsons v. Honeywell, Inc., 929 F.2d 901, 907 (2d Cir. 1991). Moreover, the terrorists’ statements were not “factual findings” for purposes of the public records exception to the hearsay rule. Id.

iii. Admitting the 9/11 Report Would Result in Unfair Prejudice, Delay, and Confusion, and, therefore, is Barred by Federal Rule of Evidence 403.

Admitting the 9/11 Report in its entirety, a book brimming with findings and recommendations, would have choked the proceedings with “scores of mini-trials” as parties challenged each finding of the 9/11 Commission. Id. at 158. Although the Court noted that specific statements may have been relevant, useful, and admissible, admitting longer sections ofthe report would have caused the trial to digress into innumerable arguments relating to myriad issues, causing undue prejudice, extensive delay and confusion. Id., citing Fed. R. Evid. 403. Moreover, The 9/11 Report could not “be permitted to displace the time-tested search for truth by examination and cross-examination.” Id. at 157.

B. Ramzi Binalshibh’s Journalistic Interview Was Not Admissible.

An Al Jazeera journalist conducted a videotaped interviewed of Ramzi Binalshibh (“Binalshibh”), an Al Qaeda member and co-conspirator in the September 11 attacks. Id. at 164. Al Qaeda kept the videotape and edited selections of the interview on to an audiotape, which it then forwarded to Al Jazeera. Id. The audiotape recording was then translated into the document that the

Aviation Defendants sought to offer into evidence. Id. Neither the underlying video, audio recordings, non-translated version of the document, nor the identity of the translator were made available. Id.

The Aviation Defendants argued that the translated interview should be admitted as an adoptive admission under Fed. R. Evid. 801(d)(2) because one of the Plaintiffs’ counsel referred to it in a settlement letter and on its website. Id. The Court rejected this argument and held that the interview was not admissible. Id. The use of one set of arguments to rebut another set of arguments does not meet the tests or reliability and trustworthiness required of Rule 801(d)(2). Id. at 43-44. Moreover, the translated interview was not sufficiently trustworthy to be considered a statement against interest under Rule 804(b)(3) as Al Qaeda was using the interview as part of a controlled public relations campaign. Id.

VI. Damages: Court Limits WTC Properties Owner’s Recovery.

What is the proper measure of damages for an owner of damaged property damaged on the ground? Plaintiff World Trade Center Properties’ (“WTCP”) claim in the September 11th Litigation sought the recovery of $16.2 billion, which constituted the alleged replacement value of Towers 1, 2, 4 and 5. Were the property damage Plaintiffs, such as WTCP, entitled to the market value of the leaseholds on the date of loss or the replacement value? This issue was resolved by Judge Hellerstein in the 9/11 Litigation after protracted Motions for Summary Judgment and a Motion to Reconsider.

As a result of the terrorist attacks of September 11, 2001, WTC 1, WTC 2, WTC 4, and WTC 5 were entirely destroyed. Following the destruction of the buildings, WTC Properties, the owner of a ninety-nine year lease of those buildings, which was effective July 16, 2001, collected $4.1 billion in insurance. However, WTC Properties sought to recover more; it sought to collect the alleged replacement costs of the buildings, which totaled $8.4 billion, as well as an additional $3.9 billion in lost rental income. The Aviation Defendants moved for summary judgment on WTCP’s claims.

WTCP sought to recover as damages exactly what a century of New York law bars it from recovering in this case: replacement costs and lost profits. The Defendants have argued that even if WTCP were able to establish their liability for the terrorists’ destruction of WTC 1, WTC 2, WTC 4 and WTC 5, its damages would be governed by the same property loss rule that has applied to every other New York property owner for more than 100 years. The measure of damages for injury to real property is the lesser of the diminution in market value or the cost of replacement. Hartshorn v. Chaddock, 135 N.Y. 116, 122 (1892).

The New York Court of Appeals recently reaffirmed that lost market value and replacement cost are each potential measures of property loss, but with “the lower of the two figures affording full compensation to the owner.” Fisher v. Qualico Contracting Corp., 98 N.Y.2d 534, 540, 749 N.Y. S.2d 467, 470 (2002) (emphasis added). The Aviation Defendants contended that WTCP proceeds as if the law were the very opposite from this “lesser of two” rule. It did not deny that the market value of the destroyed properties was substantially less than the cost to replace them. Nevertheless, WTCP seeks to collect $8.4 billion in alleged replacement costs and an additional $3.9 billion in lost rental income.

The Defendants argued that, as a matter of law, neither category of damages was recoverable. The cost to construct an income-producing real estate development was not an injury. It was an investment opportunity. Once WTCP has recovered fair market value of the destroyed buildings, it has been put back in the position it was in before September 11, 2001. Were the Court to award WTCP the damages it seeks: (i) the Aviation Defendants would be forced to finance WTCP’s construction of a brand-new, vastly different complex worth far more than the buildings destroyed on September 11, 2001 and (ii) WTCP would receive an impermissible double recovery of lost profits. The law forbids such a windfall.

First, as every reported case from Hartshorn to Fisher has held, the applicable measure of damages for the property loss in this tort action is the lesser of the lost market value or replacement costs. The undisputed record evidence regarding the valuation of the WTC properties just two months before September 11, 2001, the Court should rule that the diminution in market value is no more than $2.8 billion. It is incontrovertible that on July 16, 2001, after conducting a worldwide competitive auction involving bids from the most sophisticated commercial real estate developers, the Port Authority leased WTC 1, 2, 4, and 5 to WTCP in a transaction with a net present value of $2.8 billion. Thus, by

anyone’s measure, the alleged replacement costs of $8.4 billion far exceed the fair market value of the destroyed buildings.

Second, as the courts have repeatedly recognized, a supplemental award of future rental payments on top of fair market value was not available because market value, by definition, already includes future rental profits.

Third, the insurance proceeds received by WTCP as a result of the attacks on the WTC buildings (of at least $4.1 billion) exceed the highest possible loss in market value ($2.8 billion). Under New York’s collateral source rule, embodied in N.Y. Civ. Prac. L. & Rules § 4545(c), the diminution in market value allegedly suffered by WTCP must be offset by the insurance payments received by WTCP. As a matter of law, the Defendants conclude that WTCP has no remaining recoverable damages for the destruction of WTC 1, 2, 4, and 5.

Judge Hellerstein held that New York follows the “Lesser of Two” rule that a plaintiff whose property has been injured may recover the lesser of the dimunition of the property’s market value or its replacement cost, citing Hartshorn v. Chaddock, 135 N.Y. 116, 122 (1892).

The Court emphasized that this rule applies even when the property in question has been completely destroyed. In re Sept 11th Litig., 590 F. Supp. 2d 535, 541 (S.D.N.Y. 2008), citing Sandoro v. Harlem-Gennesee Market & Nursery, Inc., 105 A.D.2d 165 (N.Y. App. Div. 1984).

In holding that market value was the appropriate measure of damages, the Court relied upon the recent New York Court of Appeals decision Fisher v. Qualico Contracting Corp., 779 N.E. 2d 178 (N.Y. 2002) that affirmed the “Lesser of Two” rule. In re Sept. 11th Litig., 590 F. Supp. 2d at 541. In Fisher, the plaintiff’s Victorian home in Long Island was destroyed in a fire due to the negligence of a contractor hired by the plaintiff. Fisher v. Qualico Contracting Corp 779 N.E. 2d 178, 179-180 (N.Y. 2002) The plaintiff received $1,000,050.00 from his insurers, who then subrogated and sued the defendant for negligence and prevailed. Id. at 180. At trial, the subrogated plaintiff demonstrated that replacement cost was $1,033,000.00, but that the diminution in the market value was $480,000.00. Id. The court instructed the jury to award $480,000.00, the lesser of the two amounts. Id. On appeal, the Court of Appeals affirmed, holding that “[r]eplacement costs and diminution of market value are simply two sides of the same coin.” Id. at 181-82, and “each is a proper way to measure lost property value, the lower of the two figures affording full compensation to the owner” yet “avoiding uneconomical efforts.” Id.

In applying the “Lesser of Two” rule, Judge Hellerstein held that market value of the four towers as of September 11, 2001, was the limit of WTCP’s permissible recovery and that the value fixed by the parties a few months early was probably, but not necessarily, the market value of the leaseholds as of September 11, 2001. Id. at 536. Judge Hellerstein further held that the case presented a narrow question of fact as to what the market value was, and that an issue of diminution of recovery pursuant to N.Y. C.P.L.R. §4545 because insurance in other possible recoveries, presented additional issues of fact, and ordered additional proceedings allowing for final determination. Id. at 548.

In its ruling, the Court rejected WTCP’s argument that they were entitled to replacement value because the World Trade Center qualified as a “specialty property.” Id. at 532. In granting the Defendants’ motion, the Court ruled that the World Trade Center complex was not specialty property, stating in pertinent part:

The World Trade Center buildings were filled with a variety of commercial tenants, law firms of every size and character, large national and international public accounting firms, investment banking, insurance and financial institutions of every description, public restaurants, clubs and gyms, and the like. Thousands of visitors frequented the retail shops and restaurants throughout the day. Clearly, the price WTCP paid for the 99 year leases it acquired from the Port Authority reflects a full and fair market price for the property. If WTCP is entitled to recover, recovery of the property’s market value would fully compensate it. WTCP is not entitled to recover the larger value of replacement costs. (emphasis added). Id. at 543.

The Court held that WTCP’s claim for loss rental payments was “without merit,” stating that the price that WTCP paid to the Port Authority included the value of anticipated rentals and that “the price it paid fully reflected the present value of those rental streams.” Id. at 544. The Court, citing Sandoro v. Harlem-Gennesee Market & Nursery, Inc., 105 A.D.2d 1103 (N.Y. App. Div. 1984), concluded that WTCP could not recover twice, once in the form of the property’s market value, which

fully included the rental streams reasonably expected from the property and again for the separate value of the rental streams. Id. at 544. According to the Court, “since damages measured by market value take rental value into account, where a building is totally destroyed there is no separate allowance for damages for loss of rent.” Id., quoting Sandoro, 105 A.D.2d at 1104.

As to the diminutions of recovery under N.Y. C.P.L.R. section 4545 (c), the Court dismissed WTCP’s argument that §4545 (c) cannot be applied until there is a judgment of recovery/verdict, as an unimportant technical distinction, “for the issue of diminution can be tried and determined immediately following the jury verdict, on the same or a supplemental record.” Id. at 548. The Court directed the parties to inquire into the nature of the insurance recoveries, how they are to be applied, and how they compare to clarify the record on this issue. Id. CONCLUSION

As the public record and the decisions above reflect, the aviation industry was acutely aware, through several completed and attempted terrorist attacks, FAA warnings, GAO Reports, and other sources that their aircraft were at a high risk for hijackings by terrorists. Hijacking had been viewed as a persistent threat to aviation dating back to the 1960s, and the risk of terrorism was on the rise in the years, and even months, leading up to 9/11. In 1989, at an aviation security presentation to aviation industry members, terrorism expert Brian Jenkins stated that “[t]he nightmare of governments is that suicide terrorists will hijack a commercial airliner and by killing or replacing its crew, crash it into a city or some vital facility.” Brian M. Jenkins, Ph. D., Int’l Seminar on Aviation Security, February 1989. In the months leading up to 9/11, the terrorist threat was increasing, and the level of security effectiveness was decreasing, leading to a systemic failure that both invited the terrorist attack and facilitated its success. On 9/11, the danger of hijacking was both foreseeable and preventable. To the extent that the dangers in other mass tort cases are equally foreseeable and presentable, manufacturers and business owners would do well to take a lesson from the case study presented above.

A CASE STUDY OF MASS TORT LITIGATION:

LITIGATING THE 9/11 DISASTER

TIMOTHY S. TOMASIK

CLIFFORD LAW OFFICES, P.C. 120 NORTH LA SALLE STREET

31st FLOOR

CHICAGO, ILLINOIS 60602 (312) 899-9090

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INTRODUCTION

After providing a brief overview of the flights and defendants named in this action derived

from public sources, 1 this memorandum generally addresses the issues of duty, breach and

causation related to the 9/11 disaster. As discussed more fully below, the plaintiffs’ case against the

Aviation Defendants is governed by ordinary negligence principles, requiring proof of duty, breach,

causation and damages. The following provides a general overview of the plaintiffs’ fundamental

claims against the Aviation Defendants; some of the principal facts gathered to date in support of

the elements of duty, breach, and causation; and some of the significant rulings in this litigation as

an exemplar of the issues and strategies that might be confronted and pursued, respectively, in mass

tort litigation more generally.

DISCUSSION

I. Overview of the Flights and Defendants

A. The Airlines

American Airlines & AMR Corporation. On 9/11, American Airlines operated a

Boeing 767 aircraft as Flight 11, which departed from Logan National Airport in Boston at 7:59

a.m. with an intended destination of Los Angeles, California. Flight 11 was hijacked at

approximately 8:14 a.m. by Mohamed Atta, Abdul Aziz al Omari, Waleed al Shehri, Wail al

Shehri, and Satam al Suqami. Flight 11 crashed into the north tower of the World Trade Center at

8:46 a.m.

United Airlines & UAL Corporation. On 9/11, United Airlines operated a Boeing 767 aircraft

as Flight 175, which departed from Logan National Airport at 8:14 a.m. with an intended destination of

1 Discovery, documents and depositions “Subject to Confidentiality Protective Order In Re: September 11 Litigation” are not part of this public source summary. All of the information and documents cited to herein are public sources and/or can be accessed through PACER https://ecf.nysd.uscourts.gov/cgi-bin/login.pl or the website of the Southern District of New York (http://www1.nysd.uscourts.gov/cases.php?form=sept11)

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Los Angeles, California. Flight 175 was hijacked at approximately 8:42 a.m. by Marwan al Shehri,

Mohand al Shehri, Hamza al Ghamdi, Fayez Banihammad, and Ahmed al ghamdi. Flight 175 crashed

into the south tower of the World Trade Center at 9:03 a.m.

Colgan Air, Inc. & US Airways. On 9/11, Colgan Air and US Airways operated regularly

scheduled flights to and from Portland (Maine) International Jetport and Logan National Airport in

Boston, Massachusetts. On 9/11, Colgan Air operated a regularly scheduled passenger flight as US

Airways Flight 5930. Mohamed Atta and Abdul Aziz al Omari boarded this flight and flew to Boston,

where they connected to American Airlines Flight 11.

B. The Security Companies

Huntleigh USA Corporation & ICTS International NV. Huntleigh USA operated the

security checkpoint at Logan National Airport that terrorists Marwan al Shehri, Mohand al Shehri,

Hamza al Ghamdi, Fayez Banihammad, and Ahmed al Ghamdi passed through to board Flight 175.

Globe, Burns, Pinkerton’s, & Securitas. The sole security checkpoint at Portland

International Jetport was the responsibility of Globe Aviation Services. Videotape surveillance

shows that terrorists Mohamed Atta and Abdul Aziz al Omari passed through this security

checkpoint at 5:45 a.m. Atta and Omari ultimately ended up on Flight 11. Globe Aviation Services

also operated the security checkpoints at Logan National Airport in Boston where terrorists

Mohamed Atta, Abdul Aziz al Omari, Waleed al Shehri, Wail al Shehri, and Satam al Suqami

passed through to Flight 11.

C. The Manufacturer

Boeing Co. Designed and manufactured the aircraft used for Flight 11 and Flight 175,

including the cockpit doors and locking mechanisms. These mechanisms were unreasonably

dangerous and failed to prevent hijackers from entering the cockpit and taking over the airplane.

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II. The Prima Facie Negligence Case

It is well established that airlines have a duty to protect their passengers. In Stagl v. Delta

Airlines, Inc., 52 F.3d 463, 467 (2d Cir. 1995), the court held that airlines have a duty under New

York law to provide security to protect passengers against foreseeable dangers associated with

travel. Equally true, New York law mandates that “to the same standard of care as any other

tortfeasor: [common carriers] must exercise ordinary care commensurate with the existing

circumstances.” See Poaginos v. American Airlines, Inc., 912 F.2d 57, 59 (2d Cir. 1990). As more

concisely described below, it is the legal responsibility of the airlines to take reasonable security

measures given the risk of a terrorist attack.

In the context of the motions to dismiss filed in this case, Judge Hellerstein concluded that

“the Aviation Defendants, and society generally, could reasonably have expected that the screening

methods at Logan, Newark, and Dulles airports were for the protection of people on the ground as

well as for those on board the airplanes that the terrorists hijacked” and that “the Aviation

Defendants owed a duty of care, not only to their passengers to whom they concede they owed this

duty, but also to victims on the ground.” In re September 11 Litigation, 280 F. Supp.2d 279,292-93

(S.D.N.Y. 2003).

Despite the complexity of the events surrounding 9/11, the claims against the Aviation

Defendants are fundamentally negligence actions that require a classic “Palsgraff” analysis. In

order to establish a prima facie case of negligence under New York law, a claimant must prove: (1)

the defendant owed the plaintiff a cognizable duty of care; (2) the defendant breached that duty;

and, (3) the plaintiff suffered damage as a proximate result of the breach. Stagl v. Delta Airlines,

Inc., 52 F.3d 463, 467 (2d Cir. 1995).

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A. Duty to Ground Victims

Judge Hellerstein ruled that the Aviation Defendants’ duty extends to property damage

claimants. See In re September 11 Litig., 594 F. Supp. 2d 374, 380 (S.D.N.Y. 2009). “The duty of an

air carrier [is] to provide service with the highest possible degree of safety in the public interest.”

Id., citing 49 U.S.C. §§ 44701(d)(1)(A), 44702(b)(1)(A). “ The air carrier’s duty extends beyond

those aboard the aircraft to ‘individuals and property on the ground.’” Id., quoting Williams v. Trans

World Airlines, 509 F.2d 942, 946 (2d Cir. 1975). See also In re September 11 Litig., 280 F. Supp.

2d 279, 296 (S.D.N.Y. 2003) (holding Aviation Defendants could have foreseen that “death and

destruction on the ground was a hazard that would arise should hijackers take control of a plane”), In

re September 11 Litig., 2009 WL 118057 (S.D.N.Y. 2009) (“The natural and probable consequence

of an aviation disaster are deaths and injuries of people in the airplane and in the area of the crash,

and the injuries and destruction of property in and around the area.”). Moreover, Plaintiffs are not

required to prove precisely how hijackers were able to smuggle weapons on to an aircraft in order

to prove an airlines’ negligence. See Stanford v. Kuwait Airways, 89 F.3d 117 (2d Cir. 1996).

In light of the known terrorist threat that existed prior to 9/11, the Aviation Defendants owed a

legal duty to people and property on the ground. This duty is to ensure that reasonable care is taken to

provide an effective level of aviation security to deter and minimize risk of a successful terrorist

hijacking. In Stanford, the court applied the “generally accepted tort principles” of negligence cases,

and held that Middle Eastern Airlines (“MEA”) had duty to protect against terrorist hijackings given the

airline’s knowledge and awareness of the pre-existing threat of terrorist hijackings four terrorists

boarded MEA flight 426 in Beirut, Lebanon. The flight ended in Dubai, United Arab Emirates where

the four terrorists disembarked, and connected with Kuwait Airways flight KU22 1, bound for Karachi,

Pakistan. Shortly after take-off from Dubai, the terrorists hijacked the plane. The plane landed in

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Tehran, Iran and sat on the airport tarmac for days while the terrorists tortured the three American

passengers, finally murdering two. There was no evidence relating to how the terrorists were able to get

the weapons on board flight KU22 1. The estates of the two decedents brought suit alleging that MEA's

negligence was a proximate cause of the injuries and deaths occurring aboard the aircraft. The court

held that MEA had a duty to protect passengers on other inter-lined connecting flights from

unreasonable risks of harm through the use of reasonable precautions in the face of reasonably

foreseeable risks. The court further held that the plaintiffs were not required to prove proximate cause

beyond a reasonable doubt. The Stanford court determined that the airline was faced with a set of

circumstances in which a jury could reasonably find created a foreseeable risk, necessitating some

action to protect others from the threat of hijacking.

In the 9/11 Litigation, the Aviation Defendants attempted to deflect responsibility for

implementing and maintaining adequate security measures to the FAA. However, federal law does not

place the responsibility of creating and implementing an adequate security program on the FAA.

Rather, the law allocates the responsibility for adopting, implementing and performing the security

program squarely on the air carriers. The law in place on 9/11 required carriers to:

Provide for the safety of persons and property traveling on flights provided by the aircraft operator against acts of criminal violence and air piracy, and the introduction of explosives, incendiaries, or deadly or dangerous weapons aboard an aircraft.

14 C.F.R. § 108.103(a)(1), as amended July 17, 2001. Prior to the July 17, 2001 amendment, the applicable regulations were substantially the same, requiring carriers to:

Provide for the safety of persons and property traveling on air transportation and intra-state air transportation against the acts of criminal violence and air piracy.

14 C.F.R. section 108.7(a)(1), as amended July 10, 1989 and December 3, 1996.

7

Further, In re September 11 Litigation, 280 F. Supp. 2d 279, 296 (S.D.N.Y. 2003), Judge

Hellerstein held that the Aviation Defendants owed plaintiffs — including property plaintiffs

whose buildings were destroyed on 9/11 — a duty to screen persons boarding aircraft:

[T]he aviation defendants controlled who came onto the planes and what was carried aboard. They had the obligation to take reasonable care in screening precisely because of the risk of terrorist hijackings, and the dangerous consequences that would inevitably follow. The consequences that in fact followed were within the scope of the duty that the aviation defendants undertook to carry out.

Judge Hellerstein further held:

[T]he aviation defendants could best control the boarding of airplanes, and were in the best position to provide reasonable protection against hijackings and the dangers they presented, not only to the crew and passengers, but also to ground victims. Imposing a duty on the aviation defendants best allocates the risks to ground victims posed by inadequate screening, given the aviation defendants' existing and admitted duty to screen passengers and items carried aboard.

Id. at 294. In ruling on the motions to dismiss, Judge Hellerstein found that those who suffer property damage or injury on the ground were within the zone of foreseeable victims. Id. at 296.

B. Foreseeability

Under New York law, the “risk reasonably to be perceived defines the duty to be obeyed,”

Palsgraff v. Long Island R. Co., 248 N.Y. 339, 344 (1928). Based upon readily available information

and documents, the airlines had actual and/or constructive notice of the risk of terrorist hijackings.

One of the starting points in this “risk perceived” analysis is the fact that prior to 9/11, a multi-billion

dollar security system was in place. Thus, a fundamental risk was perceived prior to the attack. The

question then becomes whether the Aviation Defendants failed to exercise reasonable care in light of

the perceived risk of terrorist hijackings. Did the failure of the Aviation Defendants to implement

adequate procedures and the systemic weaknesses in aviation security increase the risk of harm to

passengers, people and property on the ground? The historical events and trends preceding 9/11

8

demonstrate that the Aviation Defendants failed to exercise reasonable care in light of the perceived

risks.

Foreseeability is an issue that will not be presumed — it must be proven. Thus, a key focus of

this case has been in garnering proof that it was foreseeable on 9/11 that terrorists could attempt to

hijack aircraft, crash them and cause catastrophic destruction on the ground. Documents from widely

available public sources as well as some publicly filed in this litigation, some of which are discussed

below, demonstrate that the prospect of hijackers commandeering commercial aircraft to use them as

flying bombs and crash them into buildings was not only imaginable, it was imagined and had been

attempted.2

III. Events and Historical Trends

History demonstrates that the threat of terrorism markedly increased between 1961 and

2000 and that the airlines had actual and/or constructive notice of the risk of terrorist hijackings:

1961: The first hijacking of an American carrier occurs in the United States.

1964: A former member of the Philippine Olympic Yachting Team boarded a Pacific Airlines plane, shoots the pilot and co-pilot, and crashes the plane.

1968: An El Al Boeing 707 flying from Rome to Tel Aviv is hijacked by three members of the Popular Front for the Liberation of Palestine (PFLP) and flown to Algeria. The hijacking establishes a historical precedent: the first terrorist hijacking in which political demands are met. The incident leads to a dramatic rise in politically motivated hijackings over the ensuing years.

1970: Members of the PFLP hijack Pan Am Flight 93, TWA Flight 741 and a Swissair flight, all bound for New York. The same day, the PFLP attempts to hijack El Al Flight 219 but are thwarted by air marshals during the flight.

1970: On September 9, a BOVAC VC-10 from Bombay to Beirut is hijacked by the PLFP to urge realization of their demands. The hijackers demand release of Palestinian extremists imprisoned in Germany, Switzerland, and Israel. On the Pan Am flight, two passengers with handguns and grenades order the plane to Lebanon and then Egypt. At a stop in Beirut, the

2 See supra note 1 and accompanying text.

9

plane is loaded with explosives which detonate shortly after landing, leaving little time for passengers or crew to escape. All of the passengers are held hostage until September 12, 1970, when 255 hostages from the four flights are released; however, the terrorists continue to hold 56 passengers. The terrorists also destroy the three remaining planes. The prisoners are released as a result of negotiations with Britain and several other governments. This series of events comes to be known as “Black September.”

1972: Hijackers take over a Southern Airways flight and threaten to crash it into a nuclear power facility in Oak Ridge, Tennessee.

February 1974: Samuel Byck attempted to hijack Delta Air Lines Flight 523, crash the plane into the White House, and assassinate President Nixon. Byck was able to board the plane with a gun and a bomb, enter the cockpit, shoot both pilots, killing one of them, and take control of the plane before his efforts were thwarted by local police officers who shot and killed him from outside the plane before it took off.

1985: TWA flight 847 from Athens to Rome is hijacked one half hour into the flight by two men with guns and hand grenades. The terrorists claim to be members of an Islamic Jihad and commandeer the Boeing 727 to Beirut. When Beirut refuses them permission to land, the terrorists threaten to crash the plane into the control tower or the presidential palace.

1985: National Security Decision Directive 180 is signed by President Ronald Reagan: International civil aviation is becoming a high visibility target for terrorist activities. “Numerous terrorists acts directed against U.S. and other air carriers in recent weeks pose a significant threat to international commerce and our national interests. Recent violent terrorist acts have resulted in the murder, torture and kidnapping of U.S. citizens and the death of hundreds of others. It is imperative to prevent and/or respond to subsequent terrorist acts.”

1986: Pan Am Flight 73 from India to New York is hijacked, stopping in Pakistan and Frankfurt, West Germany.

1986: The Vice President’s Task Force on Combating Terrorism issues the following recommendation: “Evaluate and strengthen airport and port security, pre-flight screening of passengers and carry on baggage is a cornerstone of our domestic security program.

1987: Forty-three people die when a Pacific Southwest Airlines Flight 1771 crashes after a disgruntled former employee shoots the pilots.

1988: Libyan terrorists blow up Pan Am Flight 103 over Lockerbie, Scotland, killing 259 people on the plane and 11 people on the ground.

1989: RAND Corporation terrorist expert Brian Jenkins publishes his important study ‘The Terrorist Threat to Commercial Aviation.’

1989: Terrorists bomb French UTA Flight 772, from Brazzaville, Congo to Paris. The plane explodes in mid-air, killing 171 people.

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1989: Latin American drug cartel terrorists bomb Columbia Avianca Flight 203 from Bogota to Cali, Columbia, claiming 107 lives.

1990: The Commission on Aviation Security and Terrorism reports that: “Minimum standards for security personnel do not exist. There is no regular onsite presence to ensure that carriers are complying with requirements or that requirements are adequate.”

1993: Terrorists plot to blow up Holland and Lincoln tunnels (Omar Abdahl Rahman, et al.)

1993: The World Trade Center is bombed by terrorists (Ramsey Yousef, et al.)

1993: Somali tribesman, with Al Qaeda support, shoot down U.S. Blackhawk helicopters, killing 18 and wounding 73.

1994: An Algerian armed Islamic group hijacks Air France Flight 8969 and threaten to crash it into the Eiffel Tower.

December 1994: Algerian terrorists hijacked an Air France flight in Algiers and threatened to crash it into the Eiffel Tower. The plot was thwarted when French authorities deceived the terrorists into thinking the plane did not have enough fuel to reach Paris and diverted it to Marseilles, and a French anti-terrorist force stormed the plane and killed all four terrorists.

December 1994: Algerian terrorists hijacked an Air France flight in Algiers and threatened to crash it into the Eiffel Tower. The plot was thwarted when French authorities deceived the terrorists into thinking the plane did not have enough fuel to reach Paris and diverted it to Marseilles, and a French anti-terrorist force stormed the plane and killed all four terrorists.

January 1995: A Phillipine National Police raid uncovered material in a Manilla apartment suggesting that Ramzi Yousef, Abdul Murad, and Khalid Shaykh Mohammad planned, among other things, to crash an airplane into CIA Headquarters. Information on the threat was passed to the FAA, which briefed U.S. and major foreign carriers.

April 1995: Issue of Time, the magazine’s cover story reported on the potential for terrorists to kill thousands in highly destructive acts. Senator Sam Nunn outlined a scenario in which terrorists destroy the U.S. Capitol Building by crashing a radio controlled plane into it. “It’s not far-fetched,” he says. His idea was taken from the popular Tom Clancy book, Debt of Honor, written in August 1994.

1995: The Bojinka Plot to blow up a dozen U.S. airliners while they are aflight over Pacific (Ramsey Yousef, et al.) is formulated.

1995: Terrorists bomb the office of the U.S. Program Manager for Saudi National Guard in Riyadh, killing 5 Americans.

1996: Bombing at Khobr Towers, killing 19 U.S. servicemen.

1996: The GAL Report: Aviation Security Urgent Issues Need To Be Addressed,

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citing airline security failures is published September 11, 1996.

1997: The White House Commission on Aviation and Security Recommendation advises that airlines: “Certify screening companies and improve screener performance. Better selection, training and testing of the people who work at airport x-ray machines would result in a significant boost in security. Also recommended: reduce aircraft vulnerability.

1998: Bin Laden Fatwah: In February, 1998, Osama Bin Laden and Ayman al Zawahiri published their Fatwah through Arabic newspaper in London, “calling for the murder of any American, anywhere on earth, as the core individual duty for every Muslim who can do it in any country in which it is possible to do it.”

1998: U.S. Embassies are bombed in Kenya and Tanzanea.

1999: Ahmad Rassam is arrested by U.S. Customs agents at U.S. Canadian border as he is smuggling in explosives in connection with a plot to attack the Los Angeles International Airport.

1999: Islamic terrorists hijack Indian Airlines Airbus 300

1999: On Egypt Air Flight 900, the pilot, while quietly repeating an Islamic prayer, crashes a Boeing 767 into the Atlantic Ocean, killing all aboard the plane.

1999: National Intelligence Council Report titled “The Sociology and Psychology of Terrorism: Who becomes a Terrorist and Why?” highlighted “new terrorist threats” and stated that “suicide bomber(s) belonging to Al Qaeda martyrdom battalion[s] could crash-land an aircraft packed with high explosives . . . into the pentagon . . . .”

April 6, 2000: GAO Report: Aviation Security: Vulnerabilities Still Exist In Aviation Security System: “[T]he need for strong aviation security grows every day. The threat of terrorism against the United States remains high, as evidenced by the 1995 discovery of a plot to bomb as many as 11 U.S. airliners, civil aviation is an attractive target.”

June 28, 2000: GAO Report: Aviation Security: Long-Standing Problems Impair Airport Screener’s Performance, citing system wide security failures.

October 12, 2000: Terrorist attack on the U.S.S. Cole, killing 17 American sailors.

IV. The Aviation Defendants Had Notice of the Terrorist Threat

In the year preceding 9/11, the Aviation Defendants received scores of warnings regarding al

Qaeda’s intent to attack American civil aviation domestically, as well as the possible use of aircraft as

flying suicide bombs. The government advised the Aviation Defendants that terrorism experts were

saying it was not a matter of “when” there would be an attack in the United States, but “where and

when.” U.S. DEP’T. OF TRANSP. OFFICE OF INTELLIGENCE & SEC., “The Terrorist Threat Overview

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for the United States,” Feb. 2001. The following sampling of publically filed documents produced by

the Aviation Defendants in this litigation, discussed in chronological order, provides compelling

evidence of the Defendants’ knowledge of that threat:

(i) On March 5, 1999, Massport hosted an airport security meeting at Boston Logan

International Airport—the airport from which American Flight 11 and United Flight 175 departed on

9/11. This meeting was attended by the air carriers, including American Airlines and United Airlines,

as well as the FAA and the FBI. The prepared minutes from this meeting include a summary of a

presentation given by Ted Distaso, FBI Special Agent from the Boston Office, who was assigned to a

joint task force (which included the FBI, Secret Service, the ATF, and Boston State Police) to monitor

terrorism in the area.3 The minutes state in pertinent part:

[Distaso] suggested complacency about airport security exists because nothing has happened in a while. He stated he knows of no immediate specific threat, but he mentioned the bin-Laden terrorists in the Middle East who have made threats against the United States, and that it is only a matter of time before terrorists attack. He stated his belief that they targeted the embassies to bomb because of their usually-compromised security, that airports have had the perception of very tight security. Ted stated he found for himself this is not true; he was able to walk unchallenged into one of Logan’s gate areas. He suggested it was in everyone’s best interest to harden security.

(ii) Each air carrier was required to have certain Customer Service Representatives

trained as Ground Security Coordinators (GSCs). GSCs were responsible for overseeing checkpoint

screening at airports at all times as well as being available to respond to any security issues that arose.

The Aviation Defendants provided GSCs recurrent training on an annual basis. The May 2000

American Airlines Ground Security Coordinator Recurrent Training Reference Handout included a

3 Id.

13

section dedicated solely to Osama bin-Laden.4 The GSCs were also shown a video entitled The

Terrorist and the Super Power, and then given a written test on Osama bin-Laden. The questions

included:

Q: Who does the United States Department recognize as the number one terrorist who is bankrolling events against U.S. interests?

A: Osama bin-Laden.

(iii) In October 2000 the FAA’s Office of Civil Aviation Security Intelligence released a

report to air carriers entitled “World Wide Threats Against Civil Aviation.” Throughout this 31-

page report there are multiple references to the threat posed by Osama bin-Laden and al-Qaeda.

Specifically, this report included the following:

Q: What is the most serious terrorist threat to the United States at present?

A: The Osama bin-Laden network is considered the single most serious threat to the United States and its interests at the present time....

The report explained how Osama bin-Laden uses the multi-international ties that al-Qaeda

developed, and can call on individuals and groups worldwide to prepare for, or carry out,

terrorist attacks.5

(iv) In February 2001 a report prepared by the Department of Transportation Office of

Intelligence and Security (DOT) entitled “The Terrorist Threat Overview for the United States,”

was disseminated to the air carriers, including American Airlines who produced it in discovery. In

4 Id. 5 Id.

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this report, the DOT stated that “the United States has become a more attractive target for terrorist

attacks.” The report further advised:

In July 1999, the National Intelligence Community assessed that foreign terrorists probably will attempt an attack in the United States in the next year or two. The assessment highlighted the attractiveness of transportation and the transportation infrastructure such as subways, buses, trains, cruise lines, civil aviation, and pipelines - as potential targets.

This report reiterated the great concern about Osama bin-Laden:

In testimony before Congress in February, 2000, CIA Director George Tenet said the most serious threat overall terrorist threat that the United States faces worldwide comes from Islamic extremists, most notably Osama bin-Laden.

The report discussed the changing nature of the terrorist threat, citing to the 1993 bombing of

the World Trade Center, concluding that Islamic extremists had crossed a threshold for more large

scale terrorist attacks and raised the profile of U.S. vulnerability to a terrorist attack. According to the

report, domestically, the World Trade Center bombing in 1993 was a watershed event because it

demonstrated that terrorists changed the way they look at conducting attacks against the United

States. In terms of targeting, this report warned:

TARGETING. The attack on the WTC also represented a change in targeting by international terrorists. The bombing makes it clear that symbols of U.S. capitalism, trade, and commerce can be considered viable terrorist targets, a point that was underscored by the planned bombings of the Lincoln and Holland tunnels, the George Washington bridge in New York City. Consequently, it is believed that the threat within the United States has increased, as terrorists are beginning to recognize the value of attacks against targets not previously considered symbols of the United States.

This Spring 2001 report concludes by ominously stating that “counter terrorism experts are

in agreement that the pressing question for the future is not whether there will be additional

terrorist attacks in the U.S., but when and where.”6

6 Id.

15

(v) In March 2001 the DOT disseminated a report to air carriers entitled “Transportation,

Security and Terrorism Review.” Specifically, it was a Special Edition entitled USA v. Osama bin-

Laden: Technical and Tactical Insights From the Trial. The DOT discussed how the New York trial of

four defendants in the 1998 bombing of U.S. embassies in Kenya and Tanzania provided revealing

details on Osama bin-Laden’s al-Qaeda network, methods and thinking.

The report examined the terrorist operational cycle and advised air carriers, including

American Airlines and United Airlines, that there are four groups involved in attacking a target.

The first group is the Surveillance Group, which collects information on targets and sends it to the

“Bosses.” The “Bosses,” who comprise the second group, decide which target to attack. Then a

third, Logistical Group, provides the weapons and explosives needed to attack the target. The

fourth group then arrives and carries out the attack.7 /here

In terms of target selection, this report warned air carriers that the FBI advised that the

embassy bombings would pave the way for attacks inside the U.S. The report not only linked

Osama bin-Laden directly to the attacks in Africa but commented on bin-Laden’s intent to utilize a

suicide bomber. The report quotes terrorism expert Brian M. Jenkins, Ph.D. as stating, “They want

a lot of people watching and a lot of people dead.” The report also advised air carriers that al-Qaeda

is not only training terrorists in explosives and small arms, but training them in operational

principles, including collecting target intelligence and communications. The report advised that al-

7 This notice the Aviation Defendants received regarding the terrorist operational cycle is relevant because Plaintiffs have uncovered facts demonstrating that surveillance by the terrorists was taking place prior to 9/11 at Logan and other locations. For example, one American Airlines employee observed Mohammed Atta videotaping the Logan checkpoint prior to 9/11 — one of the many key facts not found in the 9/11 Commission Report. Prior to 9/11, the FAA mandated that any such surveillance be immediately reported to the FAA. American Airlines did not report this incident to the FAA. See also supra note 1.

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Qaeda selected individuals to send to specialized schools for training in electronics and flying

aircraft.8

(vi) In April 2001, the FAA’s Office of Civil Aviation Security Intelligence gave regional

briefings to all commercial air carriers and disseminated a CD-ROM that included current threat

information regarding Osama bin-Laden and the possibility of suicide hijackings. This report

advised air carriers that they needed to have a better understanding of the current threat to U.S. air

carriers and focused on the groups and state sponsors deemed likeliest to attack symbols of the

United States. There are numerous references to the threat posed by Osama bin-Laden, including:

There is significant motivation for associates of bin-Laden to conduct a terrorist hijacking. Successful

intelligence and law enforcement operations around the world have led to the arrest and imprisonment

of many individuals linked to his organization. . With the hijacking of Indian Aviation Defendants as a

model, we’re concerned that bin-Laden’s followers may look to duplicate that success by seizing a U.S.

airliner to exchange hostages for the release of these prisoners and others.

Considering everything, we assess that a terrorist attack of a U.S. airliner is more likely to occur overseas than in the United States. A domestic hijacking would likely result in a greater number of American hostages, but would be operationally more difficult to accomplish.. . . If, however, the intent of hijackers is not to exchange hostages for prisoners, but to commit suicide and a spectacular explosion, a domestic hijacking would probably be preferable. Fortunately, we have no indication that any group is currently thinking in that direction.

While the FAA considers the suicide bombing of a U.S. airliner to be a low probability, a non-suicide bombing continues to be a major concern. For example, convicted members of the Manilla plot to bomb U.S. airliners in Asia had links to bin-Laden and members of that bombing conspiracy are still at large. Also, statements attributed to bin-Laden following the U.S. missile attack on his camp specifically threatened to bring down and hijack U.S. and Israeli aircraft.

8 See supra note 1.

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This presentation included slides that reference a 1994 Air France hijacking where an Islamic

extremist planned to crash a plane into the Eiffel Tower, and a discussion regarding terrorist use of

planes as “Flying Bombs.”9

(vii) Pinkerton International was a private security firm. Pinkerton provided intelligence reports

on a weekly basis regarding terrorist threats worldwide. On September 7, 2001, just four days before

September 11, Pinkerton reported in its weekly intelligence forecast the following:

The FAA announced on September 3 that a notice had been issued throughout the summer to U.S. airports to update their vulnerability assessments in light of a terrorist claim that U.S. airports and/or airlines were a potential target.10

As evidenced by this sampling of publically filed documents, and many, many others that have

been exchanged in discovery and/or are in the public domain, the Aviation Defendants’ claim that the

government failed to apprise them of the risk is simply not true and, in any event, irrelevant. The

Defendants were put on notice by the government and knew from their own intelligence that a

domestic hijacking was not only foreseeable, but likely to occur. Moreover, serious flaws in the

airline’s security system was well known decades before 9/11. The airlines were repeatedly informed

of these flaws and fined by the United States government for their failure to comply with and meet

the security standards of the United States.

A. Breach

On the morning of September 11th, the hijackers were allowed to board the airplanes with

items which were not allowed to pass through security. Flight attendants and passengers provided

eye and ear witness accounts regarding what occurred on the airplanes via the telephone on 9/11.

9 Id. 10 Id.

18

Their statements from the planes confirmed that there was mace on board, stabbings, and a device

that appeared to be a bomb – all restricted items. For example, in a telephone call from Flight 11,

flight attendant Betty Ong reported:

“...somebody is stabbed in business class and I think there is mace. We can’t breathe. I don’t know, I think we’re getting hijacked.. .the cockpit is not answering the phone and there is somebody stabbed in business class and we can’t breathe in Business Class.. .somebody’s got mace or something.. .our number one is stabbed...we can’t even get up to business class right now because no one can breathe. Our number one is stabbed right now.. .and our number five. Our galley flight attendant purser has been stabbed.” See http://www.youtube.com/watch?v=7XaCr7lgJTU, publically available recordings on You Tube.

Despite being continuously warned, fined and admonished as to vulnerabilities that existed

in the security system for years prior to 9/11, the Aviation Defendants continued to look the other

way. As a result, ten terrorists successfully passed through the checkpoint and boarded Flights 11

and 175 with prohibited items. The evidence has shown not only was there a systemic failure as of

9/11 but actual breaches at the checkpoint occurred in violation of industry and FAA screening

procedures.11

B. Causation

The failures of the Aviation Defendants to timely implement adequate security measures to

guard against terrorist activity aboard American carriers increased the risk of terrorist hijackings and

were a proximate cause of the damage and destruction that occurred on 9/11. The law does not

require us to prove the precise methods or weapons employed by the terrorists.

To establish proximate cause under New York law, a plaintiff must show that the

defendant’s actions were a substantial factor in causing the events which produced injury. Direct

11 Discovery, documents and depositions “Subject to Confidentiality Protective Order In Re: September 11 Litigation” are not part of this public source summary. All of the information and documents cited to herein are public sources and/or can be accessed through PACER https://ecf.nysd.uscourts.gov/cgi-bin/login.pl or the website of the Southern District of New York (http://www1.nysd.uscourts.gov/cases.php?form=sept11).

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evidence of precisely how the hijackers brought their weapons on board Flights 11 and 175 is not

essential to establish causation under well-settled tort principles discussed below. See Stanford, 89

F.3d at 121, 126-27 (proximate causation established sufficiently in a hijacking case to present the

case to the jury even where “[n]o one knew how the hijackers got their weapons on board” the

airplane — held: “Plaintiffs were not required to prove causation beyond a reasonable doubt, it was

sufficient to present evidence from which reasonable minds may conclude that it [was] more

probable that the hijacking was caused by [the airline’s] negligence than it was not.”)

While intervening criminal acts can, in certain circumstances, break the chain of causation,

New York law is settled that “[w]hen...the intervening act is a natural and foreseeable consequence

of a circumstance created by the defendant, liability will subsist.” Kush v. City of Buffalo, 59

N.Y.2d 26, 33 (1983). Here, preventing terrorism was an end and aim of the entire aviation

security industry, and the defendants’ negligence created the very risk — a terrorist attack — that

gave rise to our injuries.

Proximate cause is always a question of fact. The issue is whether hijackings with weapons

were foreseeable and the mere fact that checkpoint screening was in place gives rise to

foreseeability. Plaintiffs do not need to prove that the AVSEC Defendants were the sole or even

primary cause of those events. Demonstrating that the defendants’ conduct was a substantial factor

in causing damages, regardless of whether there may have been other contributing causes is all that

is required. PROSSER & W. PAGE KEETON, THE LAW OF TORTS, 240 (4th ed. 1971).

The intentional, heinous conduct of the 9/11 hijackers does not absolve the Aviation

Defendants from their own negligence on or before September 11. Nash v. Port Auth. of N.V. &

N.J., 2008 N.Y. Slip Op. 03991 (1st Dep’t 2008), provides compelling reasoning to refute the

Aviation Defendants’ contention that negligent actions against third parties arising out terrorist

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attacks fail because the intentional heinous conduct of terrorists operates as a

superseding/intervening cause that breaks the chain of causation.

Nash involved plaintiffs injured by the 1993 bombing of the public parking garage in the

World Trade Center who sought to recover damages allegedly attributable to the defendant

landlord’s breach of its proprietary duty to maintain its premises in a reasonably safe condition. At

trial, evidence was presented that years before the bombing, consultants had advised the defendant

that the World Trade Center was vulnerable to terrorist attack through its public parking garage. The

jury assigned 68 percent of the fault to the defendant owner for the negligence and the circumstances

under which it occurred and contributed to the bombing.

On appeal, defendants argued for a jury instruction providing for limited liability for non-

economic damages for parties 50% or less at fault, arguing that the jury could not assign a

negligent tortfeasor a percentage of fault higher that intentional tortfeasor (terrorists) who caused the

bombing. The Second Circuit rejected the defendant’s argument, and held that the defendant’s

assigned share of fault exceeded 50% and that “it does not follow that negligent tortfeasors are

automatically entitled to a release from joint and several liability whenever an intentional tortfeasor is

also responsible for the harm sued upon.” The Nash court stated in pertinent part:

Neither the magnitude of a defendant’s negligence, nor its moral blameworthiness, nor the closeness of its causal relation to a plaintiff’s harm necessarily diminishes to subordinate significance in the attribution of fault by reason of the circumstance that the harm was concurrently attributable to intentional conduct, even when the intentional conduct is particularly heinous. To the contrary, as this case so vividly illustrates, the blameworthiness of negligence may actually be increased by the heinousness of the wrongdoing it directly and foreseeably facilitates.

In upholding the jury’s apportionment of fault, notwithstanding the terrorists’ wanton conduct,

the court Nash held:

the evidence... clearly supported the view that defendant’s negligence had been

21

extraordinarily conducive to the terrorists’ conduct – so much so that the fulfillment of the terrorists’ plot and the ensuing harm could with clear justification have been understood as primarily attributable to that negligence.

Further, the court stated:

...Here, the evidence overwhelmingly supported the view that the conscientious performance of the defendant’s duty reasonably to secure its premises would have prevented the harm. This civil jury had no power to decide whether the terrorists should in any meaningful sense be “absolved” of their murderous acts. What it could and did decide was rather that the acts of these terrorists, even while obviously odious in the extreme, were not a cause for the easy absolution of this defendant from its civil obligations.

Thus, the Aviation Defendants cannot successfully advance that the intentional conduct of

the hijackers is the sole proximate cause of Plaintiff’s injuries under Nash. More importantly, the

post-9/11 verdict in Nash demonstrates New York jurors’ willingness to hold negligent parties

responsible for their conduct conducive to the terrorist’s actions.

V. Evidentiary Rulings Have Barred Speculative and Hypothetical Defenses.

Throughout this litigation, the Aviation Defendants have attempted to absolve their own

negligence by blaming the government. The government’s failures to apprehend the terrorists and

abort their plots did not excuse the Aviation Defendants’ alleged faults. In re September 11 Litig.,

621 F. Supp. 2d 131, 141 (S.D.N.Y. 2009). The Aviation Defendants sought admissibility of the

9/11 Commission Report (hereafter “The 9/11 Report”), certain recommended findings of the 9/11

Commission staff, sections of the Moussaoui trial record, and a post-arrest statement of other Al-

Qaeda members in order to demonstrate that the 9/11 attacks occurred as a result of government

failure and that the government should have done more to collect and synthesize intelligence of

terrorist plots and plans. Id. at 140.

Judge Hellerstein held that what the government knew, failed to pass on, and failed to learn

were irrelevant. Id. at 146. The Court granted the motions to the “limited extent” that these sources

22

could (1) provide information for an agreed narrative summary that explains to the jury the events

of September 11, 2001, and (2) reveal the hijackers’ plans and preparations. Id. at 140. Otherwise,

the Aviation Defendants’ motions were denied. Id. A trial against the Aviation Defendants will

focus on what they knew and should have known about the terrorist threat to civil aviation and on

what they should have done to protect against such threats. Id. at 146 (emphasis added). “The

government’s failures to detect and abort the terrorists’ plots would not affect the Aviation

Defendants’ potential liability. Id. at 141. Essentially, the Aviation Defendants couldnot inject the

government as a wrongdoer to excuse or mitigate their own failures. Id.

New York law is well-settled in that if one’s negligence proximately causes a plaintiff’s

injury, the fault of another tortfeasor who acts independently in causing the same harm does not

eradicate the fault of the first tortfeasor, unless the second tortfeasor was a superseding cause.

Skinner v. Stone, Raskill & Israel, 724 F.2d 264, 266 (2d Cir. 1983). In In re September 11

Litigation, the Court found that government’s negligence was not a superseding cause of the

Aviation Defendants’ negligence relieving them from liability for their negligence; the

government negligence preceded the Aviation Defendants’ negligence. Id. at 147. Thus, the Court

concluded, the Aviation Defendants will be proved negligent to the extent their efforts to secure

the airports and airplanes failed to conform to reasonable duties of care. Id. 147-48. Simply, the

government’s failures were not relevant, according to the court. Id. at 149.

Moreover, the evidence sought by the Aviation Defendants— the 9/11 Report, certain

recommended findings of the 9/11 Commission staff, sections of the Moussaoui trial record, and an

interview with the terrorist, Ramzi Binalshibh—was inadmissible because of Federal Rule of

Evidence 403. Id. If the probative value of the evidence “is substantially outweighed by the danger

of unfair prejudice, confusion of the issues, or delay [and] waste of time,” the court may exclude

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the evidence. Id. (citing Fed. R. Evid. 403.) An inquiry into what the government knew or should

have known and did not tell the defendants threatened to thoroughly confuse, prejudice, and

distract the jury and add to the trial’s expense and delay. Id.

A. The 9/11 Commission Report and Related Staff Reports Are Not Admissible

i. The 9/11 Commission Report

The Aviation Defendants moved for the admission of The 9/11 Report as well as the Staff

Monograph and other Staff Statements written by the 9/11 Commission Staff pursuant to the public

records exception to the hearsay rule (Fed. R. Evid. 803(8)(C)). Id. at 151. The Aviation

Defendants argued that The 9/11 Report, Staff Monograph, and Staff Statements reflected

trustworthy and reliable government-authorized investigations. Id.

First, the Court held that the Staff Monographs and Statements were inadmissible as they

did not satisfy the criteria of Rule 803(8)(C), which permits only reports that “set forth . . . factual

findings” by “public agencies.” Id. at 155, citing City of New York v. Pullman, 662 F.2d 910, 914

(2d Cir. 1981). As recommendations to the 9/11 Commissioners, they were interim reports, not

final reports. Id. Moreover, the Monographs and Statements were findings of the Commission staff,

not a public office or agency. Id.

Second, regarding the 9/11 Report, The Aviation Defendants’ evidentiary offers as to The

9/11 Report were denied, without prejudice. Id. at 156. While only “few parts of the report

satisfied the rules of admissibility,” the Court found that those few parts may be useful and

important as an agreed narrative. Id. In so holding, the Court was careful to explain that The 9/11

Report was in no way a flawed report—the Commissioners’ findings were carefully made and

based on substantial corroborative evidence. Id. at 157. However, The Report merely did not

withstand the admissibility requirements pursuant to the Federal Rules of Evidence. “Several of

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the Commissioners’ findings, as they themselves acknowledge, are based on sources not

completely trustworthy or acceptable in American courts.” Id. at 156. For example, numerous

sections were “unreliable” because they were based on information “derived from torture or

otherquestionable investigative techniques.” Id. Moreover, the report contained multiple levels of

hearsay; for example, the Commissioners themselves did not interview the terrorists. Id. at 157.

Moreover, the sections in question had very limited, if any, relevance to the issues before the court

and raised substantial dangers of bias, confusion, and undue delay. Id., citing Fed. R. Evid. 402,

403.

ii. Post-arrest Statements in the 9/11 Report Attributed to Khalid Sheikh Mohammed and Ramzi Binalshibh Were Not Admissible.

The Aviation Defendants sought to introduce the statements of terrorists Khalid

Sheikh Mohammed and Ramzi Binalshibh contained in The 9/11 Report because the two men

were integral to the planning and implementation of the attacks, were unavailable for depositions,

and had statements attributed to them in The 9/11 Report that were sufficiently trustworthy. Id. at

157. However, a statement in a public report made by an individual with no business duty to report

is considered hearsay within hearsay, and thus, must satisfy an exception to the hearsay rule. Id.,

citing Parsons v. Honeywell, Inc., 929 F.2d 901, 907 (2d Cir. 1991). Moreover, the terrorists’

statements were not “factual findings” for purposes of the public records exception to the hearsay

rule. Id.

iii. Admitting the 9/11 Report Would Result in Unfair Prejudice, Delay, and Confusion, and, therefore, is Barred by Federal Rule of Evidence 403.

Admitting the 9/11 Report in its entirety, a book brimming with findings and

recommendations, would have choked the proceedings with “scores of mini-trials” as parties

challenged each finding of the 9/11 Commission. Id. at 158. Although the Court noted that specific

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statements may have been relevant, useful, and admissible, admitting longer sections ofthe report

would have caused the trial to digress into innumerable arguments relating to myriad issues,

causing undue prejudice, extensive delay and confusion. Id., citing Fed. R. Evid. 403. Moreover,

The 9/11 Report could not “be permitted to displace the time-tested search for truth by

examination and cross-examination.” Id. at 157.

B. Ramzi Binalshibh’s Journalistic Interview Was Not Admissible.

An Al Jazeera journalist conducted a videotaped interviewed of Ramzi Binalshibh

(“Binalshibh”), an Al Qaeda member and co-conspirator in the September 11 attacks. Id. at 164.

Al Qaeda kept the videotape and edited selections of the interview on to an audiotape, which it

then forwarded to Al Jazeera. Id. The audiotape recording was then translated into the document

that the Aviation Defendants sought to offer into evidence. Id. Neither the underlying video, audio

recordings, non-translated version of the document, nor the identity of the translator were made

available. Id.

The Aviation Defendants argued that the translated interview should be admitted as an

adoptive admission under Fed. R. Evid. 801(d)(2) because one of the Plaintiffs’ counsel referred to

it in a settlement letter and on its website. Id. The Court rejected this argument and held that the

interview was not admissible. Id. The use of one set of arguments to rebut another set of arguments

does not meet the tests or reliability and trustworthiness required of Rule 801(d)(2). Id. at 43-44.

Moreover, the translated interview was not sufficiently trustworthy to be considered a statement

against interest under Rule 804(b)(3) as Al Qaeda was using the interview as part of a controlled

public relations campaign. Id.

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VI. Damages: Court Limits WTC Properties Owner’s Recovery.

What is the proper measure of damages for an owner of damaged property damaged on the

ground? Plaintiff World Trade Center Properties’ (“WTCP”) claim in the September 11th

Litigation sought the recovery of $16.2 billion, which constituted the alleged replacement value of

Towers 1, 2, 4 and 5. Were the property damage Plaintiffs, such as WTCP, entitled to the market

value of the leaseholds on the date of loss or the replacement value? This issue was resolved by

Judge Hellerstein in the 9/11 Litigation after protracted Motions for Summary Judgment and a

Motion to Reconsider.

As a result of the terrorist attacks of September 11, 2001, WTC 1, WTC 2, WTC 4, and

WTC 5 were entirely destroyed. Following the destruction of the buildings, WTC Properties, the

owner of a ninety-nine year lease of those buildings, which was effective July 16, 2001, collected

$4.1 billion in insurance. However, WTC Properties sought to recover more; it sought to collect the

alleged replacement costs of the buildings, which totaled $8.4 billion, as well as an additional $3.9

billion in lost rental income. The Aviation Defendants moved for summary judgment on WTCP’s

claims.

WTCP sought to recover as damages exactly what a century of New York law bars it from

recovering in this case: replacement costs and lost profits. The Defendants have argued that even if

WTCP were able to establish their liability for the terrorists’ destruction of WTC 1, WTC 2, WTC

4 and WTC 5, its damages would be governed by the same property loss rule that has applied to

every other New York property owner for more than 100 years. The measure of damages for injury

to real property is the lesser of the diminution in market value or the cost of replacement.

Hartshorn v. Chaddock, 135 N.Y. 116, 122 (1892).

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The New York Court of Appeals recently reaffirmed that lost market value and replacement cost are each potential measures of property loss, but with “the lower of the two figures affording full compensation to the owner.” Fisher v. Qualico Contracting Corp., 98 N.Y.2d 534, 540, 749 N.Y. S.2d 467, 470 (2002) (emphasis added). The Aviation Defendants contended that WTCP proceeds as if the law were the very opposite from this “lesser of two” rule. It did not deny that the market value of the destroyed properties was substantially less than the cost to replace them. Nevertheless, WTCP seeks to collect $8.4 billion in alleged replacement costs and an additional $3.9 billion in lost rental income.

The Defendants argued that, as a matter of law, neither category of damages was

recoverable. The cost to construct an income-producing real estate development was not an injury.

It was an investment opportunity. Once WTCP has recovered fair market value of the destroyed

buildings, it has been put back in the position it was in before September 11, 2001. Were the Court

to award WTCP the damages it seeks: (i) the Aviation Defendants would be forced to finance

WTCP’s construction of a brand-new, vastly different complex worth far more than the buildings

destroyed on September 11, 2001 and (ii) WTCP would receive an impermissible double recovery

of lost profits. The law forbids such a windfall.

First, as every reported case from Hartshorn to Fisher has held, the applicable measure of

damages for the property loss in this tort action is the lesser of the lost market value or replacement

costs. The undisputed record evidence regarding the valuation of the WTC properties just two months

before September 11, 2001, the Court should rule that the diminution in market value is no more than

$2.8 billion. It is incontrovertible that on July 16, 2001, after conducting a worldwide competitive

auction involving bids from the most sophisticated commercial real estate developers, the Port

Authority leased WTC 1, 2, 4, and 5 to WTCP in a transaction with a net present value of $2.8

billion. Thus, by anyone’s measure, the alleged replacement costs of $8.4 billion far exceed the

fair market value of the destroyed buildings.

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Second, as the courts have repeatedly recognized, a supplemental award of future rental

payments on top of fair market value was not available because market value, by definition,

already includes future rental profits.

Third, the insurance proceeds received by WTCP as a result of the attacks on the WTC

buildings (of at least $4.1 billion) exceed the highest possible loss in market value ($2.8 billion).

Under New York’s collateral source rule, embodied in N.Y. Civ. Prac. L. & Rules § 4545(c), the

diminution in market value allegedly suffered by WTCP must be offset by the insurance

payments received by WTCP. As a matter of law, the Defendants conclude that WTCP has no

remaining recoverable damages for the destruction of WTC 1, 2, 4, and 5.

Judge Hellerstein held that New York follows the “Lesser of Two” rule that a plaintiff whose property has been injured may recover the lesser of the dimunition of the property’s market value or its replacement cost, citing Hartshorn v. Chaddock, 135 N.Y. 116, 122 (1892).

The Court emphasized that this rule applies even when the property in question has been

completely destroyed. In re Sept 11th Litig., 590 F. Supp. 2d 535, 541 (S.D.N.Y. 2008), citing

Sandoro v. Harlem-Gennesee Market & Nursery, Inc., 105 A.D.2d 165 (N.Y. App. Div. 1984).

In holding that market value was the appropriate measure of damages, the Court relied

upon the recent New York Court of Appeals decision Fisher v. Qualico Contracting Corp., 779

N.E. 2d 178 (N.Y. 2002) that affirmed the “Lesser of Two” rule. In re Sept. 11th Litig., 590 F.

Supp. 2d at 541. In Fisher, the plaintiff’s Victorian home in Long Island was destroyed in a fire

due to the negligence of a contractor hired by the plaintiff. Fisher v. Qualico Contracting Corp

779 N.E. 2d 178, 179-180 (N.Y. 2002) The plaintiff received $1,000,050.00 from his insurers, who

then subrogated and sued the defendant for negligence and prevailed. Id. at 180. At trial, the

subrogated plaintiff demonstrated that replacement cost was $1,033,000.00, but that the diminution

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in the market value was $480,000.00. Id. The court instructed the jury to award $480,000.00, the

lesser of the two amounts. Id. On appeal, the Court of Appeals affirmed, holding that

“[r]eplacement costs and diminution of market value are simply two sides of the same coin.” Id. at

181-82, and “each is a proper way to measure lost property value, the lower of the two figures

affording full compensation to the owner” yet “avoiding uneconomical efforts.” Id.

In applying the “Lesser of Two” rule, Judge Hellerstein held that market value of the four

towers as of September 11, 2001, was the limit of WTCP’s permissible recovery and that the value

fixed by the parties a few months early was probably, but not necessarily, the market value of the

leaseholds as of September 11, 2001. Id. at 536. Judge Hellerstein further held that the case

presented a narrow question of fact as to what the market value was, and that an issue of

diminution of recovery pursuant to N.Y. C.P.L.R. §4545 because insurance in other possible

recoveries, presented additional issues of fact, and ordered additional proceedings allowing for

final determination. Id. at 548.

In its ruling, the Court rejected WTCP’s argument that they were entitled to replacement

value because the World Trade Center qualified as a “specialty property.” Id. at 532. In granting

the Defendants’ motion, the Court ruled that the World Trade Center complex was not specialty

property, stating in pertinent part:

The World Trade Center buildings were filled with a variety of commercial tenants, law firms of every size and character, large national and international public accounting firms, investment banking, insurance and financial institutions of every description, public restaurants, clubs and gyms, and the like. Thousands of visitors frequented the retail shops and restaurants throughout the day. Clearly, the price WTCP paid for the 99 year leases it acquired from the Port Authority reflects a full and fair market price for the property. If WTCP is entitled to recover, recovery of the property’s market value would fully compensate it. WTCP is not entitled to recover the larger value of replacement costs. (emphasis added). Id. at 543.

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The Court held that WTCP’s claim for loss rental payments was “without merit,” stating

that the price that WTCP paid to the Port Authority included the value of anticipated rentals and

that “the price it paid fully reflected the present value of those rental streams.” Id. at 544. The

Court, citing Sandoro v. Harlem-Gennesee Market & Nursery, Inc., 105 A.D.2d 1103 (N.Y. App.

Div. 1984), concluded that WTCP could not recover twice, once in the form of the property’s

market value, which fully included the rental streams reasonably expected from the property and

again for the separate value of the rental streams. Id. at 544. According to the Court, “since

damages measured by market value take rental value into account, where a building is totally

destroyed there is no separate allowance for damages for loss of rent.” Id., quoting Sandoro, 105

A.D.2d at 1104.

As to the diminutions of recovery under N.Y. C.P.L.R. section 4545 (c), the Court

dismissed WTCP’s argument that §4545 (c) cannot be applied until there is a judgment of

recovery/verdict, as an unimportant technical distinction, “for the issue of diminution can be tried

and determined immediately following the jury verdict, on the same or a supplemental record.” Id.

at 548. The Court directed the parties to inquire into the nature of the insurance recoveries, how

they are to be applied, and how they compare to clarify the record on this issue. Id.

CONCLUSION

As the public record and the decisions above reflect, the aviation industry was acutely

aware, through several completed and attempted terrorist attacks, FAA warnings, GAO Reports,

and other sources that their aircraft were at a high risk for hijackings by terrorists. Hijacking had

been viewed as a persistent threat to aviation dating back to the 1960s, and the risk of terrorism

was on the rise in the years, and even months, leading up to 9/11. In 1989, at an aviation security

presentation to aviation industry members, terrorism expert Brian Jenkins stated that “[t]he

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nightmare of governments is that suicide terrorists will hijack a commercial airliner and by killing

or replacing its crew, crash it into a city or some vital facility.” Brian M. Jenkins, Ph. D., Int’l

Seminar on Aviation Security, February 1989. In the months leading up to 9/11, the terrorist threat

was increasing, and the level of security effectiveness was decreasing, leading to a systemic failure

that both invited the terrorist attack and facilitated its success.

On 9/11, the danger of hijacking was both foreseeable and preventable. To the extent that

the dangers in other mass tort cases are equally foreseeable and presentable, manufacturers and

business owners would do well to take a lesson from the case study presented above.