Unconventional responses to unique catastrophes: tailoring the law to meet the challenges.

Author:Feinberg, Kenneth R.

I want to thank the Dean at the outset. He says I know a lot about opera and baseball. I guess it was obstruction when he slid into third base. I mean, it doesn't require any mens rea, so it is a strict liability offense. So if the runner is impeded, that's the end of it I guess.

Everybody seemed to think it was the right call, but I don't know who will win the World Series. But I want to thank the Dean for those kind words. I want to thank Roe Green for her philanthropy, for so much that she does to validate the memory of her father, and I hope that in some small way my work and what I do exemplifies what Ben stood for as a judge and as a man.

And I am honored actually to be here today to deliver the endowed Ben Green lecture. I didn't realize until the Dean introduced me that I am laboring under some real stress since it is the last lecture of the Ben Green endowed series.

So it better be good, and I better be on my "A" game today during the next half hour to forty minutes. So I will do my best to vindicate the judge and you and the law school.

Now, when the Dean introduced me just now, he neglected to mention my most recent book: Who Gets What? Fair Compensation in Times of National Tragedy, Public Affairs Press, 2012. (1) Now, you may have trouble finding this book these days on Amazon or a local bookstore if there was one. You may have trouble finding it.

Don't worry. My personal supply of that book is virtually inexhaustible.

So if anybody has trouble finding the book, let the Dean know, and we will manage to do something about it.

Now, he mentioned my work: 9/11, BP oil spill, the pay czar. The pay czar; that was an interesting assignment. That was the job I had determining the salary, the compensation of certain corporate officials who received top money, taxpayer money, so that the company would stay afloat: AIG, GM, Bank of America, Citigroup. They called me the pay czar.

Now, that's a term--I mean, my grandmother would be very confused by "pay czar." She wouldn't know what to make of that title. But it was an interesting assignment.

Now, in all of these assignments, a few basic principles are important when we talk about unconventional responses to unique tragedy, tailoring the law to fit the challenge, to meet the challenge.

We are in a law school, so let's get a few basic principles out of the way so that everybody is on the same page when we talk about some of my work.

You will note that the 9/11 tragedy resulted in Congress passing a law eleven days after 9/11, and the law simply said anybody who would rather take compensation from a fund funded entirely by the taxpayer--not airline money, not World Trade Center money, not Massport, Port Authority money--this is public money, 100 percent of it, anybody who would rather accept a check from the United States people, taxpayers, rather than go to court, if you don't want to sue the airlines and the World Trade Center and all these other private entities, whether they are responsible for the tragedy or not--that's beside the point--if you don't want to sue, you can come into a very generous program funded entirely by the taxpayer. (2) You don't have to. You can go file a lawsuit in New York City, but if you would rather take the money, you can do so. In return, you waive your right to sue. (3) You can't sue anybody. You give up your right, and in return, you get a check, and Feinberg will design and administer that program.

Well, in over thirty-three months, we distributed about $7 billion to 5,300 people who either lost loved ones or were physically injured. (4) The average award was a tax-free $2 million for a death claim, $400,000 for a physical injury claim, and in return, you waive your right--only 94 people decided to sue rather than come into the fund. (5)

The fund was a tremendous success. It did exactly what Congress wanted. It diverted 97 percent of all of the families that lost a loved one out of the tort system into a special program, (6) and that's how it worked.

Only ninety-four people decided to sue, and they all settled their cases five years later. There was never a trial over who was negligent or responsible for 9/11. That was it. It worked.

But notice in that case you waive your right to sue if you take the taxpayer's money. Now, BP, the same thing. After the BP oil spill, BP went into the White House to see President Obama, came out and said "anybody who voluntarily wants to take money from a special fund not funded by the taxpayer, funded by BP, we will front $20 billion." $20 billion. (7)

And if that's not enough, we will give more. And in return, we will pay all eligible claims arising out of the oil spill in the Gulf of Mexico. (8) You don't have to. You can litigate if you want. And we agree with the President, Ken Feinberg will design and administer that program.

Well, in 16 months, we paid out about $6.5 billion and received 220,000 releases from businesses and individuals promising not to sue; it was a trade. (9) The program worked. Now, I must say BP, we received 1.2 million claims from 50 states. (10) I got about 250 claims from Ohio. I didn't know the oil got this far to Ohio.

We got about 250 claims against the BP Oil Company from Ohio. Most of them weren't eligible. Some were, but for the most part, they weren't, but we got claims from Alaska, 400 from Massachusetts, and 35 foreign companies.

You build and announce a program like this, they will come. They will come in force, and they did. Most of the claims were denied, but 220,000 people waived their right to sue and took the money paid for by BP tax-free.

Now, those programs--9/11, BP--are very, very different from the other programs we read about in the newspaper. The Boston Marathon: after the Boston Marathon bombing, $60 million were privately donated by over 100,000 individuals and business donors from all over the country. (11)

After Newtown, Connecticut, the Sandy Hook shootings of the little first graders, $11.5 million; (12) Virginia Tech, the deranged student gunman who killed 32 people, $7 million; (13) Aurora, Colorado, the movie shootings, The Dark Knight, where the gunman comes in and sprays the movie theater patrons, $5 million. (14)

All of these programs are private donations. People watch on CNN, and they send in money. The money that is distributed in those programs is not part of the tort system. It is not an alternative to the tort system. You can take that money if you want. It is a gift. You can turn around and hire a lawyer and sue if you want to do that.

In Virginia Tech, a few families did. A few families did sue, and they won against Virginia Tech. (15) But make sure you keep them separate. The 9/11 fund and the BP oil spill, those programs are alternatives to the tort system, to lawsuits. If you take that money, you waive your right to sue.

All these other programs that you read about like Boston Marathon, that's a gift. That's found money. You don't owe any obligation other than to accept it and do what you want with it. And it has nothing to do with the tort system.

Now, why do I make that distinction? In some respects, the distinction is irrelevant. When it comes time to trying to decide who gets what, whether it is a tort alternative or a gift, you run into the same compensation problems, but there are very important distinctions, you see.

I doubt very much that you will ever again see a 9/11 Victim Compensation Fund. I mean, I think it was the right thing to do at the time, and I think it served a very valuable public service, and it demonstrated our nation's empathy for the victims of the horrible terrorist attacks. I am constantly defending that program as sound public policy. It worked. Don't ever do it again. Don't ever do that program again.

The idea that the American people will pay compensation to certain innocent victims while everybody else spends for themselves--I have great difficulty with that.

You should have read some of the e-mails I received when I was administering the 9/11 fund.

"Dear Mr. Feinberg: My son died in Oklahoma City. Where is my check?"

"Dear Mr. Feinberg: I don't get it. My daughter died in the basement of the World Trade Center in the original 1993 attacks committed by the very same people. Why aren't I eligible?"

And it didn't stop with terrorism, you see.

"Dear Mr. Feinberg: Explain something to me. Last year my wife saved three little girls from drowning in the Mississippi River, and then she drowned a heroine. Where is my check?"

You better be careful when you carve out for very generous public compensation only these people. Everybody else--sorry. Fend for yourself. It is not sound public policy in a society, which frowns on elitism, believes in equal protection of the law, is very egalitarian, and yet, only these people get tax-free compensation.

I don't think it is sound public policy, but I think it was the right thing to do as a one-off program, as a very unconventional response to a unique catastrophe in America, rivaled only by the American Civil War, Pearl Harbor, and the assassination of President Kennedy. That's it. And I think the program was the right thing to do. It's just that it is a precedent for nothing.

There was no 9/11 fund for Katrina. A thousand people died. There was not even the slightest interest in Congress having a 9/11 fund for Katrina or Sandy victims or tornadoes or hurricanes or terrorist attacks. There was no 9/11 fund.

I don't think you will ever see the BP oil spill fund again. Now, why do I say that? It is not taxpayer. Yeah, it is not, but you show me a company that is going to front $20 billion before there is even a trial and say we will pay all legitimate claims, we want to get the money out, we will pay the claims, and we will worry later about liability, about collecting contribution from co-defendants like Halliburton or Transocean. Right now we want to pay the claims.

I don't think you are going to see that again. You haven't seen it before...

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