Why lawyers are still fighting over 9/11September 18, 2012: 12:04 PM ET
Some $6 billion is at stake in two pending cases resulting from the World Trade Center disaster.
By David A. Kaplan, contributor
FORTUNE -- Call it garden-variety legal thinking -- or jurisprudential chutzpah. It all depends on how you look at it. When two commercial jetliners, commandeered by suicidal Al Qaeda terrorists, smashed into the towers of the World Trade Center on September 11, 2001, they surely were the primary causes of thousands of lost lives and billions in lost property. But can legal blame also be assessed to some degree on the airlines, an airplane manufacturer, and private checkpoint-security firms that let the terrorists get on the planes and hijack them?
That's the question a federal court jury may get to decide in the coming months or years. It's been more than a decade since 9/11 -- and billions of dollars in damages have been paid by both the U.S. government and private insurers to passengers on the planes, companies and individuals in the towers, firefighters and police officers, and a range of other victims. But the lawyers are still at it in two big conjoined cases.
In 2004, the owners of the twin towers -- World Trade Center Properties (WTCP), which consists of Silverstein Properties and several other major investors -- sued various airlines and security contractors for alleged negligence that contributed to the attacks. The claim: On the ground and in the air, United and American Airlines, along with the firms they hired to handle security, could have done much more to prevent the tragedy. WTCP also blames Boeing (BA), which made the planes that hit the towers, for "defective design" of the cockpit doors and failing to install a security system that would alert the FAA if a plane were taken over. World Trade Center Properties v. United Airlines, Case No. 08-CV-03719 and World Trade Center Properties v. American Airlines, Case No. 08-CV-03722.
At stake is up to $6 billion. Though the towers' owners sought even more, the judge limited potential damages to the fair market value of the 99-year lease that the owners held in lower Manhattan. That lease was for $2.8 billion; depending on how a court calculates interest since 2001 (as much as 9% a year), the total could more than total that. The damages would be paid by insurers.
Late last month, U.S. District Judge Alvin Hellerstein ordered the case to proceed with more discovery and move toward a trial. He denied a motion by the airlines and other defendants to throw out the case on their theory that WTCP had been paid enough. WTCP has already recovered $4 billion from property insurance claims (it initially demanded roughly twice that, based chiefly on the argument that the attack on the World Trade Center constituted not one but two separate insurable events). In the current suits, WTCP want additional damages based on the negligence theory. The judge said it was premature for him to rule on the defendants' motion.
In a subsequent frustrated letter to the court, lawyers for the towers' owners urged the judge to get on with a trial. "In the wake of 9/11, Congress elected to protect [the defendants] from financial ruin by limiting their liability to the amount of their insurance," wrote Richard Williamson, WTCP's lead attorney. "But, surely, when bestowing such an enormous benefit…Congress never envisioned a decade-long flight by their insurers to walk away with most of that insurance money untouched and earning returns while victims—and New Yorkers—wait to be made whole both economically and through full restoration of the World Trade Center site."
Then, noting the arrival of the "11th anniversary of that devastating day," Williamson added, "The time has come for the public finally to hear [our] overwhelming evidence of how [defendants] ignored government warnings about terrorist threats, failed in their duty to keep the terrorist hijackers from the boarding the aircrafts with deadly…weapons, and manufactured and operated planes without safeguards to prevent the terrorists from gaining access to the cockpits."
United Airlines told Fortune it would not comment on current litigation. Other defendants did not respond to requests for comment. Lawyers for the owners of the towers also declined comment.
Because most major World Trade Center litigations have ended by now -- including wrongful-death lawsuits brought by families -- the WTCP cases may seem like a relative footnote. But in its potential to unveil in open court a full accounting -- under cross-examination -- of airline and airport security practices before 9/11, the cases are worth watching.