P000068
January 24, 2002
Mr. Kenneth L. Zwick, Director
Office of Management Programs, Civil Division
U. S. Department of Justice
Main Building, Room 3140
950 Pennsylvania Avenue NW
Washington, D.C. 20530
Re: Sept. 11th
Compensation Fund of 2001 Rules
Dear Mr. Zwick:
I am a trusts and estates attorney. This firm represents the families of a number
of victims of the September 11 terrorist attacks, but I am writing in my individual
capacity to comment on the Rule (the "Rule") implementing the September 11th
Compensation Fund of 2001 (the "Fund") and, in particular, on the importance of
distributing awards from the Fund solely in accordance with applicable State law.
In the Statement by the Special Master published as a preface to the Rule, the
Special Master noted that the Rule referred to state law to determine the identity of the
Personal Representative, and stated, "[n]or would it be advisable for the Special Master
to step in and supplant state court practice or the testamentary intent of decedents."
Statement, p. 8. We agree that this approach is correct; unfortunately, the Rule departs
from this salutary principle with respect to the distribution of awards.
The Rule provides that "[t]he Personal Representative shall distribute the award
in a manner consistent with the law of the decedent’s domicile or any applicable rulings
made by a court of competent jurisdiction." Rule, § 104.52. But the Rule then
authorizes the Special Master to modify any proposed plan for distribution of the award
if the Special Master "concludes that . . . it does not appropriately compensate the
victim’s spouse, children, or other relatives." Id.
I respectfully submit that the Special Master’s power to direct that an award be
distributed in a manner that is not consistent with applicable State law or the rulings of
a court of competent jurisdiction is grossly unfair, may be unconstitutional, and will
create serious practical difficulties for Personal Representatives.
Under New York State law, tort damages in respect of a deceased victim are
categorized either as damages for the victim’s conscious pain and suffering, which are
payable to the victim’s estate and therefore will be disposed of under the victim’s Will
or in accordance with the rules of intestacy if the victim died without a Will, or,
alternatively, as damages for wrongful death, which are payable to the victim’s
distributees within the meaning of that term in New York Estates, Powers and Trusts
Law Section 5-4.4 (i.e., generally, the persons who would inherit under the rules of
intestacy).
Section 405(c)(3)(B) of the Act provides that submission of a claim under the
Act constitutes a waiver of the claimant’s right to be a party to an action for "damages
sustained as a result of" the events of September 11. Section 104.21(b)(1) of the Rule
states that the Special Master "may require that the claimant certify that he or she has
dismissed any pending lawsuit . . . and that there is no pending lawsuit brought by a
dependent, spouse, or beneficiary of the victim." Thus, the Rule contemplates that
submission of a claim under the Act constitutes a waiver of all rights to seek damages
arising out of the death of a victim - both for pain and suffering and for wrongful death.
Any award from the Fund should be distributed among those persons who
would have an interest in damages recovered as a result of the victim’s death under
State law. Distributing an award from the Fund to either a larger or a smaller class than
permitted under state law - or designating the award as either entirely pain and
suffering or entirely wrongful death compensation -- would open the door to many
possible disputes and complexities, and might even constitute an unconstitutional
taking.
Upon the death of a victim, two potentially different sets of people acquired a
vested interest in the causes of action for pain and suffering (those interested in the
victim’s estate) and for wrongful death (the victim’s distributees). If a victim died
intestate, the persons interested in the wrongful death and pain and suffering damages
would be the same in most cases. They would differ in two situations: First, if the
victim was survived by a spouse and one or both parents, but no descendants, the
spouse would be the only distributee for purposes of distributing the victim’s estate and
therefore the pain and suffering damages, while the spouse and the parents would be the
distributees for purposes of distributing wrongful death damages. Second, if the
victim’s estate was insolvent, the pain and suffering damages would be an estate asset
that could be reached by the creditors of the estate, while the wrongful death damages
would be distributed only among the distributees. If a victim died testate, the persons
interested in wrongful death damages could be quite different from the persons
interested in the pain and suffering damages, since there is no constraint on the identity
of the beneficiaries under the victim’s Will, who would generally receive the pain and
suffering damages.
When a Personal Representative submits a claim under the Act, the Personal
Representative has effectively waived all rights to seek wrongful death damages and
pain and suffering damages in exchange for receiving the no-fault award from the Fund.
Thus, the award from the Fund is effectively the sole compensation for the foregone tort
causes of action. I submit that it is fundamentally unfair to distribute the award to
anyone other than the persons whose rights were waived in order to obtain the award.
Although there does not appear to be any case on point, it appears that an enforced
waiver of State law tort actions without requiring distribution of the award in
accordance with State law to those persons whose rights were waived could be rise to
the level of an unconstitutional taking.
Distribution in accordance with State law will not always produce a perfect, or
even a necessarily just, result. This is equally true with respect to the multitude of
actions brought in State courts to recover damages when a victim is killed in a vehicular
accident. The law does not, however, allow a judge in a negligence case to disregard
State law to produce a result that the judge considers more "appropriate." While the
circumstances of the deaths of the victims of the September 11 attacks were horrific,
this goes to the question of the amount of an appropriate award. It is not a reason to
depart from principles developed through extensive judicial and legislative experience
as to the best way, in general, to distribute compensation available with respect to the
death of a victim, especially in the context of a special, unappealable administrative
procedure with limited ability to present and develop evidence.
The Special Master has expressed the view that he would exercise the power to
reallocate an award if a victim had made a Will leaving his or her entire estate to
charity, since the taxpayers did not intend the Fund to enrich charity. First, based on
anecdotal experience, it appears that the vast majority of the victims died intestate, and
that the vast majority of the victims who left Wills did so in order to provide for their
families in ways that most people would instantly recognize as "appropriate."
Therefore, this is not likely to be a frequent occurrence. If it does occur, in my
experience, testators cut their relatives out of Wills only after very serious consideration
and to implement very strongly held beliefs. Failing to respect those beliefs would be a
very profound betrayal of such victims. Second, to the extent that such a situation
might arise, I simply believe that upholding the overall fairness and consistency of the
administration of the Fund is more important - especially as an example of the strength
of a society built on respect for impartial administration of legal principles- than
protecting the fisc against the off chance that a small portion of the Fund may go to
charity in accordance with the wishes of a deceased victim.
Finally, giving the Special Master the power to direct that an award be
distributed in a manner inconsistent with State law will place the Personal
Representative in a position of intolerable conflict in those cases where the Special
Master exercises this power. If a victim left a Will that bequeathed the entire estate to
charity, and if the Special Master’s practice is to prohibit distribution to charity in those
circumstances, the Personal Representative will be between the proverbial rock and
hard place. If the Personal Representative submits a claim to the Fund, the Personal
Representative will be depriving the charity of its interest in pain and suffering
damages, and the charity can sue the Personal Representative for breaching its fiduciary
duty to the charity. If the Personal Representative bows to the charity’s desires and
does not submit a claim, it is exposed to a comparable lawsuit from the distributees who
would presumably be entitled to receive the entire award from the Fund in these
circumstances. In contrast, if an award is to be distributed strictly in accordance with
State law, the Personal Representative can bring a proceeding, on notice to the persons
entitled to share in the award, and obtain a court order specifying how the award is to be
distributed, avoiding the risks outlined above.
I urge, accordingly, that Rule § 104.52 be clarified as not authorizing departures
from State law (or, if applicable, foreign law) with respect to the distribution of awards.
Respectfully Submitted,
Individual Comment
____________________________________________
1 The Supreme Court has recognized several kinds of intangible interests to be property for purposes of the takings clause of the Fifth Amendment. See, e.g., Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984)(trade secrets may be subject of compensable taking); Armstrong v. United States, 364 U.S. 40 (1960)(state law materialmen’s lien); Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555 (1935)(real estate lien); Lynch v. United States, 292 U.S. 571 (1934) (contract rights).
2 In all cases, the Personal Representative is potentially liable to be second-guessed about the question of whether it is better to sue or to submit a claim. There is no way for the Rule to decrease this risk, but there is no reason for the Rule to aggravate it by exposing the Personal Representative to additional risk based on the Special Master’s discretion to re-allocate an award.