Appeals court backs victim fund in 9/11 lawsuit
Panel finds no bias in awarding compensation
From Phil Hirschkorn
CNN
NEW YORK (CNN) -- Families of the victims of the terrorist attacks of September 11, 2001, lost another battle Tuesday as a federal appeals court upheld the dismissal of their lawsuits against the administrator of a government compensation fund.
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A three-judge panel of the 2nd U.S. Circuit Court of Appeals said the victim-compensation fund was being administered fairly and was not designed "to compensate each victim's full economic losses."
Congress created the fund two weeks after the attacks to help the families of the 3,016 people killed and the injured survivors.
The fund is also designed to discourage lawsuits against American and United airlines, the carriers whose jets were hijacked in the plot. Those who sue the airlines are not allowed to benefit from the fund.
As of last week, only 43 percent of those eligible to benefit have applied to the fund. The deadline to apply for compensation is December 22.
Earlier this week, a U.S. district judge allowed about 70 plaintiffs to continue with lawsuits against the airlines, Boeing Co. and the Port Authority of New York and New Jersey, The Associated Press reported.
The lawsuits against the compensation fund allege that the fund's special master, Kenneth Feinberg, allocated awards unfairly, including by putting a cap on the compensation.
In its decision, the appeals court noted that the fund was not designed to "replicate a theoretically future income stream" and that "multimillion [-dollar] awards out of the public coffers are not necessary to provide [the families] with a strong economic foundation from which to rebuild their lives."
The court deemed Feinberg's regulations a "permissible interpretation of the act that is entitled to deference."
The fund calculates awards based in part on age and income, up to the 98th percentile of U.S. earners, or $231,000 a year. The highest presumed award is calculated at about $4 million.
Families can seek larger awards by showing "extraordinary circumstances," such as income above the 98th percentile. The largest award has been $6.6 million, according to Feinberg.
One of the plaintiffs, Cheryl Schneider, alleged that the fund had a de facto cap on awards. She said Feinberg told her that he would not award more than $6 million or $7 million to anyone.
Schneider's husband, Ian, was a partner in the brokerage firm Cantor Fitzgerald, of which more than 600 employees in the top floors of the World Trade Center's north tower were killed.
Schneider's compensation expert estimated her family's economic loss to be at least $28 million. Feinberg figured the family's lost earnings were half that, but still far more than the fund would pay.
The appeals court said Feinberg's remarks to Schneider did not set a formal cap on awards.
The appeals court ruled that assumptions of higher awards that families might obtain through lawsuits against airlines was "uncertain -- as well as prolonged, and discounted by attorneys' fees.
"Payment from the fund, by contrast, is simple, certain, noncontentious, and prompt," the appeals court said.
Payments can be received within 50 days. The average award has been about $1.5 million, tax-free.
