W000645
Monday, November 26, 2001 4:04 PM
Public Comments of Cantor Fitzgerald L.P.
Per my discussion with , enclosed are the public comments of Cantor Fitzgerald L.P. in both WordPerfect and PDF formats. Please confirm receipt of same.
Thank you for your assistance.
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To:
Kenneth L. Zwick
Director, Office of Management Programs
Civil Division
U.S. Department of Justice
Main Building, Room 3140
950 Pennsylvania Avenue NW
Washington, DC 20530
Re: Notice of Inquiry and Advance Notice of Rulemaking, September 11th Victim Compensa-
tion Fund of 2001, 28 CFR Part 104, CIV 104P, AG Order No. RIN: 1105-AA79
PUBLIC COMMENT OF CANTOR FITZGERALD L.P. ON THE
U.S. DEPARTMENT OF JUSTICE'S NOTICE OF INQUIRY
AND ADVANCE NOTICE OF RULEMAKING REGARDING
THE SEPTEMBER 11TH VICTIM COMPENSATION FUND OF 2001
Cantor Fitzgerald L.P., together with its affiliates, eSpeed, Inc. and TradeSpark L.P. (herein collectively referred to as "Cantor Fitzgerald") submit these comments in response to the Department's Notice of Inquiry. Cantor Fitzgerald is a financial services firm whose operating units are involved in a variety of market-based and software business initiatives. Cantor Fitzgerald is eager to be involved in assisting the Department in whatever way it can, and it appreciates the Department's prior efforts to let Cantor Fitzgerald participate in the process.
I. CANTOR FITZGERALD'S INTEREST IN COMMENTING
Cantor Fitzgerald occupied four floors at the top of One World Trade Center and, among the high-floor firms, was one of the trade center's oldest tenants. Not a single person who was in Cantor Fitzgerald's offices at the time of the attack survived. Several others who were not in the firm's offices, but were in the World Trade Center at the time of the attack, survived and have suffered debilitating physical injuries, including severe burns.
Out of the roughly 1,000 Cantor Fitzgerald employees who worked in One World Trade Center, 657 perished in the tragedy. Over a third of them had dependent children, most of whom are younger than 12 years of age. Over 40 Cantor Fitzgerald widows were expecting children at the time of the attack. In all, approximately 1,500 Cantor Fitzgerald children lost at least one parent.
For those of us at Cantor Fitzgerald who remain, the loss of so many friends and colleagues has been devastating. And there is no way that the families of those who were lost can ever be made truly whole. For them, each "big day" each life event will be a reminder of all that they have lost which can never be recaptured. We at Cantor Fitzgerald, however, have committed ourselves and our company to ensuring that the families our lost colleagues left behind whose grief we share and who are members of our extended family will have fewer worries, and more opportunities for happiness in the future. With this goal foremost in our minds, we are committed to rebuilding Cantor Fitzgerald and its affiliates.
To achieve this end, Cantor Fitzgerald has voluntarily developed and is implementing the following plan, which it had no legal obligation to create:
• Discretionary Bonus Payments and Distributions - On October 22, Cantor Fitzgerald began distributing more than $45 million in bonus payments and distributions to the estates of those lost on September 11. These payments were entirely discretionary and were voluntarily made by the firm in the absence of any legal obligation. The minimum payment will be $5,000, and even the estates of employees who started with the firm as recently as September 10 will receive a payment.
• Voluntary Support - Cantor Fitzgerald L.P. is undertaking to distribute for the benefit of the affected families an amount equal to 25% of the partnership's profits that otherwise would have been distributed to the remaining partners for the next 5 years. These funds will be used to pay for 10 years of healthcare benefits to the families of our lost colleagues, which will cost an estimated $70 million. The remainder of the funds will be distributed for the benefit of the families of the lost employees, and Cantor Fitzgerald will continue such distributions beyond 5 years, if necessary, until each family has received at least $100,000 in cash.
• The Cantor Fitzgerald Relief Fund - Cantor Fitzgerald has established a separate charitable relief fund to which others may donate. The Relief Fund already has distributed approximately $8 million, including at least $5,000 to each Cantor family. The fund is a Delaware corporation and has been recognized exempt by the IRS. 100% of the money donated to the fund will go to charitable disbursements; Cantor Fitzgerald will bear the operating costs.
• Registry - Cantor Fitzgerald has established a registry for affected families to receive non-monetary gifts and services from people and companies who have contacted the company seeking to help affected families. This registry is administered by the staff of the Cantor Fitzgerald Relief Fund.
• Employee Assistance Program - Cantor Fitzgerald extended its Employee Assistance Program, which provides short-term counseling, to the families and friends of those lost on September 11.
• Other Voluntary Assistance - Cantor Fitzgerald will extend the period during which all outstanding eSpeed stock options held by affected employees may be exercised to up until the fifth anniversary of the date they were granted. The firm also will fully vest and deliver all shares of eSpeed restricted stock, subject to applicable withholding taxes. In addition, Cantor Fitzgerald has fully vested the matching employer contributions under the 401(k) account balances of all affected employees as of September 15, 2001.
This plan represents a substantial sacrifice for Cantor Fitzgerald at a time of economic hardship. Nevertheless, it would be a serious mistake to view the amounts Cantor Fitzgerald has committed to its families as compensation for their losses or as having a significant impact on their continuing financial hardships. Indeed, for Cantor Fitzgerald to give its families even $100,000 each would cost over $65 million, and that would not even begin to provide for these families' needs.
In issuing its Notice of Inquiry, the Department of Justice has asked numerous questions, including whether voluntary payments, such as those outlined above, are "collateral sources" that should reduce the amount that victims' families may recover from the September 11th Victims' Compensation Fund of 2001.1 Cantor Fitzgerald plainly has a tremendous interest in not having its families penalized for voluntary payments that the company has made to them even though such payments were not required by law or contract. It also has a strong interest in ensuring that the regulations ultimately promulgated by the Department fully achieve Congress's purpose of providing those families the option of full and fast compensation for the losses they have suffered.
II. THE DEPARTMENT SHOULD ISSUE RULES DECLARING
THAT VOLUNTARY PAYMENTS, SUCH AS THOSE MADE BY
CANTOR FITZGERALD, ARE NOT "COLLATERAL SOURCE
PAYMENTS" THAT MAY BE DEDUCTED FROM FUND AWARDS
Cantor Fitzgerald believes that the Department can and must promulgate regulations to clarify that private voluntary payments to victims whether made by employers, individuals or charitable entities are not "collateral source payments" within the meaning of the statute and should not be deducted from the amount of compensation the Special Master determines a claimant is entitled to receive. Such regulations would be in keeping with both the letter and spirit of the Fund, as well as the firmly established public policy of encouraging victim assistance and private charitable gifts and trusts.
In analyzing this issue, one must first recognize that the basic common law rule has long been that evidence demonstrating a plaintiff received money from collateral sources (such as insurance) could not be introduced by a defendant at trial.2 One of the principal reasons for this rule was that society's interests were furthered by adopting a rule that encouraged individuals to plan for calamities and to assist victims.3
The "collateral source rule" has been limited by statute in many states, including New York,4 so that defendants can offset their liability with certain kinds of payments the plaintiff has received. However, consistent with basic rules of statutory construction, those statutes generally have been narrowly construed, and their interpretation has been informed by the policies underlying the common law collateral source rule.5
A. Private Voluntary Assistance Is Not a "Collateral
Source Payment" under the Language of the Statute
Under the statute, the Special Master must reduce the amount of a claimant's compensation "by the amount of collateral source compensation the claimant has received or is entitled to receive as a result of the terrorist-related crashes of September 11, 2001."6 In defining the term "collateral source," Congress gave examples that plainly evince its intent to encompass entitlements or obligations of a governmental or a contractual nature, such as "life insurance, pension funds, death benefits programs, and payments by Federal, State, or local governments."7 Each of these examples implicates a legal obligation either as a result of a private contract or a governmental entitlement for an entity to pay the claimant a specific and ascertainable monetary benefit. This is consistent with the approach of other rules and statutes that modify the common law collateral source rule. For example, under New York's rule, payment cannot be set off against a plaintiff's damages unless the court finds that "the plaintiff is legally entitled to the continued receipt of such collateral source [payment], pursuant to contract or otherwise enforceable agreement, subject only to the continued payment of a premium and such other financial obligations as may be required by such agreement." (NY CPLR § 4545(c).) A voluntary payment, of course, is no such entitlement or obligation, regardless of whether it is made before or after a claimant files a claim.8
Moreover, both of these statutory sections require a specific nexus between the entitlement (or obligation) and the terrorist attack. (See Section 405(b)(6) (the payment or entitlement must be "as a result of the terrorist-related crashes"); Section 402(4) (citing as examples entitlements "related to the terrorist-related aircraft crashes of September 11, 2001").) Put differently, to be a "collateral source payment" under the statute, the obligation whether statutory or contractual must directly arise from the terrorist attack. Gratuitous payments to the families of September 11th victims have their genesis not in terrorist activity or even the fact of death, but rather arise from the familial, civic, religious, or humanitarian concerns of individuals and entities seeking to advance their own goals and objectives.
Courts that have addressed similar statutory schemes consistently have held that private voluntary contributions are not collateral source payments for the purpose of reducing a claimant's damage award. See, e.g., Dewitz v. Nuestel, 508 N.W.2d 334, 340-41 (N.D. 1993) (cash gift from church group to accident victim was not subject to statute requiring reduction for payments from "collateral sources"); Longman v. Jasiek, 414 N.E.2d 520, 524-25 (Ill. App. 1980) (payments to cover medical expenses were not subject to statute requiring reduction for collateral source payments).
In Longman, for example, the court addressed the propriety of offsetting a personal injury award by the amount of cash payments given to the plaintiff. The Illinois statute under review broadly defined collateral source payments to include all injury-related expenses "'which have been paid, or which have become payable to the injured person by any other person, corporation, insurance company, or fund in relation to a particular injury.'" Id. (quoting Ill. Rev. Stat. 1979, ch. 110, ¶ 68.4). In holding that the cash assistance was not a collateral source payment under the statute, the court explained that the "by reason of" requirement implied a legal obligation that sprang from the specific injury:
It is clear from the statute's language that the legislative intent was to reduce judgments only as a result of moneys "paid" or "payable" by reason of a legal obligation "in relation to a particular injury."
Longman, 414 N.E.2d at 525 (emphasis added). The Longman court concluded that because there is no legal obligation to render voluntary cash assistance, such payments are not "collateral sources" under the statute and should not be deducted from the damage award. Id.
Similarly, in Dewitz, the North Dakota Supreme Court was called upon to determine whether a statute mandating the reduction of economic damage awards by all collateral source payments applied to voluntary contributions received by the victim. Dewitz, 508 N.W.2d at 340. There, the statute expansively defined the term "collateral source" to include "'any sum from any other source paid or to be paid to cover an economic loss which need not be repaid by the party recovering economic damages.'" Id. (quoting N.D. Cent. Code § 32-03.2-06) (emphasis added). Notwithstanding the term's broad statutory definition, the Dewitz court concluded that voluntary financial assistance is not a "collateral source" payment because it is not paid on account of a legal obligation triggered by the injury, but rather out of "a sense of community." Id.
With respect to the Fund, the language employed by Congress regarding collateral source payments is the functional equivalent of the statutory language at issue in Longman and Dewitz. The plain language of the statute and traditional principles of statutory construction compel the conclusion that an employer's voluntary payments to victims' families are not "collateral source payments" under the statute as Congress wrote it. The Department's rules implementing the Fund should make this fact explicit.
Any other approach would mire the Special Master in determining what payments claimants had received and whether they were "collateral source payments." This would be an absurd and fruitless inquiry. For example, is an emergency loan from a family member a "collateral source payment"? How about a "gift" of the same amount? And what if it comes from a private charity or an employer? Are toys, meals or other non-monetary gifts from concerned individuals "collateral source payments"? Pro bono assistance from various professionals? And are we really going to impose on claimants an obligation to keep track of such things?
As Congress wrote it, the statute gives the Department the only workable, bright line rule: a collateral source payment includes only payments to a claimant who had a legal entitlement to the payment by reason of a preexisting legal obligation that was triggered as a direct result of the terrorist attack of September 11th.
B. The Statute's Structure Reinforces the Conclusion that
Congress Did Not Intend to Have the Special Master
Deduct Voluntary Payments from the Amount of
Compensation He or She Awards Victims
Congress included the Fund as part of a larger statutory scheme to aid the nation's airlines. As part of the overall statutory scheme, the airlines' liability is capped, claimants are precluded from suing the airlines, and the government agrees to pay (through the Fund) for the damages suffered by those who were personally injured in the September 11th tragedy without any determination of liability.
If the Department were to issue a regulation requiring claimants' recoveries to be reduced by the amount of all voluntary assistance they received, the net effect would be to have civic-, humanitarian-, and charitably-minded citizens and entities rather than the government funding the bailout of the nations' airlines. Cantor Fitzgerald's decision to distribute 25% of the profits that would have been distributed to its partners over the next five years for the benefit of the families of its deceased employees would, in effect, be converted into a commitment to give one-fourth of those profits to the airlines, flowing through the government. That cannot have been the intention of Congress.
Indeed, this conclusion is bolstered by the fact that the only mention of private voluntary assistance in the statute is Section 406(c), which creates a mechanism whereby individuals, businesses and other entities may contribute money directly to the Fund. If the Department were to require the Special Master to reduce a claimant's compensation award by deducting private contributions the claimant received, it would render all private contributions to claimants de facto payments into the Fund. If, in writing the definition of "collateral source payments," Congress had intended to appropriate all private assistance into the government's treasury, then it would have been wholly unnecessary to create a means for civic-, humanitarian-, and charitably-minded citizens and entities to give money to the Fund at all.
One of the most basic principles of statutory construction is that statutes should be read so that "no word, clause, sentence, or phrase is rendered surplusage, superfluous, meaningless, or nugatory." 2A Norman J. Singer, Statutes and Statutory Construction § 46:03 (6th ed. 2000). If the Department were to issue regulations allowing or requiring the Special Master to offset a claimant's compensation award by the amount of private voluntary payments the claimant has received, it would be violating this basic rule.
C. The Legislative History Makes Clear that
Congress Had No Intention of Depriving
Claimants of the Comfort of Private Assistance
The legislative history behind the Fund's creation further makes clear that Congress never intended to include private voluntary contributions within the definition of collateral sources. Specifically, in explaining how the Special Master would fix compensation under the statute, Senator Leahy made no mention of deducting private contributions from a victim's compensation. Rather, he explained: "When making a determination, the Special Master will take into account any life insurance, death benefits, or other government payment received by the victims and their families."9 Senator Leahy's omission of private voluntary assistance from his explanation of the Fund's offset provision is particularly telling in light of the fact that the Senate had just addressed the importance of private contributions in the wake of the September 11th tragedies.10
As the Department recognized in its Notice of Inquiry, there are "strong policy reasons for excluding charitable contributions from the definition of 'collateral sources.'"11 Indeed, it is the fixed policy of the law to encourage such charitable gifts, trusts and other voluntary assistance whenever possible.12 Thus, between the two possible outcomes, the one that encourages such voluntary payments should be adopted.13
Congress expressly recognized the vital and independent role that private contributions have played in the aftermath of the September 11th tragedies. As Senator Hatch explained at the Senate hearings addressing the Fund:
Unfortunately, the Government cannot do everything. What pleases me most in the aftermath of this tragedy is the extent to which the communities across the country have reached out to help their neighbors .… There are many wonderful charitable organizations such as the Red Cross and the Salvation Army who responded immediately to assist victims of the terrorist attack. Donations have been pouring in from across the country to assist the victims. It warms my heart and reminds me of the Thousand Points of Light that President Bush's father often referenced regarding the generous nature of our communities. Because of all this, I am confident our country will come out of this tragedy stronger.
147 Cong. Rec. S9589, 9595 (daily ed. Sept. 21, 2001) (statement of Sen. Hatch).
Senator Hatch's comments highlight the important fact that the September 11th relief efforts require the continuing support of private individuals, employers, and charitable organizations. Unfortunately, any regulatory scheme that requires (or allows) the Special Master to deduct private voluntary contributions from a claimant's recovery would create numerous powerful disincentives for employers and charitably-minded people and entities to continue contributing to aid victims of the September 11th tragedies. Most importantly, all who made such contributions would effectively be giving their money to the federal government. Private charities, such as The Cantor Fitzgerald Relief Fund, would be severely hampered in their efforts to raise additional funds for the victims because would-be donors would no longer see their individual contributions as necessary and could not target their donations to address specific needs, such as college tuition. See Arambula, 72 Cal.App.4th at 588 (recognizing that "[c]haritable contributions are primarily motivated by the intended use to which donations are put"). And if regulations required claimants' awards to be reduced by the charitable assistance they had received up to the date they filed their claim, private charities and donors would have the incentive to delay distribution of their contributions until after the claimants had been paid by the Fund. Similarly, some employers would find it difficult to justify continued voluntary payments when the only effect on the employees' families would be a reduction in the amount of compensation they would receive from the Fund. That is not what Congress intended in creating the Fund.
Even after creating the Fund, Congress has continued to stress the importance of private assistance to the victims of September 11th, at the same time emphasizing the necessity of honoring the intent of the donors. During the recent controversy surrounding the Red Cross Liberty Disaster Fund, members of Congress sharply criticized a decision later reversed to reserve part of that fund to aid victims of future terrorist incidents. The Subcommittee members repeatedly stated their concern that this would frustrate the intent of those who made the voluntary payments. See Charitable Contributions for September 11: Protecting Against Fraud, Waste, and Abuse: Hearing Before the Subcommittee on Oversight and Investigation of the House Committee on Energy and Commerce, 107th Cong. (Nov. 6, 2001). In light of Congress's continuing concern about the availability of private assistance and the intentions of the donors, it would be ironic, to say the least, if the Department issued rules that thwarted donor intent by effectively rerouting all private contributions into the federal government's treasury.
In sum, Congress recognized the importance of continued private financial assistance to the victims of the September 11th attacks. In setting up the Fund, it even created a way in which individuals could give directly to the Fund. Nowhere did Congress indicate either in the statute or the legislative history that it intended to nationalize all private voluntary payments made to the victims by reducing the amount of compensation victims could receive from the Fund. The plain language of the statute, legislative history, fundamental principles of statutory construction, case law interpreting similar statutes, and basic public policy all compel the conclusion that the Department should not issue regulations allowing or requiring the Special Master to reduce a claimant's compensation by the amount of any private voluntary payments he or she has received. Instead, the Department's regulations must make clear that such payments, especially those made by employers, must not be deducted from amounts victims may receive from the Fund.
III. THE RULES MUST ADVANCE THE STATUTE'S PRIMARY
GOALS OF PROVIDING FULL COMPENSATION TO ALL
CLAIMANTS QUICKLY AND GIVING VICTIMS ADEQUATE
INFORMATION TO DECIDE WHETHER TO FILE A CLAIM
The Department has asked for guidance as to how the claim process may be implemented. Plainly, there are lessons to be learned from the experience gained from claims programs in mass tort settlements. There are, however, important differences between the Fund and the typical mass tort settlement, and these differences counsel for some restraint in importing the procedures of mass tort settlements into the regulations implementing the Fund. For example, in most mass tort settlements, the amount of money to be distributed among the claimants is limited. The limited nature of the settlement fund often has certain practical and structural effects on the claim process. For instance, matrices are sometimes created that cap an individual claimant's recovery based on certain qualifying characteristics. Also, evidentiary submissions in settlements may be challenged in procedures more reminiscent of an adversarial process.
The Fund created by Congress has no such artificial limitation on amount. Rather, it is designed to fully and quickly compensate claimants for each of the elements of damages that they otherwise would be able to claim in a court of law, with the exception of punitive damages. Indeed, the whole purpose of the Fund is to persuade victims of the September 11th tragedy to choose to be compensated by the Fund's expedited process rather than in interminable lawsuits against the airlines and others. Of course, if those who have suffered large financial losses cannot recoup them from the Fund because their recovery is capped, they will be more likely to pursue litigation.
Certain maxims follow naturally from the Fund's purpose of providing full compensation to victims quickly, and thereby persuading them to forego lawsuits:
• If victims are to be persuaded to file claims with the Fund rather than bring lawsuits, they must be assured that the amount they will receive will approximate the amount of damages they would be entitled to under the law at a jury trial.
• Because they give up the right to sue the moment they file a claim, victims will not be able to decide whether to file claims under the statute until the rules are really final and there is some tangible demonstration that claimants actually will receive full compensation from the Special Master.
• Because the overarching purpose of the statute is compensation, the rules should not be drafted in a way that persons who are not awarded compensation from the Fund should be deemed to be "claimants" who have waived their right to sue.
A. Certainty and Thus Quick Issuance of Truly Final Rules
Is Key To Successfully Implementing Congress's Intent
For victims of the September 11th tragedy, the clock is ticking, and has been for some time. The families have bills that must be paid and lives that have been put on hold in the uncertainty that has followed September 11th. Moreover, the statute of limitations on the filing of wrongful death and survival actions which in New York is two years14 continues to run. Congress understood these tremendous pressures when it gave the Department the task of having the Fund's claims process up and running by December 21.
The Notice of Inquiry states that the Department is considering issuing on December 21 "interim final" rules that would be subject to another round of review and comment. (Notice of Inquiry at 5.) The Department also seeks comment on whether "good cause" exists to waive the typical 30-day period between the promulgation of rules and their effective date. (Id. at 7.)
Cantor Fitzgerald respectfully submits that such "good cause" is evidenced by the fact that Congress, in requiring the Attorney General to promulgate regulations to implement the Fund's claims process "[n]ot later than 90 days after the date of enactment of this Act," clearly understood that time is of the essence in getting the claims process up and running. Another round of public comment after publishing "interim final rules" on December 21 would only further delay the date when families could have full information in order to decide whether to file a claim against the Fund.
Assuming that (i) the Department issues "interim rules" that are amended, subject to public comments, and become final sometime in late January, (ii) some families file claims immediately thereafter, and (iii) the Special Master takes the 120 days he or she is allowed by statute to carefully evaluate and determine the claims, it would be sometime in June before victims' families would begin to learn the kind of information that many will want to know before deciding whether to file a claim (e.g., exactly how the process will work and how much families will actually be paid). As the Department has explicitly recognized, without certainty as to how the compensation program will work, "some claimants may be reluctant to commit themselves to the Fund as an alternative to tort awards." (Notice of Inquiry at 9.) Moreover, the media have noted that many lawyers who are advising families will want to see the range of awards the Special Master actually makes before counseling their clients whether to submit a claim or file a lawsuit.15
Cantor Fitzgerald recognizes the difficulty of fashioning a final claims process out of whole cloth in the time called for by Congress. We have received numerous inquiries from families regarding how the Fund's claim process will proceed and how quickly they could receive money from the Fund. If the purposes of the statute are to be served, the Department must do everything within its power to create certainty with respect to the claim process as soon as possible. Any delay in the issuance of truly final regulations delays the claim process for everyone and shortens the amount of time that families have to deliberate about whether to submit a claim or file a lawsuit.
Congress intended families to have two years in which to decide whether to file a claim against the Fund. Section 405(a)(3). However, the two year statute of limitations on filing a lawsuit began running on September 11th. Thus, victims' families must decide whether to file a lawsuit by September 2003. The longer families are deprived of information about how the Fund actually will make awards and the adequacy of those awards, the shorter the time period in which they can make a reasoned decision whether to participate in the Fund or file a lawsuit.
B. All Claimants Must Be Fully Compensated for Damages
Allowed By Law, Just as They Would Be at a Trial
The Department has asked whether the Special Master should use "schedules" to enable him or her to award compensation within 120 days of a claim being filed, as Congress required in the statute. (Notice of Inquiry at 15.) Cantor Fitzgerald's suggestions about how schedules may be used beneficially are detailed in subsection C below. In this subsection, however, we address the suggestion made by some that such "schedules" should be used as a mechanism to artificially limit the size of damage awards or in some way cap recovery for some categories of September 11th victims. Such suggestions are contrary to the Fund's very purpose. The Fund was not created to measure the value of the victims' lives. Indeed, no one person's life has any more inherent value than another person's.
Rather, the Fund was established to fully compensate decedents' survivors for the elements of damages they could claim in wrongful death and survival actions under state law.16 State tort law has long held that those damages, both economic and noneconomic, are based on the individual circumstances of the decedent and the survivors. The decedents each earned different incomes and funded different activities for their families. State wrongful death and survival statutes reflect those differences, and under those statutes, the survivors' economic losses are determined, in part, by measuring the lost financial support the decedent would have provided the survivors based, inter alia, on his or her projected income. The Fund, in adopting these basic definitions of economic and noneconomic losses that reflect well-settled tort law, ensures that the victims of the September 11th tragedy are treated no differently than other tort victims.
For most of the Cantor Fitzgerald families, the deceased was the primary source of the family's income. These families made financial, life and social commitments based on the assumption that the deceased would continue to contribute to the family's income. They purchased homes, automobiles, and other things that now without that source of income they are in danger of losing. Many of the families have children who will hope to attend college someday, and undergraduate degrees alone may cost much more than $100,000 per student. Moreover, many of those who died were supporting not only their immediate family, but parents as well.
Mandatory schedules are not the only mechanism that some have suggested to artificially limit the recovery of September 11th victims. Some have suggested that a decedent's presumed work life should be reduced where the decedent was involved in certain financial professions. Any presumption that people who worked at Cantor Fitzgerald would have retired before the standard retirement age would not only be arbitrary, it would be without factual support in many, if not most, cases. Moreover, many of the markets in which the firm's employees worked were simply too new to make any reasoned assumptions about retirement age in those businesses. The statute, in requiring the Special Master to look at claimants' individual circumstances, preserves each claimant's right to present evidence about the decedent's actual intentions regarding retirement. Employing any mechanism to artificially limit the amount any victim of the September 11th tragedy may recover from the Fund including schedules and special presumptions about retirement age is antithetical to both the purpose and the language of the statute.
Congress included the Fund and the cap on airline liability in the "Air Transportation Safety and Stabilization Act" to provide an alternative to litigation against the airlines that was designed to avert the possible bankrupting of airlines by litigation and the subsequent need for a government bailout. The goal was to encourage victims to obtain their compensation from the Fund, rather than filing lawsuits. That goal would be thwarted by any regulation that artificially limited the amount claimants could recover from the Fund or undercompensated them for their damages. Indeed, such a regulation undoubtedly would encourage those with the largest economic losses to file suit.
The language of the statute reflects Congress's intention. The statute expressly states that the Fund's purpose is victim compensation.17 Nowhere does it mention or in any way authorize payment of anything less than a claimant's full damages. Rather, under the statute, compensation broadly includes "any possible economic and noneconomic losses that the claimant suffered as a result of [the terrorist attacks]."18 The statute's definition of "economic loss" leaves no doubt that the fund is designed to fully and completely compensate a claimant for at least the same pecuniary losses that he or she could recover under state law. (See Section 402 (5) (economic loss is "any pecuniary loss . . . to the extent recovery for such loss is allowed under applicable State law").)19
State law provides three primary types of pecuniary damages in a wrongful death action: lost "support" or earnings, lost services, and lost inheritance. See, e.g., EPTL § 5-4.3.20 Many courts, in calculating lost support under the wrongful death statute, look to, inter alia, the decedent's gross income at the time of death, including yearly bonuses and profit sharing plans.21 In calculating the decedent's gross income, therefore, the Special Master must not artificially constrain that figure to just "salary," but must take into account the value of the stock options, participation in partnership investment, and deferred compensation awards the decedent earned. Although stock options are not taxable income when received, they clearly have a value. The Special Master could use recognized formulae, such as a Black-Scholes analysis, to value such options at the time they were granted. Similarly, Cantor Fitzgerald awarded certain individuals the opportunity to participate in partnership investments including providing them loan guarantees which also were awarded as a result of the decedents' work for the company. The value of these opportunities also plainly comprise lost income for purposes of measuring lost support. Moreover, Cantor Fitzgerald granted certain individuals other partnership interests that should be factored into the lost support calculation.
Congress, in mandating that claimants could recover the economic damages that are allowed under state law, did not authorize the Special Master to discriminate against groups of victims by issuing awards for less than their actual damages. Rather, it bound the Special Master to take into account, inter alia, the economic damages the claimant is entitled to under state law when determining the amount of compensation from the Fund. The Department should adopt no rule or schedule that would impede the Special Master from awarding full damages to any victim of the September 11th tragedy.
C. Schedules or Matrices May Be Useful in Establishing
Minimum Compensation Amounts and Giving Victims
Information to Determine Whether to Make a Claim
The Department has requested comment on whether the publication of schedules would assist victims in determining whether to file a claim. (Notice of Inquiry at 15.) Matrices or grids are often used in mass tort settlements, and certainly the publication of such tools would assist victims in evaluating whether to file a claim. Such matrices use certain characteristics of the victim (e.g., age, medical condition) to establish individual recoveries. It is important to reiterate, however, that although matrices in mass tort cases sometimes are used to fix the outer limits of a range of recovery because of the overall limitations on the settlement fund no schedule published by the Department should fix a "cap" on the amount a claimant may recover.
That is not to say that a schedule would be of no use. Indeed, Cantor Fitzgerald is aware of many families who likely would find it extremely burdensome and emotionally exhausting to undertake the effort to marshal extensive proof regarding each of the elements of their damages. Particularly where the decedent's income was not highly variable and he or she was fully established in a profession, it may be possible to develop a formula that would reasonably approximate the claimant's pecuniary damages without the need for extensive evidentiary proofs. If the Department were to develop such a formula or matrix that a claimant could elect to recover under using minimal evidentiary proof without compromising the right of other claimants to elect a more fulsome evidentiary proceeding where they could submit more extensive proof of their pecuniary damages the Department could achieve many of the benefits Congress had in mind when it created the Fund. The key to the utility of any such matrix is that its use is not mandatory and does not forcibly cap a claimant's recovery.
To the extent the Department is considering developing a schedule for elements of claimants' and decedents' noneconomic losses, such as pain and suffering, that schedule also should be an elective schedule, not a mandatory one. The statute clearly preserves the right of claimants to ask the Special Master to look at their individual circumstances in determining their losses, both economic and noneconomic. Furthermore, if the Department uses matrices or schedules as an option that claimants can elect, they should use separate forms for economic loss and noneconomic loss. It is clearly conceivable that a claimant might want to elect a simplified process for compensation of one form of damages while preserving his or her right to pursue a full hearing on the other form of damages.
Indeed, if the Department developed an elective formula or schedule, the Department should consider paying claimants who elect such a process on an accelerated basis. If the process required the claimant who elected to be compensated from the schedule to submit a simplified "EZ" form including certain basic details about the survivors along with certain readily-available proofs of the decedent's death and full gross income (possibly through tax records or employment records), there would be no need for the Department to take 120 days to decide the claim, nor 20 days to pay the award listed in the matrix or schedule. An added benefit of this approach would be that claimants would not be required to use an economist to prove pecuniary damages.
Elective schedules and accelerated compensation processes may also be used for those who survived the September 11th tragedy, but suffered physical injuries. Numerous resource materials exist to determine average compensation for various physical injuries, such as severe burns, that could be used to create a minimum compensable amount for physical injuries. As mentioned above, however, such schedules must not be used to artificially limit a claimant from recovering his or her actual damages or deprive him or her of a more comprehensive evidentiary hearing.
D. The Regulations Can Make It Easier For Claimants
To Prove Their Claims and Receive Information
Numerous mass tort settlements have employed procedures designed to make it easier for claimants to file claims without the necessity of consulting a lawyer. For example, in the Dalkon Shield Claimants Trust, the Trust created user-friendly claim forms that were tested on unrepresented claimants from a variety of socioeconomic levels before they were finalized.22 Additionally, the Trust had reviewers who would assist claimants in ensuring that their forms were complete and in obtaining medical records.23 Similarly, in the diet drug settlement, claimants could present their records directly or authorize settlement administrators to obtain them.24
The Department has asked whether there are actions that could be taken before a claim is deemed complete or filed. (Notice of Inquiry at 10.) Cantor Fitzgerald respectfully suggests that the Department should consider employing "reviewers" or "administrators" who would be empowered to review a claim and obtain basic evidence on behalf of the claimant. In making a claim against the Fund, the claimant could sign an authorization that the "reviewer" or "administrator" could use to gather necessary records. For example, a "reviewer" who had a signed authorization could direct employers to forward directly to the Department basic employment records, which would go a long way in helping to establish lost earnings.
Certain mass tort settlements also employed communications strategies that the Department may wish to consider. In the Diet Drug litigation, class members received a "plain English" brochure describing the claim process, a more formal "official notice" with rules governing the process, and various color-coded forms, including a form for an accelerated payment option.25 Moreover, the Dalkon Shield Claimants Trust which had a goal of allowing claimants to participate in the claim process without the necessity of hiring a lawyer conducted informational meetings for unrepresented claimants in seven cities.26
Once the claim process has begun and the Special Master begins to make awards, it is important for potential claimants to receive periodic information about the amount of the awards and the progress of the claim process, particularly where as here the act of filing a claim precludes the victim from filing a lawsuit. During the conduct of the claim process, the Dalkon Shield Claimants Trust published a "plain English" newsletter for claimants, as well as a newsletter for lawyers entitled "Attorney Update."27 The Department should consider issuing similar periodic updates for victims and attorneys.
Employers are also an important resource for all communications with potential claimants. Many have established communications networks for use by the families of their employees, which also could be used to disseminate details about the Fund's claim process and progress. For example, Cantor Fitzgerald has an official website for its family at http://www.cantorusa.com, and it periodically conducts meetings with the families.
CONCLUSION
Cantor Fitzgerald appreciates the opportunity to provide comment to the Department on the various questions presented in the Notice of Inquiry, and it comprehends the difficulty the Department faces in promulgating rules and implementing the claim process by the deadline imposed by Congress. Cantor Fitzgerald stands ready to assist the Department in ensuring that the families of its lost employees, as well as its injured surviving employees, are able to look to the Fund for full and fast compensation for the economic and noneconomic damages they have suffered as a result of the September 11th terrorist attacks.
Respectfully submitted,
Comment By:
CANTOR FITZGERALD L.P.
New York, NY
1. The Fund was established by Congress in the Air Transportation Safety & System Stabilization Act, PL 107-42 § 403 (to be codified at 49 U.S.C. § 40101 et seq. (2001)). This statute is referred to herein as "the Statute" or "the Act."
2. See, e.g., Oden v. Chemung Co. Indus. Dev. Agency, 87 N.Y.2d 81, 85 (1995).
3. See, e.g., Arambula v. Wells, 72 Cal. App. 4th 1006, 1012 (1999).
4. See NY CPLR § 4545.
5. See, e.g., Oden, 87 N.Y.2d at 86 ("We note . . . that CPLR 4545(c) is a statute enacted in derogation of the common law and, as such, is to be strictly construed. . . . Further, it is to be construed in the narrowest sense that its words and underlying purposes permit, since the 'rules of the common law must be held no further abrogated than the clear import of the language used in the statute absolutely requires.'").
6. Section 405(b)(6) (emphasis added).
7. Section 402(4).
8. The requirement that a "collateral source payment" be a payment that the claimant is entitled to receive as a result of the payor's legal obligation is further supported by the statute's neutrality as to when collateral source payments are received. By requiring a reduction for such payments that claimants are "entitled to receive" in the future, Congress highlighted the fact that collateral source payments necessarily arise out of preexisting entitlements. It would make no sense to interpret the statute so that all monies received by a claimant in the past were deductible (even if they were gifts), but the only future payments deductible would be those to which the claimant had an entitlement. The statute's definition demonstrates that the very nature of what makes a payment a "collateral source payment" is the fact that it results from a legal entitlement. This is true for past payments, as well as future ones. Thus, even if a claimant already has received a gift or other voluntary payment by the time he or she files a claim, those funds are not "collateral source payments" that have been "received" under the plain meaning of the statute.
9. 147 Cong. Rec. S9589, 9599 (daily ed. Sept. 21, 2001) (statement of Sen. Patrick Leahy).
10. Id. at 9595 (statement of Sen. Orrin Hatch) ("[Charitable] donations have been pouring in from across the country to assist the victims.").
11. Notice of Inquiry at 16.
12. See Arambula v. Wells, 72 Cal. App. 4th 1006, 1012-13 (Cal. Ct. App. 1999) ("When called upon to construe private humanitarianism, 'courts do not now adopt an antagonistic spirit toward [a donor's] charitable intent … .'"); In re Price's Will, 264 A.D. 29, 32 (N.Y. App. Div.), aff'd, 46 N.E. 354 (N.Y. 1942) ("Charitable gifts and trusts are of ancient origin [and] are favorites of courts of equity … .").
13. Id.
14. EPTL 5-4.1.
15. See, e.g., Bob Van Voris, Details of Federal Airline Bailout Package Still Uncertain, N.Y.L.J. at 5 (Oct. 4, 2001) ("Once a claimant chooses either to file an administrative claim or sue in court, there is no turning back. . . . As a result, many lawyers plan to wait and see how the process works and learn whether the special master is generous or stingy with the government's money before making the call.").
16. State wrongful death and survival statutes share the same purpose of compensating for damages:
Clearly, New York's wrongful death statute was not intended to compensate distributees for the value of the decedent's life. Instead, the statute authorizes an award of "fair and just compensation" to the decedent's beneficiaries for their own pecuniary injuries, their personal loss of support or voluntary assistance, probable inheritance, services and the parental guidance that the decedent otherwise would have provided.
Lee S. Kreindler, et al., New York Law of Torts § 15.19 at 364 (West 1997).
17. Section 403.
18. Section 405(a)(2)(B)(ii).
19. Moreover, the statute defines "noneconomic losses" broadly and does not limit them to those recoverable under state law. (See Section 402 (7) (defining the term to mean "losses for physical and emotional pain, suffering, inconvenience . . . loss of society and companionship, loss of consortium . . . and all other nonpecuniary losses of any kind or nature"). This represents a Congressional determination that even where a particular state's law would not allow for recovery of a particular element of nonpecuniary damage, such as loss of consortium, the victims of the September 11th tragedy will be compensated for such loss.
20. See also Lee S. Kreindler, et al., New York Law of Torts § 15.13 at 352 (West 1997) ("The pecuniary injuries suffered are personal to the statutory distributees and limited to the loss of future voluntary assistance, possible inheritance, loss of services and, if applicable, parental guidance.").
21. See, e.g., Johnson v. Manhattan & Bronx Surface Transit Operating Auth., 71 N.Y.2d 198, 203-04 (1988).
22. See Georgene M. Vairo, The Dalkon Shield Claimants Trust: Paradigm Lost (or Found)?, 61 Ford. l. Rev. 617, 639 (1992).
23. Id. See also Georgene M. Vairo, Georgine, the Dalkon Shield Claimants Trust, and the Rhetoric of Mass Tort Claims Resolution, 31 Loy. L.A. L. Rev.79, 131-32 (1997).
24. See In re Diet Drugs (Phentermine, Fenfluramine, Dexfenfluramine) Products Liability Litigation, 2000 WL 1222042 at *24 (Aug. 28, 2000).
25. Id. at *37.
26. See Vairo, Paradigm Lost (or Found)?, 61 Ford. L. Rev. at 640.
27. Id.