Lawsuit Hell For Airlines?

The fires weren't even out at the World Trade Center and the Pentagon last week when in the halls of Congress they were talking about the lawsuits that would result from the horror of Sept. 11, 2001.

The airline industry, it seems, and in particular the folks who run American Airlines and United Airlines are worried that their companies will be forced into bankruptcy as a result of the tens of thousands of potential negligence lawsuits that could be filed by attack survivors and the family members of victims.

Executives at the two airlines directly involved, for example, understand that they may be held liable for not adequately securing their planes and protecting their passengers from the deeds that were done, even though such deeds were hard to fathom before Tuesday morning. If there are lawsuits, there almost certainly will be allegations that airport security -- supervised by the airlines -- was inadequate and that in-air procedures were insufficient to eliminate or at least minimize the horrific damage.


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Andrew Cohen

Airlines all too frequently, unfortunately, have to deal with deadly crashes which ultimately result in class-action or individual lawsuits. Usually, when such tragic events occur, when a few hundred people are killed as a result of some circumstance which the airline might have prevented, the airline, for the sake of business and public relations, settles the claims quickly and quietly and to the general satisfaction of all concerned.

But in this case a whole new class of plaintiffs potentially exists. In this case there may be more than 6,000 people who were killed as a direct or proximate cause of what happened to and on those planes. And there are maybe 5,000 more who were injured. It's an order of magnitude greater than any single airline disaster we have ever seen. And it has the industry downright petrified.

So the industry did last week what powerful industries do when they are fearful of losing their businesses; they asked their politicians for a hand-out. In particular, according to Reuters, they asked Congress for $2.5 billion in grants and $12.5 billion in loan guarantees which are designed, apparently, to cushion the extraordinary economic impact the terror attack is having, and will continue to have, on the industry itself.

Now, I'm not sure that the taxpayers want to bail out this particular industry at this particular time, and I'm not sure that Congress ought to fork over any dough without re-regulating the industry in order to make it safer, but I suppse that those are economic and political issues probably better left to economists and politicians to debate.

Also on the table, however, is a provision which comes directly into my balliwick. Congress now is considering a measure which would limit the liability of the companies involved. Sen. John McCain, R-Ariz., for example, is reportedly working on a bill to that effect.

And Sen. Christoper Bond, R-Missouri, is reportedly talking about a measure would protect the companies from liability by requiring plaintiffs to gain whatever compensation they merit through the Federal Tort Claims Act, a federal statute which, among other pro-defendant terms, dramatically reduces the size of any payout to any particular plaintiff.

There may be some merit in ultimately protecting these companies from multi-billion-dollar verdicts. But Congress ought to be very careful about doing anything rash in these early days, so soon after the attacks. First, there is a question about what legal effect congressional action would have since any such action necessarily comes after the events which would be the subject of the lawsuit. There are limitations on Congress' ability to enact legislation which has a retroactive effect.

Second, in the absence of any formal investigation into what happened on and before Sept. 11, 2001, the lawsuits which stem out of the disasters might be the best chance any of us of getting answers to some of the many questions surrounding the event. A class-action lawsuit arising from this catastrophe may be the only way corporate executives are required to answer publically for the decisions they made about how to secure airports and airplanes. There may be some value in that public vetting which Congress does not want to preclude at this stage of the game.

Finally, there is the notion in this week of signals and symbols that coming down on the side of the airline industry against its passengers and the victims of the attacks may be absolutely the wrong signal to send at this time. About as wrong a signal as the industry itself sent when it rushed to Congress last week amid the fires and smoke and rubble.


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