The Health & Environmental Settlements Project Keynote: Ken Feinberg


– Good morning, my name is David Hayes. I’m the executive director of the State Energy &
Environmental Impact Center here at NYU Law School. It’s my pleasure to
welcome you here today, both those of you who are here in person and those of you who are
watching on our live webcast. As you know, nature, health,
and environmental controversies burst on the national
scene with some regularity often raising challenging
legal and policy issues around liability,
restoration, and restitution. These issues are often
tough for single courts or for our legal system,
generally, to handle, and yet precisely because
these health matters like tobacco and vaccines, or environmental dangers or disasters, like toxic sites or the Gulf oil spill can effect so many people in so many ways in so many jurisdictions, and because the societal
challenges they represent must be addressed, and
in some fashion, solved, we somehow wrestle them to the ground. Sometimes with efficient,
fair, and effective results, sometimes less so. At the State Impact Center,
as a part of our charge of assisting state attorneys general on clean energy, climate change,
and environmental issues, we have launched a Health and Environmental
Settlements Project. Our goal for the project
is to help lawyers, legislators, and judges
better access lessons learned from past legislative
and judicial resolutions of particularly challenging and important health and environmental
issues of national importance. Toward that end, we’re looking
to dissect and evaluate key elements from a handful of major legislative and
judicial settlements. We want to spot, in particular,
structures and mechanisms that have been used effectively, or not, to determine personal, corporate,
and societal liability, to award compensation, including for future
as-yet-unknown injuries, and to redress harms, restore resources, or otherwise provide
appropriate restitution, including for as-yet-unknown health or environmental insults. Today we have a spectacular
group of experts who have intimate knowledge
about four major settlements that offer unique learnings on
some or all of these issues. By putting these matters side
by side in today’s workshop, we will begin the process
of extracting insights that will help lawyers tackle future health and environmental liability and restitution challenges that are sure to come. A quick on word on what’s next
for our Settlements Project. After today, we will
commission written analyses of the four major matters
that we will be discussing, and likely, additional settlements that have noteworthy features
that may include, for example, the National Childhood
Vaccine Injury Act, asbestos, and possibly others. We will aim to put these
together in a useful compendium along with some overarching analysis that will be published a year from now. I wanna thank our keynote speakers, Ken Feinberg and Dr. Cheryl
Hilton in particular, and our spectacular experts whose outstanding bios
are in your materials for agreeing to participate
in today’s event. You’re providing a true public service by contributing your
knowledge and insights to this endeavor. But now I wanna turn over the mic to my friend and colleague,
Professor Ricky Revesz, director of the Institute for
Policy Integrity here at NYU, the former dean of NYU, to introduce our keynoter, Ken Feinberg. – Thank you, David. One of the great things that happened at NYU Law
School a year and a half ago is when David and the State
Impact Center joined us, and it’s been wonderful to
have David as a colleague here at the law school, and to observe the really spectacular and very important work that the State Impact Center is doing, supporting, encouraging,
and adding capacity to the work of state attorneys general, who are doing such
critically important work in the clean energy and environment areas. So, I said this was a great thing that happened year and a half ago. A great thing that
happened a longer time ago was when Ken Feinberg came to
the law school as a student, because it was a few years ago,
I won’t tell you have many, but Ken is one of the law school’s all-time most distinguished alumni, and to actually focus on
what Ken has accomplished in the area of this
conference is extraordinary. Ken, among other things, I mean, it would take forever to list all of the incredible assignments that Ken has discharged
with enormous grace, and efficiency, and
competence, and integrity, but he was the special master
in the U.S. Government’s September 11 Victim Compensation Fund. He was special master for the
TARP Executive Compensation. He was the government-appointed
administrator of the BP Deep Water Horizon Disaster Victim Compensation Fund. He was appointed by the
Commonwealth of Massachusetts to administer the One Fund,
the victim assistance fund established in the wake of the
2013 Boston Marathon bombing. He was retained by GM to
assist in the recall response, and by Volkswagen to oversee
their U.S. compensation of diesel owners affected
by the emissions scandal. He was the settlement master in the Agent Orange products
liability litigation, the asbestos personal injury
litigation, the DES cases. You know, if there was like, if the FTC could
investigate monopolization of great special master assignments, they would definitely go after Ken. They would have done this a long time ago. I mean, it’s truly, truly extraordinary. I mean, you know, it’s
actually hard to imagine how, in this sort of very
competitive world we live in, one person can dominate a
really important field of law in the way that Ken has
dominated this field. He has also done some other, maybe less well-known, but
super-interesting things. He was one of three arbitrators who determined the fair market value of the Zapruder film on
the Kennedy assassination, was one of two arbitrators who determined the
allocation of legal fees in the Holocaust slave labor litigation, and early in his career
Ken spent considerable time as chief of staff for
U.S. Senator Ted Kennedy, was a prosecutor in
U.S. Attorney’s Office, was a founding partner of
the Kaye Scholer DC office, and eventually founded his
own firm, The Feinberg Group. During my years as dean I had
the chance to get to know Ken. He’s been a wonderful friend and mentor, and it’s sort of really hard to imagine how a law school, any law school, could have a more successful, and distinguished, and able alumnus, so it gives me like enormous pleasure to now get to introduce Ken, who will give us a keynote talk. Thanks so much, Ken. (audience applauding) – That just took 17 of my 20 minutes. I thank the dean, former Dean Revesz. I thank David for the invitation, and I must say, when you’re
gonna give a keynote, it’s always better, I’ve
learned over the years, to give the keynote up
front at the beginning, rather than at the end of
the day to sort of summarize, because if you do it at the end of the day and you summarize, you summarize in the view of a lot of the people in
the audience incorrectly, and then people start to complain, whereas if you do it early on and sort of set out a
blueprint, you’re sort of safe. You’re sort of safe, and what I wanna do in
literally 20 minutes, David and Ricky are tough
taskmasters on this, I just wanna lay out some principles that I guarantee will
occupy your attention during the rest of the agenda today. First of all, whoever thought of the
timing of this conference is a genius. You know, in the last few days, just picking up the New York Times, PG&E, the utility in
California with the fires, files for bankruptcy. What are we gonna do? How are we gonna settle all these claims? Chrysler, we just settled
the Chrysler emissions case in the last month. In the U.S. District Court
in San Francisco, Judge Chen. Emissions, 125,000
trucks, Chrysler vehicles, settled through a very creative process. 9/11, they’re running out of money. I read in the newspaper, the Zadroga bill right here in New York
for first responders. They’ve cut back on how much they can give
each settled responder because Congress didn’t
appropriate enough money, and Congress didn’t
appropriate enough money because if you look at that 9/11 fund, and you see the
presumptions they’ve created in the area of health, if you see the presumptions
they’ve created in terms of who’s eligible, not just first responders: citizens, people that live near the
dump where they dump the guck. I mean, you can see how Congress didn’t anticipate the number of claims that would require a reduction in the overall distribution of funds. Everything that’s going
on in the newspaper today, somebody thought about a conference today, a lot of sense in bringing
forth some of these issues. Now, I can’t stay for the day, but I must say John
Cruden’s here somewhere, and David Nachman’s supposed
to be here at some point, from the New York AG’s Office. They know everything. I mean, I would, if I was here all day, John Cruden and David Nachman know exactly what I’m talking about when I lay out this menu of items, and they’re certainly gonna be here, and they understand these issues perhaps better than anybody. Now, I want to focus on just two subjects. First, and it’s just a menu of issues that you’re gonna confront today when you talk about the settlement of these large, huge
environmental health impact cases. Here’s what I’ve learned
over the last 35 years about settling and
resolving these huge cases. First is the structure that you use to promote the settlement. What do I mean by structure? The skeleton, not the substance. Is the settlement
initiative court sponsored, like 9/11, like Agent Orange was, Judge Weinstein, or Volkswagen was, Judge Breyer in California? Is it court sponsored, or is it private? The BP Deep Water Horizon oil spill, the Boston Marathon bombings, the GM ignition switch program. I mean, skeleton issue number one, court overlay, or something private off
to the side, extrajudicial. I’ve done them both; different rules. Two, is the insurance industry involved? Never, in my cases, thank goodness. No, no, they have some
very legitimate gripes. Don’t get me wrong, but if you look at what
you’re focusing on today, for the most part, Volkswagen, BP, 9/11, no insurers anywhere at the table. Ken, get it done. We’ll worry about contribution
and subrogation later, not on your watch. My goal in these big cases: Get rid of the individual
plaintiff claims, and I shudder to think about the delays and the inefficiencies if the insurance industry is at the table. It’s an altogether different ballgame. I’ve never had to worry about that. Three, is the government involved? Now, ask John Cruden and
David Nachman about this. Volkswagen and Chrysler got done because the government was at the table, and the government pushed
towards settlement. 9/11 was a government-funded program. You’ll never see that again. That was taxpayer money. So, if the government is at the table, that’s an additional interest group, that’s an additional issue
you’ve got to think about, but having the government there is not necessarily a good or a bad thing. It’s just that you have to factor in different leverage points, different settlement considerations if the government is involved in the settlement negotiations, either directly, like in Volkswagen, or indirectly like in Volkswagen with David Nachman and the state AGs. Federal government directly involved, EPA and the Department of Justice, and in Chrysler, in Volkswagen FTC involved, and in Volkswagen, in
Chrysler, indirectly, David Nachman and the
state AGs, government. Next, structural issue. Are you going to aggregate the claims, and how are you gonna do that? I mean, if you’re talking
about a global settlement in these complex areas, are we looking at upfront
as part of the skeleton, an aggregation so that all
the claims are being settled? Now, whether that’s a
Rule 23 class, an MDL, whether it’s a local or regional
consolidation of claims, or whether, I must say, no, we don’t wanna aggregate the claims. It’s not feasible and we wanna set up some mechanism to resolve them one by one, and do you wanna aggregate claims or resolve them one by one outside of the judicial system? That’s BP. We set up a separate,
independent claims facility. That’s 9/11, the Victim Compensation Fund. There’s no aggregation of claims, but there’s a facility
available voluntarily for any individual to
exit the court system, go into that separate facility,
and resolve the claim, and that’s what we did. In BP, we resolved 92%
of the individual claims in 16 months and paid out six and a
half billion dollars. In 9/11, by statute, in 33 months we resolved 97% of the individual claims and paid out $7.1 billion
in taxpayer money. So, as a skeletal matter, aggregation, government, insurers, court sponsored, private facility, these are the issues that you’ve gotta consider all day today in trying to set out some sort
of principles or groundwork for future consideration. Also, I must say, it’s a skeletal issue, but it’s also substantive. What do you do in these cases
involving latent claims? What do you do when
you’re settling claims, and you’ve set up some sort of facility, and one of the arguments
against what you’re doing is, well, what are we gonna do
about future manifestations arising out of current exposures? That’s not really traumatic death. Those are illness claims, like in BP, whether they’re physical injury or business interruption claims. In BP, the oyster harvesters
and the shrimpers said to me, the trouble with taking your money now is we don’t know about the future. Answer: Let’s get creative. Well, one option I’ll give you is settle your damage now and
you can come back later if there’s future damage
that you can show, so let’s, I mean, in a
sense it’s not global peace because I’m inviting the latent
victim to come back later on when there’s a manifestation, but we came up with even
a better idea in BP. Your alternative, if
you don’t wanna do that, we’ve got our own experts who say that the shrimp
and the oyster harvesting will come back to normal
in three or four years. That’s what they project. We’ll pay you three or
four years damage right now if you’ll sign the release. If you’re willing to take the risk, we will give you your
expert-opinion-corroborated money now, and that’s it. You’ll bear the risk if it takes five, or six, or seven years. Well, everybody took the money, of course. Of course. Of course they took the money now. You mean, you’ll give me three
or four years damage now, a check that won’t bounce,
but I can’t come back later. That’s right. It’s your choice. Where do I sign? Of course. Anybody surprised about that? So, we gave people, it’s
creativity, you see. Latent claims can be resolved today. There are ways to do that. You just have to think
through the best way to help all sides secure
a global settlement now. Two other skeletal issues. What’s the timing? What’s the timing? How long do you want or have to try and forge a settlement? Now, in 9/11, this
Congress told me 33 months. In BP, in 16 months we were largely done, and then the lawyers took over, much to my disappointment
and to BP’s regret, but that was 16 months. In the GM ignition-switch settlements involving that ignition switch that, if the key hit the ignition switch, the switch was defective, it would shut off the car. Young drivers, particularly, would crash cars into trees, et cetera. That lasted about a year. We paid out 600 million, GM money. So, you have to have, upfront in your settlement
menu, the timing. These programs can’t go on forever. Bad idea. No one wants to be in the
claims business forever. There’s a beginning and an end. And finally, maybe the most
important skeletal question, which PG&E is now trying
to confront in California: Do you have enough money? How are you going to factor in liquidity, financial liquidity
and available resources in order to settle? Is it a settlement with
an upfront payment, like BP has all the money in the world. They just said settle the cases and don’t worry about a thing. We’ve got the money. Or is it money over time, in installments? Is it tied to ongoing
business performance? There are a lot of ways to come up with the necessary cash that you’re gonna need
to resolve these cases. I mean, I must say, in
every case I’ve worked on, money really hasn’t been an issue, which is a nice thing to have. No caps in BP or 9/11. GM, no cap, whatever it takes, we wanna get rid of the cases. Well, that’s very, very helpful. Very helpful. In Volkswagen, I mean, you know, part of Volkswagen’s owned
by the German government. I mean, it was never really an issue. Well, that’s very, very good news when you’re a special
master or trying to settle, and you know that if the
settlement is fair and reasonable the funds are there. So, those are all sort of skeletal issues before you even talk about
the substantive dispute, but those issues loom very,
very large, I suspect, in any discussion today were there’s going to be interaction among these various issues concerning the four examples
that David mentioned, and other examples that
I’ve mentioned as well. Then you get, today, to sort of the menu list
of substantive issues. I don’t care what the settlement is. I don’t care whether it’s environmental, health, business
interruption, economic loss. You’re gonna get to a half dozen critical checklist issues that you’re gonna have to deal with today one way or another. One, who’s eligible? Who’s actually eligible to
participate in the settlement? That is a huge issue. As I said, one reason the 9/11
fund is out of money today is the eligibility criteria went
way beyond, presumptively, anything Congress ever anticipated, and that’s why it’s not
only first responders that are getting paid for
their health injuries, it’s citizens in the neighborhood. It’s people that lived on the way, on the highway going out
to Fresh Kills Landfill where they say the trucks drove by and caused asbestos and stuff
to go, and now I’m sick. And there were presumptions
that were created concerning medical conditions. I’m not even taking a
position on the wisdom of it. I’m just saying, is anybody surprised that
they’re out of money now? Nobody should be surprised at all. So, eligibility is a huge issue. Mr. Feinberg, you’re doing the BP case? I own a hotel right on
the beach in Pensacola. The oil never really got to Pensacola, but everybody thought it was coming and I lost 71% of my guests that were gonna stay at the hotel. All right, we’ll take care of that. Mr. Feinberg, I just
heard what you just said. I own a hotel 10 miles from the beach and I lost 71% of the clientele, because 10 miles may
seem to you a long way, but actually there’s a golf course here. Families come. Some play golf. Some go to the beach. I want the same deal. No, you’re geographically 10 miles inland. You’re not right on the beach. There’s gotta be different
rules concerning eligibility, different rules. Mr. Feinberg, I live in Stockholm. I make rope that I sell to fishermen in the Gulf, a special rope. I don’t know anything
about proximate cause, but my rope sales are down
9% because the people, the fishermen can’t fish, and even though I’m in Stockholm, and (grumbles), there you are. Am I eligible? Mr. Feinberg, I own a crab house a half a mile from your
home in Bethesda, Maryland. Every day we get crabs from the Gulf. They come up, shipped,
the Bethesda Crab House. I’ve lost a fortune because there’s no crabs
coming out of the Gulf now, and I can’t mitigate. They only want New Orleans
crabs, and now I’m stuck, and here’s my claim. Well, have you mitigated by
getting shrimp from Maryland, or crabs, I mean Maryland crab? No, they only want the. There you are. Who’s eligible to participate
in the settlement? And even after you determine eligibility, what’s the methodology you’re going to use to calculate the settlement
value of the claim? Is it tort? That’s the 9/11 fund. They said right in the
statute, use tort law. Easier said than done, but
they said use tort law, which we did. Is it strict liability? Is it comparative negligence? Is it a flat amount? You know, one very creative way we get rid of a lot of
claims in these examples is by telling somebody, look, you can go through a 12-page claim form, fill it out, show us your damage, corroborate, attach your documents, or we’ll give you $10,000 just to fill out a two-page form. You don’t have to go to all that trouble. Now, you may give up a lot more money if you think you can corroborate it, or we wanna clear out 71% of the cases by offering a flat amount if you fill out a basic, two-page form. It’s a summary, and
we’ll settle the cases. I mean, there are a lot of different ways to develop a methodology for calculating the
value of the settlement. Three, proof. What proof do you need
to attach to your claim to show that you proved and
corroborated your claim? Now, you can have all the
presumptions in the world to help a claimant. You still have this
requirement, don’t you? At the end of the day, how do I know, as the settlement master, that your claim is legit? Not talking about fraud. We’re not even suggesting that. I’m talking about valuing your claim. You may be eligible,
but prove your damage. Now, that might mean tax returns, which few people have,
especially in the Gulf, or there may be some other corroboration, but there’s gotta be
some proof requirement to help value the aggregative settlement and determine the individual claim. Next, what about the release? Now, you realize that in 9/11, the Deep Water Horizon BP oil spill, the General Motors
ignition switch program, you take the money that’s
being offered in settlement, and you waive your right to litigate. You waive your right. Volkswagen, Chrysler, you
waive your right to litigate, versus, Ricky mentions the Boston Marathon or the Virginia Tech shootings, or the Aurora, Colorado
Dark Knight shootings, or the Sandy Hook
Elementary School shootings, or the Pulse nightclub terrorist
attack in Orlando, Florida, or the Harvest concert in Las Vegas, 50 people, 60 people killed. No release there. That’s all gift money. That’s money donated by private, and private individuals and companies all over the United States. Give these people, it’s terrible
what we saw on cable news. We send in our checks. In the Boston Marathon, in 60 days, thanks mainly to Mayor
Menino getting on a soapbox, $61 million came in from 100,000 people all over the country. 61 million. That’s no release. That’s not an alternative
to the tort system. That’s not an alternative
to a legal process. That’s 501c3 donated money. Everybody gets the same
flat amount for death. No complications there on methodology. And finally, due process. I mean, you’re gonna give people
an opportunity to be heard. In 9/11 that was the key to
the success of the program. Anybody who voluntarily
wanted to come and see me could come and see me. You don’t have to. People, human nature,
people grieve in private. A lot of people grieve in private. They don’t wanna light candles down at the World Trade Center. They wanna be left alone. Other people wanna come
and talk, confidentially. Fine, but how do you
build into your settlement a process of individually-tailored conference or hearing that undercuts the argument of many that it’s just assembly-line
justice, you see? And I find that due process
is a very serious factor here in considering the overall
strength of the program. So, that’s sort of an opening, I mean something for everybody
to think about going forward. Now, there are a couple of
things David or Ricky said that I must say bear repeating. In all of the programs that
I’ve ever been involved with, liability is irrelevant. No one’s asked me to determine whether or not the company
or the entity is liable. That’s a judicial concept. That has nothing to do with my effort at getting compensation to victims. Right now, I’m trying to settle about 2,500 priest sexual abuse cases in New York, Pennsylvania, and New Jersey. The liability of the
church is irrelevant to me. Posting the name of culpable priests is not on my watch. My watch is pay the victims. That’s my job in all of these cases. Do I have the money, the resources, the design, and the
plan to pay the claims? And if the government’s involved, if I have John Cruden at the table and David Nachman at the table, it’s gonna get done, but who represents the government
and what’s their agenda? That can make settlement difficult, and I don’t really see how
you can think about this today without factoring in those cases where the government’s involved, where it’s purely a private settlement like BP really was, or 9/11 really was. Government never, ever, to this
day has apologized for 9/11. Never will. That money is not reparations, believe me. That money I paid 9/11 is just goodwill from the people of the United States. Government will never apologize for wrongdoing or negligence in 9/11. I’m not sure they should,
but they never will. So, those are sort of, you can see why it’s so much
easier to do it in the morning, (audience laughs) before everybody starts
throwing in their two cents and throwing curveballs, ’cause at the end of the day you have to change your
whole talk in light of, you know, and you have
to sit here all day. That’s the other thing. You don’t wanna miss something. So, I’m glad, I wanna thank David. I wish I could stay. I wanna thank David, really, and Ricky for inviting me to at least put out some issues that I think will come
back during the day, and if you have a particular
question during the day you can certainly e-mail me, or even better, just ask John
Cruden how I would answer it, and he has my proxy,
as does David Nachman, if and when David manages to get here. So, I wanna thank you all for
what appears to be, really, a very, very timely conference. Thanks again. (audience applauding) – [David] Thank you so much. – Hope that was helpful.

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