A New York Appeals Court Allows Victims of the 1993 World Trade Center Bombing to Recover Massive Damages from the Port Authority: Should The Bombers' Culpability Have Lessened the Damages Award?

Last week, the Manhattan-based First Department of New York's Appellate Division sustained a jury's finding that the Port Authority of New York and New Jersey was liable in connection with the 1993 World Trade Center (WTC) attack. Now, unless the New York Court of Appeals -- New York's highest court – reverses that decision, the Port Authority will be required to pay up to $100 million in damages to 55 attack victims (or, if the victims are deceased, to their families).

In this column, I will focus on how the court dealt with the most difficult issue raised by the Port Authority on appeal: whether the grave responsibility of the original bombers should be a reason to relieve the Port Authority from some of its liability.

The Suits Arising out of the 1993 World Trade Center Bombing

The facts behind the 1993 bombing are likely to be familiar to most readers. On February 26, 1993, Islamic militants detonated explosives in a van they drove into the WTC's underground parking garage, killing six people and injuring almost 1,000 others. The explosion created a crater about six stories deep that covered an area about half the size of a football field under the building complex.

Over 500 people filed lawsuits, 90% of which settled before the case was tried in 2005. At trial, the jury heard evidence describing repeated warnings that the Port Authority received from various experts, including Scotland Yard, that the Towers could be a target. Furthermore, all the experts agreed that, although it would have been impossible to make the buildings terrorist-proof, some of the risk could have been eliminated by simply shutting down the public parking garage under the Towers.

The jury concluded that the Port Authority was 68% at fault and the terrorists 32% at fault for the attack. The Port Authority was outraged by this verdict, since it felt that the jury had suggested that the terrorists were less "guilty" than the Port Authority. As I will argue below, this is not an entirely inaccurate interpretation of the verdict.

Under New York's Division-of-Responsibility Rules, the Port Authority's 68% Share of the Liability Will Really Turn Out to Be 100%

The jury's decision to impose most of the responsibility on the Port Authority is important for more than symbolic reasons. Damages have not yet been calculated; plaintiffs predict they may amount to $100 million. Whatever they turn out to be, the jury's division of responsibility, in combination with governing law, means that the Port Authority will pay not just 68%, but100% of the damages.

In New York, as is the case in many states, if a plaintiff's injury had been caused by more than one defendant, she can opt to collect her damages from all or some of the defendants. If she chooses to sue just one (usually, the richest), that defendant must pay 100% of the damages, even if it was only partially at fault.

To try to pay less than 100%, the defendant has only a few options. He can bring the other defendants into the case ("implead" them) before trial, sue them for "contribution" after trial, or—in certain rare cases—ask the court to impose liability that is "proportionate" – that is, in proportion to their actual share of the fault in causing the plaintiff's loss.

Unable to implead or seek contribution from the terrorists, the Port Authority could only try the third option. Under Section 1601 of New York's Civil Practice Law and Rules, if the jury finds that the defendant is less than 50% at fault for an accident, then the defendant is responsible for non-economic damages (such as pain and suffering) only in direct proportion that the jury finds the defendant responsible for the accident. The defendant remains up to 100% responsible for economic damages (e.g. victims' medical expenses and lost wages).

In reality, this approach failed for the Port Authority – for the jury found that it was more than 50 percent at fault, and thus CPLR 1601 was never triggered in the first place. But consider a hypothetical: Suppose the jury had found that the Port Authority's negligence was 33.33% at fault for the bombing, and the terrorists 66.66% at fault. Suppose also that half of the $100 million of damages caused by the bombing reflected non-economic damages, such as pain and suffering. Then the Port Authoritywould have been on the hook for $66.5 million dollars – the sum of100% of $50 million (economic damages) and 33% of $50 million (non-economic damages).

The bottom line: The jury's decision to allocate more fault to the Port Authority than to the terrorists may well have cost the Port Authority tens of millions of dollars – even despite the fact that the plaintiffs were not able to recover money from the terrorists themselves.

Is It Crazy to Suggest the Port Authority Could Be More At Fault Than the Terrorists?

On appeal, the Port Authority argued, in effect, that the jury was out of its mind when it allocated liability. It said that the idea that it could be more at fault than the terrorists was "egregiously incorrect" and "bizarre." Last week, however, the Appellate Division disagreed.

In so doing, the Appellate Division was not saying it agreed with the jury on the merits. Instead, it was applyingsettled law that the apportionment of fault is a matter of fact to be determined by the jury, and that a jury's verdict should not be overturned unless it was manifestly unreasonable. But was the Appellate Division correct to reject the Port Authority's argument that the jury finding here was, indeed, manifestly unreasonable?

The answer to this argument may depend on whether one finds full compensation or fairness more important in the context of tort law.

From a full-compensation point of view, one might argue that the jury's verdict was reasonable enough, for we should err on the side of giving full compensation for the innocent victims at the WTC in 1993, not on the side of protecting the Port Authority's interest in paying for exactly the harm it caused and not a dollar more. Thus, even if it stretched credulity to deem the Port Authority more at fault than the terrorists, at least it served the interest of full compensation.

The Port Authority, however, contends that the harm to fairness here is too great to be borne. It points out that, even if the court invalidated the jury's finding that it was more than 50% liable (and hence more at fault than the terrorists), it would still have to pay plaintiffs' full economic damages. Only the non-economic (pain and suffering damages) would be apportioned according to fault.

Yet this argument implies that non-economic damages are somehow not as important or as "real" as economic damages. This prejudice against non-economic damages has probably increased as the proportion of tort damages awards representing pain and suffering damages has shot up over the past thirty years. Yet the fact remains that non-economic damages serve some very important purposes. To begin, pain is quite real for many people; the fact that no hospital bill can monetize it may simply mean that no drug or treatment can cure it. In addition, for people with little or no income, or injuries that were severe and painful but did not require long hospitalization, non-economic damages may be the only damages they can claim. Finally, since legal fees are paid for out of damages awards, if a victim cannot collect non-economic damages, then she may not be able even to find a lawyer to take her case in the first place.

To be fair, however, it's important to remember that the Port Authority was asking the court to apply a fairness approach for non-economic damages only in one type of case: the type where the absent wrongdoer is more at fault than the defendant in the courtroom. The idea behind this approach is that an innocent victim should get full compensation only if the person she sues is "worse" than the people she didn't sue. On this theory, the victim deserves full compensation – but only from the true and worst perpetrator in the incident.

Seen in this light, the Port Authority's complaint that the jury's verdict sends the wrong message—that the Port Authority was "worse" than the terrorists—makes sense. The very idea of the New York rule is that only the worst perpetrator should pay the entire pain and suffering damages amount. Still, I would encourage those who think the Appellate Division erred to read its careful opinion from last week. While the court does not go so far as to endorse the jury's findings of fact, this unanimous decision from a five-member court clearly suggests that they do not find "manifestly unreasonable" – the legal standard here -- the idea that, as between the Port Authority and the Islamic militants who set off the bomb, the bigger wrongdoer was right here at home.