9/11 First Responder’s Settlement Rejected by Judge

On Friday Judge Hellerstein (SDNY) rejected the settlement that had been reached by lawyers in the 9/11 First Responders Litigation (otherwise known as In Re World Trade Center Disaster Litigation).  He said the settlement was too obscure and that the lawyers were probably being paid too much at 30%.

The New York Times coverage is here:  Judge Rejects Deal on Health Claims of Workers at Ground Zero. 

The Times reports that the Judge said he would oversee further negotiations and would take “judicial control” over the matter.  “There has to be additional negotiations to come up with a better and fair settlement. I will not preside over a settlement based on fear or ignorance.”  He said.  “I want transparency. I want accountability. I want judicial control over this process.  They’ve got to come up with an agreement under judicial supervision that will make us all proud.”

The judge also said he would hear from plaintiffs directly about the settlement when the time came, not from their lawyers.  I recommended that judges do this in an article called The Law and Large Numbers – if you’re looking for other similar suggestions, read the last few pages of that piece. 

Now for some law.  The judge does not have formal veto over the settlement the way that he would had this case been certified as a class action (basically impossible now after Amchem).  And the right of a judge to reject a settlement like this has never been tested on appeal.  (Richard Nagareda is quoted in the Times saying this – and he will be posting on Torts Prof Blog Monday so you can read his views on aggregation there). 

The ALI Aggregate Litigation Project has proposed letting judges oversee aggregate settlements in the way Judge Hellerstein is doing but as a formal matter.  What the judge is doing now is not a formal requirement, but a use of discretion.  Of course, once the judge opines that the settlement isn’t good whether he has a formal veto or not doesn’t matter because there is no way the 95% of the plaintiffs required for the settlement to go forward will agree to accept its terms.  So as a matter of practice it looks like the ALI model is being adopted informally.

ADL