Keynote Address

• Citation: Vol. 31 No. 4
• Publication year: 2015

Keynote Address

Kenneth R. Feinberg

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2015 GEORGIA STATE UNIVERSITY LAW REVIEW SYMPOSIUM: RISKY BUSINESS: THE ART OF REDUCING LITIGATION UNCERTAINTY AND SETTLING CASES

Kenneth R. Feinberg^*

Now, this is a topic worthy of a symposium. In the work I do, there is a great deal of discussion about how the 9/11 fund, the GM ignition switch fund, and the BP oil spill fund promote speed and efficiency in establishing compensation schemes outside of the traditional litigation system.¹ Very few commentators, very few critics, very few lawyers or public policy experts focus on what I think is extremely important to claimants who file a claim: the certainty of compensation. When you file a lawsuit, you roll the dice. You roll the dice in terms of outcome. You roll the dice in terms of time. You roll the dice in terms of cost. But most of all, you roll the dice in terms of uncertainty. You have heard it a million times. Lawyers will tell clients nothing is certain. Yes, we may tell a client that there is a ninety percent chance of success. But, nothing in the civil litigation system is certain. And today, this program focuses on prediction and minimizing risk. Very important.

One of the great advantages of what I do is that a policy maker or the Congress sets up, by statute, an alternative to the civil justice system. For example, Congress established the September 11th Victim Compensation Fund thirteen days after 9/11. Anybody who lost a loved one—on the planes, at the World Trade Center, at the Pentagon—anybody who was physically injured was given a choice: sue the World Trade Center, the government, the airlines, the Port

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Authority, the security guard companies or, at your option, come into a no-fault workers' compensation-type fund. File your claim and within sixty days you will be compensated if you are eligible. And there's the amount. If you do not like the amount, opt out. Go sue. But if you like the amount, or if you are satisfied with the amount, or if you accept the amount, release your lawsuit completely. No lawsuit, here is the money. Taxpayer money! Well, ninety-seven percent of all death claimants took the money. Certainty. "Mr. Feinberg, I lost my son on the airplane." Certainty. Liability is not an issue. The only issue: how much money you are going to receive?

"Mr. Feinberg, as a result of the oil spill in the Gulf of Mexico by BP, I could not fish and I lost a $100,000." Submit your claim. Certainty. No finger pointing as to liability. BP has agreed with the President to front $20 billion to pay the claim. No risk. In sixty days you will know whether you are eligible and how much money you are going to receive. That is not risk. That is an insurance policy. If you do not like it then go litigate. But if you like it sign "I will not sue." Well, in sixteen months, $6.5 billion went out and 222,000 individuals and businesses released their claims.

Nine months ago, GM ignition switch failure was alleged in certain GM automobiles: Cobalts, Ions, Saturns, et cetera. Congress said, "We and GM have decided we will minimize risk. We will set up a no-fault compensation scheme independently designed and administered by Mr. Feinberg. And in that scheme, if you lost a loved one or were physically injured in an accident in one of these automobiles, Mr. Feinberg will evaluate your claim." GM's liability? Irrelevant. Contributory negligence of the driver—speeding, texting, drinking—irrelevant. The bankruptcy bar imposed by the bankruptcy court following GM's bankruptcy? Irrelevant. File your claim and if you are eligible—if you can demonstrate that the switch was the proximate cause of the accident, without regard to contributory negligence or GM's liability—you will receive compensation within sixty days. Minimum risk. And if you do not get the result you want, either in terms of eligibility or amount, go file a lawsuit.

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Programs like I have been asked to design and administer try and minimize the amount of "risky business." Now, when policy makers set up these programs, they are not really thinking about Georgia State's symposium and "risky business." What they are thinking about is the other two pillars of what I do—speed and efficiency. They are focused on setting up a compensation system that is voluntary. No one has to participate. Rather, setting up a system that people will know quickly how much money they are going to receive. And they will know this without the necessity of all of this litigation cost. And that is why in 9/11, in BP, in GM, virtually everybody comes into the program. It may be voluntary. Why not? Why not come into this program? Why not get a free preview of what you will receive for one of these Feinberg-administered programs? If you do not like it, do not take it.

Everybody takes it, virtually. The money is very, very generous. Because, do not forget, you are trying to voluntarily entice people to enter into these programs. There is no mandate. You have to convince them. Forgo a suit; take the compensation. Well, in order to do that you have to have a pretty generous fund. You better have the money. You better have the wherewithal to set up a program like this. The average award for a death claim in the 9/11 fund was a little over $2 million tax-free. The average award for a physical injury claim in the 9/11 fund, a little over $400,000. Ninety-seven percent accepted the money.

The other ninety-four people opted out and sued. They all settled their cases five years later. Some may have received a little more. Some may have received a little less. Five years of waiting and you have to pay your lawyer twenty-five percent. BP, ninety-two percent of the fishermen, oyster harvesters, ship boat captains, and hotels accepted the money. In sixteen months, $6.5 billion paid out. Very little "risky business."

And now GM. Well, GM is ongoing. You cannot file a claim any longer. The deadline was January 31st, 2015. Almost 4,500 claims. We have paid so far I think fifty-eight deaths attributable to the switch and maybe another 125 or 135 physical injuries. How many

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people have opted out of the program once they know how much they were going to get? None. No one has opted out. Why would they? Why would they opt out? You are going to go sue? That is "risky business."

First of all, the automobile accidents occurred years ago. If you can get around the statute of limitations and the GM bankruptcy bar, you have a chance. But the accidents occurred a long time ago. You know most—not all—most of the drivers were young drivers and most were drunk, speeding, fell asleep at the wheel, texting. So you confront a contributory negligence barrier that does not exist in my program. We are not interested in any of that. We are interested in what the police reports say, what the maintenance records show, what the photographs of the accident show in demonstrating proximate cause. Just like it is a first-year tort law school exam.

So these programs minimize risk and promote certainty. They do an end run around the subject matter of uncertainty. Now, if they do an end run around litigation uncertainty by minimizing risk and promoting certainty, why is there not more of this? Why do companies and public policy makers—judges, Congress, governors, mayors—not provide more of these alternatives to the traditional conventional civil justice system? Well, there are some real downsides to these programs. I must say, as somebody...