Colaio v. Feinberg

262 F.Supp.2d 273 (S.D.N.Y. 2003)

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Nature of the Case

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Facts

Ps contend that the Special Master’s proposed awards fail to reflect what those who died were earning, and would have continued to earn. A Special Master appointed by the Attorney General administers the Fund, and his tasks include promulgating rules and regulations for the Fund, generating application forms for claimants, and being the sole decision-maker with regard to individual compensation awards. A claimant may be represented by counsel, present evidence, and exercise “any other due process rights determined appropriate by the Special Master.” The Special Master’s compensation determinations are “final and not subject to judicial review,” and must be rendered within 120 days of the filing of the claim. By electing to file a claim with the Fund, a claimant waives all rights to bring a civil action regarding the September 11 crashes, except to recover collateral source obligations or to sue knowing participants in the hijacking conspiracy. If victims pursue the litigation route, the amounts they potentially may recover are limited, by section 408 of the Act, to the insurance coverage of the airlines, aircraft manufacturers, airport sponsors, or persons with a property interest in the World Trade Center. Section 402 defined a number of terms. “Economic loss” is “any pecuniary loss resulting from harm (including the loss of earnings or other benefits related to employment, medical expense loss, replacement services loss, loss due to death, burial costs, and loss of business or employment opportunities) to the extent recovery for such loss is allowed under applicable State law.” “Noneconomic losses” are “losses for physical and emotional pain, suffering, inconvenience, physical impairment, mental anguish, disfigurement, loss of enjoyment of life, loss of society and companionship, loss of consortium (other than loss of domestic service), hedonic damages, injury to reputation, and all other nonpecuniary losses of any kind or nature.” “Collateral source” is defined to include life insurance, pension funds, death benefit programs, and payments by Federal, State, or local governments related to the terrorist-related aircraft crashes of September 11, 2001.” The “claimant” is the “individual filing a claim for compensation under section. None of the Ps have submitted a formal claim to the Fund, but several, and perhaps all, have met with the Special Master for the purpose of evaluating what a possible award might be. P alleges that D’s promulgation and adoption of certain rules, regulations, and methodologies governing the Special Master’s administration of the Fund violate Title IV of the Act and are arbitrary and capricious, particularly in four areas: 1) basing economic loss calculations on after-tax earnings; 2) applying arbitrary and unreasonable consumption rates for single decedents; 3) using a base earnings level formula that does not reflect their economic or financial reality, and which does not consider the higher earnings level that claimants anticipated for the year 2001; and 4) failing to compensate economic loss for decedents whose average level earnings exceeded the 98th percentile for individual income according to the United States 2000 Census, by imposing a de facto, arbitrary, and unreasonable cap through adoption of an unauthorized and undefined “needs” test. In Smith v. Ashcroft, the two plaintiffs are administrators of the estates of people whose annual earnings for the three years prior to their deaths substantially exceeded $231,000. The Smith complaint seeks a judgment declaring that 1) the imposition of a “needs” test by the Special Master violates the Act and is arbitrary and capricious; 2) the burden of proof to establish economic loss shall be the same for all claimants, and those claimants whose decedents earned more than $231,000 annually should not be required to meet the heavier burden of “extraordinary circumstances” to obtain an award higher than the maximum presumptive awards; and 3) economic loss shall be based on gross pre-tax income as required by New York state law, rather than post-tax income. The third case, Schneider v. Feinberg, involves similar claims as those in Colaio and Smith. The plaintiff, Cheryl Schneider, sues for a judgment requiring the Special Master 1) to award all claimants their economic losses subject only to reduction for collateral source compensation, without consideration for financial need or proof of extraordinary circumstances, and based on pre-tax earnings of the decedent; 2) to disclose the reports of economic loss created by Price Waterhouse, a firm retained by the Special Master; and 3) to determine the plaintiff’s claim in accordance with the evidence of economic loss submitted in compliance with the Fifth Amendment’s due process and equal protection guarantees. Ds have brought motions to dismiss the complaints under Rule 12(c) of the Federal Rules of Civil Procedure.