The Future of Tort Reform: Possible Lessons from the World Trade Center Victim Compensation Fund

Abstract

As of midnight, December 22, 2003, which was the final deadline for applications to the World Trade Center Victim Compensation Fund, 2833 people had filed preliminary applications with the Fund. This number represented 95% of eligible relatives of the victims of the September 11th tragedy at the World Trade Center. It is impossible to talk about the Victim Compensation Fund without referring to numbers. By the time the deadline for final filing had arrived, the Fund had paid out approximately $1.5 billion, with an average payment of $1.8 million per family and a high payment of $6.9 million.3 The Fund will spend approximately $3 to 4 billion in payouts to claimants.

As had been widely reported for well over two years, the Victim Compensation Fund has been plagued with very public and emotional controversy. But from the outset, the fund was beset by controversy and confusion over its rules, giving it the texture of a malleable work in progress, responsive to public pressure and subject to frequent clarifications. Notwithstanding all the controversy, the confusion, and the traumatic delay on the part of claimants, it is impressive that when the final deadline arrived ― and potential claimants were put to the ultimate choice ― 95% opted to receive compensation for their injuries and grief through the Victim Compensation Fund. By implication, only 5% chose not to.

The experience of the Victim Compensation Fund may contain some possible lessons ― either useful or not ― to the debate over tort reform. In essence, the Victim Compensation Fund provides an example of an alternative to the tort litigation system as a means for seeking redress for tortious injury. In addition, the Fund (quite accidentally) provides an interesting empirical experiment upon which to consider what rational (or irrational) people might choose if given different alternatives for seeking relief.

Moreover, the Victim Compensation Fund mimics many tort reform proposals in its crucial characteristics. It is one thing to talk about tort reform in the abstract, but it is another thing to actually implement tort reform through legislation or judicial construction. The Victim Compensation Fund asks us to consider the real-world question: What if we actually gave people tort reform and offered them a choice: would they show up and choose it? Or would they reject tort reform and hew to the prevailing culture of take-no-prisoners, spare-no-cost-and-time, maximize-damages, adversarial tort litigation?

Based on the overwhelming percentage of claimants who chose remediation through the Victim Compensation Fund, one might conclude that rational people would choose a modified regime ― i.e., some aspects of tort reform ― if they believed that such a regime would fairly and expeditiously compensate them for their injuries. Also, they would choose this regime even at the cost of forgoing potentially greater compensatory damages, windfall exemplary damages, and a jury trial.

This observation is at least worth mulling over. It seems especially worth considering precisely because the Victim Compensation Fund was so beset with controversy, confusion, and successive modifications. Perhaps one of the many lessons of the Victim Compensation Fund is that while tort reform may be easy to conceptualize in theory, tort reform is not the least bit easy to implement in practice. The Victim Compensation Fund teaches that legislative or judicial tort reform may require constant tinkering at the margins to achieve the precise calibration of fairness, efficiency, catharsis, and justice.

Keywords: World Trade Center Victim Compensation Fund, mass tort litigation, funds, tort reform