Master of Disasters: Is Ken Feinberg Changing the Course of Mass Tort Resolution?
Has Kenneth Feinberg become such a brand unto himself—at once unique and ubiquitous as the nation’s problem solver—that a truck running over him would end forever the Feinberg Way for mass-dispute resolution? Is he sui generis? Answers vary. Feinberg’s own suffices for the moment. He seems surprised when asked, which is saying a lot given how much press he gets. Feinberg stops fidgeting for brief seconds, suddenly still in a beige leather lounge chair at one end of his long, narrow office in the Willard Office Building, barely more than a block from the White House. A broad smile quickly curls up. “That’s an interesting question,” he says. “No one seems to be doing what I’m doing.”
That answer is perhaps more loaded than he intends. The role was created half for him, half by him. Feinberg has become the go-to guy for our national disasters and vexing problems, from Agent Orange to the Dalkon Shield, from the 9/11 fund to the Virginia Tech massacre; more recently he has been the pay czar for the financial bailout and now the BP oil spill in the Gulf of Mexico. He is said to bring the wisdom of Solomon and, sometimes, the patience of Job in sorting through the unthinkable to compensate for loss.
But it’s more complex than that, as is Feinberg himself. Some question the impact these big settlement funds, usually launched in part to prevent or end litigation, might have on the civil justice system in general and tort law in particular. Interestingly, as an arbitrator and mediator for the most complex matters, Feinberg, 65, may or may not be in the top five among otherwise lesser-known names doing such work, depending on whom you ask.
BUCKS, NOT BLAME
Even admirers note some of his highest-profile work has basically been about who gets how much, with no concern necessary for who did what to whom or where the money comes from. Such was the case with the Sept. 11 Victim Compensation Fund, bankrolled by the U.S. government in the amount of $7 billion, and the Hokie Spirit Memorial Fund, in which he parceled out a privately raised $8 million to families of the 32 people massacred and 17 injured at Virginia Tech in 2007 by a deranged gunman.
“These cases are very important and Ken has done a splendid job, but there’s a distinction between large, complex mediation and handling 10,000 claims,” says Eric D. Green, who retired in 2007 from the Boston University School of Law after teaching for 30 years. “The crucial thing is having the money to hand out. These are mostly just claims processing.”
Green, now a full-time arbitrator and mediator, is best known for his part in a 2001 mediation of stalled negotiations in an antitrust case against Microsoft brought by 18 states.
He is both a fan and admirer of Feinberg and his work, including the more complex matters. When Feinberg was tapped by BP to run its $20 billion claims fund at the urging of President Barack Obama, Green e-mailed him congratulations that ended with a playful poke: You’ll get thousands of small claims to resolve, and I hope someday you get a big case.
There are other ways to view some of Feinberg’s higher-profile work.
Robert C. Bordone, the director of Harvard Law School’s negotiation and mediation clinical program, says Feinberg is more than a mediator in important ways. Feinberg has visited Bordone’s class each of the past five years and, at the teacher’s request, spoken about dispute-resolution system design.
“Ken knows how to look at a complex problem and design a system that tends to the needs of all stakeholders, is efficient and is sensitive also to what the public might think,” says Bordone. “He’s a brilliant system designer of the next-level cutting edge for alternative dispute resolution.”
Feinberg is avuncular and charismatic, which lends to his teaching style: raising hard questions by telling his own stories, such as about handling the tensions between the 9/11 fund’s statutory requirement that it track tort law—bankers have more projected lifetime income than do janitors—and still being fair to all.
“At the end of the class,” Bordone says, “a lot of students are thinking, ‘How can I be like him?’ ”
That ambition should be taken seriously. Last year, some of Bordone’s students went to China for Hewlett-Packard to develop a grievance system for the 5,000 to 6,000 workers who make the company’s products. This year, others are headed to Egypt to devise a conflict resolution system for the administration of international microloans.
A former vice-chair of the ABA’s Committee on Alternative Dispute Resolution and an ABA member since 1980, Feinberg does a lot of one-shot guest teaching and speaking, which accounts in part for his six- and seven-day workweeks—and workdays of 12 hours or more when on a big project. He also regularly teaches semester-long courses.
“I am in demand to teach at Georgetown, NYU, Columbia, Penn and Virginia,” he says with the matter-of-fact oomph expected of an ego big enough to command a roomful of lawyerly egos at mediation. “I have an open invitation and usually teach one class each semester at one of them.”
Feinberg is taking off this year because of the magnitude of the BP oil spill. He teaches mass torts, evidence and substantive criminal law.
Criminal law? The answer comes crisply and rapidfire: “Love it. Never forget it. Great change of pace.”
A PAST IN PROSECUTION
Feinberg was a federal prosecutor in New York’s Southern District from 1972 to ’75, handling criminal matters. That portfolio helped land his next job: staff lawyer on criminal justice reform for the U.S. Senate Judiciary Committee. He worked for the late Sen. Edward Kennedy, D-Mass., and stayed in various roles for five years.
“I didn’t think about it at the time, but maybe his first act of phenomenal mediation and compromise was when he got [Sen.] John McClellan and Ted Kennedy to co-sponsor S. 1, the criminal code reform act,” says Thomas Susman, who as a subcommittee’s chief counsel hired Feinberg. (Susman now is the director of the ABA’s Governmental Affairs Office.)
The late McClellan was a Democrat from Arkansas, though he likely would be a Republican in today’s Congress. He was conservative and extremely tough on crime. It was unlikely that he and the classic liberal Kennedy would see eye to eye on much.
“Ken somehow got the two to agree on the bill,” Susman recalls. “It passed overwhelmingly in the Senate, though it didn’t make it through the House. But that was remarkable sleight of hand by Ken.”
It also cast a die. In the early 1980s, during the Reagan administration, many key sentencing provisions from S. 1 became law.
Eventually, Kennedy made Feinberg his chief of staff, which lasted two years. Feinberg returned to work for the Judiciary Committee when the senator began preparing a run for the Democratic nomination for president in 1980, which he lost to President Jimmy Carter.
Going to work on the Hill for Kennedy “was the greatest move I ever made in my life,” Feinberg says. His matchup with the Massachusetts senator was a natural. Feinberg is a liberal Democrat. And he’s from Brockton, Mass., about 20 miles south of Boston. Fein berg’s accent is museum-quality more than four decades after leaving home. Even 35 years in Washing ton, D.C.’s Southern proximity hasn’t shortened the broad A’s, or managed to wedge R’s into their rightful place in certain words, such that it’s not “hod” to know whence he came.
When Feinberg was selected as special master for the 9/11 fund, Kennedy advised him: “Ken, just make sure that 15 percent of the families don’t receive 85 percent of the taxpayers’ money.”
In 2009, Feinberg was elected chairman of the John F. Kennedy Library Foundation as it geared up to celebrate the 50th anniversaries of the 1960 presidential campaign and 1961 inauguration.
“You never really leave Sen. Kennedy’s employ,” Feinberg says. “You remain in his ambit.”
But after Feinberg entered private practice at age 40, another mentor would have an even greater impact on his career arc: U.S. District Judge Jack Weinstein.
In 1980 Feinberg left the Hill to open and run the Washington, D.C., office of New York City’s Kaye, Scholer, Fierman, Hays & Handler, now simply Kaye Scholer. Many big firms around the country were launching D.C. outposts at the time.
They wanted leverage for clients that can be had only in Washington, but ultimately the offices would have to make money. It was a problem for many. Not for Feinberg.
He was successful early on, but in 1984 his practice took off like a rocket when Judge Weinstein tapped Feinberg as special master in Agent Orange litigation in the Eastern District of New York. Their connection came from having both clerked for Judge Stanley Fuld on the New York Court of Appeals (the state’s highest court), though 20 years apart.
The Agent Orange problem had kicked around for seven years, and he got it settled in six weeks with a then-unprecedented $180 million to divvy up through a claims matrix for Vietnam veterans.
“Once it settled, my career did a sea change over night,” says Feinberg. “I became a private mediator and arbitrator.”
In 1985, he billed $1.5 million, according to contemporaneous news reports, and was expected to easily double that the following year.
After bringing in David Branson, a rainmaker from another major New York firm’s D.C. office in 1985, Feinberg boasted to the Legal Times newspaper, “We have become a moneymaking machine for the firm. You just have to pray that neither Feinberg nor Branson gets hit by a truck.”
It turned out that the firm itself would get hit by a truck seven years later, almost fatally. The federal Office of Thrift Supervision froze Kaye Scholer’s assets, saying the firm had put itself between the agency and a savings and loan it regulated, then failed to report wrongdoing. The firm settled with the Securities and Exchange Commission for $41 million.
Kaye Scholer’s chairman was at the center of the scandal, and Feinberg often ended up as spokesman. Months later, in February 1993, he left to open his own shop, Kenneth R. Feinberg & Associates.
He took with him his booming mediation and arbitration practice.
Kenneth Feinberg
ENERGY EMBODIED
Feinberg’s face is long, his chin jutting down like a garden spade and his bare pate pulling the same effect somewhat upward. He’s average size, but of course projects large. He is a bouncing heap of kinetic and potential energy, simultaneously coiled and elastic.
His hand is like a paw as it thumps the side of the leather lounge chair, the percussion out of sync with the opera playing in the background (it is there all day, every day). In 2009, Feinberg was elected president of the Washington National Opera, perhaps the perfect person for the job at a time when its finances are down and leadership in flux. Opera has been Feinberg’s abiding passion since boyhood, the works of Richard Wagner his lifelong favorite, and listening to them his method of unwinding. In a special room at home he opens the throttle on tall, freestanding Italian-made Sonus Faber speakers to let musical drama push aside that of the day’s work.
Feinberg’s restlessness probably stems from his compulsion to multitask, which even for him is hard to do during an interview. He is almost always direct, sometimes painfully so.
It can be funny, such as the flap over his 2002 quip to a reporter accompanying him to a 9/11 families meeting on Staten Island that the place is “a Third World country.”
And not so much, such as when he tried to coax reluctant families to file with the 9/11 fund, telling a group that it was “the only game in town.” He got his head handed to him, as he often puts it when suddenly on the receiving end of powerful and successful persuasion. Some of the grief-stricken relatives let him know that it was not a game.
He changed. He went on to personally conduct more than 900 hearings for victims’ families, most of them simply emotional “exorcisms,” as he puts it, because the payouts already had been tallied. He listened to telephone messages from their loved ones at the moments they were about to perish. Feinberg wrote a 2005 book about his experiences with the fund: What Is Life Worth?: The Unprecedented Effort to Compensate the Victims of 9/11.
While he eventually overcame fallout from his initial sharp edge with the 9/11 victims’ families, similar breaches with plaintiffs lawyers in the BP oil spill may prove more difficult.
More than 1,100 plaintiffs lawyers worked pro bono with the 1,700 families in the 9/11 fund, putting together details and reasoning for their claims. Feinberg, who also took no pay, was grateful for the help.
Feinberg obviously believes in the funds he administers. He measures success by the percentage of claimants who sign on—a stunning 97 percent in the 9/11 fund, surpassing his initial hope for as much as 90 percent.
But there are big differences between 9/11 and the BP oil spill. Wrongdoing by terrorists was nearly impossible to target in court, while the deep-pocketed BP can hardly argue the well was intact. Most significantly, this time Feinberg is getting paid—and the plaintiffs lawyers want to be, too.
Last June, just four days after the announcement that he would head the fund, Feinberg delivered the first of many salvos aimed at keeping the lawyers at bay and getting claimants to deal directly with his Gulf Coast Claims Facility, which administers the fund.
On NBC’s Meet the Press he said a Gulf Coast shrimper “doesn’t need a lawyer, doesn’t have to pay a lawyer 40 percent of what he receives.”
Says Marc Moller, a New York City-based partner at Kreindler & Kreindler who was named plaintiffs liaison counsel in 9/11 litigation by the 94 families that sued airlines and others: “I don’t agree with Ken Feinberg on everything he says or every decision he makes, but he is certainly motivated to try to do the right thing as he sees it, and everybody is not always pleased by that approach. He’s a solid citizen.”
But Moller, who is not involved in the BP spill fund, sees a difference there. Trying to fence out the lawyers where massive harm is attributed directly to the company and others “is a mistake that sounds anti-lawyer, but ultimately is anti-victim. The victims can’t navigate on their own through the process in a way that enables them to get the full measure of recovery they’re entitled to.”
UNSETTLED
More than lawyers might be fenced out. Yale Law School professor Owen M. Fiss, author of the landmark 1984 law review article “Against Settlement,” has debated Feinberg on mass settlements in print and in person. Fiss believes settlements thwart the expression of public values found in the court system.
“You could settle if you want to and if there’s enough pressure for you to do it,” Fiss says of the mass-claim funds. “I’m not saying you shouldn’t, but don’t mislead yourself that this is justice, which takes time—maybe a lot of time.”
On the other side, Feinberg thinks Fiss’ well-articulated academic view loses for lack of being practical. He drops in periodically to try to disabuse Fiss’ students of their prof’s notion. “The judicial system would completely break down if private settlements weren’t worked out in more than 90 percent of cases,” he says.
With asbestos, for example, “why seek a jury result that will only confuse and promote uncertainty when the fact is that we already know issues of liability and damage and causation?” Feinberg explains. The only issue, he says, is whose product caused the injury.
For the record, asbestos litigation marks Feinberg’s most spectacular failure. He swooped into Baltimore in the early 1990s to work out a settlement, but the magic touch failed, leading to what then was called “the mother of all asbestos trials,” led by the legendary lawyer for Baltimore’s labor unions, Peter Angelos.
“I couldn’t get defendant companies and Peter Angelos and everybody on the same page, so Peter went to trial and won a smashing victory that let him buy the Baltimore Orioles with his proceeds,” says Feinberg, who then and now calls for a legislative remedy for the asbestos quagmire.
POWER PLAYS
Some have concerns about the nature of the authority ceded to Feinberg over time. When working as a special master over Agent Orange litigation in 1984, under Rule 53 of the Federal Rules of Civil Procedure, Feinberg was supervised by and made detailed reports to Judge Weinstein. With the 9/11 fund Feinberg had statutory authority from Congress with considerable flexibility in his own decisions as well as a blank check.
Last year he was tapped by the Obama administration through regulatory rule-making to be the pay czar determining compensation levels for executives at more than 400 corporations receiving bailouts under the Troubled Asset Relief Program.
Now he’s handling the BP fund on basically a handshake, with Oil Pollution Act guidelines as a malleable template.
“It seems we’ve moved into a new universe of problematic dispute resolution where people really are unrepresented,” says Linda Mullenix, a professor at the University of Texas School of Law who knows and admires Feinberg. “All they have is Ken Feinberg saying, ‘This is good for you; come on in and it’s in your best interest.’
“As you move from each model to the next, there’s less oversight. Who’s guarding the guardian?”
Thousands of BP oil spill claimants are represented by lawyers. The question is whether the clients will drop out to take lump-sum settlements from Feinberg. There are more than 300 cases from 12 states in multidistrict litigation in federal court in New Orleans against BP, Halliburton Energy Services Inc. and Cameron International Corp.
Joe Rice, a founding member of Mount Pleasant, S.C.-based Motley Rice who represents clients in the MDL, puts a sharper point on the complaint that Feinberg is wrong to keep lawyers out of the equation. Rice was scornful of the recent deadline for claimants to file for emergency funds. If claimants filed, they could receive interim payments until the fund closes in three years, all of which would be offset in any jury award. Or they could enter final settlement and get a lump sum determined by Feinberg.
The late-November deadline coupled with the tender of final settlement rankled Rice, who says, “You have a guy out of work nine months in the Gulf who thinks his claim is worth much more than they might offer, but he looks at his wife and two kids and he’s doing what he can to put food on the table as Christmas approaches. He’s more likely to take the settlement money. We’ve seen this kind of thing before from defense lawyers.”
Many or most plaintiffs lawyers involved are convinced Feinberg is doing BP’s bidding.
Says Stephen Herman of New Orleans’ Herman Herman Katz & Cotlar, a member of the MDL plaintiffs’ executive committee: “It’s extremely dangerous for someone who has the imprimatur of being an independent special master in the past to now be cloaked in this specter of independence, when in fact he’s nothing more than a defense lawyer trying to settle cases for BP.”
“He likes to say yes,” says Jeffrey Breit of Norfolk, Va.’s Breit Drescher Imprevento & Walker, who is a member of the plaintiffs’ steering committee in the MDL. “Then later you find out that it’s no. He says what the audience wants to hear.”
FACING CRITICISM
None of this has escaped Feinberg, who admits, “I was too harsh on them at the beginning in trying to entice people into this fund.” He is unapologetic in saying “the whole point of this fund is not only to pay claimants but also to corral the plaintiffs so that people don’t run to court.”
He says the trial lawyers will “end up probably being quite helpful in keeping people in the fund.”
As summer moved to autumn, the plaintiffs lawyer drumbeat brought more conciliatory words from Feinberg, though with little palliative effect. In October, he praised them in his keynote speech at a summit hosted by the U.S. Chamber of Commerce’s Institute for Legal Reform. The institute’s website lists as its first aim: “Neutralize plaintiff trial lawyers’ excessive influence over the legal and political systems.”
Feinberg bearded the lion in its den after he was introduced by chamber president Thomas Donohue, who noted Feinberg’s deft handling of the 9/11 fund was done “without the involvement of massive numbers of lawsuits involving thousands of trial lawyers.”
Feinberg stepped to the dais and quipped: “I’m pleased to know that Tom’s going to shoot out of here and not listen to what I say. I don’t want to spoil his lunch.”
Feinberg proceeded by Rolfing his audience—rubbing them the wrong way to ease their tension. He explained, for example, that he believes the “legal system works pretty well,” that all claimants in the 9/11 fund were represented by lawyers, and that it “would never have succeeded as it did without the firm, committed support of the trial bar.”
He also pointed out that the 9/11 fund was tacked on as a compromise for legislation whose main purpose was statutorily “placing barriers to litigate against the airlines and the World Trade Center.”
Feinberg got more applause at that anti-lawyer luncheon than he likely will get anytime soon from the plaintiffs lawyers he praised.
The BP oil spill looks to be Feinberg’s most problematic challenge to date. It is difficult to assay the future of the Gulf’s health, and thus the livelihoods of tens or hundreds of thousands, and resulting ripple effects elsewhere. The cash-only economy that predomi nates small-scale commercial fishing is equally hard to quantify. The list goes on and on.
Feinberg is going to sort through the mess his way, and some won’t be satisfied. He knows that. He will look to the percentages—how many entered the fund— for his measure. Litigation likely will provide another— for the first time.
Then there’s the ultimate measure: Is Feinberg sui generis?
“Everyone is sui generis,” says Weinstein, still on the bench at age 89, “but he’s more sui generis than others.”
