July 08, 2005

Tort Liability for Terror Attacks? Not so 'unforeseeable'.

In introducing the recent report on TRIA to Rep. Oxley, the Secretary of the Treasury expressed concern that without changes, another terror incident could provide a windfall to tort lawyers. Unintended Consequences: Treasury Assesses TRIA: Revisions, Limits Needed (July 2, 2005)

Martin Grace poses some questions over at PointOfLaw Forum: Terror Risk and the Trial Bar. Among them is: "So the question arises, if terrorists use an airplane in an unforeseeable way to kill people, should the airlines or the property owners be liable if they did not act unreasonably before the fact?" See also: RiskProf : Terror Risk and Tort Reform (July 1, 2005).

He's gliding past the hard question to get to an easier one to answer. For those who have to actually underwrite coverage, the harder question has to deal with the possibility that plaintiffs could convince juries that the risk of such an attack was foreseeable in 2001 and other attacks are now foreseeable. The use of a jumbo jet or a weapon of mass destruction as a terror weapon is hardly "unforeseeable."

It was 1991 when Tom Clancy wrote "The Sum of All Fears," hypothesizing a terrorist explosion of a nuclear device in a van parked at the SuperBowl. It was 1996 when he wrote "Executive Orders," hypothesizing the near-obliteration of the U.S. government when a rogue pilot flies a 747 into the U.S. Capitol during a joint session of Congress, after which a fundamentalist middle eastern nation launches a coordinated bioterror attack on the United States using the Ebola virus.

Apart from best-selling fiction, Richard A. Clarke's "Against All Enemies: Inside America's War on Terror" provides a first-person account of over two decades working on national security. In his excellent book, he makes clear that an attack like that of 9/11 was foreseeable. In "102 Minutes: The Untold Story of the Fight to Survive Inside the Twin Towers," Jim Dwyer and Kevin Flynn compile a compelling story from survivor accounts and records of calls and emails from those who died in the towers. "102 Minutes" documents ways in which shortcomings in management, staffing, communication and provisioning by state, federal and private sources led directly to the loss of life and property after the initial air strikes. Combined, these accounts, together with the official "9/11 Commission Report," provide support for a possible allegation of negligence in protecting against a known threat.

Could a jury find that the responses of private and government entities to such threats fell short of due care? I'm not confident that the answer must be "no," and until it is, the Secretary's concerns must be taken into account by those pricing insurance and reinsurance that includes such hazards. And, consequently, by those crafting legislation to make the market for such insurance feasible.


Posted by dougsimpson at July 8, 2005 02:14 PM