Risk Management 101
Tort reformers relish stereotyping trial lawyers as a bunch of ambulance-chasing pirates. In this stock propaganda, they at best file frivolous suits to trick gullible juries into awarding billions in false claims, and at worst extort settlements to avoid the negative publicity and potential jackpot verdicts of an actual trial.
While the stereotype too often rings true, many times those on the hot seat get exactly what's coming to them. Such was the case with the verdict against the Port Authority of New York and New Jersey in a negligence suit involving the first terrorist attack on the World Trade Center in 1993. A van filled with explosives parked in the garage beneath the WTC killed six and injured some 1,000.
In a classic case of failed risk management, the jury found the PA at fault because the agency took no security steps despite documented warnings that its garage was vulnerable to such an attack. The PA argued that the terrorists were ultimately responsible. That's true, but the PA was responsible for managing the risk, which they chose to ignore.
"The case was never about blaming the terrorists," David Dean, lead lawyer for the plaintiffs, was quoted as stating in The New York Times. "It was about what the Port Authority should have done. They disregarded the advice of their own experts and other experts. They were motivated by money. They should have thought about the ultimate sacrifice of human lives."
The "smoking gun" in the trial was a 1985 report by the Office of Special Planning, characterized in the Times story as "an antiterrorist task force convened by Peter Goldmark," PA executive director from 1977 to 1985.
The report couldn't have been clearer about the exposure: "A time-bomb-laden vehicle could be driven into the WTC and parked in the public parking area. The driver would then exit via elevator into the WTC and proceed with his business unnoticed. At a predetermined time, the bomb could be exploded in the basement. The amount of explosives used will determine the severity of damage…"
The report recommended all public parking be eliminated, but offered some common-sense compromise steps we take for granted in today's post-9/11 world, such as guarding lot entrances and randomly searching vehicles.
Unfortunately, Mr. Goldmark–who reportedly wept on the stand while testifying for the plaintiffs–stepped down four months before the report was released, and those who followed left the garage alone and did not even implement the compromise moves out of concern for revenue losses and inconvenience. That's both myopic and disgraceful.
This verdict opens the PA to liability claims from over 400 plaintiffs, seeking as much as $1.8 billion. The PA vows to appeal, but on what grounds, I cannot imagine. Their liability seems crystal clear.
A second suit is challenging the PA over the WTC's 2001 destruction. While the PA cannot be held responsible for terrorists flying jet planes into the twin towers, liability could be argued due to the lack of proper evacuation procedures (many were told to remain at their desks after the first plane struck), and acceptance of the building's design could come into question.
It's bad enough when an entity fails to spot potential risks to its people and property. It's immoral and perhaps even criminal to ignore reasonable warnings about such exposures, especially if inaction is based solely on short-term economic concerns.
The PA got what it deserved with this verdict, and we all received a valuable reminder about the consequences of poor risk management.
Sam Friedman is NU's Editor-In-Chief. He may be reached at sfriedman@nuco.com.
Quotebox, with mug:
"The Port Authority got what it deserved with this verdict, and we all received a valuable reminder about the consequences of poor risk management."
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