## Facts

- Following the September 11, 2001 attacks, thousands of rescue, recovery, and cleanup workers brought consolidated exposure-related claims against the City of New York and others.
- A comprehensive settlement was negotiated under court supervision and required at least 95% of eligible plaintiffs to opt in for the settlement to become effective.
- Fifty-nine clients represented by lead plaintiffs’ counsel had previously received compensation from the September 11th Victim Compensation Fund (VCF) and signed statutory releases generally waiving their rights to sue.
- Those 59 individuals later asserted their injuries were more serious than initially understood and sought to participate in or benefit from the settlement.
- The court directed lead counsel to obtain independent, conflict-free legal advice for the 59 VCF recipients regarding the effect of their releases and their position relative to the settlement.
- Lead counsel did not timely secure independent counsel and instead removed the 59 individuals from the list of eligible settlement participants before the opt-in deadline.
- The court appointed special counsel for the 59 individuals and ordered that special counsel’s reasonable fees and costs be paid by lead counsel.
- Lead counsel moved under Federal Rule of Civil Procedure 60(b) to vacate the appointment and fee-shifting order.

## Issues

1. Whether lead counsel had a conflict of interest with the 59 VCF recipients warranting appointment of independent special counsel.
2. Whether the court had authority, in supervising complex litigation and attorney conduct, to require lead counsel to pay special counsel’s reasonable fees and expenses.
3. Whether lead counsel satisfied Rule 60(b) standards for relief from the appointment and fee-shifting order.

## Decision

- The court denied the Rule 60(b) motion.
- The court held that a serious conflict existed between lead counsel’s interests in achieving the settlement’s opt-in threshold and the 59 individuals’ need for individualized advice about the legal effect of their VCF releases and potential rights.
- The court upheld the appointment of independent special counsel to protect the affected clients and the fairness of the settlement process.
- The court upheld requiring lead counsel to pay special counsel’s reasonable fees and expenses as a remedial measure tied to counsel’s failure to address the conflict and comply with the court’s directive.
- The court found no mistake, newly discovered evidence, or other basis justifying Rule 60(b) relief.

## Legal Principles

- In aggregate litigation, when a subgroup of represented clients has interests materially different from other clients or from counsel’s incentives in settlement administration, a court may require independent, conflict-free counsel for that subgroup.
- Federal courts possess inherent authority to supervise attorney conduct and to take measures necessary to protect represented parties and the integrity of settlement administration in complex cases.
- A court may shift the costs of remedial measures (including independent counsel) to the attorneys whose conduct created or worsened a conflict, where doing so is equitable and tailored to client protection.
- Rule 60(b) provides limited, extraordinary relief and is not a vehicle to revisit discretionary supervisory orders absent a sufficient showing under the rule’s grounds.

## Conclusion

The court refused to vacate its order appointing independent special counsel for 59 VCF-release clients and requiring lead counsel to pay counsel’s reasonable fees, holding that a concrete conflict existed and that Rule 60(b) provided no basis to disturb the court’s remedial supervision of the settlement process.


In re World Trade Ctr. Disaster Site Litig., 769 F. Supp. 2d 650 (S.D.N.Y. 2011)