© 2013 The Texas Lawbook.
By Mark Curriden
Senior Writer for The Texas Lawbook
(July 26) – American Airlines has faced some critical obstacles to success during the past few years, including bankruptcy and a multibillion-dollar merger with US Airways.
But last week, the Fort Worth-based airline quietly won a federal court decision in a case that once upon a time threatened the airline’s very existence.
A federal judge in New York dismissed a $3 billion lawsuit against American and United airlines brought by real estate developer Larry Silverstein, who held a 99-year lease of the World Trade Center Towers when terrorists attacked it on Sept. 11, 2001. Silverstein claimed that the airlines’ negligence allowed the hijackers to board the planes and use them as missiles.
While American Airlines officials celebrated the court decision with minimum fanfare, one lawyer in particular was especially thrilled: American Airlines Associate General Counsel Kathryn Koorenny.
While the corporate executives and high profile New York lawyers shepherding American through bankruptcy and the merger have garnered widespread publicity and praise for their efforts to produce a healthy and vibrant corporation, Koorenny has toiled for a dozen years in near obscurity.
Legal experts who have followed the World Trade Center litigation say that the brilliant behind-the-scenes work by Koorenny and the legal team in the days following the terrorist attacks were as much or more responsible for the survival of American Airlines.
Talk to Koorenny for five minutes and you realize the case is personal.
“This has been a huge part of my life for the past 12 years,” she says. “This was an act of war and terrorism. For anyone to say that we were responsible or to blame is, quite frankly, offensive.”
Koorenny, American senior attorney Doug Cotton and their in-house legal team worked tens of thousands of hours on the litigation and have been involved in every aspect of the matter.
“The tragic events of 9/11 had a profound impact on our company and our employees and customers,” says American Airlines General Counsel Gary Kennedy. “Kathy and Doug Cotton shepherded this case for 12 years and learned first-hand the wide ranging implications of these events on the lives and commerce of so many people. Sept. 11 was an event unlike any other in the history of our company.
“Kathy was the natural person to oversee this litigation because she is a bright, hard-charging lawyer who quickly gets to the heart of legal issues,” says Kennedy. “She is a passionate advocate on behalf of the company.”
Koorenny, who joined American in 1995, was attending an early morning meeting at American’s HQ on Sept. 11, 2001, when word was received that one of the company’s planes, a flight from Boston to Los Angeles, was off course and headed toward New York City.
Everyone rushed to watch CNN.
“We knew right away that first plane was ours,” she says. “There was incredible emotion and sadness for all the victims. We lost aircraft carrying our colleagues and passengers. The aircraft, of course, have been replaced, but those we lost will forever be missed.”
“But we also knew right away we had jobs to do,” she says.
In that split moment, according to legal ethics experts, Koorenny became Exhibit A for how lawyers are required to vigorously represent their clients in time of extreme crisis.
Ron Carlson, a nationally recognized legal ethics expert at the University of Georgia School of Law, says that corporate in-house lawyers too often think of themselves as employees and fail to recognize that, as lawyers, they are legally and professionally obligated to set aside personal feelings and sympathy and focus entirely on the legal needs and best interests the client, which in this case was American Airlines.
“The fact that she realized immediately that she had a job to do despite all the chaos and emotional trauma and possibly even fear going on around her demonstrates what an excellent lawyer she is,” says Carlson. “The decisions this lawyer and her team made in those first few hours and over the next few days significantly impacted the potentially devastating litigation that would follow and very well may have saved the company and thousands of jobs.”
Within minutes, Koorenny started making phone calls to lawyers in New York, but she found few answered because phone lines were down or busy. She huddled with then-AA General Counsel Anne McNamara and quickly developed a strategic plan to move forward.
“We knew that things would move fast and we needed expert advice on protecting the interests of the company and acting strategically,” Koorenny says. “We knew we wanted trial lawyers, not just litigators. We knew we needed aviation experience. We also believed that trial lawyers with mass tort experience could be enormously valuable, since we expected that many claims could be asserted against the company.”
Koorenny and McNamara selected Condon & Forsyth’s Des Barry, who had tried to verdict numerous aviation disaster cases. Because Koorenny viewed the case as essentially a mass tort, she turned to Roger Podesta at Debevoise in New York.
“The 9/11 terrorist attacks were unprecedented,” Koorenny says. “Not only did our company face the grief and loss of employees, passengers and planes, but our industry was forever changed. If we could not get a limitation on liability for the events of 9/11, our company would lose access to capital markets and have a cloud of economic uncertainty hanging over it for the length of litigation.”
Lawyers say that Koorenny played a significant behind-the-scenes role advising the airline industry in its efforts to convince Congress to pass the Airline Transportation Safety and System Stabilization Act, which was designed to limit the liability of the airlines.
Many legal commentators initially claimed that American and United would be buried in litigation from the families of those who died on the airplanes or on the ground as a result of the crashes. That turned out to be wrong, as the federally financed Victim’s Compensation Fund covered nearly all of those claims.
Instead, the major lawsuits against American came from other businesses, including World Trade Center lease owner Silverstein, who has collected more than $4 billion from his own insurance carriers.
Lawyers for Silverstein argue that their collections against their insurance company do not prevent them from getting another $3.5 billion in damage awards from the two airlines – a position U.S. District Judge Alvin Hellerstein rejected last week.
A spokesman for Silverstein told Bloomberg News that the company plans to appeal.
Koorenny believes the federal appeals court will uphold the decision, but she also insists that the Silverstein lawsuit doesn’t “threaten the balance sheet” of the airline because of the federally enacted protections.
Even so, Kooreeny says the case is critical to American because it is “important to us to defend the memory of the courageous employees who faced the terrorists on 9/11 and lost their lives that morning.
“We have resisted a finding that they, or anyone at the company, could have stopped the terrorist attacks,” she says. “Our government did not or could not stop the terrorist attacks. An admission of negligence or a judicial finding of negligence is not, in our view, supported at all by the facts.”
American is facing only one other lawsuit stemming from the Sept. 11 tragedy. Cantor Fitzgerald, a financial services firm, lost 658 employees working in the World Trade Center’s north tower. It has sued American and others for $470 million, claiming the airline’s negligence cost it a loss of business and property damage.
American is fighting the claims.
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