A multimillion-dollar dispute between Crowell & Moring and a group of victims of the 1986 Pan Am Flight 73 hijacking is intensifying with the victims seeking support from Congress and the State Department and their opponents moving to compel arbitration.
Two victims sued Crowell and its Flight 73 Liaison Group in January because of the law firm’s demand that they share any awards made pursuant to a treaty between the United States and Libya with fellow plaintiffs in their 2006 lawsuit against Libya. The number suing has grown to 10, according to an amended complaint filed on Monday in the federal district court in California.
At the center of the suit is the legitimacy and effect of a retainer agreement and a joint prosecution agreement following the 2008 U.S.-Libya treaty settling terrorism-related legal claims of U.S. citizens for $1.5 billion.
Crowell’s demand is based on provisions in the agreements stating that any recovery in its lawsuit against Libya would be shared on a sliding scale based on the type of injury and without regard to nationality, according to the complaint. A Pan Am Liaison Group was established, consisting of one American and four non-Americans, to deal with litigation counsel, and it was represented by New York's Latham & Watkins. The agreement also provided for a 25 percent contingency fee to Crowell. Crowell did file a lawsuit, but it did not result in a judgment and was dismissed after the treaty settlement.
If Crowell’s demand for the treaty awards is successful, two of the victims could lose approximately 90 percent of awards totaling from $4 million to $12 million, according to their attorney, Lee Boyd, an international law litigator from Newbury Park, Calif. The bulk of that money would go to noncitizens who comprise nearly 77 percent of Crowell's original 178 hijack clients.
Boyd, Gargi Dave—a name plaintiff in the lawsuit—and Prof. Roger Alford of Pepperdine University School of Law, who is serving as an expert consultant in the case, spent Wednesday meeting with members of the Department of State and the staffs of Democratic Sens. Frank Lautenberg of New Jersey and Dianne Feinstein and Barbara Boxer of California.
The statute enacted to implement the Libya-U.S. claims settlement immunizes from judicial process both Libya and the assets after they go to victims, noted Alford.
“Our goal would be to have State Department come in to defend its own interest in getting this money to the right victims, not to the lawyers and non-nationals,” said Boyd, adding that she also hopes Lautenberg and other members of Congress will file a statement in the lawsuit about Congress’ intent in enacting the claims statute.
In the meantime, Latham, on behalf of the Liaison Group, has filed a motion to compel arbitration in federal district court in Washington. Boyd has countered with a motion to transfer that issue to California where the original suit is pending before Judge Rolf Treu. A hearing on the motion to compel arbitration was held today before U.S. District Judge John Bates. For more on that hearing, click here.
In their lawsuit, Boyd’s clients attack the arbitration clause as “inapplicable” to this dispute and as “unconscionable.” Latham did not respond to a request for comment.