In the wake of the September 11 bombings, Congress established a Victims Compensation Fund and limited liability for a number of deep-pockets who were also victimized by the attacks.  A number of academics questioned that it was even conceivable that innocent third parties could be held liable for a terrorist attack.  Anthony J. Sebok, What's Law Got to Do With It? Designing Compensation Schemes in the Shadow of the Tort System, 53 DEPAUL L. REV. 901, 917 (2003); RICHARD A. NAGAREDA, MASS TORTS IN A WORLD OF SETTLEMENT 104 (2007); Peter Schuck, Special Dispensation, AM. LAWYER (June 2004); see also LLOYD DIXON AND RACHEL KAGANOFF STERN, COMPENSATION FOR LOSSES FROM THE 9/11 ATTACKS (RAND Institute for Civil Justice 2004).

But the legislators' fear turned out to be more than hypothetical.  When given a chance to allocate responsibility for the earlier 1993 World Trade Center bombing, a jury held the Port Authority 68% responsible for the deliberate bombing of the World Trade Center by terrorists.  The Port Authority appealed the absurd ruling, but the Appellate Division has affirmed unanimously since, after all, such absurdities are central to the modern tort regime and it is thus not "legal error" to abandon the centuries-old concept of intervening causation.  As I noted in a related Wall Street Journal editorial, contingent-fee attorneys' incentives are not to seek out the truth behind wrongdoing, but to construct a narrative that will hold the deepest pocket the most responsible, regardless of the effect on justice.  This distortion has worked its way into popular culture; a survey of family members of September 11 decedents found that the median respondent held the terrorists only 30% responsible for losses.  Gillian Hadfield, Framing the Choice between Cash and the Courthouse: Experiences with the 9/11 Victim Compensation Fund, 42 L. & SOC. R. __ (forthcoming 2008). 

I discuss the decision in more detail in an op-ed in the New York Sun.