In re September 11 Litigation

10-4197-cv
In re September 11 Litigation

1 UNITED STATES COURT OF APPEALS
2
3 FOR THE SECOND CIRCUIT
4
5 August Term, 2012
6
7
8 (Submitted: July 12, 2013 Decided: May 2, 2014)
9
10 Docket No. 10-4197
11
12 - - - - - - - - - - - - - - - - - - - -x
13
14 IN RE SEPTEMBER 11 LITIGATION:
15
16 Cedar & Washington Associates, LLC,
17
18 Plaintiff-Appellant,
19
20 - v.-
21
22 The Port Authority of New York and New
23 Jersey, Silverstein Properties, Inc.,
24 World Trade Center Properties LLC,
25 Silverstein WTC Management Co. LLC, 1
26 World Trade Center LLC, 2 World Trade
27 Center LLC, 3 World Trade Center LLC, 4
28 World Trade Center LLC, 7 World Trade
29 Company, L.P., HMH WTC, Inc., Host
30 Hotels and Resorts, Inc., Westfield WTC
31 LLC, Westfield Corporation, Inc.,
32 Consolidated Edison Company of New
33 York, AMR Corporation, American
34 Airlines, Inc., UAL Corporation, and
35 United Airlines, Inc.
36
37 Defendants-Appellees.
38
39
40 - - - - - - - - - - - - - - - - - - - -x
41
42 Before: JACOBS, CABRANES, and LIVINGSTON, Circuit
43 Judges.
1 Cedar & Washington Associates, LLC, appeals from a

2 judgment of the United States District Court for the

3 Southern District of New York (Hellerstein, J.), dismissing

4 its CERCLA indemnity claim for remediation costs it incurred

5 as owner of a building contaminated by toxic dust from the

6 September 11, 2001 attack on the World Trade Center.

7 Because the attack constituted an “act of war” for which

8 CERCLA provides an affirmative defense, we affirm.

9 SARI E. KOLATCH (Jay B. Spievack,
10 Kara Gorycki, Cohen Tauber
11 Spievack & Wagner P.C., New
12 York, N.Y., Robert D. Fox, Neil
13 Witkes, Manko, Gold, Katcher &
14 Fox LLP, Bala Cynwyd, PA, on the
15 brief), Cohen Tauber Spievack &
16 Wagner, P.C., New York, N.Y.,
17 for Appellant.
18
19 LEAH W. SEARS (Beth D. Jacob,
20 Judith S. Roth, on the brief),
21 Schiff Hardin LLP, New York,
22 N.Y., for Appellee The Port
23 Authority of New York and New
24 Jersey.
25
26 Richard Williamson, Thomas A.
27 Egan, Flemming Zulack Williamson
28 Zauderer LLP, New York, N.Y.,
29 for Appellees Silverstein
30 Properties, Inc., et al.
31
32 Christopher Walsh, Paul M.
33 Hauge, Gibbons P.C., Newark,
34 N.J., for Appellees Host Hotels
35 and Resorts, Inc. & HMH WTC,
36 LLC.

2
 1 PETER L. WINIK, Latham & Watkins
2 LLP, Washington, D.C., for
3 Appellees Westfield WTC LLC &
4 Westfield Corp., Inc.
5
6 Charles F. Rysavy, Dawn M.
7 Monsen, K&L Gates LLP, Newark,
8 N.J., for Appellee Consolidated
9 Edison Co. of New York, Inc.
10
11 MAURA K. MONAGHAN (Roger E.
12 Podesta, Debevoise & Plimpton,
13 New York, N.Y., Desmond T.
14 Barry, Jr., Condon & Forsyth
15 LLP, New York, N.Y.), Debevoise
16 & Plimpton, New York, N.Y., for
17 Appellees American Airlines,
18 Inc. & AMR Corp.
19
20 Jeffrey J. Ellis, Quirk and
21 Bakalor, P.C., New York, N.Y.,
22 Michael R. Feagley, Mayer Brown,
23 LLP, Chicago, Ill., for
24 Appellees United Air Lines, Inc.
25 & United Continental Holdings,
26 Inc.
27
28 DENNIS JACOBS, Circuit Judge:
29
30 Real estate developer Cedar & Washington Associates,

31 LLC, sues the owners and lessees of the World Trade Center

32 (and the owners of the airplanes that crashed into it) under

33 the Comprehensive Environmental Response, Compensation, and

34 Liability Act (“CERCLA”), 42 U.S.C. §§ 9601-9675, seeking

35 recovery of costs incurred in remediating a nearby building

36 contaminated by the September 11, 2001 attack on the World

37 Trade Center. The case returns to us after a remand to the

3
1 district court to determine in the first instance whether

2 the defendants are insulated by CERCLA’s “act of war”

3 defense. On remand, the United States District Court for

4 the Southern District of New York (Hellerstein, J.)

5 concluded that the attack constituted an “act of war” for

6 purposes of CERCLA’s affirmative defense, and that the

7 defendants therefore were entitled to judgment on the

8 pleadings.

9 We agree. Although CERCLA’s strict liability scheme

10 casts a wide net, an “act of war” defense avoids ensnarement

11 of persons who bear no responsibility for the release of

12 harmful substances. The attacks come within this defense.

13 As the “act of war” defense shows, CERCLA was not intended

14 to create liability for the dispersal of debris and wreckage

15 from a catastrophe that was indistinguishable from military

16 attack in purpose, scale, means, and effect. Both the

17 President and Congress responded to the September 11 attacks

18 by labeling them acts of war, and this classification

19 warrants notice, and perhaps some deference, in the CERCLA

20 context. The decisive point is that the attacks directly

21 and immediately caused the release, and were the “sole

22 cause” of the release because the attacks “overwhelm[ed] and

4
1 swamp[ed] the contributions of the defendant[s].” In re

2 September 11 Litigation, 931 F. Supp. 2d 496, 512 (S.D.N.Y.

3 2013) (quoting William H. Rodgers, Jr., Environmental Law:

4 Hazardous Wastes and Substances § 8.13 (1992)).

5

6 BACKGROUND

7 After the September 11, 2001 attacks that leveled the

8 World Trade Center (“September 11 attacks”), real estate

9 developer Cedar & Washington began renovating its leased 12-

10 story downtown office building into a 19-story business

11 hotel. In late 2004, the New York State Department of

12 Environmental Conservation and the United States

13 Environmental Protection Agency notified Cedar & Washington

14 that the interstitial spaces of the building might contain

15 finely-ground substances from the World Trade Center,

16 including concrete, asbestos, silicon, fiberglass, benzene,

17 lead, and mercury: so-called “WTC Dust.” To permit

18 renovation to continue, the government agencies required

19 Cedar & Washington to perform costly remediation. In this

20 suit, Cedar & Washington seeks to recover those costs from:

21 the owner of the World Trade Center site, lessees of World

22 Trade Center buildings, and the companies that owned the two

5
1 aircraft that were crashed into the towers.

2 The claims are premised on CERCLA and common-law

3 indemnification. The district court initially dismissed the

4 complaint on statute of limitations grounds and

5 (alternatively) on the ground that Cedar & Washington failed

6 to allege a necessary element of a CERCLA cost recovery

7 claim: either a “release” or a “disposal” of hazardous

8 substances. In re September 11 Litigation, No. 08-9146

9 (AKH), 2010 WL 9474432 (S.D.N.Y. Sept. 22, 2010) (citing 42

10 U.S.C. § 9607(a)(1)-(2)). On appeal, we declined to resolve

11 these “thorny questions of statutory interpretation”;

12 instead, we remanded under United States v. Jacobson, 15

13 F.3d 19, 22 (2d Cir. 1994), for the district court to

14 determine, in the first instance, whether the defendants

15 could invoke CERCLA’s “act of war” defense. In re September

16 11 Litigation, 485 F. App’x 443 (2d Cir. 2012). This

17 affirmative defense requires the alleged polluter to prove

18 by a preponderance of evidence that the release of a

19 hazardous substance was caused “solely by . . . an act of

20 war.” 42 U.S.C. § 9607(b).

21 Pursuant to our mandate, the district court ordered

22 briefing and heard argument, and then held, in a March 20,

6
1 2013 opinion, that Cedar & Washington’s claim could be

2 dismissed on this alternative ground (in addition to those

3 identified in its earlier opinion). In re September 11

4 Litigation, 931 F. Supp. 2d 496 (S.D.N.Y. 2013). The

5 district court emphasized that:

6 • the attacks were “unique in our history,” id. at 509;

7 • al-Qaeda’s leadership “declared war on the United

8 States, and organized a sophisticated, coordinated, and

9 well-financed set of attacks intended to bring down the

10 leading commercial and political institutions of the

11 United States,” id.;

12 • “Congress and the President responded by recognizing

13 al-Qaeda’s attacks as an act of war” and sent U.S.

14 troops “to wage war against those who perpetrated the

15 attacks and the collaborating Taliban government,” id.;

16 and

17 • the Supreme Court clarified in Hamdi v. Rumsfeld, 542

18 U.S. 507 (2004), and Hamdan v. Rumsfeld, 548 U.S. 557

19 (2006), that the attacks “were acts of war against the

20 United States.” In re September 11 Litigation, 931 F.

21 Supp. 2d at 512.1

1
These facts are subject to judicial notice under
Federal Rule of Evidence 201(b) because they are “not
7
1 Further, the district court held that this “act of war” was

2 the sole cause of any release of hazardous substances from

3 the World Trade Center’s collapse because the September 11

4 attacks “overwhelm[ed] and swamp[ed] the contributions of

5 the defendant[s].” Id. (quoting Rodgers, supra, at § 8.13).

6 The district court cautioned that its “holding as to

7 the act-of-war defense should be read narrowly, fitting the

8 facts of this case only.” Id. at 514. Its decision was not

9 necessarily applicable in contexts presenting different

10 considerations, such as “cognate laws of insurance” or the

11 Anti-Terrorism Act of 1992. Id.

12 Once the district court issued its opinion, Cedar &

13 Washington promptly notified this Court to restore

14 jurisdiction, and the appeal was reinstated.

15

16 DISCUSSION

17 The district court’s decision that the September 11

18 attacks constitute an “act of war” under CERCLA, and that

19 those attacks were the sole cause of the release of WTC

subject to reasonable dispute,” are “generally known within
the trial court’s territorial jurisdiction,” and “can be
accurately and readily determined from sources whose
accuracy cannot reasonably be questioned [here, the 9/11
Commission Report].”
8
1 dust, is reviewed de novo. Hayden v. Paterson, 594 F.3d

2 150, 160 (2d Cir. 2010) (grant of a motion for judgment on

3 the pleading accorded de novo review). We accept as true

4 all well-pled allegations and draw all reasonable inferences

5 in Cedar & Washington’s favor. Burnette v. Carothers, 192

6 F.3d 52, 56 (2d Cir. 1999) (“In deciding a Rule 12(c)

7 motion, we apply the same standard as . . . under Rule

8 12(b)(6), accepting the allegations contained in the

9 complaint as true and drawing all reasonable inferences in

10 favor of the nonmoving party.”).

11

12 I

13 CERCLA imposes strict liability for hazardous waste

14 cleanup on owners and facility operators, on certain persons

15 who arrange for the disposal or treatment of hazardous

16 waste, and on certain persons who transport hazardous waste.

17 42 U.S.C. § 9607(a)(1)-(4). Three affirmative defenses are

18 made available when CERCLA liability would not be linked to

19 responsibility for contamination. These defenses are listed

20 in Section 107(b):

21 There shall be no liability under [CERCLA] for a person
22 otherwise liable who can establish by a preponderance
23 of the evidence that the release or threat of release
24 of a hazardous substance and the damages resulting

9
 1 therefrom were caused solely by--
2
3 (1) an act of God;
4
5 (2) an act of war;
6
7 (3) an act or omission of a[n unrelated] third party
8 . . . ; or
9
10 (4) any combination of the foregoing paragraphs.
11
12 42 U.S.C. § 9607(b) (emphasis added).

13 “Act of war” is undefined in the statutory text, and

14 the legislative history is silent on the intended meaning of

15 the term. United States v. Shell Oil, Co., 294 F.3d 1045,

16 1061 (9th Cir. 2002). To construe it, we “consider not only

17 the bare meaning of the . . . phrase but also its placement

18 and purpose in the statutory scheme.” United States v.

19 Robinson, 702 F.3d 22, 31 (2d Cir. 2012) (quoting Holloway

20 v. United States, 526 U.S. 1, 6 (1999) (internal quotation

21 marks omitted)).

22 There is no doubt that CERLCA commands a broad reading,

23 and that, accordingly, its several exceptions (including

24 “act of war”) are generally read narrowly. See Gen. Elec.

25 Co. v. AAMCO Transmissions, Inc., 962 F.2d 281, 285 (2d Cir.

26 1992) (“It was Congress’ intent that CERCLA be construed

27 liberally . . . .”); see also Shell Oil, 294 F.3d at 1061-62

28 (denying “act of war” defense to oil companies who released

10
1 hazardous substances during wartime at the government’s

2 direction); Westfarm Assocs. Ltd. P’ship v. Washington

3 Suburban Sanitary Comm’n, 66 F.3d 669, 677 (4th Cir. 1995)

4 (noting CERCLA’s “narrow defenses for damages caused solely

5 by act of God, war, or third parties”).

6 However, the reason for that rule of construction is to

7 “accomplish [CERCLA’s remedial] goals.” Gen. Elec., 962

8 F.2d at 285. CERCLA was passed “to ensure that those

9 responsible for any damage, environmental harm, or injury

10 from chemical poisons bear the costs of their actions.”2

11 Id. (internal quotation marks omitted); see also Burlington

12 N. & Santa Fe Ry. Co. v. United States, 556 U.S. 599, 602

13 (2009) (“The Act was designed to promote the timely cleanup

14 of hazardous waste sites and to ensure that the costs of

15 such cleanup were borne by those responsible for the

16 contamination.” (internal quotation marks omitted)).

17 That purpose, however broad, is not advanced here by

18 imposing CERCLA liability on the airlines and the owners

2
“CERCLA’s primary purposes are axiomatic: (1) to
encourage the timely cleanup of hazardous waste sites; and
(2) to place the cost of that cleanup on those responsible
for creating or maintaining the hazardous condition.” Price
Trucking Corp. v. Norampac Indus., Inc., --F.3d--, No. 11-
2917-cv, 2014 WL 1012835, at *3 (2d Cir. Mar. 18, 2014)
(internal quotation marks omitted).
11
1 (and lessors) of the real estate. And the manifest purpose

2 of the defense is served by recognizing the September 11

3 attacks as acts of war. The attacks wrested from the

4 defendants all control over the planes and the buildings,

5 obviated any precautions or prudent measures defendants

6 might have taken to prevent contamination, and located sole

7 responsibility for the event and the environmental

8 consequences on fanatics whose acts the defendants were not

9 bound by CERCLA to anticipate or prevent. See, e.g., 2 The

10 Law of Hazardous Waste: Management, Cleanup, Liability and

11 Litigation § 14.01[8][b] (Susan M. Cooke, ed.) (delineating

12 CERCLA’s act-of-war defense as covering “man-made

13 catastrophes beyond the control of any responsible party”).

14 We therefore conclude that, solely for purposes of

15 construing CERCLA’s affirmative defenses, the September 11

16 attacks were acts of war.3

17 This contextual reading comports with the plain meaning

18 of “act of war” notwithstanding that the September 11

3
Cedar & Washington contend that the September 11
attacks are more appropriately covered by the “third-party”
affirmative defense, but that discovery would be required
for defendants to meet their burden on that defense. See
Appellant Br. 15 n.9. Because the claims are barred by the
act-of-war defense, we need not decide whether they would
also be barred by the “third-party” defense.
12
1 attacks were not carried out by a state or a government.

2 War, in the CERCLA context, is not limited to opposing

3 states fielding combatants in uniform under formal

4 declarations.4 At the same time, the district court wisely

5 avoided a broad or categorical holding. None was needed

6 because the September 11 attacks were different in means,

7 scale, and loss from any other terrorist attack. Both

8 coordinate branches of government expressly recognized the

9 September 11 attacks as an act of war justifying military

10 response, and these decisions are worthy of deference.

11 Congress, in the immediate aftermath of 9/11, passed the

12 Authorization for the Use of Military Force (“AUMF”), Pub.

13 L. No. 107-40, 115 Stat. 224 (2001), which “constitute[d]

14 the specific statutory authorization” necessary for the

15 President to enter military hostilities abroad under the War

16 Powers Act, 50 U.S.C. §§ 1541-1548, and “to use all

17 necessary and proper force” against those responsible for

18 the September 11 attacks. Similarly, the President declared

4
We recognize that in the international law context,
“war” has been traditionally defined “as a ‘use of force or
other action by one state against another’ which ‘[t]he
state acted against recognizes . . . as an act of war,
either by use of retaliatory force or a declaration of
war.’” Shell Oil, 294 F.3d at 1061 (quoting two
international law treatises).
13
1 that the September 11 attacks were acts of war and treated

2 them as such. See Address Before a Joint Session of the

3 Congress on the United States Response to the Terrorist

4 Attacks of September 11, 37 Weekly Comp. Pres. Doc. 1347,

5 1347 (Sept. 20, 2011) (“On September 11th, enemies of

6 freedom committed an act of war against our country.”).

7 The Supreme Court has deferred to those acts and

8 declarations of the other branches:

9 [N]othing in our analysis turns on the admitted absence
10 of either a formal declaration of war or a declaration
11 of martial law. Our focus instead is on the September
12 11, 2001, attacks that the Government characterizes as
13 the relevant ‘act[s] of war,’ and on the measure that
14 authorized the President’s deployment of military
15 force--the AUMF. . . . [W]e do not question the
16 Government’s position that the war commenced with the
17 events of September 11, 2001 . . . .
18
19 Hamdan v. Rumsfeld, 548 U.S. 557, 599 n.31 (2006). Like the

20 district court, we need not decide whether other terrorist

21 attacks constitute “act[s] of war” under CERCLA; the

22 September 11 attacks fit the category without question.

23 This reading is not at odds with precedent that “act of

24 war” is construed narrowly in insurance contracts. See,

25 e.g., Pan Am. World Airways, Inc. v. Aetna Cas. & Surety

26 Co., 505 F.2d 989 (2d Cir. 1974). The purpose of an all-

27 risk insurance contract is to protect against any insurable

14
1 loss not expressly excluded by the insurer or caused by the

2 insured. Id. at 1003-04 (“The experienced all risk insurers

3 should have expected the exclusions drafted by them to be

4 construed narrowly against them, and should have calculated

5 their premiums accordingly.”). A narrow reading of a

6 contractual “act of war” exclusion thus achieves the

7 parties’ contractual intent, insulating the policyholder

8 from loss. The remedial purpose of CERCLA is both different

9 and unrelated.

10 Nor is our interpretation at odds with the Anti-

11 Terrorism Act (“ATA”), 18 U.S.C. §§ 2331 et seq. The

12 purpose of the ATA was “[t]o provide a new civil cause of

13 action in Federal law for international terrorism that

14 provides extraterritorial jurisdiction over terrorist acts

15 abroad against United States nationals.” H.R. 2222, 102d

16 Cong. (1992). The statutory exception for an act of war

17 defines it as “any act occurring in the course of--(A)

18 declared war; (B) armed conflict, whether or not war has

19 been declared, between two or more nations; or (C) armed

20 conflict between military forces of any origin.” 18 U.S.C.

21 § 2331(4). Acts of war, then, are distinguished from acts

22 of terrorism.

15
1 Cedar & Washington argues that we should import that

2 distinction into the CERCLA context. However, the ATA is

3 designed precisely to differentiate between acts of

4 terrorism and acts of war, while CERCLA is silent as to

5 terrorism. Indeed, in the CERCLA context, an event may be

6 both an act of war and an act of terrorism; under the ATA

7 regime, it may not. In addition, the “act[s] of war”

8 defined in the two statutes differ geographically, because

9 the ATA applies solely abroad, whereas CERCLA only applies

10 domestically.

11 Given the manifestly distinct statutory text,

12 structure, and remedial purposes of CERCLA and the ATA, we

13 do not construe “act of war” to have the identical meaning

14 in both statutes. See Gen. Dynamics Land Sys., Inc. v.

15 Cline, 540 U.S. 581, 596 (2004) (reading language of ADEA in

16 light of purpose of statute).

17

18 * * *

19 Because they were an “act of war,” the September 11

20 attacks fall under CERCLA’s exception if they were the

21 “sole[]” cause of the alleged release. 42 U.S.C. § 9607(b).

22 The sole cause standard certainly requires more than just

16
1 proximate and but for causation. But it is satisfied here

2 because the September 11 attacks overwhelmed all other

3 causes, and because the “release” was unquestionably and

4 immediately caused by the impacts. See Rodgers, supra, at

5 § 8.13 (characterizing the sole cause standard as a

6 “formidable obstacle . . . allow[ing] escape from liability

7 only where external events overwhelm and swamp the

8 contributions of the defendant”); cf. Aegis Ins. Servs.,

9 Inc. v. 7 World Trade Co., L.P., 77 F.3d 166, 180 (2d Cir.

10 2013) (dismissing negligent design claim against owners of a

11 building destroyed on 9/11 because given “severity of the

12 cataclysm that engulfed lower Manhattan . . . , [i]t is

13 simply incompatible with common sense and experience to hold

14 that defendants were required to design and construct a

15 building that would survive the events of September 11,

16 2001”).

17 Cedar & Washington argues that the composition of the

18 dust and flying debris would have been less harmful but for

19 actions previously taken by the owners of the airplanes and

20 the real estate. This argument does not succeed in raising

21 an issue of fact or a subject for discovery. The refutation

22 is found in the text of the statute. The phrase “act of

17
1 war” is listed in parallel with “act of God,” 42 U.S.C. §

2 9607(b); it is useful and sensible to treat the two kinds of

3 events alike when it comes to showing causation. It would

4 be absurd to impose CERCLA liability on the owners of

5 property that is demolished and dispersed by a tornado. A

6 tornado, which scatters dust and all else, is the “sole

7 cause” of the environmental damage left in its wake

8 notwithstanding that the owners of flying buildings did not

9 abate asbestos, or that farmers may have added chemicals to

10 the soil that was picked up and scattered.

11

12 II

13 Cedar & Washington incurred costs removing the dust

14 residues of the planes and the World Trade Center, and seeks

15 common-law indemnification. “Implied, or common-law,

16 indemnity is a restitution concept which permits shifting

17 the loss because to fail to do so would result in the unjust

18 enrichment of one party at the expense of the other.”

19 McCarthy v Turner Constr., Inc., 17 N.Y.3d 369, 375 (2011)

20 (internal brackets omitted); see also City of New York v.

21 Lead Indus. Ass’n, Inc., 644 N.Y.S.2d 919, 922-23 (1st Dep’t

22 1996) (“The classic situation giving rise to a claim for

18
1 indemnity is where one, without fault on its own part, is

2 held liable to a third party by operation of law . . . due

3 to the fault of another.”). Under New York law, an

4 indemnitor must bear some fault for the damages suffered by

5 the indemnitee, whether on account of negligence, equitable

6 considerations, or statutory requirements. See Raquet v.

7 Braun, 90 N.Y.2d 177, 183 (1997) (“The duty that forms the

8 basis for the liability arises from the principle that

9 ‘every one is responsible for the consequences of his own

10 negligence, and if another person has been compelled . . .

11 to pay the damages which ought to have been paid by the

12 wrongdoer, they may be recovered from him.’” (quoting

13 Oceanic Steam Nav. Co. v. Compania Transatlantica Espanola,

14 134 N.Y. 461, 468 (1892)) (omission in original)). Thus a

15 polluter who causes (or is obligated by statute to

16 remediate) environmental contamination can be liable to

17 another party who cleans it up. State v. Stewart’s Ice

18 Cream Co., 64 N.Y.2d 83, 86-88 (1984).

19 Here, the act-of-war defense bars the CERCLA claim, and

20 Cedar & Washington does not identify any other basis for its

21 claim of indemnification. Because no legal duty or

22 equitable consideration obligated the defendants to

19
1 remediate WTC Dust from Cedar & Washington’s building, this

2 common law claim fails.

3

4 For the foregoing reasons, we affirm the judgment of

5 the district court.

20