Cedar & Wash. Assocs., LLC v. Port Auth. of N.Y. & N.J., Silverstein Props., Inc. (In re September 11 Litig.)

• Decision Date: 02 May 2014
• Docket Number: Docket No. 10–4197.
• Citation: 751 F.3d 86
• Court: U.S. Court of Appeals — Second Circuit
• Parties: In re SEPTEMBER 11 LITIGATION. Cedar & Washington Associates, LLC, Plaintiff–Appellant, v. The Port Authority of New York and New Jersey, Silverstein Properties, Inc., World Trade Center Properties LLC, Silverstein WTC Management Co. LLC, 1 World Trade Center LLC, 2 World Trade Center LLC, 3 World Trade Center LLC, 4 World Trade Center LLC, 7 World Trade Company, L.P., HMH WTC, Inc., Host Hotels and Resorts, Inc., Westfield WTC LLC, Westfield Corporation, Inc., Consolidated Edison Company of New York, AMR Corporation, American Airlines, Inc., UAL Corporation, and United Airlines, Inc., Defendants–Appellees.

751 F.3d 86

In re SEPTEMBER 11 LITIGATION.

Cedar & Washington Associates, LLC, Plaintiff–Appellant,

v.The Port Authority of New York and New Jersey, Silverstein Properties, Inc., World Trade Center Properties LLC, Silverstein WTC Management Co. LLC, 1 World Trade Center LLC, 2 World Trade Center LLC, 3 World Trade Center LLC, 4 World Trade Center LLC, 7 World Trade Company, L.P., HMH WTC, Inc., Host Hotels and Resorts, Inc., Westfield WTC LLC, Westfield Corporation, Inc., Consolidated Edison Company of New York, AMR Corporation, American Airlines, Inc., UAL Corporation, and United Airlines, Inc., Defendants–Appellees.

Docket No. 10–4197.

United States Court of Appeals,Second Circuit.

Submitted: July 12, 2013.

Decided: May 2, 2014.

Sari E. Kolatch (Jay B. Spievack, Kara Gorycki, Cohen Tauber Spievack & Wagner P.C., New York, NY, Robert D. Fox, Neil Witkes, Manko, Gold, Katcher & Fox LLP, Bala Cynwyd, PA, on the brief), Cohen Tauber Spievack & Wagner, P.C., New York, NY, for Appellant.

Leah W. Sears (Beth D. Jacob, Judith S. Roth, on the brief), Schiff Hardin LLP, New York, NY, for Appellee The Port Authority of New York and New Jersey.

Richard Williamson, Thomas A. Egan, Flemming Zulack Williamson Zauderer LLP, New York, NY, for Appellees Silverstein Properties, Inc., et al.

Christopher Walsh, Paul M. Hauge, Gibbons P.C., Newark, N.J., for Appellees Host Hotels and Resorts, Inc. & HMH WTC, LLC.

Peter L. Winik, Latham & Watkins LLP, Washington, D.C., for Appellees Westfield WTC LLC & Westfield Corp., Inc.

Charles F. Rysavy, Dawn M. Monsen, K & L Gates LLP, Newark, N.J., for Appellee Consolidated Edison Co. of New York, Inc.

Maura K. Monaghan (Roger E. Podesta, Debevoise & Plimpton, New York, NY, Desmond T. Barry, Jr., Condon & Forsyth LLP, New York, NY), Debevoise & Plimpton, New York, NY, for Appellees American Airlines, Inc. & AMR Corp.

Jeffrey J. Ellis, Quirk and Bakalor, P.C., New York, NY, Michael R. Feagley, Mayer Brown, LLP, Chicago, Ill., for Appellees United Air Lines, Inc. & United Continental Holdings, Inc.

Before JACOBS, CABRANES, and LIVINGSTON, Circuit Judges.

DENNIS JACOBS, Circuit Judge:

Real estate developer Cedar & Washington Associates, LLC, sues the owners and lessees of the World Trade Center (and the owners of the airplanes that crashed into it) under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. §§ 9601–9675, seeking recovery of costs incurred in remediating a nearby building contaminated by the September 11, 2001 attack on the World Trade Center. The case returns to us after a remand to the district court to determine in the first instance whether district court to determine in the first instance whether the defendants are insulated by CERCLA's “act of war” defense. On remand, the United States District Court for the Southern District of New York (Hellerstein, J.) concluded that the attack constituted an “act of war” for purposes of CERCLA's affirmative defense, and that the defendants therefore were entitled to judgment on the pleadings.

We agree. Although CERCLA's strict liability scheme casts a wide net, an “act of war” defense avoids ensnarement of persons who bear no responsibility for the release of harmful substances. The attacks come within this defense. As the “act of war” defense shows, CERCLA was not intended to create liability for the dispersal of debris and wreckage from a catastrophe that was indistinguishable from military attack in purpose, scale, means, and effect. Both the President and Congress responded to the September 11 attacks by labeling them acts of war, and this classification warrants notice, and perhaps some deference, in the CERCLA context. The decisive point is that the attacks directly and immediately caused the release, and were the “sole cause” of the release because the attacks “overwhelm[ed] and swamp[ed] the contributions of the defendant[s].” In re September 11 Litigation, 931 F.Supp.2d 496, 512 (S.D.N.Y.2013) (quoting William H. Rodgers, Jr., Environmental Law: Hazardous Wastes and Substances § 8.13 (1992)).

BACKGROUND

After the September 11, 2001 attacks that leveled the World Trade Center (“September 11 attacks”), real estate developer Cedar & Washington began renovating its leased 12–story downtown office building into a 19–story business hotel. In late 2004, the New York State Department of Environmental Conservation and the United States Environmental Protection Agency notified Cedar & Washington that the interstitial spaces of the building might contain finely-ground substances from the World Trade Center, including concrete, asbestos, silicon, fiberglass, benzene, lead, and mercury: so-called “WTC Dust.” To permit renovation to continue, the government agencies required Cedar & Washington to perform costly remediation. In this suit, Cedar & Washington seeks to recover those costs from: the owner of the World Trade Center site, lessees of World Trade Center buildings, and the companies that owned the two aircraft that were crashed into the towers.

The claims are premised on CERCLA and common-law indemnification. The district court initially dismissed the complaint on statute of limitations grounds and (alternatively) on the ground that Cedar & Washington failed to allege a necessary element of a CERCLA cost recovery claim: either a “release” or a “disposal” of hazardous substances. In re September 11 Litigation, No. 08–9146(AKH), 2010 WL 9474432 (S.D.N.Y. Sept. 22, 2010) (citing 42 U.S.C. § 9607(a)(1)-(2)). On appeal, we declined to resolve these “thorny questions of statutory interpretation”; instead, we remanded under United States v. Jacobson, 15 F.3d 19, 22 (2d Cir.1994), for the district court to determine, in the first instance, whether the defendants could invoke CERCLA's “act of war” defense. In re September 11 Litigation, 485 Fed.Appx. 443 (2d Cir.2012). This affirmative defense requires the alleged polluter to prove by a preponderance of evidence that the release of a hazardous substance was caused “solely by ... an act of war.” 42 U.S.C. § 9607(b).

Pursuant to our mandate, the district court ordered briefing and heard argument, and then held, in a March 20, 2013 opinion, that Cedar & Washington's claim could be dismissed on this alternative ground (in addition to those identified in its earlier opinion). In re September 11 Litigation, 931 F.Supp.2d 496 (S.D.N.Y.2013). The district court emphasized that:

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

• al–Qaeda's leadership “declared war on the United States, and organized a sophisticated, coordinated, and well-financed set of attacks intended to bring down the leading commercial and political institutions of the United States,” id.;

• “Congress and the President responded by recognizing al-Qaeda's attacks as an act of war” and sent U.S. troops “to wage war against those who perpetrated the attacks and the collaborating Taliban government,” id.; and

• the Supreme Court clarified in Hamdi v. Rumsfeld, 542 U.S. 507, 124 S.Ct. 2633, 159 L.Ed.2d 578 (2004), and Hamdan v. Rumsfeld, 548 U.S. 557, 126 S.Ct. 2749, 165 L.Ed.2d 723 (2006), that the attacks “were acts of war against the United States.” In re September 11 Litigation, 931 F.Supp.2d at 512.¹

Further, the district court held that this “act of war” was the sole cause of any release of hazardous substances from the World Trade Center's collapse because the September 11 attacks “overwhelm[ed] and swamp[ed] the contributions of the defendant[s].” Id. (quoting Rodgers, supra, at § 8.13).

The district court cautioned that its “holding as to the act-of-war defense should be read narrowly, fitting the facts of this case only.” Id. at 514. Its decision was not necessarily applicable in contexts presenting different considerations, such as “cognate laws of insurance” or the Anti–Terrorism Act of 1992. Id.

Once the district court issued its opinion, Cedar & Washington promptly notified this Court to restore jurisdiction, and the appeal was reinstated.

DISCUSSION

The district court's decision that the September 11 attacks constitute an “act of war” under CERCLA, and that those attacks were the sole cause of the release of WTC dust, is reviewed de novo. Hayden v. Paterson, 594 F.3d 150, 160 (2d Cir.2010) (grant of a motion for judgment on the pleading accorded de novo review). We accept as true all well-pled allegations and draw all reasonable inferences in Cedar & Washington's favor. Burnette v. Carothers, 192 F.3d 52, 56 (2d Cir.1999) (“In deciding a Rule 12(c) motion, we apply the same standard as ... under Rule 12(b)(6), accepting the allegations contained in the complaint as true and drawing all reasonable inferences in favor of the nonmoving party.”).

I

CERCLA imposes strict liability for hazardous waste cleanup on owners and facility operators, on certain persons who arrange for the disposal or treatment of hazardous waste, and on certain persons who transport hazardous waste. 42 U.S.C. § 9607(a)(1)-(4). Three affirmative defenses are made available when CERCLA liability would not be linked to responsibility for contamination. These defenses are listed in Section 107(b):

There shall be no liability under [CERCLA] for a person otherwise liable who can establish by a preponderance of the evidence that the release or threat of release of a hazardous substance and the damages resulting therefrom were caused solely by—

(1) an act of God;

(2) an act of war;

(3) an act or omission of a[n unrelated] third party ...; or

(4) any combination of the foregoing paragraphs.

42 U.S.C. § 9607(b) (emphasis added).

“Act of war” is undefined in the statutory text, and the legislative history is silent on the intended meaning of the term. United States v. Shell Oil, Co., 294 F.3d 1045, 1061 (9th Cir.2002). To construe it, we “consider not only the bare meaning of the ... phrase but also its placement and purpose in the statutory scheme.” United States v. Robinson, 702 F.3d 22, 31 (2d Cir.20...