Cirino v. City of New York
2014 U.S. App. LEXIS 10681
2d Cir.2014Background
- Thousands of lawsuits from 9/11 rescue and cleanup were consolidated before Judge Hellerstein; parties negotiated a master Settlement Process Agreement in June 2010 to resolve claims against the City and the WTC Captive.
- The Agreement required at least 95% of "eligible plaintiffs" to opt in for the settlement to become effective and promised a Bonus Payment increasing with higher opt-in rates; an Allocation Neutral and an Appeal Neutral were appointed to allocate awards.
- Parties agreed definitions and processes (Eligible Plaintiffs List (EPL), Exhibit S stipulation of dismissal), but the Agreement did not clearly address involuntary dismissals or some counting rules.
- Near the opt‑in deadline many plaintiffs’ counsel submitted 185 stipulations; the court sua sponte appointed Special Counsel, attempted contact with nonresponsive plaintiffs, and dismissed ~409 nonresponsive plaintiffs for failure to prosecute, excluding most from the EPL and triggering a $55 million Bonus Payment (district court order).
- The Agreement also provided Contingent Payments if fewer than specified numbers of New Debris Removal Claims were "filed or submitted" by particular trigger dates; many new claims filed after a statute extension were later withdrawn or dismissed before the first determination date.
- The district court ordered defendants to pay the First Contingent Payment based on counting only claims pending as of the trigger date, and barred plaintiffs’ counsel from collecting contingency fees from the Bonus and the Contingent Payments; appeals followed.
Issues
| Issue | Plaintiffs' Argument | Defendants' Argument | Held |
|---|---|---|---|
| Whether plaintiffs whose claims were involuntarily dismissed for failure to prosecute may be excluded from the EPL for opt‑in % calculation (Bonus Payment trigger) | Excluded: dismissed claims are not "pending" and Exhibit S contemplates exclusion; district court may treat them as excluded | Included: Agreement excludes only plaintiffs who voluntarily dismissed via Exhibit S; involuntary dismissals should count in denominator | Agreement ambiguous on this point; vacated and remanded for consideration of extrinsic evidence of parties’ intent or implied term determination |
| Whether Contingent Payments are triggered by the number of New Debris Removal Claims "filed or submitted" as of the determination date, or only those still pending on that date | Count only claims pending on trigger date (so withdrawn/dismissed earlier do not count) | Count all claims "filed or submitted" on or after Apr 13, 2010 regardless of later dismissal | District court erred: unambiguous Agreement counts claims "filed or submitted" as of the date; reversed the contingent‑payment order |
| Whether plaintiffs’ counsel may collect a contingency fee from the Bonus Payment | Counsel claimed contractually agreed 25% cap applied to base but Agreement also allocated fees to include Bonus; therefore they should share Bonus | Defendants supported district court’s exclusion of Bonus from additional contingency fee to preserve fund for claimants and avoid conflicts | District court did not abuse discretion in denying contingent fee recovery from the Bonus Payment; affirmed |
| Whether plaintiffs’ counsel may collect fees from the First Contingent Payment | Counsel sought fee share if contingent payment due | Defendants argued no fee or contingent payment not owed | Moot: Court reversed contingent‑payment award, so fee question as to First Contingent Payment is dismissed |
Key Cases Cited
- Collins v. Harrisov-Bode, 303 F.3d 429 (2d Cir. 2002) (settlement agreements construed as contracts)
- Cent. States Se & Sw Areas Health & Welfare Fund v. Merck-Medco Managed Care, L.L.C., 504 F.3d 229 (2d Cir. 2007) (contract interpretation reviewed de novo)
- Greenfield v. Philles Records, 98 N.Y.2d 562 (N.Y. 2002) (written agreements clear on their face must be enforced according to plain meaning)
- Haines v. City of New York, 41 N.Y.2d 769 (N.Y. 1977) (courts may supply missing contract terms in limited circumstances)
- Goldberger v. Integrated Res., Inc., 209 F.3d 43 (2d Cir. 2000) (factors for reasonableness of fees from common funds)
- In re Agent Orange Prod. Liab. Litig., 818 F.2d 226 (2d Cir. 1987) (federal courts’ supervisory power over fee arrangements)