In Re September 11 Property Damage Litigation
650 F.3d 145
2d Cir.2011Background
- Settlement between Settling Plaintiffs and Aviation Defendants approved by district court; WTCP Plaintiffs appeal challenging preemption, fairness, and crediting of payments under ATSSSA.
- Settlement allocates $1.2 billion: 60% by American and Globe (Flight 11) and 40% by United and Huntleigh (Flight 175); Huntleigh to exhaust its insurance.
- Settlement credits all payments against contributing Aviation Defendants' ATSSSA liability ceilings; Huntleigh insurers to exhaust liability limits.
- Judge Martin mediated; mediation produced mediator's number of $1.2 billion, with a 72% discount from claimed damages of $4.4 billion; parties accepted.
- Settlement covers 18 of 21 actions; four contributing Defendants to pay entire settlement; other defendants and insurers released; district court conditioning on ATSSSA compliance and good faith findings.
- District court granted final judgments and intervenor status for WTCP Plaintiffs; timing of challenges on appeal is preserved
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ATSSSA preempts NY first-come rule | WTCP argues ATSSSA preempts NY rule | Court should apply NY rule as not preempted | ATSSSA does not preempt NY rule |
| Whether district court properly evaluated settlement fairness | Settlement was not properly assessed on claim-by-claim basis | Mediator negotiations and 72% discount support fairness | Court did not abuse discretion; settlement fair |
| Whether settlement payments count toward ATSSSA liability limits | Payments were not based on liability; should not reduce limits | Liability includes settled payments; should reduce limits | Settlement payments count toward liability limits |
| Whether allocation among four defendants is appropriate | Allocation favors certain defendants; improper | Allocation negotiated to manage costs and ensure settlement | Allocation approved as part of good-faith settlement |
| Whether Huntleigh exhausted its liability limits | No explicit exhaustion | Huntleigh's payment exhausts its limits under ATSSSA | Huntleigh exhaustion approved |
Key Cases Cited
- Allstate Ins. Co. v. Russell, 13 A.D.3d 617 (N.Y.App.Div.2d Dep't 2004) (insurer may settle without paying claims ratably absent bad faith)
- Canada Life Assurance Co. v. Converium Reinsurance (Deutschland) AG, 335 F.3d 52 (2d Cir. 2003) (ATSSSA exclusive venue discussion not to preempt settlement rule)
- In re WTC Disaster Site, 414 F.3d 352 (2d Cir. 2005) (federal preemption and ATSSSA structure implications)
- Schneider v. Feinberg, 345 F.3d 135 (2d Cir. 2003) (ATSSSA liability limits context and purpose)
- Duprey v. Sec. Mut. Cas. Co., 256 N.Y.S.2d 987 (N.Y.App.Div.3d Dep't 1965) (settlements may reduce remaining liability without bad faith)
- In re Masters Mates & Pilots Pension Plan & IRAP Litig., 957 F.2d 1020 (2d Cir. 1992) (court approval of settlements generally reviewed for abuse of discretion)
- Norton v. Sam's Club, 145 F.3d 114 (2d Cir. 1998) (issues not sufficiently argued are waived)