Petition for Writ of Certiorari — Sanchez-Villalobos v. United States

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Jurisdiction

The court of appeals rendered judgment on April 29,

2005. Petitioners’ timely petition for rehearing and

rehearing en banc was denied on July 15, 2005. The

Court has jurisdiction pursuant to 28 U.S.C. § 1254(1).

Statutes Involved

The Air Transportation Safety and System Stabiliza-

tion Act (“ATSSSA”), 49 U.S.C. § 40101 note, Pub. L.

No. 107-42, 115 Stat. 230 (2001), is reprinted in the

Appendix (61a-85a).

Statement

Introduction

On September 11, 2001, the world changed. For the

persons represented by petitioners in this action—includ-

ing widows, children and parents of firefighters killed in

the collapse of the World Trade Center towers—that

change was catastrophic. What was not known publicly

at the time, but is now confirmed by The 9/1] Commis-

sion Report: Final Report of the National Commission

on Terrorist Attacks Upon the United States (2004)

(“Commission Report”) and by recently released audio-

tapes of New York City, is that those deaths could have

been prevented but for the misfeasance and culpable

negligence of agents and officials of the defendants

Motorola Inc. (“Motorola”) and the City of New York.

Both Motorola and City officials knew that the anti-

quated analog radio equipment used by the firefighters

would not work in high-rise buildings, and indeed that it

had failed at the time of the February 26, 1993 terrorist

bombing of the World Trade Center. As the Commission

Report emphasizes, that faulty equipment predictably

failed again on September 11. As a result, firefighters

were unable to communicate with fire chiefs directing

their activities and thus did not receive numerous evac-

uation orders, proximately resulting in their deaths.

This lawsuit seeks to hold defendants responsible for

that culpable conduct.

Proceedings Below

Petitioners, the personal representatives of firefight-

ers who died in the World Trade Center collapse, com-

menced this action for wrongful death against the City of

New York on December 22, 2003. Petitioners filed an

amended complaint on January 20, 2004, adding Motorola

as a party defendant. The amended complaint alleged,

inter alia, that Motorola intentionally and recklessly

misled the City into purchasing new equipment and

using old equipment that Motorola knew or should have

known would fail in high-rise buildings; that City offi-

cials and Motorola colluded and acted in concert to

ensure that Motorola would be awarded the contracts to

provide that equipment; that the City and Motorola cul-

pably failed to ensure that the equipment would work

properly; and that both defendants knowingly and reck-

lessly permitted the use of the old equipment that

already had failed in the first World Trade Center bomb-

ing. Petitioners further alleged that these culpable, inten-

tional and grossly negligent acts independently caused or

contributed to the deaths of plaintiffs’ decedents, New

York City firemen.

The lawsuit was brought in the United States District

Court for the Southern District of New York pursuant to

the Air Transportation Safety and System Stabilization

Act (“ATSSSA”), 49 U.S.C. § 40101 note, Pub. L. No.

107-42, 115 Stat. 230 (2001). ATSSSA created an

“exclusive” “Federal cause of action for damages arising

out of the hijacking[s] and subsequent crashes. . . on

September |1, 2001,” §408(b)(1), and vested in the

Southern District

original and exclusive jurisdiction over all actions

brought for any claim (including any claim for loss

of property, personal injury, or death) resulting from

or relating to the terrorist-related aircraft crashes of

September I|1, 2001.

Id., § 408(b)(3) (emphasis added).

In addition, ATSSSA created a Victim Compensation

Fund (“VCF”), id., § 401, to provide compensation for

victims “injured or killed as a result of” the airplane

crashes of September 11. /d., § 403. The statute man-

dated that victims who applied for compensation under

the fund “waive[ ] the right to file a civil action (or to be

a party to an action) in any Federal or State court for

damages sustained as a result of the terrorist-related air-

craft crashes of September 11, 2001.” /d., § 405(c)(3)(B)(i))

(emphasis added).

Petitioners claimed that the statutory waiver provi-

sion, construed in the context of the language and struc-

ture of the entire statute, and consistent with its stated

purpose to save the air transportation industry from eco-

nomic collapse,’ applies only to claims for acts or omis-

sions that were incident to the “terrorist-related aircraft

crashes,” j.e., acts that culpably caused or allowed the

hijackings or the crashes to occur. It does not bar actions

seeking compensation for damages proximately caused

by independent tortious conduct of entities, such as

Motorola, whose acts did not cause or allow the hijack-

. The Act's purpose is stated in its preamble: “An Act to pre-

serve the continued viability of the United States air transportation

system” (61a).

ings or crashes and whose financial solvency bears no

relationship to the air transportation sector's preserva-

tion.

On January 21, 2004, petitioners moved to stay earlier

orders of District Judge Alvin K. Hellerstein requiring

that cases brought by victims who had VCF awards

pending as of January 22, 2004 be dismissed within ten

days of that date. On January 22, 2004, in an oral ruling

from the Bench, Senior District Judge Charles S. Haight,

Jr., sitting as the emergency judge, denied the motion in

major respects, for reasons set forth in his subsequent

written Memorandum and Order of January 29, 2004

(31a). Judge Haight held that the waiver provision of

ATSSSA, § 405(c)(3)(B)(i), requires a complete waiver

against any potential defendant (with two narrow excep-

tions for “collateral source obligations” and the terror-

ists themselves) and for all claims (5la-52a).

The defendants then moved to dismiss the petitioners’

claims pursuant to Rule 12(b)(6), Federal Rules of Civil

Procedure, on the ground that by filing claims with the

VCF, each petitioner had waived his or her right to pro-

ceed with a judicial remedy. District Judge Hellerstein,

to whom the case was permanently assigned, granted the

motions and dismissed the actions, explicitly relying on

the January 29, 2004 opinion of Judge Haight (28a-29a).

On appeal, petitioners argued that the waiver provi-

sion, which encompassed only claims that were “a

result of the terrorist-related aircraft crashes,”

§ 405(c)(3)(B)(i), was significantly narrower in scope

than the provision creating exclusive jurisdiction in the

Southern District of New York for all claims “resulting

from or relating to” those crashes. § 408(b)(3). Noting

that a panel of the Second Circuit had already held that

even the jurisdictional provision did not reach all claims

for injuries that would not have occurred “but for” the

aircraft crashes, Canada Life Assurance Co. v. Con-

verium Ruckversicherung (Deutschland) AG, 335 F.3d

52 (2nd Cir. 2003), petitioners argued that the waiver

provision reached only claims incident to the crashes,

and not claims against independent tortfeasors whose

acts were a separate proximate cause of the injuries.

Petitioners also argued on appeal that the waiver pro-

vision was limited to “damages sustained” as a result of

the terrorist related airplane crashes, a term that the

Court and lower federal courts consistently have con-

strued as encompassing only compensatory damages.

Accordingly, petitioners requested a remand so that they

could pursue claims for punitive damages.

The court of appeals affirmed, holding that the waiver

provision is unambiguous and that it mandates waiver of

all claims that would not have arisen, in effect, but for

the events of September 11, even if there was also

an independent proximate cause: “[T]he injuries to

plaintiffs and their loved ones resulted from a series of

interrelated acts that began with the terrorist attack.

Even assuming independent, successive tortious acts by

both the terrorists and defendants . . . we are hard

pressed to find plaintiffs’ damages did not result—ar

least in part—from the terrorist attacks.” (15a) (empha-

sis added). The court focused exclusively on the lan-

guage of § 405(c)(3)(B)(i). It ignored the broader language

used in the jurisdictional grant of § 408(b)(3), and failed

to explain why the differences in that language did not

create at least ambiguity as to the scope and breadth of

the waiver provision. Moreover, it did not even attempt

to reconcile its interpretation of the statute with the con-

flicting interpretation by the Second Circuit panel in

Canada Life Assurance that even the jurisdictional grant

in ATSSSA did not extend to all “but for” claims.

The court of appeals also considered petitioners’

“damages sustained” argument on the merits despite

finding that petitioners did not raise it below (19a), but

rejected petitioners’ argument that § 405(c)(3)(B)(i), by

its use of the words “claimant waives the right to file a

civil action. . . for damages sustained,” limited the

waiver to claims for compensatory damages. Despite the

fact that “[c]ases universally distinguish a recovery for

‘damages sustained’ from a punitive damage award,”

Baas v. Hoye, 766 F.2d 1190, 1195 (8th Cir. 1985), the

court of appeals held that petitioners’ waivers of claims

for “damages sustained” were the “functional equiva-

lent” of releases of “al! debts, claims, demands, dam-

ages, actions, and causes of action” (21a) (citing

Rocanova v. Equitable Life Assurance Society, 83 N.Y.2d

603, 616 (1994)).

Petitioners timely sought rehearing and rehearing en

banc, arguing that the court of appeals panel had ignored

the conflicting decision of a different panel in the

Canada Life case and had fundamentally misinterpreted

the waiver provision as encompassing all claims for

relief, as opposed to merely claims for compensatory

damages.

While the petition was pending, yet another Second

Circuit panel of entirely different judges considered a

case involving cross-appeals from a decision of Judge

Hellerstein on the scope of the jurisdictional section of

ATSSSA, § 408(b)(3). On July 14, 2005, that panel issued

an Opinion that was fundamentally at odds with the opin-

ion of the panel in this case. /n re WTC Disaster Site, 414

F.3d 352 (2nd Cir. 2005). In contrast to the court below’s

holding that the scope and reach of § 405(c)(3)(B)(i) of

ATSSSA was clear and unambiguous on its face and

encompassed, in effect, all “but for” claims, the panel in

In re WTC Disaster Site held that

the respective reaches of terms such as “arising out

of,” “resulting from,” and “relating to” are not self-

evident. When § 408 is compared to § 405. . . itis

evident that § 408 is broader in two significant

respects. First. . . § 405 sets exacting criteria with

respect to the times and place of injury.

* oe

Second, whereas § 405 relief [and waiver] is limited

to injuries suffered “as a result of” the air crashes,

the scope of § 408, dealing with “a// actions brought

for any claim. . . resulting from or relating to” the

crashes (emphasis added [by the court]) is clearly

broader. ;

414 F.3d at 375-376.

Thus, the holding of the court below that

§ 405(c)(3)(B)(i) in effect sweeps in all “but for” claims

cannot be reconciled with the /n re WTC Site panel's

recognition that § 405’s reach is clearly narrower than

§ 408(b)(3), and the Canada Life panel's holding that

even the latter section does not include all “but for”

claims. Despite these manifest conflicts, on July 15,

2005, the very day after the /n re WTC Site decision was

announced, the court of appeals denied petitioners

requests for rehearing and rehearing en banc.

Facts

The 9/11 Commission Report repeatedly refers to the

inability of New York City firefighters operating in the

World Trader Center towers after the terrorist airline

crashes to communicate with fire chiefs directing their

activities due to faulty communications equipment.’ The

’ Commission Report at 299 (“limited effectiveness of FDNY

radios in high-rises’); id. at 307 (“firefighters did not receive the

evacuation transmissions [in part because] some FDNY radios did not

Report's observations recently were confirmed by the

City’s release of audio tapes of communications, or lack

of same, between and among first responders to the

tragedy, especially firefighters. As a result, most fire-

fighters in or about the North Tower did not receive mul-

tiple evacuation orders and died when the towers

collapsed.

As alleged in the Amended Complaint,* Handi-talkie

Saber I analog radios purchased by New York City from

Motorola were used by New York firefighters at the time

of the terrorist bombing of the World Trade Center on

February 26, 1993. At that time, defendants discovered

that firefighters on the upper floors of a high-rise build-

ing could not communicate with each other or their com-

mand posts using this radio system. Although defendants

had notice of the serious defect from first-hand accounts

and a professional investigator's report, technologically

feasible improvements were not made.

In 1997, New York City contracted with Motorola to

supply limited replacement equipment consisting of up

to 750 Saber radios and parts, to “maintain” the Saber I

radios then in use. In 1999, after notifying the City of its

intention to discontinue Saber radios, Motorola fraudu-

lently represented that its “new” XTS 3500 radios

(which, in fact, had not been developed, much less field

pick up the transmission because of the difficulties of radio com-

munications in high-rises”), id. at 319-20 (“internal communications

breakdowns resulting from the limited capabilities of radios in the

high-rise environment of the WTC"); id. at 322 (“the radios’ effec-

tiveness was drastically reduced in the high-rise environment’).

These references are in chapter 9 of the Commission Report, entitled

“Heroism and Horror.”

Since the judgment below is based on the granting of defense

motions to dismiss, all of petitioners’ allegations are deemed to be

true for purposes of the petition.

tested) would be the best substitute for the Saber radios

previously purchased by the Fire Department of New

York. Motorola and City officials conspired to avoid

competitive bidding on the purchase of these radios by

merely modifying the 1997 contract after custom-tai-

loring the specifications so that only a Motorola product

could satisfy them. As a result, New York City in 1999

bought 3,818 untested XTS 3500 radios and withdrew

the Saber analogs from use. But for such fraud and con-

spiracy, radio systems that were fully functional in high

rise buildings would have been purchased, perhaps from

a different manufacturer.

In March 2001 New York City ceased use of the Saber

I analog radios and deployed the digital XTS 3500's.

Within ten days an XTS 3500 failed to transmit the may-

day call of a New York City fireman trapped in a burn-

ing home who, as a result, barely escaped death.

Following this and other reported failures, the City

immediately recalled all the XTS 3500's. They were

replaced by the old Saber I analogs which defendants

knew, after the 1993 World Trade Center bombings,

would not function in high-rise buildings. Those radios,

without any technological enhancements, were still

exclusively used by firefighters c° September 11, 2001.

At 9:32 a.m. that day, an evacuation order to fire-

fighters in the North Tower was sent on the Motorola

Saber I system but not received by the great majority of

firefighters in the building. At 10 a.m. another order for

immediate evacuation was sent by radio and again not

received by most of the firefighters. As a result, many

firefighters, including those whose personal represen-

tatives are petitioners, did not evacuate and died in the

tower. In contrast, the police officers and emergency ser-

vice workers in the North Tower did receive warnings

over different radio systems, and successfully escaped

before the tower collapsed.

}]

Reasons for Granting the Writ

There exist two compelling grounds upon which the

Court should issue a writ of certiorari. First, in resting

exclusive federal jurisdiction in the Southern District of

New York for all claims “resulting from or related to the

terroristic attacks and airplane crashes,” Congress sought

to provide a single forum for all litigation related to

those events and to insure uniformity of treatment and

result. It is incumbent upon the Southern District and the

Court of Appeals for the Second Circuit to carry out that

mandate. Instead, in a series of panel decisions, the court

of appeals has created a mores of contradiction and

confusion, and refused to invoke its en banc jurisdiction

to resolve it.

The Court should grant certiorari pursuant to its super-

visory powers to carry out Congress’ intention of equal

treatment and uniformity of decision for victims of the

September 11 tragedy. The decision of the panel below

fundamentally conflicts with the decisions of two other

panels and effectively denies petitioners the right to seek

judicial relief against parties who were significant inde-

pendent tortfeasors, causing the death of petitioners’

decedents. Both the public importance of a fair resolu-

tion of claims for September 11 victims and the unique

circumstance where a single circuit court has exclusive

jurisdiction over all related cases and fails to resolve

intracircuit conflicts justifies exercise of the certiorari

prerogative. The Court, of course, need not resolve the

conflict itself, but rather may exercise the option of

vacating the judgment and remanding for en banc con-

sideration.

Second, the court of appeals construed the language of

the waiver provision as the “functional equivalent” of a

release of all claims, demands, damages, actions and

causes of action related to the facts at issue. But the

waiver provision, by its terms, extends only to “claims

for damages sustained,” a term that the Court and courts

of appeals have interpreted as meaning only compen-

satory, and not punitive, damages. Certiorari should be

granted to conform the court of appeals judgment to the

decisions of the Court and other circuits.

1. Certiorari Should Be Granted to Resolve the

Conflicts Within the Second Circuit, the Cir-

cuit with Exclusive Jurisdiction Over Cases

Related to the September 11 Tragedy, and to

Carry Out Congress’ Intent to Insure Uni-

formity of Treatment and Decisions in Such

Cases.

In enacting ATSSSA, Congress chose to federalize all

claims “arising from” the terrorist hijackings and plane

crashes of September 11, § 408(a)(1), and to confer

exclusive jurisdiction over all such claims in the South-

ern District of New York. § 408(a)(3). While the leg- -

islative history of the statute is sparse, and there are no

committee or conference reports, both the structure of

the statute and the few comments in the Congressional

Record make clear that Congress intended all lawsuits be

adjudicated in a single forum to insure consistency and

uniformity in application. For example, Senator Schumer

stated:

It may be a little unclear to some whether all law-

suits or just lawsuits against the airlines will be sit-

uated in the Southern District of New York. The

intent here is to put all civil suits arising from the

tragic events of September 1] in the Southern Dis-

trict.

147 Cong. Rec. $9592 (Sept. 21, 2001) (emphasis added).

Similarly, Senator McCain explained that “the bill

attempts to provide some sense to the litigation by con-

solidating all civil litigation arising from the terrorist

attacks of September 11 in one court.” 147 Cong. Rec.

$9594 (Sept. 21, 2001) (emphasis added). And Senator

Hatch emphasized: “for those who seek to pursue the

litigation route, | am pleased that we consolidated the

causes of action in one Federal court so that there will be

some consistency in the judgments awarded.” 147 Cong.

Rec. $9595 (Sept. 21, 2001) (emphasis added).

The Court of Appeals for the Second Circuit has frus-

trated that congressional purpose by failing to reconcile

conflicting panel constructions of critical portions of

ATSSSA through its en banc powers. Indeed, the Second

Circuit has long been on record as fundamentally opposed

to invocation of en banc proceedings. See, e.g., Green v.

Santa Fe Industries, Inc., 533 F.2d 1309, 1310 (2nd Cir.

1976).

Whatever may be the merits or demerits of en banc

proceedings in most cases, the procedural context of this

case is extraordinary and called out for their use. The

Second Circuit was placed in a unique position by

ATSSSA as the only circuit that would hear appeals aris-

ing out of the September 11 tragedy. Congress gave it

the responsibility to insure that all litigants before it

receive equal application of the law. The Second Cir-

cuit’s refusal to reconcile its conflicting holdings cries

out for invocation of this Court's supervisory jurisdic-

tion. S.Ct. Rule 10(a).

We recognize that the Court rarely invokes its certio-

rari power to resolve intra-circuit cenflicts. Yet such use

of the power is hardly without precedent, and is partic-

ularly appropriate in the special circumstances of this

case. In United States v. Johnston, 316 U.S. 649 (1942),

the Court granted certiorari and summarily vacated a

Ninth Circuit judgment and remanded, because a sub-

sequent Ninth Circuit decision had created an intra-cir-

cuit conflict. That, of course, is precisely the situation

here, where the Second Circuit's decision in Jn re WTC

Disaster Site was issued months after the court’s deci-

sion in this case, and just one day prior to issuance of

the Order in this case denying en banc review, i.e.,

before the entire court could even consider the clear con-

flict thereby created. Given the unique circumstances of

the Second Circuit's exclusive jurisdiction, this case pre-

sents a much stronger basis to grant certiorari than did

Johnston. See Maggio v. Zeitz, 333 U.S. 56, 59-60

(1948) (Court granted certiorari pursuant to its super-

visory jurisdiction in light of differing views within the

Second Circuit, which was the circuit most frequently

confronted with difficult bankruptcy problems); Kent v.

United States, 383 U.S. 541, 557 n.27 (1966) (certiorari

granted whe: 2 District of Columbia Court of Appeals’

decisions had been “self-contradictory”). See also Dick-

inson v. Petroleum Conversion Corp., 338 U.S. 507, 508

(1950) (certiorari granted “because of this intracircuit

conflict”); John Hancock Mutual Life Ins. Co., Inc. v.

Bartels, 308 U.S. 180, 181 (1939) (same).

Certiorari is particularly appropriate because the court

of appeals in this case fundamentally misconstrued a fed-

eral statute of historic import by applying an incorrect

rule of construction. Both the district court and the court

of appeals focused singularly on the words of the waiver

provision, § 405(c)(3)(B)(i), to the exclusion of other

language in the statute, in finding the provision “unam-

biguous” and foreclosing petitioners’ lawsuit. But the

plain meaning doctrine does not direct courts to focus

their attention exclusively on the words used in the par-

ticular phrase, clause, or sentence whose meaning is at

issue. Rather a court must look to “the plain meaning of

the whole statute, not of isolated sentences,” Beecham v.

United States, 511 U.S. 368, 372 (1994), “by reference

to the language itself, the specific context in which that

language is used, and the broader context of the statute

as a whole.” Robinson v. Shell Oil Co., 519 U.S. 337,

341 (1997). “The meaning—or ambiguity—of certain

words or phrases may only become evident when placed

in context.” FDA v. Brown & Williamson Tobacco Corp..,

529 U.S. 120, 132 (2000).

While the court of appeals dutifully acknowledged its

obligation to follow these principles (12a), it failed to do

so, ignoring completely the ambiguity of the meaning of

the phrase “as a result of” created by the “resulting from

or relating to” language in § 408(b)(3) as interpreted in

Canada Life and In re WTC Site.

In Canada Life, the Court of Appeals acknowledged

the “broad” literal terms of the language “resulting from

or relating to” in § 408(b)(3), 335 F.3d at 57, but nev-

ertheless found that the provision’s meaning was ambigu-

ous in the context of other language of the Act and the

Act's purpose and effect. /d. at 58. Without definitively

delineating the precise contours of § 408(b)(3)'s reach,

the court held that, at the least, it did not encompass al/

claims “that would not have been suffered ‘but for’ the

events of September |1 but otherwise involve no claim

or defense raising an issue of law or fact involving those

events.” /d. at 59.

In Re WTC Site, the court of appeals emphasized the

clearly narrower scope of § 405 as compared to § 408's

jurisdictional grant:

Accordingly, we conclude that whereas § 405

relief [and waiver] is limited to injuries suffered “as

a result of” the air crashes, the scope of § 408, deal-

ing with “all actions brought for any claim .

resulting from or relating to” the crashes (emphasis

added [by court] is clearly broader.

In Re WTC Site, 414 F.3d at 376.

The reasoning of the Second Circuit panels in Canada

Life and WTC Site is irresistible. The language of

§ 405(c)(3)(B)(i) is ambiguous in the overall context of

the statute's text, sweeps significantly less broadly than

§ 408(b)(3), and requires a significantly narrower con-

struction of the waiver provision than that provided by

the court in this case. The construction most consistent

with the statutory context and purpose is that the waiver

reaches only damages alleged to have resulted exclu-

sively from acts and omissions incident to the “terrorist-

related aircraft crashes” themselves, encompassing fewer

than all claims of which the terrorist attacks were a

cause in fact. This reading gives the phrase “as a result

of” in § 405(c)(3)(B)(i) a meaning sufficiently narrow to

allow for the broader scope of the “resulting from or

relating to” language in § 408(b)(3), /n re WTC Site,

while also allowing for the narrowing of § 408 under-

taken in Canada Life and giving effect to ATSSSA's

primary purpose of protecting the threatened air trans-

portation sector. Acts and omissions such as failing to

institute better measures to prevent hijackings would fall

within the waiver. But acts and omissions not incident to

the aircraft crashes themselves remain a basis for the

legal remedies normally available to injured parties.

While ignoring § 408(b)(3), the court of appeals stated

that § 405(c)(2), which limits VCF eligibility to those

who were present at the site and suffered harm or death

“as a result” of the aircraft crashes, defeats petitioners’

argument (15a). The court suggested that if petitioners

were correct that the term “as a result of” in the waiver

provision does not encompass their claims against

Motorola, then they would not have been eligible to file

claims with the VCF.

There is no such inconsistency or defect in petitioners’

argument. Petitioners do not argue that their on/y poten-

tial claim was against Motorola and the City, or that they

did not waive claims against some other entities. Peti-

tioners’ decedents indeed were killed “as a result of” the

aircraft crashes, and petitioners were entitled to file VCF

claims. Petitioners thereby waived their rights to sue for

acts Or Omissions incident to the hijackings or crashes,

é.g., against an air carrier on the theory that it owed a

duty to prevent the use of its jetliner as the instrument of

the terrorist acts. But neither petitioners’ claims with the

VCF nor their waivers under § 405(c)(3)(B)(i) encom-

passed their claims against Motorola for acts “relating

to” the crashes that independently culpably caused the

deaths. The fact that petitioners waived a right to sue

one set of defendants does not protect Motorola from lia-

bility.°

Had Congress intended to prevent VCF claimants from

seeking remedies against any tortfeasor who contributed

to their injuries, § 405(c)(3)(B){i) would have waived

civil actions for damages “resulting from or relating to”

or “arising from the terrorist-related aircraft crashes.”

That Congress chose not to speak in such broad terms,

despite using exactly such sweeping language in § 408,

necessarily must be accorded significance.

Certiorari should be granted to create uniformity of

decisions with respect to the application of ATSSSA.

Plaintiffs do not seek a double recovery. Any compensatory

damages awarded >» a jury must include a set off for compensation

awarded by the VCF, and apportionment as to comparative fault.

2. Certiorari Should Be Granted to Conform

the Decision of the Court of Appeals to the

Decisions of the Court, Other Circuits, and

Other Panels of the Second Circuit Holding

That A Claim for “Damages Sustained” is

Limited to Compensatory Damages, and

Excludes Punitive Damages.

A. The Statute Confines Waiver to “Dam-

ages Sustained,” Which Has Uniformly

Been Construed to Mean Compensatory

Damages

Even if the waiver provision is deemed to encompass

petitioners’ claims against the respondents, at the most

they waived the right to litigate with respect to “dam-

ages sustained.” ATSSSA, § 405(c)(3)(B)(i). Congress

adopted this language against the unanimous backdrop of

numerous federal and state court decisions holding that

the term “damages sustained” refers only to compen-

satory damages and excludes punitive damages:

Cases universally distinguish a recovery for “dam-

ages sustained” from a punitive damages award.

[Citations omitted.] While a recovery for damages

sustained is meant to compensate for the harm suf-

fered by the plaintiff, punitive damages are assessed

for the “purpose of visiting a punishment upon the

defendant and not as a measure of any loss or detri-

ment of the plaintiff.” C. McCormick, Handbook on

the Law of Damages § 77 (1935).

Baas v. Hoye, 766 F.2d 1190, 1195-96 (8th Cir. 1985).

In Local 20, Teamsters, Chauffeurs & Helpers Union

v. Morton, the Court determined that the nearly identical

phrase in the Labor Management Relations Act of 1947,

“damages by him sustained,” “reflected” “the congres-

sional judgment. . . that recovery for an employer's

business losses caused by a union's peaceful secondary

activities. . . should be limited to actual, compensatory

damages.” 377 U.S. 252, 260 & n.15 (1964) (reversing

award of punitive damages).

The courts of appeals, too, including the Second Cir-

cuit in earlier opinions, have so understood this termi-

nology. In Re Air Disaster at Lockerbie, Scotland, 928

F.2d 1267, 1281 (2d Cir. 1991), disapproved on other

grounds, Zicherman vy. Korean Air Lines Co., 516 U.S.

217, 229 (1996), the court interpreted the Warsaw Con-

vention’s language authorizing recovery for “dommage

survenu” to mean “damage sustained.” From that inter-

pretation, the court “deduce[d]. . . that Article 17 [of

the Warsaw Convention] contempiates monetary or com-

pensatory damages only.” /d.; see also In re Korean Air

Lines Disaster, 932 F.2d 1475, 1485 (D.C. Cir. 1991)

(“ ‘damages sustained’ strongly implies that the carrier's

responsibility is compensatory”); Floyd v. Eastern Air-

lines, Inc., 872 F.2d 1462, 1486 (11th Cir. 1989) (“The

term. . . ‘damage sustained’ is “entirely compensatory

in tone.”), rev'd on other grounds, 499 U.S, 530, 550

(1991).

In Baas, the Eighth Circuit interpreted a provision of

the Consumer Product Safety Act that stated “ ‘[a]ny

person who shall sustain injury by reason of any know-

ing (including willful) violation of a consumer product

safety rule. . . shall recover damages sustained.’ ” 766

F.2d at 1192 (quoting 15 U.S.C. § 2072) (alterations in

Original). Reversing an award of punitive damages

because they were not “damages sustained,” the court

held, “[iJnterpreting this language according to its ordi-

nary meaning, the statute provides for recovery of com-

pensatory and not punitive damages.” /d. at 1195; see

also, e.g., Carter v. Agric. Ins. Co., 72 Cal. Rptr. 462,

464 (Ct. App. 1968) (“The attachee does not sustain

punitive or exemplary damages. . . . We believe dam-

ages sustained by the attachee mean those suffered by

him, his actual damages, to compensate him for the

losses he has endured.”).

Given this consistent history of usage, Congress’

adoption of the term “damages sustained” cannot be

viewed in a vacuum. Whether the Court interprets the

term “damages sustained” according to its “ordinary

meaning” or views it as a term of art, the result is the

Same: it refers to compensatory damages only. FDIC v.

Meyer, 510 U.S. 471, 476 (1994) (when statute does not

provide a definition, courts “construe a statutory term

in accordance with its ordinary or natural meaning”);

Molzof v. United States, 502 U.S. 301, 306-07 (1992)

(“ ‘Punitive damages’ is a legal term of art that has a

widely accepted common-law meaning. . . . ‘[W]here

Congress borrows terms of art. . . it presumably knows

and adopts the cluster of ideas that were attached .

and the meaning its use will convey to the judicial mind

unless otherwise instructed.” ”) (citation omitted).

Nor should the waiver provision be viewed without

reference to ATSSSA itself. That Congress meant “dam-

ages sustained” to refer to compensatory damages is

confirmed by examining the words Congress chose to

refer to both compensatory and punitive damages together.

As noted, § 408(b)(1) creates a “Federal cause of action

for damages arising out of” the September | 1th attacks

(emphasis added). Section 408(a)(1), as amended,°® lim-

its the liability of air carriers, aircraft makers, and other

On November 19, 2001, Congress enacted the Aviation and

Transportation Security Act, Pub. L. No. 107-71, 115 Stat. 597

(2001). which, inter alia, amended ATSSSA § 408(a) to extend the

limitation on air carrier liability to other related air transportation

industry entities, as stated in the text. /d., § 201(b)(3).

related entities for lawsuits brought under § 408(b)(1),

“whether for compensatory or punitive damages,” to

the amount of their insurance coverage. The word

“damages” in these sections is used as a collective noun

referring in context to both compensatory and punitive

damages. If Congress had intended § 405(c)(3)(B)(i) to

waive claims for all types of damages, it would have

used either of the two verbal formulae found in § 408 to

refer to both types of damages and would not have

restricted the scope of “damages” by adding the word

“sustained.”

B. The Court of Appeals’ Holding that Waiver

of a Claim for “Damages Sustained” Is the

“Functional Equivalent” of a Release of All

Claims, Damages, and Causes of Action is

Contrary to the Decisions of the Court and

the Courts of Appeals

In the face of the unanimous case law holding that the

term “damages sustained” refers only to compensatory

damages, to the exclusion of punitive damages, the court

of appeals at one point in its opinion appeared to

acknowledge that a civil action for “damages sustained”

means “only a claim to be made whole” (20a). Nonethe-

less, the court resisted the logic that a waiver limited to

“damages sustained” only extinguishes claims for com-

pensatory damages. Instead, the court concluded that

petitioners’ participation in the VCF waived their

wrongful death claims for punitive damages.

The limitation of liability for air carriers and related entities

in § 408(a)(1) to the amount of their insurance coverage insures that

lawsuits brought for punitive damages, even against the air transport

industry and even by those who waived claims for compensatory

damages or “damages sustained” under § 405(c)(3)(B)(i), would not

defeat the purpose of ATSSSA by bankrupting that industry.

The court erred by conflating waiver of petitioners’

claim for compensatory damages with waiver of the under-

lying cause of action that supports both compensatory and

punitive damages. Petitioners’ complaint seeks punitive

damages against Motorola for wrongful death. The waiver

provision, limited to “the right to file a civil action. . .

for [compensatory damages],” § 405(c)(3)(B)(i), neither

encompasses that entire cause of action nor the remedy of

punitive damages that it supports.

The court of appeals attempted to overcome that lack

of congruence by, ipse dixit, deeming petitioners’ appli-

cation to the VCF “the functional equivalent of the sat-

isfaction and release in Rocanova [v. Equitable Life

Assurance Soc’y, 83 N.Y.2d 603 (1994)]” (21a). The

court’s analogy, however, only highlights the discrep-

ancy between the actual language of the statute provid-

ing for waiver and the panel's interpretation of that

language. In stark contrast to the statutory waiver pro-

vision in this case, the Rocanova plaintiff “released

defendant from ‘al/ debts, claims, demands, damages,

actions and causes of action’ related to the facts at issue

in the case.” /d. (quoting Rocanova, 83 N.Y.2d at 616)

(emphasis added). By construing the scope of the term

“damages sustained” in ATSSSA § 405(c)(3)(B)(i) as

extending to all claims, damages, and causes of action,

the court of appeals fundamentally departed from the

unanimous body of case law set forth above.

C. The Court of Appeals’ Decision Does

Not Turn on a Question of New York

Law, But Rather on its Construction of

ATSSSA § 405(c)(3)(B)(i)

While §408(b)(1) creates an exclusive federal cause of

action, ATSSSA provides that the substantive law to be

applied is the law of the place where “the crash[es]

occurred.” § 408(b)(2). In this case that place is New

York. Relying exclusively on the decision of the New

York Court of Appeals in Rocanova (21a-22a), the court

of appeals held that petitioners could not proceed with

an action that sought only punitive damages. The court

of appeals’ conclusion, however, depended entirely on

its fundamental underlying misconstruction of the scope

of the term “damages sustained” in ATSSSA

§ 405(c)(3)(B)(i) itself. By equating the waiver of claims

for “damages sustained” in ATSSSA § 405(c)(3)(B)(i)

with the release of “all . . . claims, . . . damages,

actions and causes of action” that was executed in

Rocanova, the court inevitably and unremarkably con-

cluded that New York law would bar a lawsuit by peti-

tioners for punitive damages. If the term “damages

sustained” were given its otherwise universal meaning

and scope, Rocanova is irrelevant and meaningless. Thus

the court of appeals’ misconstruction of New York law

is dependent entirely on its fundamental error in inter-

preting the waiver provision of ATSSSA.

Cases from the arbitration context, closely analogous

to the current case, reflect that a plaintiff who has not

waived his entire cause of action may bring a lawsuit

seeking only punitive damages. Just as the petitioners

here could not pursue punitive damages before the VCF,

§ 405(b)(5), plaintiffs in arbitrations similarly are lim-

ited tc compensatory damages. Nonetheless, New York

appears to recognize that such a plaintiff, after receiving

an arbitration award, still has a cause of action which

permits him to pursue a claim for punitive damages in

the courts “even though plaintiff is precluded from

recovering compensatory damages on that substantive

cause of action.” Mulder v. Donaldson, Lufkin & Jen-

rette, 623 N.Y.S.2d 560, 565 (App. Div. 1995).° See also

The court of appeals was wrong in distinguishing Mulder by

suggesting it “addressed the issue of whether a plaintiff may seek

Wussow v. Commercial Mechanisms, Inc., 293 N.W.2d

897, 900 (Wis. 1980) (Upholding trial verdict for puni-

tive damages: “The fact that there was a settlement and

payment of the claim for compensatory damages in no

way affected the continued existence of the cause of

action based on operative facts which could give rise to

multiple or alternative remedies”).

At the least, because Mulder was only a New York

Appellate Division case, and there exists “no controlling

precedent of the [New York] Court of Appeals,” N.Y. Ct.

of Appeals R. 500.17(a), and because this is a “signifi-

cant question of state law that will control the outcome”

of this case, Second Circuit Local R. Relating to Orga-

nization of Ct. § .027, the Second Circuit should have

granted petitioners’ request to certify to the New York

Court of Appeals the question of whether a plaintiff can

pursue a cause of action for punitive damages alone

where the plaintiff's compensatory damages, but not his

entire cause of action, has been satisfied. To the extent

its decision relied on New York law, it was incumbent on

the court of appeals to do so given that ATSSSA man-

dated that this action be brought in federal court while

providing that the state substantive law of the place of

the crashes apply. See Lehman Brothers v. Schein, 416

U.S. 386, 391-92 (1974) (vacating court of appeals’

judgment and remanding “so that the court of appeals

may reconsider whether the controlling issues of Florida

law should be certified to the Florida Supreme Court”);

punitive damages after receiving an award from an arbitrator

premised on a determination of fault by that arbitrator” (22a, n. 13).

This is a spurious distinction on which Mulder in no way rests. Mul-

der expressly declared that “ ‘leaving it to the arbitrators to decide

whether any wrongdoing occurred and to the courts to decide on the

appropriate measure of punishment. . . is unworkable.” ” 623

N.Y.S.2d at 565 (quoting Belco Petroleum Corp. v. AlG Oil Rig, Inc.,

565 N.Y.S.2d 776, 785 (App. Div. 1991)).

Belotti v. Baird, 428 U.S. 132, 150-151 (1976) (district

court should have certified question of state law to Mas-

sachusetts Supreme Judicial Court); Brockett v. Spokane

Arcades, Inc., 472 U.S. 491, 510 (1985) (O’Connor, J.,

concurring) (“Speculation by a federal court about the

meaning of a state statute in the absence of a prior state

court adjudication is particularly gratuitous when, as is

the case here, the state courts stand willing to address

questions of state law on certification from a federal

court”).

The court of appeals in this case never reached the

question of whether New York law would permit a law-

suit for punitive damages where the plaintiff had nor

waived such a claim, because its fundamental miscon-

struction of ATSSSA’s “damages sustained” waiver led

it to conclude, without warrant, that petitioners had

waived their entire causes of action, including for puni-

tive damages. Therefore, to the extent a question of New

York law remains once the term “damages sustained” is

construed properly to mean only compensatory damages,

the Court, as in Belotti, should remand with directions to

the court of appeals to certify the question, particularly

given the unique circumstance that petitioners never had

a choice to sue in State court.

CONCLUSION

It is strongly in the public interest that the Court

review these compelling legal issues. The events of

September I! were the most traumatic this Nation has

suffered in over a half century. The firefighters who lost

their lives in the towers were national heroes, as were

the police and security workers. Unlike the latter two

groups, however, only the firefighters did not receive the

mayday warnings to evacuate the North Tower, and only

the firefighters were lost when that tower collapsed. The

reason: they and they alone were still using the same

faulty Motorola analog radios that had failed at the

World Trade Center in 1993. Motorola has never been

held accountable for the culpable actions alleged. No

punishment or sanction has been imposed to deter it or

others from engaging in similar acts, or to express the

community's anger at or disapproval of its action.

Petitioners submit that the court of appeals abandoned

its responsibility to insure that the public is confident in

the fair, just and equal application of ATSSSA and fun-

damentally misconstrued and misapplied the Act in dis-

missing petitioners’ effort to-hold defendants accountable

and responsible.

For the reasons stated, the petition for writ of certio-

rari should be granted.

Respectfully submitted,

Eric M. LIEBERMAN

Counsel of Record

RABINOWITZ, BOUDIN, STANDARD,

KRINSKY & LIEBERMAN

111 Broadway, 11th Floor

New York, New York 10006

(212) 254-1111

RICHARD SALEM

SALEM LAW GROUP

101 East Kennedy Boulevard,

Suite 3220

Tampa, Florida 33602

(813) 224-9000

October 2005

WILLIAM A. REPPY, JR.

CHARLES L.B. LOWNDES

EMERITUS PROFESSOR OF LAW

DUKE UNIVERSITY

SCHOOL OF LAW

P.O. Box 91360

Durham, North Carolina 27708

(919) 613-7053 .

WILLIAM VAN ALSTYNE

LEE PROFESSOR OF LAW

MARSHALL-WYTHE

SCHOOL OF LAW

Williamsburg, Virginia 23187

Attorneys for Petitioner

APPENDIX

UNITED STATES COURT QF APPEALS

. FOR THE SECOND CIRCUIT

04-1942-cv

Filed July 15, 2005

At a stated term of the United States Court of Appeals

for the Second Circuit, held at the Thurgood Marshall

United States Courthouse, Foley Square, in the City of

New York, on the 15th day of July two thousand five.

VIRGILIO v. CITY OF NEW YORK

A petition for panel rehearing and a petition for rehear-

ing en banc having been filed herein by the appellants

Geraldine Halderman, Eileen Tallon, Gergard J. Prior, et

al. Upon consideration by the panel that decided the

appeal, it is Ordered that said petition for rehearing is

DENIED.

It is further noted that the petition for rehearing en

banc has been transmitted to the judges for the court in

regular active service and to any other judge that heard

the appeal and that no such judge has requested that a

vote be taken thereon.

For the Court,

Roseann B. MacKechnie, Clerk

By: ARTHUR HELLER

Motion Staff Attorney

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

August Term, 2004

(Argued: March 16, 2005 Decided: April 29, 2005)

Docket No. 04-1942-cv

LUCY VIRGILIO, Personal Representative of

Lawrence Virgilio,

Plaintiff.

GERALDINE HALDERMAN, Personal Representative of Lt.

David Halderman, EILEEN TALLON, Personal Represen-

tative of Sean Patrick Tallon, GERGARD J. PRIOR,

Personal Representative of Kevin M. Prior, CATHERINE

REGENHARD, Personal Representative of Christian

Regenhard, MAUREEN L. DEWAN-GILLIGAN, Personal

Representative of Gerard P. Dewan, JAMES BOYLE,

Personal Representative of Michael Boyle, BARBARA

BOYLE, Personal Representative of Michael Boyle,

EDWARD SWEENEY, Personal Representative of Brian

Sweeney, GERALD JEAN-BAPTISTE, Co-Personal Repre-

sentative of Gerard Jean Baptiste, Jr., ALEXANDER

SANTORA, Personal Representative of Christopher

Santora, MAUREEN SANTORA, Personal Representative

of Christopher Santora, RAFFAELA CRISCI, Personal

Representative of John A. Crisci and PATRICIA

DEANGELIS, Persona! Representative,

Plaintiffs-Appellants,

—V—

CiTy OF NEW YORK and MOTOROLA, INC.,

Defendants-Appellees.

Before:

NEWMAN, STRAUB, and WESLEY,

Circuit Judges.

Appeal from an order of the United States District Court

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

entered on April 12, 2004, dismissing plaintiffs’ com-

plaint, which alleged negligent and intentional tortious

conduct against Motorola, Inc. and the City of New York,

individually and in concert, in failing to provide adequate

communications equipment to New York City firefighters

that allegedly could have prevented the deaths of those

firefighters who died while responding to the terrorist-

related attacks of September |], 2001, at the World Trade

Center in lower Manhattan.

AFFIRMED.

ERIC M. LIEBERMAN (Carrie Corcoran, Keith

M. Donoghue, on the brief) Rabinowitz,

Boudin, Standard, Krinsky &

Lieberman, New York, New York (Rich-

ard Salem, Salem Law Group, Tampa,

Florida, William A. Reppy, Jr., Charles

L.B. Lowndes Emeritus Professor of

Law, Duke University School of Law,

Durham, North Carolina; William Van

Alstyne, Lee Proffessor of Law,

Marshall-Wythe School of Law,

Williamsburg, Virginia, on the brief), for

Plaintiffs-Appellants.

BELINA ANDERSON (Michael A. Cardozo,

Corporation Counsel, Kenneth A.

Becker, on the brief) Corporation Coun-

sel of the City of New York, New York,

New York, for Defendant-Appellee the

City of New York.

MICHAEL D. SCHISSEL, Arnold & Porter LLP,

New York, New York, for Defendant-

Appellee Motorola, Inc.

WESLEY, Circuit Judge:

In a series of tragic and terrifying attacks on September

1}, 2001, terrorists killed thousands in Pennsylvania,

Virginia, and New York, caused extensive damage to the

Pentagon, and brought about the collapse of the North and

South Towers of the World Trade Center (“WTC”). As with

other catastrophes, true heros responded, not the least

among them the brave firefighters, police, and first-

response units of the City of New York. Plaintiffs are the

personal representatives of firefighters who lost their lives

in responding tothe WTC following the attacks. Plaintiffs’

complaint focuses on the failure of radio-transmission

equipment in the North and South Towers that prevented

firefighters from receiving evacuation orders before the

Towers’ collapse. Plaintiffs commenced this action for

wrongful death against New York City (the “City”) on

December 22, 2003, and filed an amended complaint as of

right on January 20, 2004, that added Motorola, Inc.

(“Motorola”) as a defendant.

Plaintiffs claim that Motorola negligently and inten-

tionally provided the City with radio-transmission

communication equipment for firefighters that Motorola

knew to be ineffective in high-rise structures like the

Towers of the WTC, that Motorola made fraudulent

material misrepresentations to secure contracts with the

City, and that those acts and representations caused

decedents’ deaths.’ Plaintiffs also press a series of

wrongful death claims against the City based upon its

alleged failure to meet duties imposed on the City under

New York law to provide adequate and safe radio-trans-

mission equipment.’ Finally, in Count 8 of the Amended

Complaint, plaintiffs allege that the City and Motorola

engaged in concerted action in an attempt to deprive

firefighters of adequate protection and to “engage in

fraudulent misrepresentations and deceitful conduct.”

Shortly after the disaster, Congress passed the Air

Transportation Safety and System Stabilization Act (the

“Air Stabilization Act” or the “Act”). Pub. L. No. 107-42,

115 Stat. 230 (2001). The statute limited liability for the

air carriers involved in the tragedy to their insurance

coverage, see Air Stabilization Act § 408(a); created the

Victim Compensation Fund (the “Fund”) to provide no-

fault compensation to victims who were injured in the

attacks and to personal representatives of victims killed in

Four Counts of the Amended Complaint allege specific torts against

defendant Motorola, Count Four alleges a wrongful death claim based

upon design defects in radio-transmission equipment provided by

Motorola; Count Five alleges a claim for wrongful death for the failure

to warn of shortcomings in the radio equipment, Count Six alleges a

wrongful death claim due to fraudulent misrepresentation, and Count

Seven alleges a wrongful death claim due to negligent misrepre-

sentations.

Three Counts of the complaint allege wrongful death for the breach

of statutorily imposed duties by the City.

the attacks, see id. § 402(3), 405(a)({1), (b), (c); and

provided an election of remedies—all claimants who filed

with the Fund waived the right to sue for injuries resulting

from the attacks except for collateral benefits, see id.

§ 405(c)(3)(B)(i). On November 19, 2001, the Act was

amended by the Aviation and Transportation Security Act

(the “Aviation Security Act”). Pub. L. No. 107-71, 115

Stat. 597 (2001). Significantly, the amendments extended

liability limits to aircraft manufacturers, those with a

proprietary interest in the WTC, and the City of New York,

see id. § 201(b), while allowing Fund claimants to sue

individuals responsible for the attacks notwithstanding the

waiver, see id. § 201(a).

Under the Act, the final date by which claimants could

submit claims to the Fund was December 22, 2003. See Air

Stabilization Act §& 405(a)(3), 407; 28 C.F.R. 104.62. The

Special Master appointed to oversee the Fund, Kenneth R.

Feinberg, extended the filing date to January 22, 2004, for

those claimants who previously submitted incomplete

claims. The Special Master promulgated an application

form that notified claimants of the waiver provision and

required claimants to sign an acknowledgment of waiver.

The acknowledgment of waiver tracked the language of the

statutory waiver provision.

A number of September | 1-related cases were consoli-

dated before Judge Hellerstein.’ On December 19, 2003,

* One category encompassed cases alleging “wrongful death, personal

injury, and property damage against the airlines, the airport security

companies, the plane manufacturer, and the owners and lessees of the

World Trade Center” under the caption /n re September |] Litigation,

No. 2! MC 97(AKH) (S.D.N.Y. filed Nov. 1, 2002); the other

encompassed “cases alleging respiratory injuries against the City of

New York, the Port Authority of New York and New Jersey, and the

contractors that were engaged to demolish, cart away and clean up the

debris of the destroyed buildings.” /n re World Trade Ctr. Disaster

Site Litig., 270 F. Supp. 2d 357, 362-363 & nn.2-3 (S.D.N.Y. 2003).

Judge Hellerstein issued an order addressing when the

waiver via assertion of Fund claims would become effec-

tive. See In re September 1/1 Litig., 21 MC 97, 2003 WL

23145579 (S.D.N.Y. Dec. 19, 2003). Judge Hellerstein

held that “submission” of Fund claims—triggering the

waiver provision—occurs on the earlier of when a Fund

filing is substantially complete as determined by the

Special Master or January 22, 2004. /d. at *2.

A day after filing their amended complaint, plaintiffs

moved by Order to Show Cause on January 21, 2004,

asking that the court permit them to continue their lawsuit

against defendants despite having filed claims with the

Fund. Alternatively, plaintiffs asked the court to stay

Judge Hellerstein’s earlier orders—which required that

cases brought by 9/11 victims with Fund awards pending as

of January 22, 2004, be dismissed—or to place their case

on the suspense docket of the consolidated /n re September

11] Litigation docket until a general consolidated confer-

ence previously set by Judge Hellerstein for February 6,

2004, took place.” Because of the January 22nd deadline

for completing previously filed but incomplete Fund

claims, Judge Haight held a hearing on the 22nd on the

motion and issued a ruling from the bench fir ding that the

Statute’s waiver provision barred the suit against the City

or Motorola: “ ‘the plaintiffs’ claims against both the City

and Motorola are subject to the limitation on civil actions

4 : . . . .

While the facts of this case are similar to those of cases consolidated

before Judge Hellerstein in /n re September //1 Litigation, 21 MC

97(AKH), see In re World Trade Center Disaster Site Litig., 270 F.

Supp. 2d at 362-63 & n.2, this case was assigned to Judge Berman by

lot after plaintiffs filed the original complaint on December 22, 2003,

see Virgilio v. Motorola, Inc., 307 F. Supp. 2d 504, 507 (S.D.N.Y.

2004). Judge Haight heard plaintiffs’ Order to Show Cause submitted

on January 21, 2004, sitting in Part I. See Virgilio, 307 F. Supp. 2d at

507-09.

provided for in Section 405(c)(3)(B)(i) of the statute.’ ”

Virgilio v. Motorola, Inc., 307 F. Supp. 2d 504, 514

(S.D.N.Y. 2004) (Haight, J.) (quoting transcript).

On January 29, 2004, Judge Haight issued a detailed

decision that set forth his reasons for finding that plain-

tiffs’ claims were barred as aresult of their decision to file

with the Fund. See id. at514-20. Although the court denied

the relief requested in the Order to Show Cause on a

finding that the waiver provision barred plaintiffs’ claims,

itdid not dismiss the amended complaint as defendants had

yet to file answers and had little time to oppose the Order

to Show Cause other than through argument of counsel

before Judge Haight. Because plaintiffs’ case raised 9/11

claims similar to those in Jn re September 1] Litigation,

Judge Haight transferred the case to Judge Hellerstein’s

“suspense docket” of the consolidated /n re September 1]

Litigation docket. Id. at 521.°

On January 30, 2004, the next day, the City moved to

dismiss the amended complaint pursuant to Fed. R. Civ. P.

12(b)(6) or for summary judgment on several grounds,

including the Act's waiver provision; the expiration of the

statute of limitations for wrongful death actions against

The “suspense docket” was created to deal with a statute of

limitations problem faced by many 9/11 plaintiffs. Because the New

York statute for wrongful death generally ran two years after

death—i.e. September 11, 2003—-and because the Fund set a

limitations period of December 22, 2003, plaintiffs faced a choice of

whether to elect a claim under the Fund weii in advance of the

expiration date or whether to meet the statute of limitations for their

wrongful death actions. See N. Y. Est. Powers & Trust LAw § 5-

4.1(1) (1999). The “suspense docket” stayed plaintiffs’ filed claims

while they evaluated whether to seek compensation through the Fund.

New York amended the Estates Powers & Trust Law in 2003 to

provide atwo and a half year statute of limitations under § 5-4.1(1) for

victims of the WTC attacks effective July |, 2003. See id. (2005

Supp.); 2003 N.Y. LAws, ch. 114 § 1.

municipalities; and plaintiffs’ failure to serve timely

notices of claim against the City. Motorola moved to

dismiss the amended complaint on the ground of waiver.

Judge Hellerstein dismissed the complaint in an un-

published decision. See Virgilio v. Motorola, Inc., No. 03

Civ. 10156(AKH), 2004 WL 433789 (S.D.N.Y. Mar. 10,

2004). The district court adopted Judge Haight’s decision

noting that “the waiver provision applies to [ ] all of the

claims against Motorola and the City of New York... . As

plaintiffs have elected their remedy, they have also waived

the right to bring a civil action ‘for damages sustained as

a result of the terrorist-related aircraft crashes of Septem-

ber 11, 2001.°” /d. at *2 (quoting Air Stabilization Act

§ 405(c)(3)(B)(i)).

Plaintiffs appealed, and we now affirm.

Discussion

When confronted with an appeal from the dismissal of a

complaint, we review the matter anew, see, e.g., Conopco,

Inc. v. Roll Int'l, 231 F.3d 82, 86 (2d Cir. 2000), and take

as true the complaint’s allegations. A complaint may be

dismissed for failure to state a claim only if there are no

legal grounds upon which relief may be granted. See

Jacobs v. Ramirez, 400 F.3d 105, 106 (2d Cir. 2005); Fed.

R. Civ. P. 12(b)(6). The task at hand reduces itself to

examining the statute and assessing its impact on this case.

A. Statutory Scheme

The Air Stabilization Act establishes the Fund and

delegates to the Attorney General the authority to appoint

a Special Master to oversee victim compensation. See Air

Stabilization Act §$§ 401-09. As Congress noted, one

purpose of the Fund is “to provide compensation to any

individual (or relatives of a deceased individual) who was

physically injured or killed as a result of the terrorist-

10a

related aircraft crashes of September 11, 2001.” Jd. § 403.

However, eligibility for Fund payment “is conditioned

upon a waiver by claimants of ‘the right to file any civil

action’ in state or federal court” except for civil actions

against those responsible for the attack or to recover

collateral! source obligations. Schneider v. Feinberg, 345

F.3d 135, 139 (2d Cir. 2003) (quoting Air Stabilization Act

§ 405(c)(3)(B)). Because the Act seeks to provide quick

no-fault compensation decisions for victims while capping

the litigation exposure of front-line defendants, it is quite

clear that the Act's “general purpose is to protect the

airline industry and other potentially liable entities from

financially fatal liabilities while ensuring that those

injured or killed in the terrorist attacks receive adequate

compensation.” Canada Life Assurance Co. v. Converium

Riickversicherung (Deutschland) AG, 335 F.3d 52, 55 (2d

Cir. 2003) (citing 147 Cong. Rec. $9594 (daily ed. Sept.

21, 2001) (statement of Sen. McCain)).

Sections 405 and 408(b) set forth general guidelines and

requirements for Fund claims and create a federal cause of

action for claims relating to 9/11. See id. § 405, 408(b).

Section 405(c)(3)(B)(i) contains the waiver provision

central to this case:

(B) LIMITATION ON CIVIL ACTION.—

(i) IN GENERAL.—Upon the submission of a

claim under this title, the claimant waives the

right to file a civil action (or to be a party to an

action) in any Federal or State court for damages

sustained as a result of the terrorist-related air-

craft crashes of September 11, 2001. The preced-

ing sentence does not apply to a civil action to

recover collateral source obligations, ortoacivil

action against any person whois a knowing partic-

ipant in any conspiracy to hijack any aircraft or

commit any terrorist act.

lla

(as amended by the Aviation Security Act, § 201(a)).

While section 405 creates asystem for determining Fund

eligibility outside of the litigation context, section 408

funnels all civil litigation for actions “resulting from or

relating to the terrorist-related aircraft crashes of Septem-

ber 11, 2001" into the Southern District of New York by

granting that court “original and exclusive jurisdiction”

over such actions, id. § 408(b)(3), and provides that the

“substantive law for decision in any such suit shall be

derived from the law .. . of the State in which the crash

occurred unless such law is inconsistent with or preempted

by Federal law,” id. § 408(b)(2). As noted above, section

408 caps the liability of air carriers, aircraft manufactur-

ers, holders of proprietary interests in the WTC, and the

City. See id. § 408(a), 408(a)(1), 408(a)(3); Aviation

Security Act § 201(b).

B. Statutory Waiver Provision: Air Stabilization

Act § 405(c)(3)(B)(i)

We agree with the district court that under the plain

language of the statute, claimants who have filed claims

with the Fund have waived “the right to file a civil action

... for damages sustained as aresult of the terrorist-related

aircraft crashes of September 11, 2001” and that the waiver

bars claims for “damages sustained” against non-airline

defendants. We affirm the district court’s determination

and find plaintiffs’ claim barred by their election of

remedies.

Plaintiffs assert that the waiver provision does not apply

to claims against the defendants because the correct

interpretation of that section bars suits against only the

airplane-transportation industry. Plaintiffs present three

arguments to support their contention: they assert that the

district court misinterpreted Congress's purpose in enact-

ing the Air Stabilization Act; that the waiver provision

should be examined in the context of its relationship to the

I2a

statute and subsequentamendments to the Air Stabilization

Act; and that the legislative history of the waiver provision

supports a narrower interpretation of that provision than

that employed by the district court. The City and Motorola

counter that the plain language unambiguously bars the

current suit and that the legislative history of the Act

further supports their view.

When interpreting a statute, the “first step... is to

determine whether the language at issue has a plain and

unambiguous meaning with regard to the particular dispute

in the case. Our inquiry must cease if the statutory lan-

guage is unambiguous and ‘the statutory scheme is coher-

ent and consistent. ” Robinson v. Shell Oil Co., 519 U.S.

337,340 (1997) (quoting United States v. Ron Pair Enters.,

Inc., 489 U.S. 235, 240 (1989)). Further, “(t]he plainness

or ambiguity of statutory language is determined by

reference to the language itself, the specific context in

which that language is used, and the broader context of the

Statute as a whole.” /d. at 341 (citing Estate of Cowart v.

Nicklos Drilling Co.,505 U.S. 469, 477 (1992) and McCar-

thy v. Bronson, 500 U.S. 136, 139 (1991)). Thus, we begin

with the language of the statute itself.

In our view, the waiver provision is unambiguous. The

language of the waiver provision clearly states that Fund

claimants waive their right to bring civil actions resulting

from any harm caused by the 9/11! attacks: “[ujpon the

submission ofaclaim..., the claimant waives the right to

file a civil action ...in any Federal or State court for

damages sustained as a result of the terrorist-related

aircraft crashes of Sep:ember 11, 2001.” Air Stabilization

Act § 405(c)(3)(B)(i). The waiver provision plainly

requires litigants to choose between risk-free compensa-

tion and civil litigation. If this waiver provision is ambigu-

ous as plaintiffs suggest, few if any statutory provisions

could be viewed as clear.

13a

The overall structure of the Act highlights two predomi-

nate concerns: to insulate the airline industry from massive

—virtually limitless—liability arising from the sudden and

devastating acts of wanton cruelty on 9/11 and to provide

an adequate no-fault system of compensation to victims.

See Canada Life Assurance Co., 335 F.3d at 55. The statute

balanced the certainty of a no-fault recovery against the

relinquishment of one’s right to bring a federal action—

created by the statute—for injuries arising from the

disaster. See Schneider, 345 F.3d at 139; Canada Life

Assurance Co., 335 F.3d at 55 (noting Fund compensation

“in exchange for a waiver of their rights to file a civil

action”); cf. § 408(b) (creating a federal cause of action for

“damages arising out of the hijacking”). Without the Act,

victims and their families could seek compensation only

through litigation in state or federal courts. The terrorists

carried out four separate attacks in three locations—two of

which involved the damage or destruction of government

and office buildings and a concomitant loss of lives within

those structures and the areas adjacent to them. Thus, the

number of plaintiffs, possible defendants, and theories of

recovery were as diverse as the confluence of misfortunes

that befell each victim. Moreover, the litigation scatter

pattern presented the possibility of lawsuits in state and

federal courts nationwide.°

While the potential liability to the air carriers and

airplane manufacturers involved was monumental, the

prospect for recovery by the victims and their families was

not certain. A verdict against the air carriers or other

potential defendants, such as the City or Motorola, was not

See 147 Cong. Rec. $9594 (daily ed. Sept. 21, 2001) (statement of

Sen. McCain) (“It is regrettable, but perhaps inevitable, that the unity

that this terrorist attack has wrought will devolve in the courts to

massive legal wrangling and assignment of blame among our corporate

citizens.”).

l4a

guaranteed. In addition, the scope of liability was so

substantial that the prospect of Bankruptcy Court for the

air carriers was real. In order to provide the certainty of

recovery for victims and their families, Congress created

the Fund, which provides loss-based awards without an

assessment of fault or responsibility for the loss.’ All the

victims or their representatives need establish is presence

at the site of a 9/11 attack and physical injury or death as a

result of the attacks. See Air Stabilization Act § 405(c)(2).

The Act centralizes the victims’ litigation claims in one

federal court while applying the substantive state law of

the locus of the injury. It recognizes that the airline

industry might not be able to withstand the litigation tidal!

wave the attacks would create. It also recognizes that such

an onslaught would likely leave many victims and their

families waiting years, while blame for the attacks and the

resulting injuries is parsed out among hundreds of defen-

dants leaving plaintiffs to recover only a small pro rata

share of a fair award in Bankruptcy Court. Thus, the statute

carries out a careful balancing of a number of important

interests. It gives claimants areasonable choice between an

administrative claim or litigation céntralized in one court

in which the primary defendants would have limits to their

Senator McCain stated that the purpose of the Air Stabilization Act

was:

To ensure that the victims and families of victims who were

physically injured or killed on September | lth are compensated

even if courts determine that the airlines and any other potential

corporate defendants are not liable for the harm, if insurance

monies are exhausted; or are consumed by massive punitive

damage awards or attorneys’ fees, the bill also creates a victims’

compensation fund. These victims and their families may, but are

not required to, seek compensation from the Federal fund instead

of through the litigation system.

147 Cong. Rec. $9594 (daily ed. Sept. 21, 2001) (emphasis added).

15a

exposure. In our view, there is no inconsistency incompen-

sating victims and their families at a price of complete

litigation peace.

It is clear to us that plaintiffs’ claims are within the

scope of the waiver provision. Here, plaintiffs damages

arose “as a result” of the terrorist-related attacks. Plain-

tiffs assert that the waiver should not reach defendants’

alleged tortious conduct. In plaintiffs’ view, defendants’

acts independently caused plaintiffs’ injuries. But, in fact,

the injuries to plaintiffs and their loved ones resulted from

a series of interrelated events that began with the terrorist

attack. Even assuming independent, successive tortious

acts by both the terrorists and defendants, as we must on

this motion to dismiss, we are hard pressed to find plain-

tiffs’ damages did not resu/t—at least in part—from the

terrorist attacks.

Indeed, plaintiffs overlook the very language of the

statute that defines their eligibility for compensation for

the Fund. The Act provides that anyone, or their relative,

who was present at and injured or killed as a result of the

terrorist-related aircraft crashes of September 11, 2001,

may file a claim with the Fund. See Air Stabilization Act

§ 405(c)(2). In our view, plaintiffs cannot embrace the

statute's broad view that many people, in widely differing

circumstances, died “as aresult” of the attacks while simulta-

neously constricting the same language in the waiver to

include only the airlines. Compare id. § 405(c)(2) with id.

§ 405(c)(3)(B)(i).

Plaintiffs also contend that amendments to the Air Stabili-

zation Act reveal the limited scope of the waiver provision.

This argument continues to ignore the plain language of the

waiver and confuses the effect of the amendments. On

November 19, 2001, Congress amended the Air Stabilization

l6a

Act in two significant respects.* Section 201(a) of the

Aviation Security Act altered the exception in the waiver

provision to allow “civil action[s] against any person who is

a knowing participantin any conspiracy to hijack any aircraft

or commit any terrorist act.” Thus, Fund claimants have not

waived their right to sue those responsible for the attacks.

Certainly, had Congress chosen to constrict the scope of the

waiver further, as plaintiffs would have us do, it could have

done so—it did not.

The amendment also altered section 408. As originally

enacted, this section capped the airlines’ liability for

compensatory and punitive damages at the level of insur-

ance carried by the airlines. See Air Stabilization Act

§ 408(a). Thus, even if a plaintiff chose to pursue civil

litigation over filing a Fund claim, the airlines’ exposure

in federal court would not exceed their coverage. The

amendment brought the City (and others) within the

protection of the liability cap:

Liability for all claims, whether for compensatory

or punitive damages or for contribution or indem-

nity arising from the terrorist-related aircraft

crashes of September | 1, 2001, against the City of

New York shall not exceed the greater of the city's

insurance coverage or $350,000,000. If aclaimant

... Submits a claim under section 405, the claim-

ant waives the right to file a civil action (or to be

a party to an action) in any Federal or State court

for damages sustained as a result of the terrcrist-

related aircraft crashes of September 11, 2001,

including any such action against the City of New

York.

* See Aviation Security Act, Pub. L. No. 107-71, 115 Stat. $97 (Nov.

19, 2001).

17a

Aviation Security Act § 201(b)(2) (amending Air Stabiliza-

tion Act § 408(a) and adding § 408(a)(1), (3)).”

Plaintiffs contend that the amendment's repetition of the

waiver language in the liability-limiting section indicates

that the protection of section 405°s waiver provision is

limited to actions against airline industry-related defen-

dants. They argue that had the waiver included the City

before the amendment, there would be no need to mention

the waiver when limiting the City’s exposure in federal

court. In essence, plaintiffs would define the sweep of the

waiver by the scope of the limitation of liability sections of

the statute. That ignores the fact that the language of the

waiver is broad and unlimited while the limitation of

liability provision is specific. It also ignores the purpose

and effect of each provision.

Limitations on liability are just that. They are caps on

recoveries in litigation against defendants facing primary,

stunning exposure by nonclaim-filing plaintiffs. The

waiver provision on the other hand seeks to force a choice

between a risk-free claim with the Fund or a lawsuit in

federal court. Thus, a plaintiff who elects litigation still

faces the prospect that the primary defendants will exhaust

their coverage—and their liability—before plaintiff achieves

a verdict, while a plaintiff choosing the certainty of the

Fund does so at the cost of releasing all his claims with

only limited exceptions.

Contrary to plaintiffs’ argument, neither the extension of

limited liability to the City nor the inclusion of waiver

language in that extension support the assertion that the

waiver provision of section 405 protects only the airlines

or the air-transportation industry. The restatement of the

* When Congress amended the Act in November 2001 it extended the

liability cap not only to the City but also to aircraft manufacturers and

persons with a proprietary interest in the WTC. See Aviation Security

Act § 201(b).

18a

waiver did not pronounce a new extension of the waiver to

the City, nor did it introduce an ambiguity into the clear

and concise waiver provision. The clause notes that the

filing of a claim waives one’s right to bring an action in

federal court for injuries resulting—in part—from the

terrorist attacks against anyone, including the City, other

than collateral-source obligors or those responsible for the

attacks. See Air Stabilization Act § 408(b)(3) (as amended

by Aviation Security Act § 201(b)). In our view, the

amendments reinforce the view that the plain and broad

language of section 405(c)(3)(B)(i) already encompassed

any claim for damages sustained as aresult of the terrorist-

related aircraft crashes.'°

C. Scope of Waiver for “Damages Sustained”

and Viability of Any Remaining Claim to

Punitive Damages Under New York Law

Plaintiffs assert that even if the waiver provision applies

to the City and Motorola, the waiver refers only to compen-

satory damages. They contend that under New York law

they may maintain an action solely for punitive damages

against the City and Motorola. Defendants counter that this _

argument, not offered below, is waived; that the plain

meaning of “damages sustained” bars any civil recovery;

and that New York law bars plaintiffs from suing solely for

punitive damages without a concomitant claim for compen-

satory damages.

Having concluded that the language of the statute is clear and

unambiguous notwithstanding the subsequent amendments, we see no

need to examine the statute's legislative history as plaintiffs urge us to

do. Cf. Robinson, 519 U.S. at 340. We do note that the prior efforis of

our Court in that regard weigh heavily against plaintiffs’ contention.

See Schneider, 345 F.3d at 139; Canada Life Assurance Co., 335 F.3d

at 55.

19a

Defendants are correct that plaintiffs failed to raise any

argument about the scope of the waiver as it relates to a

claim for punitive damages. “In general we refrain from

passing on issues not raised below.” Westinghouse Credit

Corp. v. D’Urso, 371 F.3d 96, 103 (2d Cir. 2004) (citing

Singleton v. Wulff, 428 U.S. 106, 120 (1976)). Despite the

general rule, however, this Court retains broad discretion

to consider such issues because waiver rules are prudential

and not jurisdictional. /d. (citing Lo Duca v. United States,

93 F.3d 1100, 1104 (2d Cir. 1996)). This Court “may rule

on issues not raised in the district court... when the issues

are solely legal ones not requiring additional factfinding.”

Id. (citing Baker v. Dorfman, 239 F.3d 415, 420-21 (2d Cir.

2000)). Plaintiffs’ arguments present pure questions of

law—the meaning of a statutory term and New York's law

of punitive damages. In light of the potential for others to

raise similar arguments, we see no need to delay the law-

based decision.

Plaintiffs rely on several cases interpreting statutory

phrases similar to “damages sustained” as identifying only

“compensatory damages.”'' Compensatory damages are

just that; they compensate the injured victim for injuries

actually endured. See State Farm Mut. Auto Ins. Co. v.

Campbell, 538 U.S. 408, 416 (2003) (quoting Cooper

Indus., Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424,

432 (2001)). Thus legislation granting a prospective

plaintiff a claim for damages sustained would seem to

— Se

'! Plaintiffs rely on Local 20, Teamsters v. Morton, 377 U.S. 252, 260

& nn. 15-16 (1964), and /n re Air Disaster at Lockerbie, Scotland, 928

F.2d 1267, 1280-83 (2d Cir. 1991), overruled on other grounds

Zicherman y. Korean Air Lines Co., Lid., 516 U.S. 217, 229 (1996).

Both cases dealt with the issue of whether the grant of a right to

“damages sustained” or language similar to “damages sustained”

included a right of recovery for punitive damages. Both courts limited

recovery to compensatory damages.

20a

imply that the statute authorized only a claim to be made

whole. Plaintiffs contend that while the waiver provision

extinguishes claims, it does so only as to claims for

damages sustained—claims for compensatory damages.

Plaintiffs’ argument has some appeal; however, it over-

looks the essential nature of punitive damages under New

York law.

The Act invokes the substantive law of the State of

injury. See Air Stabilization Act § 408(b)(2). Thus, all

parties agree that New York law decides plaintiffs’ entitle-

ment to punitive damages. While compensatory damages

recompense for one’s injuries, punitive damages under

New York law serve anentirely different purpose. Punitive

damages are invoked to punish egregious, reprehensible

behavior. See Walker v. Sheldon, 10 N.Y.2d 401, 404-05

(1961). Although punitive damages must have some

relationship to the conduct for which the punishment is

imposed, they do not seek to make the injured victim

whole. See Garrity v. Lyle Stuart, Inc., 40 N.Y.2d 354,

357-58 (1977); see also Rocanova vy. Equitable Life

Assurance Soc'y of U.S., 83 N.Y.2d 603, 616-17 (1994).

They serve as an enforcement mechanism invoked by

private citizens to accomplish public policy objectives—

responsible behavior in the marketplace or where other-

wise appropriate. See Walker, 1|ON.Y.2d at 404; Rocanova,

83 N.Y.2d at 613. But, while punitive damages are not

curative in nature, under New York law they cannot be

invoked without some compensatory injury.'* See

Although this Court has previously considered the ability of a

plaintiff to receive punitive damages despite a jury verdict in which no

compensatory damages were explicitly awarded, see King v. Macri,

993 F.2d 294, 297-98 (2d Cir. 1993), that case is of no help to

plaintiffs for several reasons. King did not employ New York law; the

case involved a section 1983 claim. /d. at 296-97. In King the jury was

charged without objection that it could award punitive damages

2\a

Rocanova, 83 N.Y .2d at 616-17 (1994); see also Hubbell v.

Trans World Life Ins. Co., 50 N.Y.2d 899, 901 (1980).

Once a claim for compensatory injuries is barred, the

possibility of a punitive award is likewise relinquished.

In Rocanova, the New York Court of Appeals addressed

the relationship between the viability of aclaim underlying

a request for compensatory damages and the availability of

the remedy of punitive damages. See 83 N.Y.2d at 616.

Plaintiff alleged four causes of action based on “unfair

claim settlement practices” by the defendant insurance

company. /d. Plaintiff entered into a settlement that

released defendant from “all debts, claims, demands,

damages, actions and causes of action” related to the facts

at issue in the case. /d. The court held that where the cause

of action for compensatory damages that served as the

predicate for punitive damages was barred by a release, no

claim for punitive damages would lie. See id. The court

was clear: “in light of our conclusion that the release bars

[plaintiff's] remaining causes of action, [plaintiff] cannot

recover punitive damages since [plaintiff] is unable to

assert an underlying cause of action upon which a demand

for punitive damages can be grounded. A demand or

request for punitive damages is parasitic and possesses no

viability absent its attachment to a substantive cause of

action.” Id. (emphasis added).

In our view the statutorily imposed waiver—set out in

the acknowledgment each plaintiff signed when they filed

their Fund claim—is the functional equivalent of the

satisfaction and release in Rocanova. Under the language

of the statute, plaintiffs have waived their right to file “a

—s ——

“regardless of whether plaintiff has established actual damages.” /d. at

297. Finally, and most importantly, King involved a jury verdict, it did

not extrapolate the effect of a release of a compensatory claim on the

viability of a request for punitive damages arising out of the same

conduct. See id.

22a

civil action” for damages sustained. Plaintiffs had a right

to seek damages to redress the wrongs they and their loved

ones suffered through a civil action against defendants.

That right encompassed compensatory damages and, if

appropriate, punitive damages for egregious conduct. But

once the compensatory claim was satisfied, the parasitic

claim for punitive damages was also extinguished."’

Adopting plaintiffs’ position would require us to ignore

well-established New York law and to abrogate the clear

language of Congress that once a Fund claim is made, the

universe of potential defendants is constricted to only

terrorists responsible for the carnage and collateral-source

providers.

D. Plaintiffs’ Due Process Arguments

Lastly, the plaintiffs contend the district court erred in

failing to conduct a factual inquiry into whether each

plaintiff made a knowing and voluntary waiver of their

right to bring a civil action before filing Fund claims.

Plaintiffs never raised this argument below. We decline to

exercise our discretion to entertain it. Unlike the interpre-

tation of the scope of the waiver provision or the viability

of claims for punitive damages under New York law,

plaintiffs’ argument for why the district court should have

conducted a factual inquiry into the “knowing and volun-

tary” nature of the waiver conflicts with the positions of

the parties presented to Judge Haight or Judge Hellerstein;

‘We note that in their briefs and at argument plaintiffs relied on

Mulder v. Donaldson, Lufkin & Jenrette, 208 A.D.2d 301, 308 (Ist

Dep't 1995), for the proposition that plaintiffs may validly assert a

claim for punitive damages even after waiving their right to bring a

civil action for damages sustained. Mulder, however, addressed the

issue of whether a plaintiff may seek punitive damages after receiving

an award from an arbitrator premised on a determination of fault by

that arbitrator. See id. at 308-10.

23a

we will not entertain it. We have considered plaintiffs’

remaining contentions and find them without merit for

substantially the same reasons stated in the opinions issued

by Judge Haight and Judge Hellerstein.

We close with a general observation. The events of

September | 1, 2001, changed this nation in ways that will

not be fully understood for generations to come. However,

the pain and sense of loss that the victims and their fami-

lies fee! need not wait the judgment of history—their

anguish, we are sure, is a daily companion. As judges, we

are not unmindful of the great sacrifice that many of New

York's bravest men and women made on behalf of those

who were trapped in the burning towers at Church and

Vesey Streets. If Article III of the Constitution somehow

gave us the power to turn back time and undo the disaster

we would set to the task without reservation. Unfortu-

nately, we have only the power to assess the law as it is

given to us by Congress. Such is the nature of judging.

Conclusion

For the foregoing reasons, the district court's order

entered on April 12, 2004, dismissing the complaint is

hereby AFFIRMED without costs.

24a

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

03 CIVIL 10156(AKH)

LUCY VIGILIO, ef ai.,

Plaintiffs,

—against—

MOTOROLA AND CITY OF NY,

Defendants.

JUDGMENT

Defendants having moved to dismiss pursuant to Fed.

R Civ. P. 12(b)(6), and the matter having come before

the Honorable Alvin K Hellerstein, United States Dis-

trict Judge, and the Court, on Mar 10, 2004, having ren-

dered its Order granting defendants’ motions to dismiss

and holding that the claims against the City do not fall

within the definition of “collateral source obligation”, it

is,

ORDERED, ADJUDGED AND DECREED: That for the

reasons stated in the Court's Order, dated Mar 10 2004,

defendants’ motions to dismiss are granted and further-

more, the claims against the City do not fall within the

definition of “collateral source obligation”.

25a

Dated: New York, New York

Apr. 12, 2004

J. MICHAEL MCMAHON

Clerk of Court

[ILLEGIBLE]

Deputy Clerk

This Document was

Entered on the Docket

on April 12, 2004

26a

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

03 Civ. 10156 (AKH)

LUCY VIRGILIO, et a/.,

MOTOROLA AND CITY OF NEW YORK

ORDER GRANTING DEFENDANTS’

MOTIONS TO DISMISS

ALVIN K. HELLERSTEIN, UNITED STATES DISTRICT

JUDGE:

The parties appeared before me on March 4, 2004 for

oral argument on the defendants’ motions to dismiss this

case pursuant to Rule [2(b)(6) of the Federal Rules of

Civil Procedure. I reserved judgment at the time and

now issue my decision.

A Rule 12(b)(6) motion requires the court to deter-

mine whether plaintiff has stated a legally sufficient

claim. A motion to dismiss under Rule | 2(b)(6) may be

granted only if “it appears beyond doubt that the plain-

tiff can prove no set of facts in support of his claim

which would entitle him to relief.” Conley v. Gibson,

27a

355 U.S. 41, 45-46 (1957); Branum v. Clark, 927 F.2d

698,705 (2d Cir. 1991). In evaluating whether plaintiff

could ultimately prevail, the court must take the facts

alleged in the complaint as true and draw all reasonable

inferences in favor of the plaintiff. See Jackson Nat'l

Life Ins. Co. v. Merrill Lynch & Co., 32 F.3d 697, 699-

700 (2d Cir. 1994).

This action was brought by the personal representa-

tives of twelve New York City firefighters who lost their

lives on September 11, 2001 in the collapse of World

Trade Center Towers One and Two. The amended com-

plaint asserts numerous claims against Motorola and the

City of New York for allegedly providing the firefight-

ers with faulty radios, depriving the firefighters of

adequate protection and making fraudulent misrepre-

sentations regarding the radios. Plaintiffs bring these

claims under the Air Transportation Safety and System

Stabilization Act (the Act). See 49 U.S.C. § 40101, Pub.

L. No. 107-42, 115 Stat. 230, 240 (Sept. 22, 2001), as

amended by Pub. L. No. 107-71, § 201, L115 Stat. 597,

645 (Nov. 19, 2001); and Virgilio, et al. v. Motorola and

City of New York, 2004 U.S. Dist. LEXIS 1194 (S.D.N_Y.

2004).

Congress established the VCF “to provide compen-

sation” to victims of the September 11th attacks without

facing the uncertainties of litigation. The Act § 403. To

balance this extraordinary relief, Congress enacted a

waiver provision: “Upon the submission of a claim [to

the VCF], the claimant waives the right to file a civil

action (or to be a party to an action) in any Federal or

State court for damages sustained as a result of the ter-

rorist-related aircraft crashes.” The Act § 405(c)(3)(B)(i).

Thus, Congress provided a choice between entering the

VCF or filing a lawsuit. See Graybill v. City of New

York, 247 F. Supp. 2d 345, 349 (S.D.N.Y. 2002). I pre-

28a

viously ruled that this choice was made upon “submis-

sion of a claim,” which I held occurred on the earlier of

January 22, 2004 or the date the Special Master deemed

the claim substantially complete. /n re September 1] Lit-

igation, 2003 U.S. Dist. LEXIS 23561, *6-7 (S.D.N_Y.

Dec. 19, 2003). Plaintiffs have filed claims with the Vic-

tim Compensation Fund (VCF). Of the remaining plain-

tiffs, five have accepted payments from the VCF,' two

have claims in the hearing phase,’ and four have claims

that are not substantially complete.’ Only one has dis-

missed her claim in this court.*

The defendants argue that the case should be dis-

missed because the plaintiffs have waived their right to

sue by submitting a claim to the VCF. Plaintiffs contend

that the waiver provision should not apply to their

claims against Motorola and New York City because

Congress intended the waiver provision to apply only to

negligence claims. Plaintiffs further argue that if the

waiver provision applies to these claims, the wrongful

death claims against New York City are permissible

under the “collateral source obligation” exception to the

waiver provision. See the Act § 405(c)(3)(B){i) and

§ 402(6) (defining collateral source obligation to include

“life insurance, pension funds, death benefit programs,

and payments by Federal, State, or local governments

related to” the attacks). Plaintiff's previously raised

' The five are: Lucy Virgilio, Gerard Prior, Maureen L.

Dewan-Gillian, James and Barbara Boyle, and Edward Sweeney.

. The two are: Geraldine Halderman and Patricia DeAngelis.

, The four are: Eileen Tallon, Gerald Jean-Baptiste, Alexander

and Maureen Santora, and Raffaella Crisci.

Catherine (Sally) Regenhard, personal representative of

Christian Regenhard, voluntarily dismissed her claim by Order of

March 2, 2004.

29a

identical arguments before Judge Haight, sitting in Part

1, who deemed them unpersuasive. See Virgilio, et al. v.

Motorola and City of New York, 2004 U.S. Dist. LEXIS

1194, *25-45 (S.D.N.Y. Jan. 29, 2004). I concur with

Judge Haight’s decision and adopt his findings as my

own. Thus, I hold that the waiver provision applies to

the all of the claims against Motorola and the City of

New York. I further hold that the claims against the City

of New York do not fall within the definition of “col-

lateral source obligation.”

As plaintiffs have elected their remedy, they have also

waived the right to bring a civil action “for damages sus-

tained as a result of the terrorist-related aircraft crashes

of September 11, 2001.” The Act § 405(c)(3)(B)(i). I

thereby grant the defendants’ motions to dismiss. The

Clerk of the Court shall mark this case as closed.

In parting, I note that after counsel finished their argu-

ments at the oral argument, I allowed family members

and others to address the court. Their presentations

reminded the court of the tremendous sacrifice made by

those who were lost that day and the ongoing difficulties

the survivors face. The family members spoke of insuf-

ficient testing of the Fire Department’s radios and ongo-

ing problems with the radios. They expressed reliance on

upper level officials to have rectified the problems and

blamed them for having failed to do so. They highlighted

that the Police Department received word, causing many

to evacuate, and were able safely to leave the buildings

in much greater numbers than the firefighters. In

response to reports that firefighters could have evacuated

but did not, one mother stated: “I’m here to. . . uphold

the character and dignity of [my] son. . . [i]f he would

have heard on order to evacuate, he would have evacu-

ated. . . he loved his life. He never, never would have

done anything to commit suicide.” March 4, 2003 Hrg.

30a

Tr. at 44-45. The speakers expressed tremendous guilt at

accepting compensation for an uncompensable loss and

deep frustration at foregoing the ability to force parties

to be held accountable.

The search for resolution following a tragedy such as

this is difficult and the options are imperfect. A lawsuit

is rarely a good means of assigning accountability. More

often a lawsuit is a conduit to distribute compensation,

not a mechanism to distribute blame. Congress foresaw

this difficulty by accepting a collective responsibility for

those who lost their lives and providing for a speedy and

generous compensation procedure where the risk, burden

and expense of litigation could be avoided. The surviv-

ing family members and others associated with the vic-

tims need not feel guilt. Although their losses are

irreparable, there is a collective guilt and collective

responsibility for that which cannot be undone, as weil

as resolution that a 9/11 attack should not happen again.

So Ordered.

Dated: New York, New York

March !0, 2004

ALVIN K. HELLERSTEIN

United States District Judge

3la

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

03 Civ. 10156 (AKH)

LUCY VIRGILIO, Personal Representative of Lawrence

Virgilio; GERALDINE HALDERMAN, Personal Represen-

tative of Lt. David Halderman; E)LEEN TALLON, Personal

Representative of Sean Patrick Tallon; GERARD J. PRIOR,

Personal Representative of Kevin M. Prior, CATHERINE

(SALLY) REGENHARD, Personal Representative of Chris-

tian Regenhard; MAUREEN L. DEWAN-GILLIGAN, Personal

Representative of Gerard P. Dewan; JAMES BOYLE and

BARBARA BOYLE, Personal Representative of Michael

Boyle; EDWARD J. SWEENEY, Personal Representative

of Brian Sweeney; GERALD JEAN-BAPTISTE, Co-Personal

Representative of Gerard Jean Baptiste, Jr.; ALEXANDER

SANTORA and MAUREEN SANTORA, Personal Repre-

sentatives of Christopher Santora; RAFFAELLA CRISCI,

Personal Representative of John A. Crisci; and PATRICIA

DEANGELIS, Personal Representative of Thomas P.

DeAngelis,

Plaintiffs,

—against—

MOTOROLA, INC., and CITY OF NEW YORK,

Defendants.

32a

MEMORANDUM AND ORDER

HAIGHT, Senior District Judge:

This Opinion expands upon and amplifies a ruling by

this Court in the above captioned matter delivered from

the bench on January 22, 2004.

I. BACKGROUND

The original complaint in this case was filed on

December 22, 2003 and was subsequently assigned to

the calendar of Judge Berman by lot. Time allotted to the

City of New York, the only defendant named in the orig-

inal complaint, to answer had not yet elapsed when local

counsel for Plaintiffs addressed and personally delivered

to Judge Berman, on January 13, 2003, a letter bearing

that date. In that letter Plaintiffs asked Judge Berman to

transfer (ne case to the calendar of Judge Hellerstein.

Plaintiffs’ letter also advised Judge Berman that the City

of New York, then the only defendant, consented to the

proposed transfer. Finally, Plaintiffs asked Judge Berman

to schedule an “immediate hearing” on a request for

relief which I describe in detail, infra.' Letter of Chery]

Shammas, Esq., dated January 13, 2004 (“January 13 let-

ter”), at I.

Ordinarily, under this Court's local rules, a request by

counsel that a particular case be transferred from the cal-

endar of one Judge to that of another is submitted to the

proposed transferor and transferee Judges for their

approval. If both Judges agree to the transfer, the Clerk

is instructed to implement the transfer. If the Judges do

Plaintiffs asked Judge Berman to convene the hearing,

notwithstanding their request that the case be transferred to Judge

Hellerstein, because on January 13 Judge Hellerstein was out of the

country.

33a

not agree (which rarely, if ever, occurs), the requested

transfer is adjudicated by the Assignment Committee of

the Board of Judges.

In the case at bar, Judge Berman was unable, because

he was engaged in presiding over an ongoing trial, to

give immediate attention to Plaintiffs’ request for trans-

fer. As noted, Judge Hellerstein was out of the country

for three weeks and was also unavailable to consider

Plaintiffs’ request. In these circumstances, the matter came

to the attention of the undersigned, sitting in Part I.

On the evening of January 13, 2004 I met, ex parte,

with counsel for Plaintiffs in my chambers. During that

meeting I reviewed the original complaint. The claims

alleged in the complaint filed on December 22, 2003

arise from and relate to the terrorist attacks on the World

Trade Center on September I!, 2001. In consultation

with counsel and with Judge Hellerstein’s Chambers it

was clear to me that Plaintiffs’ causes of action were

significantly related to other cases arising from and

related to the terrorist attacks of September 11, 2001 that

have been consolidated to the calendar of Judge Heller-

stein and captioned “In re September | 1 Litigation.”

Given this relationship, | also considered several

orders issued by Judge Hellerstein affecting these con-

solidated cases reported as /n re September 11] Litiga-

tion, no. 21 MC 97, 2003 U.S. Dist. LEXIS 14411

(S.D.N.Y., July 22, 2003) (the “July 22, Order”), in re

September /] Litigation, no. 21 MC 97, 2003 U.S. Dist.

LEXIS 21243 (S.D.N.Y., November 26, 2003) (the

“November 26 Order”), and Jn re September /1 Litiga-

tion, no. 21 MC 97, 2003 U.S. Dist. LEXIS 23561

(S.D.N.Y., December 19, 2003) (the “December 19

Order”). These orders and the attendant circumstances

demonstrated the need to resolve promptly Plaintiffs’

request to transfer of the case. I therefore exercised my

34a

discretion as the Part I Judge, and by an Order dated Jan-

uary 14, 2003 on the above captioned matter (the “Jan-

uary 14 Order”), directed the Clerk of the Court to

transfer the case from the calendar of Judge Berman to

the calendar of Judge Hellerstein.

In addition to the request to transfer, Plaintiffs, in

their January 13, 2004 letter, advised Judge Berman of

their “anticipated, emergency application. . . seek{ing]

a hearing on the issue of [Plaintiffs'] right to proceed

with this litigation while still preserving their rights

under the Victim's Compensation Fund (the “Fund”).”

Letter of Chery! Shammas, Esq., dated January 13, 2004,

at | (emphasis in original). On the latter point, Plaintiffs

went on in their letter to request “an immediate hearing.”

Id. at 2. In the ex parte meeting with counsel for Plain-

tiffs conducted in my Chambers on January 13, 2003,

counsel reiterated this request. Again relying on the

above cited Orders by Judge Hellerstein and time pres-

sure concerns voiced by counsel then before me, I granted

this request and, by my January 14 Order, scheduled a

hearing for 10:30 on January 15, 2003, the time and dated

recommended by counsel. January 14 Order at 2.

On January 14, 2004, lead counsel for Plaintiffs, res-

ident in Tampa, Florida, contacted my Chambers by tele-

phone to withdraw Plaintiffs’ request for an immediate

hearing. Counsel was asked to put their request in writ-

ing. Counsel obliged in the form of a letter dated January

14, 2003. Pursuant to that letter I cancelled the sched-

uled hearing by an Order dated January |5, 2004 (the

“January 15 Order”).

On January 20, 2003[4] Plaintiffs filed an amended

complaint, which added Motorola, Inc. as a party defen-

dant, together with the City of New York. As of the date

this amended complaint was filed the original defendant,

the City of New York, had not yet filed a responsive

35a

pleading to the original complaint. In that circumstance,

Federal Rule of Civil Procedure 15(a) allowed the Plain-

tiffs to amend their complaint once as a matter of course.

In the afternoon of January 21, 2003([4) Plaintiffs

faxed a request for an Order to Show Cause to my

Chambers for my consideration as the Judge sitting in

Part !. In their proposed Order Plaintiffs requested:

[An Order] [permitting Plaintiffs to continue

their law suits against Defendants Motorola,

Inc. and the City of New York despite having

filed claims with the September 11 Victim

Compensation Fund.

In the alternative, [an Order) staying Judge

Hellerstein’'s Orders of July 22, 2003 and

December 19, 2003, which require that cases

brought by September || victims who have

Victim Compensation Fund awards pending as

of January 22, 2004 be dismissed within ten

days, until this matter can be considered by

Judge Hellerstein on or before February 6,

2004.

As a further alternative, [an Order] permitting

Plaintiffs to put this case on the suspense

docket of the consolidated /n Re September 1]

Litigation docket (21 MC 97)(AKH), until the

general consolidated conference set by Judge

Hellerstein for February 6, 2004.

[An Order] [pJermitting Plaintiffs to file Exhibit

2 to the Amended Complaint in camera; and

I signed the proposed Order on January 21, 2004 and

scheduled its return for January 22, 2004 at 12:00 p.m.

At 12:00 p.m. on January 22, 2004 I heard an oral

argument on the Order to Show Cause. Plaintiffs were

36a

represented by local counsel and by lead counsel, who

were admitted to practice in this Court pro hac vice. The

City of New York was represented by the Office of the

Corporation Counsel for the City of New York. Motorola

was represented by retained counsel.

After receiving the aid and benefit of arguments deliv-

ered by counsel, I issued an oral ruling from the bench.

The necessity for an immediate ruling on that date was

precipitated by externally executed time pressure pro-

duced by dates of election established by the Victim's

Compensation Fund, Title IV, 49 U.S.C. § 40101 (2002)

(the “Fund’’), as interpreted and enforced by and under

the authority of the Fund's Special Master. One poten-

tially critical date affecting Fund applicants was January

22, 2004, the very date of the hearing. In order to give

Plaintiffs, all of whom are potential applicants to the

Fund, information potentially critical for decisions that

matured at the end of January 22, 2004, I issued a ruling

from the bench, stating that a more detailed opinion

would be filed during the following week. This is that

opinion.

Il. DISCUSSION

A. Jurisdiction

At the January 22, 2004 hearing, counsel for Motorola

represented to the Court that Motorola had not been

served with the amended complaint by which they were

added as a Defendant. January 22, 2004 Transcript

(“Tr.”) at 29. In response to a question from the court,

counsel! for Plaintiff provided details of their efforts to

serve Motorola. Tr. at 37. Plaintiff offered, at that time,

to provide evidence of service, if necessary. Counsel for

Motorola made this inquiry unnecessary by submitting

37a

the company to personal jurisdiction. Tr. at 38. Counsel

for the City of New York did not contest proper service.

On this basis, I asserted jurisdiction over the parties.

Neithet Defendant has made a motion to dismiss the

above captioned case for lack of subject matter juris-

diction. Ja fact, at the oral argument conducted on Jan-

uary Z2, 2004 counsel for the City of New York

acknowledged that the Court does have jurisdiction over

Plaintiffs’ claims against the City. Nevertheless, this

Court is under a independent obligation to consider the

existence rel non of subject matter jurisdiction. See

Capron v. Van Noorden, 6 U.S. 126, 127 (1804) (“it was

the duty of the Court to see that they had jurisdiction,

for the consent of parties could not give it.”); Wynn v.

AC Rochester, 273 F.3d 153, 157 (2d Cir., 2001) (“Par-

ties cannot confer subject matter jurisdiction where the

Constitution and Congress have not. The absence of such

jurisdiction is non-waivable; before deciding any case

we are required to assure ourselves that the case is prop-

erly within our subject matter jurisdiction.”).

To discharge this duty, the Court posed questions to

counsel for Plaintiffs at the January 22, 2004 hearing

relating to an apparent problem with the assertion of

subject matter jurisdiction made in their complaint. In

the first paragraph of the original complaint in this mat-

ter, filed December 22, 2004[3], in paragraphs 3(h)

through 3(n) of the Affirmation in Support of the Order

to Show Cause, signed by Chery! L. Shammas, Esq., and

filed by PI iintiffs in support of their proposed Order to

Show Cause (“Affirmation”), and again in oral argument

on January 22, 2003(4) (Tr. at 9,10) Plaintiffs charac-

terize their claims against the City of New York as a

civil action to recover collateral source obligations.

Specifically, Plaintiffs assert that, in their Amended

Complaint, Count One, relying on New York Labor Law

38a

§ 27-a, and Counts One, Two, and Three relying on New

York General Municipal Law § 205-a, seek to recover

collateral source obligations owed by the City to New

York City firefighters. See Amended Complaint at 1|0-

13; Affirmation at 6,7.

By bringing an action to recover a collateral source

obl. gation, Plaintiffs have compromised their claim on

the jurisdiction of this Court. In paragraph seven of their

Amended Complaint Plaintiffs state that “[t}he juris-

diction of this Court is invoked pursuant to Section

408(b)(3) of Public Law 107-42 (Air Transportation and

System Stabilization Act)” (hereafter referred to as the

“ATSSSA”). The section to which Plaintiffs refer reads:

The United States District Court for the Southern

District of New York shall have original and exclu-

sive jurisdiction over all actions brought for any

claim (including any claim for loss of property, per-

sonal tij“ry, or death) resulting from or relating to

the terrorist-related airceaft crashes of September II,

20ui.

While Plaintiffs’ claims surely do result from and relate

to the terrorist attacks of September 11, 2001, the appar-

ently expansive grant of exclusive jurisdiction is not

without limits. Specifically, Section § 408(c) provides

that “[s)ubsections (a) and (b) do not apply to civil

actions to recover collateral source obligations.” There-

fore, the exclusive grant of jrrisdiction to the federal

courts found in § 408(b)(3) does not apply to actions to

enforce collateral source obligations, such as that

brought by Plaintiffs against the City of New York. It

follows, that, barring an altersative source of federal

subject matter jurisdiction, the Court must dismiss Plain-

tiffs’ claims seeking recovery of collateral source obli-

gations. See Associated Aviation Underwriters v. Arab

39a

Ins. Group, No. 02 Civ. 4983, 2003 U.S. Dist. LEXIS

6254 (S.D.N.Y., April 16, 2003) (finding that suits to

recover monies owed on reinsurance policies but related

to events on September |1, 2001 are actions to recover

collateral source obligations and declining to take juris-

diction on that basis); Canada Life Assurance Co. v.

Converium Ruckversicherung, 210 F.Supp. 2d., 322

(S.D.N.Y., 2002) (declining to assert jurisdiction over

September 11, 2001 related action to recover collateral

source obligations).

Counsel for the City of New York suggested a potential

solution to this jurisdictional problem, arguing that Plain-

tiffs’ claims were not, in fact, actions to “recover collat-

eral source obligations” within the meaning of the statute.

Tr. at 26. See e.g. ATSSSA §§ 402(6), 405(c)(3)(B)(i), and

408(c).

The City has an obvious interest in making this argu-

ment, given the potential impact of the waiver provision

in the ATSSSA, § 405(c)(3)(B)(i), which reads in its

entirety:

Upon the submission of a claim under this title, the

claimant waives the right to file a civil action (or to

be a party to an action) in any Federal or State court

for damages sustained as a result of the terrorist-

related aircraft crashes of September 11, 2001. The

preceding sentence does not apply to a civil action

to recover collateral source obligations, or to a civil

action against any person who is a knowing partic-

ipant in any conspiracy to hijack any aircraft or

commit any terrorist act.

While Plaintiffs concede that the waiver provision would

apply to suits against the City as a general matter, they

contend that it does not apply to their claims in partic-

ular because theirs is a “civil action to recover collateral

40a

source obligations.” If I were to accept the City’s view

that Plaintiffs’ claims are not “civil actions to recover

collateral source obligations,” then the City would have

an affirmative defense of immunity derived from Plain-

tiffs’ waiver of their right to pursue a civil action sec-

ondary to their submission of claims to the Victim's

Compensation Fund.

However, the City’s professed acceptance of subject

matter jurisdiction cannot create that jurisdiction. See

Capron and Wynn, supra. Further, while for reasons

stated infra I am not persuaded that Plaintiffs’ civil

action is one to recover collateral source obligations

within the meaning of § 405(c)(3)(B)(i), for the purposes

of evaluating subject matter jurisdiction I must consider

Plaintiffs’ allegations under the “well pleaded com-

plaint” rule propagated by the Supreme Court and the

Second Circuit.’ Within these confines I can look no far-

ther than the complaint as Plaintiffs cast it when deter-

2 «“‘The well pleaded complaint rule has been propagated in

cases where subject matter jurisdiction is sought as a function of

some federal question presented by a pleading. In the normal case of

federal question jurisdiction a federal law animates the claims found

in a pleading in some fashion or another. Here that federal law grant-

ing jurisdiction to this Court will, after having achieved this initial

purpose, give way to “tate law on cases of liability and damages. Just

as a federal court sitting in diversity is usually faced with claims

determined by state law, most claims, the present ones included, that

assert Causes of action arising from or relating to the terrorist attacks

on September 11, 2001 will be determined by state law. It seems to

this Court, however, that this circumstance does not affect the appli-

cation of the well pleaded complaint rule in this case. Assuming that

the statutory grant of jurisdiction found in § 408(b)(3) is constite-

tional, any cases brought under its umbrella will have, paraphrasing

Article Ill, Section 2 of the United States Constitution, arisen under

the laws of the United States. The fact that, once risen, the case will

not rely on federal law for guidance as to substantive merits issues is

of, at the most, academic interest

4la

mining whether or not the case, as pleaded, falls under

the subject matter jurisdiction of this Court.’ See e.g,

Louisville and Nashville Railroad v. Mottley, 211 U.S.

149, 152-153 (1908); Taylor v. Anderson, 234 U.S. 74

(1914); Caterpillar v. Williams, 482 U.S. 386, 392

(1987); Oklahoma Tax Commission v. Graham, 489 U.S.

838 (1989); Perpetual Securities, Inc. v. Tang, 290 F.3d

132,136-140 (2nd Cir. 2002). If a court determines that

a case presented to it on the basis of its original juris-

diction is not within “the original jurisdiction of the

United States district courts” then it must dismiss or

remand the case. Franchise Tax Board of California v.

Construction Laborers Vacation Trust, 463 U.S. 1, 8

(1983).

The well pleaded complaint rule is, in this context, a

term of art. It speaks not to a presumption of proper

form or of merit but to a presumption that a plaintiff is

“master of the claim.” Caterpillar at 392. Under this

presumption, for a federal court to assert jurisdiction

over a claim “it must appear, at the outset, from the dec-

laration of the bill of the party suing, that the suit is of

{a federal] character.” Tennessee v. Union & Planters

Bank, 152 U.S. 454, 464. The original complaint filed in

the above captioned matter characterized Plaintiffs’

claims against the City as “an action to recover a statu-

tory collateral source obligation.” At the January 22 oral

argument and in their Affirmation, Plaintiffs make it

clear that their claims against the City are of this char-

* LT note now, as I did at the January 22, 2004 hearing, that if I

am mistaken in my application of the well pleaded complaint rule in

the present analysis then my later finding that Plaintiffs’ claims

against the City do not form an action to recover collateral source

obligations would make § 408(c) inapplicable in this case, allowing

the Court to take jurisdiction over Plaintiffs’ claims against the City

under § 408(b)( 3).

42a

acter. Under the well pleaded complaint rule the Court

appears bound to accept Plaintiffs’ characterization of

their own claims. So doing puts Plaintiffs’ claims against

the City outside the exclusive grant of jurisdiction found

in 408(b)(3). Without another source of jurisdiction, the

Court would seem bound to dismiss Plaintiffs claims

against the City.

The City’s contention that Plaintiffs do not accurately

characterize their own claims does not remedy the juris-

dictional problem created by Plaintiffs’ complaint. The

City’s proposal would require the Court to consider the

merits of a potential defense of immunity that the City

will, most assuredly, raise as an affirmative defense

against Plaintiffs’ claims. Under the weii pleaded com-

plaint rule, however, a “plaintiff's claim itself must pre-

sent a federal question ‘unaided by anything alleged in

anticipation of avoidance of defenses which it is though

the defendant may interpose.’” Skelly Oil v. Phillips

Petroleum, 339 U.S. 667, 672 (1950) (quoting Taylor v.

Anderson, 234 U.S. 74, 75-76 (1914)). The Court may

not, then, consider the City's criticism of Plaintiffs’

characterization of their own claims in order to remedy

a pleading that is deficient as to subject matter juris-

diction.

The situation here is importantly distinguishable from

the more familiar case where initial pleadings make suf-

ficient claims of subject matter jurisdiction. In those cir-

cumstances a court may, ard should, test representations

and characterizations drafted into the complaint in order

to assure itself that a plaintiff has not, through artful but

hollow pleading, brought before a federal court a claim

that is not, in fact, within the proper jurisdiction of the

federal courts. Similarly, a federal court may dismiss a

claim that is “patently without merit,” thereby destroy-

43a

ing jurisdiction. Duke Power Co. v. Carolina Env. Study

Group, 438 U.S. 59, 70 (1978).

The well pleaded complaint rule dictates, however,

that a court may not inquire and act in the opposite

direction, examining and dismissing potentially merit-

less claims in order to gain jurisdiction. This may seem

odd, but the limitation imposed by the well pleaded com-

plaint rule and the presumption that a plaintiff is master

of his or her complaint has as much to do with institu-

tional logic as it does legal principle. If a complaint, on

its face, establishes a claim for federal jurisdiction, then

it will achieve the preliminary goal of putting the claim

before a federal court. The court can then proceed to

investigate the merits of the claim and, if the court finds

some claims wanting, take appropriate action. If, in this

preliminary review of the merits, a court takes action

that destroys jurisdiction established by the complaint,

then it is obliged to dismiss or remand the case. Alter-

natively, if a complaint, on its face, fails to establish a

basis for subject matter jurisdiction, then the merits

therein can never be considered by the court. Any

inquiry Or action would be without authority,

While the normal case in which this specter raises its

head finds a defendant trying to create federal jurisdic-

tion where a plaintiff has, through artful pleading,

avoided federal jurisdiction by making state law claims

only, this Court can see no way, in principle or law, to

distinguish this case. The well pleaded complaint rule

creates a presumption that plaintiffs, as masters of their

complaints, have chosen to characterize their claims as

they have for reasons that they alone have the initial

authority to weigh. Given this presumption, a court may

not add or subtract from a complaint presented to it for

thé purposes of gaining jurisdiction that is not created by

the complaint itself. Similarly, a Court may not anticipate

44a

potential defenses to create jurisdiction for itself, no

matter how certain it is that these defenses will be

raised. Here, Plaintiffs may not have fully appreciated

the limits imposed by § 408(c) on the § 408(b)(c) grant

of subject matter jurisdiction. They have, as a result,

filed a pleading that artfully, though perhaps uninten-

tionally, avoids the jurisdiction of this Court. I may not

remedy the situation by making a preliminary ruling on

the merits of the City's anticipated immunity defense,

despite the City’s urging to the contrary.

Even under the well pleaded complaint rule, it might

be argued that Plaintiffs’ characterization of their claims

as efforts to recover collateral source obligations are,

themselves, efforts made in “anticipation of avoidance

of” an immunity defense that Plaintiffs foresee that the

City might affirmatively raise. While this may be an

accurate characterization of Plaintiffs’ motives, it fails

to appreciate the guidance provided by cases applying

the well pleaded complaint rule cited above. Specifi-

cally, it misses the distinction between investigating rep-

resentations made in a complaint in order to defeat

jurisdiction and investigations embarked upon in order

to create jurisdiction. To test Plaintiffs’ characterization

of their claims against the City as actions seeking to

recover collateral source obligations would be to do the

latter, an activity that is forbidden by law and logic.

Moreover, the Court is not convinced that Plaintiffs’

choice to characterize their claims as they have is with-

out substantial legal effect. As pleaded, Plaintiffs’ deci-

sion to cast their claims against the City as an action to

recover a statutory collateral source obligation owed by

the City of New York to New York City firefighters wil!

do more than decorate Plaintiffs’ claim or provide secu-

rity against a potential defense. Their choice will likely

affect duties of proof and provide Plaintiffs with legal

45a

opportunities that they might not otherwise have. Even

were I empowered to, then, | would be loathe to find

their claims “patently without merit” for the purposes of

determining jurisdiction.”

By the foregoing analysis, the Court seems obliged to

dismiss Plaintiffs’ claims against the City of New York

pursuant to § 408(c). Plaintiffs do not, however, char-

acterize their claims against Motorola as part of a civil

action to recover collateral source obligations. There-

fore, Plaintiffs properly avail themselves of the juris-

dictional grant in § 408(b)(3) with respect to their claims

against Motorola.

At the January 22, 2004 hearing, counsel for Plain-

tiffs, after noting the Court's jurisdiction over claims

against Motorola, argued that the claims against the City

and the claims against Motorola are interrelated. Tr. at

19. Based upon this contention, counsel argued that

Plaintiffs’ cause of action should not be bifurcated. /d.

Later on, counsel for Plaintiffs pointed out that “the

amended complaint refers to actions that are concerted in

nature,” Tr. at 34. Counsel argued that these claims

against both Defendants jointly were not brought to

recover a collateral source obligation. /d. Counsel con-

cluded that these joint claims provided additional reason

not to parse off their claims against the City. /d.

i find these arguments persuasive. While Plaintiffs’

claim of concert between Defendants comes only at the

end of the complaint, it enjoys at least a narrative dom-

inance in Plaintiffs’ cause of action. It establishes a con-

text for evaluating and appreciating Plaintiffs’ claims

against the City and Motorola individually. Beyond this,

there are obvious overlaps in Plaintiffs’ probable bur-

dens of proof on their various claims. Specifically, Plain-

tiffs’ claims against both Defendants will likely require

that Plaintiffs establish certain alleged deficits in the

46a

design and function of Motorola XTS 3500 radios, as

well as the circumstances under which these radios

allegedly came to be used by firefighters present in at

the World Trade Center on September 11, 2001 and the

alleged shortcomings of the devices that Plaintiffs say

were made apparent to all who were paying attention by

earlier incidents. These are but a few areas of significant

interrelation that demonstrate that Plaintiffs’ claims

against the City seeking recovery of collateral source

obligations are so closely related to their claims against

Motorola individually and the Defendants jointly that

they form part of the same case and controversy. Since,

pursuant to § 408(b)(3); this Court has original and

exclusive jurisdiction over claims against Motorola indi-

vidually and against the Defendants jointly, the Court

will, relying upon under 28 U.S.C. § 1367, assert sup-

plemental jurisdiction over the claims against the City of

New York that Plaintiffs characterize as a civil action to

recover collateral source obligations.

B. The First Form of Requested Relief

Plaintiffs’ first form of requested relief is for “[an

Order] [pJermitting Plaintiffs to continue their law suits

against Defendants Motorola, Inc. and the City of New

York despite having filed claims with the September 11

Victim Compensation Fund.” Order to Show Cause at 2.

While it is not entirely clear from the text of their pro-

posed Order to Show Cause what Plaintiffs hope the

Court will do by way of this request, the accompanying

Affidavit in Support of the Order to Show Cause pro-

vides useful clarification. There it is argued that plain-

tiffs should be allowed to pursue both their claims with

the Fund and this lawsuit because the waiver provision

of the September ||th Victim Compensation Fund of

2001, § 405(c)(3)(B)(i), does not apply to Plaintiffs’

47a

claims against the Defendants in this case. At the Jan-

uary 22, 2004 hearing I expressed the view that “the

plaintiffs’ claims against both the City and Motorola are

subject to the limitation on civil actions provided for in

Section 405(c)(3)(B)(i) of the statute.” Tr. at 43. To

reach this conclusion it was necessary to address the

merits of Plaintiffs’ contention that the waiver provision

does not apply to their claims against the City, Motorola,

and both Defendants jointly. I now provide more exten-

sive explanation of the rationale underlying my January

22, 2004 conclusion.

1, The Waiver Provision Applies to Plaintiffs’ Case

Against Motorola

It is worth repeating, in this context, the language of

§ 405(c)(3)(B)(i) of the ATSSSA, which reads:

Upon the submission of a claim under this title the

claimant waives the right to file a civil action (or to

be a party to an action) in any Federal or State court

for damages sustained as a result of the terrorist-

related aircraft crashes of September |1, 2001. The

preceding sentence does not apply to a civil action

to recover collateral source obligations, or to a civil

action against any person who is a knowing partic-

ipant in any conspiracy to hijack any aircraft or

commit any terrorist act.

It is undisputed that Plaintiffs’ action against Motorola

is not one to recover collateral source obligations.

Therefore, an initial reading of the statute would suggest

that this waiver provision forbids Plaintiffs from obtain-

ing what their Order to Show Cause seeks, namely, the

privilege to pursue litigation against Motorola in civil

court while concurrently filing a claim under the Fund.

48a

In Plaintiffs’ Affirmation In Support of their proposed

Order to Show Cause, they suggest two reasons why this

may not be so. First, they argue that the purpose of the

ATSSSA was to “prevent the destruction of the nation’s

commercial aviation industry,” and consequently that the

waiver of civil action in § 405(c)(3)(B)(i) must be inter-

preted in light of this primary purpose. Affirmation at

5-6. Second, Plaintiffs note that in the ATSSSA and in

subsequent amendments, Congress chose to limit the lia-

bility of specific defendants, namely air carriers, airline

related entities (such as aircraft manufacturers and air-

port sponsors), and the City of New York. These limi-

tations on liability are promulgated in Section 408(a) of

the Act.

According to Plaintiffs, the limitations on liability set

forth in § 408(a) demonstrate that Congress interpreted

the facially broad language of § 405(c)(3)(B)(i) to, in

fact, be limited to precluding suits only against entities

whose liability Congress had chosen to limit. That is to

say, Plaintiffs argument is that the general waiver found

in § 405 only applies when a party chooses to file suit

against a defendant whose liability is limited by § 408.

Because § 408 does not limit the liability of Motorola

specifically, Plaintiffs argue that they should be entitled

to pursue litigation against Motorola while also filing

actions under the Victims Compensation Fund.

Plaintiffs’ argument relies upon a necessary and erro-

neous inference. The inference that must be true for

Plaintiffs to succeed is that Congress chose to limit the

liability of certain specific defendants in § 408 because

those were the only defendants against whom Congress

meant § 405 to apply. This conflated interpretation of

$§ 405 and 408 is not valid based on a reading of the

plain language of the statute.

49a

In point of fact, the ATSSSA serves at least two dis-

tinct purposes. One of them is to provide some protec-

tion for potential defendants who might find themselves

driven to bankruptcy by lawsuits brought against them

that arise from and relate to the tragic events of Septem-

ber 11, 2001. Another purpose is to provide potential

plaintiffs with an alternative to litigation, allowing an

opportunity to obtain compensation for their losses with-

out running the inherent risks and bearing the inevitable

costs associated with litigation. While the strategies

adopted by the Act to pursue the these two purposes are

mutually supporting (providing an alternative to litiga-

tion does provide some protection for potential defen-

dants and limitations on liability insert additional risks

of litigation that make an alternative more attractive or

necessary), the purposes themselves are entirely sepa-

rable. Limiting liability would have, of itself, provided

ample protection for potentially vulnerable defendants.

Likewise, the Victim's Compensation Fund would have,

standing alone, provided an alternative to litiga‘.on.

The structure of the Act itself reflects these separable

purposes. § 405 governs the eligibility requirements for

obtaining compensation from the Fund. As specified by

the waiver provision, one of these requirements is to

waive the right to file a civil action in any federal or

State court for damages sustained as a result of the

September |! terrorist attacks. If, upon a careful eval-

uation of her options under § 495, a potential plaintiff

decides that her most prudent course of action would be

to forgo a claim on the Fund and instead continue with

litigation, then the inquiry moves on to § 408. Under this

section, all parties are given fair warning that judgments

against certain irdividual defendants, if obtained and if

50a

necessary, will be reduced to the limits of these defen-

dants* liability insurance coverage.*

§ 408, then, governs limitations on liability that, by

practice and logic, are only worth noting once a poten-

tial plaintiff has elected not to pursue the alternative to

litigation addressed by, inter alia, § 405. It is not nec-

essary to speculate on the reasons Congress had for lim-

iting the liability of the particular entities identified in

§ 408. What is clear is that Plaintiffs have failed to

demonstrate that Congress's only, or primary, reason for

doing so was to determine who can benefit from the

waiver provision in § 405. They cannot make such a

demonstration because it is simply not the case.

In their Affirmation in Support of the Order to Show

Cause, Plaintiffs properly note that when the language of

a Statute is ambiguous, the Court must focus on the

“broader context” and “primary purpose” of the statute.

See Robinson v. Shell Oil Co., 549 U.S. 337, 344 (1997);

Castellano v. City of New York, 142 F.3d 58, 67 (2d Cir.

1998). Plaintiffs contend that the waiver language in

§ 405 of the ATSSSA is ambiguous and, therefore, must

be interpreted in light of what Plaintiffs allege is the

Act's primary purpose: to protect the commercial avia-

tion industry. To support the claim that this is the pri-

mary purpose of the ATSSSA, plaintiffs reference

comments made by members of Congress in the course

of drafting the ATSSSA. Notably, Plaintiffs reference

statements by Congressman Dan Young of Alaska, who

stated during floor debate that the ATSSSA was designed

“to address the threat to the continued stability and via-

bility of our U.S. air transportation system,” and “to

ensure the continued operation of our air transportation

. “Judgments against the City of New York shall not exceed

the greater of the city’s insurance coverage or $350,000,000,”

ATSSSA § 408(a)(3).

Sla

system.” 147 Cong. Rec. H 5894 (Sept. 21, 2001). Plain-

tiffs also reference a statement made by Senator Kay

Bailey Hutchinson of Texas, who noted that the Act was

an “effort of the U.S. Congress, working with the Pres-

ident, to shore up the aviation industry in our country.”

147 Cong. Rex. S 9589-01 (Sept. 21, 2001). From this

evidence, Plaintiffs conclude that the waiver provision

cannot be read to preclude Plaintiffs’ dual action in

applying for Fund relief and also pursuing litigation

against Motorola, who is, admittedly, not primarily in

the commercial aviation industry.

This argument fails for two reasons. First, the lan-

guage of the statute is not ambiguous. The language of

§ 405 clearly requires the waiver of civil actions against

any defendant, even those whose liability is not limited

by § 408.° Second, even if the language was ambiguous,

it is not, as stated supra, the case that the only purpose

of the ATSSSA was or is to protect the aviation industry.

Congressional remarks make clear that the ATSSSA also

serves the goal of providing expeditious compensation to

victims as an alternative to tort actions. See 147 Cong.

Rec. S. 9594 (Sept. 21, 2001) (remarks of Sen. McCain)

(“These victims and their families may, but are not

required to, seek compensation from the Federal fund

instead of through the litigation system.”); id., at S 9595

(remarks of Sen. Hatch) (The VCF “will help ensure that

injured people receive money and receive it faster than

they otherwise would if left to pursue claims through lit-

igation.”); id., at S 9599 (remarks of Sen. Leahy) (“Fil-

ing a claim under the program will preclude other civil

remedies.”); 147 Cong. Rec. H 5914 (Sept. 21, 2001)

5 Excepting, of course. “civil action(s] to recover collateral

source obligations” and actions “against any person who is a know-

ing participant in any conspiracy to hijack any aircraft or commit any

terrorist act.” ATSSSA § 408(c)(3)(B)(i).

52a

(remarks of Rep. Conyers) (“individuals may elect to

pursue compensation from the VCF or a damages action

under the ATSSSA”).

For the foregoing reasons, Plaintiffs request to con-

tinue their lawsuit against Motorola while concurrently

pursuing a claim under the Victim's Compensation Fund

is denied.

2. The Waiver Provision Applies to Plaintiffs’ Case

Against the City of New York

Earlier in this Opinion, in the context of evaluating

the authority of this Court to entertain any issues of sub-

stance in this case, I declined to consider the merits of

Plaintiffs’ assertion that their claims against the City

should not be subject to the waiver provision of

§ 408(c)(3)(B)(i). Having asserted jurisdiction over all

claims in the present action, I now must entertain ques-

tions that I could not then in order to evaluate Plaintiffs’

first requested form of relief as it would apply to Plain-

tiffs’ claims against the City.

Although it is repetitious, | will quote again the

waiver provision of the ATSSSA, § 408(c)(3)(B)(i),

which reads, in its entirety:

Upon the submission of a claim under this title, the

claimant waives the right to file a civil action (or to

be a party to an action) in any Federal or State court

for damages sustained as a result of the terrorist-

related aircraft crashes of September |1, 200!. The

preceding sentence does not apply to a civil action

to recover collateral source obligations, or to a civil

action against any person who is a knowing partic-

ipant in any conspiracy to hijack any aircraft or

commit any terrorist act.

53a

Based upon the statute itself and regulations promul-

gated by the Special Master, Judge Hellerstein has pre-

viously determined, in the context of the consolidated

docket pending before him, that, under the waiver pro-

vision, * claimant “will have waived his right to sue, or

to maintain his suit when that filing, or submission,

{with the Victim's Compensation Fund] is substantially

complete as determined by the Special Master's Claims

Evaluator or January 22, 2004, whichever is earlier, and

not before then.” December 19 decision at *9. In their

Order to Show Cause and again at the January 22, 2004

hearing Plaintiffs voiced an immediate, time-sensitive

concern that claims they may have filed or intended to

file with the Fund would provide the City and Motorola

with affirmative defenses of immunity by way of

§ 405(c)(3)(B)(i). Plaintiffs sought to remedy this con-

cern in their first proposed form of relief.

In the first paragraph of the original complaint in this

matter, filed December 22, 2003, in paragraphs 3(h)

through 3(n) of the Affirmation in Support of the Order

to Show Cause, signed by Cheryl L. Shammas, Esq., and

filed by Piaintiffs in support of their proposed Order to

Show Cause (“Affirmation”), and again in oral argument

on January 22, 2003[4] (Tr. at 9, 10) Plaintiffs argue that

any claims they might submit or have submitted to the

Fund should not require them to waive their right to pur-

sue their claims against the City because they form a

“civil action to recover collateral source obligations”

analogous to a civil action to recover a life insurance

policy. Specifically, Plaintiffs assert that, in their

amended Complaint, Count One, relying on New York

Labor Law § 27-a, and Counts One, Two, and Three rely-

ing on New York General Municipal Law § 205-a, seek

to recover collateral source obligations owed by the City

to firefighters. See Amended Complaint at 10-13; Affir-

54a

mation at 6, 7. If Plaintiffs are correct in their charac-

terization of these claims then they are entitled to the

first form of relief proposed in the Order to Show Cause.

If they are not correct then they are not so entitled.

Because I find that Plaintiffs’ claims against the City do

not fit the definition of “civil action to recover collateral

source obligations” within the meaning of these words in

the ATSSSA‘* I hold that Plaintiffs’ claims against the

City are subject to the waiver provision in § 405(c\3)(B)(i).

It follows that I must decline to grant Plaintiffs’ first

form of proposed relief with respect to their claims

against the City.

In the ATSSSA Congress defines collateral source as

“all collateral sources, including life insurance, pension

funds, death benefit programs, and payments by Federal,

State, or local governments related to the terrorist-

related aircraft crashes of September | 1, 2001." ATSSSA

§ 402(6). Plaintiffs assert that their tort claims against

the City fall within this definition because New York

Municipal Law § 205-a obliges the City to compensate

Plaintiffs for any negligent or wrongful actions by the

City or its agents that resulted in injury and death of

New York City firefighters on September 11, 2001.

Affirmation at 7, 8. Plaintiffs further contend that any

payments made by the City as a result of a judgment

5 | emphasize here, as | did on January 22, 2004, that my hold-

ing on this point is limited to the present case, the present facts, and

the present context, principally jurisdictional, in which | am also

asked by Plaintiffs to take preliminary declaratory action. | hold as I

do only for the purposes of answering the immediate and time-sen-

Sitive questions put to me as the Judge sitting in Part I. | do not intend

that my holding on this point should become the law of the case for

all contexts in which this or similar issues may arise. I certainly do

not intend this holding to affect the remaining cases on Judge Heller-

steia's consolidated docket or other litigation arising from or related

to the terrorist attacks on September 11, 2001.

55a

entered in Plaintiffs’ favor on the present tort action

would be “payments” by a “local government| } related

to the terrorist-related aircraft crashes of September |1,

2001." ATSSSA § 402(6). /d. In further support of their

position, Plaintiffs analogize between the present tort

claim and a claim on a life insurance policy, the latter

being specifically named in the definition of “collateral

source” provided in ATSSSA § 402(6). Affirmation at 7, 8.

Congress defined “collateral source” in the ATSSSA,

§ 402(6), as “all collateral sources, including life insur-

ance, pension funds, death benefit programs, and pay-

ments by Federal, State, or local governments related to

the terrorist-related aircraft crashes of September I1,

2001.” That definition does not include tort claims, such

as the one at bar, that allege and seek to prove wrongful

action that results in injury or death. The familiar inter-

pretive principle of ejudsem generis dictates that “where

general words follow an enumeration of persons or

things, by words of a particular and specific meaning,

such general words are not to be construed in their

widest extent, but are to be held as applying only to per-

sons or things of the same genera! kind or class as those

specifically mentioned.” Black's Law lictionary, Sth edi-

tio’, page 464 (citations omitted). Taking note of the

statutory definition of “collateral source” in § 402(6), it

is clear that Congress meant for all “payments by Fed-

eral, State, or local governments” to be of a kind with

“life insurance, pensicn funds, [and] death benefit pro-

grams.”

As counsel for the City acknowledged, a case brought

by a firefighter or his heir in pursuit of a contractual

right to an annuity benefit would be of a kind with the

examoles listed in § 402(6). Tr. at 27, 28. A tort claim

seeking to establish wrongdoing in order to win a judg-

ment is not, however, of a kind with actions in pursuit of

56a

entitlements under insurance polices and death benefit

programs.

The key distinction that Plaintiffs miss in their argu-

ment and in their analogy is between an action designed

to enforce an entitlement and one designed to establish

an entitlement. As its title suggests, New York General

Municipal Law § 205-a creates an “[a}dditional right of

action to certain injured or representatives of certain

deceased firefighters.” To the extent that the law creates

an entitlement, it is an entitlement to sue parties whose

“neglect, omission, willful or culpable negligence,” NY

Gen. Mun. Law § 205-a(1), results in the injury or death

of a firefighter. The law protects firefighters from some

common law defenses, but it still requires a proof of

negligence or other culpable wrongdoing. See O'Connell

v. Kavanagh, 231 A.D.2d 29 (N.Y.A.D. Ist, 1997);

Kenvan v. City of New York, 70 N.Y.2d 558 (N.Y.C.A.,

1987).

In contrast to tort cases such as these, which require

proof in order to create a judgment, actions to recover

collateral source obligations are actions to recover an

entitlement previously created by statute or by contract.

These actions do not create the entitlement. Plaintiffs

right to. sue under New York law does not create an enti-

tlement to receive funds or a complementing obligation

to pay. Plaintiffs may, if successful on their lawsuit, be

entitled to compensation on a favorable judgment. Under

the waiver provisions of the ATSSSA, however, they will

have forgone any claim on the Fund by pursuing their

tort suit.

Prior decisions by federal courts tiat have considered

the extent and meaning of “collateral source” in the con-

text of the ATSSSA also indicate that Plaintiffs’ tort

claim is not an action to recover collateral source obli-

gations. Where courts have regarded legal claims arising

57a

from and related to the September |1, 200! terrorist

attacks as actions to recover collateral source obliga-

tions, the benefit sought has been a pre-existing enti-

tlement of a kind with those enumerated in the ATSSSA.

See e.g. Canada Life Assurance Co. v. Converium Ruck-

versicherung, 335 F.3d 51, 56-58 (2nd Cir., 2003) (dis-

cussing “collateral source obligations” as rights of

contract formed by existing insurance indemnification

policies); Associated Aviation Underwriters v. Arab Ins.

Group, No. 02 Civ. 4983, 2003 U.S. Dist. LEXIS 6254

(S.D.N.Y., April 16, 2003) (suits to recover monies owed

on reinsurance policies are actions to recover collateral

source obligations); Hickey v. City of New York (in re

World Trade Ctr. Disaster Site Litig.), 270 F. Supp. 2d

357, 362 (S.D.N.Y., 2003) (“collateral source obliga-

tions” (for example, insurance or other such items

which, under the Act, are to be deducted from claims

against the Victim Compensation Fund)”). Plaintiffs’

present acticn is unlike any of these actions. It is a tort

action that seeks a judgment based on wrongdoing.

Finally, Plaintiffs argue that any recovery they might:

receive from their suit against the City would offset

awards from the Fund, thereby proving that their action

is one to recover collateral source obligations. /d. at 8.

This “proof” indulges in the common logical fallacy of

question begging, however. Plaintiffs assume that which

they seek to prove, namely that theirs is a civil action to

recover collateral source obligations. If it is, then recov-

ery on the suit would offset a Fund award. If, however,

it is not, then no offset will occur because Plaintiffs will

have had to choose between their civil action and a

claim on the Fund. Thus, there would be no Fund claim

to offset.

For the fore uo: sg reasons I am of the view that within

58a

the City is not one to recover collateral source obligations

within the meaning of ATSSSA § 405(c)(3)(B)(i). There-

fore, the waiver provision applies to Plaintiffs’ claims

against the City of New York. On this basis I decline to

grant Plaintiffs’ first proposed form of relief with respect

to their claims against the City.

3. The Waiver Provision Applies to Plaintiff's Case

Against the Defendants Jointly

Plaintiffs have not argued, in their papers or at the

January 22, 2004 hearing, that their claims against the

Defendants jointly should qualify for any particular

exception to the waiver provision at § 408(c)(3)(B)(i).

Given my conclusion that the waiver provision applies to

Plaintiffs’ claims against each of the Defendants indi-

vidually, there is no reason why it should not also apply

to claims against the Defendants jointly. I therefore con-

clude that the waiver provision applies to Plaintiffs

claim® against the Defendants jointly. Consistent with

this holding, I must decline to grant Plaintiffs’ first pro-

posed form of relief with respect to their claims against

the Defendants jointly.

C. The Second Form of Requested Relief

In an alternative to their first proposed form of relief,

Plaintiffs ask this Court to stay “Judge Helierstein’s

Orders of July 22, 2003 and December 19, 2003, which

require that cases brought by September || victims who

have Victim Compensation Fund awards pending as of

January 22, 2004 be dismissed within ten days, until the

matter can be considered by Judge Hellerstein on or’

before February 6, 2004.” By contrast to Plaintiffs’ first

proposed form of relief, this proposal does not raise any

concerns time pressure. Assuming that the situation is as

59a

Plaintiffs portray it in their request,° under Federal Rule

of Civil Procedure 6(a) the earliest date upon which

Plaintiffs’ fears might be realized is February 5, 2004.

The concerns presented in Plaintiffs’ second form of

requested relief are, thus, not immediate. Given this, the

Court sees no reason to take immediate action on Plain-

tiffs’ second request for relief and declines to do so.

D. The Third Form of Requested Relief

Plaintiffs propose, as a further alternative, that the

Court place their case on the suspense docket created by

Judge Hellerstein for some cases related to the Septem-

ber 11, 2001 terrorist attacks. By my oral Order on Jan-

uary 22, 2004 and by a separate written Order dated

January 22, 2004 I granted this request “provisionally

and in principle.” In the written Order | further ordered,

consistent with the oral Order, that “the above captioned

cause of action will be moved tu the suspense docket

maintained by Judge Hellerstein when Plaintiffs, have

met the procedural requirements for such an application

se! forth by Judge Hellerstein in his July 22, 2003 Order

reported at /n re September 1] Litigation, no. 21 MC 97,

2003 U.S. Dist. LEXLS 14411 (S.D.N_Y., July 22, 2003).”

January 22, 2004 Order at 2. My written Order of Jan-

uary 22, 2004 did not disturb my oral Order of January

® The Court does not, in any way, mean to endorse this

assumption. It seems clear that, at the very least, the dismissal that

Plaintiffs fear is not automatic. It will require an affirmative action

on the part of Judge Hellerstein. Assuming, then, that Judge Heller-

stein’s July 22, 2003 Order applies to active cases such as the one

presently at bar (another assumption this Court @»es not mean to

endorse), Plaintiffs will have ample opportunity tu ask Judge Heller-

stein himself to stay his own hand. This Court has neither the incli-

nation nor the authority to stay it for him.

60a

22, 2004 and the present Order does not disturb, in any

way, my written Order of January 22, 2004.

E. The Fourth Form of Requested Relief

At the January 22, 2004 hearing the parties agreed to

hold in abeyance the motion to file Plaintiffs’ Exhibit 2

in camera. Consistent with this agreement I decline to

grant Plaintiffs’ fourth proposed form of relief without

commenting on the merits or demerits of their request.

Ill. CONCLUSION

For the foregoing reasons the first, second, and fourth

proposed forms of relief set forth in the January 21,

2004 Order to Show Cause issued by this Court are

denied. The third form of proposed relief is granted con-

sistent with this Court's January 22, 2004 Order in the

- above captioned case.

It is SO ORDERED.

Dated: New York, New York

January 29, 2004

CHARLES S. HAIGHT, JR.

SENIOR UNITED STATES DISTRICT JUDGE

6la

UNITED STATES PUBLIC LAWS

107th Congress — First Session

Convening January, 2001

PL 107-42 (HR2926)

September 22, 2001

AIR TRANSPORTATION SAFETY

AND SYSTEM STABILIZATION ACT

An Act To preserve the continued viability of the

United States air transportation system.

Be it enacted by the Senate and House of Represen-

tatives of the United States of America in Congress

assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the “Air Transportation

Safety and System Stabilization Act”.

TITLE I—AIRLINE STABILIZATION

SEC. 101. AVIATION DISASTER RELIEF.

(a) INGENERAL.—Notwithstanding any other provi-

sion of law, the President shali take the following actions

to compensate air carriers for losses incurred by the air

Carriers as a result of the terrorist attacks on the United

States that occurred on September 11, 2001:

(1) Subject to such terms and conditions as the

President deems necessary, issue Federal credit

instruments to air carriers that do not, in the aggre-

gate, exceed $10,000,000,000 and provide the sub-

sidy amounts necessary for such instruments in

accordance with the provisions of the Federal Credit

Reform Act of 1990 (2 U.S.C. 661 et seq.).

62a

(2) Compensate air carriers in an aggregate

amount equal to $5,000,000,000 for—

(A) direct losses incurred beginning on

September |1, 2001, by air carriers as a result

of any Federal ground stop order issued by the

Secretary of Transportation or any subsequent

order which continues or renews such a stop-

page; and

(B) the incremental losses incurred beginning

September |1, 2001, and ending December 31,

2001, by air carriers as a direct result of such

attacks.

(b) EMERGENCY DESIGNATION.—Congress designates

the amount of new budget authority and outlays in all

fiscal years resulting from this title as an emergency

requirement pursuant to section 252(e) of the Balanced

Budget and Emergency Deficit Control Act of 1985 (2

U.S.C. 901i(e)). Such amount shall be available only to

the extent that a request, that includes designation of

such amount as an emergency requirement as defined in

such Act, is transmitted by the President to Congress.

SEC. 102. AIR TRANSPORTATION STABILIZA-

TION BOARD.

(a) DEFINITIONS.—In this section, the following def-

initions apply:

(1) BOARD.—The term “Board” means the Air

Transportation Stabilization Board established under

subsection (b).

(2) FINANCIAL OBLIGATION.—The term “finan-

cial obligation” means any note, bond, debenture, or

other debt obligation issued by an obligor in con-

63a

nection with financing under this section and sec-

tion 101(a)(1).

(3) LENDER.—The term “lender” means any non-

Federal qualified institutional buyer (as defined by

section 230.144A(a) of title 17, Code of Federal

Regulations (or any successor regulation) known as

Rule 144A(a) of the Securities and Exchange Com-

mission and issued under the Security Act of 1933,

including—

(A) a qualified retirement plan (as defined in

section 4974(c) of the Internal Revenue Code

of 1986 (26 U.S.C. 4974(c)) that is a qualified

institutional buyer; and

(B) a governmental plan (as defined in sec-

tion 414(d) of the Internal Revenue Code of

1986 (26 U.S.C. 414(d)) that is a qualified

institutional buyer.

(4) OBLIGOR.—The term “obligor” means a party

primarily liable for payment of the principal of or

interest on a Federal credit instrument, which party

may be a corporation, partner ship, joint venture,

trust, or governmental entity, agency, or instru-

mentality. }

(b) AIR TRANSPORTATION STABILIZATION BOARD.—

(1) ESTABLISHMENT.—There is established a

board (to be known as the “Air Transportation Sta-

bilization Board”) to review and decide on appli-

cations for Federal credit instruments under section

1O1(a)(1).

(2) COMPOSITION.—The Board shall consist of—

(A) the Secretary of Transportation or the

designee of the Secretary;

64a

(B) the Chairman of the Board of Governors

of the Federal Reserve System, or the designee

of the Chairman, who shall be the Chair of the

Board;

designee of the Secretary; and

(D) the Comptroller General of the United

States, or the designee of the Comptroller Gen-

eral, as a nonvoting member of the Board.

(1) IN GENERAL.—The Board may enter into

agreements with | or more obligors to issue Federal

credit instruments under section 10](a)(1) if the

Board determines, in its discretion, that—

(A) the obligor is an air carrier for which

credit is not reasonably available at the time of

the transaction;

(B) the intended obligation by the obligor is

prudently incurred: and

maintaining a safe, efficient, and viable com-

mercial aviation system in the United States.

(2) TERMS AND LIMITATIONS.—

(A) FORMS; TERMS AND CONDITIONS.—

A Federal credit instrument shall be issued

under section 101(a)(1) in such form and on

such terms and conditions and contain such

covenants, representatives, warranties, and

requirements (including requirements for

audits) as the Board determines appropriate.

65a

(B) PROCEDURES.—Not later than 14 days

after the date of enactment of this Act, the

Director of the Office of Management and Bud-

get shall issue regulations setting forth proce-

dures for application and minimum require

ments, which may be supplemented by the

Board in its discretion, for the issuance of Fed-

eral credit instruments under section 101(a)(1).

(d) FINANCIAL PROTECTION OF GOVERNMENT.—

(1) IN GENERAL.—To the extent feasible and

practicable, the Board shall ensure that tiie Gov-

ernment is compensated for the risk assumed in

making guarantees under this title.

(2) GOVERNMENT PARTICIPATION IN GAINS.—To

the extent to which any participating corporation

accepts financial assistance, in the form of accept-

ing the proceeds of any loans guaranteed by the

Government under this title, the Board is authorized

to enter into contracts under which the Government,

contingent on the financial success of the partici-

pating corporation, would participate in the gains of

the participating corporation or its security holders

through the use of such instruments as warrants,

stock options, common or preferred stock, or other

appropriate equity instruments.

(3) DEPOSIT IN TREASURY.—AIl amounts col-

lected by the Secretary of the Treasury under this

subsection shall be deposited in the Treasury as

miscellaneous receipis.

SEC. 103. SPECIAL RULES FOR COMPENSATION.

(a) DOCUMENTATION.—Subject to subsection (b), the

amount of compensation payable to an air carrier under

66a

section 101(a)(2) may not exceed the amount of losses

described in section 101(a)(2) that the air carrier demon-

Strates to the satisfaction of the President, using sworn

financial statements or other appropriate data, that the

air Carrier incurred. The Secretary of Transportation and

the Comptroller General of the United States may audit

such statements and may request any information that

the Secretary and the Comptroller General deems nec-

essary to conduct such audit.

(6) MAXIMUM AMOUNT OF COMPENSATION PAYABLE

PER AIR CARRIER.—The maximum total amount of

compensation payable to an air carrier under section

101{a)(2) may not exceed the lesser of—

(1) the amount of such air carrier's direct and

incremental losses described in section !01(a)(2); or

(2) in the case of—

(A) flights involving passenger-only or com-

bined passenger and cargo transportation, the

product of

(i) $4,500,000,000; and

(ii) the ratio of—

(1) the available seat miles of the air car-

rier for the month of August 2001 as

reported to the Secretary; to

(11) the total available seat miles of all

such air carriers for such month as

reported to the Secretary; and

(B) flights involving cargo-only transporta-

tion, the product of—

(i) $500,000,000; and

(ii) the ratio of —

67a

(1) the revenue ton miles or other

auditable measure of the air carrier for

« . 9 for the latest quarter for which data

i. ailable as reported to the Secretary; to

(II) the total revenue ton miles or other

auditable measure of all such air carriers

for cargo for such quarter as reported to

the Secretary.

pensation to air carriers under section 101(a)(2) in | or

more payments up to the amount authorized by this title.

SEC. 104. LIMITATION ON CERTAIN EMPLOYEE

COMPENSATION.

(a) IN GENERAL.—The President may only issue a

Federal credit instrument under section !0I1(a)(1) to

an air carrier after the air carrier enters into a legally

binding agreement with the President that, during the 2-

year period beginning September I!1, 2001, and ending

September 11, 2003, no officer or employee of the air

carrier whose total compensation exceeded $300,000 in

calendar year 20U0 (other than an employee whose com-

pensation is determined through an existing collective

bargaining agreement entered into prior to September 11,

2001 )—

(1) will receive from the air carrier total com-

pensation which exceeds, during any 12 consecutive

months of such 2-year period, the total compensa-

tion received by the officer or employee from the air

carrier in calendar year 2000; and

(2) will receive from the air carrier severance pay

or other benefits upon termination of employment

with the air carrier which exceeds twice the maxi-

68a

mum total compensation received by the officer or

employee from the air carrier in calendar year 2000.

(b) TOTAL COMPENSATION DEFINED.—lIn this sec-

tion, the term “total compensation” includes salary,

bonuses, awards of stock, and other financial benefits

provided by an air carrier to an officer or employee of

the air carrier.

SEC. 105. CONTINUATION

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