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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 2006
- **Citation:** 546 U.S. 1137

## Text

2

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

4
“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).

5

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

6

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.

7

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

8

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

9

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.”

4

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.

10

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

12
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

13

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-

14

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

15

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.

16

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.

17

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.

18

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-

19

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,

20

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

6

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).

2)
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.

7

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.

22

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

23

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

24

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)).

25

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

26

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

27

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

la

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

2a

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—

3a

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,

4a

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.

Sa

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.

Nw

Three Counts of the complaint allege wrongful death for the breach
of statutorily imposed duties by the City.

6a

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).

7a

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.

8a

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.

9a

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

6

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.

10

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

12

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.
j

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

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386016_0338%3A1. Public record. Not legal advice.