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IN RE SEPTEMBER 11 LITIGATION

September 9, 2003

IN RE SEPTEMBER 11 LITIGATION


The opinion of the court was delivered by: Alvin Hellerstein, District Judge

OPINION AND ORDER DENYING DEFENDANTS' MOTIONS TO DISMISS
The injured, and the representatives of the thousands who died from the terrorist-related aircraft crashes of September 11, 2001, are entitled to seek compensation. By act of Congress, they may seek compensation by filing claims with a Special Master established pursuant to the Air Transportation Safety and System Stabilization Act of 2001, Pub. L. No. 107-42, 115 Stat. 230 (2001) (codified at 49 U.S.C. § 40101) ("the Act"). Or they may seek compensation in the traditional manner, by alleging and proving their claims in lawsuits, with the aggregate of their damages capped at the limits of defendants' liability insurance. If they choose the former alternative, their claims will be paid through a Victim Compensation Fund from money appropriated by Congress, within a relatively short period after filing. Claimants will not have to prove fault or show a duty to pay on the part of any defendant. The amount of their compensation, however, may be less than their possible recovery from lawsuits, for non-economic damages are limited to $250000 economic damages are subject to formulas that are likely to be less generous than those often allowable in lawsuits, and punitive damages are unavailable. I have discussed, and upheld, certain portions of the Act and regulations related to the Fund in Colaio v. Feinberg, 262 F. Supp.2d 273 (S.D.N.Y. 2003), appeal filed, June 6, 2003.

Approximately seventy of the injured and representatives of those who died, and ten entities which sustained property damage, have chosen to bring lawsuits against defendants whom they claim are legally responsible to compensate them: the airlines, the airport security Page 2 companies, the airport operators, the airplane manufacturer, and the operators and owners of the World Trade Center.*fn1 The motions before me challenge the legal sufficiency of these lawsuits, and ask me to dismiss the complaints because no duty to the plaintiffs existed and because the defendants could not reasonably have anticipated that terrorists would hijack several jumbo jet airplanes and crash them, killing passengers, crew, thousands on the ground, and themselves. I discuss in this opinion the legal duties owed by the air carriers, United and American Airlines, and other airlines and airport security companies affiliated with the air carriers to the plaintiffs who were killed and damaged on the ground in and around the Twin Towers and the Pentagon; by the Port Authority of New York and New Jersey ("Port Authority") and World Trade Center Properties LLC ("WTC Properties") to those killed and injured in and around the Twin Towers; and by the Boeing Company, the manufacturer of the "757" jets that were flown into the Pentagon and the field near Shanksville, Pennsylvania, to those killed and injured in the two crashes. I hold in this opinion that each of these defendants owed duties to the plaintiffs who sued them, and I reject as well defendants' alternative arguments for dismissal.

I. Background

A. Exclusive Jurisdiction and the Governing Law

The Air Transportation Safety and System Stabilization Act of 2001, Pub. L. No. 107-42, 115 Stat. 230 (2001) (codified at 49 U.S.C. § 40101) ("the Act"), passed in the weeks following the September 11 attacks, provides that those who bring suit "for damages arising out of the hijacking and subsequent crashes" must bring their suits in the United States District Court for the Southern District of New York. The Southern District has "original and exclusive Page 3 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 11, 2001," with the exception of claims to recover collateral source obligations and claims against terrorists and their aiders, abettors and conspirators, Act § 408(c). The Act provides that the governing law shall be "derived from the law, including choice of law principles, of the State in which the crash occurred unless such law is inconsistent with or preempted by Federal law." Act § 408(b)(2). Thus, all cases, whether arising out of the crashes in New York, Virginia, or Pennsylvania, must be brought in the Southern District of New York, to be decided in accordance with the law of the state where the crash occurred.

B. The Complaints

Plaintiffs' individual pleadings have been consolidated into five master complaints, one for the victims of each crash and one for the property damage plaintiffs. Plaintiffs allege that the airlines, airport security companies, and airport operators negligently failed to fulfill their security responsibilities, and in consequence, the terrorists were able to hijack the airplanes and crash them into the World Trade Center, the Pentagon, and the field in Shanksville, Pennsylvania, killing passengers, crew, and thousands in the World Trade Center and the Pentagon and causing extensive property damage. The complaints allege that the owners and operators of the World Trade Center, World Trade Center Properties LLC and the Port Authority of New York and New Jersey, negligently designed, constructed, maintained, and operated the buildings, failing to provide adequate and effective evacuation routes and plans. Plaintiffs who died in the crashes of American flight 77 and United flight 93 also sue Boeing, the manufacturer of the two "757" airplanes, for strict tort liability, negligent product design, and breach of warranty. Page 4

C. Motions to Dismiss

I heard oral argument on May 1 and 2, 2003 on six motions by the several categories of defendants. I previously have decided three of the motions, by most of the airport operators,*fn2 by three airlines that did not carry any of the victims or alleged hijackers,*fn3 and by Fiduciary Trust Company International and Franklin Templeton Investments, an employer of one of the victims.*fn4 The three motions which remain, and which I now decide are: by the airlines and airport security companies (the "Aviation Defendants");*fn5 by the Port Authority and World Trade Center Properties LLC (together, the "WTC Defendants"); and by Boeing.

The Aviation Defendants concede that they owed a duty to the crew and passengers on the planes, but contend that they did not owe any duty to "ground victims." The Page 5

Port Authority and WTC Properties argue that they did not owe a duty to protect occupants in the towers against injury from hijacked airplanes and, even if they did, the terrorists' actions broke the chain of proximate causation, excusing any negligence by the WTC Defendants. And Boeing argues that it did not owe a duty to ground victims or passengers, and that any negligence on its part was not the proximate cause for the harms suffered by the plaintiffs.

II. Discussion

Defendants' motions were made pursuant to Fed.R.Civ.P. 12(b)(6).*fn6 A Rule 12(b)(6) motion requires the court to determine if plaintiff has stated a legally sufficient claim. A motion to dismiss under Rule 12(b)(6) may be granted only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Branum v. Clark, 927 F.2d 698, 705 (2d Cir. 1991). The court's function is "not to assay the weight of the evidence which might be offered in support" of the complaint, but "merely to assess the legal feasibility" of the complaint. Geisler v. Petrocelli, 616 F.2d 636, 639 (2d Cir. 1980). 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 and Co., 32 F.3d 697, 699-700 (2d Cir. 1994).

A. Aviation Defendants' Motion to Dismiss

The Aviation Defendants argue that they did not owe a duty to the ground victims; that the injuries suffered by the plaintiffs were beyond the scope of any foreseeable duty Page 6 that may have been owed; and that the federal laws that regulate aviation preempt any state law to the contrary.

i. Choice of Law

Section 408(b)(2) of the Act provides that the substantive law "shall be derived from the law, including choice of law principles, of the State in which the crash occurred unless such law is inconsistent with or preempted by Federal law." Ground victims of the planes that crashed into the World Trade Center and the Pentagon have filed suit against the Aviation Defendants, and thus the choice of law principles of New York and Virginia apply.

New York typically analyzes choice-of-law issues in tort cases according to two categories of rules: conduct-regulating and loss-allocating. The issue of duty-whether duty exists and its scope is conduct-regulating. New York choice of law dictates that the state in which the tort took place has the strongest interest in applying its conduct-regulating rules. Schultz v. Boy Scouts of Am., Inc., 480 N.E.2d 679, 684-85 (N.Y. 1985). Thus, the substantive law of New York governs the issue of duty in relation to the crashes at the World Trade Center.

Virginia's choice of law rules apply to the ground damage claims arising from the crash of American flight 77 into the Pentagon. Under Virginia law, the substantive law of the place of the tort controls. McMillan v. McMillan, 253 S.E.2d 662, 664 (Va. 1979). The parties agree that the law of Virginia does not differ materially from New York law with respect to the issue of duty and rely on New York law for their arguments.

ii. Existence of Duty to Ground Victims

"The threshold question in any negligence action is: does the defendant owe a legally recognized duty of care to plaintiff?" Hamilton v. Beretta U.S.A. Corp., 750 N.E.2d 1055, 1060 (N.Y. 2001). In New York, the existence of a duty is a "legal, policy-laden Page 7 declaration reserved for judges." Palka v. Servicemaster Mgmt. Servs. Corp., 634 N.E.2d 189, 192 (N.Y. 1994). The injured party must show that a defendant owed not merely a general duty to society but a specific duty to the particular claimant, for "without a duty running directly to the injured person there can be no liability in damages, however careless the conduct or foreseeable the harm." Lauer v. City of New York, 733 N.E.2d 184, 187 (N.Y. 2000). Courts traditionally "fix the duty point by balancing factors, including the reasonable expectations of parties and society generally, the proliferation of claims, the likelihood of unlimited or insurer-like liability, disproportionate risk and reparation allocation, and public policies affecting the expansion or limitation of new channels of liability." Palka, 634 N.E.2d at 193.

New York courts have been cautious in extending liability to defendants for their failure to control the conduct of others, "even where as a practical matter [the] defendant can exercise such control." D'Amico v. Christie, 518 N.E.2d 896, 901 (N.Y. 1987). "This judicial resistance to the expansion of duty grows out of practical concerns both about potentially limitless liability and about the unfairness of imposing liability for the acts of another." Hamilton, 750 N.E.2d at 1061. However, courts have imposed a duty when the defendant has control over the third party tortfeasor's actions, or the relationship between the defendant and plaintiff requires the defendant to protect the plaintiff from the conduct of others. As the New York Court of Appeals ruled, "The key in each [situation] is that the defendant's relationship with either the tortfeasor or the plaintiff places the defendant in the best position to protect against the risk of harm." Id. One additional consideration, the Court of Appeals added, is that "the specter of limitless liability is not present because the class of potential plaintiffs to whom the duty is owed is circumscribed by the relationship." Id. Page 8

Plaintiffs allege that the Aviation Defendants negligently failed to carry out their duty to secure passenger aircraft against potential terrorists and weapons smuggled aboard, enabling the terrorists to hijack and crash four airplanes. Plaintiffs argue that the Aviation Defendants employed their security measures specifically to guard against hijackings, and knew or should have known that the hijacking of a jumbo jet would create substantial risks of damage to persons and property, not only to passengers and crew, but also to people and property on the ground. Plaintiffs assert also that terrorism was a substantial international concern, and that suicidal acts by terrorists seeking to cause death, injury and havoc to as many innocent people as possible had become a frequently used strategy.

I must test this dispute over duty even before a record has been established. In New York, duty is a legal question, for the judge to decide. I must assume, for the purpose of the motion, that all well-pleaded facts about the defendants' negligence are true and will in time be proved, and that defendants' negligence proximately caused the injuries and deaths upon which plaintiffs filed their lawsuits.

Airplane crashes in residential areas are not unknown. In January 1952, an American Airlines Convair crashed into a residential area of Elizabeth, New Jersey on its approach to Newark airport, killing passengers and crew, as well as seven residents of houses it struck. Elizabeth Recalls First of 3 Crashes, N.Y. Times, Dec. 17, 1952, at 27. A month later, another plane out of Newark, a National Airlines DC-6, struck an apartment house in New Jersey, killing 29 passengers and four tenants of the apartment house. Id. Military airplanes have had to make emergency landings on highways, and have collided with automobiles. See Rehm v. United States, 196 F. Supp. 428 (E.D.N.Y. 1961). On July 9, 1982, a Pan American World Airways jet crashed shortly after takeoff, killing all on board and eight individuals on the Page 9 ground. The airline and the government acknowledged liability for the crash, which was caused by windy conditions. Pan Am and U.S. Accept Responsibility for Crash, N.Y. Times, May 13, 1983, at 6. In January 1990, a Columbian passenger airplane exhausted its fuel supply while circling La Guardia Airport waiting for clearance to land, and crashed into a residential backyard in Long Island's populated North shore. See In re Air Crash Disaster at Cove Neck, 885 F. Supp. 434 (E.D.N.Y. 1995). On November 12, 2001, two months after the aircraft crashes of September 11, 2001, a jumbo-jet passenger airplane lost its stability in take-off from JFK airport and crashed into a populated area of the Rockaways, causing the deaths of over two hundred passengers and crew members and five people on the ground. Dan Barry and Elissa Gootman, 5 Neighbors Gone, N.Y. Times, Nov. 14, 2001, at D11. Such incidents are inevitable in the context of the sheer number of miles flown daily in the United States. None matches the quantity or quality of tragedy arising from the terrorist-related aircraft crashes of September 11.

Airlines typically recognize responsibility to victims on the ground. See, e.g., Rehm, 196 F. Supp. at 428; Cove Neck, 885 F. Supp. at 439-40. As counsel for the Aviation Defendants stated in argument,

Assuming negligence and assuming there is damage to houses on the ground that is the type of traditional ground damage negligent maintenance cases in which the courts have imposed duty . . .; [W]e would concede in those circumstances assuming the facts of liability are proven there is a legal duty.
(Tr. of May 1, 2003 at 8.) However, counsel did not concede duty in relation to those killed and injured on the ground in the September 11, 2001 aircraft crashes. The "potential for a limitless liability to an indeterminate class of plaintiffs," he argued, made the instant cases distinguishable. Id. The distinction, in his opinion, is "no[t] [a] difference in kind," but "the law Page 10 of extraordinary consequences [which] can sometimes draw a distinction based on degree." Id. at 9-10. He explained:
We are in an area of policy and there are lines to be drawn that may occasionally seem arbitrary. But what really distinguishes our case from [the hypothetical example of an airplane crash into Shea Stadium while taking off from, or landing at, La Guardia airport] is the intentional intervening acts of the third party terrorists.*fn7
Id. As defense counsel commented, "we are in an area of policy," where "the existence and scope of a tortfeasor's duty is . . .; a legal question for the courts," 532 Madison Ave. Gourmet Foods, Inc. v. Finlandia Center, Inc., 750 N.E.2d 1097, 1101 (N.Y. 2001) (Kaye, Ch. J.).

It is the court's job to "fix the duty point by balancing factors," including the following:

the reasonable expectations of parties and society generally, the proliferation of claims, the likelihood of unlimited or insurer-like liability, disproportionate risk and reparation allocation, and public policies affecting the expansion or limitation of new channels of liability.
Id. (citation omitted). 532 Madison Avenue involved collapses of a high-rise office building and a 48-story construction elevator tower, both in midtown Manhattan and both causing busy areas of the city to be closed for a two-week period. The lawsuits sought recovery of financial losses resulting from the closures; plaintiffs had not suffered personal injury or property damage. Applying the considerations set out above, the Court of Appeals limited the scope of defendants' duty "to those who have, as a result of these events, suffered personal injury or property damage," but held that those who suffered merely financial losses could not recover. Id. at 1103. The Court of Appeals acknowledged that "[p]olicy-driven line-drawing is to an extent arbitrary Page 11 because, wherever the line is drawn, invariably it cuts off liability to persons who foreseeably might be plaintiffs." Id. If those who suffered financial losses were to be allowed to sue, the Court of Appeals held, "an indeterminate group in the affected areas" would be able to recover. Id. If, however, the field of plaintiffs was to be limited to those who "suffered personal injury or property damage" as a result of defendants' negligence, the limitation would "afford[] a principled basis for reasonably apportioning liability," and be "historically" consistent with New York precedents. Id.

The cases before me involve claims to recover for personal injuries, death, or property damage. They fall within the line drawn by the New York Court of Appeals in 532 Madison Avenue. There may be more plaintiffs within the ambit of duty at issue here than those contemplated under the rule set forth in 532 Madison Avenue, but that is not a principled basis of distinction. I therefore hold that the Aviation Defendants owed a duty of care, not only to their passengers to whom they concede they owed this duty, but also to victims on the ground.

In terms of the 532 Madison Avenue analysis, plaintiffs are favored by the first of the factors set out above, for plaintiffs and society generally could have reasonably expected that the screening performed at airports by the Aviation Defendants would be for the protection of people on the ground as well as for those in airplanes. Ours is a complicated and specialized society. We depend on others charged with special duties to protect the quality of the water we drink and the air we breathe, to bring power to our neighborhoods, and to enable us to travel with a sense of security over bridges, through tunnels and via subways. We live in the vicinity of busy airports, and we work in tall office towers, depending on others to protect us from the willful desire of terrorists to do us harm. Some of those on whom we depend for protection are the police, fire and intelligence departments of local, state and national governments. Others are Page 12 private companies, like the Aviation Defendants. They perform their screening duties, not only for those boarding airplanes, but also for society generally. It is both their expectation, and ours, that the duty of screening was performed for the benefit of passengers and those on the ground, including those present in the Twin Towers on the morning of September 11, 2001.

Nothing that I hold or say should be considered as any form of ruling on the reasonableness of the Aviation Defendants' conduct. Nor should it be construed as a finding on whether their conduct was the proximate cause of plaintiffs' damages, or whether that of the terrorists' constituted an intervening act breaking the chain of causation. I simply hold that the Aviation Defendants, and plaintiffs and society generally, could reasonably have expected that the screening methods at Logan, Newark, and Dulles airports were for the protection of people on the ground as well as for those on board the airplanes that the terrorists hijacked.

The second factor to consider is "the proliferation of claims." 532 Madison Ave., 750 N.E.2d at 1101. Proliferation, however, should not be mistaken for size of number. As long as the claimants are known and circumscribed by those "who have, as a result of these events, suffered personal injury or property damage," there is not an impermissible proliferation. See id. at 1103. See also In re Air Crash Disaster at Cove Neck, 885 F. Supp. 434, 439-440 (E.D.N.Y. 1995) (allowing claims of emotional injury only for those who also suffered physical injury).

Plaintiffs, the ground victims in the cases before me, complain of directly-caused physical injuries to their persons or property. Their number may be large,*fn8 tragically large, and the potential liability may be substantial if negligence and cause is proven, but the class is not indefinite and claims at this point cannot proliferate. Furthermore, the defendants will be liable Page 13 only if plaintiffs sustain their burden of proof, with the aggregate liability of the air carriers, aircraft manufacturers, airport sponsors, and persons with a property interest in the World Trade Center capped by federal statute to the limits of their liability insurance coverage. Act § 408(a)(1). Thus, "the likelihood of unlimited or insurer-like liability," the third factor of 532 Madison Avenue, does not weigh heavily against a finding of duty.

The fourth factor of 532 Madison Avenue is "disproportionate risk and reparation allocation." This inquiry probes who was best able to protect against the risks at issue and weighs the costs and efficacy of imposing such a duty. The airlines, and the airport security companies, could best screen those boarding, and bringing objects onto, airplanes. The same activities reasonably necessary to safeguard passengers and crew are those that would protect the public as well. Hijacking presents a substantial elevation of risks, not only to those aboard the hijacked airplane, but also to those on the ground. This case is thus distinguishable from other cases where courts did not find a duty to protect against third-party conduct. In Waters v. New York City Housing Authority, the court held that the owner of a housing project did not owe a duty to a passerby when she was dragged off the street into the building and assaulted. 505 N.E.2d 922 (N.Y. 1987). Imposing such a duty on landowners would do little to minimize crime, and the social benefits to be gained did not warrant the extension of the landowner's duty. See id. at 924. Similarly, in Hamilton, 750 N.E.2d at 1062, the court held that gun manufacturers did not owe a duty to victims of gun violence for negligent marketing and distribution of firearms. The connection between the manufacturers, criminal wrongdoers, and victims was too remote, running through many links in a long chain, from manufacturer, distributor or wholesaler, retailer, legal purchasers, unlawful possessors, and finally to the victims of gun violence. The court stated: Page 14

To impose a general duty of care upon the makers of firearms under these circumstances because of their purported ability to control marketing and distribution of their products would conflict with the principle that any judicial recognition of a duty of care must be based upon an assessment of its efficacy in promoting a social benefit as against its costs and burdens. Here, imposing such a general duty of care would create not only an indeterminate class of plaintiffs but also an indeterminate class of defendants whose liability might have little relationship to the benefits of controlling illegal guns.
Id. at 1063. Unlike Hamilton and Waters, the Aviation Defendants could best control the boarding of airplanes, and were in the best position to provide reasonable protection against hijackings and the dangers they presented, not only to the crew and passengers, but also to ground victims. Imposing a duty on the Aviation Defendants best allocates the risks to ground victims posed by inadequate screening, given the Aviations Defendants' existing and admitted duty to screen passengers and items carried aboard.

Lastly, recognition of a duty on the part of the Aviation Defendants would not substantially expand or create "new channels of liability," the fifth and last factor of 532 Madison Avenue. New York courts have found on other occasions that aircraft owners and operators owe a duty to those on the ground who may be harmed or sustain property damage resulting from improper or negligent operation of an aircraft. See, e.g., Hassanein v. Avianca Airlines, 872 F. Supp. 1183, 1188-90 (E.D.N.Y. 1995) (denying defendant's motion for summary judgment where plane crash could have caused a handrail in plaintiff's house to loosen, causing her fall down the stairs); Rehm v. United States, 196 F. Supp. 428, 430-31 (E.D.N.Y. 1961) (awarding damages where car occupants were hit by a plane which crashed after engine failure); Schneider v. United States, 188 F. Supp. 911, 915 (E.D.N.Y. 1960) (same). Cf. In re Air Crash Disaster at Cove Neck, 885 F. Supp. 434, 439-440 (E.D.N.Y. 1995) (ground victims of plane crash could only sustain claim if they suffered personal injury or property damage). Page 15

Although these cases involved injuries resulting from negligent operation or maintenance of airplanes, rather than negligence in regulating the boarding of airplanes, there is no principled distinction between the modes of negligence. The same general principle governs, that air carriers owe a duty to people on the ground as well as to passengers and crew.

The Second Circuit has recognized that airlines have a duty not only to passengers on the flights they operate, but also to passengers on connecting flights, and thus may be liable when they allow terrorists to board planes. In Stanford v. Kuwait Airways Corp., 89 F.3d 117 (2d Cir. 1996), the airline failed adequately to screen passengers against terrorists. The hijacking occurred, not on the airplane initially boarded, but on the connecting flight. The Second Circuit, relying on general tort principles including New York law, upheld the air carrier's duty of care as to the passengers on the connecting flight. Id. at 125. Clearly, the duty of care extends to cover those embraced by the risk of the terrorists' conduct.

Accordingly, I hold on the pleadings that the Aviation Defendants owed a duty of care to the ...


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