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WASHINGTON, DC. — (Mealey’s) The U.S. Supreme Court on Dec. 1 rejected a petition challenging the Second Circuit U.S. Court of Appeals’ finding that defendants in a Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) lawsuit can raise an “act of war” defense against claims seeking reimbursement for cleanup costs of toxic dust caused by the Sept. 11, 2001, attacks on the World Trade Center (WTC) (Cedar & Washington Associates, LLC v. The Port Authority of New York and New Jersey, et al., 14-239, U.S. Sup.).
After the terrorist attacks, Cedar & Washington Associates LLC decided to renovate its 12-story office building and convert it to a 19-story hotel. During the renovation and conversion process, the New York Department of Environmental Conservation and U.S. Environmental Protection Agency informed Cedar & Washington that portions of its building may contain "WTC Dust," which consists of finely ground substances, including asbestos, silicon, benzene, lead and mercury. The agencies informed Cedar & Washington that to continue with renovations, the company would have to remediate the dust.
In 2008, Cedar & Washington filed the underlying lawsuit, seeking to recover cleanup costs from the Port Authority of New York, as well as the lessees of the WTC buildings and the companies that owned and operated the aircraft that crashed into the buildings. U.S. Judge Alvin Hellerstein of the Southern District of New York dismissed Cedar & Washington's lawsuit on grounds that its CERCLA claim was untimely and that the company failed to allege a release or disposal of hazardous substances.
‘Act Of War’
Cedar & Washington appealed to the Second Circuit. The panel declined to review the ruling until Judge Hellerstein decided whether the defendants could raise CERCLA's act-of-war defense.
"Cedar & Washington's CERCLA claims invite the application of CERCLA to a unique and unforeseen factual circumstance," the panel said. "Their resolution may involve thorny questions of statutory interpretation. We are reluctant to resolve such questions absent consideration of a threshold question: whether the attack on the World Trade Center on September 11 was an 'act of war' within the meaning of CERCLA's affirmative defense."
On remand, Judge Hellerstein found that the attack constituted an "act of war" for purposes of CERCLA's affirmative defense and, as a result, that the defendants were entitled to judgment on the pleadings.
Cedar & Washington again appealed to the Second Circuit, which affirmed the District Court's ruling on May 2, 2014.
"Although CERCLA's strict liability scheme casts a wide net, an 'act of war' defense avoids ensnarement of persons who bear no responsibility for the release of harmful substances. The attacks come within this defense. As the 'act of war' defense shows, CERCLA was not intended to create liability for the dispersal of debris and wreckage from a catastrophe that was indistinguishable from military attack in purpose, scale, means, and effect. Both the President and Congress responded to the September 11 attacks by labeling them acts of war, and this classification warrants notice, and perhaps some deference, in the CERCLA context. The decisive point is that the attacks directly and immediately caused the release, and were the 'sole cause' of the release because the attacks 'overwhelm[ed] and swamp[ed] the contributions of the defendant[s],'" the panel said, citing In re September 11 Litigation (931 F. Supp. 2d 496, 512 [S.D. N.Y. 2013] [enhanced opinion available to lexis.com subscribers]).
Chief Judge Dennis Jacobs and Judges Jose A. Cabranes and Debra Ann Livingston comprised the panel in both appeals.
On Aug. 27, Cedar & Washington filed a petition for a writ of certiorari in the U.S. Supreme Court.
The high court denied the petition.
Robert D. Fox of Manko Gold Katcher & Fox in Bala Cynwyd, Pa., represents Cedar & Washington.
Peter L. Winik of Latham & Watkins in Washington represents the respondents.
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