     10-2970-cv(L)
     In re: Sept. 11 Prop. Damage Litig.


1                            UNITED STATES COURT OF APPEALS
2                                FOR THE SECOND CIRCUIT
3
4                                            August Term 2010
5
6
7                (Argued: March 10, 2011                     Decided: April 8, 2011)
8
9           Docket Nos. 10-2970-cv(L), 10-3128-cv(CON), 10-3131-cv(CON),
10      10-3133-cv(CON), 10-3135-cv(CON), 10-3136-cv(CON), 10-3137-cv(CON),
11      10-3139-cv(CON), 10-3140-cv(CON), 10-3141-cv(CON), 10-3143-cv(CON),
12      10-3144-cv(CON), 10-3145-cv(CON), 10-3148-cv(CON), 10-3153-cv(CON),
13      10-3157-cv(CON), 10-3159-cv(CON), 10-3178-cv(CON), 10-3180-cv(CON)
14
15                              _____________________________________
16
17                                       IN RE: SEPTEMBER 11
18                                  PROPERTY DAMAGE LITIGATION
19                              _____________________________________
20
21      WORLD TRADE CENTER PROPERTIES LLC; 1 WORLD TRADE CENTER LLC; 2
22     WORLD TRADE CENTER LLC; 3 WORLD TRADE CENTER LLC; 4 WORLD TRADE
23                 CENTER LLC; 7 WORLD TRADE COMPANY, L.P.,
24
25                                         Intervenors-Appellants,
26
27                                                   -v.-
28
29   CERTAIN UNDERWRITERS AT LLOYD’S OF LONDON COMPRISING SYNDICATES NO.
30     33, 1003, 2003, 1208, 1243, 0376; GREAT LAKES REINSURANCE (UK), PLC;
31     UNDERWRITER AT LLOYD’S, SYNDICATE NO. 1225; MUNICH-AMERICAN RISK
32    PARTNERS 7244 GMBH; GREATER NEW YORK MUTUAL INSURANCE COMPANY;
33    INSURANCE COMPANY OF GREATER NEW YORK; MUNICH REINSURANCE COM-
34        PANY UK GENERAL BRANCH; MUENCHENER RUECKVERSICHERUNES-
35   GESELLSCHAFT; WOBURN INSURANCE, LTD.; GREAT LAKES REINSURANCE U.K.
36     PLC; AMERICAN ALTERNATIVE INSURANCE CORPORATION; THE PRINCETON
37      EXCESS & SURPLUS LINES INSURANCE COMPANY; MUNICH REINSURANCE
38     AMERICA, INC., FORMERLY KNOWN AS AMERICAN RE-INSURANCE COMPANY;
39   COLISEE RE, FORMERLY KNOWN AS AXA RE AND SUCCESSOR TO THE INTERESTS
1       AND LIABILITIES OF SPS REASSURANCE; COLISEE RE CANADIAN BRANCH,
2      FORMERLY KNOWN AS AXA RE CANADIAN BRANCH AND FORMERLY KNOWN AS
3      AXA CORPORATE SOLUTIONS REASSURANCE CANADIAN BRANCH; COLISEE RE
4     MADEIRA BRANCH, FORMERLY KNOWN AS AXA RE MADEIRA BRANCH; PORTMAN
5     INSURANCE LIMITED, FORMERLY KNOWN AS AXA GLOBAL RISKS (UK) LTD. AND
6     SUCCESSOR TO THE INTERESTS AND LIABILITIES OF AXA REINSURANCE UK PLC;
7         AXA CORPORATE SOLUTIONS ASSURANCE UK BRANCH; AXA INSURANCE
8         COMPANY, FORMERLY AXA CS INSURANCE CO.; COLISEUM REINSURANCE
9    COMPANY, FORMERLY AXA CS REINSURANCE CO. US; AXA VERSICHERUNG AG;
10       AXA CESSIONS; AXA CORPORATE SOLUTIONS SERVICES UK LTD. AND AXA
11        CORPORATE SOLUTIONS ASSURANCE, FOR ITSELF AND SUCCESSOR TO THE
12        INTERESTS AND LIABILITIES OF AXA CORPORATE SOLUTIONS ASSURANCE
13        CANADIAN BRANCH; AXA ART INSURANCE CORPORATION; PARIS RE ASIA
14   PACIFIC PTE. LTD., FORMERLY KNOWN AS AXA RE ASIA PACIFIC PTE. LTD.; PARIS
15     RE, SUCCESSOR TO THE INTERESTS AND LIABILITIES OF COMPAGNIE GENERALE
16       DE REASSURANCE DE MONTE CARLO; INDUSTRIAL RISK INSURERS AND ITS
17   MEMBERS; AEGIS INSURANCE SERVICES, INC.; LIBERTY INSURANCE UNDERWRIT-
18     ERS, INC.; NATIONAL UNION INSURANCE COMPANY OF PITTSBURGH; NUCLEAR
19   ELECTRIC INSURANCE LIMITED; CERTAIN UNDERWRITERS AT LLOYD’S COMPRIS-
20   ING SYNDICATES NO. 1225 AND 1511; CONSOLIDATED EDISON COMPANY OF NEW
21   YORK, INC.; QBE INTERNATIONAL INSURANCE LTD.; CERTAIN UNDERWRITERS AT
22   LLOYD’S LONDON, AS MEMBERS OF SYNDICATES NUMBERED 1212, 1241, 79, 506,
23   AND 2791; ASSURANCES GENERALES DE FRANCE IART; ASSURANCES GENERALES
24     DE FRANCE; ALLIANZ GLOBAL RISKS US INSURANCE COMPANY F/K/A ALLIANZ
25      INSURANCE COMPANY; ALLIANZ INSURANCE COMPANY OF CANADA; ALLIANZ
26          SUISSE VERSICHERUNGS-GESELLSCHAFT; ALLIANZ VERSICHERUNGS-
27       AKTIENGESELLSCHAFT; FIREMAN’S FUND INSURANCE COMPANY; MAYORE
28     ESTATES, LLC; 80 LAFAYETTE ASSOCIATES, LLC; BARCLEY DWYER CO., INC.;
29    KAROON CAPITAL MANAGEMENT, INC.; N.S. WINDOWS LLC; TOWER COMPUTER
30    SERVICES, INC.; WALL STREET REALTY CAPITAL, INC.; WORLD TRADE FARMERS
31    MARKET, INC.; ADEM ARICI; OMER IPEK; MVN ASSOCIATES, INC.; MARSHA VAN
32                     NAME; DANIEL D’AQUILA; FLOYD VAN NAME,
33
34                              Plaintiffs-Appellees,
35
36    AMERICAN AIRLINES, INC.; AMR CORPORATION; UNITED AIR LINES, INC.; UAL
37   CORPORATION; US AIRWAYS, INC.; US AIRWAYS GROUP, INC.; COLGAN AIR, INC.;
38   GLOBE AVIATION SERVICES CORPORATION; GLOBE AIRPORT SECURITY SERVICES,
39   INC.; HUNTLEIGH USA CORPORATION; ICTS INTERNATIONAL N.V.; THE BOEING
40    COMPANY; MASSACHUSETTS PORT AUTHORITY; BURNS INTERNATIONAL SECU-

                                          2
1     RITY SERVICES COMPANY, LLC, FORMERLY KNOWN AS BURNS INTERNATIONAL
2      SECURITY SERVICES CORPORATION; BURNS INTERNATIONAL SERVICES COM-
3     PANY, LLC, FORMERLY KNOWN AS BURNS INTERNATIONAL SERVICES CORPORA-
4           TION; PINKERTON’S LLC, FORMERLY KNOWN AS PINKERTON’S INC.;
5                                     SECURITAS AB,
6
7                                  Defendants-Appellees.
8
9                        _____________________________________
10
11   Before:     B.D. PARKER, LIVINGSTON, and LYNCH, Circuit Judges.

12         Intervenors-Appellants World Trade Center Properties LLC, 1 World

13   Trade Center LLC, 2 World Trade Center LLC, 3 World Trade Center LLC, 4

14   World Trade Center LLC, and 7 World Trade Company, L.P. (collectively “WTCP

15   Plaintiffs”) appeal from a final Order of the United States District Court for the

16   Southern District of New York (Alvin K. Hellerstein, District Judge) granting

17   Plaintiffs-Appellees’ (collectively “Settling Plaintiffs”) and Defendants-Appellees’

18   (collectively “Aviation Defendants”) joint motion for orders approving their

19   Settlement Agreement and Mutual Release of Claims. We hold that the Air

20   Transportation Safety and System Stabilization Act of 2001 (“ATSSSA”), Pub.

21   L. No. 107-42, 115 Stat. 230 (2001) (codified as amended at 49 U.S.C. § 40101,

22   note), does not preempt New York State’s “first-come, first-served” settlement

23   rule, and that the proposed settlement payments reduce each contributing

24   Aviation Defendants’ remaining liability pursuant to the liability limits defined

25   in ATSSSA. We also conclude that the district court did not abuse its discretion


                                              3
1    in finding that the Settling Plaintiffs and Aviation Defendants entered into their

2    settlement agreement in good faith. Accordingly, we affirm the district court’s

3    approval of the settlement.

4          AFFIRMED.
5
6                                    CATHI HESSION (Richard Williamson, on the
7                                    brief), Flemming Zulack Williamson Zauderer
8                                    LLP, New York, New York, for Intervenors-
9                                    Appellants.
10
11                                   GREGORY P. JOSEPH (Douglas J. Pepe, on the
12                                   brief), Gregory P. Joseph Law Offices LLC, New
13                                   York, New York, for Plaintiffs-Appellees.
14
15                                   ROGER E. PODESTA, Debevoise and Plimpton LLP;
16                                   Desmond T. Barry, Jr., Condon & Forsyth LLP,
17                                   New York, New York, for Defendants-Appellees.
18
19
20   DEBRA ANN LIVINGSTON, Circuit Judge:

21         Intervenors-Appellants World Trade Center Properties LLC, 1 World

22   Trade Center LLC, 2 World Trade Center LLC, 3 World Trade Center LLC, 4

23   World Trade Center LLC, and 7 World Trade Company, L.P. (collectively “WTCP

24   Plaintiffs”) appeal from a final Order of the United States District Court for the

25   Southern District of New York (Alvin K. Hellerstein, District Judge) granting

26   Plaintiffs-Appellees’ (collectively “Settling Plaintiffs”) and Defendants-Appellees’

27   (collectively “Aviation Defendants”) joint motion for orders approving their

28   Settlement Agreement and Mutual Release of Claims, dated February 23, 2010.


                                              4
1    The district court also ordered all amounts paid pursuant to the settlement

2    agreement to be credited to the contributing Aviation Defendants’ respective

3    liability ceilings under § 408(a)(1) of the Air Transportation Safety and System

4    Stabilization Act of 2001 (“ATSSSA”), Pub. L. No. 107-42, 115 Stat. 230 (2001)

5    (codified as amended at 49 U.S.C. § 40101, note).         It further found that

6    Defendant-Appellee Huntleigh USA Corp.’s (“Huntleigh”) insurers will exhaust

7    the limits of Huntleigh’s liability insurance coverage by making payments

8    pursuant to the settlement agreement.

9          The WTCP Plaintiffs argue that the district court’s application of New

10   York state settlement rules was contrary to, and thus preempted by, ATSSSA.

11   They also contend that the court failed to make a proper evaluation of the

12   fairness of the settlement agreement, and that the court erred in crediting the

13   proposed settlement payments to the contributing Aviation Defendants’

14   respective liability limits under ATSSSA. We hold that ATSSSA does not

15   preempt New York State’s “first-come, first-served” settlement rule, and that the

16   proposed settlement payments pursuant to the settlement agreement properly

17   reduce the contributing Aviation Defendants’ remaining liability under

18   ATSSSA’s liability limits. We further conclude that the district court did not

19   abuse its discretion in finding that the Settling Plaintiffs and Aviation

20   Defendants entered into their settlement in good faith.


                                             5
1                                    BACKGROUND

2          This case concerns the multitude of property damage claims that arose

3    from the terrorist attacks of September 11, 2001, when American Airlines Flight

4    11 and United Air Lines Flight 175 struck Towers One and Two of the World

5    Trade Center.     Defendant-Appellee Globe Airport Security Services, Inc.

6    (“Globe”) provided security services for Defendant-Appellee American Airlines,

7    Inc. (“American”) and screened the passengers aboard Flight 11. Huntleigh

8    provided similar services for Defendant-Appellee United Air Lines, Inc.

9    (“United”), and screened the passengers aboard Flight 175.

10         Among the several groups of plaintiffs that filed suit against the Aviation

11   Defendants, the Settling Plaintiffs alleged subrogated and uninsured property

12   damage and business interruption claims.         The WTCP Plaintiffs similarly

13   asserted claims, alleging, inter alia, that, but for the negligence of the Aviation

14   Defendants, the terrorists would not have boarded Flights 11 and 175, and the

15   WTCP Plaintiffs’ property would not have been destroyed. After a lengthy

16   period of discovery, the Settling Plaintiffs and Aviation Defendants entered into

17   a mediation process in which retired U.S. District Judge John S. Martin, Jr.,

18   served as mediator. The WTCP Plaintiffs, however, did not participate after

19   Judge Martin concluded that their position was so far apart from that of the

20   Aviation Defendants that mediation efforts would be unproductive.


                                              6
1          Towards the end of the mediation proceedings between the Settling

2    Plaintiffs and the Aviation Defendants, which lasted two full weeks, Judge

3    Martin concluded that the two sides remained far apart.         He proposed a

4    “mediator’s number” of $1.2 billion to settle all claims. The proposed amount,

5    which Judge Martin believed to represent a reasonable settlement of all of the

6    Settling Plaintiffs’ claims, reflected a 72 percent discount from the Settling

7    Plaintiffs’ total claimed damages of $4.4 billion, and was higher than the last

8    settlement offer by the Aviation Defendants. Both sides accepted Judge Martin’s

9    number and, on February 23, 2010, entered into their Settlement Agreement

10   and Mutual Release of Claims.

11         The settlement resolves 18 of the 21 property damage actions comprising

12   the master calendar for September 11 property damage claims, 21 MC 101.1

13   Under the terms of the agreement, four of the Aviation Defendants are to pay

14   the entire settlement amount of $1.2 billion. American and Globe will pay 60

15   percent of the settlement, for damages attributed to Flight 11, while United and

16   Huntleigh will pay the remaining 40 percent, for damages attributed to Flight

17   175. Because Huntleigh had a small amount of insurance relative to the other


           1
             Due to the great number of September 11 related lawsuits, the district
     court consolidated these cases under four master case numbers, which separated
     the cases by subject matter. In re Sept. 11 Litig., 567 F. Supp. 2d 611, 614 n.3
     (S.D.N.Y. 2008). 21 MC 101 encompassed wrongful death, personal injury and
     property damage lawsuits resulting from the terrorist attacks. Id.
                                            7
1    contributing Aviation Defendants, the agreement further provides that

2    Huntleigh will contribute, and thereby exhaust, its available insurance coverage.

3    In exchange, each Settling Plaintiff is to execute and deliver releases discharging

4    and releasing all Aviation Defendants, as well as the contributing Aviation

5    Defendants’ insurers, from all claims relating to or arising out of the September

6    11 attacks. The agreement is expressly conditioned, in relevant part, upon the

7    district court’s: 1) approving both the settlement and the allocation of payments

8    between the contributing Aviation Defendants as consistent with ATSSSA; 2)

9    concluding that all amounts paid pursuant to the settlement agreement are to

10   be credited against the contributing Aviation Defendants’ respective ATSSSA

11   liability limits; and 3) finding that Huntleigh exhausted its liability limits under

12   ATSSSA.

13         In an Opinion and Order dated July 1, 2010, the district court approved

14   the settlement agreement and ordered all amounts paid pursuant to the

15   settlement agreement to be credited against the liability ceilings of the

16   contributing Aviation Defendants. The court also concluded that payment by

17   Huntleigh’s insurers exhausted the limits of Huntleigh’s liability insurance

18   coverage. On July 23, 2010, the district court issued an order clarifying that its

19   Opinion and Order was final and appealable in each of the settled actions and

20   in the collective 21 MC 101 action. It also granted intervenor status in each of


                                              8
1    the settled actions to the WTCP Plaintiffs. The court directed entry of final

2    judgment pursuant to Fed. R. Civ. P. 54(b). Judgment was entered in the

3    collective 21 MC 101 action on July 23, 2010, and in each of the settled actions

4    on July 29, 2010. The WTCP Plaintiffs timely appealed from the collective

5    action on July 30, 2010, and from each settled action on August 9, 2010.

6


7                                     DISCUSSION

8          On appeal, the WTCP Plaintiffs contend that the district court erred in

9    three respects.   First, the WTCP Plaintiffs argue that the district court’s

10   approval of the settlement pursuant to New York state law was contrary to

11   ATSSSA. Second, they argue that the district court failed to make a proper

12   evaluation of the settlement agreement and its fairness. Third, they contend

13   that the district court erred in crediting the settlement payments to the Aviation

14   Defendants’ ATSSSA liability limits because such payments were not based on

15   these defendants’ “liability.”

16         “Typically, settlement rests solely in the discretion of the parties, and the

17   judicial system plays no role.” In re Masters Mates & Pilots Pension Plan &

18   IRAP Litig., 957 F.2d 1020, 1025 (2d Cir. 1992); see also Fed. R. Civ. P.

19   41(a)(1)(A) (“[T]he plaintiff may dismiss an action without a court order by

20   filing . . . a stipulation of dismissal signed by all parties who have appeared.”).


                                              9
1    In some circumstances, however, “parties are unwilling to drop litigation unless

2    a court invokes its equitable powers to enforce their agreement.” In re Masters,

3    957 F.2d at 1025; see also Manual for Complex Litigation (Fourth) § 13.14

4    (2004).   We generally review a district court’s approval of a settlement

5    agreement for abuse of discretion. See Neilson v. Colgate-Palmolive Co., 199

6    F.3d 642, 654 (2d Cir. 1999). We review a district court’s factual conclusions

7    under the “clearly erroneous” standard, and its legal conclusions de novo. See

8    Omega Eng’g, Inc. v. Omega, S.A., 432 F.3d 437, 443 (2d Cir. 2005).

9


10   I.    Whether the District Court Properly Applied State Law to
11         Approve the Settlement Agreement
12
13         As the district court noted, under New York State law, an insurer has

14   discretion to settle whenever and with whomever it chooses, provided it does not

15   act in bad faith. See Allstate Ins. Co. v. Russell, 788 N.Y.S.2d 401, 402 (N.Y.

16   App. Div. 2d Dep’t 2004). This “‘first in time, first in right’ principle” applies

17   regardless of “whether the priority is by way of judgment or by way of settle-

18   ment.” David v. Bauman, 196 N.Y.S.2d 746, 748 (N.Y. Sup. Ct. 1960). The

19   WTCP Plaintiffs argue that the district court’s application of this “first-come,

20   first-served” settlement rule was contrary to, and therefore preempted by,

21   ATSSSA for two primary reasons. First, they contend that ATSSSA’s liability



                                             10
1    limits created a “limited fund,” from which they are entitled to a just and fair

2    distribution. Second, they argue that pursuant to ATSSSA’s provisions and its

3    overall statutory scheme, they are entitled to adequate compensation notwith-

4    standing the statute’s liability limitations. Relying on our prior decision in

5    Canada Life Assurance Co. v. Converium Rückversicherung (Deutschland) AG,

6    335 F.3d 52 (2d Cir. 2003), they assert that they are one of “those injured or

7    killed in the terrorist attacks,” to whom ATSSSA “ensur[ed] . . . adequate

8    compensation.” Id. at 55. The WTCP Plaintiffs’ contentions lack merit.

9          Section 408(b)(2) of ATSSSA provides that the substantive law for decision

10   in actions arising out of the September 11 terrorist attacks “shall be derived

11   from the law . . . of the State in which the crash occurred unless such law is

12   inconsistent with or preempted by Federal law.” ATSSSA § 408(b)(2). In

13   construing various provisions of ATSSSA, we have recognized that federal law

14   preempts state law pursuant to the Supremacy Clause, U.S. Const. art. VI, cl.

15   2, where, inter alia: 1) Congress preempts state law in express terms (and within

16   its constitutional limits); 2) state law “actually conflicts” with federal law; or 3)

17   state law “stands as an obstacle to the accomplishment and execution of the full

18   purposes and objectives of Congress.” In re WTC Disaster Site, 414 F.3d 352,

19   371-72 (2d Cir. 2005) (quoting Hillsborough Cnty. v. Automated Med. Labs., Inc.,

20   471 U.S. 707, 713 (1985)). If, as here, a statute contains an express preemption


                                              11
1    clause, “‘the task of statutory construction must in the first instance focus on the

2    plain wording of the clause, which necessarily contains the best evidence of

3    Congress’ pre-emptive intent.’”      Id. at 372 (quoting CSX Transp., Inc. v.

4    Easterwood, 507 U.S. 658, 664 (1993)).

5          A. Whether ATSSSA’s Liability Limits Create a “Limited Fund”

6          The WTCP Plaintiffs’ claim that ATSSSA created a “limited fund,”

7    preempting New York’s “first-come, first-served” settlement rule, is without

8    merit. In a section entitled “Limitation on liability,” ATSSSA specifies that

9    liability “for all claims, whether for compensatory or punitive damages or for

10   contribution or indemnity,” against the Aviation Defendants “shall not be in an

11   amount greater than the limits of liability insurance coverage maintained by”

12   the Aviation Defendants. ATSSSA § 408(a)(1). We have repeatedly made clear

13   that this provision – far from creating a fund for the payment of claims – instead

14   “caps tort liability stemming from the attacks at ‘the limits of the liability

15   insurance coverage maintained by the [Aviation Defendants].’” Schneider v.

16   Feinberg, 345 F.3d 135, 139 (2d Cir. 2003) (per curiam) (quoting ATSSSA

17   § 408(a)); see also In re WTC Disaster Site, 414 F.3d at 373 (noting that a

18   “principal component[ ]” of ATSSSA was “the limitation of the airlines’ liability

19   for damages sustained as a result of those crashes” (emphasis added)); Canada

20   Life, 335 F.3d at 55 (noting that § 408(a) “limits the liability for the events of


                                              12
1    September 11” of the Aviation Defendants). A primary purpose of ATSSSA, as

2    we have noted, was to “preserve the continued viability of the United States air

3    transportation system from potentially ruinous tort liability in the wake of the

4    attacks.” Schneider, 345 F.3d at 139 (internal quotation marks omitted); see also

5    In re WTC Disaster Site, 414 F.3d at 377 (observing that a “principal goal[ ]” was

6    “to limit the liability of entities that were likely to be sued for injuries suffered

7    in connection with the crashes”); Canada Life, 335 F.3d at 55 (finding that a

8    “general purpose” of ATSSSA was “to protect the airline industry and other

9    potentially liable entities from financially fatal liabilities”).

10         Nothing in ATSSSA’s text suggests that Congress intended to create a

11   “limited fund” from which plaintiffs bringing a federal cause of action under

12   ATSSSA against the Aviation Defendants are entitled to an equitable share. To

13   the contrary, various provisions of the statute concern the administration of, and

14   eligibility regarding, a Victim Compensation Fund for individuals willing to

15   waive such a cause of action pursuant to § 408(b). See ATSSSA §§ 404-06. And

16   Congress provided explicitly for the treatment of certain other claims involving

17   other defendants, specifying, for instance, the funds from which debris removal

18   claims were to be paid, and the manner in which settlements or judgments were

19   to be treated. See ATSSSA § 408(a)(5) (“Payments to plaintiffs who obtain a

20   settlement or judgment with respect to a claim or action to which paragraph (4)


                                               13
1    [(debris removal actions)] applies, shall be paid solely from the following funds

2    in the following order.”). Had Congress intended to create a “limited fund” for

3    those plaintiffs pursuing an ATSSSA cause of action against the Aviation

4    Defendants, and to constrain the manner in which settlements could be made,

5    it would have done so in far more explicit terms.

6          B.    Whether ATSSSA’s Purpose and Statutory Scheme Preempt New
7                York’s “First-Come, First-Served” Settlement Rule
8
9          The WTCP Plaintiffs next contend that this Court in Canada Life

10   concluded that Congress intended to ensure that ATSSSA’s liability limit

11   preserved the ability of any claimant to recover a damages award, requiring,

12   here, the preemption of New York’s “first-come, first served” settlement rule. We

13   disagree. Canada Life discussed Congress’s decision to require a single forum

14   for all actions, and found that the goal of requiring a single forum was to “ensure

15   consistency and efficiency in resolving the many expected actions arising from

16   the events of September 11.” 335 F.3d at 58. We acknowledged that Congress

17   sought to avoid the undesirable effects of litigation in multiple state and federal

18   fora, and noted that such effects “might include adjudications having a

19   preclusive effect on non-parties or substantially impairing or impeding non-

20   parties’ abilities to protect their rights.” Id. at 59 (emphasis added). This

21   discussion in Canada Life, however, referred solely to the purposes of ATSSSA’s



                                             14
1    exclusive venue provision. We never suggested there that ATSSSA pursued the

2    goal of avoiding preclusive effects by any means other than requiring an

3    exclusive forum. Canada Life therefore does not support the WTCP Plaintiffs’

4    argument.

5          We conclude that New York’s “first-come, first-served” rule, as applied by

6    the district court, is neither inconsistent with ATSSSA, nor does it stand as an

7    obstacle to the accomplishment of Congress’s objectives in enacting ATSSSA.

8    Moreover, because neither ATSSSA nor other federal law controls the approval

9    of settlements in actions commenced under § 408(b)(1), state law settlement

10   rules apply to this case. See id. § 408(b)(2). The district court therefore properly

11   applied state law settlement rules to the settlement agreement.

12


13   II.   Whether the District Court Failed to Make a Proper Evaluation of
14         the Settlement
15
16         The WTCP Plaintiffs next argue that the district court failed to make a

17   proper evaluation of the settlement and its relative fairness. Under New York

18   law, an insurer “has no duty to pay out claims ratably and/or consolidate them,”

19   so long as it does not act in bad faith. Allstate Ins. Co., 788 N.Y.S.2d at 402

20   (citing Duprey v. Sec. Mut. Cas. Co., 256 N.Y.S.2d 987, 989 (N.Y. App. Div. 3d

21   Dep’t 1965)). An insurer may therefore “settle with less than all of the claimants



                                              15
1    under a particular policy even if such settlement exhausts the policy proceeds.”

2    STV Grp., Inc. v. Am. Cont’l Props., Inc., 650 N.Y.S.2d 204, 205 (N.Y. App. Div.

3    1st Dep’t 1996). Such settlements are not “voluntary” or “additional insurance,”

4    but rather “reduc[e] the liability remaining under the policy.” Duprey, 256

5    N.Y.S.2d at 989. This has long been the rule across several jurisdictions.2 See

6    70 A.L.R.2d 416 § 2a (2008); 46A C.J.S. Insurance § 2318 (2010).

7          The WTCP Plaintiffs have presented no evidence of the bad faith

8    necessary to draw into question the settlement in this case.3 The settling

9    parties’ mediator, Judge Martin, attested that the settling parties “hotly

10   contested each other’s claims both as to legal liability and damages,” and that

11   they made detailed presentations on their differing positions. Decl. of John S.

12   Martin, Jr. ¶ 7. He has affirmed that there was no indication during the

13   mediation process that any of the parties softened its position on a proper

14   settlement for interests other than its own. Id. ¶ 8. Judge Martin has also


           2
             E.g., Travelers Indem. Co. v. Citgo Petroleum Corp., 166 F.3d 761, 764-65
     (5th Cir. 1999); Hartford Cas. Ins. Co. v. Dodd, 416 F. Supp. 1216, 1219 (D. Md.
     1976); Allstate Ins. Co. v. Evans, 409 S.E.2d 273, 274 (Ga. App. 1991); Alford v.
     Textile Ins. Co., 103 S.E.2d 8, 13 (N.C. 1958); Bennett v. Conrady, 180 Kan. 485,
     491 (1957).
           3
             Although they argued below that the settlement was the result of secrecy
     and collusion, the WTCP Plaintiffs have not raised this argument on appeal. It
     is therefore waived. See Norton v. Sam’s Club, 145 F.3d 114, 117 (2d Cir. 1998)
     (“Issues not sufficiently argued in the briefs are considered waived and normally
     will not be addressed on appeal.”).
                                            16
1    stated that the settlement agreement was reached “only after extensive arms-

2    length and good-faith negotiations among the parties and was not intended to

3    prejudice the rights of any other party.” Id. ¶ 10. In addition, the $1.2 billion

4    settlement amount was proposed by Judge Martin, represented a 72 percent

5    discount from the Settling Plaintiffs’ total claimed damages of $4.4 billion, and

6    was higher than the last settlement offer by the Aviation Defendants.

7          The WTCP Plaintiffs argue that the settlement is improper because it is

8    a lump sum applicable to all of the Settling Plaintiffs’ claims, and is not based

9    on a claim-by-claim assessment of potential liability. Judge Martin explained,

10   however, that while the parties did spend a “substantial” amount of time

11   discussing damages on a claim-by-claim basis, none of these issues could be

12   resolved by the time mediation began. Id. ¶ 12. The settling parties decided

13   that the assessment of damages on an underlying claim-by-claim and defendant-

14   by-defendant basis “could not have been done in any reasonable amount of time

15   and without substantial cost.”      Id.        Instead, both parties independently

16   concluded that damages should be allocated approximately 60 percent to Flight

17   11, and 40 percent to Flight 175. The 60/40 allocation resulted from each

18   settling party deeming Flight 11 responsible for the destruction of Tower Seven

19   – an assessment of responsibility that the WTCP Plaintiffs themselves assert in

20   their complaint.


                                               17
1          The WTCP Plaintiffs also contend that the settlement is improper because

2    it releases all Aviation Defendants from liability when only four of them are

3    responsible for paying the settlement amount. However, the settling parties

4    articulated their reasons for limiting the settlement contributors to four of the

5    Aviation Defendants. The Aviation Defendants believed that adding other

6    defendants and insurers would increase plaintiffs’ settlement demands and

7    further complicate negotiations without reducing payment by the contributing

8    Aviation Defendants’ insurers. Further, they believed that the claims against

9    the other Aviation Defendants were weaker than those against the two airlines

10   and their checkpoint security companies. The Aviation Defendants were also

11   concerned about setting an undesirable precedent for future disasters if non-

12   carrier airlines (which might in the future include American and United)

13   contributed to the settlement. In addition, the Aviation Defendants contributing

14   to the settlement did not want to face potential indemnification claims by other

15   Aviation Defendants not released. Finally, the contributing Aviation Defen-

16   dants’ insurers sought to avoid the costs of continued discovery of their four

17   insureds if the other Aviation Defendants were not released.

18         In sum, we agree with the district court that the settling parties entered

19   into their settlement agreement in good faith. We therefore conclude that the

20   district court did not abuse its discretion in approving the settlement agreement.


                                             18
1    III.   Whether the Proposed Settlement Payments Count Towards the
2           Aviation Defendants’ Liability Limits
3
4           The WTCP Plaintiffs finally argue that the district court erred in crediting

5    the settlement payments against the contributing Aviation Defendants’

6    respective liability limits. They contend that ATSSSA’s limitation only applies

7    to payments for “liability,” and that the settlement payments here should not

8    count because they were not determined on the basis of the Aviation Defendants’

9    liability. We are not persuaded.

10          When interpreting a statute, we must give terms their ordinary, common

11   meaning and read them in their appropriate context. See Bilski v. Kappos, 130

12   S. Ct. 3218, 3226 (2010) (“[I]n all statutory construction, unless otherwise

13   defined, words will be interpreted as taking their ordinary, contemporary,

14   common meaning.” (internal quotation marks and alteration omitted)); see also

15   Torraco v. Port Auth. of N.Y. & N.J., 615 F.3d 129, 142 (2d Cir. 2010) (“In the

16   usual case, if the words of a statute are unambiguous, judicial inquiry should

17   end, and the law is interpreted according to the plain meaning of its words.”

18   (internal quotation marks omitted)). The “meaning of a word [or phrase] cannot

19   be determined in isolation, but must be drawn from the context in which it is

20   used.” Strom v. Goldman, Sachs & Co., 202 F.3d 138, 146 (2d Cir. 1999)

21   (quoting Deal v. United States, 508 U.S. 129, 132 (1993)).



                                             19
1          ATSSSA states in relevant part, “liability for all claims . . . shall not be in

2    an amount greater than the limits of liability insurance coverage maintained by

3    [an Aviation Defendant].” ATSSSA § 408(a)(1) (emphasis added). “Liability,”

4    meanwhile, is defined as either: 1) “[t]he quality or state of being legally

5    obligated or accountable”; or 2) “[a] financial or pecuniary obligation.” Black’s

6    Law Dictionary 997 (9th ed. 2009). Here, reading the term in context, it is clear

7    that “liability” refers to a “financial or pecuniary obligation” that can arise

8    through the settlement of claims. This reading of “liability” in § 408(a)(1)

9    accords with the common understanding of “liability insurance,” which

10   commonly provides for an insured’s claim to arise “once the insured’s [legal

11   obligation] to a third party has been asserted.” Black’s Law Dictionary 873 (9th

12   ed. 2009) (emphasis added); see also 15 Holmes’ Appleman on Insurance § 111.1

13   (2d ed. 2000) (“[L]iability insurance protects the insured against damages which

14   he may be liable to pay to third parties arising out of the insured’s conduct.”

15   (emphasis added)). Settlements, in turn, “reduc[e] the liability remaining under

16   the policy.” Duprey, 256 N.Y.S.2d at 989 (emphasis added).

17         This reading also coheres with other provisions of ATSSSA Title IV –

18   namely § 408(a)(4), which uses similar language to limit the “liability” of certain

19   defendants for debris removal claims. While paragraph (4) specifies the limits

20   of “liability” for such entities, paragraph (5) specifies a priority of payments for


                                              20
1    plaintiffs who obtain “a settlement or judgment” with respect to “a claim or action

2    to which paragraph (4) applies.” ATSSSA § 408(a)(5) (emphasis added). If

3    “liability,” as used in § 408(a)(4), referred only to payments for legally

4    adjudicated obligations, paragraph (5) would be rendered meaningless, and the

5    word “settlement” reduced to surplusage, since there could be no

6    “settlement . . . to which paragraph (4) applies” under the WTCP Plaintiffs’

7    reading. It thus makes better sense to read “liability” to include the settlement

8    payments made here. The district court therefore did not abuse its discretion or

9    commit an error of law in crediting the settlement payments against the

10   contributing Aviation Defendants’ limits of liability.

11


12                                   CONCLUSION

13         We have considered the parties’ remaining arguments and find them to be

14   moot or without merit. For the foregoing reasons, the judgment of the district

15   court is AFFIRMED.




                                             21
