SDNY Applies Palsgraf to Deny Recovery to Con Edison in 9/11-Related Litigation

The SDNY recently held, in In re September 11 Litigation, 04-cv-7272 (Sept. 23, 2011), that the absence of duty doomed Con Edison’s negligence suit against various defendants arising from the destruction of its power station following the collapse of 7 World Trade Center on September 11, 2011.  Specifically, Con Edison sued the builder and developer of the tower, the corporate nominee of Larry Silverstein, 7 World Trade Company, L.P., and the successor-in-interest to the building’s primary tenant.  Con Edison claimed that Defendants’ negligence proximately caused Con Edison’s loss.

Judge Hellerstein disagreed, holding that Con Edison’s claims could not “overcome the improbability of a long chain of events, one acting upon another”.  This “chain” – which began with the terrorists boarding the planes and culminated with the building’s collapse (and which was spelled out by the court) – “was much too improbable to be consistent with any duty”.

The issue before the court was “not so much whether a general duty exists, but whether that duty should encompass the long chain of events on September 11, 2001, that eventuated in the destruction of the Con Edison substation.”

In resolving this issue against the plaintiff, the court applied the reasoning of the Court of Appeals’ 1928 decision in Palsgraf v. Long Island R.R. Co., 248 N.Y. 339, 343 (N.Y. 1928).  The facts of, and legal rule emerging from, the Palsgraf case are well-known to every first-year (American) law student:  A man was attempting to catch a train while carrying a package of fireworks; he was pushed (allegedly negligently) on to his train by train guards, causing him to drop his package, which detonated when it hit the ground, which in turn knocked over a set of scales at the other end of the platform, injuring Ms. Palsgraf.  Judge Cardozo, writing for the Court of Appeals, dismissed plaintiff’s case, ruling that the negligence, if any, did not proceed from a duty owed to the plaintiff, as the train guards could not reasonably foresee that their actions would cause an injury to the plaintiff.  Judge Cardozo held that “[t]he risk reasonably to be perceived defines the duty to be obeyed, and risk imports relation; it is risk to another or to others within the range of apprehension.”

The court then proceeded to apply Judge Cardozo’s rationale in Palsgraf to the facts of this case:

It was not within 7WTCo.’s, or Citigroup’s, “range of apprehension” that terrorists would slip through airport security, hijack an airplane, crash it suicidally into the one of the two tallest skyscrapers in New York City, set off falling debris that would ignite a building several hundred feet away, cause structural damage to it, destroy water mains causing an internal sprinkler system to become inoperable, kill 343 firemen, and paralyze the rest so that a fire within a building would not be put out and the building would be allowed to burn an entire day before it consumed itself and collapsed.

“The risk reasonably to be perceived” by 7WTCo. and Citigroup, and their “duty to be obeyed,” … did not encompass the strange, improbable, and attenuated chain of events that led to 7 World Trade Center’s collapse and the crushing of Con Edison’s substation. Nothing in common experience or history could give rise to a reasonably foreseeable risk relating to the chain of events flowing from the terrorists and their hijackings to the destruction of the Con Edison substation. New York imposes on courts the duty to “limit the consequences of wrongs to a controllable degree and to protect against crushing exposure to liability.” … To permit a duty to exist under the present circumstances would subject the developer of 7 World Trade Center, and a tenant, to uncontrolled and unforeseeable liability. The risks being litigated were not within the zone of reasonable foreseeability, and so extending duty here would create impermissibly broad liability, … and would offend New York policy[.]

Additionally, the acts of the September 11 terrorists that gave rise to the chain of events leading to the destruction of Con Edison’s substation were criminal acts unprecedented in their scope and effect. Thus, in Maheshwari v. City of New York, 2 N.Y.3d 288 (N.Y. 2004), the Court of Appeals held that a landlord, or controller of premises, had no duty to protect invitees from unprecedented criminal acts of others. There, the plaintiff, a Krishna, attended the concert held on land owned by the City for the purpose of handing out flyers about Krishna Consciousness, and was randomly assaulted by four concertgoers. The plaintiff sued, alleging that the defendants had been negligent for failing to provide a reasonable level of security. The Court of Appeals held as a matter of law that the scope of the defendants’ duty did not extend to the violent act committed against the plaintiff.  … The Court of Appeals noted that past crimes committed at the concert were “of a lesser degree than criminal assault, and would not lead defendants to predict that such an attack would occur or could be prevented.” …

Con Edison argues that had 7 World Trade Center not been built in violation of various industry norms and building codes, such as those of the ANSI, it would not have collapsed, even from the damage it suffered on September 11. But failure to comply with statutory or regulatory enactments is, at best, evidence of negligence; it does not define duty.  … As the New York Court of Appeals explained, compliance, or lack thereof, is some evidence of negligence—negligence not in the abstract, but in derogation of a defined duty. … Perhaps, as Con Edison argues, 7 World Trade Center might have remained standing had it been built differently, but this does not mean that a duty was breached.  [Defendants] could not have reasonably perceived the chain of events that led to the destruction of the Con Edison substation … and had no duty to Con Edison capable of giving rise to a finding of liability.

Accordingly, the court granted summary judgment to defendants.

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