Citigroup Wins Dismissal of 9/11 Suit

August 7, 2012

On behalf of Citigroup, Cleary Gottlieb successfully defeated claims brought by Con Edison and the Port Authority of New York and New Jersey for damages stemming from the collapse of 7 World Trade Center on September 11, 2001.

Con Edison asserted a negligence claim against Citigroup, a tenant in 7 World Trade Center, alleging that Citigroup’s diesel generator system leaked and contributed to the fire that caused 7 World Trade Center to collapse on September 11, damaging the Con Edison substation located beneath the building and knocking out power to Lower Manhattan. Con Edison also sued the Port Authority (the sole regulatory authority for the space and landowner) and Silverstein Properties (the landlord and builder). After over five years of discovery, Citigroup moved for summary judgment against Con Edison based on the theory that (1) Citigroup as a tenant did not owe any duty to Con Edison, and (2) Con Edison failed to establish any proximate cause between its damages on September 11th and Citigroup’s actions, especially in light of the unforeseeable, intervening acts of terrorists. Finding that the events of September 11 were “too improbable to be consistent with any duty” toward Con Edison, Judge Hellerstein granted Citigroup’s motion.

Port Authority also asserted contractual indemnification claims based upon agreements governing Citigroup’s modifications to its rental space, which Port Authority alleged required Citigroup to indemnify Port Authority for claims brought by Con Edison against Port Authority relating to Citigroup’s diesel generator system. Judge Hellerstein granted Citigroup’s motion for summary judgment, finding that Con Edison’s claims against Port Authority were not covered by the indemnification agreements between Citigroup and Port Authority. On August 7, the Second Circuit affirmed that decision, resolving all pending litigation against Citigroup arising out the collapse of 7 World Trade Center on September 11.