All four men were convicted in 2014 and sentenced the following year.
The U.S. Court of Appeals for the District of Columbia Circuit ordered a new trial after tossing out the murder conviction of former security contractor Nicholas Slatten. It overturned one of Liberty's convictions for attempted manslaughter.
The machine-gun charge was always contentious, even inside the Justice Department, where some prosecutors believed it was unfair to add an extra penalty for using a weapon that the United States government required them to carry.
The appeals court ruled that he never should have been prosecuted in the same trial as his colleagues, one of whom said he - and not Mr. Slatten - fired the first shots. Lawyers for the defendants could not immediately be reached.
Police say former Giants TE had 25 pounds of pot in vehicle
A search of his truck revealed large bags of marijuana, a metal grinder, digital scale, a vacuum sealer, and a vacuum sealer bag. He spent several hours in the Union County Jail after being unable to post the $15,000 bail but was eventually bailed out.
The 2007 massacre took place at a Baghdad traffic circle, where the four guards opened fire on unarmed Iraqi civilians, including women and children, killing 14 people and leaving 17 others wounded.
The September 16, 2007, incident stood out even in a city in a grip of a deadly sectarian war and prompted debate over the role of private security contractors working for the United States government in war zones. Shortly before the violence, a heavily armed, four-truck Blackwater Worldwide convoy the men were in had been trying to clear a path for US diplomats. Slatten had been sentenced to life in prison.
The justice department's case against Slatten, "hinged on his having fired the first shots, his animosity toward the Iraqis having led him to target the white Kia unprovoked", the court said in the unsigned ruling.
The private military company Blackwater, founded in 1997, was later sold and rebranded as Academi.