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Cranbury Brick Yard, LLC v. United States

United States Court of Appeals, Third Circuit

November 22, 2019


          Argued September 10, 2019

          On Appeal from the United States District Court for the District of New Jersey (D.C. No. 3-15-cv-02789) District Judge: Honorable Brian R. Martinotti

          John McGahren [ARGUED] Stephanie R. Feingold Counsel for Appellant

          Jeffrey Bossert Clark Allen M. Brabender Avi Kupfer [ARGUED] United States Department of Justice

          Heather E. Gange United States Department of Justice Counsel for Appellees

          Before: HARDIMAN, GREENAWAY, JR., and BIBAS, Circuit Judges.



         Cleaning up pollution is both essential and expensive. But polluters often frustrate cleanups, blaming one another to shift their fair share of the costs. The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) tries to fix this problem by forcing them all to pay: A government or person who incurs cleanup costs can sue a site's polluters to recover those costs in a "cost recovery" action. If the plaintiff prevails, the polluters are held strictly as well as jointly and severally liable. Then, the polluters can ask a court to split the bill among them equitably in a "contribution" action.

         If a polluter first settles its liability with the government, CERCLA immunizes that polluter from contribution liability to other polluters. But this immunity comes with a cost: a polluter who has settled with the government may bring a contribution claim against other polluters, but not a cost-recovery claim.

         Appellant Cranbury Brick Yard, LLC, brings both cost-recovery and contribution claims against the federal government. It seeks to recover money that it spent cleaning up a long-abandoned weapons-manufacturing facility that the U.S. military and others contaminated. But Cranbury Brick Yard settled its potential CERCLA liability with the State of New Jersey before the cleanup. That gave it immunity from contribution claims, which extinguishes its cost-recovery claim. This left only its contribution claim against the federal government. But that claim is untimely because Cranbury Brick Yard sued nine years after joining the settlement. So we will affirm.

         I. CERCLA, Briefly Explained

         CERCLA is "notorious for its lack of clarity and poor draftsmanship." Lansford-Coaldale Joint Water Auth. v. Tonolli Corp., 4 F.3d 1209, 1221 (3d Cir. 1993); accord Giovanni v. U.S. Dep't of the Navy, 906 F.3d 94, 117 (3d Cir. 2018) ("CERCLA is not the Mona Lisa of statutes."). Still, its broad contours are easy enough to grasp.

         CERCLA gives private litigants two causes of action: cost recovery under section 107(a) and contribution under section 113(f)(1). 42 U.S.C. §§ 9607(a), 9613(f)(1). The two are distinct, but they "complement each other" by applying" 'to persons in different procedural circumstances.'" United States v. Atl. Research Corp., 551 U.S. 128, 139 (2007) (quoting Consol. Edison Co. of N.Y. v. UGI Utils., Inc., 423 F.3d 90, 99 (2d Cir. 2005)); see Cooper Indus., Inc. v. Aviall Servs., Inc., 543 U.S. 157, 163 n.3 (2004). We discuss each in turn.

         A. Cost recovery

         Anyone who cleans up a brownfield may sue the site's polluters to recover "any . . . necessary costs of response." 42 U.S.C. § 9607(a)(4)(B). If a cost-recovery suit succeeds, the defendants are strictly as well as jointly and severally liable. Pa. Dep't of Envtl. Prot. v. Trainer Custom Chem., LLC, 906 F.3d 85, 89-90 (3d Cir. 2018). For "remedial action[s]" (that is, "those actions consistent with permanent remedy"), the statute of limitations for a cost-recovery action is six years from when the cleanup begins. 42 U.S.C. §§ 9601(24), 9613(g)(2)(B).

         Four kinds of "potentially responsible part[ies]" may be liable for cost recovery, including the site's current owner and anyone who owned the site "at the time of disposal of any hazardous substance." Id. § 9607(a)(1)-(2); 40 C.F.R. § 304.12(m). But an owner is immune from liability if it bought the site as a "bona fide prospective purchaser." 42 U.S.C. §§ 9601(40), 9607(r)(1). To qualify, the owner must show (among other things) that "[a]ll disposal of hazardous substances . . . occurred before [it] acquired the facility." Id. § 9601(40)(B)(i).

         B. Contribution

         If a polluter is or may be liable under CERCLA or has settled its liability with a state or the federal government, it may sue other polluters for "contribution." Id. § 9613(f)(1), (3)(B). Contribution is a "tortfeasor's right to collect from others responsible for the same tort after the tortfeasor has paid more than his or her proportionate share, [with] the shares being determined as a percentage of fault." Atl. Research, 551 U.S. at 138 (quoting Contribution, Black's Law Dictionary 353 (8th ed. 2004)). So a contribution action lets a court "allocate response costs among liable parties using . . . equitable factors." 42 U.S.C. § 9613(f)(1).

         C. Resolving the overlap

         Cost recovery and contribution are "similar and somewhat overlapping remed[ies]." Key Tronic Corp. v. United States, 511 U.S. 809, 816 (1994). That overlap became an issue after the Supreme Court's decision in Atlantic Research, which held that polluters could bring both kinds of claims against one another. 551 U.S. at 141. Since then, we and our sister circuits have clarified the relationship between the two kinds of claims.

         1. The price of contribution-claim immunity.

         A polluter who settles its CERCLA liability with the federal government or a state government enjoys immunity under § 9613(f)(2) from contribution claims. In Agere Systems, we held that if a polluter is immune from contribution claims, it cannot bring cost-recovery claims. Agere Sys., Inc. v. Advanced Envtl. Tech. Corp., 602 F.3d 204, 229 (3d Cir. 2010). Instead, it can bring only contribution claims. Id.

         Six other circuits have reached this issue. All agree. See Whittaker Corp. v. United States, 825 F.3d 1002, 1007 & n.4 (9th Cir. 2016); Hobart Corp. v. Waste Mgmt. of Ohio, Inc., 758 F.3d 757, 768 (6th Cir. 2014); Bernstein v. Bankert, 733 F.3d 190, 202 (7th Cir. 2013); Solutia, Inc. v. McWane, Inc., 672 F.3d 1230, 1236-37 (11th Cir. 2012) (per curiam); Morrison Enters. v. Dravo Corp., 638 F.3d 594, 603 (8th Cir. 2011); Niagara Mohawk Power Corp. v. Chevron U.S.A., Inc., 596 F.3d 112, 127-28 (2d Cir. 2010).

         2. Why the Agere Systems rule is necessary.

         An example may help show (a) the normal interplay between cost-recovery and contribution claims, (b) why contribution-claim immunity under § 9613(f)(2) encourages CERCLA settlements, and (c) how the Agere Systems rule helps apportion cleanup costs equitably by keeping polluters from using their immunity as both sword and shield.

         Imagine a cleanup of comic proportions: Years ago, Wayne Enterprises and LexCorp ran a chemical factory together. After it shut its doors, the site remained contaminated with hazardous substances. Now, Gotham City owns the vacant, polluted brownfield. Responding to mounting public pressure, the City spends $1 billion cleaning up the site. Then it sues both companies for cost recovery.

         In a typical CERCLA lawsuit, this is how cost-recovery and contribution claims would interact: because cost-recovery actions impose joint-and-several liability, both companies would theoretically be on the hook for 100% of the billion-dollar liability. Trainer Custom, 906 F.3d at 90. While joint-and-several liability helps compensate fully those who clean up pollution, it sometimes leads to inequitable results. Fortunately, CERCLA has an answer: the two companies could cross-claim for contribution and ask the court to split the bill between them in proportion to their percentages of fault. See Atl. Research, 551 U.S. at 139-40 (citing 42 U.S.C. § 9613(f)(1)).

         But litigation is costly and time consuming. So CERCLA encourages polluters to settle with the government to get cleanups started sooner. Contribution-claim immunity under § 9613(f)(2) promotes those efficient settlements. Imagine instead that the Environmental Protection Agency starts an enforcement action, claiming that LexCorp is responsible for $400 million of the cleanup costs at the Gotham chemical factory. LexCorp's lawyers negotiate down and settle for just $100 million. Afterwards, Wayne Enterprises cannot bring a contribution action and ask the court to allot more than $100 million in cleanup costs to LexCorp. If it could, it would undermine the finality of CERCLA settlements and thus discourage them. Cf. Atl. Research, 551 U.S. at 141 (noting that "settlement carries the inherent benefit of finally resolving liability"). Instead, contribution-claim immunity under § 9613(f)(2) protects settlements like LexCorp's.

         Without the Agere Systems rule, however, settling polluters could wield this immunity offensively to escape liability. If LexCorp settles with the government for $100 million and then sues Wayne Enterprises for cost recovery, LexCorp could impose 100% of its liability on Wayne Enterprises through joint-and-several liability. Agere Sys., 602 F.3d at 228. Worse still, because LexCorp has § 9613(f)(2) immunity, Wayne Enterprises could not counterclaim for contribution to apportion costs equitably. So LexCorp could recoup its $100 million in settlement costs even though it is "actually responsible for, and ha[s] stipulated that [it is] responsible for, a significant portion of the contamination." Id. at 228.

         So if a polluter like LexCorp who is immune from contribution claims could bring a cost-recovery action, it could use that immunity to" 'eschew equitable apportionment, '" impose "the harshness of joint and several liability" against other polluters, and shift its own liability in the process. Id. at 228-29 (quoting Atl. Research, 551 U.S. at 138). To avoid this "perverse result," we held in Agere Systems that a polluter who has contribution-claim immunity under § 9613(f)(2) cannot bring a cost-recovery claim. Id. Instead, it can bring only a contribution claim. Id. at 229.

         II. Factual Background

         A. From ...

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