New York v. Solvent Chemical Co., Inc. ( 2011 )

10-2026-cv
State of New York v. Solvent Chemical Co. et al.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
1 At a stated term of the United States Court of Appeals
2 for the Second Circuit, held at the Daniel Patrick Moynihan
3 United States Courthouse, 500 Pearl Street, in the City of
4 New York, on the 19th day of December, two thousand eleven.
5
6 PRESENT: DENNIS JACOBS,
7 Chief Judge,
8 PETER W. HALL,
9 GERARD E. LYNCH,
10 Circuit Judges.
11
12 - - - - - - - - - - - - - - - - - - - -X
13 STATE OF NEW YORK,
14 Plaintiff,
15
16 -v.- 10-2026-cv(L)
17 10-2166-cv(XAP)
18 SOLVENT CHEMICAL COMPANY, INC., 10-2383-cv(XAP)
19 Defendant-Third Party
20 Plaintiff-Appellant-Cross
21 Appellee,
22
23 ICC INDUSTRIES, INC.,
24 Defendant-Third Party
25 Plaintiff-Cross Appellee,
26
27 -v.-
28
1
1 OLIN CORPORATION,
2 Third Party Defendant-
3 Counterclaimant-Appellee-
4 Cross Appellant,
5
6 E.I. DU PONT DE NEMOURS & COMPANY,
7 Third Party Defendant-
8 Appellee-Cross Appellant.
9
10 - - - - - - - - - - - - - - - - - - - -X
11
12 FOR APPELLANT: Dennis P. Harkawik, Charles D.
13 Grieco, Brenda J. Joyce, Jaeckle
14 Fleischmann & Mugel, LLP,
15 Buffalo, New York, for Appellant
16 Solvent Chemical Company, Inc.
17
18 FOR CROSS APPELLEE: Irwin F. Roth, Law Office of
19 Irwin Roth, New York, New York,
20 Robert J. Basil, Collier &
21 Basil, P.C., New York, New York,
22 for Cross Appellee ICC
23 Industries, Inc.
24
25 FOR APPELLEES: Daniel M. Darragh, Cohen &
26 Grigsby, P.C., Pittsburgh,
27 Pennsylvania, for Appellee E.I.
28 du Pont de Nemours & Company.
29
30 JoAnn T. Sandifer, Michael H.
31 Wetmore, Joel B. Samson, Husch
32 Blackwell LLP, St. Louis,
33 Missouri, for Appellee Olin
34 Corporation.
35
36
37 Appeal from a judgment of the United States District
38 Court for the Western District of New York (Curtin, J.).
39
40 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
41 AND DECREED that the judgment of the district court be
42 AFFIRMED IN PART, VACATED IN PART, REVERSED IN PART, AND
43 REMANDED.
2
1 Both sides appeal from a judgment entered by the United
2 States District Court for the Western District of New York
3 (Curtin, J.), resolving protracted litigation about who
4 bears liability under the Comprehensive Environmental
5 Response and Compensation Act (“CERCLA”), 42 U.S.C. §§
6 9601-9675, for pollution at adjoining industrial sites. New
7 York v. Solvent Chemical Co., 685 F. Supp. 2d 357 (W.D.N.Y.
8 2010). In a separate opinion issued today in Docket No. 10-
9 2026-cv, we reverse the denial of Solvent’s request for a
10 declaratory judgment that the appellees are liable for
11 future contribution costs.
12
13 We assume the parties’ familiarity with the underlying
14 facts, procedural history, and issues presented for review,
15 and here set forth only the most salient aspects of the
16 case.
17
18 For some decades, three companies owned adjoining
19 facilities in the City of Niagara Falls, New York. E.I. du
20 Pont de Nemours & Co. (“DuPont”) owned and operated a
21 chemical facility on water near the Niagara River. Solvent
22 Chemical Company, Inc. (“Solvent”) and Olin Corporation
23 (“Olin”) owned and operated adjoining sites inland of
24 DuPont’s. The Olin property (which is known as the Olin Hot
25 Spot) is bounded by the Solvent property on one side and on
26 the other side by Gill Creek, which continues across the
27 DuPont site into the waterway. An 18-inch drainage pipe,
28 running under the Olin property, carried drainage from the
29 Solvent Site into Gill Creek. During World War II, DuPont
30 operated a chemical facility on what became the Solvent
31 Site.
32
33 In 1983, New York sued Solvent, its parent company, ICC
34 Industries, Inc. (“ICC”), and others for environmental
35 contamination at the Solvent Site (“Solvent I”). Three
36 years later, Solvent filed a third-party complaint against
37 DuPont, seeking contribution from DuPont for pollution
38 generated from DuPont’s operations on the Solvent Site
39 during World War II. New York added DuPont as a defendant
40 soon after. In 1996, the New York Department of
41 Environmental Conservation (“DEC”) issued a Record of
42 Decision (“ROD”) requiring Solvent to undertake remedial
43 action at both the Solvent Site and the Olin Hot Spot as a
44 result of chlorinated benzene contamination. Solvent
3
1 entered into a consent decree with New York obligating it to
2 perform the remedies specified in the ROD in settlement of
3 New York’s CERCLA claims. Solvent began construction of the
4 remedies in 1999 and continues to operate them today.
5
6 DuPont signed a consent decree with New York resolving
7 its liability for pollution at the Solvent Site stemming
8 from its own operations on the site during World War II.
9 The consent decree specifically excluded pollution
10 originating from the neighboring DuPont facility and
11 migrating to the Solvent Site or Olin Hot Spot.
12
13 In 1998, Solvent filed a fifth amended third-party
14 complaint adding Olin as a party and seeking contribution
15 for its response costs incurred under its consent decree
16 with New York. Olin counterclaimed against Solvent and
17 filed a fourth-party claim against ICC seeking to recover a
18 portion of response costs incurred while cleaning up Gill
19 Creek in the early 1990s.
20
21 In 2001, Solvent commenced a new suit against DuPont
22 asserting both cost recovery and contribution claims under
23 CERCLA for the costs incurred under its consent decree with
24 New York that resulted from migration of chlorinated
25 aliphatics from the adjoining DuPont facility onto the
26 Solvent Site and Olin Hot Spot (“Solvent II”).
27
28 Solvent I and Solvent II were consolidated and tried
29 without a jury over 19 days in late 2007. The district
30 court entered judgment on May 14, 2010, awarding Solvent
31 contribution from DuPont in the amount of $2,050,371 and
32 from Olin in the amount of $462,288 for costs incurred prior
33 a date in 2007 (chosen for administrative convenience). It
34 denied Solvent’s prayer for a declaratory judgment that
35 DuPont and Olin were liable for future cleanup costs. The
36 court also ordered Solvent to pay Olin $8,041 for the
37 cleanup of Gill Creek.
38
39 Solvent’s CERCLA Contribution Claim. The judgment
40 requires DuPont and Olin to contribute to the costs incurred
41 by Solvent in cleaning up the Solvent Site and the Olin Hot
42 Spot. We affirm. The Solvent obligation arose under its
43 consent decree with New York. Solvent is therefore entitled
44 to seek contribution from potentially responsible parties
4
1 (“PRPs”) under CERCLA’s contribution provision. See 42
2 U.S.C. § 9613(f)(3)(B) [CERCLA § 113(f)(3)(B)] (“A person
3 who has resolved its liability to the United States or a
4 State for some or all of a response action or for some or
5 all of the costs of such action in an administrative or
6 judicially approved settlement may seek contribution from
7 any person . . . .”).
8
9 DuPont argues that Solvent cannot obtain relief under
10 subsection 113(f)(3)(B) because Solvent’s complaint linked
11 the contribution claim to subsection 113(f)(1). Even if the
12 two subsections constitute separate causes of action for
13 contribution, it is the factual allegations that render a
14 federal complaint viable, not a recitation of statutes. See
15 Albert v. Carovano, 851 F.2d 561, 571 n.3 (2d Cir. 1988).
16 The filing of Solvent’s original complaint (Solvent II) put
17 DuPont on notice that Solvent was seeking contribution for
18 costs it was incurring to clean up the Solvent Site and Olin
19 Hot Spot pursuant to a consent decree with New York. This
20 suffices to state a claim for contribution under CERCLA.
21 Cf. Consol. Edison Co. of N.Y., Inc. v. UGI Utils., Inc.,
22 423 F.3d 90, 104 (2d Cir. 2005) (finding that party
23 adequately pled claim for cost recovery under section 107(a)
24 when it had erroneously cited section 113(f)(1) in its
25 complaint).1 We also find that DuPont failed to preserve
26 any statute of limitations defense that it had to Solvent’s
27 claim by failing to raise it until 2006.
28
29 The district court did not err in concluding that
30 Solvent sustained its burden of proof: (1) DuPont was a PRP
31 under section 107(a); (2) the DuPont plant is a facility
32 under section 101(9); (3) DuPont released hazardous
33 substances at the facility; (4) Solvent incurred some costs
34 in responding to the release; and (5) the costs incurred
35 conform to the National Contingency Plan. See Prisco v. A &
36 D Carting Corp., 168 F.3d 593, 602-03 (2d Cir. 1999).
37 DuPont argues that it cannot have common liability at the
38 DuPont Site or Hot Spot because it released chemicals at a
39 neighboring plant. Not so. See Niagara Mohawk Power Corp.
1
We do not express an opinion on whether Solvent may
proceed on its § 107(a) claim, as that claim is unnecessary
to Solvent’s recovery here.
5
1 v. Chevron U.S.A., Inc., 596 F.3d 112, 134-35 (2d Cir.
2 2010).
3
4 DuPont’s Divisibility Defense. DuPont argues that any
5 liability it might have for harm to the Solvent Site is
6 “divisible” from that of Solvent and Olin, and that it
7 should pay only the incremental cost caused by the presence
8 of chlorinated aliphatics at the Solvent Site and Olin Hot
9 Spot. Divisibility (or apportionment) is inapplicable to
10 contribution claims under section 113(f); it is a common law
11 doctrine that may be used to blunt the harshness of joint-
12 and-several liability under section 107(a). See Burlington
13 N. & Santa Fe Ry. Co. v. United States, 129 S. Ct. 1870,
14 1882 & n.9 (2009). “[A]pportionment looks to whether
15 defendants may avoid joint and several liability by
16 establishing a fixed amount of damage for which they are
17 liable, while contribution actions allow jointly and
18 severally liable PRPs to recover from each other on the
19 basis of equitable considerations.” Id. (internal quotation
20 marks and alterations omitted).
21
22 Exclusion of Testimony. An Olin employee, James Brown,
23 testified about remediation of Gill Creek undertaken from
24 1990 to 1992, what was cleaned up, and how much it cost.
25 The district court excluded his opinion testimony that
26 Solvent should be responsible for the cost of cleaning up
27 the full length of the creek (rather than just a small
28 portion) because such a cleanup would have been required on
29 account of Solvent’s chlorinated benzene alone. The
30 district court excluded this portion of Brown’s testimony
31 under Fed. R. Evid. 701(c), as testimony based on the
32 witness’s scientific, technical, or specialized knowledge
33 rather than observation.
34
35 We review evidentiary rulings for abuse of discretion.
36 General Elec. Co. v. Joiner, 522 U.S. 136, 139 (1997). We
37 see no such error in the district court’s conclusion that
38 Brown relied on his technical knowledge to (1) link
39 chlorinated benzene pollution throughout Gill Creek to
40 Solvent and (2) assess whether the chlorinated benzene
41 attributable to Solvent alone would have necessitated the
42 removal of sediment throughout the creek. In analyzing the
43 chemicals found in the stream and comparing them to state
44 cleanup standards, Brown no doubt relied on the expertise he
6
1 had developed in 27 years of working on environmental and
2 remediation projects. A witness’s application of
3 specialized knowledge to facts gleaned in an investigation
4 in order to render an opinion at trial is sufficient to run
5 afoul of Rule 701(c). See United States v. Garcia, 413 F.3d
6 201, 216-17 (2d Cir. 2005).
7
8 ICC’s Direct Liability Under § 107(a)(2). The district
9 court ruled that Solvent’s parent company, ICC, is not
10 liable for Solvent’s pollution of Gill Creek. Under CERCLA,
11 a parent company can be held liable for a subsidiary’s
12 environmental harms if it directly “operates” the facility
13 responsible for the harm. See United States v. Bestfoods,
14 524 U.S. 51, 64-65 (1998). In order for a parent to be
15 directly liable under CERCLA, it “must manage, direct, or
16 conduct operations specifically related to pollution, that
17 is, operations having to do with the leakage or disposal of
18 hazardous waste, or decisions about compliance with
19 environmental regulations.” Id. at 66-67. Of course, as
20 the Supreme Court has recognized, “the difficulty comes in
21 defining actions sufficient to constitute direct parental
22 ‘operation.’” Id. at 66.
23
24 Olin cites as evidence of control a series of Solvent
25 consultations with employees of another ICC subsidiary,
26 Dover Chemical. According to the president of Solvent (who
27 was also president of Dover), Dover employees were asked to
28 “look over the [Solvent] plant and give [Solvent]
29 suggestions” based on their expertise. Joint Appendix 229.
30 It cannot be said that by this consultation, ICC exercised
31 control over Solvent’s operations that resulted in
32 environmental harm and that was “eccentric under accepted
33 norms of parental oversight of a subsidiary's facility,”
34 such that it is subject to operator liability under CERCLA.
35 Bestfoods, 524 U.S. at 72.
36
37 Allocation. Dupont and Solvent challenge different
38 aspects of the district court’s allocation of past response
39 costs. We review a district court’s allocation of response
40 costs for abuse of discretion. Goodrich Corp. v. Town of
41 Middlebury, 311 F.3d 154, 168-69 (2d Cir. 2002). A district
42 court abuses its discretion where (1) its decision rests on
43 a legal error or clearly erroneous factual finding or (2)
7
1 its allocation cannot be located within the range of
2 permissible outcomes. Id. at 169.
3
4 As to the allocation of damages for the Solvent Site,
5 the district court adopted the framework proposed by a
6 Solvent expert, James Kohanek, which evaluated each party’s
7 share of the contamination addressed by each component of
8 the ROD. Using this framework, and relying on the findings
9 of other experts, Kohanek found that 68.39% of the
10 groundwater being remediated contained chlorinated
11 aliphatics and 31.61% contained chlorinated benzenes. He
12 attributed 98% of the aliphatics to DuPont, using a “tracer”
13 compound associated with its plant, and 2% to Solvent. He
14 attributed 98% of the benzene to Solvent and 2% to Olin. He
15 proposed allocating damages strictly along these volumetric
16 lines.
17
18 While adopting Kohanek’s framework, the court found
19 that Kohanek erred in failing to “account for the principal
20 negative environmental impact of the chlorinated benzenes
21 driving the groundwater remedy,” and “for significant
22 concentrations of chlorinated benzene DNAPL[2] found in the
23 soil covering approximately 60% of the Site as well as in
24 the bedrock fractures[.]” Solvent, 685 F. Supp. 2d at 451.
25 The court turned to the allocation proposed by DuPont’s
26 expert, Charles Faust, which used volumes from monitoring
27 wells--rather than pumping wells, as Kohanek did--and then
28 adjusted the volumes by the relative risk of harm each
29 contaminant posed to groundwater. The court averaged Faust
30 and Kohanek’s calculations to conclude that chlorinated
31 benzenes contributed 62.05% to the cost of cleanup and
32 chlorinated aliphatics 37.95%. It discounted DuPont’s share
33 of aliphatic contamination by 10% (giving that portion of
34 liability to Solvent) to account for “the principley
2
DNAPL, or dense nonaqueous phase liquid, is a
heavier-than-water substance that flows through soil and
into bedrock, where it comes to rest, cannot easily be
cleaned, and acts as a long-term source of groundwater
pollution. The DEC selected a long-term containment
strategy rather than a cleanup strategy because of the
presence of DNAPL that could not be cleaned up and would
continue to pollute the groundwater for years.
8
1 negative environmental impact” of chlorinated benzenes. Id.2 at 451. The court ultimately assigned Solvent 65.98% of the
3 cost, DuPont 33.39% of the cost, and Olin .63% of the cost.
4
5 DuPont argues that Kohanek’s proposed allocation of
6 costs overlooked relative toxicities of chlorinated benzene
7 and chlorinated aliphatics. However, the court’s allocation
8 recognizes that Kohanek’s proposed allocation did not
9 account for toxicity. It also recognized that Faust’s
10 allocation did account for toxicity, and it was therefore
11 part of the overall allocation. There was no abuse of
12 discretion.
13
14 As to the allocation of damages for the Olin Hot Spot,
15 the district court again relied on Kohanek’s framework in
16 allocating remediation costs. Kohanek testified that
17 chlorinated aliphatics constituted 93.52% of the
18 contamination in the Hot Spot groundwater, and chlorianted
19 benzenes constituted 6.48%. He allocated 100% of the
20 aliphatics to DuPont, which the parties do not contest on
21 appeal. He allocated 98% of the chlorinated benzene to Olin
22 and 2% to Solvent. He therefore proposed that DuPont bear
23 93.52% of the cost, Olin 6.35% (98% x 6.48%), and Solvent
24 0.13% (2% x 6.48%). The district court found the proposed
25 allocation inequitable, reasoning that:
26
27 [T]he undisputed proof at trial established that the
28 DEC’s integrated B-Zone remedy for the Solvent Site
29 included the installation and operations of pumping
30 wells on Olin’s property to achieve hydraulic control
31 at the Hot Spot, based on the determination that the
32 contaminants found in that area were similar to the
33 predominant site indicator chemicals driving the
34 remedy--i.e., chlorinated benzenes--which were likely
35 due in part to migration from the Solvent Site.
36
37 Solvent, 685 F. Supp. 2d at 452 (internal quotation marks
38 omitted). Citing the parties’ inability to “reach any
39 workable consensus as to the reasonable scientific
40 conclusions to be drawn from the vast amounts of data
41 generated at the Site,” the district court concluded that
42 DuPont should bear the same amount of liability for the Olin
43 Hot Spot as it did the Solvent Site (i.e., 33.39%), and that
44 Olin should bear the responsibility proposed by Solvent
9
1 (6.35%). Id. at 452-53. The court allocated the remaining
2 60.26% to Solvent. Id. at 453.
3
4 The district court failed to adequately articulate a
5 basis for its allocation. Solvent’s proposal that Olin bear
6 6.35% of the cleanup costs for the Olin Hot Spot was
7 premised on the view that 93.52% of the costs resulted from
8 contamination by chlorinated aliphatics, of which DuPont was
9 the sole producer. The district court’s rejection of this
10 view in favor of a finding that the remedy was driven
11 primarily by contamination from chlorinated benzenes--which
12 both Olin and Solvent produced--therefore removes the
13 foundation for the 6.35% figure. Moreover, the district
14 court should not, without further explanation, have borrowed
15 for its Hot Spot findings the same percentage of
16 responsibility it had allocated to DuPont for B-Zone
17 contamination at the Solvent Site. There was substantial
18 dispute about the nature and extent of contamination at the
19 Hot Spot, as well as about the similarity (or lack thereof)
20 between the contamination at the Hot Spot and at the Solvent
21 Site. Absent resolution of at least some of these issues,
22 the district court's use of its allocation at the Solvent
23 Site in allocating costs for the Hot Spot is not supported.
24 Although the district court was disserved by the “parties’
25 inability to reach any workable consensus as to the
26 reasonable scientific conclusions” to be drawn from the
27 evidence, id. at 452, the finding made nevertheless lacks
28 support.
29
30 For the foregoing reasons, we AFFIRM in part, VACATE
31 the district court’s allocation of response costs for the
32 Olin Hot Spot, REVERSE the district court’s judgment in
33 favor of Olin and DuPont on Solvent’s prayer for a
34 declaratory judgment for reasons stated in a separate
35 opinion issued today, and REMAND for the district court to
36 reallocate response for the Olin Hot Spot and to enter a
37 declaratory judgment in favor of Solvent not inconsistent
38 with this order.
39
40 FOR THE COURT:
41 CATHERINE O’HAGAN WOLFE, CLERK
42
43
10