Decisions regarding whether a suit is one for cost recovery, under
CERCLA §107, or one for contribution, under CERCLA §113, as the Seventh Circuit
recognized, “have not been notable for their clarity.” Rumpke of Indiana, Inc. v. Cummins Engine Co., Inc., 107 F.3d 1235,
1240 (7th Cir., 1997). This is
particular so for the Seventh Circuit’s own decision three years earlier in Akzo
Coatings, Inc. v. Aigner Corp.,
30 F.3d 761 (7th Cir., 1994). This blog entry will argue that Akzo was decided from a time period when
the Seventh Circuit did not view divisibility as negating joint and several
liability.
In Akzo, the plaintiff
performed a cleanup pursuant to a UAO and then brought suit against several
PRPs. Id. at 762. The plaintiff argued that its suit was one for cost recovery
rather than one for contribution because its share of the harm was divisible. Id. at 764-65. Presumable, the argument the claimant
was making in Akzo was the same one
as the court suggest suggested a PRP could make in United States v. Asarco, Inc., 814 F.Supp. 951, 956 n. 4 (D. Colo.,
1993): “if two parties are not jointly and severally liable because the harm is
divisible, one party could assert an independent cost recovery claim against
the other because there is no common liability and therefore no right of
contribution.” The Akzo Court said it did not matter
whether the plaintiff could prove its divisible share of the harm because “its
claim remains one by and between jointly and severally liable parties”, and
therefore, its claim “is a quintessential claim for contribution.” 30 F.3d
at 764-65.
By today’s understanding of divisibility this holding from Akzo is nonsensical. The United States Supreme Court in Burlington Northern & Santa Fe Ry. v.
United States, 129 S.Ct. 1870, 1880-81 (2009) made it undisputable that
where a party can prove its divisible share of the harm liability under CERLA §
107 is several only rather than joint and several. In other words, asking whether the harm is divisibility is
same thing as asking whether liability is joint and several. Reading Akzo’s holding with that understanding of divisibility is like
saying, “it does not matter if the plaintiff is jointly and severally liable
for the harm because the plaintiff is jointly and severally liable for the
harm.” However, Akzo was written over
a decade before Burlington Northern, and
examining other decisions of Seventh Circuit from that time period shows the
Seventh Circuit might not have had that understanding of divisibility.
Two years before Akzo,
the Seventh Circuit decided Environmental
Transportation Systems, Inc. v. Ensco, Inc., 969 F.2d 503 (7th Cir., 1992).
“CERCLA was originally enacted without any provision for contribution.” Id. at 507-508. In 1986, Congress Amended CERCLA by way
of the Superfund Amendments and Reauthorization Act (“SARA”) to explicitly
provide for a right to contribution. Cooper
Industries, Inc. v. Aviall Service, Inc., 543 U.S. 157, 162 (2004). The Ensco
Court was asked to “enumerate specific factors to be considered by courts
making an equitable determination to allocate cleanup costs in contribution.” 969 F.2d at 509. While considering the factors that courts should consider in
contribution, the Ensco Court examined
pre-SARA decisions that “discussed equitable factors that courts might look to
in order to ‘apportion’ CERCLA liability.” Id. at 507-08 (citing United
States v. Chem-Dyne Corp., 572 F.Supp. 802 (S.D. Ohio, 1983); United States v. A & F Materials Co.,
578 F.Supp. 1249 (S.D. Ill., 1984)).
The Ensco Court
indicated that both A & F Materials
and Chem-Dyne were cited in the
legislative history of SARA in its discussion of how the new contribution
provision would operate. Id. at 508. In 1980, Congressman Albert Gore
proposed an amendment to CERCLA, that did not pass, which proposed that courts
use six criteria, often referred to as the “Gore Factors”, to apportion damages
among liable parties instead of imposing joint and several liability. Id. The A & F
Materials Court found that “rigid application of the Restatement approach to
joint and several liability is inappropriate,” and that if a defendant cannot
prove its divisible share of the harm under the Restatement approach, then the court
has “the power to impose joint and several liability” or the court can chose to
apportion damages based on the Gore Factors. 578 F.Supp. at 1256. The Ensco Court cited A & F Materials for this position
that the Gore Factors could be “evaluated in order to determine whether or not
joint and several liability should be imposed.” 969 F.2d at 508. The Ensco Court noted, that
“[t]he Chem-Dyne decision… [also] refers to ‘apportionment’ in terms of
divisibility for the defendant seeking to avoid joint and several liability…” . Id.
This posed a dilemma. These decisions “focused on whether the court would or would
not impose joint and several liability under CERCLA, not what the equitable
share of persons jointly and severally liable to the government should be.” Id. The court described the task before it in Ensco as follows:
Our task in this case is
how to apply reasoning from cases whose joint and several liability rationale
is really very different from the context of a contribution action. There can
be no right to contribution unless there is joint and several liability, but
the cases cited in the legislative history are discussions of the equity of
applying joint and several liability in the first place.
Id. This statement begs the question: since SARA’s legislative history
discussed these cases in the context of the new contribution provisions, should
these doctrines—divisibility and use of the Gore Factors, which prior to SARA
were used to apportion liability—now be used only to allocate liability in a
contribution action among jointly and severally liable parties? The Ensco
court did just that with respect to the Gore Factors holding that the Gore
Factors do not negate joint and several liability. Id. at 508-09.
Thus, the Ensco court
adopted a post-SARA use for the Gore Factors that is very different from the
pre-SARA use of them—the Gore Factors are now understood to be used to allocate
liability among parties who are jointly and severally liable instead of being
used to determine whether or not to impose joint and several liability. Id. at 508-09 (The court states “[t]here can be no right to
contribution unless there is joint and several liability…”, and then adopts the
Gore Factors as criteria a court can consider in making a equitable allocation
in a contribution action); see also, Kerr-McGee Chemical Corp. v. Lefton Iron
& Metal Co., 14F.3d 321, 326 (7th Cir., 1994) (citing Ensco for the proposition that the Gore
Factors can be considered in a contribution action). Therefore, immediately after Ensco
it became a legitimate question in the Seventh Circuit whether liability would
ever be “apportioned” in cost recovery case? Or whether apportionment was
now synonymous with allocation in contribution? In other words, does divisibility negate joint and several liability?
These questions are especially apparent since one of these Gore Factors—“the abilitiy
of the parties to demonstrate that their contribution to a discharge, release
or disposal of a hazardous waste can be distinguished”—sounds a lot like a
divisibility analysis, and the Gore Factors do not negate joint and several
liability.
Less than a month before Akzo,
the Seventh Circuit did indicate that “apportionment” was now an analysis
preformed exclusively in a contribution action rather than in a cost recovery
action in Town of Munster v.
Sherwin-Williams Co. Inc., 27 F.3d 1268, 1270, 1272 n.2 (7th
Cir., 1994). “Under the CERCLA statutory scheme, §
107 (codified at 42 U.S.C. § 9607) governs liability, while § 113(f) [(codified
at 42 U.S.C. § 9613(f))] creates a mechanism for apportioning that liability
among responsible parties.” Id. at
1270. At that time, apportionment
seemed to be synonymous with allocation; “[a]t the apportionment stage, §
113(f)(1) authorizes courts to allocate response costs among liable parties
using such equitable factors as the court determines are appropriate…” Id. at 1272 n.2.
A few years after Akzo,
in Rumpke, supra, the Seventh Circuit again used language that suggests that
when SARA amended CERCLA, the Courts moved away from a scheme of promoting
apportioning liability under CERCLA § 107 (described in the Pre-SARA decisions—A & F Materials and Chem-Dyne) to a scheme whereby liability
is now only allocated under CERCLA § 113 (described in the Post-SARA decisions—Ensco and Town of Munster):
As our Akzo decision
implied, we see nothing in the language
of § 107(a) that would make it unavailable to a party suing to recover for
direct injury to its own land, under circumstances where it is not trying to apportion costs (i.e.,
where it is seeking to recover on a direct liability theory, rather than trying
to divide up its own liability for someone else's injuries among other
potentially responsible parties). It is
true that liability under § 107(a) is joint and several, and § 113(f) exists
for the express purpose of allocating fault among PRPs. See Town of Munster, Ind. v.
Sherwin-Williams,
27 F.3d 1268, 1272 n. 2 (7th Cir.1994); Environmental Transp. Systems, Inc.
v. ENSCO, Inc., 969 F.2d 503, 508 (7th Cir.1992).
Nevertheless, one of two outcomes would follow from a landowner suit under §
107(a): either the facts would establish that the landowner was truly blameless,
in which case the other PRPs would be entitled to bring a suit under § 113(f)
within three years of the judgment to establish their liability among
themselves, or the facts would show that the landowner was also partially
responsible, in which case it would not be entitled to recover under its §
107(a) theory and only the § 113(f) claim would go forward. Neither one of those
outcomes is inconsistent with
the statutory scheme promoting
allocation of liability.
107 F.3d at 1240-41 (emphasis added). Therefore, it appears, that at the time of Ensco, Town of Munster, Akzo and
Rumpke, the Seventh Circuit did not
believe that the divisibility defense negated joint and several liability; to
conclude otherwise, would appear to render Akzo
nonsensical.
In 2007, the Seventh Circuit for the first
time declared divisibility is an exception to joint and several liability in Metropolitan Water Reclamation District of
Greater Chicago, v. North American Galvanizing & Coatings, Inc., 473
F.3d 824, 827 n. 3 (7th Cir., 2007).
Therein, the Seventh Circuit simultaneously suggested that its decision
in Akzo might have to be reconsidered
and stressed that its holding was dependent upon joint and several liability:
“[o]ur holding today does not require us to revisit our pre-Cooper Industries decision in Akzo Coatings, in which we held a claim
‘by and between jointly and severally liable parties for an appropriate
division of the payment one of them has been compelled to make’ must be brought
under § 113(f)(1).” Id.
at 836.
Different Circuit Judges decided Akzo and Metro Water. Akzo, 30 F.3d at 762 (Before Easterbrook
and Rovner, Circuit Judges, and Williams, District Judge); Metro Water, 473 F.3d at 825 (Before Bauer, Flaum, and Ripple,
Circuit Judges). However, a year
after Metro Water, in United States v. Capital Tax Corp., 545
F.3d 525, 534-35 (7th Cir., 2008) the Seventh Circuit had another opportunity
to discuss divisibility and one of the same Circuit Judges who decided Capital Tax also decided Akzo. Id. at 527 (Before Cudahy, Posner, and Rovner,
Circuit Judges); Akzo, 30 F.3d at 762
(Before Easterbrook and Rovner, Circuit Judges, and Williams, District Judge).
When the Capital Tax Court discussed divisibility as an exception to joint and several liability it
did so in almost begrudging manner. “Some courts have noted that the ‘fit’
between § 433A and CERCLA is actually quite unclear; § 433A focuses on
causation while CERCLA is a strict liability statute.” Id. at 535 n.9. “[Divisibility] has the potential to eviscerate the
strict liability principles of CERCLA.” Id.
There is no apparent explanation for why the Seventh Circuit
decided to finally adopt divisibility as a defense to joint and several liability
in Metro Water. Perhaps the Seventh Circuit knew
something about the Supreme Court’s view—two years later in Burlington Northern the Court made
divisibility an undisputable defense to joint and several liability. 129 S.Ct.
at 1880-81. In any case, at the
time of Akzo it
appears the Seventh Circuit did not view divisibility as negating joint and several
liability.
THAT’S
MY ARGUMENT.
© June 2013 Brandon J. Evans
© June 2013 Brandon J. Evans
