This is the fifth of a series of blog entries regarding the evolution of CERCLA §107 cost recovery claims and CERCLA §113 contribution claims. It will discuss discussed how U.S. v. Atlantic Research Corp., 551 U.S. 128 (2007), Burlington Northern & Santa Fe Ry. v. United States, 129 S.Ct. 1870 (2009), and other cases have continued to restore the nature of a contribution action to the way it was before SARA was enacted.
My first blog entry to this series discussed how cost recovery and contribution were distinct legal remedies prior to SARA being enacted. My second blog entry to this series discussed how the circuit courts blurred those distinctions after SARA was enacted. My third blog entry to this series discussed how Cooper Industries, Inc. v. Aviall Services, Inc., 543 U.S. 157 (2004), and other cases have begun restoring the nature of a contribution action to the way it was before SARA was enacted. My fourth blog entry to this series discuss how Atlantic Research and other cases have begun restoring the nature of a cost recovery action to the way it was before SARA was enacted. The overarching argument of this series of blog entries is that cost recovery and contribution were distinct remedies prior to SARA, then the Circuit Courts blurred the distinctions between these two remedies, and now, starting primarily with Cooper Industries, the Supreme Court and other courts have begun restoring those distinctions that existed prior to SARA.
Atlantic Research and Burlington Northern make it clear that the Supreme Court agreed with the Seventh Circuit and other Courts of Appeals that continued to maintain that contribution requires joint and several liability between the parties. Atlantic Research held that contribution is not “synonymous with any apportionment of expenses among PRPs.” Atlantic Research, 551 U.S. at 138. The Court clarified that under CERCLA § 113(f)(1) a PRP’s right to contribution “is contingent upon an inequitable distribution of common liability among liable parties.” Id. at 138-39.
The Court noted that the “suit” for contribution could begin “before or after the establishment of common liability”, but in “either case” the “right to contribution” is “contingent” upon the common liability being established in the suit for contribution. Id. The Court contrast contribution with the right to recovery in cost recovery, which does not require the claimant to establish its own liability “to a third party.” Id. at 139. Thus, potentially liable parties have the right to seek contribution, but only parties actually liable have the right to recover in contribution. This point was explained in Taylor Farm Ltd. Liability Co. v. Viacom, Inc., 234 F.Supp.2d 950, 962-63 (S.D. Ind., 2002), as follows:
Contribution is an action among parties who have been found to be liable for at least some portion of the damages alleged in the underlying lawsuit. Of course, an action for contribution may also be initiated by a party who is a defendant in a lawsuit (and therefore not yet liable). But once a person is sued, that person's potential liability is not merely hypothetical. A ruling on contribution, or relative fault, will not occur unless the defendant is first found to be liable during the course of the lawsuit… section 113(f)(1) of CERCLA does not authorize preemptive contribution actions. It only authorizes a party who is potentially liable to seek contribution during a civil action, or alternatively, a party who is found liable under section 106 or 107(a) to seek contribution following that civil action.
This view is in line with observation by the Seventh Circuit that “[u]nder the technical definition of contribution at common law” a person “who is not itself liable may not pursue contribution.” Metropolitan Water Reclamation Dist. of Greater Chicago v. N. Am. Galvanizing & Coatings, Inc., 473 F.3d 824, 836 n. 17 (7th Cir., 2007). Further, it provides logical reason why the statute of limitation for a contribution claim under CERCLA § 113(f)(1) does not begin to run until there is a judgment—until there is a judgment the right to recover in contribution is merely a contingent interest. See 42 U.S.C. §§ 9613(f)(1), (g)(3)(A) (the right to seek contribution under § 113(f)(1) accrues when there is a “civil action” against the person; however, the statute of limitations does not begin to run on that action until there is a “judgment” against the person.); contrast with the right to contribution under § 113(f)(3)(B), which is a vested interest the moment the cause of action accrues; see 42 U.S.C. §§ 9613(f)(3)(B), (g)(3)(B) (the right to contribution under § 113(f)(3)(B) accrues when there is a settlement, and the statute of limitations begins to run when there is a settlement).
Atlantic Research also makes it clear that “common liability” is not established by simply showing that all the parties to a contribution suit are liable under CERCLA § 107(a). The Court criticized Pinal Creek, which had held that “[b]ecause all PRPs are liable under the statute, a claim by one PRP against another PRP necessarily is for contribution”, for its “imprecise” usage of the term contribution that “confuses” the complementary nature of cost recovery and contribution. Atlantic Research, 551 U.S. at 138.
Burlington Northern provides insight into what else is necessary to establish common liability, wherein the Court stated, “contribution actions allow jointly and severally liable PRPs to recover from each other on the basis of equitable considerations.” 129 S.Ct. at 1882 n.9 (emphasis added). For this proposition, the Supreme Court cited the Ninth Circuit’s decision in Burlington Northern, which stated as follows:
In so holding, we begin from the fundamental difference between apportionment and contribution. Apportionment, which is the relevant question in this case, looks to whether defendants may avoid joint and several liability by establishing a fixed amount of damage for which they are liable. Section 433A of the Restatement speaks to this issue. Contribution is a distinct concept. If there is insufficient evidence to support apportionment, jointly and severally liable PRPs may still seek to recover from each other in a later contribution action. See, e.g. RESTATEMENT (THIRD) OF TORTS § 23(a) (2000) (“When two or more persons are or may be liable for the same harm and one of them discharges the liability of another by settlement or discharge of judgment, the person discharging the liability is entitled to recover contribution from the other, unless the other previously had a valid settlement and release from the plaintiff.”).
United States v. Burlington Northern & Santa Fe Ry. Co., 520 F.3d 918, 939-40 (9th Cir., 2008) (emphasis added). Thus, contribution is contingent upon the parties being jointly and severally liable.
Additionally, this conclusion makes sense because “joint” and “common” are synonyms for each other. www.Merriam-Webster.com. The conclusion is also supported by the Seventh Circuit’s declaration that “[t]here can be no right to contribution unless there is joint and several liability…” Environmental Transportation Systems, Inc. v. Ensco, Inc., 969 F.2d 503, 508 (7th Cir., 1992); see also, United States v. Asarco, Inc., 814 F.Supp. 951, 956 n.4 (D. Colo., 1993) (“[I]f two parties are not jointly and severally liable… there is no common liability and therefore no right of contribution.”); County Line Inv. Co. v. Tinney, 933 F.2d 1508, 1516 (10th Cir., 1991) (“contribution is only available where joint liability can be imposed.”).
This conclusion is also supported by the Post SARA Courts of Appeals decisions that were careful to note that contribution requires joint and several liability, which were discussed in my second blog entry to this series. Lastly, this conclusion brings the post-SARA view of contribution more in line with the pre-SARA view of contribution that required joint liability between the parties to a contribution suit, which is discussed in my first blog entry to this series.
THAT’S MY ARGUMENT.
© August 2013 Brandon J. Evans