ELR Citation: ELR 20403
No(s). 1:89cv29 (N.D. Ind. Oct 3, 1994)

The court denies a motion to reconsider its decision that a company that incurred response costs at an Indiana site pursuant to a U.S. Environmental Protection Agency consent decree may bring a cost recovery action against nonsettling, third-party defendants under §107 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The third-party defendants filed their motion for reconsideration, arguing that Akzo Coatings, Inc. v. Aigner Corp., 24 ELR 21254 (7th Cir. 1994), United Technologies Corp. v. Browning-Ferris Industries, Inc., 24 ELR 21356 (1st Cir. 1994), and Munster, Town of v. Sherwin-Williams Co., 24 ELR 21108 (7th Cir. 1994), suggest that the court incorrectly held that the company may maintain a cost recovery action. The court first addresses the third-party defendants' claim that it should hold the company liable because the company allegedly owned the site at which wastes were dumped. In Akzo, the Seventh Circuit allegedly held that a plaintiff seeking cost recovery was liable for response costs because it sent waste to the site at issue in that case. The Seventh Circuit then held that the plaintiff could not pursue a cost recovery claim because it was liable "in some measure" and was seeking to apportion liability for an injury to which it contributed. The court in this case notes that the party seeking cost recovery in Akzo admitted its liability for depositing solvents at the site in question. The court finds unsupported the third-party defendants' contention that the Seventh Circuit held the party seeking cost recovery in Akzo liable simply because it sent waste to the site. The court notes that in this case, the company seeking cost recovery never admitted liability, had never been adjudicated a liable party, and entered into a consent decree that expressly did not constitute an admission. The court rejects the third-party defendants' argument that the court should have found the company to be a liable party, and thus limited to contribution actions, because liability under CERCLA is strict. Even though liability is strict under CERCLA, legal liability cannot attach until a party has either admitted liability or has been adjudicated liable. Even if the court construed the company's allegations in its complaint as admissions, the third-party defendants' argument that the company admitted that it is a responsible party by virtue of evidence obtained via discovery is meritless. Evidence does not establish a fact as being true. In all likelihood, the court would have to conduct an extensive trial before it could determine whether the company was a responsible person.

The court next addresses the third-party defendants' observation that the Seventh Circuit in Akzo cited and declined to follow two decisions the court in this case discussed in its prior decision—Burlington N.R.R. v. Time Oil Co., 738 F. Supp. 1339 (W.D. Wash. 1990), and Key Tronic Corp. v. United States, 21 ELR 21443 (E.D. Wash. 1990). The court notes that contrary to the third-party defendants' implication, it did not rely on those cases. The court discussed Key Tronic to show that some courts were permitting cost recovery actions against settling parties where CERCLA's policy of encouraging settlements would not be frustrated. The court holds that Key Tronic was not relevant to the court's prior decision, because the case before the court never involved an attempted cost recovery action. The court discussed Burlington to facilitate its discussion of the distinction between a §107 action and a §113 action. The court did not endorse any of the holdings or conclusions of the Burlington court, and Burlington was not pertinent to the court's prior decision. The court further notes that its prior decision was available to the Seventh Circuit at the time of the Akzo decision. The fact that Akzo did not cite the court's decision buttresses the conclusion that Akzo does not directly contradict that decision.

The court next turns to the third-party defendants' claim that United Technologies is contrary to the court's prior decision. In United Technologies, the First Circuit held that a claim by parties to a consent decree with the United States against nonsettling parties for cost recovery was a contribution action. The First Circuit noted that the parties seeking cost recovery had admitted that they were liable parties. The court in this case holds that United Technologies does not apply to this case, because the United Technologies parties admitted liability and entered into a consent decree before the effective date of CERCLA §122, which provides that participation in a §122 settlement is not an admission of liability. In this case, the company has not admitted liability, and the consent decree provides that the company may pursue cost recovery and contribution claims against certain nonparties. Thus, no basis exists for the court to conclude that the company's cost recovery claim is, in actuality, solely a claim for contribution.

The court next holds that Sherwin-Williams supports the court's prior decision. In Sherwin-Williams, no disputed issue existed on whether the party seeking cost recovery was a liable party or whether it could properly bring a §107 action. The court was concerned with what defenses the defendant could assert against the §107 action. If the Seventh Circuit believed that the §107 action was, as the third-party defendants claim, merely a §113 action in disguise, the Seventh Circuit would not have devoted an entire opinion to analyzing §107 to determine whether the defendant could properly assert equitable defenses. Finally, the court denies the third-party defendants' motion for certification of interlocutory appeal. The court holds that if the third-party defendants honestly believed that Sherwin-Williams was in direct conflict with the court's prior decision, they should have filed a motion for certification shortly after the Seventh Circuit rendered that decision. Additionally, the court rejects the third-party defendants assertion that a decision by the Seventh Circuit will materially advance the ultimate termination of the litigation by simplifying pretrial procedures.

[The court's prior decision is published at 24 ELR 21437.]

Counsel for Plaintiffs
Deborah M. Leonard, David H. Miller, Ass't U.S. Attorneys
U.S. Attorney's Office
3128 Federal Bldg.
1300 S. Harrison St., Fort Wayne IN 46802
(219) 422-2595

Maureen M. Katz
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Counsel for Defendant
Percy L. Angelo
Mayer, Brown & Platt
190 S. La Salle St., Chicago IL 60603
(312) 782-0600