Archive for October, 2010

Ninth Circuit holds contribution claims of intervenors are not barred by prior settlement under Sec. 113 of CERCLA

SteveK October 21st, 2010

On September 15, 2010, in City of Emeryville v. Robinson, the U.S. Court of Appeals for the 9th Circuit ruled that a prior settlement under CERCLA and California law between Sherwin-Williams and the City of Emeryville for the costs to remediate contaminated property did not bar contribution claims asserted by entities that were not part of a settlement in a subsequent action for contamination that had migrated to a neighboring parcel. In the initial action, Sherwin-Williams had settled with Emeryville in a court approved settlement that Sherwin-Williams asserted provided broad protection against contribution claims based on contamination “at, on, under, or emanating from” the facility.

After Sherwin-Williams had complied with its obligations to pay for past costs and contribute for future remedial costs, an action was commenced by the Emeryville Redevelopment Agency for contamination on an adjacent parcel.  Cross claims were asserted in the second action by Emeryville and by recent or current owners of the second tract. Sherwin-Williams commenced an action to enforce the settlement agreement. The other parties in the Redevelopment Agency’s action moved to intervene in Sherwin-Williams’ action to enforce the settlement. The District Court ruled in favor of Sherwin-Williams. On appeal, however, the Ninth Circuit held that although the claims of Emeryville were barred, the claims by the other parties that had not been included in, or even noticed of the prior settlement, were not precluded. The court conducted a thorough analysis of the specific language of ’113(f) of CERCLA, which included restating the significance of a the rights of a party to contribution (see, June 2010 post on 9th Circuit’s decision in United States v. Aerojet), and found that the protections of that section did not apply. The reasons included that the protection includes claims of a State or the Federal Government, neither of which apply, and that the intervenors had no actual or constructive notice of the settlement since they were neither parties to the prior suit, prior settlement, or were even involved with the properties at the time of the prior litigation and settlement. The court essentially held that it would be unfair to bar claims by such parties and noted that the overwhelming majority of courts that have enforced a CERCLA bar to contribution claims in a private party settlement have done so “only where the persons…were PRPs who were involved in or aware of the settlement discussions, or non-parties who otherwise at least had constructive notice that their contribution claims stood to be extinguished.”

This case demonstrates the potential risks that may exist after the settlement of a suit for site remediation or reimbursement of cleanup costs. Although the courts do encourage settlement and are inclined to provide for contribution protection; the rights of private parties to seek contribution will not be automatically extinguished in the interest of closing the matter completely. As in other cases, the courts will endeavor to carefully analyze the language of the contribution and protection provisions under ‘ 113. Although it is not always possible to create a settlement that provides complete protection, it is essential to attempt to anticipate other claims, as well as the potential involvement of off-site migration and subsequently affected parties in any settlement agreement.

DiFrancesco, Bateman, Coley, Yospin, Kunzman, Davis & Lehrer, PC (www.dbnjlaw.com ) is a full service law firm in New Jersey which provides a broad range of legal services, including the representation of clients in environmental and defense of toxic exposure matters. For additional information about the matters in this bulletin or in the firm’s environmental practice, please contactSteven A. Kunzman, Esq. who heads our Environmental and Latent Injury Litigation Department

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NJ District Court rules that NJDEP waived its NRD claims

SteveK October 5th, 2010

On September 29, 2010, in FMC v. American Cyanamid consolidated with U.S. v FMC Corporation, Judge Cavanaugh of the U.S. District Court for New Jersey granted summary judgment to FMC Corporation  ruling that the NJDEP had waived its right to assert claims for natural resource damages (NRD) for a Superfund site in Franklin Township, N.J.  The parties agreed that in 2001 a coordinator for the NJDEP Office of Natural Resource Recovery (ONRR) prepared a written internal memorandum in which it was stated that the NJDEP would not assess NRD for the site because the groundwater plume did not extend off-site and because the proposal was being reviewed to re-inject treated water into the ground.  The position was conveyed orally to counsel for FMC. This position was consistent with the NJDEP’s policy for recovery of NRD which had been implemented in the 1990s. The policy was subsequently changed in 2002 and the change was memorialized in Policy Directive 2003-07 which provided that the ONRR would employ a settlement formula to evaluate and assess NRD, including for on-site groundwater. The position that there would be no claim for NRD for the FMC site; however, was subsequently confirmed during the course of settlement discussions in a letter from the office of the Attorney General in 2003.  Judge Cavanaugh concluded that the letter to FMC from the ONRR in 2003 (along with the prior statement in 2001) constituted a knowing and intentional waiver of any claims for NRD for the groundwater at the site. The court rejected the government’s argument that it can change its policies for the benefit of the public without creating rights in parties who claim to have relied on an old policy.  The court agreed that the government can change its policies, but concluded that it cannot expressly waive its rights two times in the span of two years “and then about face years later.” The judge concluded that allowing such a result “would serve to completely alter the calculus of the litigation and undermine settlement negotiations that the parties engage in with the State.” The claims of New Jersey for NRD were, therefore, dismissed.

This case demonstrates that New Jersey’s policies on NRD are continually developing. It is unlikely that a memorandum stating that the NJDEP will not be seeking NRD will be available in most cases. This decision does, however, indicate that the effort to obtain NRD for groundwater that is not likely to go off site is, at its core, a decision based on policy, not necessarily science.

DiFrancesco, Bateman, Coley, Yospin, Kunzman, Davis & Lehrer, PC (www.dbnjlaw.com ) is a full service law firm in New Jersey which provides a broad range of legal services, including the representation of clients in environmental and defense of toxic exposure matters. For additional information about the matters in this bulletin or in the firm’s environmental practice, please contactSteven A. Kunzman, Esq. who heads our Environmental and Latent Injury Litigation Department

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