Ameripride Svc Inc v. Valley Industrial, et al

Filing 735

ORDER signed by Senior Judge Lawrence K. Karlton on 5/12/11 GRANTING-IN-PART and DENYING-IN-PART 698 Motion for Summary Judgment. The amounts AmeriPride paid in settlement to Huhtamaki and Cal-Am are not recoverable under CERCLA section 107. AmeriPride may file an Amended Complaint seeking to recover these costs under CERCLA section 113(f). Said complaint shall be filed no later than 14 days from the date of this order. (Donati, J)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 AMERIPRIDE SERVICES, INC., A Delaware corporation, 12 NO. CIV. S-00-113 LKK/JFM Plaintiff, 13 v. 14 15 VALLEY INDUSTRIAL SERVICE, INC., a former California corporation, et al., O R D E R 16 Defendants. 17 18 / AND CONSOLIDATED ACTION AND CROSS- AND COUNTER-CLAIMS. / 19 20 This case is one more involving the cleanup of hazardous 21 chemicals at a site formerly used for dry cleaning. The parties’ 22 claims principally arise under the Comprehensive Environmental 23 Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. § 24 9601 et seq. 25 formerly owned the site, and released hazardous chemicals into the 26 soil during its ownership. Defendant Texas Eastern Overseas, Inc. (“TEO”) Plaintiff AmeriPride Services, Inc. 1 1 (“AmeriPride”) then purchased the site and has conducted an ongoing 2 effort to clean up the chemicals. 3 costs of this cleanup from TEO. TEO counter-argues that AmeriPride 4 shares responsibility for the contamination and that AmeriPride’s 5 cleanup costs were excessive, such that AmeriPride’s claims should 6 be denied or offset. 7 defenses to AmeriPride’s claims and as counterclaims. 8 9 AmeriPride seeks to recover the TEO presents these counter-arguments as both The case is before the court on AmeriPride’s motion for summary judgment. AmeriPride seeks summary judgment on 10 AmeriPride’s CERCLA claims and on all counterclaims.1 11 resolves the matter on the papers and after oral argument. For the 12 reasons 13 adjudication, as provided by Fed. R. Civ. P. 56(g). 14 costs are largely appropriate and AmeriPride’s remediation effort 15 was proper, but triable questions remain as to whether AmeriPride 16 bears a portion of the responsibility for these costs. stated below, the court grants The court partial summary AmeriPride’s I. STANDARD 17 18 Summary judgment is appropriate when there exists no genuine 19 issue as to any material fact. Such circumstances entitle the 20 moving party to judgment as a matter of law. 21 56(c); see also Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 22 (1970); Secor Ltd. v. Cetus Corp., 51 F.3d 848, 853 (9th Cir. 23 1995). Fed. R. Civ. P. Under summary judgment practice, the moving party 24 1 25 26 AmeriPride also brings state law claims, and AmeriPride initially moved for summary judgment as to these claims as well. AmeriPride’s reply brief affirmatively abandoned this aspect of the motion. 2 1 always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,” which it believes demonstrate the absence of a genuine issue of material fact. 2 3 4 5 6 Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting Fed. 7 R. Civ. P. 56(c)). 8 If the moving party meets its initial responsibility, the 9 burden then shifts to the opposing party to establish the existence 10 of a genuine issue of material fact. Matsushita Elec. Indus. Co. 11 v. Zenith Radio Corp., 475 U.S. 574, 585-86 (1986); see also First 12 Nat’l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 288-89 13 (1968); Secor Ltd., 51 F.3d at 853. 14 party may not rely upon the denials of its pleadings, but must 15 tender evidence of specific facts in the form of affidavits and/or 16 other admissible materials in support of its contention that the 17 dispute exists. 18 391 U.S. at 289. 19 reasonable inferences from the facts before it in favor of the 20 opposing party. 21 States v. Diebold, Inc., 369 U.S. 654, 655 (1962) (per curiam)); 22 County of Tuolumme v. Sonora Cmty. Hosp., 236 F.3d 1148, 1154 (9th 23 Cir. 2001). 24 to produce a factual predicate as a basis for such inferences. See 25 Richards v. Nielsen Freight Lines, 810 F.2d 898, 902 (9th Cir. 26 1987). In doing so, the opposing Fed. R. Civ. P. 56(e); see also First Nat’l Bank, In evaluating the evidence, the court draws all Matsushita, 475 U.S. at 587-88 (citing United Nevertheless, it is the opposing party’s obligation The opposing party “must do more than simply show that 3 1 there is some metaphysical doubt as to the material facts . . . . 2 Where the record taken as a whole could not lead a rational trier 3 of fact to find for the nonmoving party, there is no ‘genuine issue 4 for trial.’” Matsushita, 475 U.S. at 586-87 (citations omitted). 5 Rule 56(g) provides that “If the court does not grant all the 6 relief requested by the motion, it may enter an order stating any 7 material fact — including an item of damages or other relief — that 8 is not genuinely in dispute and treating the fact as established 9 in the case.” II. BACKGROUND 10 11 The court begins by summarizing the structure of CERCLA’s 12 relevant provisions. The court then discusses the facility itself, 13 TEO’s operation of the facility, TEO’s contentions that AmeriPride 14 contributed to the contamination at the facility, and the efforts 15 that have been taken to clean the facility. 16 A. CERCLA 17 Congress enacted CERCLA in 1980 “in response to the serious 18 environmental and health risks posed by industrial pollution.” 19 Burlington Northern & Santa Fe Railway Company v. United States, 20 --- U.S. ----, 129 S.Ct. 1870, 1874 (2009). “The Act was designed 21 to promote the timely cleanup of hazardous waste sites and to 22 ensure that the costs of such cleanup efforts were borne by those 23 responsible for the contamination.” Id. 24 Under CERCLA section 107(a), 42 U.S.C. § 9607(a), the federal 25 government, state governments, and private parties may all initiate 26 cleanup of toxic areas, and each such entity may sue potentially 4 1 responsible parties for reimbursement of response costs. 2 Harbor v. County of Los Angeles, 433 F.3d 1260, 1265 (9th Cir. 3 2006) (Carson Harbor II) (quoting Ascon Properties, Inc. v. Mobil 4 Oil Co., 866 F.2d 1149, 1152 (9th Cir. 1989)). 5 has identified four elements necessary to a private plaintiff’s 6 prima facie case under section 107(a): 7 Carson The Ninth Circuit (1) the site on which the hazardous substances are contained is a “facility” under CERCLA’s definition of that term, Section 101(9), 42 U.S.C. § 9601(9); 8 9 (2) a “release” or “threatened release” of any “hazardous substance” from the facility has occurred, 42 U.S.C. § 9607(a)(4); 10 11 (3) such “release” or “threatened release” has caused the plaintiff to incur response costs that were “necessary” and “consistent with the national contingency plan,” 42 U.S.C. §§ 9607(a)(4) and (a)(4)(B); and 12 13 14 (4) the defendant is within one of four classes of persons subject to the liability provisions of Section 107(a). 15 16 City of Colton v. American Promotional Events, Inc.-West, 614 F.3d 17 998, 1002-03 (9th Cir. 2010) (quoting Carson Harbor Village, Ltd. 18 v. Unocal Corp., 270 F.3d 863, 870-71 (9th Cir. 2001) (en banc) 19 (Carson Harbor I)).2 A “release” for purposes of this section 20 includes “any spilling, leaking, pumping, pouring, emitting, 21 22 23 24 25 26 2 Government plaintiffs face a lesser burden under section 107. Whereas a private plaintiff must show that response costs were consistent with the national contingency plan, City of Colton, 614 F.3d at 1002-03, a government plaintiff need only show that the costs were incurred, leaving it to the defendant to show that costs were inconsistent with the national contingency plan. United States v. W.R. Grace & Co., 429 F.3d 1224, 1232 n.13 (9th Cir. 2005), United States v. Chapman, 146 F.3d 1166, 1169 (9th Cir. 1998). 5 1 emptying, discharging, injecting, escaping, leaching, dumping, or 2 disposing into the environment.” 42 U.S.C. § 9601(22).3 The “four 3 classes known 4 “potentially responsible parties,” include, as is relevant to this 5 case, “(1) the owner and operator of . . . a facility,” and “(2) 6 any person who at the time of disposal of any hazardous substance 7 owned or operated any facility at which such hazardous substances 8 were disposed of.” 9 113(g)(2), a party who prevails on a section 107 claim may also 10 seek a declaratory judgment that it is entitled to reimbursement 11 for future response costs as well. 12 at 1008. of persons subject to liability,” 42 U.S.C. § 9607(a). also as Under CERCLA section See City of Colton, 614 F.3d 13 Absent from the four elements of a prima facie case is any 14 requirement that the plaintiff be innocent with regard to the 15 contamination at issue. 16 551 U.S. 128, 139 (2007). 17 party remediates the damage and incurs response costs, that party 18 may seek to recover these costs from another. United States v. Atlantic Research Corp., Thus, where one potentially responsible Id. 19 3 20 21 22 23 24 25 26 At oral argument, counsel for both parties suggested that under CERCLA, it is enough to show that a property owner used a hazardous chemical and that the chemical may be found in the soil. In other words, both parties suggested that no evidence of a specific release was necessary. Neither party argued for this proposition in its briefing, and no counsel provided any authority for this proposition at oral argument. As the Northern District of California recently recognized, “[t]he Ninth Circuit has not adopted this broad position,” Walnut Creek Manor, LLC v. Mayhew Center, LLC, 622 F. Supp. 2d 918, 926 (N.D. Cal. 2009), although it does not appear that the Ninth Circuit has rejected it either. Because the parties’ briefing does not rely on this interpretation of CERCLA, the court does not further address it here. The parties may revisit this issue in their trial briefs. 6 1 With regard to allocating responsibility among potentially 2 responsible parties, CERCLA provides overlapping and somewhat 3 convoluted mechanisms. 4 potentially responsible parties. 5 at 1879, 1881. 6 several as well. 7 1188, 1192 (E.D. Cal. 2009). 8 liability for the entire response cost has two options under 9 CERCLA. Under section 107, a defendant may avoid joint and several 10 liability by proving that “a reasonable basis for apportionment 11 exists.” 12 States v. Chem-Dyne Corp., 572 F. Supp. 802, 810 (S.D. Ohio 1983)). 13 Apportionment on this basis looks solely to whether the defendant 14 can “establish[] a fixed amount of damage for which [it] is 15 liable,” and not to any equitable concerns. 16 (quotation omitted). 17 authorizes claims for contribution “from any other person who is 18 liable or potentially liable under section 9607(a) of this title, 19 during or following any civil action under section 9606 of this 20 title or under section 9607(a) of this title.” 21 9613(f)(1). 22 equitable factors. 23 court may allocate response costs among liable parties using such 24 equitable factors as the court determines are appropriate.”), 25 Burlington Northern, 129 S.Ct. at 1882 n.9. 26 differs from section 107 in several other regards; for example, Section 107 imposes strict liability on Burlington Northern, 129 S.Ct. Liability under section 107 is generally joint and Adobe Lumber, Inc. v. Hellman, 658 F. Supp. 2d A defendant seeking to avoid Burlington Northern, 129 S.Ct. at 1881 (citing United Section Id. at 1882 n.9 Alternatively, CERCLA section 113(f)(1) 113(f) does allow for 42 U.S.C. § consideration of Id. (“In resolving contribution claims, the 7 Section 113(f)(1) 1 section 113(f) provides a shorter statute of limitations. 2 Atlantic Research, 551 U.S. at 139; 42 U.S.C. § 113(g). 3 B. 4 See The Contaminated Facility This suit concerns perchloroethylene (“PCE”) at a facility 5 located at 7620 Wilbur Way in Sacramento, California. 6 Statement of Undisputed Facts (“SUF”) ¶ 1.4 PCE is listed as a 7 hazardous substance under CERCLA. 8 § 302.4. PCE and other chemicals (including but not limited to PCE 9 breakdown products) have been found in the soil at and near the 10 facility. SUF ¶ 4. 11 groundwater at the facility. Plaintiff’s 42 U.S.C. § 9601(14), 40 C.F.R. These chemicals have also been found in the SUF ¶¶ 8-9. PCE is the most 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 4 Pursuant to E.D. Cal. Local Rule 260(a), AmeriPride has submitted a “Statement of Undisputed Facts,” to which TEO has responded. The court cites only those facts that TEO has conceded are undisputed. Local Rule 260(b) permits TEO to oppose summary judgment with a “Statement of Disputed Facts.” TEO has filed such a document, although TEO mislabels it as another statement of undisputed facts. (Dkt. 716). To avoid conflating TEO’s filing with AmeriPride’s, the court refers to TEO’s as a Statement of Disputed Facts, or “SDF.” Both parties’ briefs and statements of facts rely heavily on declarations submitted by counsel and experts. Both parties in turn object to portions of these declarations as lacking foundation. These objections raise issues regarding the degree to which foundational documents must be tendered to the court in a Federal Rule of Civil Procedure 56 motion for summary judgment. For the most part, the court need not resolve these issues, because the parties have either stipulated to sufficient foundational facts or the foundation is provided by separately submitted deposition testimony. In discussing the underlying facts, the court generally cites to the underlying testimony or admission, where possible, rather than to the expert’s restatement thereof. The parties also object to aspects of the expert declarations as inadmissibly stating legal conclusions. These objections are generally well founded, and the court disregards the appropriate sections of the challenged declarations. In all other regards, evidentiary objections not discussed in this order are overruled. 8 1 widespread and highly concentrated of the contaminants, id., and 2 has been found at levels exceeding federal and state maximums, SUF 3 ¶¶ 4, 6. 4 C. VIS/TEO’s Ownership of the Facility 5 The defendant in this case is Texas Eastern Overseas, Inc., 6 appearing as successor in interest to Valley Industrial Services, 7 Inc. 8 reinstated under a receivership for purposes of this case. 9 In re Texas Eastern Overseas, 2009 WL 4270799 (Del. Ch. Nov. 30, TEO is a dissolved Delaware corporation that has been See 10 2009), aff’d by 998 A.2d 852 (2010). 11 TEO’s curious legal posture is not at issue in this motion. 12 parties similarly do not dispute that TEO is the successor in 13 liability to VIS. 14 the court refers to TEO and all its predecessors as “TEO.” 15 Fortunately for this court, SUF ¶ 25-31, especially 31.5 The For simplicity, Beginning in July 1972, TEO conducted industrial dry cleaning 16 at the facility. SUF ¶ 19. This continued into the 1980s, and 17 possibly through TEO’s transfer of the facility to AmeriPride’s 18 predecessor-in-interest in March 1983. 19 used “dense nonaqueous phase liquid” PCE (“DNAPL PCE”) as a solvent Id. During this time, TEO 20 5 21 22 23 24 25 26 TEO objects to many of these purportedly undisputed facts, but the objections generally do not raise relevant and triable disputes. Notably, TEO does not dispute that “TEO is a successor to VIS, Inc. by way of mergers,” and that the “merger agreements contemplate the passage of liabilities of the merged entities, as of the time of the merger, to the resulting entities.” Responses to SUF ¶ 28, 31. TEO nonetheless asserts that “what liabilities may have passed as a result of those mergers is not undisputed.” Response to SUF ¶ 28. TEO has not articulated any argument as to why it should not be held liable for all of VIS’s liabilities. This fleeting objection fails to raise a triable material question on the issue. 9 1 for its dry cleaning operations. 2 SUF ¶¶ 3, 11, 20. On at least four occasions, TEO spilled DNAPL PCE. 3 21-24. 4 SUF ¶¶ On at least two of these occasions, the spill was not contained: 5 6 * In 1980 or 1981, a pipe broke while a storage tank for DNAPL 7 PCE was being moved, and 50 to 100 gallons of DNAPL PCE 8 spilled onto the ground at the facility. SUF ¶ 21. 9 10 * In the late 1970s, a delivery truck driver left the pump 11 running while filling a PCE storage tank, causing a DNAPL PCE 12 spill. 13 PCE spilled. 14 TEO states that a 1/8 to 1/4 inch deep puddle of PCE formed 15 in the room when the spill occurred and that this spill 16 formed a stream flowing out the door to a drainage canal. 17 Robert Smith Dep. 25:8-15, Oct. 24, 2005 (Dkt. 717-7) (“2005 18 Smith Dep.”). 19 to six feet wide, although it is unclear whether this refers 20 to the width of the puddle or the stream. SUF ¶ 22. TEO contends it is unclear what volume of Response to SUF ¶ 22. The evidence cited by The cited testimony states that “it” was four Id. 21 22 At least two more spills occurred, but TEO contends that these 23 spills were cleaned prior to reaching the environment: 24 //// 25 //// 26 //// 10 1 * Between 1976 and 1981 an approximately 20 gallon overflow of 2 DNAPL PCE occurred when operators forgot to turn off a pump. 3 SUF ¶ 24, SDF ¶ 3. 4 5 * 6 In the late 1970s a “boil-over” occurred, resulting in DNAPL PCE being released. SUF ¶ 23. 7 8 TEO’s contention that these spills were cleaned is based on the 9 testimony of two employees. The first testified that employees had 10 been instructed to use clothes to soak up spilled material. 11 Smelosky Dep. 21:6-13 (Dkt. 717-8). 12 employees would attempt to “soak up all the [PCE] [they] could,” 13 Flowers Dep. 64:18-19 (Dkt. 717-5). 14 specifically states that any form of cleanup occurred in these 15 specific instances. 16 cleanup was undertaken, no evidence indicates that these actions 17 would have cleaned the entire amount of the spill. 18 not resolve that issue here. 19 Warner, that at least one spill was not contained and that some of 20 the DNAPL PCE spilled by TEO “most likely” reached the soil and 21 impacted groundwater. 22 D. 23 The other testified that None of the cited evidence AmeriPride argues that even if this type of The court does TEO admits, by way of its expert Jim Warner Decl. ¶ 6 (Dkt. 718) AmeriPride’s Operation of the Facility The plaintiff in this action is AmeriPride Inc. AmeriPride’s 24 predecessor in interest purchased the facility from TEO in 1983. 25 SUF ¶¶ 32-35. 26 In arguing that TEO is 11 entirely to blame for the 1 contamination, AmeriPride argues that it never conducted dry 2 cleaning operations, stored or used PCE, or otherwise conducted 3 activities that contributed to the PCE contamination at the site. 4 TEO 5 contributed to the contamination in four ways: (1) by using and 6 storing dry cleaning equipment, (2) by failing to respond to a 1983 7 discovery of PCE contamination, (3) by spilling waste in 1993, and 8 (4) by discharging wastewater into the soil. 9 each of these in turn. offers evidence purportedly indicating that AmeriPride The court discusses TEO has presented evidence creating a 10 triable question as to the first, second, and fourth arguments, but 11 not the third. 12 1. Whether AmeriPride Used or Stored Dry Cleaning Equipment 13 Dry cleaning equipment remained at the facility until sometime after 15 AmeriPride 16 operations. 17 triable question as to this issue, the court notes that the 18 majority of evidence TEO cites is incomplete. Thus, TEO’s argument 19 on this part rests on a thin foundation. 20 AmeriPride purchased continued to use the facility.6 14 this equipment TEO in argues dry that cleaning Although the court concludes that TEO has raised a The one piece of evidence indicating that AmeriPride conducted 21 22 23 24 25 26 6 AmeriPride concedes this fact. So long as the equipment remained in use (see following paragraph of the body), PCE would presumably have remained present. The evidence offered by TEO, however, indicates that once the equipment was put into storage, all PCE was drained out of the equipment. See Flowers Dep. 104 (Dkt. 717-5). TEO cites the deposition of James Burlingame for the proposition that PCE remained onsite until 1985, but TEO has failed to provide the cited page of this deposition (page 34). See Dkt. 717-9. 12 1 dry cleaning is an Environmental Assessment that states that dry 2 cleaning was performed until 1987. 3 16 4 Consultants at the behest of AmeriPride. 5 that the 1987 date was merely a “typographical error” in the 6 report. 7 citing letters submitted by AmeriPride to the California water 8 authorities. 9 AmeriPride also cites (Dkt. 717-16). This Weissenberger Decl. Ex. Q, 12, assessment was Id. prepared by Delta AmeriPride argues AmeriPride attempts to support this characterization by See L. Smith Rebuttal Decl., Ex. H (Dkt. 727-6). competing evidence indicating that dry 10 cleaning stopped during TEO’s ownership. See Taylor Dep. 64 (Dkt. 11 714-4), Cal. Regional Water Quality Control Board Cleanup and 12 Abatement Order No. R5-2003-0059 ¶ 7 (May 7, 2003) (Dkt. 298-7 page 13 76 of 228) (“2003 Abatement Order”). 14 judgment motion, the court must assume that the trier of fact could 15 credit the original report.7 On AmeriPride’s summary 16 TEO’s other evidence does not support TEO’s position, in that 17 none of this other evidence specifies when dry cleaning halted. 18 Jesse Taylor, a former employee at the facility, repeatedly and 19 explicitly stated in the cited portion of his deposition that he 20 21 22 23 24 25 26 7 The conclusion reached is somewhat anomalous since the trial of this case is to the court, and on the basis of the evidence submitted, it is unlikely that the court would find for the defendant on the issue. Nevertheless, applying summary judgment standards, the court feels compelled to find there is a triable issue of fact. See Minidoka Irrigation Dist. v. Dept. of Interior, 406 F.3d 567, 575 (9th Cir. 2005) (citing Kearney v. Standard Ins. Co., 175 F.3d 1084, 1095 (9th Cir. 1999) (en banc)) (explaining that district court judges must apply the ordinary summary judgment standard even when the matter will subsequently be heard by the same district court judge in a bench trial). 13 1 did not know when dry cleaning was shut down. Taylor Dep. 64 (Dkt. 2 717-4). 3 deposition that dry cleaning stopped 4-5 years before he quit. 4 Flowers Dep. 104 (Dkt. 717-5). 5 when Flowers quit, this statement does not indicate that dry 6 cleaning occurred on AmeriPride’s watch. 7 employee, states that dry cleaning stopped after Smith left a 8 position in the dry cleaning room but before Smith stopped working 9 at the facility altogether. Tim Flowers, another former employee, stated in his In the absence of evidence as to Robert Smith, a third 2005 Smith Dep. 45 (Dkt. 717-7). 10 Again, because TEO offers no evidence as to when Smith changed 11 positions or when he left the facility, this testimony does not 12 enable a trier of fact to conclude that AmeriPride conducted dry 13 cleaning. 14 “AmeriPride continued to order dry cleaning products from 1986 to 15 1992 from Fabrilife products.” 16 717). 17 who has no personal knowledge of this fact. 18 relies on a purported “vendor sales record.” 19 document, however, provides no indication that it is a sales record 20 and does not mention Fabrilife. 21 a heading for “BRANCH: Sacramento,” it lists only the details of 22 two dry cleaning machines. 23 Accordingly, this exhibit (if it could be properly authenticated) 24 might support the contention that equipment remained present after 25 AmeriPride’s purchase, but does not demonstrate that the equipment 26 was in use. Moving beyond employee testimony, TEO argues that Weissenberger Decl. ¶ 19 (Dkt. TEO relies on the declaration of its counsel Weissenberger, Id. Weissenberger instead Id. The attached Id. Ex. Q (Dkt. 717-16). Under The document is dated 1989. 14 Id. 1 2. Whether AmeriPride Discovered Contamination in 1983 2 TEO contends that AmeriPride discovered the contamination in 3 1983, but that AmeriPride did not report this discovery. 4 Below, I examine that evidence. 5 At some point, a trench at the facility was enlarged in 6 connection with expansion of laundry (non-dry-cleaning) facilities. 7 A trier of fact could conclude that this expansion occurred during 8 AmeriPride’s ownership, in 1983 or 1984. 9 deposition testimony of former TEO relies on the 2005 employee Robert Smith, who 10 explicitly states that the trench was expanded after AmeriPride 11 purchased 12 AmeriPride argues that Smith recanted this testimony in 2006. 13 the 2006 deposition, Smith stated that the expansion occurred prior 14 to AmeriPride’s purchase. 15 727-6 Page 44 of 84) (“2006 Smith Dep.”). 16 not refer to R. Smith’s initial statement or address the conflict 17 between the two statements. 18 the court must assume that a trier of fact faced with this 19 conflicting 20 testimony.8 21 22 the facility. evidence 2005 Smith Dep. 36 (Dkt. 717-7). In R. Smith Dep. 14 (May 3, 2006) (Dkt. could Id. The 2006 testimony does At the summary judgment stage, choose to credit Smith’s 2005 While the trench was being expanded, employees smelled fumes that they identified as PCE coming from the exposed soil. 2005 23 24 25 26 8 AmeriPride further provides the testimony of Mr. Dankoff, another employee, which also indicates that the expansion occurred prior to AmeriPride’s purchase. This testimony does not defeat the existence of a triable question, although it raises the issue discussed in the prior footnote. 15 1 Smith Dep. 36 (Dkt. 717-7). Smith testified that “if [he] 2 remember[ed] correctly” employees, including those in a nearby 3 office, were sent home because the smell was so strong that it gave 4 them headaches. Id. at 37. 5 It is undisputed that, whenever the trench was expanded, the 6 discovery of PCE fumes was not reported to any authorities.9 7 Instead, the only action that was taken was to replace concrete 8 over the soil and contain the fumes. 9 10 3. Whether AmeriPride Discharged Pollutants in 1993 TEO contends that AmeriPride “released hazardous chemicals to 11 the subsurface” in 1993. Warner Decl. ¶ 26 (Dkt. 718). The 12 evidence cited in support of this contention is an inspection 13 report prepared by a County of Sacramento official. 14 County Environmental Management Dept. of Compliance, Inspection 15 Report (December 6, 1993) (Dkt. 707-49). The report indicates that 16 a “waste oil drum [was] overflowing and leaking onto the ground.” 17 TEO has not offered evidence indicating that this leak reached the 18 “subsurface,” or that it otherwise could have contributed to the 19 soil and groundwater contamination at issue here. 20 showing, this fact is immaterial. Sacramento Absent such a 21 4. Whether AmeriPride’s Operations Have Leaked Wastewater 22 TEO argues that AmeriPride repeatedly discharged wastewater, 23 24 25 26 9 At oral argument, TEO separately argued that AmeriPride “discovered” the PCE contamination in 1983 because AmeriPride continued to employ persons with knowledge of the prior spills. Because this theory of discovery was not articulated in the brief, the court discusses it only in passing. 16 1 primarily from laundry operations, into the soil. 2 that this wastewater aggravated the PCE contamination in two ways. 3 First, the wastewater allegedly mobilized the DNAPL PCE that was 4 already in the soil, pushing this PCE down to the water table and 5 spreading the contamination. Second, the wastewater was allegedly 6 contaminated with additional PCE, as a result of washing clothes 7 that were contaminated with PCE. 8 evidence regarding discharge of wastewater, and then turns to the 9 evidence regarding the effects of this water. 10 TEO contends The court first surveys the As the court explains, TEO has raised triable questions as to both theories. a. 11 A Trier of Fact Could Conclude that Several Wastewater Leaks Occurred 12 13 TEO contends that AmeriPride discharged wastewater into the 14 soil on several discrete occasions, and also 15 that the wastewater/sewer system pervasively leaked wastewater. 16 The first asserted discrete discharge was in 1983 or 1984. 17 A triable question exists as to whether AmeriPride discharged 18 wastewater into the soil at this time. 19 a pipe broke and was patched in 1983 or 1984.10 20 48 (Dkt. 717-6). 21 or sump pump and/or tank. Id. at 49-50. Delossantos presumed that Delossantos testified that Delossantos Dep. The pipe connected washing machines to a sewer 22 10 23 24 25 26 The testimony regarding timing is as follows: Q: When was that? A. Just before I got out of there. Q: Early ‘80’s? A: Something like that. Q: ‘83? ‘84? A: Yeah Dkt. 717-6, at 48. 17 1 the leak was discovered during a weekly cleaning of a trench 2 adjacent to the pipe, suggesting that the pipe had been leaking for 3 at most a week. 4 facility used “[m]ore [water] than you want to know [per day]. 5 don’t know. 6 thousands.” 7 Id. at 49. Delossantos testified that the I can’t take a number. I Thousands of gallons, Id. at 50.11 A trier of fact could conclude that a second wastewater 8 discharge occurred in 1997. 9 testified that in 1997, AmeriPride added a new style of washer that 10 required reconfiguration of a drainage trench. Burlingame Dep. 132 11 (Dkt. 717-9). 12 draining a restroom was breached. 13 that this water flowed into the soil for “a day or two” and that 14 the only “whatever was in the line” leaked, which “may have been 15 just a few gallons.” 16 at 136. 17 Former employee James Burlingame In the course of this reconfiguration, a sewer line Id. at 135. Id. at 133. Burlingame opined This leak reached the soil. Id. Some evidence indicates that a third leak occurred in 2005. 18 Burlingame Dep. 119-21, 123 (Dkt. 717-9). 19 that at this time AmeriPride again damaged a wastewater pipe in the 20 course of an excavation, resulting in discharge of wastewater into 21 the soil. Id. Burlingame testified Water leaked for a “few minutes.” Id. at 121. On 22 23 24 25 26 11 Regarding this pipe breach, TEO also cites the declaration of Jim Warner, ¶ 26 (Dkt. 718). Warner merely cites the above portions of the Dessantos deposition and opines that this leak constituted a “potential release[] of PCE and other contaminants by [AmeriPride] at the [facility].” Id. This opinion is discussed below. The court notes it here merely to state that Warner adds no additional facts regarding the timing, extent, etc. of the leak. 18 1 this occasion the top of another pipe was also broken, but because 2 of the nature of the breach “nothing really leaked out” of the 3 second pipe. 4 5 Id. Fourth, the parties agree that the wastewater sump overflowed “a couple” of times. SDF ¶ 29. 6 Finally, in addition to these discrete leaks resulting from 7 damage or overflow, TEO raises a triable question as to whether the 8 system inherently leaks. TEO marshals three types of evidence in 9 support of this argument. First, TEO’s expert Warner argues that 10 wastewater systems generally leak, implying that leaks may be 11 presumed here. Warner Decl. ¶ 30 (Dkt. 718). Warner supports this 12 assertion with citations to various studies by the Environmental 13 Protection Agency and California regulators. 14 parties agree that contaminants other than PCE breakdown products 15 have been found on the site. 16 most 17 wastewater. 18 evidence regarding the integrity of the sewer system. 19 argues that video and conductivity test demonstrated that the 20 system did not leak. 21 inherent in these studies, opining that the studies could not 22 reveal whether leaks exist. likely source of Id. ¶ 32. Id. Second, the Warner’s expert opinion is that the these contaminants would be leaking Third, TEO seeks to rebut AmeriPride’s AmeriPride Warner offers testimony regarding limits Warner Decl. ¶ 31.12 23 12 24 25 26 In a fourth argument about leaks in the wastewater system, Warner contends that on site studies have found soil moisture in a pattern indicating wastewater leaks. Warner Decl. ¶ 31 (Dkt. 718). AmeriPride objects to this testimony on the ground that these underlying studies were not tendered in connection with TEO’s opposition to the present motion; TEO disputes whether Fed. R. Civ. 19 b. 1 Effects of the Wastewater Leaks 2 In the preceding section, the court concluded that TEO had 3 raised triable questions as to whether AmeriPride had discharged 4 wastewater into the soil. 5 aggravated the groundwater contamination by contributing additional 6 PCE and by mobilizing the PCE that was already there. i. 7 TEO contends that these discharges PCE in the Wastewater 8 The parties agree that AmeriPride received laundry that was 9 contaminated with PCE, notably laundry from automotive and print 10 shops. Farr Decl. ¶ 25 (Dkt. 698-5), Warner Decl. ¶¶ 11-12 (Dkt. 11 718). The parties further agree that dissolved PCE has been 12 detected in AmeriPride’s wastewater, although AmeriPride disputes 13 Warner’s conclusion that the wastewater “consistently contained 14 dissolved PCE.” 15 the wastewater system leaked, a trier of fact could conclude that 16 these leaks contributed additional PCE to the soil. ii. 17 18 Because there is a triable question as to whether TEO’s expert Wastewater Can Move PCE Already in The Ground Warner testifies, on the basis of his 19 professional training and experience, that DNAPL PCE of the type 20 spilled by TEO moves through soil slowly absent something to push 21 it farther, such that “only a minor portion . . . would have most 22 likely impacted groundwater” as a result of the initial spills. 23 Warner Decl. ¶ 6 (Dkt. 718). Warner similarly declares that 24 25 26 P. 56 required these studies to be submitted. The court need not resolve this dispute, because other aspects of Warner’s testimony are sufficient to create a triable question as to whether the wastewater system leaked. 20 1 wastewater could have mobilized the DNAPL PCE in the soil, causing 2 it to travel further through the soil and therefore reach the 3 groundwater. 4 testimony. 5 E. 6 Id. ¶ 9. A trier of fact could credit this Cleanup of the Facility The court now turns to the facts regarding AmeriPride’s 7 investigation and remediation of PCE contamination. 8 to many of the facts in this section on hearsay grounds and by 9 arguing that the cited evidence fails to support TEO objects the facts 10 asserted. Except where otherwise noted, these objections are 11 overruled. In particular, much of the evidence falls into the 12 public record and business record exemptions to the hearsay rule. 13 1. Discovery of PCE 14 “In 1997, during remodeling work, AmeriPride detected . . . 15 PCE . . . in near-surface soil beneath the Site . . . . AmeriPride 16 conducted additional soil investigations . . . to determine the 17 extent of the PCE in the soil gas and possible soil cleanup 18 alternatives.” 19 and Abatement Order RS-2009-0702 ¶ 10 (April 30, 2009) (Dkt. 698-7 20 page 173 of 228) (“2009 Abatement Order”); see also Marcus Dep. 14 21 (Dkt. 698-7 page 32 of 228). Cal. Regional Water Quality Control Board Cleanup 22 AmeriPride reported this discovery to the Sacramento County 23 Environmental Management Department by telephone. Marcus Dep. 14. 24 AmeriPride contends that this call was made “immediately,” but the 25 cited evidence provides no indication as to timing. 26 After the discovery of the contamination, a series of soil 21 1 bores and groundwater monitoring wells were installed. Marcus Dep. 2 16, 2009 Abatement Order ¶ 11 (indicating that well investigations 3 were done between 1997 and 2002). 4 that PCE was in the groundwater as well as the soil. These investigations revealed Id. 5 In August 2001, PCE was detected in water from two nearby 6 wells: a California-American Water Company municipal supply well 7 and a well used by Huhtamaki North America (formerly Chinet). 2003 8 Abatement Order ¶¶ 14-15 (Dkt. 698-7, page 77 of 228). As a result 9 of this contamination, Cal-Am and Huhtamaki discontinued use of 10 these and neighboring wells. Id. ¶¶ 14-17. 11 2. Remedial Actions 12 Also in 2002, the California Regional Water Quality Control 13 Board (“RWQCB”) became the government agency with control over the 14 site investigation. 2009 Abatement Order ¶ 16 (Dkt. 698-7 page 173 15 of 228). 16 Delta and Burns & McDonnell, have performed investigation and 17 remediation at the site on behalf of AmeriPride. 18 12-13 (698-6 page 3 of 65); SUF ¶ 53. 19 is ongoing, as the work directed by the RWQCB has not been 20 completed. 21 Id., SUF ¶ 60. 22 and its breakdown products in the soil and groundwater at and near 23 the facility. 24 In Under the direction of the RWQCB, two consulting firms, SUF ¶ 54. Stott Decl. ¶¶ The cleanup at the facility As such, additional costs will be incurred. TEO has not performed any work to address the PCE SUF ¶ 55. connection with this investigation and remediation, 25 AmeriPride designed and executed a community relations plan which 26 included a number of public meetings. 22 SUF ¶ 89. AmeriPride 1 conducted remedial investigation/feasibility study efforts, 2 implemented interim remedial/removal actions involving public and 3 private water supplies, and implemented final remedial measures. 4 SUF ¶¶ 90, 92. 5 and safety plans. 6 efforts were approved by regulators after public comment. 7 94. AmeriPride further designed and conducted health SUF ¶ 93. AmeriPride’s proposed remediation SUF ¶ 8 As part of AmeriPride’s remediation, contaminated groundwater 9 is pumped to the surface at Operating Units 2 and 3 of the 10 facility. 11 AmeriPride’s laundry operations, after which it is discharged into 12 the municipal sewer system. 13 This groundwater is treated and then used in AmeriPride places its total costs in connection with the 14 action 15 investigation and remediation as of August 2010, Bryant Decl. ¶ 48 16 (Dkt. 698-8 page 11 of 159), $474,729.67 in regulatory oversight 17 through September 2010, Peter Decl. ¶ 30 (Dkt. 698-17 page 8 of 9), 18 and $10.25 million in settlement paid to Huhtamaki and Cal-Am, SUF 19 ¶ 62. 20 at over $18 million. This includes $7,331,528.25 for TEO does not dispute that these amounts were spent. The RWQCB determined that the facility was responsible for the 21 PCE in the Huhtamaki and Cal-Am wells. 22 ordered AmeriPride to provide replacement water for these two 23 companies. 24 discharged by the $10.25 million in settlements referred to in the 25 preceding paragraph. 26 //// SUF ¶ 61. SUF ¶ 64. The RWQCB then The RWQCB held that this obligation was SUF ¶¶ 68-69, 74-75. 23 III. ANALYSIS 1 2 AmeriPride seeks summary judgment as to its claims under 3 CERCLA sections 107 and 113(g)(2). AmeriPride further seeks 4 summary judgment on TEO’s counterclaims, which are brought under 5 CERCLA section 113(f) and state law. 6 As summarized above, section 107 allows a party to recover 7 “response costs” from parties who contributed to contamination. 8 Once a party has paid costs under section 107, that party may use 9 section 113(f) to seek indemnification or contribution from other 10 parties, including the section 107 plaintiff. 11 court begins by discussing the elements of a prima facie case under 12 section 107. The court then determines that AmeriPride is entitled 13 to summary judgment as to satisfaction of the bulk of these 14 elements, although questions remain as to the precise amount of 15 response costs incurred. 16 allocating those costs between AmeriPride and TEO, whether through 17 apportionment under section 107 or through a claim for contribution 18 under 19 adjudication 20 AmeriPride’s section 113(g)(2) claim for declaratory judgment 21 regarding liability for future response costs. 22 section 113(g)(2) claim is largely derivative of AmeriPride’s 23 section 107 claim, and therefore can only be partially resolved on 24 this motion. 25 //// 26 //// section of 113(f). these In this order, the The court then turns to the question of Material issues. questions Finally, 24 the preclude court summary addresses AmeriPride’s 1 2 3 4 5 A. Section 107 Claim As explained above, a private plaintiff must show four elements to demonstrate a prima facie case under section 107: (1) the site on which the hazardous substances are contained is a “facility” under CERCLA’s definition of that term, Section 101(9), 42 U.S.C. § 9601(9); 6 7 (2) a “release” or “threatened release” of any “hazardous substance” from the facility has occurred, 42 U.S.C. § 9607(a)(4); 8 9 10 (3) such “release” or “threatened release” has caused the plaintiff to incur response costs that were “necessary” and “consistent with the national contingency plan,” 42 U.S.C. §§ 9607(a)(4) and (a)(4)(B); and 11 12 (4) the defendant is within one of four classes of persons subject to the liability provisions of Section 107(a). 13 City of Colton, 614 F.3d at 1002-03. In this case, AmeriPride has 14 satisfied the first, second, and fourth elements of this test; TEO 15 does not meaningfully contest these issues. The property is a 16 “facility” “where a hazardous substance has . . . come to be 17 located.” 42 U.S.C. § 9601(9), SUF ¶ 4. TEO released PCE into the 18 soil at least once. 42 U.S.C. § 9601(22) (defining releases). TEO 19 is a type of person potentially subject to liability, as TEO owned 20 the facility at the time the PCE was disposed of. 42 U.S.C. §§ 21 9607(a)(2), 9601(21) (corporations are persons for purposes of 22 CERCLA), 9601(29) (“disposal” includes “spilling”). 23 As to the third element, TEO intermingles two arguments, 24 asserting that AmeriPride violated the national contingency plan 25 and that AmeriPride seeks costs outside the scope of CERCLA section 26 25 1 107.13 2 with the national contingency plan, and then turns to TEO’s three 3 arguments: 4 requirements, that AmeriPride’s response was not cost effective, 5 and that AmeriPride seeks recovery for amounts that are not 6 “response costs” within the meaning of section 107. 7 reasons explained below, AmeriPride is entitled to summary judgment 8 on the overall issue of national contingency plan compliance. 9 Nonetheless, it appears that the amount sought by AmeriPride must The court first reviews the caselaw regarding compliance that AmeriPride violated the plan’s reporting For the 10 be reduced. Furthermore, the court agrees that a second group of 11 costs cannot be recovered under section 107, although the court 12 will permit AmeriPride to seek these costs under section 113(f). 13 The court postpones discussion of apportionment and contribution 14 until part III(B) below. 15 1. The National Contingency Plan 16 Response costs are considered consistent with the National 17 Contingency Plan “if the action, when evaluated as a whole, is in 18 substantial compliance” with it. 19 (emphasis added). 40 C.F.R. § 300.700(c)(3)(I) The National Contingency Plan is codified at 40 20 21 22 23 24 25 26 13 TEO also asserts without meaningful argument that AmeriPride’s response costs were not “necessary,” a separate aspect of the third section 107 element. Response costs are considered necessary when “an actual and real threat to human health or the environment exist[s].” Carson Harbor I, 270 F.3d at 871. The Regional Water Quality Control Board identified such a threat, and TEO does not dispute that such a threat existed. Instead, TEO’s “necessity” argument merely rephrases TEO’s cost-effectiveness argument. That is, TEO argues that certain specific costs were unnecessary because cheaper alternatives were available. The court addresses cost effectiveness below. 26 1 C.F.R. part 300. This plan “specifies procedures for preparing and 2 responding 3 Environmental Protection Agency (EPA) pursuant to CERCLA § 105.” 4 Cooper Indus., Inc. v. Aviall Servs., Inc., 543 U.S. 157, 161 n. 5 2 (2004). “It is designed to make the party seeking response costs 6 choose a cost-effective course of action to protect public health 7 and the environment.” Carson Harbor II, 433 F.3d at 1265 (internal 8 quotation marks omitted), see also City of Colton, 614 F.3d at 9 1003. to contaminations and was promulgated by the 10 For purposes of a claim under CERCLA section 107(a)(4)(B), the 11 court evaluates substantial compliance by looking to the provisions 12 enumerated in 40 C.F.R. §§ 300.700(c)(5) and (c)(6) and to whether 13 the response “results in a CERCLA-quality cleanup.” 14 300.700(c)(3). 15 other things, worker health and safety, documentation, reporting 16 of releases, site evaluation, and remedial investigation and 17 feasibility studies. Subpart (c)(6) imposes requirements regarding 18 public 19 ‘protective of human health and the environment,’ (2) utilizes 20 ‘permanent solutions and alternative treatment technologies or 21 resource recovery technologies,’ (3) is cost-effective, and (4) is 22 selected after ‘meaningful public participation.’” 23 Manor, 622 F. Supp. 2d at 930 (quoting 55 Fed. Reg. 8666, 8793 24 (March 8, 1990)). 25 AmeriPride has satisfied the majority of these requirements. 26 e.g., Subpart (c)(5) enumerates requirements for, among participation. SUF ¶¶ 40 C.F.R. § A “CERCLA-quality cleanup” is “(1) Walnut Creek In this case, TEO does not dispute that 89-90, 92-94. Instead, 27 TEO’s sole See, national 1 contingency plan arguments are that AmeriPride violated reporting 2 requirements and that the response action was not cost effective. 3 The cases provide unclear guidance as to how compliance with 4 the contingency plan fits into the section 107 analysis. CERCLA 5 allows recovery of “necessary costs of response incurred by any 6 other person consistent with the national contingency plan.” 7 U.S.C. § 9607(a)(4)(B). 8 held that consistency with the national contingency plan is an 9 element of a private party’s prima facie case under section 107. 10 Carson Harbor I, 270 F.3d at 870-71, see also Ascon Properties, 866 11 F.2d 1149. 12 proving that cleanup costs were consistent with this plan. 13 Harbor II, 433 F.3d at 1265. 14 I had held, however, that “the question [of] whether a response 15 action is necessary and consistent with the criteria set forth in 16 the contingency plan is a factual one to be determined at the 17 damages 18 Fairview/California, Inc. v. Dow Chemical Co., 840 F.2d 691, 695 19 (9th Cir. 1988), see also Mid Valley Bank v. North Valley Bank, 764 20 F. Supp. 1377, 1389-90 (E.D. Cal. 1991) (Karlton, J.) (following 21 Cadillac Fairview to hold that “a failure to comply with the 22 [National Contingency Plan] is not a defense to liability, but goes 23 only to the issue of damages.”).14 42 An en banc panel of the Ninth Circuit has A private plaintiff accordingly bears the burden of stage of a Carson Other cases prior to Carson Harbor section 107(a) action.” Cadillac 24 14 25 26 Another case holding that national contingency plan noncompliance affected damages, but not liability, was Basic Management Inc. v. U.S., 569 F. Supp. 2d 1106, 1121 (D. Nev. 2008). Although Basic Management was decided after Carson Harbor I and II, 28 1 As this court understands the issue, these cases may be 2 reconciled by noting that under the statutory text, the question 3 is whether any particular cost is consistent with the national 4 contingency plan, rather than whether the plaintiff has uniformly 5 adhered 6 violations of the national contingency plan warrant different 7 treatment. 8 the national contingency plan completely bars recovery. 9 Colton, 614 F.3d at 1004. to the plan. Thus, different types of substantial Total failure to comply with the procedural aspects of City of Similarly, the Northern District of 10 California has held that a plaintiff who failed to provide “any 11 meaningful opportunity for public participation [had committed] 12 more than a technical or de minimis deviation from the NCP. . . . 13 As such, [the plaintiff had not] met its burden of demonstrating 14 that its incurred response costs were ‘consistent’ with the NCP, 15 and thus recoverable under CERCLA.” Waste Mgmt. of Alameda County, 16 Inc. v. E. Bay Reg’l Park Dist., 135 F. Supp. 2d 1071, 1103 (N.D. 17 Cal. 2001). City of Colton suggested, however, that a past failure 18 to 19 Contingency Plan did not bar all possible future recovery. 20 of Colton, 614 F.3d at 1004 n.4, 1004-08. 21 case effectively conceded that past costs had been incurred without 22 substantial compliance with the national contingency plan, but the 23 plaintiff sought a declaratory judgment entitling it to recovery comply with the procedural requirements of the National City The plaintiff in that 24 25 26 it relied on a Fifth Circuit case without citing the above Ninth Circuit authority; as such, Basic Management carries little persuasive weight. 29 1 of future costs that would be incurred in compliance with the plan. 2 Id. at 1004. 3 declaratory judgment in the absence of a showing of “liability for 4 past costs . . . under section 107.” 5 not reject, however, the plaintiff’s underlying premise that future 6 costs could be consistent with the plan notwithstanding past 7 inconsistency. The court held that CERCLA did not authorize such a Id. at 1008. The court did 8 Thus, the inquiry under CERCLA section 107(a)(4)(B) is whether 9 the particular costs for which the plaintiff seeks reimbursement 10 were incurred in connection with the national contingency plan, and 11 not whether the plaintiff has ever violated the plan. For example, 12 a 13 complying with the public participation requirements cannot recover 14 the costs of that action. 15 Supp. 2d at 1103. 16 incurs costs without public participation can recognize the error, 17 seek meaningful participation regarding any work that remains, and 18 thereby recover the latter costs. 19 twin aims of providing an incentive for cleanup while ensuring that 20 the cleanup occurs in an effective (and cost-effective) manner. 21 To hold otherwise would mean that once a party had substantially 22 violated the national contingency plan, that party would have 23 little incentive to remediate the site. 24 also 25 particular costs complied with the national contingency plan. 26 //// plaintiff who disregard undertakes a remedial action without first Waste Mgmt. of Alameda County, 135 F. It appears, however, that a party who initially the statute’s This approach serves CERCLA’s syntax, 30 Holding otherwise would which looks to whether 1 2. 2 Under 40 C.F.R. § 300.700(c)(5)(iv), one of the indicia of 3 “substantial compliance” with the national contingency plan is 4 compliance with 40 C.F.R. § 300.405. 5 reporting of “releases” of hazardous materials. 6 provides that “A release may be discovered through: . . . (5) 7 Inventory or survey efforts or random or incidental observation 8 reported by government agencies or the public; . . . [or] (8) Other 9 sources,” 10 Reporting the 1983 Discovery of PCE Fumes and “reports of [such] Section 300.405 requires releases . Specifically, it . . shall, as appropriate, be made to the [National Response Committee].” 11 As noted above in part II(D)(2), TEO has raised a triable 12 question as to whether AmeriPride discovered PCE in the soil in 13 1983 14 AmeriPride was required to report the presence of PCE at that time. 15 The court assumes that reporting was required without deciding the 16 issue. Even under this assumption, the failure to report a release 17 does not preclude a finding of substantial compliance with the 18 National Contingency Plan. NL Industries, Inc. v. Kaplan, 792 F.2d 19 896, 898-99 (9th Cir. 1986). 20 confronted this issue, the court quotes the opinion at length: 21 22 23 24 25 26 when excavation released PCE fumes. TEO argues that Because NL Industries squarely [defendant] NL Industries contends that [plaintiff] Kaplan did not incur response costs “consistent with the national contingency plan” since it failed to report promptly the existence of a release of hazardous substances to the National Response Center, as required by 40 C.F.R. § 300.63(b) (1985). We have held, however, that consistency with the national contingency plan does not necessitate strict compliance with its provisions. [Wickland Oil Terminals v. 31 1 Asarco, Inc, 792 F.2d 887, 891-92 (9th Cir. 1986).] The apparent purpose of the requirement that releases be reported promptly to the National Response Center is to facilitate the development by a lead agency of a coordinated governmental response. Since we have held in Wickland that private parties may incur costs consistent with the national contingency plan without acting pursuant to a cleanup program approved by a lead agency, it would make little sense for us to bar private party recovery under section 107(a) of CERCLA on the basis of failure to comply with 40 C.F.R. § 300.63(b) (1985). Therefore, we hold that noncompliance with this section does not alone render the incurrence of response costs inconsistent with the national contingency plan. 2 3 4 5 6 7 8 9 10 11 NL Industries, 792 F.2d at 898-99. 12 subsequent 13 pertains to compliance with the national contingency plan.15 cases addressing the The court is not aware of any reporting requirement as it 14 At oral argument, TEO conceded that NL Industries established 15 that failure to report, without more, does not constitute a 16 substantial violation of the national contingency plan. TEO argues 17 that something “more” is present in this case, namely, harm 18 resulting from the delay in reporting. 19 that NL Industries rested on the factual conclusion that the 20 failure to report was harmless in that case. In contrast, TEO argues 21 15 22 23 24 25 26 All the cases TEO cites about reporting have to do with claims for failure to report under CERCLA section 103, and none have to do with the question of whether failure to report precludes recovery of costs under section 107. United States v. Buckley, 934 F.2d 84, 89 (6th Cir. 1991), Sierra Club, Inc. v. Tyson Foods, Inc., 299 F. Supp. 2d 693 (W.D. Ky. 2003). Tyson Foods stands for the unobjectionable propositions that a party actual or constructive knowledge will trigger a duty to report, but that the duty only arises when there is knowledge of both a release and that the release occurred in a reportable quantity. 32 1 The court agrees that a failure to report, if it leads to a 2 delay in a response, can aggravate contamination. 3 a party whose delay makes the problem worse can bear responsibility 4 for a share of the response costs. 5 156 F.3d 416, 422 (2d Cir. 1998), overruled on other grounds by 6 W.R. Grace & Co.-Conn. v. Zotos Int’l, Inc., 559 F.3d 85, 90 (2d 7 Cir. 2009) (citing Cooper Indus., Inc. v. Aviall Servs., Inc., 543 8 U.S. 157 (2004)). 9 by posturing the delay as a violation of the national contingency 10 plan, TEO argues that AmeriPride should be wholly barred from 11 recovery. 12 Under CERCLA, Bedford Affiliates v. Sills, TEO argues for a broader proposition, however: The court rejects TEO’s broader argument as contrary to the 13 purposes of CERCLA. 14 failed to report a discharge leading to a delay in cleanup, that 15 party would be forever barred from recovering response costs. This 16 would 17 incentive to clean the site. 18 report unique among violations of the contingency plan. 19 court explained above, City of Colton implies that other violations 20 of the national contingency plan can be corrected, at least 21 prospectively. 22 fails to report cannot partially cure this failure by reporting at 23 a later date--indeed, AmeriPride did file a later report in this 24 case. 25 26 vastly Under TEO’s interpretation, once a party had diminish, if not wholly eliminate, the party’s It would also make a failure to As the Under TEO’s interpretation, a party who initially The court further notes that TEO’s interpretation would apparently be at odds with the purposes of CERCLA. 33 Under TEO’s 1 position, once AmeriPride had failed to initially report a release, 2 AmeriPride would be forever barred from recovering response costs 3 under 4 requirements into, in some sense, a more extreme violation of 5 CERCLA 6 responsible for the majority of pollution can bring a section 107 7 claim against another party to recover the small fraction of costs 8 attributable to the second party. 9 consequently remove a key incentive for the non-reporting party to 10 remediate the site, thereby frustrating CERCLA’s primary purpose. 11 Cases concerning other violations of the national contingency plan 12 have not imposed such forward looking consequences. 13 above, City of Colton suggested that where a party has failed to 14 comply with the national contingency plan, the party could not 15 recover past costs, but that the door remained open for compliance 16 in future remedial efforts and thus future recovery. 17 section than 107. This discharge Rejecting TEO’s of would make pollution argument violation itself. of Even reporting a party TEO’s interpretation would does not read As discussed the reporting 18 requirement out of the regulation, because a failure to report 19 still carries consequences. 20 action for failure to report discharges of hazardous chemicals, 21 CERCLA § 103, and the threat of such suits is an incentive to 22 report. 23 demonstrate a substantial violation of the national contingency 24 plan, is one factor that may be evaluated together with other 25 violations in determining substantial compliance. Washington State 26 Dept. of Transp. v. Washington Natural Gas Co., Pacificorp, 59 F.3d A failure to CERCLA provides a separate cause of report, 34 while itself insufficient to 1 793, 805 (9th Cir. 1995) (compliance evaluated based on the 2 “situation as a whole.”).16 3 a failure to report may expose a party to liability contribution 4 under 5 consequences, the court’s rejection of TEO’s argument does not 6 eliminate the reporting requirement from the regulation. 7 case, the report requirement remains an issue for trial because of 8 the contribution question. 9 section In 113(f). summary, there Finally, as the court explained above, Because is a of triable these numerous question as potential In this to whether 10 AmeriPride was aware of the PCE contamination in 1983. Regardless 11 of whether AmeriPride was aware of PCE contamination in 1983, 12 AmeriPride’s response costs were incurred in substantial compliance 13 with the national contingency plan. 14 report in the context of its section 113(f) counterclaim. TEO may raise the failure to 15 3. 16 TEO next argues that the particular remedial measures adopted 17 by AmeriPride violated the national contingency plan because they 18 were not “cost effective,” 55 Fed. Reg. 8793. 19 TEO’s argument and grants summary adjudication to AmeriPride on 20 this issue. 21 Appropriateness of Response Costs The court rejects TEO first argues that rather than treating the contaminated 22 water, AmeriPride should 23 municipal sanitary sewer. 24 13-14. have discharged the water into the TEO’s Opp’n to Pl.’s Mot. For Summ. J., TEO asserts that this option would have been cheaper, 25 16 26 In this case, however, TEO has not provided evidence of any other general violations of the national contingency plan. 35 1 relying on the Warner expert declaration. (Dkt. 718). Warner 2 offers no evidence, however, regarding his cost calculations. 3 AmeriPride argues that discharging contaminated water to the 4 sanitary sewer would be more expensive than treating the water. 5 AmeriPride re-uses the treated water in laundry operations before 6 discharging the water to the sewer. Stott Rebuttal Decl. ¶ 8 (Dkt. 7 727-9). 8 AmeriPride would be unable to use it for laundry. 9 would therefore have to pay to discharge of both contaminated water If AmeriPride did not first treat the contaminated water, Id. AmeriPride 10 and laundry’s “process water” into the sewer. 11 option would not obviate the expenses incurred in extracting and 12 testing the contaminated water. 13 declaration indicating that as a result of these expenses, stopping 14 treatment of contaminated water at Operating Unit 2 would increase 15 expenses by $21,100 annually. 16 present motion, TEO has not submitted any evidence to the contrary. 17 Instead, Warner’s analysis of Operating Unit 2 ignores the costs 18 associated 19 sanitary sewer. with disposing of Id. Id. ¶ 9. Moreover, this AmeriPride submitted a In connection with the contaminated water through the Warner Decl. ¶ 49 (Dkt. 718). 20 TEO advances a broader argument regarding the facility’s 21 “operating unit 3”. For this unit, Warner argues that discharging 22 to the sanitary sewer would also have saved many up-front capital 23 costs in addition to saving annual treatment costs, but Warner does 24 not provide any evidence regarding annual costs of disposal to the 25 sanitary sewer. 26 credit Warner’s conclusions regarding capital savings. AmeriPride Id. The court assumes that a trier of fact could 36 1 has provided evidence indicating, however, that these capital 2 savings would be overwhelmed by increases in annual disposal costs, 3 an issue on which TEO has not provided evidence.17 4 Decl. ¶¶ 11-14 (Dkt. 727-9). 5 a triable question as to whether discharging the contaminated water 6 directly 7 treatment option. into the sanitary Stott Rebuttal Accordingly, TEO has failed to raise sewer would have been a cheaper 8 TEO also asserts that AmeriPride seeks recovery for “other 9 potentially unjustified costs enumerated in [expert] Jim Warner’s 10 declaration and report.” 11 14. 12 addresses despite TEO’s failure to discuss these costs in its 13 brief. 14 competitive bidding was used for construction work at the site. 15 If not, it is possible that the costs could have been reduced.” 16 Warner Decl. ¶ 49 (Dkt. 718). 17 triable question. 18 (“metaphysical doubt” insufficient to defeat motion for summary 19 judgment). 20 TEO’s Opp’n to Pl.’s Mot. For Summ. J., Warner identifies only two such costs, which the court Warner states “I was not able to determine whether This is insufficient to raise a Matsushita Elec. Indus., 475 U.S. at 585-86 Warner also argues that, although the Regional Water Quality 21 Control Board requires AmeriPride to monitor the plume of 22 groundwater contamination on a quarterly basis, AmeriPride “should 23 have been more aggressive in negotiating [with the Board for] a 24 25 26 17 Warner assumed that the costs of water disposal and the operating costs of the treatment facility would be equivalent, without indicating that he had actually considered the issue. 37 1 semiannual or even annual monitoring program.” 2 This does not raise a triable issue. 3 wholly speculative as to whether such an aggressive posture would 4 have influenced the agency. 5 the Board would have been receptive because the local Board has 6 approved less frequent monitoring on analogous projects. 7 Since those questions turn on particular facts, an assertion of 8 similarity is less then convincing. 9 whether less frequent monitoring, although cheaper, would have been 10 as effective. By requiring a cost-effective response, the national 11 contingency plan does not mandate the cheapest possible response. 12 Instead, courts have held that more expensive options were cost- 13 effective when the added expense bought additional environmental 14 benefit. 15 American Premier Underwriters, Inc., 240 F.3d 534, 546 (6th Cir. 16 2001). 17 Board has approved semiannual monitoring in other cases does not 18 raise a triable question as to the cost-effectiveness of quarterly 19 monitoring. 20 4. 21 Separate from TEO’s arguments regarding compliance with the 22 national contingency plan, TEO challenges AmeriPride’s calculation 23 of costs. 24 AmeriPride’s costs have been partially offset by recovery from 25 other 26 reimbursement for funds paid in settlement to third parties. Franklin Warner Decl. ¶ 49. It appears to the court Warner argues that it is likely that Id. Moreover, it is unclear as to County Convention Facilities Authority v. Thus, the court concludes that Warner’s statement that the AmeriPride’s Calculation of Response Costs TEO first raises triable questions as to whether sources. TEO then argues 38 AmeriPride cannot seek The 1 court concludes that although these settlement costs are not 2 recoverable under CERCLA section 107, AmeriPride may pursue them 3 under section 113(f). 4 a. Costs Offset by Other Sources 5 TEO argues that AmeriPride’s costs are offset by the economic 6 benefit AmeriPride derives from re-using treated water and by funds 7 AmeriPride has received in settlement from third parties. 8 Taking the first issue, TEO argues that by re-using the 9 treated water, AmeriPride offsets the cost of purchasing water from 10 the city, but that AmeriPride has failed to include this savings 11 in its cost calculations. 12 13-14. Warner Decl. ¶ 49 (Dkt. 718). 13 argument as an aspect of cost-effectiveness, the argument merely 14 speaks to accounting, rather than to whether AmeriPride’s course 15 of conduct was cost effective (and by extension, whether AmeriPride 16 complied with the national contingency plan). Warner declares that 17 AmeriPride saved $28,632 in this manner. 18 responded to this argument. 19 testimony, the consequence will be to reduce AmeriPride’s recovery 20 by $28,632, not to wholly bar AmeriPride from recovery. TEO’s Opp’n to Pl.’s Mot. For Summ. J., Although TEO presents this AmeriPride has not If the trier of fact credits Warner’s 21 As to funds received in settlement, under CERCLA, a settlement 22 by one defendant “reduces the potential liability of the others by 23 the amount of the settlement.” 24 asserts that AmeriPride has received funds in settlements with 25 Chromalloy and Petrolane, although TEO does not quantify these 26 funds. TEO’s response to SUF ¶ 56. 39 42 U.S.C. § 9613(f)(2). TEO AmeriPride agrees that it has 1 received these funds and that its claim must be reduced by this 2 amount. 3 funds, the court does not further address this issue now. b. 4 5 Because the parties’ briefing does not quantify these Money AmeriPride Paid in Settlement TEO also points to AmeriPride’s settlement of claims brought 6 against it 7 AmeriPride paid $8.25 million in settlement to Huhtamaki and $2 8 million to Cal-Am, for a total of $10.25 million. 9 4 (“Huhtamaki Settlement”), Notice of Mot. and Joint Mot. for 10 Approval of Settlement, 2:02-cv-01479, Dkt. 100 at 2 (“Cal-Am 11 Settlement”). 12 agreed to dismiss appeals of certain Cleanup and Abatement Orders 13 issued by the Central Valley Regional Water Quality Control Board 14 and to comply with future orders issued by the Board regarding PCE. 15 Although 16 indemnification or contribution for these costs under section 107, 17 the court permits AmeriPride to pursue these costs under section 18 113(f). the by Huhtamaki and California-American (Cal-Am). Dkt. 638 page In these settlement agreements, AmeriPride further court concludes that AmeriPride may not seek 19 The Supreme Court has explained that “[w]hen a party pays to 20 satisfy a settlement agreement or a court judgment, it does not 21 incur its own costs of response . . . [r]ather, it reimburses other 22 parties for costs that those parties incurred.” Atlantic Research, 23 551 U.S. at 139. 24 the relationship between CERCLA sections 107 and 113(f). 25 sections have differing scopes. 26 of action for “contribution” for damages paid to another party. The court reached this conclusion by examining The two Section 113(f) provides a cause 40 1 Atlantic Research, 551 U.S. at 139. 2 of “response costs.” 3 is that section 113(f) has a shorter statute of limitation than 4 section 107. 5 funds paid to a third party, a party could always circumvent 6 section 113(f)’s statute of limitations by repackaging the same 7 claim under section 107. 8 9 Section 107 allows recovery Another distinction between the two sections The Court held that if “response costs” included Id. Here, the court agrees with TEO that the funds AmeriPride paid in settlement were not “response costs.” AmeriPride argues to the 10 contrary, asserting that these payments were for the cost of 11 providing 12 AmeriPride argues that pursuant to the Regional Water Quality 13 Control Board Abatement Orders, AmeriPride had pre-existing legal 14 obligations to provide replacement water to Huhtamaki and Cal-Am, 15 and that the Board held that the settlements discharged these 16 obligations. The settlement agreements demonstrate, however, that 17 rather than fulfilling these obligations directly, AmeriPride paid 18 funds in exchange for agreements from Cal-Am and Huhtamaki to 19 release AmeriPride from this obligation. 20 Huhtamaki Settlement at 3, 4, 8. 21 funds to Huhtamaki and Cal-Am, rather than actually purchasing 22 replacement water, the court cannot view these payments as response 23 costs. replacement water and therefore response costs. Cal-Am settlement at 5, Because AmeriPride simply paid 24 Atlantic Research did not hold that a party cannot seek 25 contribution for settlement payments; the Court merely held that 26 such claims must be brought under section 113(f) rather than 41 1 section 107. Nothing appears to preclude AmeriPride from bringing 2 a section 113(f) claim here. 3 statute of limitations has expired. 4 AmeriPride should be prevented from recovering these costs because 5 AmeriPride failed to cite the correct provision of the statute in 6 its complaint. 7 AmeriPride may therefore seek to recover these costs under section 8 113(f). Notably, it does not appear that the Thus, TEO simply argues that The court rejects this “magic words” argument. 9 Finally, TEO notes that the settlements restated AmeriPride’s 10 existing obligation to comply with Regional Water Quality Control 11 Board orders regarding cleanup. 12 settlement restated these obligations, the costs associated with 13 these obligations were transformed into non-recoverable settlement 14 costs. TEO misunderstands Atlantic Research. Notwithstanding the 15 settlement, costs paid in connection with remediation actually 16 performed by AmeriPride remain recoverable. TEO argues that because the 17 5. Summary of Liability under Section 107 18 TEO raised three arguments in response to AmeriPride’s section 19 107 claim. First, TEO argued that the claim was barred by 20 AmeriPride’s failure to report PCE contamination in 1983. Assuming 21 that AmeriPride was aware of the contamination at that time, any 22 failure to report does not demonstrate that AmeriPride was not in 23 substantial compliance with the national contingency plan, as 24 explained by the Ninth Circuit in NL Industries, 792 F.2d 896. 25 Second, TEO argues that AmeriPride’s response costs were not cost- 26 effective. TEO has failed to raise a triable question regarding 42 1 cost-effectiveness. Finally, TEO challenges AmeriPride’s 2 accounting for costs. 3 AmeriPride’s recovery must be offset by the value of the treated 4 water and by amounts AmeriPride received in settlement from third 5 parties. 6 Huhtamaki and Cal-Am were not “response costs” recoverable under 7 CERCLA section 107, but AmeriPride may seek to recover these funds 8 under section 113(f). Triable questions exist as to whether The court further agrees that funds AmeriPride paid to 9 Thus, AmeriPride is entitled to summary judgment regarding the 10 threshold question of TEO’s liability under section 107. The court 11 therefore turns to the questions of AmeriPride’s fault in the 12 matter. 13 B. 14 Apportionment and Contribution CERCLA provides various mechanisms by which liability may be 15 distributed among potentially responsible parties. Under section 16 107, where the defendant can show that it is liable for only an 17 identifiable portion of the harm, courts will apportion liability 18 accordingly. 19 To defeat a plaintiff-initiated motion for summary judgment, the 20 defendant only needs to show there are “genuine issues of material 21 fact regarding a reasonable basis for apportionment of liability.” 22 U.S. v. Alcan Aluminum Corp. (Alcan-PAS), 990 F.2d 711, 722 (2nd 23 Cir. 1993). 24 strict standards of section 107, a defendant may seek contribution 25 under section 113(f), which allows for consideration of additional 26 equitable factors, and which further allows a defendant to seek Burlington Northern, 129 S.Ct. at 1882 n.9 (2009). Even when apportionment is not possible under the 43 1 contribution from the section 107 plaintiff. Burlington Northern, 2 129 S.Ct. at 1882 n.9. 3 In the instant motion, AmeriPride argues that it did not 4 contribute to the PCE contamination in any way, and that the court 5 should therefore ascribe 100% of the liability to TEO. 6 basis, AmeriPride argues that the court should grant summary 7 judgment for AmeriPride’s section 107 claim, dismiss TEO’s section 8 113(f) 9 counterclaims. 10 counterclaim, and similarly dismiss TEO’s On this state law The court rejects this argument because triable questions 11 exist as to whether AmeriPride contributed to the PCE 12 contamination. 13 culpable conduct. 14 cleaning 15 AmeriPride’s purchase of the facility, presumably spilling some 16 PCE. 17 with PCE into the soil. 18 discharge, even if it was not contaminated with PCE, “mobilized” 19 the PCE already in the soil and therefore aggravated the problem. 20 See Carson Harbor I, 270 F.3d at 877 (“movement of [existing] 21 contamination 22 ‘disposal.’”) (citing Kaiser Aluminum & Chemical Corp. v. Catellus 23 Development Corp., 976 F.2d 1338, 1342 (9th Cir. 1992)). 24 AmeriPride may have discovered the contamination in 1983 or 1984, 25 in which case AmeriPride’s delay in response may have allowed the 26 problem to become worse. TEO has provided evidence supporting four types of using First, TEO argues that AmeriPride conducted dry PCE during the years immediately following Second, that AmeriPride discharged wastewater contaminated . . . Third, that AmeriPride’s wastewater result[ing] 44 from human conduct is a Fourth, 1 Thus, there are triable questions as to whether TEO was 100% 2 responsible. This defeats the predicate underlying AmeriPride’s 3 argument for summary judgment on these issues. 4 C. AmeriPride’s Claim for Declaratory Judgment Regarding Future 5 Response Costs 6 Finally, AmeriPride seeks summary judgment on its claim for 7 future response costs under CERCLA section 113(g)(2). 8 to such a claim is success on a claim under section 107. 9 Colton, 614 F.3d at 1008. City of To the extent that the court has 10 determined 11 substantially complied with the national contingency plan, the 12 court 13 similarly compliant. 14 allocation of responsibility between AmeriPride and TEO, however, 15 the court cannot grant declaratory judgment holding TEO responsible 16 for those future costs. determines AmeriPride’s that existing continuation of response those actions actions have will be Because triable questions exist as to the IV. CONCLUSION 17 18 that A predicate For the reasons stated above, the court orders as follows: 19 20 1. AmeriPride’s motion for summary judgment is GRANTED IN 21 PART. The court grants partial summary judgment pursuant 22 to Fed. R. Civ. P. 56(g). 23 24 2. The amounts AmeriPride paid in settlement to Huhtamaki 25 and Cal-Am are not recoverable under CERCLA section 107. 26 AmeriPride may file an amended complaint seeking to 45 1 recover these costs under CERCLA section 113(f). Said 2 complaint shall be filed no later than fourteen (14) 3 days from the date of this order. 4 5 3. AmeriPride’s statement of costs may need to be reduced 6 to account for funds received in settlements with other 7 parties and for the economic value of the treated water. 8 9 4. All of the remaining are response 10 AmeriPride “necessary” 11 and costs claimed consistent by with the national contingency plan. liable for 12 13 5. TEO is a potentially responsible party 14 AmeriPride’s response costs pursuant to CERCLA section 15 107(a)(4)(B). The precise amount of this liability, and 16 potential apportionment of liability between TEO and 17 AmeriPride, remains to be determined. 18 19 6. Triable questions remain as to whether AmeriPride 20 “released” or “disposed of” PCE within the meaning of 21 CERCLA. 22 23 7. Similarly, triable questions 24 equitable allocation 25 pursuant to CERCLA section 113(f). of 26 46 costs remain between regarding the the parties, 1 8. Accordingly, the court denies AmeriPride’s motion for 2 summary judgment insofar as this motion pertains to 3 allocation of liability on AmeriPride’s CERCLA claims. 4 The 5 summary judgment as to TEO’s counterclaims. court similarly denies 6 7 IT IS SO ORDERED. 8 DATED: May 12, 2011. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 47 AmeriPride’s motion for

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