Ameripride Svc Inc v. Valley Industrial, et al

Filing 912

ORDER signed by Judge Lawrence K. Karlton on 4/4/12 ORDERING the Defendant shall pay to the plaintiff $7,754,456.18; The parties SHALL file a stipulation with the court within fourteen (14) days of the issuance of this order as to the interest payable by defendant by virtue of plaintiff's past expended costs, for which Defendant shall be liable; Defendant SHALL be responsible for one half of all future cleanup costs. (Becknal, R)

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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, NO. CIV. S-00-113 LKK/JFM 12 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 Pending before the court is resolution of the trial of this 21 case. 22 of trial, both the facts and the law are difficult. 23 As the court has stated at various times during the course Nonetheless, to begin with the obvious, the court adopts the 24 undisputed facts contained in the pretrial order. 25 Pretrial Conf. Order, ECF No. 854. Unfortunately, those are about 26 the only obvious matters which can be resolved after trial. 1 See Final 1 The court is faced with a trial which the parties have 2 tendered as one requiring resolution of contested expert opinion 3 testimony. 4 appear to be reasonable people, who have come to contradictory 5 results. The court wishes to be clear as to its opinion that this 6 is not a case involving hired guns who will say anything someone 7 pays them to say. The experts who have testified are well qualified and 8 The testimony of the experts are not opinions in fields of 9 exact science, but rather applied science. That fact helps account 10 for at least some of the divergent opinions that have been received 11 by the court. 12 lies not only in the nature of the field but also in human nature. 13 Central to some of the experts’ testimony is the application 14 of various formulas, which in turn are dependent upon assumptions 15 which 16 employed. 17 by the expert, may, however innocently, be influenced by the trial 18 needs of the expert’s sponsor.1 provide The reason for those divergent opinions, however, the integers to be resolved by the equations In that regard, the “reasonable” assumptions employed 19 Moreover, and perhaps more to the point, the applied science 20 being contested was developed for purposes quite distinct from the 21 questions asked in trial. 22 at issue seeks to determine where cleanups are necessary and how 23 to proceed with the cleanup. 24 essence, agreed with the court when asked whether the use of In the real world, the applied science In that regard, a defense expert, in 25 1 26 All of the assumptions employed were supported by other expert writing, EPA guidance documents or the like. 2 1 inexact, but experience-based, assumptions was sufficient for the 2 purpose of cleanup. 3 sufficient to carry the burden of proof at trial, since quite 4 different questions are being asked. 5 that burden is no more than the preponderance of the evidence. 6 7 ultimate factual determinations. The court concludes as follows: 9 1) PCE is listed as a hazardous substance under the act. 42 U.S.C. § 9601(14), 40 C.F.R. § 302.4. 11 12 That is true even though Nonetheless, the court is able to make a sufficient number of 8 10 Such applications, however, may not be 2) The plaintiff’s claims relative to the spill of DNAPL PCE are supported by the evidence.2 13 3) The defendant’s assertion that, by virtue of leaks in the 14 waste water system used by plaintiff, the plaintiff spilled waste 15 water into the vadose zone, is supported by the evidence. 4) During defendants’ operation on the property the waste 16 17 water system also leaked. 18 cleaning and the laundering of contaminated shop towels and other 19 such 20 contributed to PCE being deposited in the soil. items which Moreover, defendant engaged in both dry contained PCE. Both of these activities 21 5) At various times after plaintiff acquired the property, 22 plaintiff added washing machines which increased the volume of 23 waste water being leaked. 6) Although plaintiff did not engage in dry cleaning, for 24 25 2 26 DNAPL PCE is dense nonaqueous phase liquid PCE. The parties agree it is pure PCE. 3 1 some period of time it also laundered PCE-laden shop towels and 2 like items. 3 refused to launder items which were thought to contain PCE, and, 4 accordingly, thereafter the amount of PCE in the waste water was 5 reduced. 6 7 8 9 After the danger of PCE became apparent, plaintiff 7) The waste water flow of both plaintiff and defendant touching the DNAPL carried the PCE to the ground water. 8) Vapor emanating from the deposited DNAPL PCE also contributed to the PCE in the ground water. 10 9) The contaminated ground water eventually reached property 11 down stream, which caused the relevant governmental agencies to 12 order plaintiff to undertake the cleanup of the site. 13 14 15 10) The evidence does not permit a rational allocation of fault between plaintiff and defendant.3 The suit tests liability under CERLA. I now briefly sketch 16 the court’s understanding of the pertinent provisions of that 17 statute.4 18 serious 19 pollution.” 20 United States, 556 U.S. 599, –-, 129 S.Ct. 1870, 1874 (2009). “The 21 Act was designed to promote the timely cleanup of hazardous waste 22 sites and to ensure that the costs of such cleanup efforts were Congress enacted CERCLA in 1980 “in response to the environmental and health risks posed by industrial Burlington Northern & Santa Fe Railway Company v. 23 3 24 25 26 This conclusion will be somewhat elaborated later in this opinion. 4 The court here draws on its previous explanation of the statute during resolution of a motion for summary judgement entered May 12,2011. See Order, ECF No. 735. 4 1 borne by those responsible for the contamination.” 2 Id. (internal citations omitted). 3 Under CERCLA section 107(a), 42 U.S.C. § 9607(a), the federal 4 government, state governments, and private parties may all initiate 5 cleanup of toxic areas, and each such entity may sue potentially 6 responsible parties for reimbursement of response costs. 7 Carson Harbor v. County of Los Angeles, 433 F.3d 1260, 1265 (9th 8 Cir. 2006) (Carson Harbor II) (quoting Ascon Properties, Inc. v. 9 Mobil Oil Co., 866 F.2d 1149, 1152 (9th Cir. 1989)). 10 Circuit has identified four elements necessary 11 to See The Ninth a private plaintiff’s prima facie case under section 107(a): (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); 12 13 14 (2) a “release” or “threatened release” of any “hazardous substance” from the facility has occurred, 42 U.S.C. § 9607(a)(4); 15 16 (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 17 18 19 (4) the defendant is within one of four classes of persons subject to the liability provisions of Section 107(a). 20 21 22 City of Colton v. American Promotional Events, Inc.-West, 614 F.3d 23 998, 1002-03 (9th Cir. 2010) (quoting Carson Harbor Village, Ltd. 24 v. Unocal Corp., 270 F.3d 863, 870-71 (9th Cir. 2001) (en banc) 25 (Carson Harbor I)). 26 includes “any A “release” for purposes of this section spilling, leaking, 5 pumping, pouring, emitting, 1 emptying, discharging, injecting, escaping, leaching, dumping, or 2 disposing into the environment.” 3 classes 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 section 113(g)(2), a party who prevails on a section 107 claim may of seek persons a subject 42 U.S.C. § 9601(22). to liability,” also 42 U.S.C. § 9607(a)(1)-(2). 10 also declaratory judgment that it is 11 reimbursement for future response costs as well. 12 The “four known as Under CERCLA entitled to Colton, 614 F.3d at 1008. See City of 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. United States v. Atlantic Research Corp., 16 551 U.S. 128, 139 (2007). 17 party remediates the damage and incurs response costs, that party 18 may seek to recover those costs from another. Thus, where one potentially responsible Id. 19 With regard to allocating responsibility among potentially 20 responsible parties, CERCLA provides overlapping and somewhat 21 convoluted mechanisms. 22 potentially responsible parties. 23 at 1879, 1881. 24 several. Adobe Lumber, Inc. v. Hellman, 658 F. Supp. 2d 1188, 1192 25 (E.D. Cal. 2009). 26 entire response cost has two options under CERCLA. Section 107 imposes strict liability on Burlington Northern, 129 S.Ct. Liability under section 107 is generally joint and A defendant seeking to avoid liability for the 6 Under section 1 107, a defendant may avoid joint and several liability by proving 2 that “a reasonable basis for apportionment exists.” 3 Northern, 129 S.Ct. at 1881 (citing United States v. Chem-Dyne 4 Corp., 572 F. Supp. 802, 810 (S.D. Ohio 1983)). 5 this basis looks solely to whether the defendant can “establish[] 6 a fixed amount of damage for which [it] is liable,” and not to any 7 equitable 8 Alternatively, CERCLA section 113(f)(1) authorizes claims for 9 contribution “from any other person who is liable or potentially 10 liable under section 9607(a) of this title, during or following any 11 civil action under section 9606 of this title or under section 12 9607(a) of this title.” 13 does allow for consideration of equitable factors. 14 resolving contribution claims, the court may allocate response 15 costs among liable parties using such equitable factors as the 16 court determines are appropriate.”), Burlington Northern, 129 S.Ct. 17 at 1882 n.9. 18 It concerns. is clear Id. that at 1882 n.9 Apportionment on (quotation 42 U.S.C. § 9613(f)(1). plaintiff has Burlington omitted). Section 113(f) established Id. (“In defendant’s 19 liability under § 107. 20 the meaning of the statute, there were releases from that facility, 21 the releases caused plaintiff to incur response costs consistent 22 with 23 responsible for the release of DNAPL PCE and for its discharge of 24 waste water, which, together with the plaintiff’s waste water, 25 mobilized the DNAPL and resulted in contamination of the ground 26 water. Moreover, as noted above, vapor transport also affected the the national Simply put, the site is a facility within contingency 7 plan, and the defendant is 1 ground water. Given that the court concluded above that defendant 2 cannot “establish[] a fixed amount of damage for which [it is] 3 liable,” Burlington Northern, 129 S.Ct at 1882 n.9, defendant is 4 relegated to seeking equitable apportionment under 5 Before addressing the issue of equitable apportionment, the court 6 must first address the question of damages. 7 into a written stipulation as follows: § 113(f)(1). The parties entered 8 1. AmerPride has directly incurred $7,570,921 in 9 investigation and remediation costs though August 10 2010. 11 2. AmeriPride has directly incurred $474,730 in 12 regulatory oversight costs through September 2010. 13 3. AmerPride paid $8,250,000 to Huhtamaki to 14 settle all claims Huhtamaki had against AmeriPride. 15 4. AmeriPride paid $2,000,000 to Cal-Am Water 16 Co. to settle all claims Cal-Water Co. had against 17 Ameripride. 18 Stipulation, ECF No. 861. 19 It is also undisputed that Ameripride received $ 500,000 in 20 settlement 21 See 22 (Undisputed Fact). 23 issue in the instant case. 24 defendants are entitled to a credit for those sums. 25 26 Final from Chromalloy Pretrial Conf. and Order, $2,750,000 ECF No. from 854, Petrolane. at 13, ¶ 93 Both settlements related to the pollution at This court has previously held that There is no question that items 1 and 2 are sums subject to equitable apportionment. Defendant, however, contests whether it 8 1 should be considered responsible for any of the sums paid in 2 settlement of the claims of Huhtamaki and Cal-Water. 3 that it can only be responsible for “response costs,” and since it 4 cannot be said that those sums are exclusively response sums, 5 plaintiff’s claim must fail. 6 summary 7 settlement payments under § 107. 8 Nonetheless the court held there, and continues to believe, that 9 it could and should consider those payments under §113. judgment order, It asserts For reasons explained in the court’s plaintiff cannot recover for those See Order, ECF No. 735, at 40. See id. 10 Defendant argues, nevertheless, that those payments should not be 11 considered because the settlements resolved all claims, including 12 various state law claims, not only those which would be considered 13 response costs if incurred in supplying settling plaintiffs with 14 alternate sources of water. The court simply cannot agree. 15 Whether the settled claims were under the federal statute or 16 pled as state claims, the gravamen of all those claims was the 17 contamination of the ground water, the very claims at issue in the 18 suit under CERCLA. 19 any authority addressing the question of how the court should 20 account for AmeriPride’s settlement with Cal-Am Water Co. and 21 Huhtamaki, when that settlement involved multiple claims, 22 surprisingly, has the court’s own research found any established 23 guidance thereon. The parties have not supplied the court with nor, 24 While CERCLA § 9613 has provisions addressing contributions 25 after settlement with a governmental party, there is no proviso 26 directly dealing with settlements with nongovernmental parties. 9 1 See 42 U.S.C. § 9613(f)(3)(B) (“A person who has resolved its 2 liability to the United States or a State for some or all of a 3 response action ... in an administrative or judicially approved 4 settlement may seek contribution from any person who is not party 5 to a settlement ....”); see also City of Detroit v. Simon, 247 F.3d 6 619, 628 (6th Cir. 2001) (there is no contribution protection for 7 a party that entered into a settlement with Detroit because the 8 city cannot be equated with the United States or a state, as the 9 language of CERCLA requires); Akzo Coatings, Inc. v. Aigner Corp., 10 30 F.3d 761, 771 (7th Cir. 1994) (noting that “§ 113(f)(2) says . 11 . . [n]othing . . . about resolving liability to private parties”). 12 However, although the text of CERCLA is silent regarding the right 13 of contribution protection for private party settlements, to 14 facilitate settlement, a number of federal courts have interpreted 15 CERCLA's language to include private parties. 16 Citizens Communications Co., 532 F.3d 70, 90 fn.7 (1st Cir. 2008) 17 (citing 2 A.J. Topol & R. Snow, Superfund Law and Procedure, § 18 7:91, at 181 (2007 ed.)); K.C.1986 L.P. v. Reade Mfg., 472 F.3d 19 1009, 1017 (8th Cir.2007) (“Although § 9613(f)(2) governs only the 20 effect of settlements with the government, not private parties, 21 general equitable principles remain in play.”). City of Bangor v. 22 Because the very purpose of § 113 is to do equity, such a 23 purpose is clearly served by recognizing payments made to private 24 claimants in settlement of state claims arising out of CERLA- 25 focused suits. 26 subject to Accordingly, the court finds that the total amount equitable apportionment 10 is $18,295,651.00, less 1 $3,250,000 for a total of $15,045,651.00. 2 consultant and other costs of $446,656.84 paid for investigation 3 and remediation at the AmeriPride site since August 2010, and the 4 $16,604.52 paid for regulatory oversight of the AmeriPride site 5 since 6 apportionment is $15,508,912.36. January 2011, the total amount After including the subject to equitable 7 Section 223(f) gives the trial court broad discretion to 8 consider whatever equitable factors it deems appropriate under the 9 circumstances of the case. 42 U.S.C. § 9613(f)(1) (“In resolving 10 contribution claims, the court may allocate response costs among 11 liable parties using such equitable factors as the court determines 12 are 13 apportionments use what are called the “Gore factors,” named after 14 a rejected attempt by then-Congressman Albert Gore to amend CERCLA 15 that would have listed those factors as a basis for allocating 16 liability. 17 74 (1st Cir. 1999); Centerior Serv. Co. v. Acme Scrap Iron & Metal 18 Corp., 153 F.3d 344, 354 (6th Cir. 1998); United States v. Colorado 19 & Eastern R.R. Co., 50 F.3d 1530, 1536 n.5 (10th Cir. 1995); Kerr- 20 McGee Chem. Corp. v. Lefton Iron & Metal Co., 14 F.3d 321, 326 (7th 21 Cir. 1994); In re Bell Petroleum Servs., Inc., 3 F.3d 889, 899-900 22 (5th Cir. 1993). 23 appropriate.”)5 Some courts, in making equitable See, e.g., Acushnet Co. v. Mohasco Corp., 191 F.3d 69, The “Gore factors” are as follows: (I) The ability of the 24 5 25 26 A district court’s equitable apportionment determinations are subject to an abuse of discretion standard of review on appeal. In re Dant & Russell, 951 F.2d 246, 249 (9th Cir. 1991). 11 1 parties to demonstrate that their contribution to a discharge, 2 release or disposal of a hazardous waste can be distinguished; (ii) 3 The amount of the hazardous waste involved; (iii) The degree of 4 toxicity of the hazardous waste involved; (iv) The degree of 5 involvement by the parties in the generation, transportation, 6 treatment, storage, or disposal of the hazardous waste; (v) The 7 degree of care exercised by the parties with respect to the 8 hazardous waste concerned, taking into account the characteristics 9 of such waste; and (vi) The degree of cooperation by the parties 10 with Federal, State, or local officials to prevent any harm to the 11 public health or the environment. 12 United States v. A & F Materials, Co., 578 F.Supp. 1249 (S.D. Ill. 13 1984).6 14 Bell Petroleum, 3 F.3d 899-900; Another district court when applying the Gore Factors added 15 “critical factors” for courts to take into account in making CERCLA 16 contribution allocations, to wit: the financial resources of the 17 liable parties; the extent of the benefit that the parties received 18 from the hazardous waste disposal practices; the extent of the 19 parties’ knowledge and awareness of the environmental contamination 20 of the site; and the efforts made, if any, to prevent environmental 21 harm and the efforts made to settle the case. 22 Davis, 31 F.Supp.2d 45, 63 (D.R.I. 1998), aff’d, 261 F.3d 1 (1st 23 Cir. 2001). United States v. 24 25 26 6 This court must confess some unwillingness to apply factors rejected by Congress. 12 1 Yet another district court has further considered: (1) 2 economic benefits received by a party as a result of its cleanup 3 actions; (2) a party’s efforts to conduct source control at its 4 facility; (3) windfalls from settlements a party made with other 5 PRPs; and (4) a party’s decision to release some PRPs from 6 liability. 7 Liquidating Trust, 306 F.Supp.2d 1040, 1101 (D.Kan. 2003). City of Wichita, Kansas v. Trustees of APCO Oil orp. 8 None of these lists is intended to be exhaustive or exclusive, 9 and “in any given case, a court may consider several factors, a few 10 factors, or only one determining factor . . . depending on the 11 totality of the circumstances presented to the court.” 12 States v. Consolidated Coal Co., 345 F.3d 409, 413-14 (6th Cir. 13 2003) (quoting Environmental Trans. Sys., Inc. v. ENSCO, Inc., 969 14 F.2d 503, 509 (7th Cir. 1992). United It is this court’s view that, in many ways, the factors noted 15 16 above will not fairly measure apportionment. First, it is hardly 17 insignificant that, until the decision of the Delaware 18 Court, the defendants were defunct corporations who had no capacity 19 to respond to cleanup orders. 20 way of clearly allocating responsibility for the contamination of 21 either the vadose zone or the ground water. 22 evidence is that, but for the DNAPL PCE deposits of the defendant, 23 the ground water would not have been affected; however, it appears 24 equally true that, but for the leaks in waste water system, the 25 //// 26 //// Supreme Second, as noted above, the is no 13 The best view of the 1 ground water might well not have been effected.7 2 it is certainly true that plaintiffs spilled more waste water 3 because it increased the number of machines and processed laundry 4 over a longer period, it is also true that during defendant’s 5 period of possession of the facility, the waste water it spilled 6 contained more PCE and that it also engaged in dry cleaning using 7 PCE as a solvent.8 8 appreciated during defendant’s operation of the facility, or in the 9 earlier years of plaintiff’s operation. Moreover, while Moreover, PCE’s environmental danger was not Given the facts as the court has found them, it concludes 10 11 that the fairest apportionment is to divide responsibility equally. 12 This would result in each party being responsible for $7,754,456.18 13 in costs expended so far. This number, however, fails to recognize 14 that plaintiff has borne all of these costs for the many years 15 since the first cleanup order. 16 court 17 calculated in accordance with 42 U.S.C. § 9607 (incorporating the 18 interest rate calculation provided in 26 U.S.C. § 9507(d)(3)(C)).9 will order defendant To roughly address this fact, the to also pay interest in amounts 19 7 20 21 22 23 24 25 26 It appears to be uncertain whether a cleanup order would have been issued if there had been no contamination of the ground water and the property continued to be used for commercial purposes. 8 The extent of defendant’s spill is not known because records were apparently not kept of its use of water, the extent of waste water, or contents of waste water. 9 “Interest on advances made to the Superfund shall be at a rate determined by the Secretary of the Treasury (as of the close of the calendar month preceding the month in which the advance is made) to be equal to the current average market yield on outstanding marketable obligations of the United States with 14 1 The parties SHALL submit a stipulation within fourteen (14) days 2 of the issuance of this order as to this interest rate as applied 3 to plaintiff’s past expended costs. 4 declaratory judgment as to future cleanup costs. 5 explained above, the defendant shall be responsible for one half 6 of all future costs.10 Finally, plaintiff seeks For the reasons 7 Accordingly the court order as follows: 8 1) Defendant shall pay to the plaintiff $7,754,456.18. 9 2) The parties SHALL file a stipulation with the court within 10 fourteen (14) days of the issuance of this order as to the interest 11 payable by defendant by virtue of plaintiff’s past expended costs, 12 for which Defendant shall be liable. 13 14 3) Defendant SHALL be responsible for one half of all future cleanup costs. 15 IT IS SO ORDERED. 16 DATED: April 4, 2012. 17 18 19 20 21 22 23 24 25 26 remaining periods to maturity comparable to the anticipated period during which the advance will be outstanding and shall be compounded annually.” 26 U.S.C. § 9507(d)(3)(C). 10 Defendants liability may be limited by the amount of insurance available. The court has received no evidence concerning such limitation, and thus makes no finding as to that question. 15

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