Lewis, et al v. Russell, et al

Filing 434

MEMORANDUM and ORDER RE: MOTION FOR ORDER APPROVING SETTLEMENT AND BARRING CONTRIBUTION CLAIMS signed by Judge William B. Shubb on 11/08/12 ORDERING that the settlement between Workroom and Lewis is APPROVED; all claims asserted by Lewis against Wor kroom in the SAC be, and hereby are, DISMISSED with prejudice; all claims for contribution or indemnity against Workroom arising out of the clean-up of the Property are BARRED; and Section 6 of the UCFA is ADOPTED as the law in this case for the purpose of determining the legal effect of the settlement agreement on the liability of the non-settling defendants. (Benson, A.)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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----oo0oo---11
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CHARLES H. LEWIS and JANE W.
LEWIS,

NO. CIV. 2:03-2646 WBS CKD

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Plaintiffs,
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v.

MEMORANDUM AND ORDER RE: MOTION
FOR ORDER APPROVING SETTLEMENT
AND BARRING CONTRIBUTION CLAIMS

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ROBERT D. RUSSELL; IRENE
RUSSELL; BEN J. NEWITT; the
Estate of PHILLIP NEWITT,
Deceased; JUNG HANG SUH; SOO
JUNG SUH; JUNG K. SEO; THE DAVIS
CENTER, LLC; MELVIN R. STOVER,
individually and as trustee of
the Stover Family Trust; EMILY
A. STOVER, individually and as
trustee of the Stover Family
Trust; STOVER FAMILY TRUST;
RICHARD ALBERT STINCHFIELD,
individually and as successor
trustee of the Robert S.
Stinchfield Separate Property
Revocable Trust, and as trustee
of the Barbara Ellen Stinchfield
Testamentary Trust; ROBERT S.
STINCHFIELD SEPARATE PROPERTY
REVOCABLE TRUST; THE BARBARA
ELLEN STINCHFIELD TESTAMENTARY
TRUST; WORKROOM SUPPLY, INC., a
California corporation; SAFETYKLEEN CORPORATION, a California
corporation; the CITY OF DAVIS;
JENSEN MANUFACTURING COMPANY;
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VIC MANUFACTURING COMPANY;
MARTIN FRANCHISES INC., aka/dba
MARTINIZING DRY CLEANING,

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Defendants.

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AND RELATED COUNTER, CROSS,
AND THIRD PARTY CLAIMS.
/

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Charles H. Lewis and Jane W. Lewis (the “Lewises”)
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brought this action pursuant to the Comprehensive Environmental
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Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C.
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§§ 9601-9675, for recovery of costs incurred removing hazardous
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substances from a piece of real property located in Davis,
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California (“Property”).

Charles Lewis, the surviving plaintiff,

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and defendant Workroom Supply, Inc. (“Workroom”) now request that
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the court approve the settlement they have reached.
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I.

Factual and Procedural Background

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This multi-party litigation concerns the contamination
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of the Property with tetrachloroethene (“PCE”), a chemical
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allegedly released through the operation of a dry cleaning
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facility on the Property.

(See Second Am. Compl. (“SAC”) ¶ 40

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(Docket No. 197).)

The parties include the alleged owners and

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managers of the Property during the relevant time period, the
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operators of the dry cleaning facility, the entities that
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supplied and removed the PCE, and the manufacturers of the
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equipment used in dry cleaning operations at the Property.

(See

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id. ¶¶ 7-25; First Am. Third Party Compl. (“FATPC”) ¶¶ 1-2
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(Docket No. 198).)

The City of Davis is also a party to the

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litigation because of its alleged role in maintaining the
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underground sewer system that services the Property.

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Since the filing of the original complaint in 2003, the parties

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have filed numerous counterclaims, crossclaims, and third-party

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claims for contribution pursuant to 42 U.S.C. § 9613(f).

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(SAC ¶ 22.)

In February 1999, the California Regional Water

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Quality Control Board, Central Valley Region (“RWQCB”), informed

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the owners and operators of the Property that it had discovered

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PCE in the soil and groundwater at the Property.

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The RWQCB then issued a Cleanup and Abatement Order on October 2,

(SAC ¶ 40.)

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2002, instructing the current and past owners and operators of

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the Property to investigate the extent of the PCE contamination

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and to prepare work plans to address the contamination.

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42.)

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incurred costs in carrying out the activities ordered by the

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RWQCB.

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(Id. ¶

Thereafter, some of the parties, including the Lewises,

(Id. ¶¶ 42, 46.)
The Lewises filed the Complaint in this action on

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December 9, 2003, seeking various forms of declaratory relief and

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asserting claims for cost recovery and contribution, 42 U.S.C. §§

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9607, 9613; contribution and/or indemnity, Cal. Health & Safety

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Code § 25363(e); equitable indemnity and contribution;

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negligence; and breach of contract.

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Workroom was named as one of several defendants in the original

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Complaint, (id.), and in the Second Amended Complaint (“SAC”) on

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the ground that it supplied PCE to the owners and/or operators of

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the dry cleaning business located on the Property, (SAC ¶ 20),

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and therefore is considered an “operator” under CERCLA, (Pls.’

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Opp’n to Mot. for Summ. J. at 3-7 (Docket No. 390)).

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defendants filed crossclaims naming Workroom as a cross3

(See Compl. (Docket No. 1).)

Several

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defendant.

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by Newitt (Docket No. 27); First Am. Cross-Cl. by City of Davis ¶

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17 (Docket No. 229).)

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(E,g., Cross-Cl. by Suhs (Docket No. 13); Cross-Cl.

Workroom delivered PCE to the property from 1992 to

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2004.

Workroom disputes claims that it is therefore liable as an

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“operator” of the property under CERCLA based on these

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deliveries.

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3-6.)

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over the facility to be considered an operator under CERCLA and

(Def.’s Reply to Pls.’ Opp’n to Mot. for Summ. J. at

Rather, Workroom argues that it lacked sufficient control

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that there is no evidence that any PCE contamination occurred

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during the delivery process.

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(Id.)

Workroom and Lewis have reached a settlement that they

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now ask the court to approve.

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of the proposed settlement, Workroom would pay Lewis $30,000 to

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be used pursuant to the direction of the RWQCB to remediate the

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groundwater contamination at the Property.

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¶ 4 (Docket No. 407).)

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SAC as against Workroom with prejudice.

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have also agreed to give each other a “broad release with regard

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to the matters asserted in the instant action and with regard to

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the Site.”

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the settlement is within the reasonable range of Workroom’s

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potential liability and ability to pay, noting that Workroom’s

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liability is contested and that there is uncertainty regarding

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the facts in dispute, the issues in controversy, and the court’s

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potential ruling on Workroom’s motion for summary judgment.

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¶ 9.)

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(Id. ¶ 6.)

(Docket No. 406.)

Under the terms

(Hunter-Rocha Decl.

Lewis, in turn, has agreed to dismiss his
(Id. ¶ 5.)

Both parties

Both parties’ attorneys represent that

Under the terms of the agreement, the settlement is

(Id.

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contingent upon this court issuing an order that (1) approves the

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settlement, (2) dismisses with prejudice all claims asserted

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against Workroom in this proceeding, including those by Lewis,

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and (3) bars contribution and indemnity claims against Workroom

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in this proceeding.

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Settlement at 3:14-19 (Docket No. 406).)

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(Appl. for Determination of Good Faith

The City of Davis has filed an opposition to the

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settlement agreement requesting that the court apply the

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proportionate share approach, embodied in the Uniform Comparative

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Fault Act (“UCFA”), to determine the liability of the non-

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settling parties on all federal law and state law claims asserted

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in this action.

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Good Faith Settlement at 8:12-15 (Docket No. 415).)

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parties received notice of the proposed settlement, no party has

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otherwise filed an opposition.

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II.

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(Davis’s Opp’n to Appl. for Determination of
While all

Discussion
A.

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Federal Law Claims
“The initial decision to approve or reject a settlement

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proposal is committed to the sound discretion of the trial

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judge.”

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(quoting Officers for Justice v. Civil Serv. Comm’n, 688 F.2d

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615, 625 (9th Cir. 1982)).

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inadequate, or unreasonable, it ought to be approved.”

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also Stearns & Foster Bedding Co. v. Franklin Holding Corp., 947

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F. Supp. 790, 813 (D.N.J. 1996) (“In deciding whether to approve

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a proposed settlement in a CERCLA case, a district court must

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weigh the ‘fairness, adequacy and reasonableness’ of the proposed

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settlement.” (quoting United States v. Rohm & Haas Co., 721 F.

S.E.C. v. Randolph, 736 F.2d 525, 529 (9th Cir. 1984)

“Unless a consent decree is unfair,

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Id.; see

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Supp. 666, 685 (D.N.J. 1989))).

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The settlement proposed by Lewis and Workroom comes in

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a case that has dragged on for over eight years and in which

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trial is not set to begin for over a year more.

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clean-up cases such as this one, resolution is often achieved

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through the settlement process.

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outcome under CERCLA.

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1251, 1264 (9th Cir. 2010) (citing United States v. Atl. Research

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Corp., 551 U.S. 128, 138-39 (2007); Kotrous v. Goss-Jewett Co. of

In environmental

Indeed, settlement is a favored

City of Emeryville v. Robinson, 621 F.3d

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N. Cal., Inc., 523 F.3d 924, 930-31 (9th Cir. 2007)).

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this fact, earlier in this proceeding the court approved a stay

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of litigation pending settlement talks.

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Although the initial settlement process outlined by the court was

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unsuccessful, settlement between parties remains an appropriate

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route to resolution in this CERCLA action.

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Mindful of

(Docket No. 124.)

Settlement with respect to Workroom is particularly

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appropriate given the uncertain evidence as to whether PCE

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contamination occurred during Workroom’s deliveries to the

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property and the control that it exerted over the property’s

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operations, and thus it is uncertain if it would have ultimately

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been found liable for clean-up costs associated with the

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Property.

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negotiations, and both parties’ attorneys represent that the

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terms of the settlement are the best available to settle Lewis’

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claims.

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the settlement is a fair and reasonable one.

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Both parties were represented by counsel in settlement

(Hunter-Rocha Decl. ¶ 9.)

These facts all suggest that

The court must also determine whether the proposed
settlement would prejudice the non-settling parties.
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The parties

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to the settlement have not specified what effect the settlement

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has on the liability of the non-settling parties.1

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does not specify how settlements in private party cost recovery

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actions should be apportioned or evaluated for fairness, merely

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charging district courts to “allocate response costs among liable

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parties using such equitable factors as the court determines are

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appropriate.”

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issued a decision directly addressing the issue.

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Inc. v. Hellman, No. CIV 05-1510, 2009 WL 256553, at *3 (E.D.

42 U.S.C. § 9613(f)(1).

CERCLA itself

Nor has the Ninth Circuit
Adobe Lumber,

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Cal. 2009) (noting that “[i]n the twenty-eight years that CERCLA

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has been [sic] existence, the Ninth Circuit has never addressed

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the question of the proper credit method for settlements between

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private PRPs under CERCLA.”).

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Circuit has, however, stated that “[t]he proportionate share

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approach is the law in the Ninth Circuit.”

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229 F.3d 790, 796 (9th Cir. 2000).

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In a non-CERCLA case, the Ninth

In re Exxon Valdez,

Under the proportionate share approach, embodied in the

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Uniform Comparative Fault Act (“UCFA”), the liability of non-

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settling parties is reduced by the proportionate share of the

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Although the parties are silent on the issue, there is
reason to believe that the parties intend for the court to apply
the proportionate share approach. The parties state that the
“issues of disputed fact and law and proof of liability in the
instant Lewis-Workroom Settlement are similar to those presented
by the Lewis-Newitt Settlement and, for the same reasons, the
Lewis-Workroom Settlement also should be approved by the court.”
(Appl. for Determination of Good Faith Settlement at 5:4-7.) In
the Lewis-Newitt Settlement, the parties specifically requested,
and the court approved, application of the proportionate share of
liability. (See Mem. of P. & A. in Supp. of Mot. Approving
Settlement at 3:22-5:24 (Docket No. 363); Feb. 29, 2012, Order at
7:14-9:16.) It is thus reasonable that the parties assumed that
the court would similarly apply the proportionate share approach
to all settlement agreements in this case.
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settling party or parties’ obligations.

Adobe Lumber, 2009 WL

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256553, at *3 (citing

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20 (1st Cir. 2004)).

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approach of the Uniform Contribution Among Tortfeasors Act

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(“UCATA”), under which the liability of non-settling parties is

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reduced only by the dollar amount of the settlement.

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In re Jiffy Lube Sec. Litig., 927 F.2d 155, 161 (4th Cir. 1991)).

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Under the UCFA, if the settling parties’ liability is eventually

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determined to be greater than the settlement amount, the

Am. Cyanamid Co. v. Capuano, 381 F.3d 6,
This is in contrast to the pro tanto

Id. (citing

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plaintiff’s recovery is reduced; under the UCATA, if the settling

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parties’ liability is less than the settlement amount, the

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remaining defendants must make up the deficit.

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Id. at *4.

The overwhelming majority of courts in the Ninth

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Circuit that have addressed the issue have applied the UCFA in

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CERCLA cases.

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cases).

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Congressional intent behind CERCLA because it,

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Adobe Lumber, 2009 WL 256553, at *3 (citing

These courts have noted that the UCFA furthers the

1)
provides
for
equitable
apportionment
of
responsibility; 2) furthers settlement because no precise
dollar amount need be determined upon settlement; 3)
eliminates the need for a good faith hearing; and 4)
prevents culpable settlors from escaping liability
(whereas under a pro tanto rule, a settlor who paid more
than his fair share would reduce the liability of
nonsettlors, a result which discourages settlement).

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Patterson Envtl. Response Trust v. Autocare 2000, Inc., No. CIV F

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01-6606, 2002 U.S. Dist. LEXIS 28323, at *14 (E.D. Cal. June 28,

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2002) (citing Comerica Bank-Detroit v. Allen Indus., Inc., 769 F.

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Supp. 1408, 1414 (E.D. Mich. 1991)).

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approach, in contrast, the parties injured by a low settlement --

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the nonsettling defendants -- have no ability to prevent or
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Under the pro tanto

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affect the settlement amount.

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thus makes it more likely that pre-trial settlements and the

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overall litigation will achieve an equitable allocation of

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liability among all responsible parties.

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The proportionate share approach

In this case, the court will similarly employ the

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proportionate share approach to determine the effect of

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settlements, as that method better facilitates the equitable

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allocation of liability in accordance with the statutory guidance

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of CERCLA section 113(f)(1).

See also New York v. Solvent Chem.

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Co., Inc., 984 F. Supp. 160, 168 (W.D.N.Y. 1997) (concluding that

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the UCFA “is consistent with the purposes behind [CERCLA]

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sections 113(f)(1) and 113(f)(2)”); Hillsborough County v. A & E

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Road Oiling Serv., Inc., 853 F. Supp. 1402, 1410 (M.D. Fla. 1994)

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(explaining that the purposes of CERCLA include prompt clean up

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and the fair allocation of costs and declaring that the “UCFA

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effectively embraces both”); United States v. SCA Serv. of Ind.,

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Inc., 827 F. Supp. 526, 535 (N.D. Ind. 1993) (“The UCFA will

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better promote CERCLA’s policy of encouraging settlements, while

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securing equitable apportionment of liability for

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[n]on-settlors.”).

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The settlement is also contingent upon a contribution

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bar that would protect Workroom from contribution and indemnity

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claims “with regard to the matters asserted in this action and

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with regard to the Site.”

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Settlement at 3:17-19.)

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multi-party litigation, a court may review settlements and issue

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bar orders that discharge all claims of contribution by non-

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settling defendants against settling defendants.

(Appl. for Determination of Good Faith
In order to facilitate settlement in

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See In re

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Heritage Bond Litig., 546 F.3d 667, 677 (9th Cir. 2008); Franklin

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v. Kaypro Corp., 884 F.2d 1222, 1225 (9th Cir. 1989).

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of courts have held that it is permissible to bar contribution

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claims against settling parties in a CERCLA contribution action,

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“in accordance with the federal common law as exemplified by § 6

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of the Uniform Comparative Fault Act or § 4 of the Uniform

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Contribution Among Tortfeasors Act.”

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Solutions Alliance v. Waste Mgmt., Inc., No. 3:04cv013, 2011 WL

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382617, at *4 (S.D. Ohio Feb. 3, 2011) (citing Stearns & Foster

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Bedding Co., 947 F. Supp. at 813; Foamseal, Inc. v. Dow Chem.,

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991 F. Supp. 883, 886 (E.D. Mich. 1998); Barton Solvents, Inc. v.

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Sw. Petro-Chem, Inc., 834 F. Supp. 342, 345-46 (D. Kan. 1993);

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Am. Cyanamid Co. v. Kino Indus., Inc., 814 F. Supp. 215, 219

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(D.R.I. 1993); Comerica Bank-Detroit, Inc., 769 F. Supp. at

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1413).

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such an order is often particularly appropriate in CERCLA cases.

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AmeriPride Servs. Inc. v. Valley Indus. Servs., Inc., Nos. CIV.

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S-00-113, S-04-1494, 2007 WL 1946635, at *2 (E.D. Cal. July 2,

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2007) (citing Foamseal, Inc., 991 F. Supp. at 886).

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A number

Responsible Envtl.

Indeed, another court in this district has noted that

In considering whether to approve the settlement, the

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court notes that it is entirely reasonable that Workroom would

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wish to free itself from the burden of litigation by settling the

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claims between Lewis and itself.

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that Lewis would wish to accept certain payment from a defendant

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whose liability is uncertain and who has a limited ability to

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pay.

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settlement payment compares to the total clean-up costs, the fact

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that Lewis, who would bear the risk that $30,000 ultimately

It is also entirely reasonable

Although Lewis and Workroom did not explain how the $30,000

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proves inadequate, contends that it is a reasonable settlement

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payment suggests that it is an adequate amount.

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Davis stated that it would not object to the proposed settlement

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if the court applied the proportionate share approach to

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determine the effect of the settlement, which it has done.

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(Davis’s Opp’n to Appl. for Determination of Good Faith

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Settlement at 3 n.1.).

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not to find the proposed settlement a fair, reasonable, and

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adequate one.

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B.

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The City of

The court can therefore find no reason

State Law Claims
Although some courts asked to approve an agreement such

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as this one that would settle both CERCLA and state law claims

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have considered exclusively federal law, Acme Fill Corp. v.

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Althin DC Med., Inc., No. C 91-4268, 1995 WL 822664, at *9 (N.D.

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Cal. Nov. 2, 1995), others have considered both federal and state

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law, AmeriPride Servs. Inc., 2007 WL 1946635, at *3-4.

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California law, parties to a settlement in an action with

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multiple tortfeasors may petition the court to make a

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determination that the settlement was entered into in good faith.

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See Cal. Civ. Proc. Code §877.6(a).

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if non-settling parties are afforded an opportunity to respond to

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the request for good faith determination.

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Code § 877.6(a)(2).

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Under

A hearing need not be held

See Cal. Civ. Proc.

In determining whether a settlement agreement has been

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made in good faith, California courts consider “(1) a rough

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approximation of plaintiffs’ total recovery and the settlor’s

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proportionate liability; (2) the amount paid in settlement; (3)

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the allocation of settlement proceeds among plaintiffs; and (4) a
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recognition that a settlor should pay less in settlement than he

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would if he were found liable after a trial.”

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Intermodal, Inc. v. Lapmaster Int’l LLC, 632 F.3d 1056, 1064 (9th

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Cir. 2011) (quoting Tech–Bilt, Inc. v. Woodward-Clyce Assocs., 38

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Cal. 3d 488, 499 (1985)) (internal quotation marks omitted).

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“Other relevant considerations include the financial conditions

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and insurance policy limits of settling defendants, as well as

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the existence of collusion, fraud, or tortious conduct aimed to

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injure the interests of non-settling defendants.”

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Mason & Dixon

Id.

In this case, there is no suggestion of collusion or

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fraud.

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the $30,000 settlement payment compares to the total clean-up

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costs, the fact that Lewis is willing to accept that amount while

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bearing the risk that it is less than what Workroom might

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ultimately have been required to pay suggests that it is in the

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range of appropriate settlement amounts.

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section 877, any party challenging a settlement bears the burden

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of establishing that the proposed settlement amount is “so far

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‘out of the ballpark’ that the equitable objectives of § 877 are

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not satisfied.”

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C 06-07164, 2010 WL 3211926, at *13 (N.D. Cal. Aug. 12, 2010)

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(citing Tech-Bilt, 38 Cal. 3d at 499-500).

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attempted to make such a showing.

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As noted above, although the parties have not shown how

Additionally, under

Tyco Thermal Controls LLC v. Redwood Indus., No.

No party here has

Furthermore, under California Code of Civil Procedure

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section 877.6(a)(2), “[i]f none of the nonsettling parties files

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a motion within 25 days of mailing of the notice, application,

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and proposed order, or within 20 days of personal service, the

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court may approve the settlement.”
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As previously noted, although

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the City of Davis has filed an opposition to the settlement

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agreement, the purpose of the motion is to address the liability

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of the non-settling parties and request that the court apply

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UCFA’s proportionate share approach, not to oppose the good faith

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of the settlement.

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share approach to determine the legal effect of the settlement

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agreement on the liability of the non-settling defendants, no

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opposition to the settlement agreement remains.

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10

As the court will apply the proportionate

Accordingly, the court finds that the settlement was
entered into in good faith.

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IT IS THEREFORE ORDERED that:

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(1) The settlement between Workroom and Lewis is

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approved;

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(2) All claims asserted by Lewis against Workroom in
the SAC be, and hereby are, DISMISSED with prejudice;

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(3) All claims for contribution or indemnity against

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Workroom arising out of the clean-up of the Property be, and

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hereby are, barred; and

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(4) Section 6 of the UCFA is adopted as the law in this

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case for the purpose of determining the legal effect of the

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settlement agreement on the liability of the non-settling

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defendants.

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DATED:

November 8, 2012

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