Asarco LLC v. Union Pacific Railroad Company
MEMORANDUM AND ORDER granting Union Pacific's 51 MOTION to Dismiss. A separate judgment will be entered in accordance with this Memorandum and Order. Ordered by Judge Joseph F. Bataillon. (MKR)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
ASARCO LLC, a Delaware corporation;
MEMORANDUM AND ORDER
UNION PACIFIC RAILROAD COMPANY,
a Utah corporation;
This matter is before the court on the defendant’s motion to dismiss pursuant to
Fed. R. Civ. P. 12(b)(6).
Filing No. 51.
Plaintiff Asarco filed this action seeking
contribution against Union Pacific Railroad Company pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq.
(“CERCLA”), for environmental liability related to the Omaha Lead Superfund Site in
The Omaha Lead Site is a 27 square mile residential area in Omaha, Nebraska,
where many of the properties are contaminated with lead. At one point Asarco and
Union Pacific jointly operated and managed a metals refinery and smelter near Omaha,
Nebraska. Both parties owned the site at different times between 1871 and 1997.
Union Pacific originally owned the property upon which the Asarco facility was based.
Union Pacific leased the property to Asarco until 1946 at which time it sold the property
to Asarco. The Environmental Protection Agency (“EPA”) contended that most of the
lead contamination came from the Asarco lead smelter and refinery in Omaha. These
polluted areas became known as the Omaha Lead Site (“OLS”). It was designated as a
Superfund site in 2003, with both Asarco and Union Pacific named as potentially
responsible parties (“PRPs”), with a clean-up cost of around $400 million.
Prior to any settlement, Asarco filed a Freedom of Information Act action (“FOIA”)
against the EAP, alleging fraud and destruction of property.
No documents were
disclosed to Asarco. Thereafter, Asarco went into bankruptcy.
Asarco says it
discovered that Union Pacific filed its own FOIA action and asked to join Union Pacific in
obtaining relevant documents.
Union Pacific believed that it was responsible for only the industrial lead and not
any residential lead. As a result, it began obtaining EPA documents. Union Pacific
believed the EPA was destroying such documents and sought an injunction regarding
the same. The court entered a temporary restraining order against the EPA.1
Asarco also argues that it told Union Pacific it might file a contribution action
against Union Pacific. Union Pacific and Asarco then negotiated an agreement called
the Tolling Agreement which stated that the parties agree “to defer resolution of the
Contribution Claim until after the conclusion of the FOIA litigation” and to not “in any
way alter the claims . . . [or] defenses . . . available to any Party, except as provided [in
the Agreement].” Tolling Agreement ¶ 7; ¶ 4, Filing No. 1 -2. This agreement was
drafted to extend the statute of limitations for two years on the contribution claim.
In 2005 Asarco filed Chapter 11 bankruptcy in the Southern District of Texas. In
March 2009 Asarco and the government filed a proposed settlement in the amount of
$187.5 million. The bankruptcy court thereafter approved the settlement. The Plan
Complaint in Union Pac. R.R. Co. v. United States EPA, No. 8:10-CV-00235-LSC, Filing No. 1
(D. Neb. June 23, 2010); Nebraska FOIA case, Filing No. 16 (D. Neb. June 24, 2010). The FOIA case
was referred to mediation by order on October 7, 2010. Asarco knew of this order eleven days before it
entered into the Tolling Agreement.
Administrator later moved to reopen and reduce the settlement amount. Asarco and the
United States have now reached an agreement of $15 million and are awaiting court
Asarco originally filed the current case against Union Pacific in Arizona District
Court. Filing No. 1. Union Pacific then moved to transfer or dismiss the case. The
Arizona District Court held a hearing and thereafter transferred the case to the District of
Nebraska pursuant to 28 U.S.C. § 1406(a). Filing No. 27 and Filing No. 28. The district
court judge in Arizona stated: “The court further finds that venue in the Arizona District
Court is improper because the Nebraska District Court has retained continuing
jurisdiction over the Consent Decree. . . .” and “[I]t is clear that the Nebraska District
Court has retained continuing jurisdiction over the Consent Decree and all matters
related to it.”. Filing No. 27, at 5 and 6.
The clerk of court pursuant to a random draw assigned the case to this court.
Thereafter, Union Pacific filed a notice of related case and asked that the case be
transferred to Judge Smith Camp. Filing Nos. 42 and 43. Asarco filed a response
arguing that this was not a related case, because the claims are outside of the consent
decree. Filing No. 44. Judge Smith Camp denied the motion to reassign the case.
Filing No. 57.
Asarco moved to intervene in the Nebraska FOIA case, arguing that it had an
interest in the cost reimbursement, that it was potentially adverse to Union Pacific, and
that a resolution against the EPA, absent Asarco, could affect the rights of Asarco. The
EPA objected to Asarco’s participation in the Nebraska FOIA case and the mediation,
stating that mediation was an attempt to achieve “a global resolution of any potential
OLS contamination liability, state and federal, facing Union Pacific.” Ex. 11, Nebraska
FOIA case, Filing No. 52, at 2 (D. Neb. Nov. 5, 2010). The EPA also told Asarco that it
could protest the findings and the “public comment period would be an appropriate
venue for Asarco LLC to challenge a settlement agreement between Union Pacific and
the EPA on CERCLA claims.” Id. at 4. Union Pacific and the EPA advised the court in
the Nebraska FOIA case of an agreement on November 12, 2010. The parties also
served notice of the agreement on counsel for Asarco.
Union Pacific and the government settled their case in May 2011. Filing No. 53,
The government then filed a separate CERCLA action asking the court to
approve the settlement by entering a proposed consent decree. The consent decree
was published in the Federal Register and counsel for Asarco notified of the settlement.
Asarco had the right to intervene in the Nebraska CERCLA case, object to the consent
decree, and appeal its approval. See United States v. Union Elec. Co., 64 F.3d 1152,
1155 (8th Cir. 1995) (non-settling PRPs permitted to intervene as a matter of right to
preserve contribution rights so as to challenge consent decree). Asarco also had the
right to submit comments to the EPA and to file objections in the consent decree
lawsuit. Asarco did nothing. On August 9, 2011, the court entered a final judgment
approving the consent decree, including contribution protection for those matters
“addressed” in the settlement.
Union Pacific paid $25 million in clean-up costs,
although it did not admit to any liability. Union Pacific argues that the consent decree as
approved by the court protects it from contribution claims under CERCLA, Section
113(f)(2), 42 U.S.C. § 9613(f)(2).
STANDARD OF REVIEW
Summary judgment is appropriate when, viewing the facts and inferences in the
light most favorable to the nonmoving party, “the pleadings, the discovery and
disclosure materials on file, and any affidavits show that there is no genuine issue as to
any material fact and that the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(c). The plain language of Rule 56(c) mandates the entry of summary
judgment, after adequate time for discovery and upon motion, against a party who fails
to make a showing sufficient to establish the existence of an element essential to that
party’s case, and on which that party will bear the burden of proof at trial. Celotex Corp.
v. Catrett, 477 U.S. 317, 322 (1986). “The movant ‘bears the initial responsibility of
informing the district court of the basis for its motion, and must identify ‘those portions of
[the record] . . . which it believes demonstrate the absence of a genuine issue of
material fact.’” Torgerson v. City of Rochester, 643 F.3d 1031, 1042, (8th Cir. 2011) (en
banc) (quoting Celotex, 477 U.S. at 323). If the movant does so, “the nonmovant must
respond by submitting evidentiary materials that set out ‘specific facts showing that
there is a genuine issue for trial.’” Id. ( quoting Celotex, 477 U.S. at 324). “The inquiry
performed is the threshold inquiry of determining whether there is the need for a trial—
whether, in other words, there are any genuine factual issues that properly can be
resolved only by a finder of fact because they may reasonably be resolved in favor of
either party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). A “genuine”
issue of material fact exists “when there is sufficient evidence favoring the party
opposing the motion for a jury to return a verdict for that party.” Id. at 251-52 (noting the
inquiry is whether the evidence presents a sufficient disagreement to require
submission to a jury or whether it is so one-sided that one party must prevail as a matter
of law). If “reasonable minds could differ as to the import of the evidence,” summary
judgment should not be granted. Id. at 251.
The evidence must be viewed in the light most favorable to the nonmoving party,
giving the nonmoving party the benefit of all reasonable inferences. Kenney v. Swift
Transp., Inc., 347 F.3d 1041, 1044 (8th Cir. 2003). “In ruling on a motion for summary
judgment, a court must not weigh evidence or make credibility determinations.” Id.
“Where the unresolved issues are primarily legal rather than factual, summary judgment
is particularly appropriate.” Koehn v. Indian Hills Cmty. Coll., 371 F.3d 394, 396 (8th
The court agrees with Union Pacific that this is either a CERCLA response
contribution action or it is a breach of contract case. The court concludes it is clearly a
A. Consent Decree
Section 113(f)(2) states:
A person who has resolved its liability to the United States or a State in an
administrative or judicially approved settlement shall not be liable for
claims for contribution regarding matters addressed in the settlement.
42 U.S.C. § 9613(f)(2). The language of the settlement agreement indicates that the
“matters addressed” in the consent decree include the scope of Union Pacific’s
contribution liability (Filing No. 53. ¶¶ 81, 92) along with protection from any contribution
“actions or claims” related to “all response actions taken or to be taken and all response
costs incurred or to be incurred . . . at or in connection with the [OLS], by the United
States or any other person.” Id. ¶ 81. The language protects Union Pacific “for claims
for contribution regarding matters addressed in the settlement.”
113(f)(2), 42 U.S.C. § 9613(f)(2).
Union Pacific argues that the Consent Decree approved by Judge Laurie Smith
Camp completely resolves all of Union Pacific’s liability at the Omaha Lead Superfund
site in Omaha, as to all parties, including the federal government, the State of
Nebraska, and all private parties. Union Pacific argues that the lawsuit filed in Arizona
by Asarco and transferred to Nebraska is an attempt to unravel the Consent Decree and
hold Union Pacific responsible for contribution.
Union Pacific also contends that federal law subordinates all rights of potentially
responsible parties to the government. The Eighth Circuit acknowledges that
contribution claims against those who settle “are also subordinate to the rights of the
United States or a State. . . “ and “A person seeking contribution under § 113(f) may be
subject to the equitable allocation of response costs, see § 113(f)(1), and may not
recover from previously settling parties, see § 113(f)(2).” Morrison Enterprises., LLC v.
Dravo Corp., 638 F.3d 594, 603 (8th Cir. 2011). Other courts have specifically noted
that Section 113(f)(2) extinguishes such claims under CERCLA.
See, e.g., United
States v. Aerojet Gen. Corp., 606 F.3d 1142, 1151 (9th Cir. 2010); United States v. BP
Amoco Oil, 277 F.3d 1012, 1021 (8th Cir. 2002); Comerica Bank-Detroit v. Allen
Industries, Inc., 769 F. Supp. 1408 (E.D. Mich. 1991) (“The terms of § 113(f)(2) make it
clear that the cross claims [for contribution] do not survive the settlement between the
State and [the defendant].”).
The government and Union Pacific settled the case in May of 2011, and Judge
Smith Camp approved the settlement on August 9, 2011, following a thirty-day public
comment period. Asarco did not submit any comments to the EPA during this time
period and did not attempt to intervene in the Nebraska CERCLA case. Asarco did not
object to the Consent Decree.
The court finds that under CERCLA Section 113(f)(2), 42 U.S.C. § 9613(f)(2),
judicial approval of the settlement gives Union Pacific protection from contribution
claims, meaning that no one can sue Union Pacific for “costs incurred” in relation to the
OLS. The court agrees that were it to grant relief to Asarco, the result would be an
unraveling of the Consent Decree. The Arizona District Court noted as much stating
“the relief requested by Asarco is ‘inextricably intermingled’ with the provisions of the
Consent Decree” and that “the relief Asarco seeks is directly contrary to the terms of the
Consent Decree.” (Filing No. 27 at 6.)2
The court further finds that the government does have a right to settle with one
PRP, and such settlement bars other PRPs from seeking contribution from that party.
42 U.S.C. § 9613(f)(2). The statute states that “[i]n any action . . . the rights of any
person [who settles] . . . shall be subordinate to the rights of the United States or the
State. 42 U.S.C. § 9613(f)(3)(C). See BP Amoco Oil PLC, 277 F.3d at 1017; United
States v. Alcan Aluminum, Inc., 25 F.3d 1174, 1186 n. 17 (3rd Cir. 1994). See also
United States v. Union Elec. Co., 64 F.3d 1152, 1166 (8th Cir.1995). Additionally, the
First Circuit has held that contribution protection “was designed to encourage
The court determines that it does not matter whether the language stated by the Arizona case is
a decision on the merits or not, because the court agrees in any event with the statements made by the
settlements and provide PRPs a measure of finality in return for their willingness to
settle.” Cannons Engineering Corp, 899 F.2d at 92. Likewise, the Eighth Circuit has
stated that contribution protection “prevents duplicate liability and encourages
cooperation with the government, thereby serving the goals of efficient and effective
environmental cleanup and regulation.” BP Amoco Oil, 277 F.3d at 1021.
The court agrees with Union Pacific that Counts III and IV must be dismissed
(declaratory judgment and contribution claims). A person who has resolved its liability
to the United States . . . in [a] . . . judicially approved settlement shall not be liable for
claims for contribution regarding matters addressed in the settlement.”
§ 9613(f)(2); see also 42 U.S.C. § 9622(h)(4). Contribution protection was designed to
encourage settlements and provide PRPs a measure of finality in return for their
willingness to settle. Id. (citing H.R. Rep. No. 99–253, Part I, 90th Cong., 1st Sess. 80
(1985), reprinted in 1986 U.S. Code Cong. & Admin. News 2835, 2862). Additionally,
contribution protection “prevents duplicate liability and encourages cooperation with the
government, thereby serving the goals of efficient and effective environmental cleanup
and regulation.” BP Amoco Oil, PLC, 277 F.3d at 1021; see also United States v.
Cannons Engineering, 899 F.2d 79, 92 (1st Cir. 1990) (“Congress specifically provided
that contribution actions could not be maintained against settlors.” (citing 42 U.S.C. §
9613(f)(2)). This protection under § 1132(f)(2) applies to matters addressed by the
consent decree. In the case before the court, the consent decree includes “all response
actions taken or to be taken and all response costs incurred or to be incurred and
natural resource damages, at or in connection with the Site, by the United States or any
other person.” Filing No. 53, Ex. 2 ¶ 81.
Based on the foregoing, the court finds the consent decree protects Union Pacific
from any claims of contribution, absent a specific waiver, as discussed hereinafter.
B. Tolling Agreement
The court agrees that the construction of this agreement is a legal, not factual,
question. Ruble v. Reich, 611 N.W.2d 844, 849-50 (Neb. 2000).
Asarco argues that contribution protection under CERCLA can be contractually
waived. See, e.g., Sherman v. PremierGarage Sys., LLC, No. CV 10-0269-PHX-MHM,
2010 WL 3023320, *5 (D. Ariz. July 30, 2010) (citing Swanson v. Image Bank, Inc., 206
Ariz. 264 (2003)); Mardan Corp. v. C.G.C. Music, LTD, 804 F.2d 1454, 1458-60 (9th Cir.
1986); Interstate Power Co. v. Kansas City Power & Light Co., 909 F. Supp. 1224, 1233
(N.D. Iowa 1991).
Asarco and Union Pacific entered into a Tolling Agreement.
Filing No. 1,
Complaint, Ex. A, at 5. Asarco and Union Pacific agreed to toll any applicable statute of
limitations on Asarco’s contribution claims until two years after the conclusion of Union
Pacific’s FOIA litigation against the EPA. Id. at 3, ¶ 4. The parties also “reserve[d] all
rights and defenses which they may have, except as set forth in this Agreement, to
contest or defend any claim or action the other Party may assert or initiate against
them.” Id. at 4, ¶ 10. Additionally, the parties agreed to an integration clause which
states that the contract “contains the entire agreement between the Parties, and no
statement, promises, or inducements made by any Party, or agent or representative of
any Party that is not contained in this Agreement shall be valid or binding.” Id. at 4,
¶ 15. The parties expressly agreed that the Tolling Agreement could “not be enlarged
or altered except by writing signed by all the Parties.” Id. Asarco points out the Tolling
Agreement allowed for the contribution claim to be submitted to alternative dispute
resolution and that Asarco’s intervention in the FOIA case “shall not . . . constitute a
waiver of any . . . position related to the Contribution Claim . . . to be resolved
subsequently in ADR between the Parties.” Agreement ¶¶ 3, 13.
Asarco contends that the purpose of the Tolling Agreement was to allow it to
enforce its own contribution rights in the event the government and Union Pacific
entered into a consent decree. Union Pacific argues that Asarco knew that if Union
Pacific settled with the government, Asarco would lose its claims against Union Pacific.
Union Pacific also asserts that there is no language such as “waiver of contribution,”
“contribution protection,” and “CERCLA Section 113(f)” anywhere in the Tolling
Agreement. This omission, argues Union Pacific, is compelling.
With respect to the waiver, Union Pacific argues the Tolling Agreement cannot
counteract the contribution protection under the statute § 113(f)(2).
contends that any such waiver must be clear and unambiguous in any event, which it is
not. See PMC, Inc. v. Sherwin-Williams Co., 151 F.3d 610, 612-15 (7th Cir. 1998)
(Posner, J.). The Second and Eighth Circuits have likewise held that under CERCLA
indemnity agreements with allocations of liability must “evince a clear and unmistakable
intent of the parties. . . .” Keywell Corp. v. Weinstein, 33 F.3d 159, 165 (2d Cir. 1994);
see also Lion Oil Co., Inc. v. Tosco Corp., 90 F.3d 268, 270 (8th Cir. 1996) (finding
purchaser’s agreement to indemnify seller of oil refinery for all CERCLA liability was
valid based on the clear, unequivocal and unambiguous allocation of liability in the sales
contract). See also Metro. Edison Co. v. N.L.R.B., 460 U.S. 693, 708 (1983) (“We will
not infer from a general contractual provision that the parties intended to waive a
statutorily protected right unless the undertaking is ‘explicitly stated.’ More succinctly,
the waiver must be clear and unmistakable.”) . Communication Workers of Am. AFLCIO, Local 1051 v. N.L.R.B., 644 F.2d 923, 928 (1st Cir. 1981) (“Where a statutory right
is involved . . . ‘a waiver should be express, and . . . a mere inference, no matter how
strong, should be insufficient.”). The same law applies in Nebraska. Davenport Ltd.
P’ship v. 75th & Dodge I, L.P., 780 N.W.2d 416, 425 (Neb. 2010) (holding that waiver
requires “clear, unequivocal, and decisive action of a party showing such purpose”).
Asarco argues that clear and unmistakable standard applies to groups, such as
unions, representing constitutional or statutory rights, but not to statutory rights as we
have in this case. See Wright v. Univ. Mar. Serv. Corp., 525 U.S. 70, 80-81 (1998); see
also Children’s Hosp. Med. Ctr. v. Cal. Nurses Ass’n, 283 F.3d 1188, 1192 (9th Cir.
2002) (“In Wright, the Supreme Court stated that the clear and unmistakable standard
does not apply to an “an individual’s waiver of his own rights.”); Walker v. Carnival
Cruise Lines, 63 F. Supp. 2d 1083, 1090 (N.D. Cal. 1999) (citing Wright for the
conclusion that the “clear and unmistakable” standard does not apply in instances
where a party has waived a statutory right in an “individual . . . contract”). Asarco
contends this court need only find that Union Pacific waived its right to protected
contribution when it signed the Tolling Agreement.
The court finds the tolling agreement does not permit an end run around the
Settlement Agreement. The court agrees with Union Pacific that the language in the
Tolling Agreement does not support a waiver of Union Pacific’s contribution defense
under the statute. The court further finds it does not matter if it applies a clear and
unequivocal standard or not. At the very least the waiver must be explicitly expressed.
There is no such language in this case. There is no clear agreement between the
parties to preserve anything other than an extended two-year statute of limitations.
There is no language that expressly waives the CERCLA contribution defense. There is
no waiver or guarantee of anything else. The Tolling Agreement waiver states: “[T]he
Parties agree that the statute of limitations is a waivable defense, as between the
Parties.” Compl. Ex. A at 3, ¶ 7. The Tolling Agreement further states that the parties
“reserve all rights and defenses which they may have, except as set forth in this
Agreement, to contest or defend any claim or action the other Party may assert or
initiate against them.” Compl. Ex. A, ¶ 10 at 4. There is no specific part of the Tolling
Agreement that mentions Asarco’s CERCLA contribution claim against Union Pacific
and preservation of the same.3
There is no explicit language that permits such a
Accordingly, the court finds the Tolling Agreement does not support
Asarco’s claim and does not permit contribution against Union Pacific.
The claims set forth in Counts I, II and V, although couched as indemnification
and breaches of contract, are likewise contribution claims. They are based on the same
circumstances previously set forth herein. To allow these claims to proceed would
again eradicate the contribution protection permitted upon settlement with the
government. See Cannons Engineering, 899 F.2d at 92 (“Although CERCLA is silent
regarding indemnification, we refuse to read into the statute a right to indemnification
that would eviscerate § 9613(f)(2) and allow non-settlors to make an end run around the
statutory scheme.”); United States v. Pretty Prods., Inc., 780 F. Supp. 1488, 1495-97
Union Pacific points out that as a result of the Tolling Agreement, Asarco benefited greatly.
Asarco received thousands of documents pursuant to the FOIA case from Union Pacific that allowed it to
reopen five federal cases and reduce or vacate its settlement with the government, based on fraud and
document destruction, resulting in a $15 million settlement with the United States and Asarco.
(S.D. Ohio 1991) (dismissing indemnity, breach of contract, and other equitable claims
as “disguised” claims for contribution). Thus, they too are dismissed.
In summary, the court concludes that the CERCLA settlement with the
government protects Union Pacific from contribution claims such as the one presented
in this case. Second, the parties in the Tolling Agreement extended the statute of
limitations for two years, but they did not specifically waive the CERCLA contribution
protections. In fact, Union Pacific reserved all rights and defenses to contest or defend
any claim the other might have against them. Filing No. 1-2, ¶¶ 4, 7, 10. Third, Asarco
failed to file anything during the public comment process, even though it received notice
of and instructions on how to do so and failed to intervene in the CERCLA case. For
these reasons, the court finds Union Pacific’s motion to dismiss should be granted.
THEREFORE, IT IS ORDERED that Union Pacific’s motion to dismiss, Filing No.
51, is granted.
A separate judgment will be entered in accordance with this
Memorandum and Order.
Dated this 1st day of July, 2013.
BY THE COURT:
s/ Joseph F. Bataillon
United States District Judge
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