W.R. Grace-Conn. v. Zotos International
Filing
228
DECISION AND ORDER DIRECTING the parties to file closing arguments and supplemental briefs as described herein no later than sixty (60) days from date of entry of this Order. Signed by William M. Skretny, Chief Judge on 9/14/2012. (MEAL)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
W.R. GRACE & CO. – CONN.,
Plaintiff,
v.
DECISION AND ORDER
98-CV-838S
ZOTOS INTERNATIONAL, INC.,
Defendant.
I. INTRODUCTION
Plaintiff W.R. Grace & Co.-Conn. (“Grace”) is the current owner of a parcel of
property on Brewer Road in Waterloo, New York (“Brewer Road Site” or “the Site”) where
hazardous waste was deposited over fifty years ago. Grace commenced this action on
December 30, 1998, pursuant to section 113 of the Comprehensive Environmental
Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C. § 9613(f), the
Declaratory Judgment Act, 28 U.S.C. § 2201, and New York law, seeking contribution from
Defendant Zotos International, Inc. (“Zotos”) for costs incurred in connection with Grace's
investigation and remediation of contamination at the Site.
II. BACKGROUND
A non-jury trial on the issue of liability was held before this Court on May 17, 19, 20,
21, 24, 25 and 26, 2004. The parties introduced approximately four hundred exhibits and
each offered lay and expert witness testimony. Following the trial, each party submitted a
post-hearing brief, a responding brief, and a brief on the evidentiary issues raised at trial.
Each party also prepared proposed findings of fact and conclusions of law for the Court's
consideration.
On December 15, 2004, Zotos filed a Notice of Recent Decision of the United States
Supreme Court in Cooper Industries, Inc. v. Aviall Services, Inc., 543 U.S. 157 (2004),1 and
requested that the parties be given the opportunity to brief the significance of Cooper to
the liability issues in this case. Grace joined in Zotos’ request by filing a Motion for
Supplemental Briefing on Liability Issues. The requests were granted and each party
submitted a supplemental and reply brief.
By Decision and Order dated May 3, 2005 (Docket No. 205), this Court examined
Cooper and concluded that Grace could not maintain a contribution claim under § 113(f)
of CERCLA.
Grace appealed, urging that it was entitled to seek contribution under § 113(f)(3)(B).
Alternatively, Grace argued for the first time on appeal that it was entitled to cost recovery
pursuant to § 107(a)(4)(B) of CERCLA.
The Second Circuit affirmed this Court’s May 3, 2005 ruling with respect to § 113(f),
and remanded for further proceedings on the ground that Grace could maintain a cause
of action to pursue necessary costs under § 107. See W.R. Grace & Co.-Conn. v. Zotos
Intern., Inc., 559 F.3d 85 (2d Cir. 2009).
Following a status conference on May 1, 2009, Grace filed a Second Amended
Complaint (Docket No. 218) on May 15, 2009, to reflect the new statutory basis under
which it now pursues recovery. Zotos filed an Answer and Counterclaim for contribution
under § 113(f). (Docket No. 219.) Grace answered the Counterclaim on June 15, 2009.
(Docket No. 220.)
Presently, Grace requests that this Court hold Zotos liable under CERCLA §
1
The Cooper court held that a party can bring a contribution action under § 113(f)(1) of CERCLA
only if a civil action has been initiated against it pursuant to Section 106 or 107 of the statute .
2
107(a)(3), 42 U.S.C. § 9607(a)(3) for the response costs at the Site in an amount to be
determined during the damages phase of this case.
III. DISCUSSION
A.
Closing Arguments
At the May 1, 2009 status conference, both attorneys stated their desire to present
closing arguments, which were not scheduled at the conclusion of the bench trial. In their
briefs, both counsel rely on the trial record and their existing findings, as informed by their
prior briefs and one supplemental Supreme Court case that has been fully briefed. Given
the number of years that have passed since trial and the new issue presented for
determination in this case, this Court finds that both parties should submit written closing
arguments no later than sixty days (60) from the date of entry of this Order.
B.
Applicable Legal Standard
Additionally, it has come to this Court’s attention that the parties have not agreed
upon a legal criteria to apply in this case in light of the Supreme Court’s decision in
Burlington Northern and Santa Fe Ry. Co. v. United States, 556 U.S. 599 (2009), which
was decided while this case was pending on appeal.
The Burlington Northern court considered whether Shell Oil was properly held liable
as an entity that had “arranged for the disposal” of hazardous substances within the
meaning of CERCLA § 107 when it sold a product containing hazardous materials to a
distributor, and that distributor regularly spilled some of that product during transport. In
finding that Shell was not liable as an arranger, the Supreme Court clarified that arranger
liability attaches only where an entity “takes intentional steps to dispose of a hazardous
substance.” 556 U.S. at 600. It concluded, “[i]n order to qualify as an arranger, Shell must
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have entered into the sale of [its product] with the intention that at least a portion of the
product be disposed of during the transfer process by one or more of the methods
described in [CERCLA].” Id. at 612. Thus, for liability to attach, Shell must have intended
“that at least a portion of the product be disposed of during the transfer process,” and mere
knowledge that the spills occurred, without more, was an insufficient basis to find that Shell
had arranged for disposal. Id.
In its supplemental brief dated June 25, 2009, Grace purports that the case law
relied on its post-trial brief, which appear to encompass a broader definition of arranger
liability,2 remain valid under Burlington Northern. (Docket No. 221.) In response, Zotos
contends that the decisions cited by Grace are no longer authoritative under Burlington
Northern, and that the Second Circuit’s decision in General Electric Company v. AAMCO
Transmissions, Inc., 962 F.2d 281 (2d Cir. 1992), is restricted in scope by Burlington’s
holding. (Docket No. 222.)
It has been three years since supplemental briefs were filed, and the parties
maintain sharply differing views concerning the persuasiveness of the evidence offered by
each party in this case. Grace and Zotos are therefore requested to submit additional
briefing on the following recent cases to assist the Court in determining the legal standard
to be applied: U.S. v. General Elec. Co., 670 F.3d 377 (1st Cir. 2012); Team Enterprises,
LLC v. Western Investment Real Estate Trust, 647 F.3d 901 (9th Cir. 2011); Schiavone v.
Northeast Utilities Service Co., No. 08-CV-429, 2011 WL 1106228 (D. Conn. March 22,
2
See Cadillac Fairview/California, Inc. v. U.S., 41 F.3d 562 (9th Cir. 1994), Catellus
Developm ent Corporation v. U.S., 34 F.3d 748 (9th Cir. 1994), GenCorp, Inc. v. Olin Corp., 390 F.3d 433
(6th Cir. 2004), U.S. v. Aceto Agr. Chem icals Corp., 872 F.2d 1373 (8th Cir. 1989), U.S. v. Consolidated
Rail Corp., 729 F.Supp. 1461 (D. Del. 1990).
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2011); DVL, Inc. v. General Elec. Co., 811 F.Supp.2d 579 (N.D.N.Y. 2010); Appleton
Papers Inc. v. George A. Whiting Paper Co., No. 08-C-15, 2012 WL 2704920 (E.D. Wis.
July 3, 2012).
IV. CONCLUSION
This Court sees the need for further clarification and proceedings in order to render
its decision on the issue of arranger liability under CERCLA § 107. The parties are
therefore directed to file closing arguments and supplemental briefs as described herein
no later than sixty (60) days from date of entry of this Order. Oral argument may be
scheduled if it is deemed necessary by the Court.
SO ORDERED.
Dated: September 14, 2012
Buffalo, New York
/s/William M. Skretny
WILLIAM M. SKRETNY
Chief Judge
United States District Court
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