Control Data Corp. v. S.C.S.C. Corp.

• Decision Date: 10 May 1995
• Docket Number: Nos. 94-1875,94-2414 and 94-2506,s. 94-1875
• Citation: 53 F.3d 930
• Parties: , 25 Envtl. L. Rep. 21,378 CONTROL DATA CORPORATION, a Delaware Corporation, Appellee, v. S.C.S.C. CORP., a Minnesota Corporation; Schloff Chemicals and Supply Co., a Minnesota Corporation; and Irvin Schloff and Ruth Schloff, Appellants. CONTROL DATA COPRORATION, a Delaware Corporation, Appellant, v. S.C.S.C. CORP., a Minnesota Corporation; Schloff Chemicals and Supply Co., a Minnesota Corporation; and Irvin Schloff and Ruth Schloff, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 930

53 F.3d 930

40 ERC 1884, 25 Envtl. L. Rep. 21,378

CONTROL DATA CORPORATION, a Delaware Corporation, Appellee, v. S.C.S.C. CORP., a Minnesota Corporation; Schloff Chemicals and Supply Co., a Minnesota Corporation; and Irvin Schloff and Ruth Schloff, Appellants.

CONTROL DATA COPRORATION, a Delaware Corporation, Appellant, v. S.C.S.C. CORP., a Minnesota Corporation; Schloff Chemicals and Supply Co., a Minnesota Corporation; and Irvin Schloff and Ruth Schloff, Appellees.

Nos. 94-1875, 94-2414 and 94-2506.

United States Court of Appeals,

Eighth Circuit.

Submitted Dec. 14, 1994.

Decided May 10, 1995.

Leon R. Erstad, Minneapolis, MN, argued, for appellant.

Edwin R. Holmes, Apple Valley, MN, argued, for appellee.

Before RICHARD S. ARNOLD, Chief Judge, HEANEY, Senior Circuit Judge, and FAGG, Circuit Judge.

RICHARD S. ARNOLD, Chief Judge.

Control Data Corporation brought this suit under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), 42 U.S.C. Sec. 9601 et seq., and the Minnesota Environmental Response and Liability Act (MERLA), Minn.Stat. Sec. 115B.01 et seq. Following a bench trial, the District Court ¹ found the Schloff defendants--S.C.S.C. Corp., Schloff Chemical, and Irvin and Ruth Schloff--liable under CERCLA and allocated responsibility for 33 1/3% of Control Data's response costs, as defined by CERCLA, to those defendants. Alternatively, the District Court found S.C.S.C. Corp. and Schloff Chemical liable under MERLA and allocated responsibility for 33 1/3% of Control Data's removal costs, as defined by MERLA, to those defendants. The District Court held that Irvin and Ruth Schloff were not liable under MERLA.

The Schloff defendants appeal. We affirm the judgment of the District Court finding the Schloff defendants liable under CERCLA and allocating 33 1/3% of Control Data's response costs to them. We also affirm the District Court's decision to award Control Data 33 1/3% of its attorneys' fees under MERLA, but reverse that part of the District Court's judgment awarding attorneys' fees under CERCLA.

I. Factual Background

Control Data owns and operates a printed-circuit-board facility on Meadowbrook Road in St. Louis Park, Minnesota. Across Meadowbrook Road and Minnehaha Creek, the Schloff defendants owned and operated a dry-cleaning supply business, Schloff Chemical, from 1975 until 1989. ² Irvin Schloff was president of Schloff Chemical from 1963 to 1989, and exercised day-to-day control over its operations until 1985, when a General Manager was hired. Ruth Schloff has been the record owner of the real property where Schloff Chemical was located since 1974. S.C.S.C. Corp. is the current corporate incarnation of Schloff Chemical.

In 1987, Control Data discovered a leak in its sewer line. Fearing contamination, Control Data initiated an investigation, and, indeed, discovered the presence of volatile organic compounds in the groundwater underlying the Control Data site. Principal among these contaminants were 1,1,1 trichloroethane (TCA) and its degradation substances and tetrachloroethylene (PERC) and its degradation substances. A degradation substance is what a chemical becomes when it begins to break down. PERC and TCA degrade into many of the same substances.

After confirming that groundwater contamination existed, Control Data reported its findings to the Minnesota Pollution Control Agency (MPCA) and began cooperating with that agency in an effort to clean up the site. Control Data has admitted that it is the source of the TCA and its degradation substances. TCA has been spilled, or "released" in CERCLA terminology, many times by Control Data. But Control Data denied ever using, much less releasing, PERC, a circumstance which led the MPCA to search for other sources for the PERC contamination. It turns out that Schloff Chemical was that source.

Schloff Chemical released PERC several times between 1975 and 1989. The PERC released by Schloff Chemical formed a "plume," or discernible body of contaminants, that has migrated beneath Minnehaha Creek and joined with the TCA plume, created by Control Data's releases, on the Control Data site. It is now impossible to discern one plume from the other.

In April of 1988, Control Data entered into a consent decree with the MPCA that required it to investigate, monitor, and clean up the contamination. Pursuant to this agreement, Control Data has installed a remediation system which removes both the TCA and the PERC contaminants concurrently. This cleanup is ongoing and will proceed for an undetermined period of time. ³

Control Data brought this lawsuit in order to recover a portion of the costs it incurred as a result of the PERC contamination on its site. The District Court found that the Schloff defendants were all liable under CERCLA because they were responsible for releasing hazardous substances into the environment, and that release had caused Control Data to incur response costs. Important to the District Court's reasoning was its finding that PERC is more toxic and more difficult to clean up than TCA. Since the remediation system was designed and constructed around the need to clean up PERC, the release of PERC created additional response costs.

This greater level of toxicity was also central in the District Court's allocation of liability. Though the Schloff defendants were responsible for only 10% of the contamination on the site, the District Court allocated 33 1/3% of the cost of cleanup to them. It did so because PERC is more toxic, and thus more harmful and difficult to remove, than TCA.

In the alternative, the District Court found Schloff Chemical and S.C.S.C. Corp. liable under MERLA. Only the costs of removal, as opposed to remediation, were recoverable under MERLA, however. Once again, the District Court allocated 33 1/3% of the costs to these defendants, because of the greater level of toxicity attributable to PERC. The District Court found that Irvin and Ruth Schloff were not liable under MERLA because they had not been negligent in their handling of PERC.

Finally, the District Court awarded Control Data 33 1/3% of its attorneys' fees and litigation expenses under both CERCLA and MERLA. The Supreme Court of the United States has since held that attorneys' fees are not response costs under CERCLA in most instances, and thus are not recoverable. Key Tronic v. United States, --- U.S. ----, ----, 114 S.Ct. 1960, 1967, 128 L.Ed.2d 797 (1994). MERLA, however, specifically allows prevailing parties to recover attorneys' fees and litigation expenses.

In this appeal, the Schloff defendants challenge the District Court's ruling on several grounds. First, they argue that they are not liable for those portions of the response costs that are the costs of investigation. Those costs, they argue, were caused by Control Data's release. Second, they argue that the District Court erroneously allocated 33 1/3% of the response costs to them. They initially dispute the finding that PERC is more toxic than TCA. They also question whether toxicity is a measure which may be used to increase allocation beyond the volume of pollution chargeable to a defendant. Finally, they argue that the award of attorneys' fees is erroneous.

Control Data cross-appeals the District Court's award of 33 1/3% of its attorneys' fees instead of 100%. It argues that the Schloff defendants should be responsible for all of its litigation expenses because, but for the Schloff defendants' refusal to contribute their fair share to the cleanup, it would have had no litigation expenses at all.

II. CERCLA Framework

We begin our discussion, as we must, with the language of the statute. Recovery of response costs by a private party under CERCLA is a two-step process. ⁴ Initially, a plaintiff must prove that the defendant is liable under CERCLA. Once that is accomplished, the defendant's share of liability is apportioned in an equitable manner.

CERCLA liability is established under 42 U.S.C. Sec. 9607(a) (CERCLA Section 107(a)).

Notwithstanding any other provision or rule of law, and subject only to the defenses set forth in subsection (b) of this section--

(1) the owner and operator of a vessel or a facility,

(2) any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of,

(3) any person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by such person, by any other party or entity, at any facility or incineration vessel owned or operated by another party or entity and containing such hazardous substances, and

(4) any person who accepts or accepted any hazardous substances for transport to disposal or treatment facilities, incineration vessels or sites selected by such person, from which there is a release, or a threatened release which causes the incurrence of response costs, of a hazardous substance, shall be liable for--

(A) all costs of removal or remedial action incurred by the United States Government or a State or an Indian tribe not inconsistent with the national contingency plan; [and]

(B) any other necessary costs of response incurred by any other person consistent with the national contingency plan....

Thus, in order to prove liability, a plaintiff must show that a defendant is within one of the four classes of covered persons enumerated in subsections (1) through (4); that a release or threatened release from a facility has occurred; ⁵ that the plaintiff incurred response costs ⁶ as a result; and that the costs were necessary and consistent with the national contingency plan. ⁷ 42 U.S.C. Sec. 9607; see United States v. Aceto Agricultural Chemicals Corp., 872 F.2d 1373, 1378-79 (8th Cir.1989).

A problematic portion of this calculus is the causation element. At the outset, we note that...