Appleton Papers Inc. v. George A. Whiting Paper Co.

• Citation: 776 F.Supp.2d 857
• Decision Date: 01 March 2011
• Docket Number: Case No. 08–C–16.
• Parties: APPLETON PAPERS INC. and NCR Corp., Plaintiffs,v.GEORGE A. WHITING PAPER CO., et al., Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

776 F.Supp.2d 857

APPLETON PAPERS INC. and NCR Corp., Plaintiffs,

v.GEORGE A. WHITING PAPER CO., et al., Defendants.

Case No. 08–C–16.

United States District Court, E.D. Wisconsin.

March 1, 2011.

Anthony J. Steffek, Brandon J. Evans, Heidi D. Melzer, Michael L. Hermes, Hermes Law Ltd., Green Bay, WI, Dennis P. Birke, Megan A. Senatori, Ronald R. Ragatz, Dewitt Ross & Stevens SC, Madison, WI, Evan B. Westerfield, J. Andrew Schlickman, Charles K. Schafer, Eric W. Ha, Kathleen L. Roach, Margaret R. Sobota, William F. Conlon, Sidley Austin LLP, Joan Radovich, Eimer Stahl Klevorn & Solberg LLP, Chicago, IL, J. Ric Gass, Gass Weber Mullins LLC, David J. Turek, Milwaukee, WI, for Plaintiffs.Christopher P. Riordan, Von Briesen & Roper SC, Scott B. Fleming, Weiss Berzowski Brady LLP, Linda E. Benfield, Paul Bargren, Foley & Lardner LLP, M. Andrew Skwierawski, S. Todd Farris, Ted A. Warpinski, Friebert Finerty & St. John SC, Thomas R. Schrimpf, Hinshaw & Culbertson LLP, Milwaukee, WI, Philip A. Munroe, Direnzo & Bomier LLC, Timothy B. Anderson, Remley & Sensenbrenner SC, Neenah, WI, David G. Mandelbaum, Marc E. Davies, Monique M. Mooney, Sabrina Mizrachi, Caleb J. Holmes, Greenberg Traurig LLP, Philadelphia, PA, Patrick H. Zaepfel, Kegel Klein Almy & Grimm LLP, Lancaster, PA, Allison E. McAdam, David A. Rabbino, Brian L. Zagon, Hunsucker Goodstein & Nelson PC, Lafayette, CA, Erik S. Mroz, Hunsucker Goodstein & Nelson PC, Woodland Hills, CA, John F. Cermak, Jr., Sonja A. Inglin, Baker Hostetler LLP, Los Angeles, CA, Thomas R. O'Donnell, William E. Coughlin, Calfee Halter & Griswold LLP, Cleveland, OH, Joseph C. Basta, Michelle A. Gale, Dykema Gossett PLLC, Ann Arbor, MI, Sarah A. Slack, Foley & Lardner LLP, Paul G. Kent, Richard C. Yde, Ted Waskowski, Meg E. Vergeront, Stafford Rosenbaum LLP, Madison, WI, James P. Walsh, Appleton City Attorney, Appleton, WI, Allison C. Swanson, City of Green Bay, Green Bay, WI, for Defendants.

DECISION AND ORDER

WILLIAM C. GRIESBACH, District Judge.

Numerous Defendants have filed motions for summary judgment on their counterclaims for contribution from Plaintiffs NCR and Appleton Papers. Consideration and scheduling of these motions has been somewhat expedited, over Plaintiffs' objection, in response to Defendants' assertion that the remaining issues are limited and are susceptible to resolution through motion practice. The Defendants' position is largely based on this Court's determination, in its December 16, 2009 Decision and Order, that Plaintiffs are not entitled to contribution because they knowingly took the risk that the product they mobilized would have long-lasting environmental consequences. From that decision, the Defendants argue, it follows that the funds they have already contributed to the Lower Fox River cleanup effort should be shifted to the Plaintiffs. That is, they believe the same equitable factors that barred Plaintiffs from receiving contribution would support the awarding of full contribution to the Defendants. In addition to their motions seeking recovery of their cleanup costs, the Defendants have also moved for a declaratory judgment based on the December 16 ruling. Specifically, they ask that I declare not only that Plaintiffs are barred from seeking contribution from Defendants for past costs, but that they are barred from seeking such costs in the future as well. Several of the Defendants have also filed motions touching on more individualized issues.

Plaintiffs contest both the big picture and the details. They argue that other equitable factors, which this Court did not consider in its earlier ruling, would justify denial of contribution with respect to many of the Defendants. They also argue that because their own discharges of PCBs were downstream of Little Lake Butte Morts (known as OU1), they cannot be held accountable for the substantial cleanup costs Defendants incurred there. In addition, they argue that because they were not “arrangers” of the disposal of the toxic waste material, there is no basis for holding them liable for amounts contributed by Defendants. Finally, they spend significant efforts contesting the particular costs many Defendants seek to recover.

For the reasons given below, I conclude that Plaintiffs are not liable in contribution for Defendants' OU1 cleanup costs unless they are found to be arrangers, a question that cannot be answered at this stage of the proceedings. The Defendants are entitled to full contribution, however, for all of their appropriate costs incurred in cleaning up OU2–OU5, as well as any future costs they may be deemed liable for in those sections of the river. I further conclude that Plaintiffs are not entitled to contribution from the United States Army Corps of Engineers.

I. AnalysisA. Defendants' Claims for Contribution of OU1 Expenses

Plaintiffs discharged PCBs into OU2 (the portion of the River between Little Lake Butte des Morts and the City of De Pere), and these PCBs flowed throughout OU2 and downriver into OU3, OU4 and OU5 (Green Bay). As such, Plaintiffs argue that they cannot be held liable for contribution for PCBs found in OU1 because it is undisputed that their own discharges did not flow upriver into Little Lake Butte des Morts, or OU1. The OU1 Defendants (WTM I Company and P.H. Glatfelter Company) offer a number of arguments supporting their claims for contribution of more than $110 million in expenses they incurred in cleaning up OU1. They also seek prospective relief in the form of a judgment declaring that Plaintiffs are jointly and severally liable for all costs either WTM I or Glatfelter might be required to pay in the future. They argue that Plaintiffs were arrangers of the disposal of the PCBs, which makes them liable under § 107. They further argue that even if they were not arrangers, they mobilized the PCBs into the entire Fox River Site and should be held liable for the entire cleanup expenditure on equitable grounds. I address these arguments below.

1. Arranger Liability

The Defendants concede that the Plaintiffs' own discharges did not pollute OU1, but they argue that Plaintiffs are liable not only as successors to dischargers of pollutants (in OU2–5) but as successors to arrangers of the disposal of those pollutants in OU1. The history of PCB discharges into the Lower Fox River is addressed more fully in this Court's previous decisions. To summarize, NCR produced carbonless copy paper (“CCP”) by creating a PCB-laden emulsion it sent to the Appleton Coated Paper Company (“ACPC”), which coated it on paper according to NCR's specifications. This process produced a waste product known as “broke”—paper scrap and trimmings—and ACPC sold the broke, through brokers, to paper recycling companies who used it in their own papermaking facilities. The recycling process resulted in the discharge of PCBs into the Fox River Site, including Little Lake Butte des Morts (“OU1”). The Defendants argue that in selling its broke to recycling mills, ACPC “arranged” to dispose of the broke, which was a hazardous substance containing PCBs, and thus Plaintiffs are liable for any environmental damage to OU1 even though their own discharges did not wind up in OU1.

Section 9607(a)(3) applies to an entity that “arrange[s] for disposal ... of hazardous substances.” Much of the present argument on arranger liability involves the interpretation and application of the Supreme Court's 2009 decision in Burlington Northern and Santa Fe Ry. Co. v. United States, –––U.S. ––––, 129 S.Ct. 1870, 173 L.Ed.2d 812 (2009). There, the Court noted that the term “arrange” is subject to a multitude of shadings and interpretations:

It is plain from the language of the statute that CERCLA liability would attach under § 9607(a)(3) if an entity were to enter into a transaction for the sole purpose of discarding a used and no longer useful hazardous substance. It is similarly clear that an entity could not be held liable as an arranger merely for selling a new and useful product if the purchaser of that product later, and unbeknownst to the seller, disposed of the product in a way that led to contamination. Less clear is the liability attaching to the many permutations of “arrangements” that fall between these two extremes-cases in which the seller has some knowledge of the buyers' planned disposal or whose motives for the “sale” of a hazardous substance are less than clear. In such cases, courts have concluded that the determination whether an entity is an arranger requires a fact-intensive inquiry that looks beyond the parties' characterization of the transaction as a “disposal” or a “sale” and seeks to discern whether the arrangement was one Congress intended to fall within the scope of CERCLA's strict-liability provisions.

129 S.Ct. at 1878–1879 (citations omitted).

The Court concluded that under the plain meaning of the term, “an entity may qualify as an arranger under § 9607(a)(3) when it takes intentional steps to dispose of a hazardous substance.” Id. at 1879. This means that a party's state of mind comes into play: in order to qualify as an arranger, the entity must not only have the intention to get rid of something, but the “intention that at least a portion of the product be disposed of ... by one or more of the methods described in § 6903(3).” Id. at 1880. As set forth in § 6903(3), the term “disposal” means “the discharge, deposit, injection, dumping, spilling, leaking, or placing of any solid waste or hazardous waste into or on any land or water so that such solid waste or hazardous waste or any constituent thereof may enter the environment or be emitted into the air or discharged into any waters, including ground waters.” In Burlington Northern, the Supreme Court addressed the potential liability of Shell Oil Company for its sales of a pesticide called “D–D” to a distributor known as Brown & Bryant (“B & B”).

When B & B purchased D–D [from Shell], Shell would arrange for delivery by common...