Kalamazoo River Study v. Menasha Corp

• Decision Date: 15 June 2000
• Docket Number: No. 99-1197,99-1197
• Citation: 228 F.3d 648
• Parties: (6th Cir. 2000) Kalamazoo River Study Group, Plaintiff-Appellant, v. Menasha Corporation; Eaton Corporation, Defendants-Appellees, Rockwell International Corporation, et al., Defendants. Argued:
• Court: U.S. Court of Appeals — Sixth Circuit

Page 648

228 F.3d 648 (6th Cir. 2000)

Kalamazoo River Study Group, Plaintiff-Appellant, v. Menasha Corporation; Eaton Corporation, Defendants-Appellees, Rockwell International Corporation, et al., Defendants.

No. 99-1197

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Argued: June 15, 2000

Decided and Filed: October 5, 2000

Appeal from the United States District Court for the Western District of Michigan at Grand Rapids. No. 95-00838--Robert Holmes Bell, District Judge. [Copyrighted Material Omitted] Alan C. Bennett, Law, Weathers & Richardson, Grand Rapids, Michigan, Jerome T. Wolf, James L. Moeller, Amy E. Bauman, David S. Ladwig, SONNENSCHEIN NATH & ROSENTHAL, Kansas City, Missouri, Alan C. Bennett, LAW, WEATHERS & RICHARDSON, Grand Rapids, Michigan, for Appellant.

Joseph C. Basta, DYKEMA GOSSETT, Detroit, Michigan, for Appellees.

Kathryn J. Humphrey, Joseph C. Basta, Nicholas G. Zotos, DYKEMA GOSSETT, Detroit, Michigan, for Appellees.

Richard A. Glaser, James G. O'Connor, DICKINSON WRIGHT, Grand Rapids, Michigan, for Defendant-Appellee

R. Justin Smith, UNITED STATES DEPARTMENT OF JUSTICE, ENVIRONMENT & NATURAL RESOURCES DIVISION, Washington, D.C., for Amicus Curiae.

Before: JONES, MOORE, and GILMAN, Circuit Judges.

OPINION

KAREN NELSON MOORE, Circuit Judge.

Plaintiff-appellant Kalamazoo River Study Group ("KRSG") is an unincorporated association of paper manufacturers seeking to recover costs incurred in the investigation and remediation of contamination by polychlorinated biphenyls (PCBs) in the Kalamazoo River. KRSG brought suit against eight corporate defendants, including defendants-appellees Menasha Corporation and Eaton Corporation, pursuant to the contribution provision of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et seq. The district court granted summary judgment in favor of Menasha and in favor of Eaton with regard to its Kalamazoo and Marshall facilities, and it ruled in favor of Eaton with regard to its Battle Creek facility after a bench trial. Because the district court applied an incorrect liability standard for CERCLA contribution actions, we REVERSE the judgments and REMAND for further proceedings.

I. BACKGROUND

We set forth the relevant facts underlying this dispute in a previous opinion:

In 1990, after nearly 20 years of investigating polychorinated [sic] biphenyl (PCB) contamination in the Kalamazoo River, the Michigan Department of Natural Resources ("MDNR") determined that a three-mile portion of Portage Creek from Cork Street to the Kalamazoo River, and a 35-mile portion of the Kalamazoo River from this confluence downstream to the Allegan City Dam (the "Site") were heavily concentrated with PCBs. Consequently, the MDNR listed the Site as an environmental contamination site under the Michigan Environmental Response Act, and the United States Environmental Protection Agency ("EPA") listed the Site on the National Priority List ("NPL") as a Superfund Site pursuant to CERCLA § 105. The MDNR and the EPA authorized the MDNR to conduct an Endangerment/Risk Assessment (E/RA) for the Site.

Following the E/RA, MDNR identified three paper mills -- HM Holdings, Inc., Georgia-Pacific Corporation and Simpson Plainwell Paper Company -- with facilities located on or near the Kalamazoo River as potentially responsible parties ("PRPs") for the PCB contamination. All three companies entered into an Administrative Order by Consent ("AOC") which required them to perform a Remedial Investigation and Feasibility Study ("RI/FS") at the Site. Subsequently, James River Company, which voluntarily agreed to pay a portion of the RI/FS costs, joined with the other three companies to form an unincorporated association called the Kalamazoo River Study Group ("KRSG").

Kalamazoo River Study Group v. Rockwell Int'l Corp., 171 F.3d 1065, 1066-67

(6th Cir. 1999) (footnotes and citations omitted).¹ Under the RI/FS, KRSG is required to extend its investigation upstream and downstream of the NPL site to include a ninety-five-mile stretch of the Kalamazoo River.

Although none of KRSG's member corporations have admitted liability nor have they been adjudged legally liable for the contamination at the NPL site, KRSG has incurred significant costs for its performance of the RI/FS at the NPL site and will continue to incur substantial costs in connection with those activities as well as remediation of the NPL site. KRSG filed this action in the United States District Court for the Western District of Michigan in December of 1995, seeking to recover its response costs from eight other corporations² that allegedly contributed to the contamination at the NPL site. KRSG's suit was based on CERCLA, the Michigan Natural Resources and Environmental Protection Act, Mich. Comp. Laws Ann. § 324.20101 et seq., and various common law theories. In its first case management order, the district court bifurcated the trial of this case into two phases: liability and allocation of damages. All of the district court's rulings thus far have gone to liability. Only the district court's judgments respecting two of the defendants -- Eaton and Menasha -- are at issue in this appeal.

On March 6, 1998, the district court granted summary judgment on the issue of liability to defendant Menasha. See Kalamazoo River Study Group v. Rockwell Int'l, 3 F. Supp. 2d 799, 814 (W.D. Mich. 1998). It was in this opinion that the district court articulated the liability standard that is challenged by KRSG in this appeal. The parties disputed whether CERCLA requires a plaintiff to show causation in the sense that a particular defendant's release caused the plaintiff to incur costs. After examining the issue, the district court concluded that in a contribution action, the court should ask whether a particular defendant's release was of sufficient significance to justify holding it liable for the response costs. Applying this "threshold of significance standard," id. at 807, the court concluded that defendant Menasha was entitled to summary judgment.

In an opinion dated June 30, 1998, the court applied the threshold of significance standard in ruling on cross-motions for summary judgment as to liability filed by KRSG and Eaton. The court found a material question of fact with regard to Eaton's liability for its facility at Battle Creek. However, the court granted summary judgment in favor of Eaton with regard to its facilities at Marshall and Kalamazoo.

From August 10 to August 17, 1998, the district court presided over a bench trial on the issue of Eaton's liability with regard to the Battle Creek facility. In an opinion dated December 7, 1998, the district court entered judgment in favor of Eaton, explaining that "[b]ecause the concentrations of PCBs upstream of Plaintiff's members are low, their incidence is sporadic, and they have not been located close to the Eaton facility, the Court concludes that Plaintiff KRSG has not met its burden of demonstrating that any PCBs released from Eaton's Battle Creek facility have added to the PCB contamination of the Kalamazoo River." J.A. at 346 (D. Ct. Op. 12/7/98).

On February 3, 1999, the district court granted KRSG's motion to certify its March 6, June 30, and December 7 orders with respect to Eaton and Menasha as final and appealable pursuant to Federal Rule of Civil Procedure 54(b). We therefore have jurisdiction pursuant to 28 U.S.C. § 1291.

II. ANALYSIS

The district court granted summary judgment on the issue of liability to Menasha, and to Eaton with regard to its Kalamazoo and Marshall facilities. We review de novo a district court's grant of summary judgment. See Ercegovich v. Goodyear Tire & Rubber Co., 154 F.3d 344, 349 (6th Cir. 1998). Summary judgment is proper only when there is no dispute as to a material question of fact and one party is entitled to a judgment as a matter of law. Fed. R. Civ. P. 56(c). Viewing all facts and inferences drawn therefrom in the light most favorable to the nonmovant, we must determine whether the evidence presented is such that a reasonable jury could find for that party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

The district court granted judgment in favor of Eaton with regard to its Battle Creek facility after a bench trial on the issue of liability. We review the legal conclusions of the district court de novo, but we review the district court's factual findings following a bench trial for clear error. See Schroyer v. Frankel, 197 F.3d 1170, 1173 (6th Cir. 1999).

A. The Proper Standard for CERCLA Contribution Actions

CERCLA is a statute designed "to facilitate the prompt cleanup of hazardous waste sites by placing the ultimate financial responsibility for cleanup on those responsible for hazardous wastes." KRSG, 171 F.3d at 1068 (quotation omitted); see also B.F. Goodrich v. Betkoski, 99 F.3d 505, 514 (2d Cir. 1996) (noting that the purposes of CERCLA include "facilitating efficient responses to environmental harm, holding responsible parties liable for the costs of the cleanup, and encouraging settlements that reduce the inefficient expenditure of public funds on lengthy litigation" (citation omitted)), cert. denied, 524 U.S. 926 (1998).

Once a site has been cleaned up, CERCLA provides two causes of action for a party to recover the costs incurred as a result of the cleanup effort. The first is a recovery action governed by § 107(a), 42 U.S.C. § 9607(a). That section provides:

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...