Louisiana Pacific v. Beazer Materials & Services, Civ. S-89-871 LKK.

• Decision Date: 01 February 1994
• Docket Number: No. Civ. S-89-871 LKK.,Civ. S-89-871 LKK.
• Citation: 842 F. Supp. 1243
• Court: U.S. District Court — Eastern District of California
• Parties: LOUISIANA PACIFIC CORPORATION, a Delaware corporation, Plaintiff, v. BEAZER MATERIALS & SERVICES, INC., A Delaware corporation, as Successor in Interest to Koppers Company, Inc., a Delaware corporation, et al., Defendants. And Related Third-Party Action.

842 F. Supp. 1243

LOUISIANA PACIFIC CORPORATION, a Delaware corporation, Plaintiff, v. BEAZER MATERIALS & SERVICES, INC., A Delaware corporation, as Successor in Interest to Koppers Company, Inc., a Delaware corporation, et al., Defendants. And Related Third-Party Action.

No. Civ. S-89-871 LKK.

United States District Court, E.D. California.

February 1, 1994.

COPYRIGHT MATERIAL OMITTED

James C. Collins, Thelen, Marrin, Johnson & Bridges, San Francisco, CA, for Louisiana Pacific Corp.

David B. Glazer and Helen H. Kang, U.S. Dept. of Justice, Environmental Enforcement Section, San Francisco, CA, for the U.S.

Anne M. Lawlor Goyette, Bronson, Bronson & McKinnon, San Francisco, CA, for Woodward-Clyde Consultants.

Patrick J. Cafferty, Jr., Munger, Tolles & Olson, San Francisco, CA, for Beazer Materials & Services Beazer East Malcolm S. Segal, Segal & Kirby, Sacramento, CA, for Koppers Industries.

ORDER

KARLTON, Chief Judge Emeritus.

This litigation concerns the allocation of the cost of cleaning up two Superfund sites on the National Priorities List ("NPL") established pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601-75. The original suit was brought by Louisiana Pacific ("LP") against Beazer East, Inc. ("Beazer"). It sought costs expended by both LP and the Environmental Protection Agency ("EPA") in the course of investigating those sites.¹ LP also sought declaratory judgment concerning future liability under the Act. See Louisiana Pacific Corp. v. Beazer Materials & Services, Inc., 811 F.Supp. 1421 (E.D.Cal.1993).

The United States, however, has now filed a complaint seeking to recover from LP its response costs pursuant to 42 U.S.C. §§ 9607 and 9613(g). In response, LP filed a third-party complaint against Beazer,² and Woodward-Clyde Consultants ("WCC"). The third-party complaint seeks CERCLA contribution and declaratory relief against Beazer pursuant to 42 U.S.C. §§ 9607(a) and 9613(f). It also alleges claims for negligence and for violation of Cal.Bus. & Prof.Code § 17200 against WCC.³

LP now moves for summary judgment on the Government's complaint, arguing that the United States is precluded as a matter of law from recovering its costs of the investigation of the LP site because EPA unlawfully conditioned LP's opportunity to conduct its own, potentially lower cost investigation, on the company's waiver of various due process rights. See Louisiana Pacific Corp., 811 F.Supp. at 1424. Beazer and WCC join that motion pursuant to Fed.R.Civ.P. 14, arguing that because the United States may not recover these costs from LP, any claim by LP attempting to pass these costs along to them must fail. The United States has cross-moved, contending that as a matter of law the position it took during the failed settlement negotiations cannot bar its claim for cost recovery. In the alternative, the United States argues that should this court conclude that EPA may not condition LP's opportunity to conduct its own study upon the waiver of certain constitutional rights, summary judgment may nonetheless not be granted to LP and third-party defendants because disputed issues of fact remain as to the cause for the failed negotiations.⁴

The standards for resolution of a motion for summary judgment are well-known and need not be set out here. See, e.g., Clark v. Kizer, 758 F.Supp. 572, 574-75 (E.D.Cal. 1990). For the reasons herein stated, LP, Beazer and WCC's motions seeking dismissal premised on the doctrine of unconstitutional conditions are denied, and the United States' motion relative to that claim is granted in part and denied in part.

I FACTS⁵

On February 13, 1986, the EPA notified LP that it was potentially liable for CERCLA costs at the site of its Oroville sawmill. For the next several months, LP and EPA worked out the terms of a plan for the investigation and evaluation of that site which was intended to be incorporated into a consent order.⁶ Although LP agreed to perform all the work described in the plan, a dispute arose relative to those provisions of EPA's proposed consent decree relating to work additional to that specified in the initial plan. EPA proposed that the only remedy LP would enjoy if it disagreed with EPA over the need for additional work was to invoke the dispute resolution provisions. Notwithstanding those provisions, however, LP would be subject to $5,000 per day in stipulated penalties. These penalties were not to be subject to judicial review nor would they be stayed by the pendency of the dispute resolution proceedings.⁷

In due course, LP informed EPA that it would not agree to the stipulated penalties provisions insofar as they apply to potential future work orders.⁸ EPA responded that it would modify the proposed consent order so that LP could dispute the imposition of penalties, but only if LP won the underlying dispute concerning additional work. LP again did not want to risk the possibility of the massive penalties and proposed a good faith provision, i.e., that the penalties for failing to conduct the further work would not be imposed if LP challenged them in good faith. LP also proposed as an alternative that the consent order include a provision for judicial review of the appropriateness of the amount of penalties.⁹ EPA refused to make these concessions and told LP that it would hire its own contractor to do the investigation. The costs of this investigation form the basis of EPA's recovery action against LP.

While the facts noted above are not disputed, other potentially material factual disputes remain. LP tenders evidence supporting its argument that the stipulated penalties provision was the sole reason for the breakdown in negotiations. EPA counters with evidence that the scope of LP's initial investigation plan fell "far short" of what EPA was looking for in an investigation. EPA allegedly concluded that LP could be allowed to do the investigation only if the consent order "included a meaningful commitment from LP to perform additional work, as necessary, to assure EPA that a complete RI/FS would be conducted." It contends that the proposed stipulated penalties were included to ensure that the additional work was done in a timely manner. Thus EPA asserts that it was not its insistence on LP's waiver of a constitutional right which caused the breakdown in negotiations and EPA's decision not to authorize LP to conduct the investigation of its sites, but rather it was LP's inadequate proposal for conducting the investigation.

II THE NATURE OF UNCONSTITUTIONAL CONDITIONS

The doctrine of unconstitutional conditions provides that the Government cannot condition the receipt of a government benefit on waiver of a constitutionally protected right. It functions to insure that the Government may not indirectly accomplish a restriction on constitutional rights which it is powerless to decree directly. Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972).¹⁰

The doctrine has long been recognized, finding its origin in Barron v. Burnside, 121 U.S. 186, 7 S.Ct. 931, 30 L.Ed. 915 (1887). Almost 50 years ago, the high court explained that "constitutional guarantees, so carefully safeguarded against direct assault, should not be open to destruction by the indirect but no less effective process of requiring a surrender which, though in form voluntary, in fact lacks none of the elements of compulsion." Frost & Frost Trucking Co. v. Railroad Comm'n, 271 U.S. 583, 593, 46 S.Ct. 605, 607, 70 L.Ed. 1101 (1926). See also Parks v. Watson, 716 F.2d 646, 650 (9th Cir.1983) ("the government may not impose a choice between the government benefit and the exercise of a constitutionally guaranteed right"). Although it has been suggested that the doctrine has been "somewhat eroded," Lawrence H. Tribe, American Constitutional Law § 10-8, at 681 (2d ed. 1988), the Supreme Court's recent reliance on it demonstrates continued vitality. See Rutan v. Republican Party of Illinois, 497 U.S. 62, 72, 110 S.Ct. 2729, 2735, 111 L.Ed.2d 52 (1990).

Nonetheless, this court would be less than candid if it did not acknowledge that the occasions when the doctrine is applied and when it is not are difficult to predict. See Posadas de Puerto Rico Assoc. v. Tourism Co., 478 U.S. 328, 106 S.Ct. 2968, 92 L.Ed.2d 266 (1986); Schneckloth v. Bustamonte, 412 U.S. 218, 288 n. 12, 93 S.Ct. 2041, 2078 n. 12, 36 L.Ed.2d 854 (Marshall, J., dissenting); California v. LaRue, 409 U.S. 109, 137, 93 S.Ct. 390, 407, 34 L.Ed.2d 342 (1972) (Marshall, J., dissenting). Moreover, despite its venerable age, the jurisprudence concerning the doctrine of unconstitutional conditions is both undeveloped and uncertain; indeed, it has been described as "a doctrine in search of a theory." Kathleen M. Sullivan, Unconstitutional Conditions and the Distribution of Liberty, 26 San Diego L.Rev. 327 (1989).¹¹ What the recent academic examination adverted to in note 11 has made plain is that, although there is a uniformly felt need for a doctrine constraining indirect governmental pressure on the exercise of constitutional rights, no easy or perhaps single rationale for application of the doctrine exists.¹²

Unlike academics, of course, I am not charged with resolving theoretical enigmas, but rather, with deciding concrete cases. Nonetheless, the absence of a tenable theoretical base and what frequently appear to be inconsistent results renders decision-making an uncertain task. Accordingly, I turn to the task at hand with less than full confidence.

Because 42 U.S.C. § 9604(a) provides EPA with discretion to grant or deny a potentially responsible party authorization to conduct the study, the Government need not engage in settlement negotiations relative to conducting the investigation at all. United States v. Cannons Engineering Corp., 899 F.2d 79, 93 (1st Cir.1990); United States v. Serafini, 781 F.Supp. 336, 339 (M.D.Pa.1992) (same). Thus no constitutional issue...