Refined Metals Corp. v. NL Indus. Inc.

• Decision Date: 22 August 2019
• Docket Number: No. 18-3235,18-3235
• Citation: 937 F.3d 928
• Parties: REFINED METALS CORPORATION, Plaintiff-Appellant, v. NL INDUSTRIES INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

937 F.3d 928

REFINED METALS CORPORATION, Plaintiff-Appellant,

v.NL INDUSTRIES INC., Defendant-Appellee.

No. 18-3235

United States Court of Appeals, Seventh Circuit.

Argued March 25, 2019

Decided August 22, 2019

Rehearing En Banc Denied September 20, 2019

Robert Ledson Collings, Attorney, SCHNADER, HARRISON, SEGAL & LEWIS, Philadelphia, PA, for Plaintiff-Appellant.

Joel L. Herz, Attorney, LAW OFFICES OF JOEL L. HERZ, Tucson, AZ, for Defendant-Appellee.

Before Wood, Chief Judge, and Flaum and Sykes, Circuit Judges.

Wood, Chief Judge.

This is a case about who should bear the costs of cleaning up a contaminated lead smelter site in Beech Grove, Indiana, a suburb of Indianapolis. Plaintiff Refined Metal Corporation ("Refined") has owned the site since 1980, when it acquired it from defendant NL Industries Inc. ("NL"). After years of litigation involving both the federal Environmental Protection Agency ("EPA") and the Indiana Department of Environmental Management ("IDEM"), Refined entered into a settlement with both agencies in 1998. The 1998 Decree, as we will call it, required Refined to close the site, pay a $210,000 fine, and remedy the contamination. For their part, EPA and IDEM agreed not to bring suit against Refined on at least some of their potential claims (though the parties dispute the scope of those covenants). These covenants not to sue took effect immediately upon the entry of the 1998 Decree. In 2017, almost 19 years later, Refined sued NL to recoup some of the cleanup costs for which it is responsible.

A delay of 19 years is a long time to keep an entitlement to reimbursement up in the air. The question before us is whether it is so long that Refined lost its statutory right to bring this action. The district court found that Refined’s claim qualified as a "contribution action" under section 113(f)(3)(B) of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9613(f)(3)(B). Contribution claims are subject to a three-year statute of limitations, and so the court dismissed the suit on that ground. It also relinquished supplemental jurisdiction over Refined’s state law claims. On appeal, Refined argues that its suit is instead a "cost-recovery" action under section 107(a) of CERCLA, 42 U.S.C. § 9607(a), and that it would be timely under that subsection’s more permissive limitations period. NL contends that it wins no matter which CERCLA provision applies, given that the statute of limitations applicable to section 107(a) is only six years and, as NL sees things, that clock began running and expired long ago.

It matters, in our opinion, whether this is a section 113(f)(3)(B) contribution action or a section 107(a) cost-recovery case. If it were the latter, we would need to conduct a searching examination of what actions to clean up the site anyone has taken, and when. But we can skip that inquiry, because we agree with the district court that this is a section 113(f)(3)(B) contribution action, and the limitations period had expired by the time Refined filed suit. We therefore affirm the decision of the district court.

I

CERCLA, commonly known as the Superfund Act, "shifts the cost of [an environmental] cleanup to the parties responsible for creating the hazard and away from taxpayers, who otherwise would be left to pick up the bill." NCR Corp. v. George A. Whiting Paper Co. , 768 F.3d 682, 689 (7th Cir. 2014). The statute identifies who may be held liable; they are called "potentially responsible parties" or PRPs in the jargon of environmental law. If a PRP believes that it has paid or may become liable for paying "cleanup costs in excess of its fair share," id. , the statute permits it to seek compensation from other PRPs.

There are two such routes available to someone seeking to recover from a PRP: a section 107(a) "cost-recovery" action and a section 113(f) "contribution" action. Bernstein v. Bankert , 733 F.3d 190, 206 (7th Cir. 2013). A plaintiff such as Refined will often prefer to proceed under the cost-recovery provision in section 107(a), because it not only contains a longer statute of limitations, but it also bars defendants from asserting equitable defenses. NCR Corp ., 768 F.3d at 690. These plaintiff-friendly provisions make sense: section 107 generally, if not always, operates as an avenue for recovering "costs incurred during a self-initiated environmental cleanup" rather than one spurred by a lawsuit or settlement. Id. But if either statutory trigger for a section 113(f) contribution action is present—a qualifying lawsuit under section 113(f)(1) or a qualifying settlement under section 113(f)(3)(B)—the plaintiff may proceed only under that provision. See Bernstein , 733 F.3d at 206 ("[A] plaintiff is limited to a contribution remedy when one is available.").

The statutory trigger at issue in this case is the one spelled out in section 113(f)(3)(B), which creates a right to contribution for a party that has "resolved its liability to the United States or a State for some or all of a response action or for some or all of the costs of such action in an administrative or judicially approved settlement." (A "response" is a term of art in CERCLA that encompasses both short-term "removal" actions and more permanent "remedies" or "remedial actions." 42 U.S.C. § 9601(25) ). The district court found that the 1998 Decree resolved enough of Refined’s liability to qualify as "an administrative or judicially approved settlement" under section 113(f)(3)(B). Since the three-year clock for contribution suits starts when the settlement is entered, the district court ruled that the statute of limitations ran out in 2001 and this suit was time-barred.

On appeal, Refined advances nine issues, which we have reorganized into three principal arguments, in support of its contention that the 1998 Decree did not trigger a section 113(f)(3)(B) contribution claim. If it is correct, and if other conditions were satisfied, then it would be able to pursue a section 107 cost-recovery claim. First, Refined asserts that its refusal to admit liability in the 1998 Decree meant that the Decree did not actually "resolve[ ] its liability to the United States or a State for some or all of a response action," as the statute requires. Second, Refined argues that only settlements that resolve liability for CERCLA-specific violations qualify as predicates for section 113(f)(3)(B) claims. As Refined reads it, the 1998 Decree included only covenants from the agencies not to sue Refined under other statutes—in particular, the Resource Conservation and Recovery Act (RCRA) and the Clean Air Act—and left Refined’s CERCLA liability open. Refined asks us to find that this is an independent reason that the 1998 Decree could not have triggered a contribution action. Third, Refined argues that it could not have sought a "contribution" from NL because, in its view, NL and Refined are not "joint tortfeasors." We address its arguments in that order.

A

In determining whether the 1998 Decree qualified under section 113(f)(3)(B), Refined urges us to focus on the presence or absence of an admission of liability. But that is not the central inquiry. We recognize that in Bernstein , we found that a settlement had not resolved enough of the PRP’s liability to trigger a section 113(f)(3)(B) claim, but the circumstances are important. We reached this result when (1) the settlement expressly stated that the defendant companies did not admit any liability or the validity of the EPA’s findings; and (2) the covenants not to sue were not immediately effective, but instead were conditional on complete performance of the terms of the settlement. 733 F.3d at 212. The district court in this case found it "clearer than a remediated stream" which of the two factors the Bernstein court found dispositive: the lack of an immediately effective covenant not to sue. The Bernstein court emphasized that "if the EPA had included an immediately effective promise not to sue as consideration for entering into the agreement, the situation would be different ." Id. at 213 (emphasis added). We have in this case that "different" situation. Bernstein also noted that it was "very difficult to say, in light of [a section from the settlement in which the defendant companies refused to admit liability], that the agreement between the parties constituted a resolution of liability." Id . at 212.

And we do not need to guess what effect each of the two factors Bernstein identified would have in isolation, because we have revisited this topic. In NCR Corp . —a case Refined does not even cite in its opening brief—we found that a settlement’s inclusion of an immediately effective covenant not to sue meant that a PRP had "resolved its liability ... for some or all of a response action," which in turn started the clock on a contribution claim. 768 F.3d at 682. In its reply brief, Refined points out that "the NCR Court makes no mention of a non-admission clause, an issue raised in Bernstein. " But that is precisely why NCR dooms Refined’s argument. In NCR , the only factor that the court explicitly discussed as a reason for distinguishing the settlement from the one in Bernstein was the immediate effectiveness (as opposed to conditional nature) of the covenant not to sue. Granted, the court noted that the settlement before it "diverge[d] in every meaningful way from the one in Bernstein that left section 107(a) liability available." 768 F.3d at 692. Yet its reasoning leaves no doubt that the immediately effective covenant not to sue was the dispositive point. Because that factor is present in this case, the mere fact that Refined refused to admit liability is not enough to exempt the 1998 Decree from the reach of section 113(f)(3)(B).

B

We now turn to the scope of the covenants not to sue that were included in the 1998 Decree. All agree that they were not comprehensive. Both EPA and IDEM included clauses reserving their rights to file suit under particular statu...