Responsible Envtl. Solutions Alliance v. Waste Mgmt. Inc

• Decision Date: 03 February 2011
• Docket Number: Case No. 3:04cv013
• Parties: RESPONSIBLE ENVIRONMENTAL SOLUTIONS ALLIANCE, Plaintiff, v. WASTE MANAGEMENT, INC., et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

RESPONSIBLE ENVIRONMENTAL SOLUTIONS ALLIANCE, Plaintiff,

v.WASTE MANAGEMENT, INC., et al., Defendants.

Case No. 3:04cv013

UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

Dated: February 3, 2011

JUDGE WALTER HERBERT RICE

AMENDED DECISION AND ENTRY (TO REFLECT SETTLEMENT BY AND BETWEEN THE PARTIES) SUSTAINING AMENDED JOINT MOTION OF PLAINTIFF AND SETTLING DEFENDANTS TO APPROVE SETTLEMENT (DOC. #246); OPINION ALLOCATING EQUITABLE SHARES BETWEEN PLAINTIFF AND DEFENDANT CHEMICAL WASTE MANAGEMENT, INC.; DEFENDANTS COLOR PAC, INC., AND RIVERWOOD INTERNATIONAL CORPORATION ORDERED TERMINATED AS PARTIES DEFENDANT; JUDGMENT TO BE ENTERED IN FAVOR OF PLAINTIFF AND AGAINST DEFENDANT CHEMICAL WASTE MANAGEMENT, INC.; TERMINATION ENTRY

Plaintiff Responsible Environmental Solutions Alliance ("Plaintiff") is comprised of a number of potentially responsible parties ("PRPs") which have entered into an administrative consent order with the United States Environmental Protection Agency ("U.S. EPA"), agreeing to fund a Remedial Investigation/ Feasibility Study ("RI/FS") for the barrel fill operating unit ("BFOU"), located at the Tremont City Landfill Site ("Tremont Site"), in Clark County, Ohio. Plaintiff bringsthis litigation under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. § 9601, et seg. In particular, Plaintiff seeks to recover contribution, under § 113(f) of CERCLA, 42 U.S.C. § 9613(f), from a number of other PRPs, including Defendants Chemical Waste Management, Inc. ("CWM"), ¹ The Danis Companies ("TDC"), Diversified Environmental Management Company ("DEMCO"), Danis Environmental Industries, Inc. ("DEI"), and Clarkco Land Co. ("Clarkco"), the latter three being subsidiaries of TDC.² In particular, Plaintiff seeks to recover a portion of the response costs it has so far incurred to fund that RI/FS from those five Defendants. Plaintiff also requests the entry of a declaratory judgment, holding that those Defendants are liable for a portion of the response costs it incurs in the future to complete the RI/FS and to construct any remedy ordered by the U.S. EPA.

Chemical wastes were disposed at the BFOU from November 5, 1976, until December 17, 1979. On March 8, 1977, the property on which the BFOU is located was transferred to IWD Chemical Disposal Co., Inc., of Ohio ("IWD Chemical"), ³ by N.D. Realty Co., Inc. ("N.D. Reality"), which, through a series of name changes, became Defendant Tremont Landfill Company ("TLC").⁴ TLC is a subsidiary of DEMCO. At the time, IWD Chemical was a subsidiary of Danis Industries Corporation ("Danis Industries"), which, by virtue of a merger, is a predecessor of DEMCO.⁵ In 1980, after the disposal of hazardous waste at the BFOU had ceased, Waste Management, Inc. ("Waste Management"), purchased the shares of IWD Chemical from Danis Industries. Prior to that transaction, the property on which the BFOU is located was transferred to TLC. Through a subsequent merger, CWM became the successor of IWD Chemical.

This Case in now before the Court on two matters, to wit: 1) a decision on the merits of Plaintiff's claim for contribution against CWM, which requires that the Court allocate equitable shares of the response costs to each of those parties; and 2) the Amended Joint Motion of Plaintiffs and Settling Defendants to Approve Settlement (Doc. #246). As a means of analysis, the Court will initially rule on the Amended Joint Motion of Plaintiff and Settling Defendants to Approve Settlement (Doc. #246), following which it will turn to the equitable allocation.

I. Amended Joint Motion of Plaintiff and Settling Defendants to Approve Settlement (Doc. #246)

The Plaintiff has entered into a settlement agreement with the Settling Defendants, under which the Settling Defendants have agreed to pay Plaintiff thesum of $300,000, in exchange for dismissal of its claims against them. The settlement agreement also covers claims against TLC, which has had a default judgment entered against it and for which a receiver has been appointed. In addition, the Settling Defendants would receive contribution protection. As further consideration for the settlement, Clarkco has agreed to transfer 24.803 acres of land adjacent to the BFOU to TLC, which through its receiver would grant permanent access and environmental covenants to Plaintiff, the U.S. EPA and the Ohio Environmental Protection Agency ("Ohio EPA").⁶

This is not the first time the Court has been asked to approve that settlement agreement. In its Decision of March 27, 2008, this Court overruled, without prejudice, the Joint Motion of Plaintiff and the Settling Defendants to Approve Settlement, for a Declaration of Contribution Protection for Settled and Dismissed Defendants and to Credit Settlement Proceeds Pro Tanto (Doc. #236). See Doc. #245. As the caption of that motion indicates, the Plaintiff and the Settling Defendants had requested that the Court approve a settlement agreement entered into by the Plaintiff and the Settling Defendants, that this Court declare that the Settling Defendants are protected against claims for contribution by CWM or any other PRP and that the Court credit the settlement proceeds on a pro tanto basis. CWM opposed that motion. See Doc. #238. The Court overruled the first two branches of that motion, because the moving parties had failed to present evidentiary support for their assertion that the settlement is fair, reasonable and adequate, had been reached as a result of arms length negotiations and Settling Defendants had limited resources with which fund a settlement. See Doc. #245 at 3. The Court also directed the Plaintiff and CWM to address the issue of whether to credit the settlement proceeds on a pro tanto basis in supplemental briefing concerning the equitable allocation of costs between those parties, jd-at 3 n. 3.

Plaintiffs and the Settling Defendants (collectively "Moving Parties") have renewed their requests that the Court approve their settlement agreement and that the Court afford contribution protection to the Settling Defendants and TLC. Doc. #246. As a means of analysis, the Court will initially decide whether to approve the settlement agreement, following which it will turn to the question of whether to afford contribution protection to the Settling Defendants.

Both Moving Parties and CWM agree that, in deciding whether to approve the settlement, this Court must determine whether it is "fair, reasonable and adequate!,] in other words, consistent with the purposes that CERCLA is intended to serve." United States v. Akzo Coatings of America, Inc., 949 F.2d 1409, 1435 (6^th Cir. 1989). See also United States v. Cannons Engineering Corp., 899 F.2d 79, 85 (1^st Cir. 1990) (noting that, in determining whether to approve a settlement agreement, "the trial court's review function is only to 'satisfy itself that the settlement is reasonable, fair and consistent with the purposes that CERCLA is intended to serve'") (quoting H.R.Rep. No. 253, Pt. 3, 99^th Cong., 1^st Sess. 19 (1985), reprinted in, 1986 U.S.C.C.A.N. 3038, 3042). In Akzo Coatings, the Sixth Circuit stressed that in determining whether settlement is fair, reasonable and consistent with the purposes of CERCLA, the District Court must apply an arbitrary and capricious standard. 949 F.2d at 1424-26. Of course, a settlement must be both procedurally and substantively fair. Cannons Engineering, 899 F.2d at 86. Substantive fairness introduces into the question of whether to approve asettlement "some acceptable measure of comparative fault, apportioning liability among the settling parties according to rational (if necessarily imprecise) estimates of how much harm each PRP has done." Id. at 87.

In their motion, the Moving Parties have presented a number of factual reasons in support of their contention that the settlement is fair, reasonable and adequate, such as the settlement was reached as a result of arms length negotiations; the Settling Defendants have limited resources with which fund a settlement; it would be exceedingly difficult, at best, to impose direct or derivative liability on any one or more or all of the Settling Defendants; and TLC has had a default judgment entered against it and a receiver appointed for it. See Doc. #246. Unlike their earlier motion, the Moving Parties have submitted evidentiary support to the motion, in the form of the deposition of Gregory Daily ("Daily"), as well as the affidavits of Michael Cyphert ("Cyphert"), counsel for Plaintiffs; R. Gary Winters ("Winters"), counsel for the Settling Defendants; and Thomas Danis, the majority shareholder of TDC.⁷ In response, CWM argues that the Court should overrule the Moving Parties' motion, because there is ample evidence that liability for the actions of TLC can be imposed upon the Settling Defendants. See Doc. #249. CWM also contends that the Moving Parties have not submitted sufficient evidence demonstrating that the Settling Defendants are unable to pay more than the amount set forth in the settlement agreement.⁸ id-As a means of analysis, the Court will initially discuss the issue of the imposition of direct orderivative liability on TDC, DEMCO and/or DEI, following which it will turn to the parties' arguments concerning the ability of the Settling Defendants to fund a settlement.

In discussing the imposition of derivative or direct liability on TDC, DEMCO and/or DEI, it bears emphasis that the Court is not determining whether such liability can be imposed upon any one or more or all of them. Rather the Court is assessing whether the Plaintiff's position that such liability cannot be imposed is objectively reasonable, since an objectively reasonable position that direct or derivative liability cannot be imposed on any of the Settling Defendants constitutes a "plausible explanation" for the proportionate share of the liability that the settlement imposes upon the Settling Defendants. See Cannons...