United States v. Rogers Cartage Co.

• Decision Date: 27 July 2015
• Docket Number: Nos. 12–3624 & 13–3052.,s. 12–3624 & 13–3052.
• Citation: 794 F.3d 854
• Parties: UNITED STATES of America, Plaintiff v. ROGERS CARTAGE COMPANY, Defendant–Cross Claim Third/Party Plaintiff–Appellant, v. Monsanto Company, et al., Defendants–Cross Claim Third/Party Defendants–Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

794 F.3d 854

UNITED STATES of America, Plaintiff

v.ROGERS CARTAGE COMPANY, Defendant–Cross Claim Third/Party Plaintiff–Appellant

v.Monsanto Company, et al., Defendants–Cross Claim Third/Party Defendants–Appellees.

Nos. 12–3624 & 13–3052.

United States Court of Appeals, Seventh Circuit.

Argued Jan. 6, 2014.

Decided July 27, 2015.

David S. Gualtieri, Attorney, Department of Justice, Washington, DC, J. Christopher Moore, Attorney, Office of the United States Attorney, Fairview Heights, IL, for Plaintiff.

Ronald J. Eisenberg, Attorney, Robert Schultz, Attorney, Schultz & Associates LLP, Chesterfield, MO, for Defendant–Cross Claim Third/Party Plaintiff–Appellant.

Jane E. Fedder, Attorney, Joseph G. Nassif, Attorney, Husch Blackwell LLP, St. Louis, MO, Bernard J. Ysursa, Sr., Attorney, Cook, Ysursa, Bartholomew, Brauer & Shevlin, Belleville, IL, for Defendants–Cross Claim Third/Party Defendants–Appellees.

Before EASTERBROOK, WILLIAMS, and TINDER, Circuit Judges.

Opinion

TINDER, Circuit Judge.

The villages of Sauget and Cahokia, Illinois, located along the east bank of the Mississippi River just south of East St. Louis, are home to a three-and-a half-mile storm water conveyance channel known as Dead Creek. The name is morbid, but fitting. For more than a century, the area has been dominated by industrial activity, and for much of that time, Dead Creek was the recipient of a broad array of waste materials, including polychlorinated biphenyls (“PCBs”). Because of its extensive contamination, the creek became the center of a cleanup site designated by the U.S. Environmental Protection Agency (“EPA”) as Sauget Area 1. In 1999, the government sued several potentially responsible parties (“PRPs”) regarding the cleanup of Sauget Area 1, and many of those PRPs brought contribution claims against one another. One PRP, Rogers Cartage Company, settled with the other PRPs, but later it sought contribution from them again via a third-party complaint in a separate action. After that third-party complaint was severed and transferred back to the EPA action, the district court dismissed it and imposed sanctions against Rogers Cartage based on the settlement agreement. Rogers Cartage appeals those decisions, and we affirm.

I. BACKGROUND

In 1999, the United States filed a complaint under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), seeking to recover costs incurred by the EPA in removing hazardous substances from a site known as Sauget Area 1, which follows Dead Creek through the Villages of Sauget and Cahokia, Illinois, just south of East St. Louis. Monsanto Company and Solutia, Inc. were among the original defendants in the case. From the early 1900s until 1997, Monsanto operated chemical plants in Sauget, Illinois, and St. Louis, Missouri. During that time, Monsanto disposed of chemical waste from those plants, including PCBs and other hazardous substances, at waste disposal sites within Sauget Area 1. In 1997, Monsanto spun-off its chemical business to Solutia, and Solutia agreed to indemnify Monsanto against any environmental claims relating to that business.

Monsanto and Solutia filed a third-party complaint bringing several new parties into the action, including Rogers Cartage Company, which formerly operated two trucking depots near (but not within) Sauget Area 1, one in the Village of Sauget and one in the Village of Cahokia. Monsanto and Solutia sought contribution from Rogers Cartage based on the allegation that Rogers Cartage washed its trucks at these two depots after hauling hazardous substances, releasing those substances into drainage systems that ultimately made their way into Dead Creek, thus contributing to the pollution of Sauget Area 1. The government subsequently amended its complaint to add Rogers Cartage as a defendant, and several other defendants brought cross-claims against Rogers Cartage based on the same theory.

In 2000, Monsanto merged with Pharmacia & Upjohn, Inc., creating the new entity Pharmacia Corporation. In 2001, Pharmacia was substituted for Monsanto as a party.

In late 2003, the district court held a bench trial to resolve the government's claims against Rogers Cartage. Ultimately, the court found that the government had not established by a preponderance of the evidence that the discharges from Rogers Cartage's trucking depots ever made their way into Dead Creek. Therefore, the court ruled in favor of Rogers Cartage.

After the bench trial, Rogers Cartage moved to dismiss the contribution claims brought against it by Pharmacia, Solutia, and other defendants. The district court granted that motion, reasoning that those claims failed as a matter of law because Rogers Cartage had been found not liable on the claim brought by the government under CERCLA § 107, 42 U.S.C. § 9607. At that point, all claims by or against Rogers Cartage were dismissed with prejudice.

In June 2007, the Supreme Court decided United States v. Atlantic Research Corp., 551 U.S. 128, 127 S.Ct. 2331, 168 L.Ed.2d 28 (2007), marking a change in the law and establishing that potentially responsible parties that incur voluntary cleanup costs may seek contribution from other potentially responsible parties under CERCLA § 107. In light of this decision, Pharmacia and Solutia sought leave to file an amended cross-claim against Rogers Cartage, arguing that their contribution claims were no longer derivative of the government's claims against Rogers Cartage. The district court granted the motion, and an amended cross-claim was filed bringing Rogers Cartage back into the case. Subsequently, two other defendants, Cerro Copper Products Co. (now Cerro Flow Products, Inc.) and Exxon Mobil Oil Corporation, were also permitted to file amended cross-claims against Rogers Cartage based on Atlantic Research.

Rogers Cartage subsequently filed counterclaims against Pharmacia, Solutia, Cerro, and Exxon Mobil, seeking contribution from those companies based on their releases of hazardous substances in Sauget Area 1. In the counterclaim against Pharmacia and Solutia, Rogers Cartage alleged that Monsanto Company had arranged for the transport and disposal of hazardous substances by Rogers Cartage without informing Rogers Cartage of the nature of the substances involved.

In February 2011, Pharmacia, Solutia, Cerro, and Exxon Mobil settled their claims against Rogers Cartage for $7,500,000. However, the settlement agreement provided that Rogers Cartage would be required to pay only $50,000 of that amount itself, so long as it cooperated in the effort to recover the difference from its insurance carrier, Travelers. The agreement also provided that Pharmacia, Solutia, Cerro, and Exxon Mobil would fund any coverage dispute with Travelers.

The settlement agreement further provided for the release of all claims between the parties “pertaining to the Sauget Area 1 and 2 Sites,” including any claims “brought or alleged, or which could have been brought or alleged” in the EPA action. The agreement defined the “Sauget Area 1 Sites” to include “the geographic area so named and identified by the United States Environmental Protection Agency (‘U.S. EPA’),” and “any portion of any property constituting a drainage pathway, to the extent it is contaminated by such drainage, to or from Dead Creek.” The agreement also contemplated that cleanup of Rogers Cartage's Cahokia depot would be paid for out of the settlement proceeds. Specifically, it provided that a portion of any insurance recovery above $3 million would be placed in a trust account which Rogers Cartage could use to pay for, inter alia, “any claims against Rogers regarding contamination at the Cahokia facility alleged to have been operated by Rogers.”

Rogers Cartage leased the land where its Cahokia depot was located from ConocoPhillips Pipe Line Company, which is now Phillips 66 Pipeline LLC. In June 2011, Phillips 66 (then ConocoPhillips) filed a separate action against Rogers Cartage, seeking contribution for the costs it incurred in voluntarily cleaning up its Cahokia property. In May 2012, Rogers Cartage filed a third-party complaint against Pharmacia, Solutia, and an entity it called “Old Monsanto,” apparently referring to the former Monsanto Company that no longer exists. In its third-party complaint, Rogers Cartage again alleged that Monsanto arranged for the disposal of hazardous substances at the Cahokia property.

Monsanto, Solutia, and Pharmacia (collectively, “MS & P”) moved to dismiss Rogers Cartage's third-party complaint in the Phillips action on the grounds that it was barred by the settlement agreement in the EPA action and otherwise failed to state a claim upon which relief could be granted. In the alternative, MS & P moved to sever the third-party complaint and transfer it to the EPA action so that it could be considered by the judge who had previously approved the settlement agreement. The motion was granted to the extent that it requested severance and transfer, and the EPA action was reopened for that purpose.

In the EPA action, MS & P moved to enforce the settlement agreement and dismiss Rogers Cartage's recently transferred third-party complaint. At a hearing on October 15, 2012, the district court orally granted that motion, finding that the settlement agreement unambiguously encompassed claims for cleanup of the Cahokia property. At the end of the hearing, the court asked MS & P's counsel to quickly move for attorney's fees if he intended to do so.

On October 19, 2012, Solutia moved for sanctions against Rogers Cartage, its attorney (Robert Schultz), and Travelers under 28 U.S.C. § 1927, Federal Rule of Civil Procedure 11, and the court's inherent power, seeking $200,000 in attorney's fees. Among other things, Solutia argued that Rogers Cartage's third-party complaint was frivolous because it was plainly barred by the settlement agreement.

On November 14, 2012, the district court granted Solutia's motion for sanctions, reasoning simply that Rogers Cartage ...