US v. Kayser-Roth Corp.
| Decision Date | 14 March 1996 |
| Docket Number | C.A. No. 88-0325B. |
| Citation | 917 F. Supp. 889 |
| Parties | UNITED STATES of America, Plaintiff, v. KAYSER-ROTH CORPORATION and Hydro-Manufacturing, Inc., Defendants. |
| Court | U.S. District Court — District of Rhode Island |
Cynthia S. Huber, Senior Attorney, Environmental Enforcement Section, Environment and Natural Resources Division, U.S. Department of Justice, Washington, DC, Lois J. Schiffer, Ass. Attorney General, Environment and Natural Resources Division, Washington, DC, Sheldon Whitehouse, United States Attorney, District of Rhode Island, Providence, RI, Everett Sammartino, Ass. United States Attorney, District of Rhode Island, Providence, RI, for Plaintiff.
Deming E. Sherman, Edwards & Angell, Providence, RI, for Defendant Kayser-Roth Corp.
Haig Barsamian, Providence, RI, William G. Grande, Jr., Providence, RI, for Defendant Hydro-Manufacturing, Inc.
Pursuant to Federal Rule of Civil Procedure 60(b), Hydro-Manufacturing, Inc. ("Hydro") filed a Motion to Vacate or Modify the Consent Decree entered into on January 18, 1990. Hydro argues that the Decree should be altered or vacated because of circumstances which are unfairly burdensome. Based upon recent First Circuit law and principles of equity, Defendant's Motion is denied.
This matter commenced years ago under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601-9675 (1995), when the United States entered into a Consent Decree with Hydro and litigated successfully against Kayser-Roth Corporation ("Kayser") in response to pollution at Stamina Mills.
The Stamina Mills Superfund site is located 14 miles north of Providence, Rhode Island, in the town of North Smithfield, on the Branch River. Contamination of the river and surrounding residential water wells occurred in March 1969 when trichlorethylene ("TCE") escaped as it was improperly pumped into storage tanks. At that time, Stamina Mills was a textile manufacturing company owned by a subsidiary corporation of Kayser. Because it was the owner at the time of the pollution, the Court found Kayser liable for the release of hazardous-materials, under 42 U.S.C. § 9607(a)(2).
Hydro purchased the site in March of 1981 and thereby, as an owner, became liable for response costs incurred, and to be incurred, according to § 9607(a)(1) of CERCLA. Rather than litigate liability, Hydro and the United States agreed to settle. The Consent Decree was first submitted in 1989, further negotiations then took place, and a final Decree was entered in January of 1990.
For a fuller expose of the facts, the reader should refer to United States v. Kayser-Roth Corp., 724 F.Supp. 15 (D.R.I.1989), aff'd., 910 F.2d 24 (1st Cir.1990), cert. denied, 498 U.S. 1084, 111 S.Ct. 957, 112 L.Ed.2d 1045 (1991) and Hydro-Manufacturing, Inc. v. Kayser-Roth Corp., 903 F.Supp. 273 (D.R.I.1995).
Under the terms of the Decree, Hydro retains legal title to the property, pays real estate and sewer assessment taxes to the Town of North Smithfield until the site is remedied, at which point, Hydro must sell the land and pay the proceeds to the United States.1 However, should Hydro find an acceptable buyer, it need not wait for clean-up completion before selling the property. In exchange, Hydro received a covenant not to sue under § 107 of CERCLA and contribution protection pursuant to § 113 of CERCLA. Hydro now seeks to vacate the Consent Decree entirely. In the alternative, Hydro proposes a new decree which provides that if Kayser fails to pay the cost of clean-up, Hydro will either forfeit the net proceeds from a sale of the property, or pay the market value of the property to the government.
Hydro argues that under Fed.R.Civ.P. 60(b)(5) or (6), a Consent Decree may be vacated or modified by the court. Hydro contends that because Kayser has been found to be the uncontroverted contaminator of the site, and Hydro is simply an innocent land-owner, the Decree is no longer equitable. Furthermore, the pollution cleanup will take longer than reasonably anticipated, so the obligation to pay municipal taxes for an additional ten to twenty years would be an undue hardship on Hydro. The issue is whether these two arguments warrant modification or vacation of the Consent Decree.
Rule 60(b) of the Fed.R.Civ.P. does not set forth the exact circumstances when a decree may be changed. The relevant provision allows alteration if: "(5) the judgement has been satisfied, released, or discharged, reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment." Fed.R.Civ.P. 60(b)(5) and (6). In the absence of any codified standards, guidance may be found in case law.
In 1932 the Supreme Court wrote that a movant must make "a clear showing of grievous wrong" in order to modify a consent decree. United States v. Swift & Co., 286 U.S. 106, 119, 52 S.Ct. 460, 464, 76 L.Ed. 999 (1932). In Swift the Court resolved a long-standing antitrust dispute between the government and the meat-packing industry. In the decree the meat-packers agreed not to manufacture, sell or transport various food products. Id. at 111, 52 S.Ct. at 461. Ten years later, the meat-packers argued the industry had changed such that the restraints of the decree's injunction "were now useless and oppressive." Id. at 113, 52 S.Ct. at 462. The Court reaffirmed that a court of equity retains the power to modify an injunction in adaptation to changed circumstances. Id. at 114, 52 S.Ct. at 462; See also In re Pearson, 990 F.2d 653, 658 (1st Cir.1993). However, the Court refused to vacate the order and held that, "nothing less than a clear showing of grievous wrong evoked by new and unforeseen conditions should lead us to change what was decreed after years of litigation with the consent of all concerned." Id. at 119, 52 S.Ct. at 464.
Almost sixty years later, the Supreme Court revisited the issue of consent decrees and possible modification, although in a different context. This time the Court examined a district court's order to dissolve an injunction which enforced a school desegregation order in Oklahoma City. Board of Education of Okl. City Public Schools v. Dowell, 498 U.S. 237, 111 S.Ct. 630, 112 L.Ed.2d 715 (1991). Here, the Court declined to utilize the strict Swift standard, rather, the Court held that the school board must simply show that it was operating consistently with the Equal Protection Clause of the Fourteenth Amendment and it was unlikely for the discrimination to reoccur. Id. at 247, 111 S.Ct. at 636-37. The consent decree could be lifted because the aim of the desegregation litigation had been met. Id., citing United States v. United Shoe Machinery Corp., 391 U.S. 244, 248, 88 S.Ct. 1496, 1499, 20 L.Ed.2d 562 (1968).
In Dowell the Court went to great lengths to explain that the Swift standard was inapplicable because under principles of federalism school desegregation orders could not exist in perpetuity. The Court held that federal regulatory control, implemented by a decree, should only last until the discrimination is eliminated. Dowell, 498 U.S. at 248, 111 S.Ct. at 637. Ultimately, local communities should control the education of their children, not courts. Id.
In a case decided the following year, the Supreme Court refined this more relaxed standard for decree modification when in the arena of public institutional reform. In Rufo v. Inmates of Suffolk County Jail, 502 U.S. 367, 112 S.Ct. 748, 116 L.Ed.2d 867 (1992), a decree provided that a new jail be built in order to prevent the double bunking of pretrial detainees. The county sheriff filed a motion to modify the decree during the prison construction. The district court denied the motion and the First Circuit affirmed. The Supreme Court again refused to use the Swift standard, and instead held that a movant "bears the burden of establishing that a significant change in circumstances warrants revision of the decree ... the court should consider whether the proposed modification is suitably tailored to the changed circumstance." Id. at 383, 112 S.Ct. at 760. The Court noted that the increase of institutional reform litigation has made it more crucial that a district court be able to modify a decree in response to changed circumstances. Id. at 380, 112 S.Ct. at 758. Yet, the Court cautioned that modification is not justified when a decree simply becomes inconvenient for a party. Id. at 383, 112 S.Ct. at 760.
Recently, the First Circuit had an opportunity to decide if a decree enjoining the use of a trademark between two wine-trading companies should be changed. In that case, Alexis Lichine & Cie v. Sacha A. Lichine Estate Selections, Ltd., 45 F.3d 582 (1st Cir. 1995), the court navigated between the two seemingly different Supreme Court modification standards.2 The First Circuit held the two standards should not be viewed as "a limited dualism but as polar opposites of a continuum in which we must locate the instant case." Id. at 586.
The First Circuit's analysis avoids strict classification of a case to determine the applicable standard. The Court declined to rule that there is an institutional reform exception to Swift or a private party exception to Rufo. Id. at 586. Thus, we need not decide whether the decree between Hydro and the government is solely a private, permanent contract and thus, warranting the Swift standard. Nor must the court find that the public service ramifications of the decree suggest that the more relaxed Rufo standard should be employed.
Instead of wrestling with that task, the First Circuit directed that decree modification should be allowed upon...
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