US v. Montrose Chemical Corp. of California

• Decision Date: 26 April 1993
• Docket Number: No. CV 90-3122 AAH (JRx).,CV 90-3122 AAH (JRx).
• Citation: 827 F. Supp. 1453
• Parties: UNITED STATES of America, and State of California, Plaintiffs, v. MONTROSE CHEMICAL CORPORATION OF CALIFORNIA, et al., Defendants. and Related Claims.
• Court: U.S. District Court — Central District of California

827 F. Supp. 1453

UNITED STATES of America, and State of California, Plaintiffs, v. MONTROSE CHEMICAL CORPORATION OF CALIFORNIA, et al., Defendants and Related Claims.

No. CV 90-3122 AAH (JRx).

United States District Court, C.D. California.

April 26, 1993.

Myles E. Flint, Acting Asst. Atty. Gen., Gerald F. George, Helen H. Kang, Environment and Natural Resources Div., U.S. Dept. of Justice, San Francisco, CA, Adam Kushner, Sharon Zamore, Environmental Enforcement Section Environment and Natural Resources Div., U.S. Dept. of Justice, Washington, DC, for U.S.

John A. Saurenman, Deputy Atty. Gen., Los Angeles, CA, for State of California.

Frank Rothman, Jose R. Allen, Peter Simshauser, Elizabeth P. Cowie, Skadden, Arps, Slate, Meagher & Flom, San Francisco, CA, for DDT Indus., defendants.

Paul Galvani, Ropes & Gray, Boston, MA, for ICI American Holdings, Inc., Rhone-Poulenc Basic Chemicals Co., Atkemix Thirty-Seven, Inc. Co., and Stauffer Management.

Moses Lasky, Charles B. Cohler, David M. Rosenberg-Wohl, William A. Logan, Lasky, Haas, Cohler & Munter, San Francisco, CA, for Westinghouse Elec. Corp.

B. Richard Marsh, Wesley G. Beverlin, Knapp, Marsh, Jones & Doran, Los Angeles, CA, Lloyd S. Guerci, Mayer Brown & Platt, Washington, DC, for LACSD and South Bay Cities Sanitation District.

Keith W. Pritsker, Deputy City Atty., Los Angeles, CA, for City of Los Angeles.

Rufus C. Young, Jr., S. Paul Bruguera, Stephen R. Onstot, Jeffrey Kightlinger, Burke, Williams & Sorensen, Los Angeles, CA, for Cities of Alhambra, Azusa, Bell, Bellflower, City of Commerce, Downey, El Monte, El Segundo, Glendora, Hawaiian Gardens, Hawthorne, Irwindale, La Canada, Flintridge, Lomita, Lynwood, Manhattan Beach, Montebello, Paramount, Pasadena, Sierra Madre and Temple City.

Richard G. Montevideo, Rutan & Tucker, Costa Mesa, CA, for City of Baldwin Park, Lawndale, Signal Hill and West Covina.

Cary S. Reisman, Wallin, Kress, Reisman, Price & Dilkes, Santa Monica, CA, for Cities of Bell Gardens Bradbury, Huntington Park, La Verne Maywood, Rosemead, San Gabriel and Santa Fe Springs.

David P. Waife, Mitchell E. Abbott, Richards, Watson & Gershon, Los Angeles, CA, for Cities of Artesia, Carson, Compton, Cudahy, La Habra Heights, La Puente Monrovia, Norwalk, Rancho Palo Verdes, Rolling Hills, San Marino, South El Monte, and South Gate.

Roger W. Springer, City Atty., Oliver, Stoever, Barr & Vose, Los Angeles, CA, for

City of Covina Hermosa Beach and South Pasadena.

Christine Gosney, City Atty., Lynberg & Watkins, Los Angeles, CA, for City of Culver City.

Ronald T. Pohl, Asst. City Atty., Torrance, CA, for City of Torrance.

Joseph W. Fletcher, City Atty., Carolyn A. Barnes, Asst. City Atty., Burbank, CA, for City of Burbank.

David J. Prager, Los Angeles, CA, for County of Los Angeles.

Thomas L. Woodruff, Rourke & Woodruff, Orange, CA, for Cities of Anaheim, Brea, Buena Park, Cypress, Fountain Valley, Fullerton, Huntington Beach, Irvine, La Habra, La Habra Heights, La Palma, Los Alamitos, Newport Beach, Orange, Placentia, Santa Ana, Seal Beach, Stanton, Tustin, Villa Park, Yorba Linda, County Sanitation Dist. of Orange County, Costa Mesa Sanitation Dist., Garden Grove Sanitary Dist., Midway Sanitary Dist., Irving Ranch Water Dist., Los Alamitos County Water Dist. and Yorba Linda Water Dist.

Mary L. Walker, Stephen L. Marsh, Luce, Forward, Hamilton & Scripps, San Diego, CA, for Cities of Chino, Montclair and Upland and Liaison Counsel for Ontario, Fontana and Cucamonga County Water Dist.

Karl S. Lytz, Kimberly M. McCormick, Ronald R. Stuff, David Judson Barrett, Latham & Watkins, San Diego, CA, for Montrose Chemical Corp. of California.

ORDER GRANTING PLAINTIFFS' MOTION FOR ENTRY OF SECOND CONSENT DECREE

HAUK, Senior District Judge.

I. FACTS AND BACKGROUND

In this action, plaintiffs United States of America and the State of California ("Plaintiffs") seek entry of the second consent decree (the "Proposed Decree") resulting from the early settlement process that this Court established at its initial hearing in this matter on March 18, 1991. In early 1992, Plaintiffs lodged the first consent decree in this matter (the "Potlach Settlement"), which called for payment of $12 million by defendants Potlach Corporation and Simpson Paper Company. This Court granted entry of the Potlach Settlement on May 19, 1992.

The Proposed Decree now before the Court has been entered into by Plaintiffs and defendant County Sanitation District No. 2 of Los Angeles County ("LACSD") and certain third-party defendant local governmental entities ("Local Governmental Entities"). LACSD and the Local Governmental Entities are alleged to have owned or used sanitation systems and stormwater runoff systems that discharged wastewater to the ocean, or to have otherwise engaged in activities (such as mosquito abatement) which may have resulted in the discharge of hazardous substances such as DDT into the environment.

Plaintiffs had previously negotiated a proposed consent decree with LACSD and certain other sanitation districts in 1990. At that time, however, the Court expressed concern that the facts behind the proposed settlement remained unclear.¹ Plaintiffs subsequently withdrew this proposed consent decree at the request of LACSD to permit attempts to negotiate a settlement that would include a broader group of the Local Governmental Entities.

The Proposed Decree now before the Court is for $45.7 million. If this Court approves the Proposed Decree, LACSD and all 150 of the Local Governmental Entities will be removed from this action, greatly simplifying this litigation. The Proposed Decree calls for two substantial cash payments upon approval, one for $9.3 million for natural resource damages, and one for $3.5 million for response costs at the Montrose Chemical NPL Site ("Montrose Site").² Further payments totalling $33.6 million for natural resource damages would be made over the next four years. Solely at the discretion of Plaintiffs, up to $8.0 million of that money could be provided in the form of in-kind services. The Local Governmental Entities would also release any claims for natural resource damages or for response costs associated with the Montrose Site.

In return, the Local Governmental Entities would receive covenants not to sue for both claims asserted by Plaintiffs in this matter. Under the Proposed Decree, the Local Governmental Entities could not be sued in relation to either the Plaintiffs' natural resource damage claim, or the United State's claim for response costs associated with the Montrose Site. The covenants not to sue are subject to limited "reopener" provisions, which would permit Plaintiffs to seek additional natural resource or response costs damages to the extent that such claims were based on new information or unknown conditions. In addition, the natural resource trustees (the "Trustees") are given discretion under the Proposed Decree to decide how to allocate the damages. Under the terms of the Proposed Decree, however, the Trustees would exercise their discretion in compliance with the provisions of CERCLA.

As with the Potlach Settlement, there is opposition to entry of the Proposed Decree from the non-settling defendants, Montrose Chemical Corporation of California, et al. (the "DDT Defendants") and Westinghouse Electric Corporation ("Westinghouse").

II. NON-SETTLING DEFENDANTS' OBJECTIONS TO CONSENT DECREE

The DDT Defendants and Westinghouse challenge both the substantive and procedural fairness of the proposed settlement. Their objections are focused on five areas: 1) the proper role of this Court; 2) Plaintiffs' rationale for settlement; 3) the adequacy of the factual record; 4) the Proposed Decree's consistency with CERCLA; and 5) the Proposed Decree's limitation on additional damages resulting from implementation of secondary treatment.

A. Role of the Court

The DDT Defendants question the amount of deference this Court should give to Plaintiffs' evaluation of the facts and rationale for settlement. In its approval of the Potlach Settlement, this Court gave Plaintiffs' apportionment of liability great deference in the interest of early settlement. United States v. Montrose Chem. Corp. of Cal., 793 F.Supp. 237, 240 (C.D.Cal.1992).

In addition, Westinghouse questions the amount of deference this Court should give Special Master Peetris' recommendation (the "Recommendation"). As with the Potlach Settlement, the Special Master has recommended that this Court grant Plaintiffs' motion to enter the Proposed Decree.

B. Plaintiffs' Rationale for Settlement

The DDT Defendants and Westinghouse question the Plaintiffs' rationale for settlement, which took into account a variety of factors, with volumetric contribution the major factor for the industrial defendants. With regard to LACSD and the Local Governmental Entities, Plaintiffs took into consideration (1) the risks and costs of litigation; (2) the involvement of LACSD in early efforts to control the discharge of DDT and PCBs; (3) the public service nature of the settling parties' sewer collection; and (4) the fact that LACSD and the Local Governmental Entities were willing to engage in early settlement negotiations.

C. The Adequacy of the Factual Record

In questioning the adequacy of the factual record, the DDT Defendants and Westinghouse argue two points. First, they argue that the Proposed Decree's provision for contribution protection to the settling defendants should make the Proposed Decree subject to greater scrutiny by this Court with respect to the facts of the litigation.

Second, they claim that the facts supporting the Plaintiffs' rationale for settlement are absent or unreliable or wrong. In support of this argument, the non-settling defendants first argue that New York v. SCA Services, Inc., 1993 WL 59407 (S.D.N.Y.1993) represents a new trend in natural resource damages cases and provides a basis for this Court to depart from the approach it...