US v. Montrose Chemical Corp. of California
| Decision Date | 19 May 1992 |
| Docket Number | No. CV 90-3122-AAH.,CV 90-3122-AAH. |
| Court | U.S. District Court — Central District of California |
| Parties | UNITED STATES of America, et al., Plaintiffs, v. MONTROSE CHEMICAL CORPORATION OF CALIFORNIA, et al., Defendants. and related claims. |
Gerald F. George, Helen Kang, Environment Enforcement Section, Environment and Natural Resources Div., U.S. Dept. of Justice, San Francisco, Cal., Adam M. Kushner, Robert Oakley, Sharon Zamore, Environment Enforcement Section, Environment and Natural Resources Div., U.S. Dept. of Justice, Washington, D.C., for U.S.
John A. Saurenman, Deputy Atty. Gen., Los Angeles, Cal., for State of Cal.
Karl S. Lytz, Kim McCormick, Latham & Watkins, San Diego, Cal., for Montrose Chemical Corp. of California.
Paul B. Galvani, Roscoe Trimmier, Ropes & Gray, Boston, Mass., for Rhone-Poulenc Basic Chemicals Co., Atkemix Thirty-Seven, Inc., Stauffer Management Co. and ICI American Holdings, Inc.
Jose R. Allen, Peter Simshauser, Skadden, Arps, Slate, Meagher & Flom, San Francisco, Cal., for Chris-Craft Industries, Inc.
Gregory McClintock, McClintock, Weston, Benshoof, Rochefort, Rubalcava & MacCuish, Los Angeles, Cal., for Potlatch Corp.
Rene P. Tatro, Jeffrey W. Johnson, Heller, Ehrman, White & McAuliffe, San Francisco, Cal., for Simpson Paper Co.
David Rosenberg-Wohl, Charles B. Cohler, Scott P. DeVries, Lasky, Haas, Cohler & Munter, San Francisco, Cal., for Westinghouse Elec. Co.
B. Richard Marsh, Wesley Beverlin, Knapp, Marsh, Jones & Doran, Los Angeles, Cal., for County Sanitation Dist. No. 2 of Los Angeles County.
Mary Walker, Stephen L. Marsh, Teryl S. Murabayashi, Luce, Forward, Hamilton & Scripps, San Diego, Cal., for Cities of Chino, Montclair and Upland.
Roger W. Springer, Oliver, Barr & Vose, Los Angeles, Cal., for Cities of Covina, Hermosa Beach and South Pasadena.
PLAINTIFFS' MOTION FOR ENTRY OF CONSENT DECREE
In this action Plaintiffs United States and the State of California have filed a Motion for entry of a consent decree entered into by Plaintiffs and PCBs Defendants Potlatch Corporation ("Potlatch") and Simpson Paper Company ("Simpson").1 Pursuant to the decree, Potlatch and Simpson are jointly and severally obligated to pay $12 Million to Plaintiffs over the next 4 years in three equal payments of $4 million — the first payment to be distributed within ten days after entry of the decree. In exchange, the settling Defendants receive covenants not to sue and releases from any claims for contribution. The DDT Defendants, non-settling PCBs Defendant Westinghouse, and Third-Party Defendant cities and Cross-Defendant County Sanitation District No. 2 of Los Angeles County ("LACSD") all strongly object to entry of the consent decree.
The Court held a hearing on this matter on May 11, 1992 at which Special Master Judge Peetris was in attendance. The Court gave all counsel the opportunity to question the Special Master with respect to the settlement negotiations undertaken, as well as the procedural and substantive fairness of the proposed consent decree.
The Court has considered everything presented at the hearing, in addition to the Proposed Consent Decree itself, the Motion For Entry of Consent Decree, the Opposition thereto, and the Plaintiffs' Reply, as well as Memoranda of Points and Authorities filed by the parties, together with all the files and records herein.
Each of three sets of parties filed a separate opposition to Plaintiffs' Motion For Entry of Consent Decree. First, the DDT Defendants (Montrose Chemical Corporation et al.) challenge both the substantive and procedural fairness of the proposed settlement. These parties are primarily concerned with Potlatch and Simpson's receipt of "contribution protection." See 42 U.S.C. § 9613(f)(2). With the grant of "contribution protection" the non-settling Defendants will be barred from pursuing claims against either Potlatch or Simpson. The non-settling Defendants argue that this result is unfair because, in their opinion, the proposed settlement is disproportionately small in relation to the settling parties probable liability. The DDT Defendants also complain that they know nothing about the negotiations that took place between the Plaintiffs and the settling Defendants; in particular, they have no information about the "allocation methodology" used by Plaintiffs to calculate the $12 million proposed figure. Finally, the DDT Defendants challenge the procedural fairness of the proposed settlement.
Second, Westinghouse, the non-settling PCBs Defendant, challenges the volumetric figures for PCBs discharges used by Plaintiffs in calculating the proposed settlement. However, Westinghouse's "objection" is not relevant to the present Motion for Entry of Proposed Consent Decree, because Westinghouse does not object to the $12 million proposed settlement, but merely complains about its own potential liability and possibilities for settlement.
Third, Cross-Defendant LACSD and various Third-Party Defendant cities, challenge the substantive fairness of the proposed settlement. These parties complain that pursuant to the proposed settlement, Potlatch and Simpson will be allowed to continue their actions (for contribution) against them.
In support of their Motion for Entry of Proposed Consent Decree, Plaintiffs contend that the proposed settlement is both procedurally and substantively fair. Plaintiffs maintain that the proposed settlement is procedurally fair because all negotiations were supervised by Special Master Peetris, who reported to the Court that all negotiations were at arms length.
They also argue that the proposed settlement is substantively fair because it is based on Plaintiffs' "reasonable assessment of litigation risk, the relative volumes of DDT and PCBs in the areas at issue, and the roles of the named defendants, including the volumes of DDT and PCBs discharged by each of the generators." Exhibit "A" to Plaintiffs' Memorandum of Points & Authorities, at p. 13. In calculating the proposed settlement, the Plaintiffs relied, in part, on the following volumetric figures:
Plaintiffs' Points & Authorities, at pp. 9-12. Based on these figures, Plaintiffs argue that the proposed settlement is fair to all parties.
Before approving a consent decree under CERCLA, the District Court must satisfy itself that the proposed settlement is fair, reasonable, and consistent with the purposes of CERCLA. H.R.Rep. No. 253, 99th Cong., 1st Sess. 19 (1985), reprinted in 1986 U.S.C.C.A.N., 2835, 3042; United States v. State of Oregon, 913 F.2d 576, 580 (9th Cir.1990), cert. denied sub nom Makah Indian Tribe v. United States, ___ U.S. ___, 111 S.Ct. 2889, 115 L.Ed.2d 1054 (1991); United States v. Seymour Recycling Corp., 554 F.Supp. 1334, 1337 (S.D.Ind.1982).
Reviewing the proposed settlement the District Court is now guided by the following factors: (1) the relative costs and benefits of litigating this case under CERCLA; (2) the risks of establishing liability on the part of the settlors; (3) the good faith efforts and adversarial relationship of the negotiators; (4) the reasonableness of the settlement as compared to the settlor's potential volumetric contribution; (5) the ability of the settlors to withstand a greater judgment; and (6) the effect of settlement on the public interest as expressed in CERCLA. United States v. Rohm & Haas Company, 721 F.Supp. 666, 687 (D.N.J. 1989).
One primary goal of CERCLA is to encourage early settlement. Additionally, "in settlement negotiations, particularly in the early phases of environmental litigation, precise data relevant to determining the total extent of harm caused and the role of each PRP potentially responsible party is often unavailable." U.S. v. Cannons Engineering Corp., 899 F.2d 79, 88 (1st Cir.1990). Accordingly, it would be contrary to CERCLA's overriding goal of achieving prompt settlement to require, prior to approval of the proposed settlement, precise...
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...an interlocutory order, or under the pragmatic finality doctrine. Utah, 14 F.3d at 1497. In United States v. Montrose Chemical Corp., 793 F. Supp. 237 (C.D. Cal. 1992), the court approved a proposed consent decree in which defendants Potlatch Corporation and Simpson Paper Company agreed to ......