MEMORANDUM AND ORDER RE: MOTION FOR ORDER APPROVING SETTLEMENT AND BARRING CONTRIBUTION CLAIMS AND RELATED COUNTER, CROSS, AND THIRD PARTY CLAIMS.
Charles H. Lewis and Jane W. Lewis (the "Lewises") brought this action pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601-9675, for recovery of costs incurred removing hazardous substances from a piece of real property located in Davis, California ("Property"). Charles Lewis, the surviving plaintiff, and defendant Workroom Supply, Inc. ("Workroom") now request that the court approve the settlement they have reached.
I. Factual and Procedural Background
This multi-party litigation concerns the contamination of the Property with tetrachloroethene ("PCE"), a chemical allegedly released through the operation of a dry cleaning facility on the Property. (See Second Am. Compl. ("SAC") ¶ 40 (Docket No. 197).) The parties include the alleged owners and managers of the Property during the relevant time period, the operators of the dry cleaning facility, the entities that supplied and removed the PCE, and the manufacturers of the equipment used in dry cleaning operations at the Property. (See id. ¶¶ 7-25; First Am. Third Party Compl. ("FATPC") ¶¶ 1-2 (Docket No. 198).) The City of Davis is also a party to the litigation because of its alleged role in maintaining the underground sewer system that services the Property. (SAC ¶ 22.) Since the filing of the original complaint in 2003, the parties have filed numerous counterclaims, crossclaims, and third-party claims for contribution pursuant to 42 U.S.C. § 9613(f).
In February 1999, the California Regional Water Quality Control Board, Central Valley Region ("RWQCB"), informed the owners and operators of the Property that it had discovered PCE in the soil and groundwater at the Property. (SAC ¶ 40.) The RWQCB then issued a Cleanup and Abatement Order on October 2, 2002, instructing the current and past owners and operators of the Property to investigate the extent of the PCE contamination and to prepare work plans to address the contamination. (Id. ¶ 42.) Thereafter, some of the parties, including the Lewises, incurred costs in carrying out the activities ordered by the RWQCB. (Id. ¶¶ 42, 46.)
The Lewises filed the Complaint in this action on December 9, 2003, seeking various forms of declaratory relief and asserting claims for cost recovery and contribution, 42 U.S.C. §§ 9607, 9613; contribution and/or indemnity, Cal. Health & Safety Code § 25363(e); equitable indemnity and contribution; negligence; and breach of contract. (See Compl. (Docket No. 1).) Workroom was named as one of several defendants in the original Complaint, (id.), and in the Second Amended Complaint ("SAC") on the ground that it supplied PCE to the owners and/or operators of the dry cleaning business located on the Property, (SAC ¶ 20), and therefore is considered an "operator" under CERCLA, (Pls.' Opp'n to Mot. for Summ. J. at 3-7 (Docket No. 390)). Several defendants filed crossclaims naming Workroom as a cross- defendant. (E,g., Cross-Cl. by Suhs (Docket No. 13); Cross-Cl. by Newitt (Docket No. 27); First Am. Cross-Cl. by City of Davis ¶ 17 (Docket No. 229).)
Workroom delivered PCE to the property from 1992 to 2004. Workroom disputes claims that it is therefore liable as an "operator" of the property under CERCLA based on these deliveries. (Def.'s Reply to Pls.' Opp'n to Mot. for Summ. J. at 3-6.) Rather, Workroom argues that it lacked sufficient control over the facility to be considered an operator under CERCLA and that there is no evidence that any PCE contamination occurred during the delivery process. (Id.)
Workroom and Lewis have reached a settlement that they now ask the court to approve. (Docket No. 406.) Under the terms of the proposed settlement, Workroom would pay Lewis $30,000 to be used pursuant to the direction of the RWQCB to remediate the groundwater contamination at the Property. (Hunter-Rocha Decl. ¶ 4 (Docket No. 407).) Lewis, in turn, has agreed to dismiss his SAC as against Workroom with prejudice. (Id. ¶ 5.) Both parties have also agreed to give each other a "broad release with regard to the matters asserted in the instant action and with regard to the Site." (Id. ¶ 6.) Both parties' attorneys represent that the settlement is within the reasonable range of Workroom's potential liability and ability to pay, noting that Workroom's liability is contested and that there is uncertainty regarding the facts in dispute, the issues in controversy, and the court's potential ruling on Workroom's motion for summary judgment. (Id. ¶ 9.)
Under the terms of the agreement, the settlement is contingent upon this court issuing an order that (1) approves the settlement, (2) dismisses with prejudice all claims asserted against Workroom in this proceeding, including those by Lewis, and (3) bars contribution and indemnity claims against Workroom in this proceeding. (Appl. for Determination of Good Faith Settlement at 3:14-19 (Docket No. 406).)
The City of Davis has filed an opposition to the settlement agreement requesting that the court apply the proportionate share approach, embodied in the Uniform Comparative Fault Act ("UCFA"), to determine the liability of the non-settling parties on all federal law and state law claims asserted in this action. (Davis's Opp'n to Appl. for Determination of Good Faith Settlement at 8:12-15 (Docket No. 415).) While all parties received notice of the proposed settlement, no party has otherwise filed an opposition.
A. Federal Law Claims "The initial decision to approve or reject a settlement proposal is committed to the sound discretion of the trial judge." S.E.C. v. Randolph, 736 F.2d 525, 529 (9th Cir. 1984) (quoting Officers for Justice v. Civil Serv. Comm'n, 688 F.2d 615, 625 (9th Cir. 1982)). "Unless a consent decree is unfair, inadequate, or unreasonable, it ought to be approved." Id.; see also Stearns & Foster Bedding Co. v. Franklin Holding Corp., 947 F. Supp. 790, 813 (D.N.J. 1996) ("In deciding whether to approve a proposed settlement in a CERCLA case, a district court must weigh the 'fairness, adequacy and reasonableness' of the proposed settlement." (quoting United States v. Rohm & Haas Co., 721 F. Supp. 666, 685 (D.N.J. 1989))).
The settlement proposed by Lewis and Workroom comes in a case that has dragged on for over eight years and in which trial is not set to begin for over a year more. In environmental clean-up cases such as this one, resolution is often achieved through the settlement process. Indeed, settlement is a favored outcome under CERCLA. City of Emeryville v. Robinson, 621 F.3d 1251, 1264 (9th Cir. 2010) (citing United States v. Atl. Research Corp., 551 U.S. 128, 138-39 (2007); Kotrous v. Goss-Jewett Co. of N. Cal., Inc., 523 F.3d 924, 930-31 (9th Cir. 2007)). Mindful of this fact, earlier in this proceeding the court approved a stay of litigation pending settlement talks. (Docket No. 124.) Although the initial settlement process outlined by the court was unsuccessful, settlement between parties remains an appropriate route to resolution in this CERCLA action.
Settlement with respect to Workroom is particularly appropriate given the uncertain evidence as to whether PCE contamination occurred during Workroom's deliveries to the property and the control that it exerted over the property's operations, and thus it is uncertain if it would have ultimately been found liable for clean-up costs associated with the Property. Both parties were represented by counsel in settlement negotiations, and both parties' attorneys represent that the terms of the settlement are the best available to settle Lewis' claims. (Hunter-Rocha Decl. ¶ 9.) These facts all suggest that the settlement is a fair and reasonable one.
The court must also determine whether the proposed settlement would prejudice the non-settling parties. The parties to the settlement have not specified what effect the settlement has on the liability of the non-settling parties.*fn1 CERCLA itself does not specify how settlements in private party cost recovery actions should be apportioned or evaluated for fairness, merely charging district courts to "allocate response costs among liable parties using such equitable factors as the court determines are appropriate." 42 U.S.C. § 9613(f)(1). Nor has the Ninth Circuit issued a decision directly addressing the issue. Adobe Lumber, Inc. v. Hellman, No. CIV 05-1510, 2009 WL 256553, at *3 (E.D. Cal. 2009) (noting that "[i]n the twenty-eight years that CERCLA has been [sic] existence, the Ninth Circuit has never addressed the question of the proper credit method for settlements ...