AMERIPRIDE SERVICES INC., a Delaware Corporation, Plaintiff-Appellee,
TEXAS EASTERN OVERSEAS INC., a Delaware Corporation dissolved, Defendant-Appellant
Argued and Submitted November 20, 2014, San Francisco, California
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Appeal from the United States District Court for the Eastern District of California. D.C. No. 2:00-cv-00113-LKK-JFM. Lawrence K. Karlton, Senior District Judge, Presiding.
VACATED AND REMANDED.
The panel vacated the district court's judgment
after trial in a contribution action under the Comprehensive Environmental
Response, Compensation, and Liability Act arising out of the contamination of
the soil and groundwater in an industrial area of Sacramento, California.
Agreeing with the First Circuit, and declining to
follow the reasoning of the Seventh Circuit, the panel held that in allocating
liability to a nonsettling defendant in a CERCLA contribution action, the
district court is not required to apply either the proportionate share approach
of the Uniform Comparative Fault Act or the pro tanto approach of the Uniform
Contribution Among Tortfeasors Act, but rather has discretion to determine the
most equitable method of accounting for settlements between private parties. The
panel held that because the district court first ruled that it was adopting the
proportionate share approach but later, at trial, effectively applied the pro
tanto approach, and did not explain its methodology for complying with CERCLA §
9613(f) and furthering the goals of CERCLA, the panel could not determine
whether the district court abused its discretion in allocating response costs
(costs of cleanup of contaminated soil and groundwater). Accordingly, the panel
remanded the case to the district court for further proceedings.
Consistent with the Tenth Circuit, the panel held
that a party can seek contribution under § 9613(f)(1) only for settlement costs
that were for necessary response costs consistent with the national contingency
plan, a plan promulgated by the federal government to guide federal and state
response actions. Accordingly, the district court erred in failing to determine
the extent to which costs were incurred consistent with the plan. The panel held
that the district court also erred in setting the date on which prejudgment
interest began to accrue and in assigning causes of action pursuant to Cal. Civ.
Proc. Code § 708.510.
Fred M. Blum (argued) and Erin K. Poppler, Bassi Edlin Huie & Blum LLP, San Francisco, California; Ronald Bushner, Wilson, Elser, Moskowitz, Edelman, & Dicker LLP, San Francisco, California, for Defendant-Appellant.
Philip C. Hunsucker (argued), Brian L. Zagon, Maureen B. Hodson, and Marc A. Shapp, Hunsucker Goodstein PC, Lafayette, California; Lee N. Smith, Weintraub Tobin Chediak Coleman Grodin Law Corporation, Sacramento, California, for Plaintiff-Appellee.
Before: Ferdinand F. Fernandez and Sandra S. Ikuta, Circuit Judges, and William H. Albritton III, Senior District Judge.[*]
IKUTA, Circuit Judge.
This appeal requires us to determine whether the district court erred in calculating and allocating liability under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), 42 U.S.C. § § 9607(a) and 9613(f), in AmeriPride Services Inc.'s contribution action against Texas Eastern Overseas, Inc. (TEO). TEO challenges (1) the district court's method of allocating liability among settling and nonsettling parties; (2) its determination that AmeriPride could recover costs that were not " necessary costs of response incurred . . . consistent with the national contingency plan," § 9607(a)(4)(B);  (3) its selection of the date prejudgment interest started accruing based on equitable factors, rather than on the accrual dates specified in § 9607(a); and (4) its assignment of TEO's causes of action against its insurers to AmeriPride. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we vacate the district court's judgment and remand for further proceedings.
We begin by reviewing the statutory framework applicable to this appeal. CERCLA, 42 U.S.C. § § 9601§ 9675, is a statutory scheme giving the federal government broad authority to require responsible parties to clean up contaminated soil and groundwater. Key Tronic Corp. v. United States, 511 U.S. 809, 814, 114 S.Ct. 1960, 128 L.Ed.2d 797 (1994). Section 9607(a) states that any enumerated responsible party, including any person who is a current owner or operator of contaminated property, is liable for " any . . . necessary costs of response incurred by any other person consistent with the national contingency plan." 42 U.S.C. § 9607(a)(4)(B). " Response" costs are limited
to cleanup, enforcement, and related security costs. 42 U.S.C. § 9601(23)§ (25). The national contingency plan (NCP) is a national plan promulgated by the federal government to guide federal and state response actions. 42 U.S.C. § 9605; 40 C.F.R. pt. 300 (publishing the NCP). A private person (someone who is not the United States, a state, or a tribe) who has incurred " necessary costs of response" that are consistent with the NCP, 42 U.S.C. § 9607(a)(4)(B), may bring an action to recover such costs, including " interest on the amounts recoverable." § 9607(a).
In addition to allowing private parties to sue for cost recovery under § 9607(a), CERCLA also authorizes a responsible party who has incurred liability under § 9607(a) to bring an action for contribution under § 9613(f)(1) against any other potentially responsible party. " Contribution" is not defined in CERCLA, but is interpreted to mean " the tortfeasor's right to collect from others responsible for the same tort after the tortfeasor has paid more than his or her proportionate share, the shares being determined as a percentage of fault." United States v. A. Research Corp., 551 U.S. 128, 138, 127 S.Ct. 2331, 168 L.Ed.2d 28 (2007) (internal quotation marks omitted). " In resolving contribution claims, the court may allocate response costs among liable parties using such equitable factors as the court determines are appropriate." § 9613(f)(1). CERCLA does not limit the equitable factors a court may consider.
We now turn to the facts of this case. This action arose out of the contamination of the soil and groundwater in an industrial area of Sacramento, California. Valley Industrial Services, Inc. (VIS) operated an industrial dry cleaning and laundry business at that site for seventeen years. VIS used perchloroethylene (PCE) as a solvent in its dry cleaning operations. PCE is designated as a " hazardous substance" under CERCLA. 42 U.S.C. § 9602; 40 C.F.R. § 302.4. During its operations, VIS released PCE into the environment. VIS eventually merged into TEO, which expressly assumed VIS's liabilities.
VIS was a wholly owned subsidiary of Petrolane, Inc. during part of the time it was operating at the Sacramento site. In 1983, Petrolane sold the Sacramento site; the property passed through various hands until AmeriPride became the owner. During AmeriPride's ownership, there were additional releases of PCE-contaminated water into the soil and groundwater. The contamination at the Sacramento site migrated
onto a neighboring property owned by Huhtamaki Foodservices, Inc. (Huhtamaki), and contaminated groundwater wells owned by California-American Water Company (Cal-Am). Chromalloy American Corporation, which owned property in the vicinity of the Sacramento site, also released hazardous ...