Opinion
No. 98-CV-2777 D, 98-CV-2968 D, 00-CV-2245 D (Consolidated Cases)
March 14, 2003
ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS SETTLING DEFENDANTS AND TO PROVIDE CONTRIBUTION PROTECTION
This matter is before the Court on the motion of Plaintiffs Signature Combs, Inc., et al. ("Plaintiffs") to dismiss with prejudice nine Defendants from the above-titled actions, pursuant to Fed.R.Civ.P. 54(b) and ¶ III(20) of the Court's January 9, 2001 Case Management Order ("CMO") (Doc. # 149-1, Case # 98-cv-02777), and for the Court to enter a bar order providing contribution protection to these Settling Defendants from all "matters addressed" in a December 19, 2000 Consent Decree ("Consent Decree") entered by the United States District Court for the Eastern District of Arkansas, Jonesboro Division. Pls.' Mot. To Dismiss Settling Defs. and To Provide Contribution Protection, Doc. # 288-1, Case # 98-cv-02777. For the following reasons, Plaintiffs' motion is GRANTED. I. Factual Background and Procedural History
Several Settling Defendants have also joined in Plaintiffs' motion. See IBC Manuf. Co.'s Joinder in Pls.' Mot., Doc. # 298-1, Case # 98-cv-02777; Doc. # 250-1, Case # 98-cv-02968; Waterways Marine of Memphis, Inc.'s Joinder in Pls.' Mot., Doc. # 307-1, Case # 98-cv-02777; Doc. # 256-1, Case # 98-cv-02968; Fleming Co., Inc's Joinder in Pls.' Mot., Doc. # 316-1, Case # 98-cv-02777.
These defendants are: 1) Eaton Corp.; 2) Fleming Co., Inc.; 3) Hunter Fan Co.; 4) IBC Manufacturing Co.; 5) Lehman-Roberts, Inc.; 6) Mobil Oil Corp.; 7) Shannon Brothers Enterprises, Inc.; 8) TRW, Inc.; and 9) Waterways Marine of Memphis, Inc. ("Settling Defendants").
Paragraph 92 of the Consent Decree provides, in pertinent part:
The Parties agree, and . . . this Court finds, that the Settling Defendants and the Settling Federal Agencies are entitled, as of the effective date of this Consent Decree, to protection from contribution actions or claims as provided by CERCLA Section 113(f)(2), 42 U.S.C. § 9613(f), for matters addressed in this Consent Decree. The matters addressed in this Consent Decree include any and all response actions related to the [Gurley Sites] and any and all response costs incurred or to be incurred by the Settling Defendants or the United States or the State or others related to the [Gurley Sites] including, but not limited to, any action, suit or claim for response costs under CERCLA sections 106, 107, 11. The "matters addressed" in this settlement do not include those response costs or response actions as to which the United States or the State have reserved their rights under this Consent Decree. . . .
Pursuant to the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et seq., Plaintiffs seek to recover response costs allegedly incurred by Plaintiffs at the South 8th Street Landfill Superfund Site and the Gurley Pit Superfund Sites (collectively, the "Gurley Sites"). These response costs stem from remedial measures taken to clean up hazardous waste dumped at the Gurley Sites in the 1950s- 197Os.
Other relevant factual and background information for the above-titled cases can be found in the Court's Order Granting Def.'s Mot. To Dismiss (entered February 14, 2003). In the interest of brevity, these facts will not be recited herein.
On September 8, 1998, the United States filed United States v. Aircraft Serv. Int'l., Inc., et al., No. J-C-98-362 (E.D. Ark. 1998), seeking to recover from Plaintiffs $10 million in response costs that the EPA allegedly incurred in implementing the Gurley Pit Site remedy. A virtually identical case was also brought on September 9, 1998, by the Arkansas Department of Pollution Control Ecology. See Arkansas Dept. of Pollution Control and Ecology v. Aircraft Serv. Int'l., Inc., et al., No. J-C-98-363 (E.D. Ark. 1998). On November 18, 1998, the EPA issued Plaintiffs, along with certain additional parties, a unilateral administrative order ("UAO") pursuant to Section 106 of CERCLA, 42 U.S.C. § 9606, requiring the recipients to perform a specific remedial action for the South 8th Street Site.
On September 8, 1998, Plaintiffs brought the instant suit in an effort to recoup their anticipated expenses. Plaintiffs filed their Third Amended Complaint ("Complaint") on March 20, 2000. Count II, the only remaining claim in the Complaint, asserts that all the defendants are severally liable for contribution to Plaintiffs' past and future cleanup costs under CERCLA Section 113(f)(1), 42 U.S.C. § 96013(f)(1). On December 19, 2000, Plaintiffs in the instant action entered into the Consent Decree with the United States and the ADPCE regarding response costs for the Gurley Pit Site and remedial responsibilities for the South 8th Street Site.
Count I of the Complaint was dismissed with prejudice against all defendants in the above-titled actions by this Court's February 14, 2003 Order.
On January 12, 2001, the Court entered the CMO to administer the disposition of the above-titled cases. William H. Hyatt, Jr., Esq., was appointed Special Master by the Court to oversee the mediation proceedings. Paragraph III(20) of the CMO states that "Plaintiffs are directed to tender to the Court on or before January 2, 2002, an appropriate motion . . . that provides for the resolution of all claims asserted or deemed asserted against any Defendant with which Plaintiffs have reached a settlement during the course of the Phase I mediation process." Plaintiffs have now reached settlement agreements with each of the Settling Defendants, with the most recent settlement finalized on April 30, 2002. Plaintiffs filed the instant motion on May 30, 2002.
II. Legal Analysis
A. Contribution Bars For Settling Defendants in Private Party CERCLA Settlements
Fed.R.Civ.P. 54(b) empowers district courts in multi-party litigation to enter judgment against "fewer than all of the . . . parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment." Courts applying Rule 54(b) have found "no just reason for delay" in CERCLA settlements providing contribution protection because of the absence of any risk of piecemeal litigation at the appellate level in such cases. See Comerica Bank-Detroit v. Allen Indus., Inc., 769 F. Supp. 1408, 1410 (E.D. Mich. 1991). As a result, courts routinely use Rule 54(b), upon parties' motions for the entry of judgment, to approve settlements in complex CERCLA litigation and to provide contribution bars for settling defendants from counter-claims brought by other defendants. See Foamseal, Inc. v. The Dow Chemical Co., 991 F. Supp. 883, 886 (E.D. Mich. 1998) (collecting cases); Barton Solvents, Inc. v. Southwest Petro-Chem, Inc., 834 F. Supp. 342, 345-46 (D. Kan. 1993) (collecting cases); City And County of Denver v. Adolph Coors Co., 829 F. Supp. 340. 343-44 D. Col. 1993; Comerica Bank-Detroit v. Allen Indus., Inc., 769 F. Supp. 1408, 1414-15 (E.D. Mich. 1991); Allied Corp. v. Acme Solvent Reclaiming, Inc., 771 F. Supp. 219 (N.D. Ill. 1990).
CERCLA § 113(f) only provides for contribution protection for settling defendants entering into settlement with the United States or a state governmental entity. See CERCLA § 113(f)(2). Two other federal statutes, the Uniform Contribution Among Tortfeasors Act § 4, 12 U.L.A. 98 (1975) ("UCATA") and the Uniform Comparative Fault Act, 12 U.L.A. 44 (West Supp. 1992) ("UCFA"), however, authorize federal courts to provide contribution bars for settling defendants. Courts have applied the UCATA or the UCFA to allow contribution bars because courts have a strong interest in promoting all types of settlement, particularly in complex CERCLA claims, yet a defendant to a CERCLA action would not be willing to settle "if after settlement, it would remain open to contribution claims from other defendants. The measure of finality which a cross-claim bar provides make[s] settlements more desirable." Allied Corp., 771 F. Supp. at 222 (citing Metro. Housing Dev. Corp. v. Arlington Heights, 616 F.2d 1006, 1013 (7th Cir. 1980)).
Section 4 of the UCATA states, in relevant part:
When a release or covenant not to sue or not to enforce judgment is given in good faith to one of two or more persons liable in tort for the same injury . . . . . . . (b) It discharges the tortfeasor to whom it is given from all liability for contribution to any other tortfeasor.
Section 6 of the UCFA states, in relevant part:
A release, covenant not to sue, or similar agreement entered into between a claimant and a person liable discharges that person from all liability for contribution, but it does not discharge any other person liable upon the same claim unless it so provides. However, the claim of the releasing person against other persons is reduced by the amount of the released person's equitable share of the obligation. . .
The vast majority of courts choosing between the UCATA and the UCFA have adopted the UCFA approach. See, e.g., Foamseal, 991 F. Supp. at 886; Barton, 834 F. Supp. at 348-49;Comerica, 769 F. Supp. at 1414;Allied Corp., 771 F. Supp. at 223; but see Atlantic Richfield Co. v. American Airlines, Inc., 836 F. Supp. 763, 766 (N.D. Okla. 1993);Denver, 829 F. Supp. at 345. This Court also elects to apply the UCFA to CERCLA settlements because the Court finds the UCFA's proportionate liability standard to be preferable to the UCATA's pro tanto liability apportionment for a variety of reasons. First, the UCFA approach "does not . . . hang the non-settling defendants out to dry" because it provides for equitable apportionment of responsibility, regardless of the settlement amount. Comerica, 769 F. Supp. at 1414; see also United States v. Western Processing Co., 756 F. Supp. 1424, 1430 (W.D. Wash. 1990) (citations omitted).
Second, the UCFA eliminates the need for an evidentiary hearing to determine the fairness of the settlement because the proportionate credit to non-settling defendants is not based on the settlement amount. See id. at 1414; Western Processing, 764 F. Supp. at 1430. This factor constitutes perhaps the primary reason for adopting the UCFA instead of the UCATA in the context of CERCLA settlements because such hearings are often long and arduous, and "would negate the benefits, such as finality and reduced cost, which a settlement otherwise offers to the settling parties." Allied Corp., 771 F. Supp. at 223; see also Comerica, 769 F. Supp. at 1411 (the "preparation for such `mini-trials,' and the uncertainty of the outcomes, would discourage parties from settling, and this would be contrary to CERCLA's policy of encouraging early settlement.").
Third, the UCFA allows partial settlement of complex claims involving multiple parties more easily than the pro tanto approach which requires imprecise allocation prior to trial. See Western Processing, 764 F. Supp. at 1430. Finally, "total settlement is encouraged after partial settlement[,] as a culpable nonsettlor cannot escape responsibility when a settling defendant pays more than his fair share and cannot gamble on a jury verdict in view of a guaranteed credit; this serves also to deter wrongful conduct." Id. Indeed, the burden is on the plaintiffs seeking settlement to ensure that the settlement amount closely approximates the probable proportional share of the settling defendants because, if the settlement amount is less than this share, the plaintiffs, and not the non-settling defendants, will have to make up the difference. See Comerica, 769 F. Supp. at 1414.
B. Analyzing the Settlement Agreement and Request for Contribution Protection
Plaintiffs aver that dismissal of Settling Defendants, along with the contribution bar, "advances the strong federal interest in promoting settlement." Mem. of Law in Supp. of Pls.' Mot. at 5 (Doc. # 289-1, Case # 98-cv-02777). Plaintiffs also contend that the settlements are equitable and properly account for Settling Defendants' proportional share of responsibility for the waste dumped at the Gurley Sites, and that negotiations for the settlements were conducted in good faith and under the auspices of the Special Master in accord with the CMO's mediation process. Id. at 6. Plaintiffs further argue that good cause exists for extending the CMO's January 2, 2002 deadline for filing motions to dismiss settling parties, pursuant to CMO ¶ III (23), because Plaintiffs have cooperated with the Special Master and have worked diligently to foster settlement throughout the mediation process.Id. at 8-9.
Defendant Mueller Copper Tube Products, Inc. ("Mueller") is the only non-settling defendant ("Non-Settlor") in the above-titled cases who has objected to Plaintiffs' motion. See Resp. To Pls.' Mot. To Dismiss (Doc. # 317-1, Case # 98-cv-02777). Mueller contends that Plaintiffs' motion should be denied because CERCLA only provides for a contribution bar when a private party settles with federal or state governmental entities, whereas Settling Defendants in the case sub judice are entering into a settlement with other private parties. See Def's Mem. In Resp. To Pls.' Mot. at 3-4 (Doc. # 318-1, Case # 98-cv-02777) (citing 42 U.S.C § 113(f)(2)). Mueller acknowledges that other courts have entered contribution bars in purely private party settlements. Mueller states that those cases are inapposite, however, because non-settling defendants in those cases only faced exposure to several liability under CERCLA § 113 whereas non-settling defendants in the instant case face exposure to joint and several liability under CERCLA §§ 107 and 113.See id. at 4-5. As a result, Mueller claims that the imposition of a contribution bar would be patently unfair to Non-Settlors because any Non-Settlor could be liable "for the entire response costs and would have no recourse for contribution against the Settling Defendants." Id. at 5. Mueller also argues that Plaintiffs' motion should be denied because it was brought almost five months after the deadline for any such motions according to the CMO. See id. at 5-6.
Mueller also rebuts Plaintiffs' arguments that dismissing Settling Defendants will aid in the clean-up of the Gurley Sites and that two Settling Defendants never had an opportunity to enter into the Consent Decree because they were joined as parties only after entry of the Consent Decree. See id. at 6-7. The Court, however, does not rely on either of these arguments in deciding the present motion.
The Court finds Plaintiffs' arguments to be persuasive. Plaintiffs and Settling Defendants have engaged in lengthy, good-faith negotiations that have resulted in an equitable settlement of Plaintiffs' claims. Both sides also have worked closely with the Special Master in fashioning the settlement. In sum, the Court does not believe the $389,023.63 settlement to be "a sweet heart deal", and Mueller "has not alleged, and the Court is not aware of, any bad faith or malfeasance" on the part of Plaintiffs or Settling Defendants. Comerica, 769 F. Supp. at 1412. Moreover, dismissing Settling Defendants from the case and providing them with contribution protection embraces both the mediation objective of Phase I of the CMO and CERCLA's goal of promoting settlement. Additionally, Mueller's CERCLA § 107-based argument is moot because the Court previously dismissed Plaintiffs' CERCLA § 107 claims. See Order Granting Def.'s Mot. To Dismiss (entered February 14, 2003). As a result, neither Mueller nor any other Non-Settlor can be burdened with joint and several liability.
The Court also finds compelling reasons for granting Plaintiffs' request to extend the CMO January 2, 2002 deadline to allow Plaintiffs to bring their motion at this time. The CMO itself allows extensions of deadlines "based upon a showing of good cause." CMO, ¶ 3(23). Plaintiffs and Settling Defendants have cooperated with the Special Master throughout Phase I and have engaged in good-faith negotiations to resolve Plaintiffs' CERCLA claims. On December 21, 2001, as negotiations between Plaintiffs and Settling Defendants continued, the Special Master advised the Court that "[n]egotiations between plaintiffs and some defendants are still ongoing. . . . Therefore, with the Court's permission, I propose to continue working with those parties until such time as I believe that no further progress is likely, or alternatively, such time as the parties indicate to me that they believe no further progress can be achieved." Mem. of Law In Supp. of Pls.' Mot. at 8. The additional time requested by the Special Master has born the desired fruits of the Phase I process, with the Special Master subsequently informing the Court, through its May 28, 2002 Supplementary Status Report, that Plaintiffs and Settling Defendants had reached an agreement and would be bringing the instant motion. The Court grants Plaintiffs' request to extend the CMO deadline and finds Plaintiffs' motion to be timely filed under the CMO because 1) this additional time after the January 2, 2002 deadline allowed Plaintiffs and Settling Defendants to reach an equitable settlement; 2) the settlement will reduce litigation costs for all parties and conserve judicial resources; and 3) Mueller has not shown how it or any other Non-Settlors might be prejudiced by extending the CMO deadline.
III. Conclusions
Accordingly, Plaintiffs' motion to dismiss Settling Defendants and to provide them with a contribution bar is GRANTED. The Court hereby dismisses all claims for contribution and response costs brought by Plaintiffs and/or Non-Settlors against Settling Defendants arising out of any of the matters or transactions alleged or referred to in the above-titled actions. The Court also enters a bar order providing Settling Defendants with contribution protection with respect to all "matters addressed" in ¶ 92 of the December 19, 2000 Consent Decree. Pursuant to the UCFA, Plaintiffs' remaining claims against Non-Settlors shall be reduced by the amount of each Settling Parties' equitable share of the liability, if any, as equitable shares are determined at trial.
IT IS SO ORDERED.
EXHIBIT A
IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TENNESSEE
SIGNATURE COMBS, INC. (f/k/a AMR COMBS, INC.), et al.,
Plaintiffs
v. CIVIL ACTION NO. 98-2777 D UNITED STATES OF AMERICA, CIVIL ACTION NO. 98-2968 D et al., CIVIL ACTION NO. 00-2245 D (Consolidated Cases) Defendants
ORDER APPROVING MOTION OF FLEMING COMPANIES, INC. TO PARTICIPATE BY TELEPHONE
This matter is before the Court pursuant to the Motion of Fleming Companies, Inc. to Participate by Telephone in this matter, and the Court having considered the Motion, and for good cause shown,
IT IS HEREBY ORDERED on this 20 day of February, 2003, that the Motion of Fleming Companies, Inc. to Participate by Telephone is hereby granted.
/s/Bernice Bouie Donald BERNICE B. DONALD UNITED STATES DISTRICT JUDGE