Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_00-cv-00113/USCOURTS-caed-2_00-cv-00113-67/pdf.json

Nature of Suit Code: 893
Nature of Suit: Environmental Matters
Cause of Action: 42:9607 Real Property Tort to Land

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

AMERIPRIDE SERVICES INC., a 

Delaware Corporation,

Plaintiff,

v.

TEXAS EASTERN OVERSEAS INC., a 

Delaware Corporation dissolved,

Defendant.

No. 2:00-cv-00113-MCE-EFB

MEMORANDUM AND ORDER

This Comprehensive Environmental Response, Compensation, and Liability Act 

(“CERCLA”) case was brought by Plaintiff AmeriPride Services Inc. (“AmeriPride”) 

against Defendant Texas Eastern Overseas, Inc. (“TEO”) to determine how to allocate 

liability for the parties’ contamination of a piece of land. The Honorable Lawrence K. 

Karlton presided over a twelve-day bench trial, after which TEO appealed some of his 

legal findings. The Ninth Circuit Court of Appeals vacated the judgment and remanded 

for further proceedings. Judge Karlton had since retired, and, on remand, the case was 

referred to the undersigned. Presently before the Court is the parties’ further briefing on 

the remanded issue of “whether the Court should use the pro rata or pro tanto approach

to allocate the $3.25 million in settlement payments from Chromalloy and Petrolane to 

///

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AmeriPride.” ECF No. 987. For the following reasons, the Court now holds that use of 

the pro rata approach is appropriate. 

BACKGROUND1

This action arises out of the contamination of soil and groundwater at and around 

an industrial laundry facility located at 7620 Wilbur Way in Sacramento, California (“the 

Facility”). AmeriPride owns the Facility, which was previously owned and operated for 

seventeen years by Valley Industrial Services, Inc. (“VIS”) as an industrial dry cleaning 

and laundry business. VIS used perchloroethylene (“PCE”) as a solvent in its dry 

cleaning operations. During its operations, VIS released PCE into the soil and 

groundwater. 

For part of the time that VIS operated the Facility, it was a wholly owned 

subsidiary of Petrolane. VIS eventually merged into Defendant TEO, which expressly 

assumed VIS’s liabilities. TEO is a Delaware corporation that dissolved in 1992. It first 

appeared in this case on July 13, 2000, when it answered and asserted a counterclaim. 

In November 2009, a receiver was appointed for TEO for “the sole purpose of 

establishing the capacity of TEO to be sued in [this action] solely to the extent of its 

insurance assets . . . .” That appointment was confirmed in 2010. 

In 1983, Petrolane sold the Facility, which subsequently changed ownership 

several times until AmeriPride became the owner. AmeriPride did not conduct dry 

cleaning operations at the Facility, but, during its ownership, there were additional 

releases of PCE-contaminated water into the soil and groundwater. . The 

contamination at the Facility migrated onto a neighboring property owned by Huhtamaki 

Foodservices, Inc. (“Huhtamaki”) and contaminated wells owned by California-American 

Water Company (“Cal-Am”).

///

 1 The following facts are taken, sometimes verbatim, from the JSR. 

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In 1997, AmeriPride found evidence of PCE in the soil under the Facility and 

reported the discovery to regulatory authorities. In 2002, the California Regional Water 

Quality Control Board took regulatory control over the investigation at the Facility. Since 

then, AmeriPride has performed investigation and remediation of the PCE in the soil and 

groundwater at and near the Facility under the direction of the California Regional Water 

Quality Control Board. The cleanup is ongoing. 

In January 2000, AmeriPride filed this action against VIS, TEO, Petrolane, 

Chromalloy, and other parties under CERCLA and various state laws to recover costs it 

incurred responding to the PCE contamination. TEO answered and asserted a 

counterclaim against AmeriPride. 

On July 9, 2002, Cal-Am filed a separate complaint against AmeriPride and TEO 

seeking recovery of its response costs, damages, and other relief in connection with the 

contamination of its wells. AmeriPride paid Cal-Am $2 million to settle those claims. 

Two years later, in July 29, 2004, Huhtamaki sued AmeriPride; AmeriPride later paid 

Huhtamaki $8.25 million to settle. In addition, in 2006, AmeriPride entered into 

settlement agreements with Chromalloy and Petrolane for $500,000 and $2.75 million, 

respectively.

The following year, the Court approved AmeriPride’s settlements with Petrolane, 

Chromalloy and Huhtamaki in an order entering judgment under Federal Rule of Civil 

Procedure2 54(b). AmeriPride’s proposed order to approve the settlements asked the 

Court to adopt the Uniform Comparative Fault Act’s (“UCFA”) pro rata approach as the 

federal common law in this case for the purpose of determining the legal effect of the 

settlement agreements. The Court agreed with AmeriPride and adopted the UCFA in 

the order approving the settlements. 

In 2011, TEO told the Court that it should receive a dollar-for-dollar credit for the 

settlement payments to AmeriPride. Settlement attempts between TEO and AmeriPride 

in 2007 were ultimately unsuccessful so AmeriPride pursued its cost recovery claims 

 2

 All subsequent references to “Rule” are to the Federal Rules of Civil Procedure. 

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against TEO. In January 2011, AmeriPride filed a motion for summary judgment against 

TEO seeking an order that TEO was liable to AmeriPride for its response costs, including 

the settlement amount it paid to Cal-Am and Huhtamaki. AmeriPride also moved to 

dismiss TEO’s counterclaim for contribution. 

On May 12, 2011, the Court granted in part AmeriPride’s motion for summary 

judgment and determined as a matter of law that: (1) TEO is a potentially responsible 

party liable for AmeriPride’s response costs under CERCLA; (2) AmeriPride paid for 

investigation and remediation costs of $7,750,921 through August 2010, and regulatory 

oversight costs of $474,730 through September 2010; and (3) AmeriPride’s investigation 

and remediation costs are necessary and consistent with the National Contingency Plan, 

40 C.F.R. pt. 300 (“NCP”). With respect to AmeriPride’s claims under CERCLA section 

107 for amounts it paid in settlement to Cal-Am and Huhtamaki, the Court denied 

summary judgment. Specifically, the Court found that the settlement funds were not

response costs recoverable under section 107 but that AmeriPride could seek to recover 

them under section 113(f)(1); and granted leave for AmeriPride to file an amended 

complaint (which it did on May 24, 2011). In light of this ruling, the Court did not address 

whether those settlement amounts were paid to reimburse Cal-Am and Huhtamaki for 

necessary response costs incurred consistent with the NCP. 

The Court also denied several of AmeriPride’s other summary judgment claims. 

Because the Court determined triable issues of fact remained about whether AmeriPride 

released or disposed of PCE and regarding the equitable allocation of costs between the 

parties, the Court: (1) denied AmeriPride’s summary judgment to the extent it pertains to 

allocation of liability on AmeriPride’s CERCLA claims; and (2) denied AmeriPride’s 

summary judgment of TEO’s counterclaim. 

The case proceeded to trial. The main issue remaining at trial was the equitable 

allocation of responsibility under AmeriPride’s and TEO’s respective CERCLA claims. 

The parties presented their evidence to the Court over the course of a twelve-day bench 

trial. On April 4, 2012, the Court entered an order finding, in part, that:

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[T]he total amount subject to equitable apportionment is 

$18,295,651.00, less $3,250,000 for a total of 

$15,045,651.00. After including the consultant and other 

costs of $446,656.84 paid for investigation and remediation at 

the AmeriPride site since August 2010, and the $16,604.52 

paid for regulatory oversight of the AmeriPride site since 

January 2011, the total amount subject to equitable 

apportionment is $15,508,912.36.

The Court calculated the total amount subject to equitable apportionment by 

combining AmeriPride’s investigation, remediation, and regulatory oversight costs, then

adding the $10.25 million AmeriPride paid in settlement to Huhtamaki and Cal-Am. 

From this total the Court then deducted the $3.25 million AmeriPride received from 

settling its claims against Chromalloy and Petrolane, in effect applying the Uniform 

Contribution Among Tortfeasors Act’s (“UCATA”) pro tanto approach to equitably 

account for these settlements.

Next, the Court apportioned the total liability fifty-fifty between TEO and 

AmeriPride, concluding that “given the facts as the Court has found them . . . the fairest 

apportionment is to divide responsibility equally.” ECF No. 915, at 14. The Court also 

issued a declaratory judgment that TEO is responsible for one-half of all future cleanup 

costs. To “roughly address” the fact that AmeriPride had “borne all of [the] costs for the 

many years since the first cleanup order,” the Court also ordered TEO to pay 

prejudgment interest to AmeriPride “in amounts calculated in accordance with 42 U.S.C. 

§ 9607.” The Court stated that the interest accrual date was a matter of equity rather 

than statutory requisites, and ordered the parties to submit a stipulation as to the amount 

of interest. The parties filed the interest stipulation on April 18, 2012, agreeing on the 

methodology for the calculation except as to when interest should start to accrue, and 

instead gave the Court interest amounts calculated based on the parties’ different start 

dates. The Court then determined interest accrued from the date the costs were first 

incurred by AmeriPride, rejecting TEO’s argument that such interest did not begin to 

accrue until the date AmeriPride demanded payment of a specific amount in writing. 

///

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On April 20, 2012, the Court issued the order containing the determination of the 

issues at trial, which included the Court’s award of interest. The Court adopted all of the 

undisputed facts contained in the pretrial order, and entered judgment in accordance 

with the Court’s order on the same day. The Court ordered TEO to pay AmeriPride 

$9,974,421.95 and issued a declaratory judgment that TEO is responsible for one-half of 

all future cleanup costs. 

That decision was appealed, and, in April 2, 2015, the Court of Appeals vacated 

the judgment and remanded with instructions to:

1. Explain which equitable factors the Court considered in allocating the 

$3.25 million in settlement payments from Chromalloy and Petrolane to AmeriPride, or 

select those factors and allocate the settlement payments in accordance with those 

factors in the first instance;

2. Determine the extent to which AmeriPride reimbursed Huhtamaki and 

Cal-Am for necessary response costs incurred consistent with the NCP; and

3. Apply the interest provisions in CERCLA Section 107(a) to determine when 

interest began to accrue on the costs paid by AmeriPride (i.e., when the amount was 

demanded in writing or the date of the expenditure, whichever is later).

Since this Court had previously applied both pro rata and pro tanto methods to 

allocate settlement costs, the critical issue on remand is which method is proper in this 

case. 

ANALYSIS

A district court has discretion pursuant to 42 U.S.C. § 9613 to equitably account 

for settlements between private parties in a contribution action under CERCLA. 

AmeriPride Services Inc. v. Texas Eastern Overseas Inc., 782 F.3d 474, 487 (9th Cir. 

2015). There are two basic approaches for exercising this discretion. Under the 

UCATA’s pro tanto approach, the liability of a non-settling defendant is reduced by the 

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dollar amount of settlements previously obtained by the plaintiff. On the other hand, the 

UCFA’s pro rata approach looks at the settling parties’ proportionate share of the liability 

and deducts that from the total amount of liability, regardless of the dollar amounts of 

settlements obtained by the plaintiff. A district court abuses its discretion if it chooses a 

method that would discourage settlement, is inequitable, or is inconsistent with 

CERCLA’s goals. Id. at 488. 

In its April 2012 post-trial order, the Court applied the pro tanto approach. ECF 

No. 912 at 15. Plaintiff requests that this Court apply the same approach on remand, 

arguing that Defendant’s expert witness used the pro tanto approach as well and that 

Defendant’s counsel conceded at oral argument that such an approach was proper. 

Defendant, however, asks that the Court instead apply the pro rata approach, arguing 

that the 2007 Order and Judgment’s adoption of the pro rata approach with respect to 

Plaintiff’s settlements with Chromalloy and Petrolane makes any later application of the 

pro tanto approach inequitable. 

The Court agrees with Defendant: adopting the pro rata approach is the most 

equitable path forward, is consistent with the purposes of CERCLA, and will not deter 

settlement of this action. The Court therefore adopts the pro rata approach to apportion 

liability here. 

A. Application of the Pro Rata Approach Is Not Inequitable.

Before applying the pro tanto approach in April 2012, the Court had already 

determined that the pro rata approach should govern any allocation of liability between 

Plaintiff and remaining non-settling parties. Specifically, the Court found that the 

application of the pro rata approach would “allow the parties to achieve finality in their 

settlements” and was warranted by the good-faith nature of the settlements. ECF 

No. 638 at 6. Defendant justifiably relied on this ruling in not challenging the fairness of 

the settlements, and proceeded to trial accordingly. AmeriPride, 782 F.3d at 488-89. 

Moreover, the Court’s adoption of the pro rata approach in 2007 obviated the 

need for a fairness hearing with respect to Chromalloy and Petrolane’s settlements. If

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the Court were to adopt the pro tanto approach now, Chromalloy and Petrolane would 

be forced to defend their settlements at a fairness hearing eight years after those 

settlements were reached in order to give Defendant the opportunity to protect its rights. 

On the other hand, Defendant’s rights will be adequately safeguarded without the need 

for Chromalloy and Petrolane to expend additional funds defending their settlements if 

the Court adopts the pro rata approach. 

Furthermore, application of the pro rata approach will not result in an inequitable 

outcome for Plaintiff. Plaintiff previously argued for its application in 2007, and in doing 

so, expressly agreed to assume the risk that its settlements with Chromalloy and 

Petrolane were less than their share of their liability for the site’s contamination. ECF 

No. 279 at 10. Plaintiff has not argued that applying the pro rata approach will 

inequitably affect its interests. Accordingly, the Court’s adoption of the UCFA’s pro rata

approach is most consistent with the equitable constraints on the Court’s exercise of its 

discretion. 

B. The Pro Rata Approach Is Consistent With CERCLA’s Purposes.

CERCLA’s core purpose is the protection of the “public health and environment 

‘by facilitating the expeditious and efficient cleanup of hazardous waste sites.’” Id. at 

487 (quoting Carson Harbor Village, Ltd. v. Unocal Corp., 270 F.3d 863, 888). Its 

secondary purpose is ensuring that responsible polluters pay for the necessary 

remediation. Id. As the parties admit in their JSR, cleanup of the site at issue here has 

been ongoing since 2002. Cleanup continued after the Court adopted the pro rata

approach in 2007 and continues today. There is no indication anywhere in the record 

that cleanup of the site will cease if this Court readopts the pro rata approach. There is 

therefore no indication that the Court’s adoption of the pro rata approach will conflict with 

CERCLA’s core purpose. 

C. The Pro Rata Approach Will Not Deter Settlement.

As Plaintiff recognized in May 2006, the pro rata approach actually encourages 

settlement of CERCLA claims. ECF No. 279 at 9 (citing Comercia Bank-Detroit v. Allen 

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Indus., Inc., 769 F.Supp. 1408, 1414 (E.D. Mich. 1991). The pro rata approach protects 

non-settling defendants by assuring that their liability will only reflect their portion of the 

responsibility for cleanup costs. Id. at 10. In conjunction with the contribution bar of 

42 U.S.C. § 9613, settling defendants are adequately protected as well. Id. 

Furthermore, the pro rata approach negates the need for an evidentiary hearing to 

determine the fairness and good faith of the settlement, making the settlement process 

more efficient for both courts and litigants. In general, therefore, the pro rata approach 

in no way deters fair settlements. 

More importantly in this case, the Court’s re-adoption of the pro rata approach will 

not deter settlement. Only TEO remains as a defendant, and neither party has shown 

that application of the pro rata approach will deter it from settling. And, as explained 

more fully in Section A of this Order, the Court’s adoption of the pro rata approach at this 

juncture will not, and cannot, reopen the settlements made in 2007. Accordingly, the 

Court acts within its discretion by adopting the pro rata approach. 

CONCLUSION

For the reasons stated above, the Court will apply the UCFA’s pro rata approach 

to determine the first remanded issue.

IT IS SO ORDERED. 

Dated: September 25, 2015

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