United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 03-1520

___________

Kennedy Building Associates, *

*

Plaintiff - Appellee, *

* 

v. * Appeal from the United States

* District Court for the

Viacom, Inc., as successor in interest * District of Minnesota.

to CBS Corporation, as successor in *

interest to Westinghouse Electric *

Corporation, *

*

Defendant - Appellant. *

___________

Submitted: December 15, 2003

Filed: July 15, 2004 

___________

Before WOLLMAN, JOHN R. GIBSON, and RILEY, Circuit Judges.

___________

JOHN R. GIBSON, Circuit Judge.

Viacom, Inc., the corporate successor to Westinghouse Electric Corporation,

appeals the judgment entered against it for damages and injunctive relief and the

awards of attorneys' fees and prejudgment interest in this suit arising out of

Westinghouse's environmental contamination of a site it once owned in Minneapolis.

Kennedy Building Associates, the present owner of the contaminated property,

obtained a jury verdict awarding it $225,000 in compensatory damages and

$5,000,000 in punitive damages on its common law claim for strict liability. The
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district court awarded Kennedy $106,393.23 in response costs Kennedy had already

incurred under the federal Comprehensive Environmental Response, Compensation

and Liability Act (CERCLA) and the Minnesota Environmental Response and

Liability Act (MERLA), and declared Viacom liable for any response costs Kennedy

should incur in the future. The court also issued an injunction under the Minnesota

Environmental Rights Act (MERA), requiring Viacom to clean up the contamination

at the site. The court awarded Kennedy statutory attorneys' fees, witness fees, and

costs in the amount of $1,113,915, and prejudgment interest in the amount of

$41,677.89. Viacom appeals everything except the CERCLA and MERLA relief,

arguing that the strict liability award was not permissible under Minnesota common

law; that the strict liability claim cannot support an award of punitive damages; that

the MERA claim is moot because Viacom has entered an administrative consent order

concerning the contaminated property; that the attorneys' fee award was excessive;

and that the prejudgment interest was excessive because Viacom had offered to settle

the case. We reverse as to the common law strict liability claim and the punitive

damages award; reverse and remand the award of injunctive relief with instructions

to modify the injunction; remand for adjustment of the fees award; affirm the award

of prejudgment interest on the CERCLA and MERLA claims; and reverse the

prejudgment interest on the strict liability award.

Westinghouse owned the property at 2303 Kennedy Street in Minneapolis from

the 1920s until 1980. Westinghouse used the building there to house an electrical

transformer repair facility. A portion of Westinghouse's business there was the repair

of transformers that were insulated with Inerteen, a Westinghouse product that

contained polychlorinated biphenyls, known as PCBs. Chlorobenzenes were used as

a solvent to thin the PCBs down to a usable consistency. 

By the late 1960s, it was recognized that PCBs were potential carcinogens and

that they were accumulating, rather than breaking down, in tissues and in the

environment. In 1976, Congress passed the Toxic Substances Control Act, which
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singled out PCBs as a hazardous substance, requiring the EPA to prescribe rules

restricting their manufacture, use and disposal. Pub. L. No. 94-469, Title I, § 6, 90

Stat. 2020 (1976) (codified at 15 U.S.C. § 2605). In 1979, EPA banned rebuilding

of transformers that contained PCB levels of more than 500 parts per million, stating

that these operations presented an unreasonable risk of release of PCBs.

Polychlorinated Biphenyls (PCBs), Manufacturing, Processing, Distribution in

Commerce, and Use Prohibitions, 44 Fed. Reg. 31514 (May 31, 1979) (codified at 40

C.F.R. pt. 671). PCBs and chlorobenzenes are classified as hazardous substances

under MERLA and CERCLA. Minn. Stat. § 115B.02, subd. 8(1) (cross referencing

33 U.S.C. § 1321(b)(2)(A)); 42 U.S.C. § 9601(14) (same); 40 C.F.R. § 116.4 (listing

hazardous substances). Sites contaminated with hazardous substances are subject to

remediation under federal and state law. See 42 U.S.C. § 9604 (CERCLA); Minn.

Stat. § 115B.04, subd. 1 (MERLA).

In 1971-73, Westinghouse undertook a study of the sites where it used PCBs.

The purpose of the study was to ascertain whether PCBs were leaking from those

sites and migrating off Westinghouse property, and if so, whether the PCBs were

likely to be detected by others and traced back to Westinghouse. The head of the

Westinghouse study, Dr. Thomas Munson, testified at trial that he examined four such

facilities (but not the Minneapolis facility). Munson said, "We found PCBs

everywhere we looked." Munson testified that Westinghouse stopped the study after

the initial sampling of four plants showed PCBs were leaving the sites and showing

up in wildlife (and fish markets) nearby. On cross examination, Viacom counsel

brought out that the four plants sampled were manufacturing, not repair facilities, but

Munson said that "it was a given" that repair sites were contaminated and that he told

Westinghouse management,

It simply wasn't possible to handle, ah, gallon quantities of PCBs,

pumping them into transformers, draining them out of transformers,

without having some spillage. And it was just a given at that time that
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every facility that had been doing that for any length of time would have

spilled considerable amounts of PCB.

(February 4, 2002, vol 4 p. 105-06.) The district court found, 

Westinghouse knew during the time it owned the site at issue that there

were health risks associated with PCBs, and that PCB contamination

was virtually certain to be found at its long-term transformer-repair

facilities.

(Order of May 31, 2002, slip op. at 3.) Viacom does not argue that this finding was

clearly erroneous. 

The district court found Westinghouse's operations contaminated the property

with PCBs and chlorobenzenes through spillage, overflow of an oil-storage tank, and

burning of PCB-contaminated oil in the building's furnace. Evidence at trial indicated

that the site's soil was contaminated by PCB concentrations as high as 9,100 mg/kg

(the allowable level is 1.2 mg/kg) and the groundwater contains concentrations as

high as 37,000 μg/liter (the allowable level is .04 μg/liter). Expert witness William

Welbes testified that the amount of PCB contamination now at the site indicates that

approximately 18,000 pounds of PCBs have been spilled there, resulting in

contamination of 25,000 tons of soil. Chlorobenzenes were also present in the

groundwater. Welbes testified that, because the site was also contaminated with

mineral oil, which is a solvent for the PCBs, the PCBs at the site are presently

migrating and contaminating surrounding soil and groundwater of neighboring

properties. The chlorobenzenes are very water soluble and they "show every

indication of having left the site and they're still migrating." 

The district court found that despite Westinghouse's knowledge that PCB

contamination was "virtually certain" to exist on the property, Westinghouse sold the

site to Hillcrest Development Company in 1980 without conducting any investigation
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or decontamination at the site and without disclosing the nature of its work at the site.

(Order of May 31, 2003, slip op. at 3.) Gerald Trooien, a partner in Kennedy

Building Associates, bought the property from Hillcrest in 1982 and transferred it to

Kennedy. The district court found that at the time Trooien bought the property, he

did not know and had no reason to know that Westinghouse had disposed of

hazardous substances at the site. (Id. at 4.)

In 1997 Kennedy entered negotiations to sell the property back to Hillcrest.

In preparation for the purchase, Hillcrest hired an environmental consultant, who

discovered the PCB contamination. Hillcrest withdrew its offer to purchase the site.

Kennedy reported the contamination to the Minnesota Pollution Control Agency and

entered the Agency's voluntary clean-up and investigation program, which required

Kennedy to undertake field investigations of the contamination of the soil and

groundwater in order to avoid being referred to the federal Superfund program. The

Kennedy Building site was listed on the Minnesota Pollution Control Agency's

permanent list of priorities on September 27, 2000. 

In 1999 Kennedy filed this suit in state court seeking relief under MERLA and

MERA, as well as under the common law of nuisance, negligence and strict liability.

Viacom removed the case to federal court on grounds of diversity of citizenship, and

Kennedy amended its complaint to add claims for CERCLA relief and punitive

damages. Viacom filed a counterclaim asserting Kennedy was liable under CERCLA

and MERLA, and seeking injunctive relief against Kennedy under MERA. 

At the time of trial, Kennedy had incurred costs of $106,393.23 in investigating

the contamination. The Minnesota Pollution Control Agency had required it to file

a deed restriction showing the property was contaminated, which meant that Kennedy

could not do anything that would disturb the soil on the property without obtaining

Agency approval. The Agency issued Kennedy an assurance letter stating that

Kennedy did not contaminate the site. Viacom and the Agency entered an
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administrative consent order on the eve of trial, January 22, 2002, in which Viacom

agreed to conduct a remedial investigation, submit a feasibility study, develop a

response action plan, and implement such a plan. 

The common law and punitive damages claims were submitted to a jury, which

found in favor of Viacom on the negligence and nuisance claims, but which awarded

$225,000 in actual damages and $5,000,000 in punitive damages on the strict liability

claim. Because the CERCLA, MERLA, and MERA claims invoked the court's

equitable jurisdiction, the district court decided those claims. The court found that

Kennedy proved its CERCLA and MERLA claims against Viacom and that Viacom

did not prove its CERCLA and MERLA claims against Kennedy. The court awarded

Kennedy response costs of $106,393.23 for costs already incurred and declared

Viacom liable for future response costs. The court held that Kennedy proved its

MERA claim and accordingly the court enjoined Viacom "to remediate the site's soil,

groundwater, and building interior so that the previously-placed deed restriction may

be removed, pursuant to Minn. Stat. § 116B.07." 

Kennedy filed post-trial motions seeking prejudgment interest and an award of

attorneys' fees, expert witness's fees and costs. The motion was referred to a

magistrate judge, who recommended the award of $41,677.89 in prejudgment interest

on the CERCLA response costs and the actual damages award, and an award of

$1,113,915 for attorneys' fees, expert witness's fees, and costs. The district court

adopted the magistrate judge's recommendation and entered judgment accordingly.

I.

Viacom argues that the district court erred in interpreting Minnesota common

law to hold a land-owner strictly liable to its successor in interest for contamination

of land. The district court interpreted the common law tort derived from the English

case of Rylands v. Fletcher, LR 3 H.L. 330 (1868), to provide a cause of action to
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Kennedy against Viacom for the escape of PCBs and chlorobenzenes onto the soil

and groundwater of the property. Viacom argues that the Rylands rule only creates

a cause of action for land-owners against neighbors who cause harm by their use of

nearby property. Viacom contends that Minnesota has not and would not extend the

Rylands rule to create a cause of action in favor of a land-owner against its

predecessor in title for harm done to the land when the predecessor owned it. 

This Court reviews the district court’s determinations of state law de novo.

Salve Regina Coll. v. Russell, 499 U.S. 225, 231 (1991). Our task is to ascertain

how the Minnesota Supreme Court would answer the question before us; if no

decision of that court directly addresses the question, we look at “related state court

precedents, analogous decisions, considered dicta, and other reliable sources in an

effort to determine what the Minnesota Supreme Court’s decision would be.” Union

Pac. R.R. v. Reilly Indus., Inc., 215 F.3d 830, 840 (8th Cir. 2000).

In Rylands, the owners of a mill, Rylands and Horrocks, built a reservoir on

land north of their mill, to supply their mill with water. The plaintiff, Fletcher, leased

coal mines on a neighboring close of land between the reservoir and the mill. The

water from the reservoir burst into old, disused shafts that communicated with

Fletcher’s mine and flooded the mine. Fletcher sued and prevailed in the Court of

Exchequer Chamber, but Rylands and Horrocks appealed, arguing that because they

did not know the shafts communicated with the mine, they were not negligent, and

therefore they could not be liable. The House of Lords held that Fletcher did not have

to prove negligence, since “the person who, for his own purposes, brings on his land

and collects and keeps there anything likely to do mischief if it escapes, must keep

it in at his peril.” Id. at 339. Lord Cairns’s opinion recited the lower court’s

statement of the ratio decedendi of the case expressly depending on the relationship

of neighbor to neighbor:
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[I]t seems but reasonable and just that the neighbour who has brought

something on his own property (which was not naturally there),

harmless to others so long as it is confined to his own property, but

which he knows will be mischievous if it gets on his neighbour’s, should

be obliged to make good the damage which ensues if he does not

succeed in confining it to his own property.

Id. at 340.

"Minnesota was one of the first American jurisdictions to adopt the strict

liability rule of [Rylands]," Minnesota Mining & Mfg. Co. v. Travelers Indem. Co.,

457 N.W.2d 175, 183 (Minn. 1990), and was a leader in the development of the tort

in this country, Jed Handelsman Shugerman, The Floodgates of Strict Liability:

Bursting Reservoirs and the Adoption of Fletcher v. Rylands in the Gilded Age, 110

Yale L. J. 333, 348 (2000). Beginning with a case involving a tunnel collapse that

flooded neighboring property in Cahill v. Eastman, 18 Minn. 324, 1872 WL 3309

(1872), Minnesota applied the theory in a wide variety of fact situations. See, e.g.,

Sachs v. Chiat, 162 N.W.2d 243, 246 (Minn. 1968) (pile driving damaged neighbor’s

house); Bridgeman-Russell Co. v. City of Duluth, 197 N.W. 971 (Minn. 1924) (water

reservoir flooded neighbor’s property); Wiltse v. City of Red Wing, 109 N.W. 114,

115 (Minn. 1906) (water reservoir flooded neighbor’s house); Hannem v. Pence, 41

N.W. 657, 658 (Minn. 1889) (ice fell on plaintiff from defendant's unsafely designed

building). In particular, Minnesota applied the theory to pollution and ground water

contamination. Minnesota Mining & Mfg. Co., 457 N.W.2d at 183; Berger v.

Minneapolis Gaslight Co., 62 N.W. 336 (Minn. 1895) (petroleum contaminated

neighbors’ property). The Minnesota Supreme Court summarized the rule as follows:

[A] party who, for his own profit, keeps on his premises anything not

naturally belonging there, the natural tendency of which is to become a

nuisance, and to do mischief if it escapes, is liable if it escapes, without

proof of negligence, for all damages directly resulting therefrom.

Wiltse, 109 N.W. at 115 (emphasis in original). 
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The Minnesota Supreme Court has never entertained the question of whether

the Rylands rule applies to the case of a land-owner suing its predecessor in title for

damage to the land antedating the plaintiff's ownership of the land. 

 

Kennedy does not claim that Minnesota has yet made the leap from liability to

neighbors to liability to successors in title, but instead argues that Minnesota courts

would do so, relying on T&E Indus. v. Safety Light Corp., 587 A.2d 1249, 1255-59

(N.J. 1991), in which the New Jersey Supreme Court extended Rylands liability to the

claim of a land-owner against its predecessor in title for contaminating the land.

Accord Hanlin Group, Inc. v. Int’l Minerals & Chem. Corp., 759 F. Supp. 925, 934

(D. Me. 1990); see also Interstate Power Co. v. Kansas City Power & Light Co., 909

F. Supp. 1224, 1240 (N. D. Iowa 1991) (denying summary judgment on strict liability

claim brought by land-owner against predecessor in title for polluting land, but

without discussing issue of whether strict liability should be extended to successors

in title). The majority of courts that have considered this question have agreed that

strict liability should not be extended to cover claims by a subsequent owner of the

land against an earlier owner. Rosenblatt v. Exxon Co., 642 A.2d 180, 185-88 (Md.

1994); Hicks v. Humble Oil & Refining Co., 970 S.W.2d 90, 97 (Tex. Civ. App.

1998); Hydro-Mfg., Inc. v. Kayser-Roth Corp., 640 A.2d 950, 958 (R.I. 1994); Futura

Realty v. Lone Star Bldg. Ctrs., 578 So. 2d 363, 365 (Fla. Dist. Ct. App. 1991);

Andritz Sprout Bauer, Inc. v. Beazer East Inc., 174 F.R.D. 609, 623-26 (M.D. Pa.

1997); Cross Oil Co. v. Phillips Petroleum Co., 944 F. Supp. 787, 789-90 (E.D. Mo.

1996); 325-343 E. 56th St. Corp. v. Mobil Oil Corp., 906 F. Supp. 669, 677-78

(D.D.C. 1995); Dartron Corp. v. Uniroyal Chem. Co., 893 F. Supp. 730, 740 (N.D.

Ohio. 1995); 55 Motor Ave. Co v. Liberty Indus. Finishing Corp., 885 F. Supp. 410,

423 (E.D.N.Y. 1994); Wellesley Hills Realty Trust v. Mobil Oil Corp., 747 F. Supp.

93, 101-02 (D. Mass. 1990) (buyer knew of contamination at time of land sale); see

also City of Minneapolis v. Arkla, Inc., No. 4-91-CV-44, 1993 WL 61827, at * 2 (D.

Minn. 1993) (unpublished) (Under Minnesota law, claim for strict liability for

ultrahazardous activities is “available only to adjoining or neighboring landowners.”).
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We must determine what the principle would be for limiting or extending

Rylands liability and ascertain whether the Minnesota Supreme Court would accept

or reject such a principle.

Viacom contends that the strict liability rule was "developed to protect the

owner of property adjacent to a site from which a harmful release occurs." Minnesota

has not limited the Rylands cause of action to cases in which the plaintiff and

defendant were neighboring land-owners. The Minnesota Supreme Court once

applied the doctrine in favor of a plaintiff who was not a land-owner, but was merely

walking by the defendant's unsafely designed building when ice fell from the building

onto the public sidewalk. Hannem v. Pence, 41 N.W. 657 (Minn. 1889).

Furthermore, in Cahill the Minnesota Supreme Court applied the rule to a defendant

that did not own the land on which it created a hazard. 1872 WL 3309, at *5 ("That

the defendants did not own the soil could not of course lessen the liability, if any,

which they might, because of their operations therein, incur with respect to plaintiffs.

If the owner could not have made the excavation with impunity, certainly one who

was not the owner could not."). Moreover, it made no difference that the defendant

was no longer in possession or control of the instrumentality that caused the hazard.

Id. "If [the defendants] were responsible for the consequences of the excavation, they

could not evade them by giving up such possession and control to others." But cf.

Mahowald v. Minnesota Gas Co., 344 N.W.2d 856, 860 (Minn. 1984) ("close

examination" of Minnesota strict liability cases, including Cahill, shows that in each

the instrumentality that caused damage was in "exclusive control" of the person

sought to be charged.).

Viacom contends that the rationale for the Rylands rule is that a land-owner

cannot protect itself from the activities of neighboring land-owners, and that such a

rule should not apply to a successor land-owner because it could have avoided the

harm by inspecting the property before it bought it. This reasoning finds support in

case law from other jurisdictions, but is questionable in Minnesota. One of the

leading cases on this issue concluded that a key ingredient of Rylands was the
1

We cite Rosenblatt with caution because it is clear that Maryland law is more

restrictive of the strict liability tort than Minnesota law. Maryland has declined to

extend strict liability to a case in which the defendant was a contractor that did not

own the land on which it created a hazard. Rosenblatt, 642 A.2d at 187. Minnesota

applied the Rylands doctrine to a contractor, rather than land-owner, in the first case

in which it adopted the doctrine. Cahill, 1872 WL 3309, at *5.

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neighboring land-owner’s inability to protect himself from his neighbor’s dangerous

activities; accordingly, the court held that a land-owner who purchased the property

after the harm was done could have avoided encountering the harm and therefore

could not recover under Rylands.

 

Subsequent users . . . are able to avoid the harm completely by

inspecting the property prior to purchasing or leasing it. Thus, it is not

unreasonable to expect subsequent users to bear the risk of such harm.

We think, however, that it would be unreasonable to hold the prior user

liable to remote purchasers or lessees of commercial property who fail

to inspect adequately before taking possession of the property.

Rosenblatt v. Exxon Co., 642 A.2d 180, 188 (Md. 1994).1

 Accord 325-43 E. 56th St.,

906 F. Supp. at 677-78. However, this rationale would also defeat a Rylands cause

of action by plaintiffs who bought a property after neighbors had created a hazard, at

least where the hazard was obvious. See Rosenblatt, 642 A.2d at 186 (strict liability

limited to claims by occupier of land harmed by actions abnormally dangerous in

relation to area, when carried on by "contemporaneous occupier" of neighboring

land). Kennedy contends that this reasoning is inconsistent with the Minnesota

Supreme Court's decision in Cahill. There, the Minnesota Supreme Court adopted the

Rylands rule in a case in which defendants' tortious act was complete before the

plaintiffs obtained an interest in the land. The defendants, Eastman et al., constructed

a tunnel on the land of the St. Anthony Falls Water Power Co., the "assignee" of

plaintiff's landlord, Steele. 1872 WL 3309, at *4. The tunnel was built before

October 4, 1869, and the plaintiffs leased the mill on adjoining property shortly

afterwards, in December 1869 and January 1870, respectively. Id. at *4-5. River
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water burst into the tunnel, causing erosion the length of the tunnel on October 4,

1869, before the plaintiffs became lessees. After the plaintiffs leased the mill, the

tunnel flooded again in April 1870, this time eroding the land on which the mill

stood. Id. at *5. Since the Cahill plaintiffs entered the leasehold after the tunnel had

been built and one flood had happened, Kennedy contends that it was not fatal to the

plaintiff's case that they acquired the property after the defendant created the

hazardous condition or even after the hazard had manifested itself. The Minnesota

Supreme Court did not inquire into whether the plaintiffs could have discovered the

hazard by inspecting the property before entering into it. Minnesota law would thus

not appear to restrict the Rylands cause of action to plaintiffs in possession of

property at the time the defendant created the hazard, and it is questionable whether

a neighbor's claim would be defeated by a showing that he could have learned of the

hazard before acquiring the property. (However, the Cahill plaintiffs were in

possession of the land at the time of the flood that eroded their mill; thus, they were

not merely purchasers of land that had already suffered the damage for which they

sued.) 

Furthermore, a rule restricting Rylands liability on the ground that subsequent

purchasers can inform themselves of the condition of the property would not fit a case

such as this one, where the district court found that a visual inspection of the property

did not reveal the contamination and that Kennedy "did not know, and had no reason

to know, when [it] purchased the site, that Westinghouse had disposed of hazardous

substances at the site." 

We do, however, conclude that there is a principle that precludes a Rylands

cause of action by a subsequent owner of the affected land. Minnesota's version of

the Rylands rule has required that there be an "escape" of the instrumentality causing

the harm. In Berger, the Minnesota Supreme Court summed up the rule:

The essential condition of liability, without proof of negligence on the

part of the owner, for injury to others by the escape of things kept by
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him on his own premises, is that the natural tendency of the things kept

is to become a nuisance or to do mischief, if they escape. The authority

of Cahill v. Eastman is not to be extended beyond the class of cases

possessing all of the elements upon which the judgment of the court was

based.

62 N.W. at 338 (emphasis added). With this admonition in mind, we may not extend

the Rylands rule to a case in which the harm was not caused by an escape. Kennedy

argues that the release of the PCBs and chlorobenzenes was an escape, and that it is

not necessary for the escape to cross a property line. However, in Hannem v. Pence,

the case in which the ice fell from the defendant's building onto the plaintiff, who was

walking on the public sidewalk, the Minnesota Supreme Court characterized the tort

as one in which the defendant in effect spreads his dominion past his own property:

His [the defendant's] act was an attempt to extend his right as proprietor

beyond the limits of his own property, at the expense of the safety of the

traveling public. He was bound at his peril to keep the ice and snow that

collects on his own roof within his own limits, and if the shape of his

roof is such as necessarily or naturally to throw it upon the street, he is

responsible for all damages, precisely as if he had under the same

circumstances thrown it upon the premises of an adjacent owner.

41 N.W. at 659. This reasoning simply does not apply to a suit based on harm done

to the defendant's own property. Kennedy rightly points out that not all courts limit

strict liability to cases involving an escape. See Wellesley Hills, 747 F. Supp. at 102

("Of course, as the rule developed, courts applied it to situations which did not

involve an 'escape' from the land."). This view is reflected in Restatement (Second)

§ 519. However, the Minnesota Supreme Court has emphatically not adopted

Restatement (Second) § 519, see Mahowald, 344 N.W.2d at 860-61, but has adhered

to its own interpretation of the Rylands rule. Kennedy further argues that there was

evidence that the PCBs did migrate across the property line. Be this as it may,

Kennedy's suit was to recover for the damage to the 2303 Kennedy Street property,

not for damage caused by the escape of the pollutants onto other people's property.
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For instance, Kennedy's complaint alleged: "Defendant is strictly liable for the

damages resulting as a natural consequence from the release of PCBs and related

hazardous substances on the Property. . . ." (emphasis added). We conclude that this

case does not fit the pattern of Rylands liability under Minnesota law.

Therefore, we must reverse the district court’s entry of judgment for Kennedy

on the jury’s verdict of strict liability and accompanying punitive damages. 

II.

Viacom next contends that the injunction entered under MERA, Minn. Stat. §

116B.03, is moot because Viacom has entered a consent order with the Minnesota

Pollution Control Agency, in which Viacom agreed to conduct a remedial

investigation, submit a feasibility study, develop a response action plan, and

implement such a plan. 

 

The administrative consent order does not state substantive standards for the

remediation of the site. Instead, it requires Viacom to design and implement a

remedial plan whose terms are yet unknown. The operative language of the consent

order requires Viacom to

Perform the following response actions in accordance with the terms and

conditions of this Order:

1. Prepare a Remedial Investigation Work Plan (RI Work

Plan);

2. Conduct the Remedial Investigation (RI) in accordance

therewith;

3. Submit a Remedial Investigation Report (RI Report);

4. Conduct a Feasibility Study (FS);

5. Submit a Feasibility Study Report (FS Report);

6. Develop a Response Action Plan (RAP); and
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7. Implement the Response Action Plan, including any

operation and maintenance of remedial action systems,

monitoring, and institutional controls. . . .

The substance of the clean-up will eventually be determined by negotiation between

Viacom and the Agency, with remedies in case negotiations break down. Viacom is

to submit to the Agency the various studies and plans called for in the order. The

Agency is to approve the documents or propose revisions, to which Viacom then must

respond. If the parties do not come to agreement, the Agency can do the work itself

and sue Viacom. In the resulting lawsuit, the issues would be limited to the question

of whether the Agency's clean-up was "reasonable and necessary to protect the public

health and welfare and the environment." 

The district court found that Viacom had not yet fulfilled the obligations

imposed on it in the consent order. The court found that because "the site's soil and

groundwater PCB concentrations exceeded the [Agency's] acceptable limits,

[Kennedy] was required to place a deed restriction on the property. The restriction

notifies potential purchasers of the contamination and restricts the owner's use and

development options while the contamination remains." The court granted "judgment

in favor of [Kennedy] and against Viacom, and affirmatively enjoins Viacom to

remediate the site's soil, groundwater, and building interior so that the previouslyplaced deed restriction may be removed, pursuant to Minn. Stat. § 116B.07." 

Viacom argues that the administrative consent order is entitled to some sort of

preemptive effect because the Agency is a party to it. We must consult MERA itself

to determine whether it gives the consent order a preemptive effect. MERA allows

the state attorney general to intervene in MERA litigation pursued by others, Minn.

Stat. Ann. § 116B.03, subd. 3, but it does not appear from the statute that the attorney

general replaces the existing plaintiff or alters the plaintiff's standing to pursue

declaratory or equitable relief in the name of the state. The Attorney General has not

chosen to intervene in this case. This is a critical difference between the procedures
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provided by MERA and those provided by the Clean Water Act, upon which Viacom

relies in citing Comfort Lake Ass'n, Inc. v. Dresel Contracting, Inc., 138 F.3d 351

(8th Cir. 1998). Under the federal Clean Water Act, various statutory provisions

provide that citizen suits are barred or preempted by agency action; in Comfort Lake

these statutory provisions led us to conclude that a citizen suit had no substantive

claim for civil penalties once such penalties had been recovered by the state in

administrative proceedings. Comfort Lake, 138 F.3d at 356-57. Viacom points to no

such provisions in MERA. 

Viacom contends that, in light of the administrative consent agreement, MERA

relief is precluded by Minn. Stat. § 116B.03 subd. 1, which states, "[N]o action shall

be allowable under this section for conduct taken by a person pursuant to any

environmental quality standard, limitation, rule, order, license, stipulation agreement

or permit issued by the pollution control agency, department of natural resources,

department of health or department of agriculture." Kennedy obviously did not sue

for any action taken pursuant to the consent agreement since the consent agreement

was not signed until the eve of trial and, even then, contained no substantive terms

other than agreements to study and arrive at actual clean-up measures in the future.

The preemptive scope of section 116B.03, subd. 1, appears to depend on

whether the injunction directly contradicts the Agency stipulation or can co-exist with

the stipulation. In Williams Pipeline Co. v. Soo Line R.R., 597 N.W.2d 340 (Minn.

Ct. App. 1999), the Minnesota Court of Appeals rejected a similar argument that an

Agency consent order preempted a MERA claim. Williams owned a pipeline

transporting petroleum products through a Superfund site. It entered a consent order

with the Minnesota Pollution Control Agency and EPA to remove the pipeline from

the site, but the consent order did not specify where the replacement pipeline should

be placed, although Williams could only reroute within the site if EPA and the

Minnesota Pollution Control Agency approved. Id. at 342-43. Williams proposed

to reroute its pipeline under a railroad yard owned by MT Properties and sought an
2

The trial court in Williams also concluded that jurisdiction was barred by a

provision of CERCLA that precludes jurisdiction over challenges to administrative

clean-up orders, 42 U.S. C. § 9613(h). 597 N.W.2d at 343; see also Werlein v. United

States, 746 F. Supp. 887, 894, 897 (D. Minn. 1990) (no jurisdiction over MERA

claims regarding site subject to ongoing administrative clean-up), vacated in part on

other grounds, 793 F. Supp. 898 (D. Minn. 1992). The Minnesota Court of Appeals

concluded that § 9613(h) did not bar jurisdiction over state court proceedings based

on state law. Williams, 597 N.W.2d at 344. The court's conclusion was bolstered by

the fact that § 9613(h) specifically excludes from its jurisdictional bar federal suits

alleging state claims in which jurisdiction is predicated on diversity of citizenship.

Id. Viacom removed this case to federal court on the ground of diversity of

citizenship.

-17-

easement by condemnation. Id. at 343. MP brought a MERA claim to enjoin the

rerouting. The trial court found that rerouting the pipeline in the railroad yard would

lead to shifting, mixing, spreading and dispersion of the existing contamination, id.

at 345, but concluded that the MERA claim was barred by Minn. Stat. § 116B.03,

subd. 1 because the claim challenged an action taken pursuant to the Minnesota

Pollution Control Agency and EPA consent order. Id. at 343.2

 The Court of Appeals

reversed, holding:

Because the consent order allows Williams to choose among several

alternatives, its decision to seek this particular easement and rerouting

does not constitute an action taken "pursuant to" an order or stipulation

of the [Minnesota Pollution Control Agency], and section 116B.03 is

inapplicable. 

Id. at 346. Thus, a consent order that specifies general but not particular actions a

defendant must take to clean up a site does not preempt a MERA claim based on

aspects of the defendant's actions that were not required by the consent order. On the

other hand, MERA does not authorize an injunction that imposes standards

conflicting with substantive standards affirmatively imposed by the Minnesota

Pollution Control Agency or one of the other agencies named in section 116B.03,

subd. 1. Cf. Holte v. State, 467 N.W.2d 346, 349 (Minn. Ct. App. 1991) (affirmative
-18-

order of Department of Agriculture pursuant to Grasshopper Control Act was not

amenable to MERA challenge). Requiring a direct conflict with agency action to find

preemption takes cognizance of both the language in section 116B.03, subd. 1,

protecting administrative action from MERA challenge, and the language of Minn.

Stat. § 116B.12, which provides that the "rights and remedies provided [in MERA]

shall be in addition to any administrative, regulatory, statutory or common law rights

and remedies now or hereafter available." See State by Fort Snelling State Park Ass'n

v. Minneapolis Park & Rec. Bd., 673 N.W.2d 169, 177 (Minn. Ct. App. 2003) (citing

§ 116B.12 in declining to find that MERA claim was preempted by administrative

proceedings). 

Because Viacom and the Minnesota Pollution Control Agency have, as yet, not

agreed upon substantive terms of remediation, there is as yet no conflict between any

order of the Minnesota Pollution Control Agency and the district court's order.

Whether any conflict would ever arise is completely speculative, and we cannot find

preemption based on hypothetical facts.

Viacom contends that the administrative stipulation rendered moot the MERA

claim. We must consider whether a defendant's entry into an agreement with a third

party to negotiate a resolution to the violation on which injunctive relief is based

moots a claim for injunctive relief. "Simply stated, a case is moot when the issues

presented are no longer 'live' or the parties lack a legally cognizable interest in the

outcome." County of Los Angeles v. Davis, 440 U.S. 625, 631 (1979) (quoting

Powell v. McCormack, 395 U.S. 486, 496 (1969)). The "heavy" burden of proving

mootness falls on the party asserting the case has become moot. Id. A case becomes

moot if it can be said with assurance that there is no reasonable expectation that the

violation will recur or if interim relief or events have completely and irrevocably

eradicated the effects of the alleged violation. Id.
-19-

Viacom contends that by entering the administrative consent order, it

responded to the continuing contamination of the soil and groundwater at the site.

But, as the district court found, Viacom did not abate the contamination. Whether

abatement ever occurs depends on future events entirely outside Kennedy's control.

As the Supreme Court pointed out in Friends of the Earth, Inc. v. Laidlaw Envt'l

Servs., Inc., 528 U.S. 167, 191-92 (2000), the question of mootness, unlike that of

standing, is likely to be raised after years of litigation when the case is far advanced.

Because of that societal investment in the case, "to abandon the case at an advanced

stage may prove more wasteful than frugal." Id. at 192. If the suit were to be

dismissed upon an agreement between third parties to perform at some time in the

future, if "some impediment arises or some prolonged delay ensues" in the planned

performance, the plaintiff would be "at square one." Kostok v. Thomas, 105 F.3d 65,

66 (2d Cir. 1997). In this case, Kennedy is not a party to the unperformed

administrative consent agreement. If the Agency fails to devote the resources to see

that Viacom eventually performs, Viacom does not suggest that Kennedy can enforce

the agreement.

Viacom cites Comfort Lake Ass'n, Inc. v. Dresel Contracting, Inc., 138 F.3d

351 (8th Cir. 1998), in which an action to enjoin a contractor from violating a

pollution discharge permit was dismissed as moot after the construction project which

was causing the violations was completed and the permit had terminated. It also cites

Grandson v. Univ. of Minnesota, 272 F.3d 568, 574 (8th Cir. 2001), cert. denied, 535

U.S. 1054 (2002), in which a claim seeking an injunction requiring the University to

establish a women's hockey team was deemed moot because the University had

already established such a team at the behest of the United States Department of

Education. Additionally, Viacom cites Mississippi River Revival, Inc. v. City of

Minneapolis, 319 F.3d 1013, 1015 (8th Cir. 2003), in which another Clean Water suit

seeking to force defendants to obtain discharge permits was moot once the permits

were obtained. Id. at 1016. Civil penalties under the Clean Water Act were not

available for "wholly past violations" and the defendants were able to prove that it
-20-

was "absolutely clear that the allegedly wrongful behavior could not reasonably be

expected to recur." Id. (quoting Laidlaw, 528 U.S. at 189). The claim for civil

penalties was therefore moot as well as the claim for injunctive and declaratory relief.

In each case Viacom cites, the condition on which the suit was based had been

remedied. Here, it has not. 

Even assuming for the sake of argument that entering an administrative

agreement to do something in the future is the same thing as having already done the

thing for purposes of mootness analysis, in this particular case, the consent order does

not contain substantive standards for remediation of the contamination. Relief

granted in another tribunal can moot a claim, but only where the relief granted is

complete. See Lewis v. BT Inv. Managers, Inc., 447 U.S. 27, 35 n.5 (1980); 13A

Charles Alan Wright et al., Federal Practice and Procedure § 3533.2 & n.31 (1984 &

2003 Supp.) ("Partial relief in another action, on the other hand, does not moot an

action seeking additional relief."). 

The district court ordered Viacom to "remediate the site's soil, groundwater,

and building interior so that the previously-placed deed restriction may be removed."

Testimony at trial indicated that a deed restriction is required when the level of PCBs

on the property exceeds the Minnesota Pollution Control Agency's reference value,

which is 1.2 milligrams per kilogram. The site had PCB concentrations as high as

9,100 milligrams per kilogram. The consent order neither orders Viacom to abate the

level of PCBs to any particular level or to make it possible to clear the title restriction.

Therefore, the relief granted by the consent order is not the same as that granted by

the MERA injunction. Viacom has not proven that the MERA injunction is moot. 

However, the injunction is subject to another serious objection. We conclude

that MERA does not support the injunction as drawn, even without regard to the

effect of the administrative consent order. Viacom contends that the private attorney
-21-

general-type suit available under MERA is preventative in nature and does not

authorize the court to order clean-up of an existing toxic waste site. 

MERA provides that any partnership, corporation, association, organization or

other entity with members residing in Minnesota may bring a civil action for

declaratory or equitable relief in the name of the state of Minnesota "for the

protection of the air, water, land, or other natural resources located within the state

. . . from pollution, impairment, or destruction." Minn. Stat. § 116B.03, subd. 1.

"Pollution, impairment or destruction," is defined as "any conduct by any person"

which violates, or is likely to violate a state standard, permit, etc. or which "materially

adversely affects or is likely to materially adversely affect the environment." Minn.

Stat. § 116B.02, subd. 5. Viacom cites Werlein v. United States, 746 F. Supp. 887,

898 (D. Minn. 1990), vacated in part on other grounds, 793 F. Supp. 898 (D. Minn.

1992), in which the court observed: "Generally, MERA does not seem to contemplate

affirmative injunctive relief that essentially amounts to an order to clean up past

pollution. . . . In fact, If MERA were so construed, courts could use MERA to order

clean-up of all pollution anywhere within the state. Under plaintiffs' definition,

whoever is responsible for that pollution is engaging in conduct by not cleaning it

up." 

The language Viacom quotes from Werlein was followed by a caveat that

Viacom omits, interpreting MERA to authorize injunctive relief to clean up hazardous

substances when such substances create ongoing pollution of underground water and

lakes, which constitute "separate natural resources." 746 F. Supp. at 898. 

Even under the view that MERA only protects the land, air and water

from current or prospective harm, the statute applies, because both are

present here. While MERA may not authorize the Court to order a total

cleanup at the Trio Solvents site, the Court believes that MERA

empowers it to order defendants to abate any continuing contamination

of underground or surface waters.
-22-

Id.; accord Soo Line R.R. v. B.J. Carney & Co., 797 F. Supp. 1472, 1486-87 (D.

Minn. 1992) ("[T]he failure to remedy a toxic waste site is considered ongoing

actionable conduct under MERA. . . . Because the complaint alleges that the

defendants' activities have caused hazardous substances to be released that will

continue to contaminate the soil and groundwater at the site, the Court finds that Soo

Line has properly pleaded a claim under MERA." (citation omitted)). These cases

from the District of Minnesota appear to us to have arrived at the correct

interpretation of MERA, which is that the statute can require remediation of past

pollution to the extent past deposits pose a threat of continuing contamination of

natural resources, including soil and water.

Viacom stipulated in the administrative consent order that "there . . . continue

to be releases or threatened releases, within the meaning of Minn. Stat. § 115B.02,

subd. 15, of these hazardous substances from the Kennedy Building Site. . . ." At

trial, Kennedy's expert William Welbes testified that the PCBs on the Kennedy site

continued to migrate because they were accompanying non-PCB transformer oil,

which would migrate with the groundwater. Welbes also testified that the

chlorobenzenes on the site would also migrate. The district court found: "The PCBs

continue to migrate in the soil and groundwater today due to the presence of

transformer mineral oil constituents." 

The district court's Conclusions of Law pertaining to Kennedy's MERA claim

state in their entirety:

[Kennedy] claims that Viacom is liable pursuant to the Minnesota

Environmental Rights Act, Minn. Stat. §§ 116B.01 et seq. The Court

concludes that [Kennedy] has proven its MERA claim by the

preponderance of the evidence.

Accordingly, the Court grants judgment in favor of [Kennedy] and

against Viacom, and affirmatively enjoins Viacom to remediate the site's

soil, groundwater, and building interior so that the previously-placed

deed restriction may be removed, pursuant to Minn. Stat. § 116B.07.
-23-

The order in this case exceeds the relief authorized by MERA. The district

court's injunction is not aimed at prevention of new pollution of separate natural

resources, but orders complete clean-up of the Kennedy site, sufficient to clear the

deed restriction, without any reference to what would be necessary to prevent future

pollution. Testimony at trial indicated that a deed restriction is required when the

level of PCBs on the property exceeds the Minnesota Pollution Control Agency

reference value, which is 1.2 milligrams per kilogram. A PCB level of more than 1.2

milligrams per kilogram does not necessarily mean that the contamination threatens

neighboring land or water. Kennedy's expert Welbes testified at trial, "Cleanup is not

necessarily required [when the PCB levels exceed 1.2] as long as it can be proven that

it does not pose an immediate health risk and that the plume is stable." Jan. 30, 2002,

vol. 2, p. 166. Although there is evidence of continuing migration of the

contaminants, the injunction is not tailored to address only that problem. Therefore,

the injunction cannot be upheld as drawn. The injunction must be redrawn to order

only the relief authorized by MERA, that is, the prevention of ongoing releases of

PCBs and chlorobenzenes into soil and groundwater. 

We must remand the injunction for more precise definition of the specific acts

required of Viacom. See United States v. Articles of Drug, 825 F.2d 1238, 1247 (8th

Cir. 1987).

III.

The district court awarded attorneys' fees, expert witness fees and costs

authorized under MERLA, Minn. Stat. § 115B.14, in the amount of $1,113,915. 

Viacom contends that the fees and costs award included expenses incurred in

litigating claims other than the MERLA and CERCLA claims, and that there is no

statutory authorization for award of fees on those claims. 
-24-

The district court's decision to award fees under MERLA to the prevailing

party and the amount of such an award will not be disturbed absent a clear abuse of

discretion. Control Data Corp. v. S.C.S.C. Corp., 53 F.3d 930, 939 (8th Cir. 1995);

Musicland Group, Inc. v. Ceridian Corp., 508 N.W.2d 524, 535 (Minn. Ct. App.

1994). "A request for attorney's fees should not result in a second major litigation."

Hensley v. Eckerhart, 461 U.S. 424, 437 (1983).

The starting point for determining the fee award is the number of hours

reasonably expended on the case multiplied by a reasonable hourly rate. Musicland

Group, 508 N.W.2d at 535. The magistrate judge to whom the district court referred

the fees litigation conducted this analysis, and Viacom does not demonstrate an abuse

of discretion with regard to this analysis. 

Where a plaintiff succeeds on some claims in litigation and fails on others, the

court must decide first, whether the claims involve a common core of facts and were

based on related legal theories; and second, whether the plaintiff's level of success

justifies basing the fee award on the hours reasonably expended. Id. (citing Hensley,

461 U.S. at 430). No fee can be awarded on unsuccessful claims that were not related

to the successful claim. Hensley, 461 U.S. at 434-35. Where successful and

unsuccessful claims involve a common core of facts and related theories, it will

generally be impracticable to separate the hours spent on the claims, and rather than

trying to do so, the court should focus on the overall relief the plaintiff obtained in

relation to the time reasonably spent on the litigation. Id. at 435. In assessing

whether claims are so related that the fees cannot practicably be severed, one

consideration is whether the "types of relief requested" under the various claims are

similar or have differing purposes. Musicland, 508 N.W.2d at 535. Apportionment

of fees between successful and unsuccessful claims is entrusted to the district court's

discretion. Gopher Oil Co. v. Union Oil Co., 955 F.2d 519, 527 (8th Cir. 1992).

Where the MERLA claim is accompanied by other claims for which no statutory fees

are available, as in this case, the relationship between eligible and non-eligible claims
-25-

is subject to the same analysis as the relationship between successful and nonsuccessful claims. See id. (successful common law fraud claim had different purpose

than CERCLA and MERLA claims and therefore fees were not compensable);

Musicland, 508 N.W. 2d at 535 (successful common law claims all intertwined with

MERLA and therefore fees compensable).

The magistrate judge considered the intertwinement question and concluded

that "all claims litigated shared a common core of facts with the MERLA claim rather

than an <overriding, or separate and distinct' purpose. Consequently, attorneys fees

and costs[s] are recoverable because [Kennedy] had a high degree of success. At trial

[Viacom] was found 100% liable for clean-up, and [Kennedy] was 0% liable." The

district court awarded fees in accordance with the magistrate's recommendation. 

Viacom argues that the time spent on the MERA claim is not compensable and

should be separated from the compensable fees because the MERA claim sought

injunctive relief which was not available under MERLA. The MERLA claim resulted

in a judgment for Kennedy's past response costs and a declaration that Viacom is

"liable for all future response costs, pursuant to Minn. Stat. § 115B.11, subd. 2(b)."

Damages were not available under MERA, Minn. Stat. § 116B.03, and the MERA

injunction in this case directed Viacom to clean up the contamination, rather than

reimbursing Kennedy for doing so. Viacom cites Gopher Oil, in which we remanded

for separation of fees incurred in litigating a fraud claim, from those incurred in

litigating a MERLA claim. 955 F.2d at 527. We held that the purpose of the fraud

claim was to protect the plaintiff from contribution claims resulting from its

ownership of the contaminated facility, and this "overriding" purpose mandated

separation of the fees notwithstanding intertwinement of the claims. Id. Under the

reasoning of Gopher Oil, the distinction in the aims and purposes of the MERLA

claim and the MERA claim is sufficient to require the district court to separate out the

fees incurred in furtherance of the MERA claim, to the extent practicable. 
-26-

Viacom makes the same argument with regard to Kennedy's claim for punitive

damages, but Kennedy's fee petition stated that it excluded from its fee request the

hours spent solely in furtherance of its punitive damages claim, and Viacom does not

attempt to demonstrate that this is incorrect. 

Viacom also contends that it should not be liable for fees incurred after its

settlement proposal of June 18, 2001. We reject the contention that the June 18

proposal can be given such an effect, for reasons discussed in section IV, below.

We must remand for the district court to reduce the fee award by the amount

of fees attributable to the MERA claim.

IV.

On June 18, 2001, Viacom sent Kennedy an offer of settlement consisting of

an eight-page proposed agreement under which Viacom would undertake clean-up

operations "to the extent, and only to the extent, required by any governmental

regulatory agency having the requisite authority and jurisdiction" and would also pay

$400,000 to Kennedy. Under the proposal, if Viacom damaged the building during

remediation, "Viacom shall . . . if appropriate in the sole discretion of Viacom . .

restore any impaired premises to substantially the same condition as existed

immediately prior to the implementation of the investigation and remediation."

(emphasis added). The agreement did not specify any substantive standards for

remediation of the contamination and in fact contained the following prohibition:

Prohibition. [Kennedy] shall not, directly, indirectly, or in any manner,

seek to influence the actions or decisions of any governmental

regulatory agency concerning the soil on the Property or groundwater

beneath or adjacent to the Property, or the extent of Viacom's

obligations with respect thereto. To the extent that [Kennedy] violates

this prohibition, [Kennedy] shall be and become solely responsible for
-27-

the investigation and remediation of the soil on the Property and the

groundwater beneath and adjacent to the Property.

This settlement proposal was made approximately six months before the Minnesota

Pollution Control Agency consent order was executed. Thus, the purport of the

proposal was for Viacom to do whatever unspecified action a government agency

might later decide on, if any, with Kennedy barred from any input into the appropriate

measures to be taken with regard to abatement of hazardous waste on its own

property. 

Viacom argues that this proposal stopped the accrual of prejudgment interest

under Minn. Stat. § 549.09, subd. 1(b). The magistrate judge concluded that

Viacom's offer to settle was "not sufficiently precise" to afford it the benefit of the

offer-counter offer mechanism in the Minnesota statute. This apparently referred to

the lack of substantive standards for the clean-up and indeed the contingency of the

clean-up offer on Viacom being ordered to do anything at all by some government

agency at some unspecified time. Additionally, the offer added a condition that

Kennedy would not exercise its rights to petition the government agency in any way

concerning government action affecting its own property. Viacom demanded that

Kennedy agree to a condition that certainly has not been granted by the judgment in

this case, nor could such a condition have been included as relief for any cause of

action litigated herein. Viacom's proposal did not function as an offer of settlement

within the meaning of Minn. Stat. Ann. § 549.09 stopping the accrual of interest. Cf.

Hodder v. Goodyear Tire & Rubber Co., 426 N.W.2d 826, 841 (Minn. 1988) (offer

that did not encompass all claims in suit did not stop interest). 

Obviously, the award of interest on the strict liability award must be vacated,

but the interest on the CERCLA and MERLA award should be affirmed.
-28-

V.

We reverse the judgment in favor of Kennedy for strict liability and punitive

damages, reverse and remand the award of injunctive relief with instructions to

modify the injunction in accordance with this opinion, remand the award of attorneys'

fees for segregation and disallowance of those hours expended in furtherance of the

MERA claim, affirm so much of the interest award as pertains to the CERCLA and

MERLA claims, and reverse that part of the interest award that pertains to the strict

liability damages. We remand for further proceedings consistent with this opinion.

_______________