In the

United States Court of Appeals

For the Seventh Circuit ____________________

Nos. 12-3624 & 13-3052

UNITED STATES OF AMERICA,

Plaintiff

v.

ROGERS CARTAGE COMPANY,

Defendant-Cross Claim

Third/Party Plaintiff-Appellant,

v.

MONSANTO COMPANY, et al.,

Defendants-Cross Claim

Third/Party Defendants-Appellees.

____________________

Appeals from the United States District Court for the

Southern District of Illinois.

No. 3:99-cv-00063-GPM-PMF — G. Patrick Murphy, Judge.

____________________

ARGUED JANUARY 6, 2014 — DECIDED JULY 27, 2015

____________________

Before EASTERBROOK, WILLIAMS, and TINDER, Circuit Judges.
2 Nos. 12-3624 & 13-3052

TINDER, Circuit Judge. The villages of Sauget and Cahokia, Illinois, located along the east bank of the Mississippi 

River just south of East St. Louis, are home to a three-and-a 

half-mile storm water conveyance channel known as Dead 

Creek. The name is morbid, but fitting. For more than a century, the area has been dominated by industrial activity, and 

for much of that time, Dead Creek was the recipient of a 

broad array of waste materials, including polychlorinated 

biphenyls (“PCBs”). Because of its extensive contamination, 

the creek became the center of a cleanup site designated by 

the U.S. Environmental Protection Agency (“EPA”) as Sauget Area 1. In 1999, the government sued several potentially 

responsible parties (“PRPs”) regarding the cleanup of Sauget 

Area 1, and many of those PRPs brought contribution claims 

against one another. One PRP, Rogers Cartage Company, 

settled with the other PRPs, but later it sought contribution 

from them again via a third-party complaint in a separate 

action. After that third-party complaint was severed and 

transferred back to the EPA action, the district court dismissed it and imposed sanctions against Rogers Cartage 

based on the settlement agreement. Rogers Cartage appeals 

those decisions, and we affirm.

I. BACKGROUND

In 1999, the United States filed a complaint under the 

Comprehensive Environmental Response, Compensation 

and Liability Act of 1980 (“CERCLA”), seeking to recover 

costs incurred by the EPA in removing hazardous substances from a site known as Sauget Area 1, which follows Dead 

Creek through the Villages of Sauget and Cahokia, Illinois, 

just south of East St. Louis. Monsanto Company and Solutia, 

Inc. were among the original defendants in the case. From 
Nos. 12-3624 & 13-3052 3

the early 1900s until 1997, Monsanto operated chemical 

plants in Sauget, Illinois, and St. Louis, Missouri. During 

that time, Monsanto disposed of chemical waste from those 

plants, including PCBs and other hazardous substances, at 

waste disposal sites within Sauget Area 1. In 1997, Monsanto 

spun-off its chemical business to Solutia, and Solutia agreed 

to indemnify Monsanto against any environmental claims 

relating to that business.

Monsanto and Solutia filed a third-party complaint 

bringing several new parties into the action, including Rogers Cartage Company, which formerly operated two trucking depots near (but not within) Sauget Area 1, one in the 

Village of Sauget and one in the Village of Cahokia. Monsanto and Solutia sought contribution from Rogers Cartage 

based on the allegation that Rogers Cartage washed its 

trucks at these two depots after hauling hazardous substances, releasing those substances into drainage systems that ultimately made their way into Dead Creek, thus contributing 

to the pollution of Sauget Area 1. The government subsequently amended its complaint to add Rogers Cartage as a 

defendant, and several other defendants brought crossclaims against Rogers Cartage based on the same theory.

In 2000, Monsanto merged with Pharmacia & Upjohn, 

Inc., creating the new entity Pharmacia Corporation. In 2001, 

Pharmacia was substituted for Monsanto as a party. 

In late 2003, the district court held a bench trial to resolve 

the government’s claims against Rogers Cartage. Ultimately, 

the court found that the government had not established by 

a preponderance of the evidence that the discharges from 

Rogers Cartage’s trucking depots ever made their way into 
4 Nos. 12-3624 & 13-3052

Dead Creek. Therefore, the court ruled in favor of Rogers 

Cartage.

After the bench trial, Rogers Cartage moved to dismiss 

the contribution claims brought against it by Pharmacia, Solutia, and other defendants. The district court granted that 

motion, reasoning that those claims failed as a matter of law 

because Rogers Cartage had been found not liable on the 

claim brought by the government under CERCLA § 107, 42 

U.S.C. § 9607. At that point, all claims by or against Rogers 

Cartage were dismissed with prejudice.

In June 2007, the Supreme Court decided United States v. 

Atlantic Research Corp., 551 U.S. 128 (2007), marking a change 

in the law and establishing that potentially responsible parties that incur voluntary cleanup costs may seek contribution 

from other potentially responsible parties under CERCLA 

§ 107. In light of this decision, Pharmacia and Solutia sought 

leave to file an amended cross-claim against Rogers Cartage, 

arguing that their contribution claims were no longer derivative of the government’s claims against Rogers Cartage. The 

district court granted the motion, and an amended crossclaim was filed bringing Rogers Cartage back into the case. 

Subsequently, two other defendants, Cerro Copper Products 

Co. (now Cerro Flow Products, Inc.) and Exxon Mobil Oil 

Corporation, were also permitted to file amended crossclaims against Rogers Cartage based on Atlantic Research.

Rogers Cartage subsequently filed counterclaims against 

Pharmacia, Solutia, Cerro, and Exxon Mobil, seeking contribution from those companies based on their releases of hazardous substances in Sauget Area 1. In the counterclaim 

against Pharmacia and Solutia, Rogers Cartage alleged that 

Monsanto Company had arranged for the transport and dis-
Nos. 12-3624 & 13-3052 5

posal of hazardous substances by Rogers Cartage without 

informing Rogers Cartage of the nature of the substances involved.

In February 2011, Pharmacia, Solutia, Cerro, and Exxon 

Mobil settled their claims against Rogers Cartage for 

$7,500,000. However, the settlement agreement provided 

that Rogers Cartage would be required to pay only $50,000 

of that amount itself, so long as it cooperated in the effort to 

recover the difference from its insurance carrier, Travelers. 

The agreement also provided that Pharmacia, Solutia, Cerro, 

and Exxon Mobil would fund any coverage dispute with 

Travelers.

The settlement agreement further provided for the release of all claims between the parties “pertaining to the 

Sauget Area 1 and 2 Sites,” including any claims “brought or 

alleged, or which could have been brought or alleged” in the 

EPA action. The agreement defined the “Sauget Area 1 Sites” 

to include “the geographic area so named and identified by 

the United States Environmental Protection Agency (‘U.S. 

EPA’),” and “any portion of any property constituting a 

drainage pathway, to the extent it is contaminated by such 

drainage, to or from Dead Creek.” The agreement also contemplated that cleanup of Rogers Cartage’s Cahokia depot 

would be paid for out of the settlement proceeds. Specifically, it provided that a portion of any insurance recovery 

above $3 million would be placed in a trust account which 

Rogers Cartage could use to pay for, inter alia, “any claims 

against Rogers regarding contamination at the Cahokia facility alleged to have been operated by Rogers.”

Rogers Cartage leased the land where its Cahokia depot 

was located from ConocoPhillips Pipe Line Company, which 
6 Nos. 12-3624 & 13-3052

is now Phillips 66 Pipeline LLC. In June 2011, Phillips 66 

(then ConocoPhillips) filed a separate action against Rogers 

Cartage, seeking contribution for the costs it incurred in voluntarily cleaning up its Cahokia property. In May 2012, 

Rogers Cartage filed a third-party complaint against Pharmacia, Solutia, and an entity it called “Old Monsanto,” apparently referring to the former Monsanto Company that no 

longer exists. In its third-party complaint, Rogers Cartage 

again alleged that Monsanto arranged for the disposal of 

hazardous substances at the Cahokia property.

Monsanto, Solutia, and Pharmacia (collectively, “MS&P”) 

moved to dismiss Rogers Cartage’s third-party complaint in 

the Phillips action on the grounds that it was barred by the 

settlement agreement in the EPA action and otherwise failed 

to state a claim upon which relief could be granted. In the 

alternative, MS&P moved to sever the third-party complaint 

and transfer it to the EPA action so that it could be considered by the judge who had previously approved the settlement agreement. The motion was granted to the extent that 

it requested severance and transfer, and the EPA action was 

reopened for that purpose.

In the EPA action, MS&P moved to enforce the settlement agreement and dismiss Rogers Cartage’s recently 

transferred third-party complaint. At a hearing on October 

15, 2012, the district court orally granted that motion, finding 

that the settlement agreement unambiguously encompassed 

claims for cleanup of the Cahokia property. At the end of the 

hearing, the court asked MS&P’s counsel to quickly move for 

attorney’s fees if he intended to do so.

On October 19, 2012, Solutia moved for sanctions against 

Rogers Cartage, its attorney (Robert Schultz), and Travelers 
Nos. 12-3624 & 13-3052 7

under 28 U.S.C. § 1927, Federal Rule of Civil Procedure 11, 

and the court’s inherent power, seeking $200,000 in attorney’s fees. Among other things, Solutia argued that Rogers 

Cartage’s third-party complaint was frivolous because it was 

plainly barred by the settlement agreement.

On November 14, 2012, the district court granted Solutia’s motion for sanctions, reasoning simply that Rogers 

Cartage “filed a complaint in the face of an unambiguous 

settlement agreement.” The court ordered Rogers Cartage to 

pay Solutia $200,000 in fees, but it did not impose any sanctions on Mr. Schultz or Travelers. In doing so, the court purported to rely on all three of the bases suggested by Solutia: 

§ 1927, Rule 11, and the court’s inherent power.

Rogers Cartage has filed two notices of appeal. The first 

appeal must be dismissed as premature,1 but the second presents all issues for resolution. In the second notice of appeal, 

Rogers Cartage challenges both the district court’s dismissal 

of its third-party complaint and the district court’s sanctions 

order.

 1 We have jurisdiction over “appeals from all final decisions of the district

courts of the United States.” 28 U.S.C. § 1291. A final decision is “‘one which 

ends the litigation on the merits and leaves nothing for the court to do but 

execute the judgment.’” Riley v. Kennedy, 553 U.S. 406, 419 (2008) (quoting 

Catlin v. United States, 324 U.S. 229, 233 (1945)). In this case, Rogers Cartage’s 

first notice of appeal was filed after the district court orally granted MS&P’s 

motion to dismiss, but before the court ruled on Solutia’s motion for sanctions. Moreover, the court had indicated that a written order on the motion 

to dismiss would follow. Thus, at the time Rogers filed its first notice of 

appeal, the litigation was ongoing, and the district court had more work to 

do than simply executing the judgment. Because the first appeal was filed 

prior to a final decision on the merits, we conclude that it must be dismissed 

for lack of jurisdiction. 
8 Nos. 12-3624 & 13-3052

II. DISMISSAL

MS&P moved to dismiss Rogers Cartage’s third-party 

complaint under Federal Rule of Civil Procedure 12(b)(6), 

arguing that it was barred by the settlement agreement. On 

appeal, Rogers Cartage first argues that the district court 

committed procedural error in granting the motion because 

it was based on an affirmative defense and relied on facts 

not alleged in the third-party complaint, namely, the content 

of the settlement agreement. Rogers contends that the district court should have converted the motion into a motion 

for summary judgment and given Rogers an opportunity to 

present evidence in response.

Although MS&P moved for dismissal under Rule 

12(b)(6), the problem it identified with the third-party complaint was not that Rogers failed to state a claim; “the problem [was] that [Rogers] signed a release waiving the right to 

make a claim.” Yassan v. J.P. Morgan Chase & Co., 708 F.3d 

963, 975 (7th Cir. 2013). Because the release of a claim is an 

affirmative defense, MS&P should have raised it and then 

moved for judgment on the pleadings under Rule 12(c). See 

Carr v. Tillery, 591 F.3d 909, 913 (7th Cir. 2010). “Though district courts have granted Rule 12(b)(6) motions on the basis 

of affirmative defenses and this court has affirmed those 

dismissals, we have repeatedly cautioned that the proper 

heading for such motions is Rule 12(c), since an affirmative 

defense is external to the complaint.” Brownmark Films, LLC 

v. Comedy Partners, 682 F.3d 687, 690 n.1 (7th Cir. 2012). 

However, we have found such procedural missteps harmless 

when all the facts necessary to rule on the affirmative defense are properly before the court on the motion to dismiss. 
Nos. 12-3624 & 13-3052 9

See Yassan, 708 F.3d at 975; Brownmark Films, 682 F.3d at 690; 

Carr, 591 F.3d at 913.

Rogers Cartage argues that the settlement agreement 

should not have been considered by the district court without converting MS&P’s motion into a motion for summary 

judgment and giving Rogers notice and an opportunity to 

present evidence in response to the motion. In general, if 

“matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for 

summary judgment under Rule 56. All parties must be given 

a reasonable opportunity to present all the material that is 

pertinent to the motion.” Fed. R. Civ. P. 12(d). However, 

“the failure to afford such procedure will not necessarily 

mandate reversal unless ‘the record discloses the existence of 

unresolved material fact issues,’ or ‘the parties represent that 

they would have submitted specific controverted material 

factual issues to the trial court if they had been given the opportunity.’” Woods v. City of Chicago, 234 F.3d 979, 991 (7th 

Cir. 2000) (quoting Milwaukee Typographical Union No. 23 v. 

Newspapers, Inc., 639 F.2d 386, 391 (7th Cir. 1981)). 

Here, the language of the settlement agreement and Rogers Cartage’s third-party complaint is undisputed, and Rogers has not identified any evidence (other than that which it 

actually presented at the hearing on the motion to dismiss) 

that would have had any bearing on the motion. Indeed, as 

discussed below, the settlement agreement is unambiguous 

and therefore no external evidence was necessary to determine whether it barred Rogers Cartage’s third-party complaint. As a result, we find no reversible procedural error in 

the district court’s dismissal of that complaint.
10 Nos. 12-3624 & 13-3052

Turning to the substantive issues relating to that dismissal, we first note that “[w]e review an order enforcing a settlement only for an abuse of discretion.” Newkirk v. Vill. of 

Steger, 536 F.3d 771, 773 (7th Cir. 2008). “A settlement 

agreement is a particular kind of contract, and so contract 

law (here, the law of Illinois) governs.” Id. at 774. Rogers 

Cartage argues that the settlement agreement was intended 

to cover only the cleanup of Sauget Area 1 and Sauget Area 

2, relying on the fact that the release provisions do not mention the Cahokia facility. However, “[a] contract must be 

construed as a whole, viewing each provision in light of the 

other provisions.” Thompson v. Gordon, 948 N.E.2d 39, 47 (Ill. 

2011). Here, the settlement agreement provided for the release of all claims between the parties “pertaining to the 

Sauget Area 1 and 2 Sites,” and it defined the “Sauget Area 1 

Sites” to include “any portion of any property constituting a 

drainage pathway, to the extent it is contaminated by such 

drainage, to or from Dead Creek.”

Rogers Cartage maintains that its Cahokia depot was not 

a drainage pathway to Dead Creek, and it argues that in order to determine otherwise, the district court would have 

had to consider evidence that cannot be considered on a motion to dismiss. This argument misses the point. The theory 

of liability underlying MS&P’s contribution claims against 

Rogers Cartage in the EPA action was that contaminants released at Rogers Cartage’s two trucking depots drained into 

Dead Creek and therefore contributed to the contamination 

in Sauget Area 1. Whether that theory is true is irrelevant. 

The parties settled any claims they may have had against 

each other, assuming that it was true. Therefore, under the 

settlement agreement, Rogers Cartage’s Cahokia depot is 
Nos. 12-3624 & 13-3052 11

considered a drainage pathway to Dead Creek, and it is included in the definition of the “Sauget Area 1 Sites.”

Moreover, the agreement provided that a portion of any 

insurance recovery above $3 million would be placed in a 

trust account which Rogers Cartage could use to pay for, inter alia, “any claims against Rogers regarding contamination 

at the Cahokia facility alleged to have been operated by 

Rogers.” This provision would have little import if Rogers 

could still sue MS&P for the cleanup of its Cahokia depot, 

and contracts should not be construed “in a manner that 

would nullify or render provisions meaningless.” Thompson, 

948 N.E.2d at 47.

Rogers Cartage contends that releases are to be construed 

narrowly under Illinois law, but rules of construction come 

into play only when a contract is ambiguous. Maddux v. 

Blagojevich, 911 N.E.2d 979, 988 (Ill. 2009). Rogers also relies 

on deposition testimony from MS&P’s lawyer suggesting 

that the settlement agreement was not intended to encompass the cleanup of the Cahokia facility. However, a court 

can consider extrinsic evidence to determine the parties’ intent only when a contract is ambiguous. See Thompson, 948 

N.E.2d at 47. “If the words in the contract are clear and unambiguous, they must be given their plain, ordinary and 

popular meaning.” Id. That is precisely what the district 

court did in enforcing the settlement agreement. Therefore, 

we affirm the dismissal of Rogers Cartage’s third-party 

complaint.

III. SANCTIONS

The district court granted Solutia’s motion for sanctions 

and ordered Rogers Cartage to pay $200,000 in attorney’s 
12 Nos. 12-3624 & 13-3052

fees based on its finding that Rogers “filed a complaint in the 

face of an unambiguous settlement agreement.” In doing so, 

the court purported to rely on all three of the bases suggested by Solutia: 28 U.S.C. § 1927, Federal Rule of Civil Procedure 11, and the court’s inherent power. Under any of these 

authorities, we review the district court’s sanctions order for 

abuse of discretion. Lightspeed Media Corp. v. Smith, 761 F.3d 

699, 708 (7th Cir. 2014) (§ 1927); Tucker v. Williams, 682 F.3d 

654, 661 (7th Cir. 2012) (inherent power); Golden v. Helen 

Sigman & Assocs., Ltd., 611 F.3d 356, 363 (7th Cir. 2010) (Rule 

11).

To the extent the court relied on § 1927 in imposing sanctions against Rogers Cartage, it abused its discretion. That 

statute provides as follows:

Any attorney or other person admitted to conduct cases in any court of the United States or 

any Territory thereof who so multiplies the 

proceedings in any case unreasonably and 

vexatiously may be required by the court to 

satisfy personally the excess costs, expenses, 

and attorneys’ fees reasonably incurred because of such conduct.

28 U.S.C. § 1927. Under the statute, sanctions may be levied 

against an attorney who files a claim that is “without a plausible legal or factual basis and lacking in justification.” Lightspeed, 761 F.3d at 708 (quoting Walter v. Fiorenzo, 840 F.2d 

427, 433 (7th Cir. 1988)) (internal quotation mark omitted).

But as MS&P concedes, § 1927 cannot be used to impose 

sanctions against a party.
Nos. 12-3624 & 13-3052 13

MS&P argues that we should remedy the district court’s 

mistake by finding “that the sanction applies to both Rogers 

and its counsel, and that the division of payment should be 

left to them.” However, the district court’s order is not susceptible to such an interpretation. See Memorandum and 

Order at 3, United States v. Rogers Cartage, No. 3:99-cv-63-

GPM (S.D. Ill. Aug. 21, 2013), ECF No. 907 (“Rogers Cartage 

is ORDERED to pay attorney fees and costs to Solutia, Inc. 

in the amount of $200,000.”). Therefore, we cannot affirm the 

district court’s sanctions order based on § 1927.

The district court also abused its discretion to the extent 

it relied on its inherent power in sanctioning Rogers Cartage. 

It is true that “the inherent power of a court can be invoked 

even if procedural rules exist which sanction the same conduct.” Chambers v. NASCO, Inc., 501 U.S. 32, 49 (1991). But 

“when there is bad-faith conduct in the course of litigation 

that could be adequately sanctioned under the Rules, the 

court ordinarily should rely on the Rules rather than the inherent power.” Id. at 50. And when the court chooses to exercise its inherent power, it should explain “why Rule 11 

was inadequate to serve [its] purposes.” Corley v. Rosewood 

Care Ctr., Inc., 142 F.3d 1041, 1059 (7th Cir. 1998). In this case, 

the district court did not explain why exercising the inherent 

power was necessary. Indeed, it purported to rely on both 

§ 1927 and Rule 11 in addition to the inherent power. And as 

we will explain, Rule 11 was adequate for the court’s purposes. Therefore, we cannot affirm the court’s sanctions order based on the inherent power.

The filing of a complaint that is precluded by an unambiguous settlement agreement is conduct that fits squarely 

within the ambit of Rule 11. Rule 11(b) prohibits the filing of 
14 Nos. 12-3624 & 13-3052

frivolous claims, and when a frivolous claim is made, Rule 

11(c)(1) gives the court discretion to “impose an appropriate 

sanction on any attorney, law firm, or party that violated the 

rule or is responsible for the violation.” As discussed above, 

we agree with the district court that the settlement agreement unambiguously barred Rogers Cartage’s third-party 

claims against MS&P. Therefore, we find no abuse of discretion in the court’s conclusion that sanctions were appropriate under Rule 11, and we may affirm the court’s sanctions 

order on that basis.

Rogers Cartage argues that MS&P failed to abide by Rule 

11’s procedural safeguards, and therefore the court erred in 

imposing sanctions pursuant to that rule. A motion for sanctions under Rule 11 “must be served under Rule 5, but it 

must not be filed or be presented to the court if the challenged paper, claim, defense, contention, or denial is withdrawn or appropriately corrected within 21 days after service or within another time the court sets.” Fed. R. Civ. P. 

11(c)(2). However, we have suggested that strict compliance 

with this so-called “safe harbor” provision may be excused 

where there was substantial compliance, where it was impossible to comply, or where the party against whom sanctions are sought waived compliance. See Methode Elecs., Inc. 

v. Adam Techs., Inc., 371 F.3d 923, 927 (7th Cir. 2004). 

We conclude that MS&P substantially complied with 

Rule 11’s safe-harbor provision in this case. MS&P’s motion 

to dismiss not only contained arguments that Rogers Cartage’s third-party complaint was frivolous, it also included a 

request for attorney’s fees. The only plausible basis for an 

award of attorney’s fees would have been sanctions under 

one of the authorities discussed above. As a result, Rogers 
Nos. 12-3624 & 13-3052 15

Cartage was on notice that MS&P was requesting sanctions 

in the form of attorney’s fees, and it had more than a month 

to withdraw its third-party complaint before the district 

court ruled on MS&P’s motion to dismiss. In sum, the district court did not commit reversible error in imposing sanctions under Rule 11.

IV. CONCLUSION

The appeal in Case Number 12-3624 is DISMISSED as 

premature. As to Case Number 13-3052, the district court’s 

dismissal of Rogers Cartage’s third-party complaint and its 

order of sanctions against Rogers Cartage are AFFIRMED.