2000 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

9-20-2000

Black Horse Lane v. Dow Chem Corp

Precedential or Non-Precedential:

Docket 0-5031

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Recommended Citation

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http://digitalcommons.law.villanova.edu/thirdcircuit_2000/202
 Filed September 20, 2000 

 

 UNITED STATES COURT OF APPEALS 

 FOR THE THIRD CIRCUIT 

 

 No. 00-5031 

 

 BLACK HORSE LANE ASSOC., L.P., a New Jersey limited 

 partnership; UNITED STATES LAND RESOURCES, L.P., a 

 New Jersey limited partnership; UNITED STATES REALTY 

 RESOURCES, INC., a New Jersey Corporation; and 

 LAWRENCE S. BERGER 

 

 v. 

 

 DOW CHEMICAL CORPORATION; ESSEX CHEMICAL 

 CORPORATION, a wholly owned subsidiary of DOW 

 CHEMICAL CORPORATION, a Michigan Corporation 

 

 Black Horse Lane Associates, L.P., United States Land 

 Resources, L.P., United States Realty Resources, Inc. and 

 Lawrence S. Berger, 

 

 Appellants 

 

 On Appeal from the United States District Court 

 for the District of New Jersey 

 (D.C. Civ. No. 97-1250) 

 District Judge: Honorable Nicholas H. Politan 

 

 Argued August 8, 2000 

 

 BEFORE: BARRY, WEIS and GREENBERG, Circuit Jud ges 

 

 (Filed: September 20, 2000) 

 

 

 

 

 

 Paul H. Schafhauser (argued) 

 Berger & Bornstein 

 237 South Street 

 P.O. Box 2049 

 Morristown, N.J. 07960-2049 

 

 Attorneys for Appellants 

 

 Kenneth H. Mack (argued) 

 Linda Mack 

 Fox, Rothschild, O'Brien & Frankel 

 997 Lenox Drive 

 Princeton Pike Corporate Center, 

 Building 3 
 Lawrenceville, N.J. 08648 

 

 Attorneys for Appellees 

 

 OPINION OF THE COURT 

 

 GREENBERG, Circuit Judge. 

 

 I. INTRODUCTION 

 

 This matter comes before this court on an appeal by 

 plaintiffs United States Land Resources, L.P. ("USLR"), 

 United States Realty Resources, Inc. ("USRR"), Black Horse 

 Lane Associates, L.P. ("Black Horse"), and Lawrence S. 

 Berger ("Berger") (collectively "appellants") from two orders 

 entered by the district court in this matter: (1) the order 

 entered August 10, 1999, granting a motion by appellees 

 Dow Chemical Corporation ("Dow") and Essex Chemical 

 Corporation ("Essex") for summary judgment pursuant to 

 Fed. R. Civ. P. 56, and denying appellants' cross-motion for 

 summary judgment on appellees' counterclaim; and (2) the 

 "Final Order" entered December 16, 1999, affirming the 

 June 30, 1999 order of the magistrate judge imposing 

 sanctions against appellants, and dismissing appellees' 

 counterclaim without prejudice for lack of subject matter 

 jurisdiction. This litigation arises out of a sale of 

 environmentally distressed real property located at 120 

 Black Horse Lane, South Brunswick, New Jersey 

 (hereinafter "the Property"), by Essex to USLR. 

 

 2 

 

 

 

 For the reasons that follow, we will affirm the August 10, 

 1999 and December 16, 1999 orders of the district court in 

 all respects. 

 

 II. FACTS and PROCEEDINGS 

 

 A. Factual Background 

 

 The historical facts in this case are rather straightforward 

 and, insofar as material to this appeal, essentially are not 

 disputed. Appellants, USLR, USRR, Black Horse, and 

 Berger, are related entities: USLR is the general partner in 

 Black Horse, USRR is the general partner of USLR, and 

 Berger is the president of USRR.1 Appellees Essex and Dow 

 also are related entities as Essex is Dow's wholly-owned 

 subsidiary by virtue of its purchase of all of Essex's stock 

 in 1988. 

 

 During the 1980s, Essex owned and operated the 

 Property, where it engaged in the business of preparing 
 adhesive-backed paper products. On or about August 17, 

 1984, Essex discovered that chemicals it used in that 

 process had leaked into the ground of the Property. In 

 October 1984, Essex entered into environmental cleanup 

 and decommission negotiations with the New Jersey 

 Department of Environmental Protection ("DEP"). Essex 

 submitted a "Clean-Up Plan" to the DEP on December 19, 

 1985, which the DEP conditionally approved on December 

 20, 1985. 

 

 Prior to Essex's submission of the Clean-Up Plan to the 

 DEP, it entered into a sales agreement ("the Agreement") on 

 September 5, 1985, with USLR to sell the Property to USLR 

 for $3.6 million. The parties do not dispute that appellants 

 were aware of the Property's environmental problems at the 

 time that USLR and Essex entered into the Agreement. The 

 Agreement required Essex to obtain and implement an 

 approved Clean-Up Plan at its sole expense. Paragraph 16 

 of the Agreement set forth Essex's responsibilities with 

 _________________________________________________________________ 

 

 1. Also, Berger is a named partner in the lawfirm representing 

 appellants. 

 

 3 

 

 

 

 respect to the remediation and detoxification of the 

 Property: 

 

 The parties acknowledge that the Subject Premises to 

 be conveyed are subject to the provisions of the 

 Environmental Clean-Up Responsibility Act, N.J.S.A. 

 13:1K-6 et seq. (`ECRA') [now named the Industrial Site 

 Recovery Act (`ISRA')]. Seller agrees to obtain approval 

 of a Clean-Up Plan from the Department of 

 Environmental Protection (`DEP'), post the necessary 

 financial security for performance pursuant to ECRA, 

 will implement the approved Clean-Up Plan and 

 complete the detoxification of the Subject Premises in 

 accordance with and to the approval of the DEP. 

 Pending DEP approval of a Clean-Up Plan, Seller will 

 attempt to obtain the consent of the DEP to the 

 conveyance of the Subject Premises. `ECRA Approval' 

 will be deemed to have taken place upon the receipt by 

 Seller from the DEP of the approval of the 

 implementation of the Clean-Up Plan and satisfactory 

 detoxification of the Subject Premises or a consent 

 from the DEP to convey the Subject Premises to 

 Purchaser in the form of an Administrative Consent 

 Order and bond securing the detoxification of the 

 Subject Premises by Seller, all in a form and substance 

 satisfactory to Purchaser's mortgage lender. In no event 
 shall Purchaser be obligated under this Contract to 

 assume any ECRA Clean-Up responsibilities. If ECRA 

 Approval is not obtained prior to January 1, 1986, 

 Purchaser shall have the continuing right to terminate 

 this Contract by giving Seller notice at any time up to 

 January 20, 1986. If ECRA Approval is not obtained by 

 June 1, 1986, this Contract shall be automatically 

 terminated and after the refund of the Deposit to 

 Purchaser, neither party shall have any rights or 

 claims against the other arising out of this Contract. 

 

 App. at 93a-94a. Title to the Property closed on December 

 23, 1985, three days after the DEP conditionally approved 

 the Clean-Up Plan, and on that day USLR assigned its 

 rights in the Property to its present owner, appellant Black 

 Horse. 

 

 4 

 

 

 

 As previously mentioned, at some point in 1988, appellee 

 Dow purchased all of Essex's stock, and Essex became a 

 wholly-owned subsidiary of Dow. Since that time, Dow 

 employees have been involved in the remediation and 

 detoxification of the Property, but these Dow employees 

 have been acting as "consultants" to Essex in that 

 connection. SA at 546, 549. 

 

 Essex began its soil remediation efforts shortly after it 

 sold the Property in 1985. While we are not able to 

 ascertain the exact date of completion from the record, 

 appellants' counsel confirmed at oral argument that soil 

 remediation was finished within two years of the sale of the 

 Property. See generally app. at 235a; SA at 536; appellees' 

 br. at 17. Essex commenced groundwater remediation in 

 1988, app. at 236a, but, to date, it has not completed that 

 remediation. It is Essex's alleged failure to complete 

 remediation and detoxification of the Property within a 

 "reasonable time" that forms the crux of the parties' dispute 

 in this case. 

 

 One specific example that appellants cite as proof of 

 Essex's alleged failure to remediate the Property within a 

 reasonable time pertains to Essex's cleanup efforts with 

 respect to certain "chlorinated volatile organic compounds" 

 ("CVOCs") found in the soil and groundwater in certain 

 areas of the Property.2 In 1991, the DEP ordered Essex to 

 perform a "temporary well point survey" to investigate the 

 presence and source of CVOCs found in the groundwater 

 and soil gas. See app. at 304a. After Essex conducted 

 extensive investigations into the source and levels of 

 CVOCs found in the soil gas and groundwater, Essex 

 proposed to remediate the areas of the Property 
 contaminated with CVOCs by means of soil vapor 

 _________________________________________________________________ 

 

 2. "CVOCs" is a shorthand reference to those volatile organic compounds 

 that Essex used to clean the plant's adhesive-backed paper rolls. 

 The CVOCs found on the northeastern and eastern portions of 

 the Property include tetrachloroethylene, trichloroethylene, trans-1,2- 

 dichloroethylene, and vinyl chloride. App. at 237a. Essex discovered 

 trace amounts of CVOCs on the eastern and northeast corners of the 

 Property in 1985, but the concentrations were so low that at that time 

 DEP did not require Essex to address them. See appellees' br. at 19; 

 App. at 200a, 237a; SA at 553. 

 

 5 

 

 

 

 extraction ("SVE") technology, specifically, a "dual phase 

 extraction system." App. at 307a. In May 1992, DEP 

 approved this proposal. App. at 307a, 240a. 

 

 Notwithstanding DEP's approval of Essex's proposed 

 system, Essex did not begin to install and operate the 

 system immediately. Rather, from 1992 to 1997, Essex 

 continued to investigate the source of the various CVOCs 

 found on the Property, and conducted various tests at 

 DEP's request. See app. at 238a-40a. This additional 

 investigation required Essex to modify the SVE design, 

 which requirement might account for the delay in its 

 installation. App. at 240a. In any event, Essex completed 

 its installation of the dual-phase extraction system in 

 August 1997. We note, however, that Essex experienced 

 some "start up" difficulties at the outset of its operation of 

 the system. App. at 240a. Insofar as we can determine from 

 the record, Essex is continuing its remediation efforts in 

 connection with the CVOCs detected on the Property. 

 

 B. Procedural History 

 

 Appellants commenced this action in the district court in 

 1997, and filed an amended complaint shortly thereafter. 

 The amended complaint sets forth five causes of action 

 against appellees Essex and Dow:3 (1) a claim based on a 

 breach of Paragraph 16 of the sales contract as a result of 

 Essex's failure to complete its cleanup of the Property 

 within a "reasonable time", (count I);4 (2) a claim based on 

 a breach of the implied covenant of good faith and fair 

 dealing based on "defendants' " actions in connection with 

 their cleanup efforts, (count II); (3) a claim for damages 

 pursuant to section 107(a)(4)(B) of the Comprehensive 

 Environmental Response, Compensation, and Liability Act 

 ("CERCLA"), 42 U.S.C. S 9607(a)(4)(B), based on appellants' 

 alleged expenditure of "necessary costs of response," and 

 _________________________________________________________________ 
 

 3. Inasmuch as the amended complaint refers to Essex and Dow 

 collectively as "defendants" and asserts allfive claims against each 

 entity, we refer to the defendants together as "appellees" unless 

 otherwise noted. 

 

 4. The count does not use the term "reasonable time" but appellants 

 contend that a reasonable time provision is implicit in the Agreement. 

 

 6 

 

 

 

 for declaratory and injunctive relief, (count III); (4) a claim 

 for contribution for the costs of "clean-up and removal" and 

 for injunctive and declaratory relief pursuant to the New 

 Jersey Spill Compensation and Control Act, N.J. Stat. Ann. 

 S 58:10-23.11 et seq. ("the Spill Act"), (count IV); and (5) a 

 claim for "damages" based on appellees' breach of the 

 Agreement "as well as the contamination with respect to the 

 subject Property for which defendants are responsible," 

 (count V). See app. at 67a. Appellees filed an answer to the 

 amended complaint and a counterclaim seeking declaratory 

 relief that remediation of the Property under Paragraph 16 

 of the Agreement included use of "engineering and 

 institutional controls" and an order requiring appellants to 

 consent to them. App. at 80a-81a. 

 

 The parties commenced discovery on November 7, 1997. 

 Appellants designated Berger as their Fed. R. Civ. P. 

 30(b)(6) witness to testify on behalf of USLR, USRR and 

 Black Horse. On October 2, 1998, appellees' counsel began 

 to depose Berger, but counsel was not able to obtain a date 

 to reconvene the deposition. As a result of counsels' 

 inability to agree on the date that Berger's deposition 

 should resume, appellees' counsel sought an order from the 

 magistrate judge overseeing discovery to set the date for the 

 resumption of the deposition. After a teleconference with 

 the parties on October 6, 1998, the magistrate judge signed 

 an order dated October, 9, 1998, which provided the 

 following: 

 

 IT IS on this 9th day of October, 1998, ORDERED, as 

 follows: 

 

 1. Lawrence S. Berger, as Plaintiffs' Fed. R. Civ. P. 

 30(b)(6) designated witness and fact witness, shall 

 appear for oral deposition commencing on Tuesday, 

 October 13, 1998, at 10:00 a.m. and continuing from 

 day to day thereafter until completed. 

 

 App. at 657a. 

 

 Notwithstanding the court's directive, when appellees' 
 counsel appeared at Berger's law office to continue his 

 deposition on October 13, 1998, Berger failed to appear and 

 his counsel, Paul Schafhauser, was "in trial" and not in the 

 

 7 

 

 

 

 office. SA at 60-61. At that point, appellees' counsel again 

 sought the court's intervention. 

 

 On October 15, 1998, the magistrate judge signed and 

 entered an order which directed that Berger's deposition 

 recommence on Monday, October 19, 1998, at 10:00 a.m. 

 App. at 660a. The order also provided that "[a]s a sanction 

 for failure by Lawrence Berger to appear for depositions on 

 Tuesday, October 13, Plaintiffs shall promptly pay the fees 

 and costs of counsel fees for defendants (a) for appearing at 

 Mr. Berger's non-deposition on October 13, and (b) for 

 bringing this application and appearance today." App. at 

 660a. While Berger appeared for his deposition at the 

 designated date and time, appellees claim that he provided 

 evasive and non-responsive answers to many of counsel's 

 questions relating to the negotiation and execution of the 

 Agreement, and appellants' damages allegations. See 

 generally app. at 540a-655a. 

 

 After the completion of discovery, the parties filed several 

 motions germane to this appeal. First, appelleesfiled a 

 motion for summary judgment pursuant to Fed. R. Civ. P. 

 56, seeking dismissal of the amended complaint in its 

 entirety. Appellants opposed the motion, and filed a cross- 

 motion for summary judgment on appellees' counterclaim 

 for declaratory relief. In addition, appellees filed a motion 

 before the magistrate judge for discovery sanctions 

 pursuant to Fed. R. Civ. P. 37(b), (d), seeking to preclude 

 appellants "from asserting, at trial, a position which differs 

 from the testimony of their Rule 30(b)(6) witness." App. at 

 20a. Appellees also sought reimbursement of the attorney's 

 fees and costs associated with Berger's deposition and their 

 filing of the second sanctions motion. 

 

 The magistrate judge granted appellees' request for 

 sanctions pursuant to Rule 37 by letter opinion and order 

 entered June 30, 1999. Relying on Rule 37(b) and (d), he 

 agreed that Berger's conduct warranted the sanction 

 appellees requested, namely that appellants would be 

 precluded from asserting a position and introducing 

 evidence contrary to the positions Berger asserted during 

 his deposition. The court also concluded that Berger's lack 

 of preparedness at his deposition warranted the imposition 

 of monetary sanctions pursuant to Rule 37(d) in the form of 

 

 8 
 

 

 

 costs and attorney's fees associated with taking the 

 deposition and bringing the sanctions motion before the 

 court. App. at 22a. Appellants filed an appeal from the 

 magistrate judge's order to the district court. 

 

 In the meantime, after hearing oral argument on the 

 cross-motions for summary judgment on June 28, 1999, 

 see app. at 806a-831a, the district court granted appellees' 

 motion on the amended complaint and denied appellants' 

 cross-motion on the counterclaim by letter opinion and 

 order entered August 10, 1999. Addressing appellees' 

 motion first, the district court determined that dismissal of 

 the amended complaint in its entirety was appropriate for 

 several reasons, each of which we will discuss in greater 

 detail in the discussion that follows.5 

 

 With respect to the breach of contract claim (count I), the 

 court held that Paragraph 16 of the Agreement did not 

 contain a provision requiring Essex to remediate the 

 Property in a "reasonable time," and, given the commercial 

 context in which the parties negotiated and executed the 

 Agreement and appellants' subsequent conduct, the court 

 should not imply that the contract had a reasonable time 

 provision. See app. at 10a. Alternatively, it stated that even 

 if it were to assume that there is an implicit "reasonable 

 time" provision in Paragraph 16 of the Agreement, 

 _________________________________________________________________ 

 

 5. Before engaging in a substantive analysis of appellants' claims 

against 

 Essex, the district court dismissed with prejudice all claims appellants 

 asserted against Dow, reasoning that 

 

 (1) plaintiffs' causes of action arise solely out of plaintiffs' 

 contractual relationship with defendant Essex; (2) Dow and Essex 

 are not related except to the extent that Dow acquired Essex's 

 stock; 

 (3) Essex is a responsible party and not insolvent; and (4) there 

 is 

 not even a scintilla of evidence that would justify piercing 

 Essex's 

 corporate veil. 

 

 App. at 7a n.1. Appellants assert that the district court erred in 

 dismissing outright the claims against Dow, claiming that there are 

 factual issues concerning whether it is a proper party in this suit. We 

 will affirm the court's dismissal of Dow without further discussion as 

 appellants' argument clearly is without merit. In any event, our 

 affirmance of the summary judgment for Essex means that Dow cannot 

 be liable to appellants. 

 
 9 

 

 

 

 appellants failed to adduce any evidence from which a 

 reasonable jury could conclude that 14 years, i.e., from 

 1985 to the date of the district court's decision, was an 

 unreasonably long time period to complete the type of 

 detoxification and remediation called for in the Clean-Up 

 Plan. App. at 11a. Turning next to appellants' claim based 

 on the alleged breach of the implied covenant of good faith 

 and fair dealing (count II), the court found that appellants 

 failed to produce sufficient evidence that Essex acted in bad 

 faith or engaged in misconduct that caused the delay in 

 completing the cleanup of the Property. App. at 13a. 

 

 Third, the court dismissed the CERCLA and Spill Act 

 claims for damages on the ground that appellants could not 

 demonstrate that they incurred any compensable costs 

 under either statute. The court pointed out that the only 

 costs that appellants allegedly incurred were the fees they 

 paid to their consultant, Enviro-Sciences, Inc. ("ESI"), but 

 that such fees were not compensable under either the 

 CERCLA or the Spill Act. App. at 15a. The court also denied 

 appellants' request for injunctive and declaratory relief 

 under CERCLA and the Spill Act, reasoning that 

 declaratory relief was inappropriate because "plaintiffs have 

 utterly failed to make any showing that they are likely to 

 incur any future costs that will be recoverable" under either 

 statute. It further found that injunctive relief was not 

 warranted in view of the circumstance that Essex"is 

 contractually and statutorily bound to detoxify the 

 Property," and there was no evidence that Essex had 

 breached the contract or violated CERCLA or the Spill Act. 

 App. at 15a-16a. Next, the court dismissed count V, stating 

 that "because plaintiffs have failed to adduce sufficient 

 evidence in support of their breach of contract claims, they 

 cannot recover the damages outlined in Count Five of the 

 Complaint." App. at 16a. 

 

 Finally, the district court addressed and denied 

 appellants' cross-motion for summary judgment on the 

 counterclaim, noting that appellants "cite no authority in 

 support of their motion," but "merely allege that `Plaintiffs 

 do not and need not consent to any [engineering and 

 institutional controls] with respect to the Property.' " 

 Ultimately the court found that "[o]n the present record, 

 

 10 

 

 

 

 this Court is unable to say that the plaintiffs are entitled, 

 as a matter of law, to a judgment dismissing defendants' 
 counterclaims."6 App. at 17a. The court's order stated that 

 appellants' amended complaint was dismissed with 

 prejudice. 

 

 After the district court ruled on the parties' dispositive 

 motions, on or about August 13, 1999, the district court 

 ordered the parties to file cross-motions with respect to 

 Essex's counterclaim. App. at 775a. On December 13, 

 1999, the district court heard oral argument on the cross- 

 motions, and also considered appellants' outstanding 

 appeal from the magistrate judge's sanctions order. Ruling 

 on the outstanding motions the district court (1) affirmed 

 the magistrate judge's sanctions order, and (2) dismissed 

 Essex's counterclaim against appellants without prejudice 

 for lack of subject matter jurisdiction because the 

 controversy set forth in the counterclaim was not ripe. See 

 app. at 832a-49a. The district court then memorialized its 

 record rulings in its "Final Order" entered December 16, 

 1999. App. at 23a. The monetary sanctions have been 

 quantified and we understand that appellants have paid 

 them. 

 

 Appellants filed a timely notice of appeal to this court 

 from the district court's orders of August 10, 1999, and 

 December 16, 1999. App. at 34a. The appellees do not 

 cross-appeal from the dismissal of their counterclaim. We 

 have jurisdiction pursuant to 28 U.S.C. S 1291.7 Of course, 

 the fact that the dismissal of the counterclaim was without 

 _________________________________________________________________ 

 

 6. The court also addressed and denied appellees' motion for sanctions 

 pursuant to Fed. R. Civ. P. 11. That aspect of the court's ruling is not 

 in issue in this appeal, and we need not address it any further. 

 

 7. The district court exercised subject matter jurisdiction pursuant to 

28 

 U.S.C. S 1331 inasmuch as count III of the amended complaint asserted 

 a claim pursuant to CERCLA. The district court exercised supplemental 

 jurisdiction over the remaining state law claims pursuant to 28 U.S.C. 

 S 1367. We exercise plenary review over the district court's dismissal 

of 

 appellants' amended complaint and the counterclaim, see Nelson v. 

 Upsala College, 51 F.3d 383, 385 (3d Cir. 1995), and review the court's 

 disposition of the sanctions issue pursuant to Rule 37 for an abuse of 

 discretion. See General Ins. Co. of Am. v. Eastern Consol. Utils. Inc., 

 126 

 F.3d 215, 219 (3d Cir. 1997). 

 

 11 

 

 

 

 prejudice does not in the circumstances here deprive us of 

 jurisdiction. See Presbytery of N.J. v. Florio , 40 F.3d 1454, 
 1461 (3d Cir. 1994); see also Erie County Retirees Ass'n v. 

 County of Erie, 220 F.3d 193, 202 (3d Cir. 2000). 

 

 III. DISCUSSION 

 

 As is evident from our recitation of the procedural history 

 leading to this appeal, appellants challenge several of the 

 district court's rulings made during the proceedings in this 

 matter. First, we will address the court's August 10, 1999 

 order dismissing the amended complaint. Then, we will 

 review the district court's December 16, 1999 order 

 dismissing appellees' counterclaim without prejudice, and 

 affirming the magistrate judge's sanctions order. 

 

 A. District Court's Dismissal of 

 the Amended Complaint 

 

 1. Breach of Contract Claim (Count I) 

 

 Appellants focus most of their attention on the district 

 court's dismissal of their breach of contract claim pleaded 

 in count I of the amended complaint. While recognizing that 

 under New Jersey law, courts generally find that there is a 

 "reasonable time" term implicit in contracts that do not set 

 forth any time limitation for performance, the district court 

 nevertheless held that "[i]n this case, the Court finds no 

 justification for implying a `reasonable time' for 

 performance because such a term is not `necessary to give 

 business efficacy to the contract as written.' " App. at 8a. 

 The court explained that "[a] main purpose of the 

 Agreement, and the only purpose of Paragraph 16, was to 

 require Essex to remediate the Property to the full 

 satisfaction of the DEP and thereby make the land freely 

 marketable." App. at 8a. The court found that"a 

 `reasonable time' limitation is not necessary because 

 Essex's performance under the contract--obtainingfinal 

 DEP approval--must be evaluated solely by reference to the 

 DEP." App. at 9a. Accordingly, the court stated that "such 

 a contract simply does not lend itself to a reasonable time 

 limitation." Id. 

 

 12 

 

 

 

 It also dismissed the breach of contract claim on the 

 alternative ground that appellants presented insufficient 

 evidence from which a reasonable jury could conclude that 

 Essex breached its obligation to perform remediation and 

 obtain DEP approval pursuant to the Clean-Up Plan within 

 a "reasonable time." On this point, the district court held as 

 follows: 

 

 Plaintiffs allege that Essex has breached its contractual 
 obligation to complete the detoxification and obtain 

 final DEP approval `within a reasonable time.' 

 Therefore, to prevail, plaintiffs must show that a 

 `reasonable time' has already expired. The Agreement 

 was executed in 1985. This Court cannot say that 

 fourteen years is unreasonable as a matter of law. In 

 the context of an ISRA clean-up, which plaintiff Berger 

 understood to be a `cumbersome' and `long' process, 

 plaintiffs must adduce evidence that a `reasonable time' 

 for completion of the clean-up is less then fourteen 

 years. . . . 

 

 Such evidence might be in the form of reprimands or 

 other statements from regulatory agencies like the 

 DEP. Plaintiffs might also carry their evidentiary 

 burden with expert testimony that, under the 

 circumstances of this site and comparing it to other 

 sites, fourteen years is an unreasonable length of time. 

 In this case, however, plaintiffs have simply failed to 

 adduce any evidence that fourteen years is 

 unreasonable. The only evidence that even remotely 

 addresses this issue is contained in plaintiffs' expert 

 report. . . . 

 

 Giving plaintiffs the best of Mr. Cohen's report, `the 

 environmental program undertaken on this site has 

 been slow and ineffective in treating the contaminants 

 that were release by Essex Chemical.' But evidence of 

 a slow and ineffective clean-up process, without more, 

 cannot reasonably support an inference that fourteen 

 years is unreasonable. 

 

 App. at 11a-12a. 

 

 Appellants contend that the court erred in dismissing 

 their breach of contract claim because, notwithstanding the 

 

 13 

 

 

 

 absence in Paragraph 16 of the Agreement of an explicit 

 date by which Essex was to complete its cleanup of the 

 Property and obtain DEP approval, by implication the 

 Agreement requires Essex to fulfill its contractual 

 obligations within a reasonable time. Appellants rely on the 

 well-established principle of New Jersey law, which is 

 applicable here on the contractual issues, that" `[w]here no 

 time is fixed for the performance of a contract, by 

 implication a reasonable time was intended.' " Br. at 41 

 (quoting, inter alia, Becker v. Sunrise at Elkridge, 543 A.2d 

 977, 983 (N.J. Super. Ct. App. Div. 1988)). They claim that 

 the district court erred in concluding that the nature of this 

 particular contract, and Essex's obligation with respect to 
 the remediation of the Property, rendered a "reasonable 

 time" limitation unreasonable in the circumstances. 

 Alternatively, they assert that at a minimum, there was a 

 genuine issue of material fact as to whether the parties 

 intended that Essex complete its remediation obligations 

 within a reasonable time, thus precluding summary 

 judgment in appellees' favor. Second, appellants contend 

 that contrary to the district court's finding, they presented 

 sufficient evidence from which a reasonable jury could 

 conclude that Essex failed to remediate the Property within 

 a "reasonable time." 

 

 Appellees respond that the district court correctly 

 dismissed the breach of contract claim because appellants 

 base their argument on the incorrect premise that 

 Paragraph 16 omits a contractual provision which in turn 

 requires the court to supply a "reasonable time" limitation. 

 Br. at 36. They claim that contrary to appellants' 

 construction of the contract, Paragraph 16 does contain a 

 definite term for completion of the Property's remediation 

 and therefore does not omit a contractual provision. In 

 appellees' view the contract unambiguously provides the 

 only term for completion that is reasonable in the 

 circumstances--namely, that Essex's obligation is satisfied 

 if the detoxification is undertaken "in accordance with and 

 to the approval of DEP." Br. at 35-36. They claim that the 

 district court correctly determined that it would be 

 unreasonable to find that the Agreement included an 

 implied reasonable time limitation, given the commercial 

 context of the sale and purchase. 

 

 14 

 

 

 

 Appellees further assert that, in any event, even if we 

 agreed with appellants that the district court should have 

 implied a "reasonable time" limitation on Essex's 

 remediation obligations pursuant to Paragraph 16, 

 summary judgment was appropriate because there is no 

 evidence that Essex breached its contractual obligations in 

 that connection. They claim that the district court correctly 

 determined that appellants failed to meet their burden of 

 producing evidence demonstrating that as of the date that 

 appellants filed their complaint in the district court, Essex 

 had failed to remediate and detoxify the Property in 

 accordance with the Clean-Up Plan, and obtain DEP 

 approval of its efforts, within a reasonable time. 

 

 Appellees' protestations notwithstanding, we reject the 

 district court's conclusion that a reasonable time provision 

 was not implicit in Paragraph 16 of the Agreement. After 

 all, New Jersey courts uniformly have applied the principle 

 that "where no time is fixed for the performance of a 
 contract, by implication a reasonable time was intended." 

 See Becker, 543 A.2d at 983 (contract for sale of real 

 property); see also, e.g., River Dev. Corp. v. Liberty Corp., 

 148 A.2d 721, 722 (N.J. 1959) (license to reclaim land must 

 be exercised within a reasonable time); Ridge Chevrolet- 

 Oldsmobile, Inc. v. Scarano, 569 A.2d 296, 300 (N.J. Super. 

 Ct. App. Div. 1990) (performance under real estate 

 contract); Mazzeo v. Kartman, 560 A.2d 733, 737 (N.J. 

 Super. Ct. App. Div. 1989) ("If the trial judge cannot 

 determine the parties' actual intent [concerning the 

 temporal limits of a right of first refusal], he should 

 determine a `reasonable time' for the expiration of the 

 right."); Ocean Cape Hotel Corp. v. Masefield Corp., 164 

 A.2d 607, 614 (N.J. Super. Ct. App. Div. 1960) (where 

 plaintiff claimed that defendant was obligated to make 

 certain repairs to property, if plaintiff 's claim had been 

 based on breach of contract, the court would have implied 

 a term that required completion of performance within a 

 reasonable time and would not have permitted parol 

 evidence that defendant promised repairs as of a certain 

 fixed date); McGraw v. Johnson, 126 A.2d 203, 206 (N.J. 

 Super. Ct. App. Div. 1956) (noting that performance under 

 contract must be completed within reasonable time where 

 claim was based on contractor's alleged failure to complete 

 

 15 

 

 

 

 building of home within a reasonable time); Curtis Elevator 

 Co. v. Hampshire House, Inc., 362 A.2d 73, 76 (N.J. Super. 

 Ct. Law Div. 1976) (performance under contract to install 

 elevators; where no specific date for completion was 

 provided in contract, court implied term requiring 

 completion within a reasonable time). 

 

 The district court predicated its analysis on statements in 

 New Jersey cases to the effect that terms are implied to 

 "give business efficacy to the contract as written." See app. 

 at 8a (citing McGarry v. Saint Anthony of Padua Roman 

 Catholic Church, 704 A.2d 1353, 1357 (N.J. Super. Ct. App. 

 Div. 1998)). But appellants argue persuasively that it would 

 be commercially unreasonable to construe the terms of 

 Paragraph 16 so as to permit Essex to begin its cleanup at 

 its leisure, and to continue its efforts in perpetuity without 

 the threat or even the slightest possibility of adverse legal 

 consequences flowing from inordinate delay. We also doubt 

 that the parties could have intended such a bizarre result. 

 See Onderdonk v. The Presbyterian Homes of N.J., 425 A.2d 

 1057, 1063 (N.J. 1981) ("Central to this inquiry of 

 ascertaining what, if any, terms are implied is the intent of 

 the parties. Intent may be determined by examination of 

 the contract and in particular the setting in which it was 

 executed."). 
 

 Nevertheless, notwithstanding our holding that a 

 "reasonable time" term is implicit is Paragraph 16 of the 

 Agreement, we agree with the district court's alternative 

 basis for dismissing appellants' breach of contract claim, 

 i.e., that a reasonable time period has not expired.8 We are 

 mindful that "[w]hat constitutes a reasonable time under 

 New Jersey law `is usually an implication of fact, and not of 

 law, derivable from the language used by the parties 

 considered in the context of the subject matter and the 

 _________________________________________________________________ 

 

 8. In view of our result appellees should understand that they do not 

 have forever to complete the remediation and detoxification. To the 

 contrary, they must diligently pursue their efforts to obtain the DEP 

 approval within a reasonable time. Of course, it is not our intention by 

 making this point to invite further litigation. We believe that if 

 appellees 

 are diligent in these efforts and keep appellants advised of the steps 

 they 

 are taking that the parties should be able to avoid additional judicial 

 proceedings. 

 

 16 

 

 

 

 attendant circumstances, in aid of the apparent intention.' " 

 Mazzeo, 560 A.2d at 737 (quoting Borough of West Caldwell 

 v. Borough of Caldwell, 138 A.2d 402, 412 (N.J. 1958)). 

 Nevertheless, appellants would bear the burden of proof on 

 this issue at trial, to show that a reasonable time has 

 expired, and to survive summary judgment, they must 

 adduce evidence from which a reasonable jury could 

 conclude that Essex breached its contractual obligation to 

 complete its remediation and detoxification efforts within a 

 reasonable time. Here, even viewing the facts in the light 

 most favorable to appellants, we agree with the district 

 court's assessment of the weakness of appellants' evidence 

 as well as the court's conclusion that appellants failed to 

 demonstrate that there was a genuine issue of material fact 

 on the issue of whether Essex had breached its obligation 

 to remediate the Property and obtain DEP approval within 

 a reasonable time. Simply put, the record does not support 

 the conclusion that appellants posit, i.e., that Essex 

 breached its contractual duties to complete the remediation 

 and detoxification efforts within a reasonable time. 

 

 For example, appellants first point to an Essex"Expense 

 Appropriation Request" which indicated that the 

 "completion date" of the entire project would be "1987."9 

 App. at 777a. But we do not share appellants' view that 

 this evidence can support a conclusion that Essex breached 

 Paragraph 16 of the Agreement. Obviously, the fact that 
 Essex estimated its completion date incorrectly does not 

 support the conclusion that it has failed to cleanup the 

 Property within a reasonable time. While a party's advance 

 estimate of the time to complete a project might be 

 persuasive evidence of the reasonable time for that 

 undertaking, it is not in the circumstances here in which 

 the scope of the project was so uncertain. 

 _________________________________________________________________ 

 

 9. According to the deposition testimony of Irwin Zonis, Essex's Chief 

 Environmental Officer who was involved in the remediation and 

 detoxification of the Property, the purpose of the Expense Appropriation 

 Request was to notify Essex's financial department of the amount of 

 funds deemed necessary for the completion of the project. He further 

 explained that the document "told the financial department that the 

 $320,000 would be expended by the end of 1987." App. at 189a. 

 

 17 

 

 

 

 Appellants also rely on the fact that in March 1986, 

 shortly after the DEP approved Essex's Clean-Up Plan, Dr. 

 Calvin J. Benning ("Benning"), Director of Environmental 

 Affairs for Essex, wrote to the DEP questioning whether 

 certain of the standards set forth in the Clean-Up Plan with 

 respect to the contemplated soil remediation and whether 

 the Clean-Up Plan's requirements were reasonable in the 

 circumstances. App. at 225a-26a. For convenience, we will 

 refer to this correspondence as Essex's "March 1986 letter." 

 Appellants claim that the March 1986 letter was Essex's 

 "attempt[ ] to circumvent the parameters and conditions" of 

 its Clean-Up Plan, and that it demonstrates that Essex 

 failed to proceed "reasonably and diligently" with the 

 Property's detoxification. Br. at 46. 

 

 We cannot agree. The March 1986 letter questions the 

 cleanup levels relating to the soil remediation which Essex 

 completed within two years of the sale of the Property. See 

 generally app. at 235a; appellees' br. at 17. Certainly if 

 Essex also had completed the groundwater remediation 

 within that period appellants would not have instituted 

 litigation alleging a breach of Paragraph 16. Thus, 

 inasmuch as appellants' breach of contract claim 

 essentially is predicated on Essex's failure to complete 

 groundwater remediation, we fail to see how this letter 

 supports appellants' argument. 

 

 Similarly, appellants cite the fact that Essex did not 

 begin groundwater remediation efforts until 1988 or 

 remediation of the CVOCs until 1997. See br. at 47-48. 

 However, appellants do not present evidence indicating that 

 the delays were avoidable, and in any event, were 

 unreasonable. Also they rely on the circumstance that 
 groundwater pumping "was frequently interrupted 

 throughout the years," br. at 47, and that the DEP gave 

 Essex a rating of "unacceptable due to `failure to operate the 

 groundwater remediation system in the capacity it was 

 designed.' " App. at 298a (emphasis added). But a review of 

 the evidence in the record confirms that the interruptions 

 Essex experienced are not a basis for holding that it 

 unreasonably delayed its performance under Paragraph 16. 

 To the contrary, intermittent delays are to be expected on 

 a remediation project which cannot be compared to an 

 

 18 

 

 

 

 ordinary construction project built in accordance with fixed 

 plans which is thus far less likely to encounter problems 

 than a remediation undertaking. Moreover, as appellees 

 correctly point out, the DEP's "unacceptable" rating did not 

 relate to the length of time that Essex had expended on the 

 remediation and detoxification of the Property. Rather, the 

 DEP comments related to the need for Essex to implement 

 a sufficient maintenance program so that it could manage 

 the problems it had been experiencing with the wells more 

 efficiently in the future. See app. at 298a. Thus, we cannot 

 view the DEP's comments as tantamount to a statement 

 that Essex was taking too long to finish the Property 

 cleanup. 

 

 As the district court correctly observed, app. at 11a-12a, 

 appellants' strongest evidence on this score is a statement 

 by their environmental consultant, Irving Cohen of ESI. 

 Cohen issued a report in which he opined that "the 

 environmental program undertaken on this site has been 

 slow and ineffective in treating the contaminants that were 

 released by Essex Chemical." App. at 418a. In our view, 

 however, this statement does not create a factual issue for 

 the jury on the issue of unreasonable delay. Importantly, 

 Cohen stops short of stating definitively that, given the 

 circumstances, Essex had taken too long to complete its 

 remediation and detoxification efforts. Moreover, even if he 

 had stated such a conclusion it would not have an 

 adequate foundation as he does not analyze specifically the 

 types of contaminants involved in this project and the 

 circumstances surrounding the remediation of this site. Nor 

 does he compare Essex's efforts to other sites plagued with 

 similar environmental contaminants. Given the vague 

 nature of Cohen's conclusion, we agree with the district 

 court's observation that "evidence of a slow and ineffective 

 cleanup process, without more, cannot reasonably support 

 an inference that fourteen years is unreasonable." App. at 

 12a. 

 

 When boiled down to its essence, appellants' argument is 
 that because the cleanup of the Property has taken longer 

 to finish than the parties originally anticipated, Essex has 

 breached Paragraph 16 of the Agreement as it has not 

 completed the cleanup within a "reasonable time." While it 

 

 19 

 

 

 

 may be unfortunate that it has taken Essex an extended 

 period of time to complete the cleanup of this Property, the 

 delay does not support a conclusion that the amount of 

 time it already has spent is unreasonable given the nature 

 of Essex's contractual obligation. By appellants' own 

 admission, the remediation and detoxification of the 

 Property is a large effort which, by its very nature, is a 

 lengthy and time-consuming process. Given the realities of 

 the situation, appellants simply have failed to point to any 

 evidence in this record demonstrating that the length of 

 time that Essex has taken to detoxify the Property and 

 obtain DEP approval is unreasonable in the circumstances. 

 Accordingly, we will affirm the district court's dismissal the 

 breach of contract claim. 

 

 2. Breach of the Implied Duty of Good Faith 

 and Fair Dealing (Count II) 

 

 The district court also dismissed appellants' claim based 

 on Essex's alleged breach of the implied duty of good faith 

 and fair dealing, reasoning: 

 

 In this case, plaintiffs allege only that Essex has failed 

 to complete the clean-up process and obtain final DEP 

 approval within a reasonable time. They point to no 

 acts or omissions done in bad faith. There is no 

 allegation, and certainly no evidence, that Essex has 

 committed any misconduct. Summary judgment is 

 therefore appropriate. 

 

 App. at 13a. Appellants claim that the district court erred 

 in granting summary judgment on this claim because it 

 ignored evidence from which a reasonable jury could 

 conclude that Essex breached the implied duty of good faith 

 and fair dealing during the course of its cleanup of the 

 Property. Appellants point to the following evidence in 

 support of their claim: (1) documents confirming that 

 appellees "attempted to renege upon the standards set forth 

 in the Clean-Up Plan"; (2) evidence showing that appellees 

 "inexplicably failed to even begin remediation for many 

 years after delineating contamination on the Property"; and 

 (3) DEP documents reprimanding Essex for " `violations' and 

 `unacceptable' progress." Br. at 49. 

 

 20 
 

 

 

 To be sure, "every contract in New Jersey contains an 

 implied covenant of good faith and fair dealing." Sons of 

 Thunder, Inc. v. Borden, Inc., 690 A.2d 575, 587 (N.J. 

 1997); see also Restatement (Second) of Contracts S 205 

 (1981) ("Every contract imposes upon each party a duty of 

 good faith and fair dealing in its performance and its 

 enforcement."). "The implied covenant is an independent 

 duty and may be breached even where there is no breach 

 of the contract's express terms." Emerson Radio Corp. v. 

 Orion Sales, Inc., 80 F. Supp.2d 307, 311 (D.N.J. 2000) 

 (citing, inter alia, Sons of Thunder, Inc., 690 A.2d at 575); 

 see also Bak-a-Lum Corp. v. Alcoa Bldg. Prods., Inc. , 351 

 A.2d 349, 352 (N.J. 1976). 

 

 The implied covenant of good faith and fair dealing 

 requires that "neither party shall do anything which will 

 have the effect of destroying or injuring the right of the 

 other party to receive the fruits of the contract." Sons of 

 Thunder, Inc., 690 A.2d at 587 (internal quotation marks 

 omitted); Palisades Properties, Inc. v. Brunetti , 207 A.2d 

 522, 531 (N.J. 1965). A party to a contract breaches the 

 covenant if it acts in bad faith or engages in some other 

 form of inequitable conduct in the performance of a 

 contractual obligation. See, e.g., Sons of Thunder, Inc., 690 

 A.2d at 589 (distinguishing prior decision in Karl's Sales & 

 Service, Inc. v Gimbel Bros. Inc., 592 A.2d 647 (N.J. Super. 

 Ct. App. Div. 1991), in which "there were no allegations of 

 bad faith or dishonesty on the part of the terminating 

 party" to the contract); Association Group Life, Inc. v. 

 Catholic War Veterans, 293 A.2d 382, 384 (N.J. 1972) 

 (stating that a contracting party breaches duty of good faith 

 and fair dealing by engaging in behavior that was"not 

 contemplated by the spirit of the contract and fell short of 

 fair dealing"); Emerson Radio Corp., 80 F. Supp.2d at 311 

 ("The Restatement and the [New Jersey] cases note a state 

 of mind or malice-like element to breach of good faith and 

 fair dealing, holding that the duty excludes activity that is 

 unfair, not decent or reasonable, nor dishonest."); Kapossy 

 v. McGraw-Hill, Inc., 921 F. Supp. 234, 248 (D.N.J. 1996) 

 (noting that courts "imply a covenant of good faith and fair 

 dealing in order to protect one party to a contract from the 

 other party's bad faith misconduct or collusion with third 

 parties where there is no breach of the express terms of the 

 

 21 

 

 

 

 contract"); see also Restatement (Second) of Contracts S 205 

 cmt. a (noting that "[t]he phrase `good faith' is used in a 

 variety of contexts, and its meaning varies somewhat with 
 the context" and explaining that "[g]ood faith performance 

 or enforcement of a contract emphasizes faithfulness to an 

 agreed common purpose and consistency with the justified 

 expectations of the other party; it excludes a variety of 

 types of conduct characterized as involving `bad faith' 

 because they violate community standards of decency, 

 fairness or reasonableness.").10 

 

 Section 205 of the Restatement (Second) of Contracts 

 provides examples of the types of behavior that can give 

 rise to a claim for breach of the implied duty of good faith 

 and fair dealing in the context of one's performance under 

 a contract: 

 

 Subterfuges and evasions violate the obligation of good 

 faith in performance even though the actor believes his 

 conduct to be justified. But the obligation goes further: 

 bad faith may be overt or may consist of inaction, and 

 fair dealing may require more than honesty. A complete 

 catalogue of types of bad faith is impossible, but the 

 following types are among those which have been 

 recognized in judicial decisions: evasion of the spirit of 

 the bargain, lack of diligence and slacking off , willful 

 rendering of imperfect performance, abuse of power to 

 specify terms, and interference with or failure to 

 cooperate in the other party's performance. 

 

 Id. S 205 cmt. d (emphasis added). 

 

 Appellants' basic contention is that the circumstances of 

 this case demonstrate that there is a genuine issue of 

 material fact concerning Essex's lack of good faith in its 

 _________________________________________________________________ 

 

 10. Quite coincidentally this very panel on the same day that it heard 

 argument in this case also heard argument in a case under Pennsylvania 

 law involving the implied duty of good faith and fair dealing. See 

 Northview Motors, Inc. v. Chrysler Motors Corp., No. 99-3873, 2000 WL 

 1273953, ___ F.3d. ___ (3d Cir. Sept. 8, 2000). Plainly, New Jersey law 

 imposes a broader obligation on a party to a contract than Pennsylvania 

 law to act in good faith in its performance. The parties, however, do 

not 

 dispute that New Jersey law applies in this case, and we will decide the 

 case on that basis. 

 

 22 

 

 

 

 performance of its obligation to remediate the Property and 

 obtain DEP in accordance with Paragraph 16 of the 

 Agreement. They claim that since the DEP approved the 

 Clean-Up Plan in 1985, Essex has not performed its 

 cleanup in a diligent manner, and in fact, has engaged in 
 bad faith conduct purposely to protract the process. 

 According to appellants, Essex's conduct has precluded 

 them from obtaining the fruits of their contract, i.e., a 

 property that is not environmentally distressed. 

 

 We cannot agree that the evidence in this case supports 

 the existence of a genuine issue of material fact on the 

 issue of Essex's good faith in its performance of its 

 obligation to remediate and detoxify the Property. In reality, 

 appellants' argument rests exclusively on their subjective 

 interpretation of the March 1986 letter in which Benning 

 set forth the following reservations as to whether certain 

 aspects of the Clean-Up Plan were reasonable in the 

 circumstances: 

 

 The clean-up plan calls for the excavation and disposal 

 of the contaminated soil to a level of 1 ppm, . . . based 

 on the requirements of the case manager at BISE. I 

 believe these levels are extremely low and not 

 warranted. . . . We fully intend to remove the 

 contaminated dirt from the former tank farm area. . . . 

 However to satisfy BISE we are required to perform 15 

 separate sample analyses in the laboratory instead of 

 using a portable field analyzer to determine the extent 

 of pollution and excavation, and to excavate to 1 ppm 

 residual total VOC in the soil. I believe these 

 requirements are both unreasonable and unwarranted. 

 The clean up plan had to be approved by the end of 

 1985 and time was not available to question the 

 requirement or to rationally discuss these points. 

 However, the IAG discussion [which Benning attended 

 on March 18, 1986] indicate [sic] that the[DEP] has 

 also been rethinking some of their procedures and 

 actions. I believe hexane and heptane are classified as 

 hydrocarbon and I believe that a higher level than 1 

 ppm is perfectly justified. 

 

 App. at 225a-26a. Appellants claim that this letter exhibits 

 Essex's lack of good faith and confirms that Essex 

 

 23 

 

 

 

 attempted to "renege upon the standards set forth in the 

 Cleanup Plan." Br. at 49; reply br. at 22-23. 

 

 While the letter questions whether the cleanup level of 1 

 ppm is warranted and whether lab analysis of soil samples 

 is necessary as opposed to Essex merely conductingfield 

 measurements of the soil, the letter does not demonstrate 

 a lack of good faith on Essex's part in performing its 

 obligations pursuant to Paragraph 16 of the Agreement. 

 First, as we previously mentioned, the letter discusses 
 Essex's obligations under the Clean-Up Plan relating to soil 

 remediation, but appellants do not dispute that Essex has 

 completed its soil remediation and detoxification efforts. In 

 fact, appellants confirmed that Essex began its cleanup of 

 the soil shortly after the sale, and that it completed soil 

 remediation sometime within two years. Thus, we fail to see 

 how this letter can demonstrate Essex's lack of diligence in 

 that regard, or how Essex's conduct in questioning certain 

 aspects of the Clean-Up Plan compromised appellants' right 

 "to receive the fruits of the contract." See Sons of Thunder, 

 Inc., 690 A.2d at 587 (internal quotation marks omitted). 

 

 Moreover, and perhaps more importantly, Benning wrote 

 the March 1986 letter after he met with DEP officials and 

 discussed the topic of appropriate cleanup levels in soil. 

 The letter specifically states that the "IAG discussion on 

 March 18 indicate [sic] that the department has also been 

 rethinking some of their procedures and actions." App. at 

 225a. Thus, while the letter questioned the reasonableness 

 of certain aspects of the Clean-Up Plan, Benning's 

 comments indicate that he did so because of his previous 

 discussions with DEP officials which apparently led him to 

 believe that the DEP might no longer view some of its 

 requirements as necessary or appropriate. Thus, when 

 viewed in context, the letter does not indicate that Essex 

 intended to renege on its obligation to cleanup the Property, 

 and it does not indicate that Essex performed its 

 contractual obligations with a lack of good faith. 

 

 In any event, Benning's concern over certain aspects of 

 the Clean-Up Plan is of no consequence when we consider 

 that less than two months later, he wrote a memorandum 

 to Essex officials in which he recognized and re-emphasized 

 

 24 

 

 

 

 Essex's obligation to adhere to the requirements set forth in 

 Clean-Up Plan. The memorandum states: 

 

 Lately we have received letters from NJDEP and have 

 discussed our program and permit applications with 

 both state and local officials. These discussions have 

 led to some very specific program requirements and 

 items we must `keep in mind.' 

 

 For example: 

 

 1. The NJDEP's ECRA office and the department of 

 solid waste management have made it very clear 

 that we must adhere to the Clean Up Plan . 

 

 App. at 227a. 
 

 Simply put, the fact that Benning questioned certain 

 aspects of the Clean-Up Plan is not evidence that Essex 

 acted in bad faith, as the DEP obviously responded to 

 Benning's concerns by indicating that Essex was obligated 

 to remediate the Property in accordance with the Clean-Up 

 Plan, and Benning expressly reaffirmed Essex's intent to 

 comply with its contractual and statutory obligations in 

 that regard. Moreover, appellants do not demonstrate that 

 Essex ever failed to implement a substantive remediation 

 measure that the DEP required in connection with Essex's 

 cleanup of the Property, and do not dispute that Essex 

 completed soil remediation on the Property within two years 

 of the sale. In our view, Benning's May 1986 memorandum 

 reaffirming Essex's commitment to remediate the Property 

 in accordance with the Clean-Up Plan belies appellants' 

 assertion that the March 1986 letter evidences Essex's 

 intent from the outset to conduct its remediation and 

 detoxification efforts in "bad faith." Reply br. at 23. In the 

 circumstances, we will affirm the district court's dismissal 

 of appellants' claim that Essex breached the duty of good 

 faith and fair dealing. 

 

 3. Appellants' CERCLA Claim (Count III) 

 and Spill Act Claim (Count IV) 

 

 Count III of the amended complaint asserts a claim for 

 damages and injunctive and declaratory relief pursuant to 

 CERCLA, and count IV seeks the same relief pursuant to 

 

 25 

 

 

 

 the Spill Act. As previously mentioned, the district court 

 dismissed the CERCLA claim, reasoning that appellants 

 had not incurred any compensable "necessary costs of 

 response" pursuant to section 107(a)(4)(B) of CERCLA. See 

 42 U.S.C. S 9607(a)(4)(B). In particular, the court explained 

 that the only costs that appellants claimed to have incurred 

 were the fees they paid to their environmental consultant, 

 ESI. The district court found that those fees were not 

 recoverable under CERCLA "because they had nothing to 

 do with any effort by plaintiffs to detoxify the Property or to 

 prevent or minimize the release of hazardous substances." 

 App. at 14a (emphasis added). The district court explained 

 that the fees were not recoverable because ESI merely 

 reviewed the quarterly reports that Essex submitted to 

 appellants and the DEP; ESI never visited the Property, 

 monitored the contamination or the cleanup of the 

 Property, or gathered data related to the investigation or 

 remediation of the Property. The district court stated that 

 "ESI's fees are those of an ordinary expert witness: the fees 

 represent litigation costs, not environmental monitoring 
 costs." App. at 15a. Similarly, the court dismissed 

 appellants' Spill Act claim seeking to recover ESI's fees 

 because the fees "are unrelated to any prevention, 

 mitigation, or remediation of contamination on the 

 Property." App. at 14a. 

 

 The district court also denied appellants' request for a 

 declaration that Essex is liable to appellants for any future 

 costs pursuant to CERCLA or the Spill Act. The court 

 stated that "[p]laintiffs have utterly failed to make any 

 showing that they are likely to incur any future costs that 

 will be recoverable under CERCLA or the Spill Act. Indeed, 

 it is undisputed that Essex is contractually obligated to 

 remediate the Property at its own expense." App. at 15a. 

 Inasmuch as there was "no evidence--or even an allegation 

 --that the plaintiffs intend to participate in future clean-up 

 activities or incur any costs that might be recoverable 

 under CERCLA," the court concluded that granting 

 declaratory relief would be inappropriate. 

 

 Finally, the court denied appellants' request for an 

 injunction compelling Essex to commence and complete the 

 cleanup on the basis that there was no present case or 

 

 26 

 

 

 

 controversy. The court reasoned that "[t]here is no dispute 

 that Essex is under both a contractual and statutory duty 

 to detoxify the Property; nor is there any dispute that Essex 

 has worked continuously to remediate the Property." The 

 court further explained that "[i]n the absence of evidence 

 that Essex has breached the Agreement or violated CERCLA 

 or IRSA, there is no basis for the injunction that plaintiffs 

 seek." App. at 16a. 

 

 On appeal from the CERCLA and Spill Act dispositions, 

 appellants primarily claim that the district court erred in 

 dismissing their CERCLA claim for monetary relief. 11 While 

 _________________________________________________________________ 

 

 11. We will address only briefly the several other issues appellants 

raise 

 in connection with their CERCLA and Spill Act claims pleaded in counts 

 III and IV of the amended complaint. Specifically, appellants maintain 

 that the district court erred in rejecting their request for injunctive 

 and 

 declaratory relief pursuant to CERCLA, and in dismissing count IV of the 

 amended complaint, their Spill Act claim. First, appellants contend that 

 they are entitled to declaratory relief under CERCLA even if they have 

 not incurred any compensable response costs as of yet, "[p]articularly 

 [because] in light of the inexplicable lack of progress by Defendants in 

 detoxifying the Property to date, Plaintiffs may well be forced to incur 
 future response costs to complete [the] detoxification. . . ." Br. at 52 

 (citing Bowen Eng'g v. Estate of Reeve, 799 F. Supp. 467, 476 (D.N.J. 

 1992), aff 'd, 19 F.3d 642 (3d Cir. 1994) (table)). They also state 

 generally that injunctive relief pursuant to CERCLA is appropriate in 

the 

 circumstances, but fail to explain the reason for their position on that 

 point. See id. 

 

 We reject appellants' arguments in their entirety. First, appellants have 

 not presented any evidence with respect to their request for a 

declaratory 

 judgment as to future response costs under CERCLA demonstrating that 

 such relief is appropriate. Given our discussion in the text that 

follows, 

 it is clear that appellants have not incurred any response costs to 

date, 

 and it is undisputed that Essex, rather than appellants, is bound 

 contractually to complete the cleanup of the Property and obtain final 

 DEP approval. Thus, there is nothing in the record suggesting that 

 appellants ever will incur response costs, and there is no potential for 

 injury that is "sufficiently immediate and real" so as to warrant 

 declaratory relief pursuant to section 113(g)(2) of CERCLA, 42 U.S.C. 

 S 9613(g)(2). See Kelley v. E.I. DuPont de Nemours & Co., 17 F.3d 836, 

 845 (6th Cir. 1994) (internal quotation marks omitted); see also United 

 States v. USX Corp., 68 F.3d 811, 819 (3d Cir. 1995) (quoting statement 

 in Kelly, 17 F.3d at 844, that " `[i]n providing for the recovery of 

 response 

 

 27 

 

 

 

 appellants have not set forth their CERCLA argument in 

 any detail, we understand they predicate it on a belief that 

 they are entitled to recover the amounts paid to appellants' 

 environmental consultant, ESI, as "necessary costs of 

 response" pursuant to section 107(a) of CERCLA, because 

 those "oversight costs" fall within the scope of either 

 _________________________________________________________________ 

 

 costs, Congress included language [in section 113(g)(2)] to insure that a 

 responsible party's liability [for response costs], once established, 

 would 

 not have to be relitigated. . . .' ") (emphasis added)); The Southland 

 Corp. 

 v. Ashland Oil, Inc., 696 F. Supp. 994, 999 (D.N.J. 1988) ("To be 

granted 

 a declaratory judgment on the issue of liability, . . . plaintiff[ ] 

must 

 establish four factors to satisfy the requirements of section 107(a)," 

 including "that, as a result [of defendants' conduct], [plaintiff] has 

 incurred response costs."); compare Bowen Eng'g, 799 F. Supp. at 476 

 (stating that "[O]nce some expenditure [for response costs] has been 
 made, the controversy is sufficiently real to permit the court to issue 

a 

 declaratory judgment on defendant's liability.") (internal quotation 

marks 

 omitted). Second, appellants' vague assertion that injunctive relief is 

 appropriate in this case, without any further elaboration on that point, 

 is unconvincing. 

 

 Finally, we agree with the district court's disposition of the Spill Act 

 claim seeking both monetary and equitable relief. While we have 

 considered appellants' argument on this score, which essentially 

consists 

 only of a citation to T&E Industries, Inc. v. Safety Light Corp., 587 

A.2d 

 1249 (N.J. 1991), we fail to see how the case is germane here because 

 it did not present claims under the Spill Act. In any event, after 

 reviewing the applicable statutory provisions and case law on point, we 

 are convinced that the district court did not err in dismissing count 

IV. 

 Accordingly, we will affirm the court's dismissal of the Spill Act claim 

 without further discussion. See N.J. Stat. Ann. S 58:10-23.11b.d. 

 (providing definition of "cleanup and removal costs" for purposes of 

Spill 

 Act); id. S 58:10-23.11g.c.(1) (stating that responsible persons are 

 "strictly liable, jointly and severally, without regard to fault, for 

all 

 cleanup and removal costs no matter by whom incurred") (emphasis 

 added); compare Analytical Measurements, Inc. v. The Keuffel & Esser 

 Co., 843 F. Supp. 920, 929-30 (D.N.J. 1993) (stating that costs of the 

 initial soil and groundwater investigation, analysis of problems and 

 alternatives, excavation of soil, removal of thefirst 600 tons of soil 

to 

 Ohio, and design of a groundwater investigation plan were "clearly 

 recoverable under the Spill Act since they are associated with the 

 cleanup and removal of discharged hazardous substances"; court also 

 noted that declaratory relief was appropriate because it would "resolve 

 any uncertainties over who is responsible for future cleanups"). 

 

 28 

 

 

 

 "removal" or "remedial" action as defined by section 101 of 

 CERCLA, 42 U.S.C. S 9601(23), (24). See generally br. at 53 

 (citing United States v. Lowe, 118 F.3d 399, 401-02 (5th 

 Cir. 1997), which held, contrary to our decision in United 

 States v. Rohm and Haas Co., 2 F.3d 1265 (3d Cir. 1993), 

 that EPA's costs incurred in oversight of the private party 

 cleanup of site were compensable "response costs" 

 pursuant to section 107(a) of CERCLA). Appellants state 

 that the court erred in finding that ESI's fees were those of 

 "an ordinary expert witness," inasmuch as"an `expert 

 witness' is clearly required only in the context of litigation 

 while, by contrast, Plaintiffs have been forced to retain and 
 utilize the expertise of ESI, an environmental consultant, 

 for the past fifteen years due to the lack of progress made 

 by Essex with respect to the Property's `detoxification.' " Br. 

 at 53. 

 

 Appellants' argument thus raises the issue of whether 

 ESI's fees are "necessary costs of response" for which 

 appellants, as private parties, may recover in a suit 

 pursuant to section 107(a)(4)(B) against Essex, the party 

 indisputably responsible for the cleanup of the Property 

 pursuant to the Clean-Up Plan approved by the DEP. To 

 answer that question, we must ascertain the character of 

 the costs in question, and determine whether they fall 

 within the types of costs recoverable by an innocent party 

 pursuant to section 107(a)(4)(B) of CERCLA. 

 

 We begin with the relevant statutory language. Section 

 107 of CERCLA, 42 U.S.C. S 9607(a)(4), provides that 

 certain enumerated parties "shall be liable for .. . all costs 

 of removal or remedial action incurred by the United States 

 Government or a State or an Indian tribe not inconsistent 

 with the national contingency plan; [and] . . . any other 

 necessary costs of response incurred by any other person 

 consistent with the national contingency plan. . . ." The 

 statute defines "response" as "remove, removal, remedy, 

 and remedial action," and states that these terms include 

 "enforcement activities related thereto." See CERCLA 

 section 101(25), 42 U.S.C. S 9601(25). It then defines 

 "remove or removal" and "remedy or remedial action" as 

 follows: 

 

 29 

 

 

 

 (23) The terms `remove' or `removal' means[sic] the 

 cleanup or removal of released hazardous substances 

 from the environment, such actions as may be 

 necessary taken in the event of the threat of release of 

 hazardous substances into the environment, such 

 actions as may be necessary to monitor, assess, and 

 evaluate the release or threat of release of hazardous 

 substances, the disposal of removed material, or the 

 taking of such other actions as may be necessary to 

 prevent, minimize, or mitigate damage to the public 

 health or welfare or to the environment, which may 

 otherwise result from a release or threat of release. The 

 term includes, in addition, without being limited to, 

 security fencing or other measures to limit access, 

 provision of alternative water supplies, temporary 

 evacuation and housing of threatened individuals not 

 otherwise provided for, action taken under section 

 9604(b) of this title, and any emergency assistance 

 which may be provided under the Disaster Relief and 
 Emergency Assistance Act. . . . 

 

 (24) The terms `remedy' or `remedial action' means [sic] 

 those actions consistent with permanent remedy taken 

 instead of or in addition to removal actions in the event 

 of a release or threatened release of a hazardous 

 substance into the environment, to prevent or minimize 

 the release of hazardous substances so that they do 

 not migrate to cause substantial danger to present or 

 future public health or welfare or the environment. The 

 term includes, but is not limited to, such actions at the 

 location of the release as storage, confinement, 

 perimeter protection using dikes, trenches, or ditches, 

 clay cover, neutralization, cleanup of released 

 hazardous substances and associated contaminated 

 materials, recycling or reuse, diversion, destruction, 

 segregation of reactive wastes, dredging or excavations, 

 repair or replacement of leaking containers, collection 

 of leachate and runoff, onsite treatment or 

 incineration, provision of alternative water supplies, 

 and any monitoring reasonably required to assure that 

 such actions protect the public health and welfare and 

 the environment. The term includes the costs of 

 permanent relocation of residents and businesses and 

 

 30 

 

 

 

 community facilities where the President determines 

 that, alone or in combination with other measures, 

 such relocation is more cost-effective than and 

 environmentally preferable to the transportation, 

 storage, treatment, destruction, or secure disposition 

 offsite of hazardous substances, or may otherwise be 

 necessary to protect the public health or welfare; the 

 term includes offsite transport and offsite storage, 

 treatment, destruction, or secure disposition of 

 hazardous substances and associated contaminated 

 materials. 

 

 Section 101(23)(24), 42 U.S.C. S 9601(23), (24) (footnotes 

 omitted). 

 

 As we explained in United States v. Rohm and Haas Co., 

 "[i]n general, removal actions are short term responses to a 

 release or threat of release while remedial actions involve 

 long term remedies." 2 F.3d at 1271. Here, while appellants 

 fail to recognize explicitly the distinction between"removal" 

 and "remedial" actions and do not attempt to place ESI's 

 consultant fees in either category, given the character of the 

 costs at issue we believe that if the activities involved here 

 are included within the definition of "response costs," it is 

 because they are "removal" rather than "remedial" actions. 
 Cf. id. (noting that the parties agreed that if the 

 government's oversight activities were deemed "necessary 

 costs of response," it would be because they were removal 

 actions rather than remedial actions). 

 

 Although the district court believed that ESI's consulting 

 fees are best characterized as those of an "ordinary expert 

 witness," appellants contest that statement by indicating 

 rather cryptically in their brief that ESI has been 

 appellants' environmental consultant for "fifteen years with 

 respect to the Property's `detoxification,' " and therefore 

 contend that we cannot consider ESI to be an "expert 

 witness" retained only for litigation purposes. While 

 appellants fail to cite an applicable portion of the record in 

 support of that statement, our review of the parties' 

 submissions confirms that Cohen testified at his deposition 

 that appellants had retained ESI as a consultant as early 

 as 1987 or 1988. See SA at 527. 

 

 31 

 

 

 

 Nevertheless, based on our study of the record, exercising 

 plenary review we conclude that the district court did not 

 err in concluding that ESI's consulting fees for which 

 appellants seek reimbursement were litigation-related 

 expenses. Inasmuch as private parties may not recoup 

 litigation-related expenses in an action to recover response 

 costs pursuant to section 107(a)(4)(B) of CERCLA, see Key 

 Tronic Corp. v. United States, 511 U.S. 809, 819-20, 114 

 S.Ct. 1960, 1967 (1994); Redland Soccer Club, Inc. v. 

 Department of the Army, 55 F.3d 827, 850 (3d Cir. 1995), 

 and appellants do not claim to have incurred any other 

 costs which fall within the definition of "necessary costs of 

 response," we agree with the district court's disposition of 

 the CERCLA claim. 

 

 In Redland Soccer Club, we determined that the Redland 

 plaintiffs' litigation costs, which included attorney's fees, 

 health risk assessments and expert witness fees, were not 

 "response costs" under any of the statutory definitions 

 found in section 9601 of CERCLA. 55 F.3d at 849-50 & 

 n.12 (citing, inter alia, Key Tronic Corp., 511 U.S. at 819, 

 114 S.Ct. at 1967, which held that litigation-related 

 attorney's fees were not recoverable in a private response 

 cost recovery action). In reaching our result, wefirst 

 observed that "under section [107], plaintiffs may only 

 recover response costs which are necessary and consistent 

 with the [National Contingency Plan]." Id. at 850. Second, 

 we found that "[t]he heart of these definitions of removal 

 and remedy are `directed at containing and cleaning up 

 hazardous releases.' . . . [T]herefore[,] . . . `necessary costs 

 of response' must be necessary to the containment and 
 cleanup of hazardous releases." Id. (quoting United States v. 

 Hardage, 982 F.2d 1436, 1448 (10th Cir. 1992) (alteration 

 in original) (internal quotation marks omitted)). Given that 

 the costs incurred were all litigation-related expenses 

 unrelated to any remedial or response action at the 

 property itself, we stated that "we do not believe the district 

 court erred in determining that plaintiffs' costs are not 

 response costs because they are not `monies . . . expended 

 to clean up sites or to prevent further releases of hazardous 

 chemicals.' " Id. (quoting Redland Soccer Club, Inc. v. 

 Department of Army, 801 F. Supp. 1432, 1435 (M.D. Pa. 

 1992), aff 'd in relevant part, 55 F.3d 827 (3d Cir. 1995)). 

 

 32 

 

 

 

 Here, as in Redland, the record required the district court 

 to reach its conclusion that the costs for which the parties 

 involved were seeking reimbursement were litigation-related 

 expenses, and thus do not fall within the definition of 

 "necessary costs of response." We first point out that, 

 notwithstanding appellants' use of ESI's services prior to 

 the commencement of this litigation, the billing statements 

 that appellants submitted as proof of the amounts 

 expended for ESI's service were for "consulting fees." 

 Importantly, the billing statements cover services that ESI 

 rendered in connection with the Property intermittently 

 from November 1996 to May 1998. See SA at 1-17. 

 Obviously, inasmuch as appellants filed their complaint in 

 the district court in March 1997, appellants are seeking 

 reimbursement for consulting services rendered just prior 

 to the time that they commenced this litigation, as well as 

 reimbursement for services during the duration of the 

 proceedings in the district court. The timing of the 

 transactions demonstrates that the district court correctly 

 concluded that ESI performed consulting services in 

 anticipation of appellants instituting this litigation, and also 

 performed consulting work during the pendency of this 

 litigation. 

 

 In this connection, we find it significant that Cohen 

 prepared an expert report for purposes of this litigation on 

 behalf of ESI for appellants dated April 28, 1998, see app. 

 at 412a, and that ESI correspondingly recorded a 

 significant charge on its billing statement to USLR for that 

 billing period. See SA at 13. The only reasonable inference 

 we can draw from these circumstances is that the 

 "consulting fee" that appellants paid to ESI for that time 

 period represented, at least in significant part, ESI's 

 payment for its preparation of the expert report. 

 

 Second, we note that the record reflects, and it is not 

 disputed, that as appellants' environmental consultant, 
 ESI's responsibilities were limited to reviewing Essex's 

 quarterly reports it submitted to the DEP, and to providing 

 appellants with a summary or analysis of Essex's progress 

 in completing its remediation and detoxification efforts in 

 accordance with the approved Clean-Up Plan. See app. at 

 466a; see also SA at 527. Indeed, ESI was not involved in 

 

 33 

 

 

 

 Essex's cleanup effort; it neither performed an investigation 

 of the Property nor gathered data for that purpose. In our 

 view, the nature of Essex's responsibilities toward its 

 clients as described in the record thus confirms that it was 

 retained to assess, for litigation purposes, whether Essex 

 was complying with its contractual responsibility to cleanup 

 the Property pursuant to the requirements set out in the 

 Clean-Up Plan. 

 

 Moreover, it is relevant to our analysis that Berger's 

 deposition testimony, as appellants' designated Rule 

 30(b)(6) witness, is far from illuminating on the necessary 

 costs of response issue. Contrary to the spirit of Rule 

 30(b)(6), Berger's evasive answers provide us with little 

 assistance in determining the exact purpose for which 

 appellants retained ESI, the nature of ESI's services that 

 are referenced cryptically in the billing invoices in the 

 record, and whether the costs incurred in relation thereto 

 were the result of litigation-related consultation or were 

 incurred in connection with work performed for some other 

 purpose. Berger's responses clearly do not suggest that 

 ESI's consulting fees were anything other than expenses 

 incurred in connection with the lawsuit that appellants 

 eventually might file if they were not satisfied with Essex's 

 progress (and ultimately did file) against appellees. We only 

 need cite the following colloquy between Essex's counsel 

 and Berger, which occurred at his deposition, to illustrate 

 our point: 

 

 Q: [Referring to the invoices for ESI] Mr. Berger, have 

 you ever seen those bills before? 

 

 A. I have no idea. 

 

 Q. Well, then look through them. 

 

 A. I could look through them for the next five hours 

 and I would have no idea. We've 90 properties. I get 

 bills from people. There are bills going into 1997 and 

 before. I have no idea whether I have ever seen these 

 bills or any other bills you might put in front of me 

 today. 

 
 Q. Mr. Berger, other than the charges represented in 

 those bills, are there any other costs that have been 

 

 34 

 

 

 

 expended by any plaintiff for any environmental 

 consulting or removal or remediation with respect to 

 the Black Horse Lane property? 

 

 A. I have no idea. 

 

 Q. Do you know a man named Mr. Irving Cohen? 

 

 A. Yes. 

 

 Q. How long have you known him? 

 

 A. I would say about ten years. 

 

 Q. And in what capacity do you know him? 

 

 A. Mr. Cohen was the president of Enviro-Sciences. It's 

 an environmental consulting firm. 

 

 Q. Has that firm ever been used by [appellant] Black 

 Horse Lane Associates? 

 

 A. I have no idea. 

 

 Q. Looking through the exhibits, if you could, could 

 you tell me whether those bills appear to indicate that 

 such was the case? 

 

 A. These bills are--at least the ones that I can see here 

 --are from Enviro-Sciences, Inc. They reference Essex 

 Chem, and I will tell you that every one references 

 Essex Chem, except for those that reference Black 

 Horse Lane, which is the subject property of this 

 lawsuit. Other than that, I can't tell you anything 

 about these bills. All I'm doing is reading from the bills 

 for you. 

 

 Q. Turn to the bills that talk about Black Horse Lane, 

 Phase One, I believe. 

 

 A. There's a bill dated 10-16-97 that says `Phase One, 

 Black Horse Lane.' 

 

 Q. All right. To what does that bill refer? 

 

 A. I don't understand the question. 

 
 Q. What does Phase One, Black Horse Lane refer to? 

 

 A. I have no idea. 

 

 35 

 

 

 

 Q. Did you ever order a Phase One on Black Horse 

 Lane? 

 

 A. I have no idea. 

 

 Q. Do you have an understanding what the phrase 

 `Phase One' means? 

 

 A. Yes, I do. 

 

 Q. What is that? 

 

 A. It's a preliminary environmental report which 

 basically points out areas of potential environmental 

 concern. 

 

 Q. Does it include any invasive testing, as far as you 

 know? 

 

 A. Typically, no. 

 

 Q. Do you have any idea why Black Horse Lane would 

 have ordered a Phase One at or about the time period 

 for which the bill is indicated? 

 

 A. Sitting here today, I have no idea why we did or 

 didn't. I suspect if we did, in fact, order one a year ago, 

 at that point I had a reason for it, but I don't know 

 what that reason would be sitting here today. If, in 

 fact, we did order a Phase One. I don't recall that 

 either. 

 

 App. at 544a. Our review of the remainder of Berger's 

 deposition testimony regarding the nature of ESI's 

 consulting work for appellants confirms that he failed to 

 offer any useful information concerning the factual basis for 

 appellants' CERCLA response cost claim relating to the fees 

 paid for ESI's services. See generally app. at 544a-49a. 

 

 Given the totality of the information in the record, we 

 agree with the district court's assessment of the nature of 

 ESI's consulting responsibilities to its client during the time 

 period for which appellants seek reimbursement. We believe 

 that the record requires the conclusion that ESI's work was 

 designed to assess, for potential or actual litigation 

 purposes, the extent of Essex's remediation efforts and its 
 progress in that regard. Accordingly, ESI's consulting fees 

 charged in connection with its services are not"response 

 

 36 

 

 

 

 costs" that are recoverable in a private cost recovery suit 

 pursuant to section 107(a)(4)(B) of CERCLA.12 

 

 In any event, assuming arguendo that we were to accept 

 appellants' position that ESI's consulting fees were not for 

 strictly "litigation costs" in the sense that appellants 

 retained ESI's services during the relevant time period 

 solely to assist them in preparing to litigate this matter, we 

 nevertheless would reach the result we do, primarily for two 

 reasons. First, appellants cannot reasonably deny that the 

 record demonstrates that ESI's role was limited to 

 evaluating Essex's progress on the cleanup effort and to 

 reporting its progress (or lack thereof) to appellants. Indeed, 

 it is significant that neither appellants nor ESI have played 

 any role in the containment and cleanup of the Property. At 

 best, it appears that ESI served as appellants' 

 environmental advisor in relation to the Property, and that 

 appellants simply monitored, for their own benefit, Essex's 

 progress in its cleanup efforts. Given that neither ESI nor 

 appellants were involved in any capacity in the actual 

 environmental cleanup of the Property, it is clear that the 

 fees appellants paid in connection with ESI's consulting 

 work did not relate to any remedial or response action at 

 the Property. As in Redland, the funds for which appellants 

 seek reimbursement were not "necessary to the 

 containment and clean up of hazardous releases," see 

 Redland, 55 F.3d at 850 (emphasis added), inasmuch as 

 appellants simply had no involvement in any remedial or 

 removal actions on the Property. Cf. Key Tronic Corp., 511 

 U.S. at 820, 114 S.Ct. at 1967 (stating that "some lawyers' 

 _________________________________________________________________ 

 

 12. Again, we have not overlooked the circumstance that there are 

 references in the record to the fact that Cohen performed some 

 undefined environmental work for appellants prior to the dates found on 

 the billing invoices in the record. See, e.g. , app. at 546a (Berger 

 testifying 

 that he had a "general recollection" that Cohen of ESI performed 

 "environmental work" for Black Horse Lane Associates prior to February 

 14, 1997). Nevertheless, as we previously stated, the invoices submitted 

 indicate that the environmental consulting for which appellants seek 

 reimbursement in this cost recovery claim began in November 1996 and 

 continued intermittently through May 1998. Thus, while it appears that 

 ESI performed work for appellants prior to its work for which they seek 

 reimbursement, that fact is irrelevant inasmuch as appellants only seek 

 reimbursement for those amounts listed on the billing invoices. 

 
 37 

 

 

 

 work that is closely tied to the actual cleanup may 

 constitute a necessary cost of response in and of itself 

 under the terms of S 104(a)(4)(B)," andfinding that the 

 component of claim that covers attorneys' work in 

 identifying other potentially responsible parties fell within 

 that category). 

 

 Second, inasmuch as ESI's role was limited to reviewing 

 the manner in which Essex was performing its legal 

 obligation to remediate the Property and reporting Essex's 

 progress to appellants, we think it fair to characterize ESI 

 as an "overseer" of Essex's progress on behalf of appellants. 

 But our decision in Rohm & Haas precludes appellants 

 from recovering such "oversight" costs as"response costs" 

 pursuant to section 107(a)(4)(B) of CERCLA. In Rohm & 

 Haas, we held that the EPA could not recover from the 

 statutory responsible party the cost of its "oversight" of the 

 remedial actions performed and paid for by the private 

 party. See 2 F.3d at 1278. The oversight costs the EPA 

 incurred there included "direct costs (i.e. , hiring contractors 

 to provide sampling support and field investigation) and 

 indirect costs (i.e., travel costs, payroll, hiring contractors to 

 review [defendants'] work"). Id. at 1269 n.4 (emphasis 

 added). We stated that the "key issue" was whether 

 CERCLA's definition of "removal" should be read "to 

 encompass the government's activity in overseeing a 

 removal or remedial action paid for and conducted by 

 private parties." Id. at 1275. 

 

 In reaching our conclusion, we looked to the definition of 

 "removal" found in section 101(23) of CERCLA, and noted 

 that "[n]owhere in the definition of removal is there an 

 explicit reference to oversight of activities conducted and 

 paid for by a private party." Id. at 1275. Moreover, we 

 reviewed the five categories in the definition of removal, 

 with particular focus on the third of the five, i.e., "such 

 actions as may be necessary to monitor, assess, and 

 evaluate the release or threat of release of hazardous 

 substances," as the EPA argued that it was that aspect of 

 the definition that applied to permit recovery of the 

 oversight costs it sought. In analyzing this language, we 

 rejected the EPA's argument that it supported the relief 

 requested, explaining our holding as follows: 

 

 38 

 

 

 

 Examined in a vacuum, this language could be 

 understood to encompass at least some oversight of the 
 activities of a private party, particularly private 

 activities focusing on assessment of the risk. On the 

 other hand, it is at least as plausible to read this 

 language as referring only to actual monitoring of a 

 release or threat of release rather than oversight of the 

 monitoring and assessment activities of others. This 

 latter reading would be consistent with an 

 understanding of the definition that distinguishes at all 

 stages--assessment, response formulation, and 

 execution--between actions taken to define the scope 

 of the risk created by a release or threatened release 

 and actions taken to evaluate the performance of 

 others to determine whether they are meeting their 

 legal obligations. We believe a reading of the statutory 

 definition that embraces this distinction is 

 linguistically the more plausible one. 

 

 Id. at 1275-76. We further concluded that"[a]ll things 

 considered, we cannot say that clause [3] of the removal 

 definition is sufficient to constitute the clear statement of 

 intent required by [National Cable Television Ass'n, Inc. v. 

 United States, 415 U.S. 336, 342, 94 S.Ct. 1146, 1149-50 

 (1974) ("NCTA")]."13 Id. at 1276. 

 _________________________________________________________________ 

 

 13. Obviously, we premised our result in Rohm & Haas on our 

 application of the NCTA doctrine, which we believed required the EPA to 

 demonstrate "a clear statement of congressional intent" for it to 

recover 

 the oversight costs as response costs. See 2 F.3d at 1273, 1276. But our 

 application of the NCTA doctrine does not undermine our reliance on our 

 statutory interpretation analysis in Rohm & Haas as germane here. 

 Plainly put, we reach our result because the language of the relevant 

 statutory provisions requires that we do so. Indeed, the only plausible 

 basis for finding that appellants' oversight actions through ESI are 

 "removal" activities is if they fall within the third category of 

"removal" 

 actions, i.e., actions "necessary to monitor, assess, and evaluate the 

 release or threat of release of hazardous substances." But as we 

 explained in Rohm & Haas, this language plainly refers to actual 

 monitoring, assessment or evaluation "of a release or a threat of 

release." 

 Id. at 1275 (emphasis added). Here, ESI's oversight activities, to the 

 extent that we are willing for the sake of argument to deem them 

 monitoring, assessment or evaluation activities, were not related to the 

 release or threat of release of hazardous substances. Rather, the object 

 of ESI's reports, insofar as we can tell from the record, was to analyze 

 Essex's removal activities, including its cleanup, disposal, monitoring 

 and assessment actions, as described in its quarterly reports to the 

DEP. 

 

 39 

 

 
 

 Our interpretation of the removal definition as excluding 

 the sort of "oversight" costs that the EPA sought in Rohm & 

 Haas compels the conclusion that appellants cannot 

 recover the funds paid to ESI for its consultant work, even 

 though appellants are private entities rather than a 

 governmental agency. As in Rohm & Haas, appellants seek 

 reimbursement from Essex, the responsible party, for costs 

 appellants incurred in monitoring the responsible party's 

 compliance with its legal obligations. See Rohm & Haas, 2 

 F.3d at 1279 n.23 ("The oversight costs here held to be 

 non-recoverable are incurred at a different level of 

 supervision. They are the costs of overseeing the 

 performance of the entity that has assumed responsibility 

 for the cleanup."). Indeed, there is no dispute in this case 

 that Essex is bound contractually to complete remediation 

 and detoxification of the Property, and that appellants have 

 not assisted Essex in meeting its statutory and contractual 

 obligations. In this sense, then, the district court was 

 correct in its observation that the costs for which 

 appellants seek reimbursement were not incurred as a 

 result of appellants' actions in cleaning up the Property. 

 

 Obviously then, inasmuch as our holding in Rohm & 

 Haas precludes the EPA from seeking reimbursement for 

 "oversight" costs incurred in overseeing the performance of 

 a private entity where a private party has assumed 

 responsibility for the cleanup, an analysis of the scope of 

 the "removal" definition necessarily requires us to reach the 

 same result in a situation where a private party seeks 

 reimbursement for overseeing another private party's legal 

 obligation to cleanup a property. In short, we are satisfied 

 that Congress did not intend section 107(a)(4)(B) to provide 

 a private party with a cause of action against a responsible 

 party for reimbursement of the party's expenses in 

 retaining an environmental consultant for oversight 

 purposes without direct involvement in the responsible 

 party's remediation and detoxification efforts. 

 

 In sum, we are convinced that the district court correctly 

 determined that appellants could not recover, pursuant to 

 section 107(a)(4)(B) of CERCLA, the monies they expended 

 in consulting fees in connection with ESI's services during 

 the relevant time period. We will affirm the district court's 

 

 40 

 

 

 

 dismissal of appellants' private cost recovery action pleaded 

 in count III of the amended complaint.14 

 

 B. District Court's Final Order of 

 December 16, 1999 
 

 Appellants next contend that the district court erred in 

 affirming the magistrate judge's letter opinion and order 

 entered June 30, 1999, which granted appellees' motion for 

 discovery sanctions against appellants pursuant to Rule 

 37(b) and (d).15 As we previously mentioned, the magistrate 

 _________________________________________________________________ 

 

 14. We also will dismiss appellants' Spill Act claim under Count IV. See 

 n.11, supra. Moreover, as we previously mentioned, count V of the 

 complaint pleaded a claim for "damages" stemming from appellees' 

 alleged "acts, omissions and breaches." App. at 66a. The district court 

 dismissed this count, stating that "[b]ecause plaintiffs have failed to 

 adduce sufficient evidence in support of their breach of contract 

claims, 

 they cannot recover the damages outlined in Count Five of the 

 Complaint." Id. at 16a. Inasmuch as we agree with the district court's 

 dismissal of counts I through IV of the complaint, we will affirm the 

 district court's dismissal of count V, as there is no independent 

 substantive basis for appellants' claim for relief. 

 

 15. Appellants also maintain that the district court erred in dismissing 

 appellees' counterclaim without prejudice. The counterclaim sought a 

 declaratory judgment that remediation of the Property under the 

 Agreement included use of "engineering and institutional controls," and 

 an order requiring appellants to consent to them. App. at 80a-81a. 

 Appellees explain that their counterclaim actually sought an order 

 compelling appellants to consent to their use of a Classification 

 Exception Area ("CEA"), which is "a remediation by passive rather than 

 active means." App. at 845a. 

 

 As we previously mentioned, appellants initially sought partial 

 summary judgment to dismiss the counterclaim with prejudice, but the 

 district court denied their motion in its order of August 10, 1999, 

 reasoning that appellants failed to demonstrate that they were entitled 

to 

 judgment as a matter of law. The court observed that appellants failed 

 to cite any authority in support of the motion, and"merely allege[d] 

that 

 `Plaintiffs do not and need not consent' to the engineering and 

 institutional controls." App. at 16. After the court dismissed the 

 amended complaint in its entirety, appellees moved for summary 

 judgment on the counterclaim. After oral argument on appellees' motion, 

 the court entered an order dismissing the counterclaim without 

 

 41 

 

 

 

 judge agreed with appellees' argument that Berger's 

 conduct warranted a sanction in the form of precluding 

 appellants from asserting a position and introducing 

 evidence contrary to the position Berger asserted during his 

 deposition. In addition, the magistrate judge concluded that 
 Berger's lack of preparedness at his deposition justified the 

 imposition of monetary sanctions pursuant to Rule 37(d) in 

 the form of costs and attorney's fees associated with taking 

 the deposition and bringing the sanctions motion before the 

 court. App. at 22a. The magistrate judge clearly set forth 

 the factual and legal basis for his ruling, relying primarily 

 on the Court of Appeals for the Fifth Circuit's decision in 

 Resolution Trust Corp. v. Southern Union Co., 985 F.2d 196 

 (5th Cir. 1993) ("Southern Union"): 

 

 Here, Berger was not completely prepared on any 

 occasion for which he sat for a deposition. Further, his 

 _________________________________________________________________ 

 

 prejudice, because, in its view, there was no current case or controversy 

 with respect to the subject matter of the counterclaim. 

 

 We have reviewed the entire record, and we agree with the district 

 court's disposition of the counterclaim. It appears that the appellees 

 instituted the counterclaim in response to certain statements by 

 appellants to the effect that they would not consent to the use of a CEA 

 to remediate the Property, and would oppose any application that Essex 

 made to the DEP for that purpose. Appellees' br. at 14. Nevertheless, 

the 

 court's dismissal of the counterclaim was appropriate because appellees 

 do not dispute that Essex has not applied for a CEA, and presently 

 cannot do so. Accordingly, appellants' threats to the effect that they 

 would not consent to the use of a CEA do not present a controversy ripe 

 for resolution, and the court did not err in dismissing the counterclaim 

 without prejudice for lack of subject matter jurisdiction. See, e.g., 

 Philadelphia Fed'n of Teachers v. Ridge, 150 F.3d 319, 323 (3d Cir. 

 1998) (discussing and applying ripeness doctrine in context of claims 

 seeking declaratory relief, and noting that "[t]he function of the 

 ripeness 

 doctrine is to prevent federal courts, `through avoidance of premature 

 adjudication, from entangling themselves in abstract disagreements.' ") 

 (quoting Abbot Labs v. Gardner, 387 U.S. 136, 148, 87 S.Ct. 1507 

 (1967), overruled on other grounds, Califano v. Sanders, 430 U.S. 99, 

 105, 97 S.Ct. 980 (1977)); The Presbytery of N.J. v. Florio, 40 F.3d at 

 1462 (addressing ripeness issue in context of suit seeking declaratory 

 relief and stating that "[i]t is the plaintiff 's responsibility to 

allege 

 facts 

 that invoke the court's jurisdiction"). 

 

 42 

 

 

 

 lack of preparation cannot be a mere oversight but is, 

 instead, a clear demonstration of bad faith. This is 

 obvious from Berger's repeated denial of any knowledge 

 of his status as a 30(b)(6) witness despite being present 

 at the deposition and being asked each and every time 
 he appeared if he had knowledge of his status. Further, 

 Berger, as did the plaintiffs' witness in Resolution Trust 

 Corp., even denied knowledge of documents which he 

 himself had signed, claiming that he had no 

 recollection of such documents despite acknowledging 

 that he normally did not sign anything that he did not 

 read first. These infractions would not be so 

 detrimental if Berger were no so consistent with his 

 apparent incompetence and lack of cooperation. Had 

 he taken the time to prepare in the slightest as Rule 

 30(b)(6) requires, he might have been fully prepared for 

 at least one deposition. Additionally, Berger's actions 

 are magnified by his status as a member of the Bar. 

 

 App. at 21a. 

 

 In affirming the magistrate judge's order, the district 

 court provided its reasons on the record: 

 

 I read the record. It is appalling. It is appalling. 

 

 [Berger] did nothing except show his face only under 

 the threat of court orders. When he showed up, he 

 knew he was a 30(b)(6) witness and, notwithstanding 

 the fact that he knew he was a 30(b)(6) witness, he 

 refused to answer questions in an intelligent way. He 

 refused to prepare, as you are required to prepare 

 under 30(b)(6), to intelligently answer questions and 

 just literally thumbed his nose at the defendants and, 

 frankly, at the Court. 

 

 . . . . 

 

 I'm satisfied, based upon my review of the record--and 

 I defy anyone to look at the record here which was 

 created by Mr. Berger--that the actions taken by[the 

 magistrate judge] were well within his discretion and 

 do not constitute either an abuse of discretion or are 

 they contrary to law or shocking to the conscience of 

 the Court. 

 

 43 

 

 

 

 One, in order to come to that conclusion, one must 

 live in the shoes of [the magistrate judge] in trying to 

 conduct orderly discovery in this matter. 

 

 One must review meticulously the record of 

 noncompliance by Mr. Berger in this matter. 

 

 [The magistrate judge] did not issue this opinion 

 lightly. [The magistrate judge] was fully cognizant of 
 the totality of the facts surrounding this matter, which 

 border upon almost conscious disregard of the Court 

 and the court rules. . . . 

 

 Affirmed. 

 

 App. at 836a, 843a-44a. 

 

 Appellants make two arguments in support of their 

 request to vacate the monetary sanctions order. 16 They first 

 claim that the district court abused its discretion in 

 affirming the magistrate judge's monetary sanctions 

 because the court misunderstood the requirements for 

 imposing sanctions pursuant to Rule 37(d). They assert 

 that Rule 37 required as a prerequisite to imposing a 

 monetary sanction that the court first issue an order 

 compelling appellants to supply the requested discovery 

 responses, and then find that they failed to do so. See 

 Reply Br. at 29. They further claim that pursuant to Rule 

 37(d), "a party making a motion based upon an alleged 

 violation of Rule 37(d) must certify that the movant has in 

 good faith conferred or attempted to confer with the party 

 failing to answer or respond in an effort to obtain such 

 answer or response without court action," but that there 

 was no such "good faith" effort by appellees to resolve the 

 _________________________________________________________________ 

 

 16. Appellants also claim that the court abused its discretion in 

granting 

 appellees' motion pursuant to Rule 37(b) to the extent that it precluded 

 appellants from asserting at trial a position which differs from 

Berger's 

 testimony. Given that we are affirming the summary judgment 

 dismissing the amended complaint in its entirety, we need not address 

 this argument. Also, appellants apparently contend that the court erred 

 in awarding a monetary sanction pursuant to Rule 37(b)(2). This 

 argument is without merit, as it is clear to us that the court awarded 

 attorney's fees and costs pursuant to subdivision (d) of Rule 37 rather 

 than subdivision (b). See App. at 22a (citing Rule 37(d)). 

 

 44 

 

 

 

 dispute without court action. Reply Br. at 30 (internal 

 quotation marks omitted). 

 

 Finally, they rely on the fact that Rule 37(d) states that 

 sanctions may be imposed when a party, inter alia, "fails 

 . . . to appear before the officer who is to take the 

 deposition, after being served with a proper notice." Here, 

 they argue that we should apply the "fails to appear" 

 language literally, and that sanctions were inappropriate in 
 this case because Berger appeared for his deposition after 

 the magistrate judge's October 15, 1998 order and"testified 

 under oath for more than seventeen hours." Br. at 59-60. In 

 support of their literal reading of Rule 37(d), they rely 

 primarily on the Court of Appeals for the First Circuit's 

 opinion in R.W. International Corp. v. Welsh Foods, Inc., 937 

 F.2d 11 (1st Cir. 1991), which stated that "Rule 37(d) 

 sanctions apply only when a deponent `literally fails to 

 show up for a deposition session.' " Id. at 15 n.2 (quoting 

 Salahuddin v. Harris, 782 F.2d 1127, 1131 (2d Cir. 1986)). 

 

 Their second argument is based on their interpretation of 

 Berger's behavior during his deposition. They claim that 

 even if we agree with the magistrate judge's finding that 

 Rule 37(d) could support the imposition of sanctions when 

 a Rule 30(b)(6) witness provides inadequate and evasive 

 answers, the record demonstrates that Berger's deposition 

 did not present a situation warranting sanctions. They 

 claim that "[a] fair examination of the transcript of Mr. 

 Berger's 570-page deposition confirms that Mr. Berger 

 testified fully and in good faith in response to Defendants' 

 questioning." In any event, they maintain that"any 

 `violation' of Rule 30(b)(6) which might be said to have 

 existed was minimal, and indeed, paled in comparison with 

 the extraordinarily broad discovery obtained by Defendants 

 in this matter." Br. at 63. 

 

 We are not persuaded by either contention. Beginning 

 with appellants' interpretation of the language of Rule 37(d),17 

 _________________________________________________________________ 

 

 17. Rule 37(d) provides: 

 

 (d) Failure of Party to Attend at Own Deposition or Serve Answers 

 to 

 Interrogatories or Respond to Request for Inspection. If a party 

or 

 an 

 officer, director, or managing agent of a party or a person 

 designated 

 

 45 

 

 

 

 they simply are incorrect that the magistrate judge 

 committed an error of law in awarding a monetary sanction 

 to appellees. Initially, we point out that unlike subdivision 

 (b) of Rule 37, on its face subdivision (d) does not require 

 the court, prior to imposing sanctions, to have issued an 

 order compelling discovery. See Al Barnett & Son, Inc. v. 

 Outboard Marine Corp., 611 F.2d 32, 35 (3d Cir. 1979) ("[A] 

 direct order by the Court, as Rule 37(a) and (b) requires, is 

 not a necessary predicate to imposing penalties under Rule 
 37(d)."), repudiated on other grounds, Alexander v. Gino's 

 Inc., 621 F.2d 71 (3d Cir. 1980); compare Fed. R. Civ. P. 

 37(b)(2) ("If a party . . . or a person designated under Rule 

 30(b)(6) . . . fails to obey an order to provide or permit 

 discovery, including an order made under subdivision (a) of 

 this rule . . . .") with Fed. R. Civ. P. 37(d) (stating that if the 

 party fails, inter alia, to appear for a deposition, "the court 

 . . . may make such orders in regard to the failure as are 

 just"). Moreover, while appellants claim that subdivision (d) 

 _________________________________________________________________ 

 

 under Rule 30(b)(6) or 31(a) to testify on behalf of a party fails 

( 

 1) to 

 appear before the officer who is to take the deposition, after 

 being 

 served with a proper notice, or (2) to serve answers or 

objections 

 to 

 interrogatories submitted under Rule 33, after proper service of 

 the 

 interrogatories, or (3) to serve a written response to a request 

 for 

 inspection submitted under Rule 34, after proper service of the 

 request, the court in which the action is pending on motion may 

 make such orders in regard to the failure as are just, and among 

 others it may take any action authorized under subparagraphs (A), 

 (B), and (C) of subdivision (b)(2) of this rule. Any motion 

 specifying 

 a failure under clause (2) or (3) of this subdivision shall 

include 

 a 

 certification that the movant has in good faith conferred or 

 attempted to confer with the party failing to answer or respond 

in 

 an 

 effort to obtain such answer or response without court action. In 

 lieu of any order or in addition thereto, the court shall require 

 the 

 party failing to act or the attorney advising that party or both 

to 

 pay 

 the reasonable expenses, including attorney's fees, caused by the 

 failure unless the court finds that the failure was substantially 

 justified or that other circumstances make an award of expenses 

 unjust. 

 

 The failure to act described in this subdivision may not be 

 excused on the ground that the discovery sought is objectionable 

 unless the party failing to act has a pending motion for a 

 protective 

 order as provided by Rule 26(c). 

 

 46 
 

 

 

 requires the party seeking sanctions to certify in their 

 motion papers that they conferred or attempted to confer in 

 good faith with the party failing to answer or respond in an 

 effort to avoid court intervention, subdivision (d) explicitly 

 only requires such a certification where the motion specifies 

 a failure "under clause (2) or (3) of this subdivision." Fed. 

 R. Civ. P. 37(d). Here, appellees made the motion for 

 sanctions based on clause (1) of subdivision (d), which 

 deals with a party's failure "(1) to appear before the officer 

 who is to take the deposition." Id. 

 

 In addition, while we recognize that the court's statement 

 in Welsh Foods supports appellants' interpretation of the 

 language of Rule 37(d)--namely that it requires an actual 

 "no show" to satisfy the "fails to appear" requirement in 

 subdivision (1)--they apparently have overlooked the 

 circumstance that the magistrate judge's decision relied on 

 Southern Union, 985 F.2d 196. Importantly, in Southern 

 Union the Court of Appeals for the Fifth Circuit rejected a 

 literal interpretation of Rule 37(d) in situations where 

 the uncooperative deponent is a party's Rule 30(b)(6) 

 designated witness. 

 

 In Southern Union the defendant Southern Union Co. 

 ("Southern Union") served notice on the RTC that it 

 intended to depose it pursuant to Rule 30(b)(6), and set 

 forth with specificity ten discrete topics with which the 

 deponent was to be familiar. After the RTC designated two 

 individuals as Rule 30(b)(6) deponents, Southern Union's 

 representatives traveled from Washington, D.C. to Dallas, 

 Texas, to conduct the depositions. Neither representative, 

 however, possessed any knowledge relevant to the matters 

 designated in the Rule 30(b)(6) notice. Consequently, 

 Southern Union moved for sanctions, and the district court 

 granted the motion, awarding costs and fees incurred in 

 deposing the RTC's two witnesses and in identifying 

 ultimately the proper deponent with knowledge of the 

 relevant facts. See id. at 196-97. 

 

 Relying upon the Court of Appeals for the Second 

 Circuit's opinion in Salahuddin, a case cited subsequently 

 in Welsh Foods, the RTC contended that sanctions 

 pursuant to Rule 37(d) were not appropriate because both 

 witnesses literally appeared for their depositions, albeit that 

 

 47 

 

 

 

 neither was helpful or forthcoming with pertinent 

 information. The Court of Appeals for the Fifth Circuit 
 rejected that argument, reasoning: 

 

 Were we here faced with a case involving the deposition 

 of a natural person we might be inclined to agree with 

 the reading of Rule 37(d) by our Second Circuit 

 colleagues [in Salahuddin]. The deposition of a 

 corporation, however, poses a different problem, as 

 reflected by Rule 30(b)(6). Rule 30(b)(6) streamlines the 

 discovery process. It places the burden of identifying 

 responsive witnesses for a corporation on the 

 corporation. Obviously, this presents a potential for 

 abuse which is not extant where the party noticing the 

 deposition specifies the deponent. When a corporation 

 or association designates a person to testify on its 

 behalf, the corporation appears vicariously through 

 that agent. If that agent is not knowledgeable about 

 relevant facts, and the principal has failed to designate 

 an available, knowledgeable, and readily identifiable 

 witness, then the appearance is, for all practical 

 purposes, no appearance at all. 

 

 In the instant case, RTC possessed documents that 

 clearly identified [the eventual deponent] as having 

 personal knowledge of the subject of the deposition. 

 RTC did not furnish those documents or designate 

 [that deponent] until after it had designated Perry and 

 Wieting, obliged Southern Union's counsel to travel 

 from Washington, D.C. to Dallas for a useless 

 deposition, and been served with Southern Union's 

 motion for sanctions. The finding that RTC did not 

 make a meaningful effort to acquit its duty to designate 

 an appropriate witness is manifest. The district court 

 did not abuse its discretion in awarding fees and costs 

 under Rule 37(d). 

 

 Id. at 197-98. 

 

 Following the reasoning in Southern Union, several courts 

 similarly have read the phrase "fails . . . to appear" in Rule 

 37(d) pragmatically in light of the purposes of Rule 30(b)(6) 

 and the parties' obligations thereunder. See, e.g., Starlight 

 Int'l Inc. v. Herlihy, 186 F.R.D. 626, 639 (D. Kan. 1999) 

 

 48 

 

 

 

 ("Corporations, partnerships, and joint ventures have a 

 duty to make a conscientious, good-faith effort to designate 

 knowledgeable persons for Rule 30(b)(6) depositions and to 

 prepare them to fully and unevasively answer questions 

 about the designated subject matter."); The Bank of New 

 York v. Meridien Biao Bank Tanzania Ltd., 171 F.R.D. 135, 

 151 (S.D.N.Y. 1997) (" `Producing an unprepared witness is 
 tantamount to a failure to appear.' ") (quoting United States 

 v. Taylor, 166 F.R.D. 356, 363 (M.D.N.C. 1996)); Taylor, 

 166 F.R.D. at 363 ("[I]nadequate preparation of a Rule 

 30(b)(6) designee can be sanctioned based on the lack of 

 good faith, prejudice to the opposing side, and disruption of 

 the proceedings."); Zappia Middle East Constr. Co. v. The 

 Emirate of Abu Dhabi, No. 94-1942, 1995 WL 686715, at *8 

 (S.D.N.Y. Nov. 17, 1995) (agreeing with rule announced in 

 Southern Union that providing a wholly inadequate witness 

 may amount to non-appearance under Rule 30(b)(6), but 

 finding that sanctions were not warranted in the 

 circumstances of that case); Municipal Subdistrict, Northern 

 Colo. Water Conservancy District v. OXY USA, Inc. , 990 P.2d 

 701, 710 (Colo. 1999) (en banc) (following Southern Union, 

 985 F.2d at 197, and holding that trial court may issue 

 sanctions for failure to appear under Col. R. Civ. P. 37(d)-- 

 the state's analogue to Fed. R. Civ. P. 37(d)--when a 

 corporation designates a deponent who appears but is 

 unable to answer all the questions specified in the Col. R. 

 Civ. P. 30(b)(6) notice); see also, e.g., Turner v. Hudson 

 Transit Lines, Inc., 142 F.R.D. 68, 78-79 (S.D.N.Y. 1991) 

 ("[A] party that fails to provide witnesses knowledgeable in 

 the areas requested in a Rule 30(b)(6) notice is likewise 

 subject to sanctions."); Thomas v. Hoffman-LaRoche, Inc., 

 126 F.R.D. 522, 525 (N.D. Miss. 1989) ("Sanctions are 

 appropriate when a party fails to comply with a request 

 under Rule 30(b)(6) to provide a knowledgeable deponent to 

 testify on behalf of the organization."); see generally Boland 

 Marine & Mfg. Co. v. M/V Bright Field, No. 97-3097, 1999 

 WL 280451, at *3 (E.D. La. May 3, 1999) (acknowledging 

 the rule announced in Southern Union butfinding that 

 deponent was prepared adequately and that sanctions were 

 not warranted). 

 

 We agree with the distinction the Court of Appeals drew 

 

 49 

 

 

 

 in Southern Union, and find its analysis persuasive.18 In 

 reality if a Rule 30(b)(6) witness is unable to give useful 

 information he is no more present for the deposition than 

 would be a deponent who physically appears for the 

 deposition but sleeps through it. Indeed, we believe that the 

 purpose behind Rule 30(b)(6) undoubtedly is frustrated in 

 the situation in which a corporate party produces a witness 

 who is unable and/or unwilling to provide the necessary 

 factual information on the entity's behalf. See generally 

 Fed. R. Civ. P. 30 advisory committee's notes (stating that 

 the procedure outlined in subdivision (b)(6) should be 

 viewed as "an added facility for discovery" and would "curb 

 the `bandying' by which officers or managing agents of a 

 corporation are deposed in turn but each disclaims 
 knowledge" of relevant facts). "For courts to permit litigants 

 to disregard the responsibilities that attend the conduct of 

 litigation would be tantamount to `encouraging dilatory 

 tactics.' " Al Barnett & Son, Inc., 611 F.2d at 35 (quoting 

 Cine Forty-Second Street Theatre v. Allied Artists Pictures 

 Corp., 602 F.2d 1062, 1068 (2d Cir. 1979)). Thus, we hold 

 that when a witness is designated by a corporate party to 

 speak on its behalf pursuant to Rule 30(b)(6), "[p]roducing 

 an unprepared witness is tantamount to a failure to 

 appear" that is sanctionable under Rule 37(d). See Taylor, 

 166 F.R.D. at 363. Accordingly, we conclude that the 

 district court did not commit an error of law in affirming 

 the magistrate judge's sanctions order entered pursuant to 

 Rule 37(d), as the magistrate correctly applied the Court of 

 Appeals for the Fifth Circuit's construction, which we 

 _________________________________________________________________ 

 

 18. We point out that the cases appellants cite in addition to Welsh 

 Foods in further support of their argument are equally unhelpful, as 

 none of them involved a situation in which the uncooperative and/or 

 unknowledgeable witness was a corporate entity's Rule 30(b)(6) designee. 

 See, e.g., Estrada v. Rowland, 69 F.3d 405, 405-06 (9th Cir. 1995) 

 (deponent was plaintiff pursuing action pursuant to 42 U.S.C. S 1983 

 against prison officials); Aziz v. Wright, 34 F.3d 587, 588-89 (8th Cir. 

 1994) (same); Salahuddin, 782 F.2d at 1131 (same); Stevens v. 

 Greyhound Lines, Inc., 710 F.2d 1224, 1228 (7th Cir. 1983) (deponent 

 was plaintiff in employment discrimination suit); SEC v. Research 

 Automation Corp., 521 F.2d 585, 587 (2d Cir. 1975) (deponent was 

 individual defendant and president of corporate defendant). 

 

 50 

 

 

 

 approve, of the phrase "fails . . . to appear" in Southern 

 Union. 

 

 We reject appellants' final contention that Berger's 

 responses during his deposition did not support the district 

 court's finding that he failed to cooperate with appellees' 

 attorneys, and that his conduct was tantamount to a 

 failure to appear that warranted sanctions under Rule 

 37(d). To the contrary, our review of Berger's deposition 

 testimony in its entirety confirms the observations of both 

 the magistrate judge and the district court on this point. 

 Indeed, throughout his lengthy deposition, Berger failed to 

 offer meaningful testimony about most, if not all, of the 

 items specified in the notice of deposition. While we need 

 not recite every instance in which Berger's testimony was 

 incomplete and unhelpful on the specified topics, we believe 

 that two examples of his uncooperative attitude and his 

 flagrant disregard for his obligation as a Rule 30(b)(6) 

 witness amply illustrate our point. 

 
 First, when Berger was asked about the Agreement he 

 signed between USLR and Essex, he stated that he had no 

 recollection of (1) seeing or signing the Agreement, (2) 

 negotiating the Agreement (or who participated in its 

 negotiation), (3) drafting the various provisions in the 

 Agreement (or who participated in its drafting), or (4) the 

 circumstances surrounding the purchase of the Property, 

 i.e., if he attended the closing and where it occurred, even 

 though he admitted that he was personally involved in the 

 purchase of the Property and "probably negotiated the 

 contract." See app. at 525a. Second, when asked about any 

 and all cleanup costs appellants' incurred as a result of the 

 contamination on the Property, Berger testified that he did 

 not know: (1) whether appellants spent any money to 

 cleanup hazardous waste; (2) whether appellants performed 

 any environmental evaluation or investigation on the 

 Property, whether they incurred costs in doing so, and 

 whether there are any records that such tests were 

 performed; (3) whether appellants hired ESI to perform 

 consulting services for the Property, and if so, the dates 

 and purposes for which appellants retained ESI; (4) 

 whether ESI's billing statements in the record reflected 

 work performed on the Property or other unrelated services; 

 

 51 

 

 

 

 and (5) whether appellants performed any removal or 

 remedial actions on the Property. App. at 521a, 523-25a, 

 544a-49a. 

 

 Obviously, as appellants' Rule 30(b)(6) witness, Berger 

 should have been prepared to discuss these and other 

 topics designated in the notice of deposition. Instead, he 

 divulged as little information as possible in every area that 

 appellees identified. Moreover, Berger's uncooperative 

 attitude is demonstrated further by statements in which he 

 claimed that he was unaware that he was appellants' 

 designated Rule 30(b)(6) representative, did not know what 

 the phrase "Rule 30(b)(6) representative" meant, and was 

 not familiar with Rule 30(b)(6) or what it required him to 

 do. App. at 513a-14a, 527a, 544a. He also admitted at one 

 point that he did not recall whether he reviewed the notice 

 of deposition prior to the date of the deposition, app. at 

 527a, and later stated clearly that he had not bothered to 

 read it at all. App. at 610. Simply put, we find his professed 

 ignorance on these points particularly unconvincing given 

 that he obtained undergraduate and law degrees from 

 prestigious universities and has been licensed to practice 

 law since "either [19]65 or [19]66." App. at 508a. 

 

 In any event, we believe that the magistrate judge's 

 finding that Berger engaged in discovery abuses plainly is 
 justified on this record. The magistrate judge had ample 

 evidence of Berger's failure to cooperate, which in turn 

 rendered his deposition a virtual non-event. Accordingly, we 

 will affirm the monetary sanctions ordered pursuant to 

 Rule 37(d). 

 

 IV. CONCLUSION 

 

 For the foregoing reasons, the district court's orders of 

 August 10, 1999, and December 16, 1999, will be affirmed. 

 

 A True Copy: 

 Teste: 

 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

 

 52