Opinion ID: 201206
Heading Depth: 1
Heading Rank: 3

Heading: Issues relating to the trial

Text: 49 In reviewing the appeal of a bench trial, we review the district court's legal conclusions de novo and its factual findings for clear error. Cariglia v. Hertz Equip. Rental Corp., 363 F.3d 77, 82 (1st Cir.2004).
50 The Capuanos argued to the district court that Fed.R.Civ.P. 19(a) required all non-settling PRPs to be joined as necessary parties. The district court held that Rule 19 does not require joinder of other known solvent PRPs. In their appellate brief, the Capuanos mention the Rule 19 issue, but do not provide any arguments as to why Rule 19 requires other PRPs to be joined. Since the Capuanos failed to develop any argument, we consider this issue waived. See United States v. Bongiorno, 106 F.3d 1027, 1034 (1st Cir.1997) (We have steadfastly deemed waived issues raised on appeal in a perfunctory manner, not accompanied by developed argumentation.).
51 After trial, the district court concluded that the Capuanos, as operators, were liable for the total volume (100%) of waste dumped at the Picillo site. The Capuanos were also liable for a share of the waste dumped at the Picillo site as arrangers [and they were] liable as transporters for 7.94% of the total waste delivered to the site. The district court concluded that R & H was liable for 3.23% of the waste. 52 Before allocating percentage shares of liability, the district court informed the Capuanos that it would consider the relative fault of non-parties in arriving at an equitable allocation of liability. The district court did not ultimately consider the relative fault of non-parties when allocating liability because the parties failed to present evidence concerning the relative fault of non-parties. According to the district court, the Capuanos' decision not to present any evidence that may have mitigated their liability ... is one they will have to live with. The Capuanos, not wanting to live with it, appealed the issue, arguing that a district court cannot make a proper allocation unless it accounts for the shares of all PRPs, regardless of whether the PRPs are parties to the action and regardless of whether evidence was presented regarding the absent PRP's actions. 53 In resolving contribution claims, a district court has broad discretion to allocate response costs among liable parties using such equitable factors as the court determines are appropriate. 42 U.S.C. § 9613(f)(1). It is not unprecedented for a district court to reason that a fair and equitable allocation [can] only be achieved by comparing [a defendant's] role as a PRP to other PRPs. United States v. Consol. Coal Co., 345 F.3d 409, 414 (6th Cir.2003). However, the decision to allocate response costs among the named parties or all parties is within the Court's discretion to adopt and apply. United States v. Consol. Coal Co., 184 F.Supp.2d 723, 745 (S.D.Ohio 2002). Indeed, in some cases apportioning responsibility among all PRPs is not an attractive option as it could complicate an already difficult allocation process or saddle firms ... with excess costs and might take years of trial time. Akzo Nobel Coatings, Inc. v. Aigner Corp., 197 F.3d 302, 306 (7th Cir.1999). 54 R & H provided the district court with evidence indicating that the Capuanos were liable, as operators, for 100% of the waste at the Picillo site. The district court did not abuse its discretion in reaching such a conclusion since the district court found the evidence to be credible and, more important for the purposes of this discussion, unrefuted. See, e.g., United States v. Davis, 31 F.Supp.2d at 68 (allocating 100% liability among the parties to the action, even though many other PRPs existed).
55 The district court concluded that R & H paid the United States government $4,636,725 for groundwater related cleanup costs. By using a pro tanto approach and subtracting the $382,807 R & H received in settlements, the district court concluded that the net total R & H paid to the United States for the groundwater cleanup was $4,253,918. Since R & H's share of the cleanup, based upon 3.23% of liability, was $1,602,080, the Capuanos were held liable for $2,651,838—the amount R & H paid in excess of their share. 56 The Capuanos argue that the district court erred in making this calculation because the district court should have determined the equitable pro-rata share of liability of the settling PRPs rather than deducting the monetary amount of the settlements from R & H's costs. CERCLA, as amended by SARA, states that [a] person who has resolved its liability to the United States or a State ... does not discharge any of the other potentially liable persons unless its terms so provide, but it reduces the potential liability of the others by the amount of the settlement. 42 U.S.C. § 9613(f)(2) (emphasis added). We have held that this plain language admits of no construction other than a dollar-for-dollar reduction of the aggregate liability. United States v. Cannons Eng. Corp., 899 F.2d 79, 92 (1st Cir.1990). 57 CERCLA also allows a private party to seek contribution from non-settling parties, but, unlike a settlement with the United States or a State, CERCLA does not instruct a court as to how a settlement agreement between two private parties affects the contribution liability of non-settling parties. See 42 U.S.C. § 9613(f)(1). Rather, CERCLA charges a district court to allocate response costs among liable parties using such equitable factors as the court determines are appropriate. 42 U.S.C. § 9613(f)(1). 58 We read this provision to give the district court discretion regarding the most equitable method of accounting for settling parties. We believe that the district court did not abuse its discretion by applying the pro tanto approach given the circumstances of this case. Courts that have addressed the issue of a private-party contribution suit involving settling parties have debated between two approaches. The first approach, the claim reduction approach, advanced by the Capuanos, follows the method of the Uniform Comparative Fault Act (UCFA), which provides that the liability of non-settlers is reduced by the proportionate share of fault attributed to the settling parties. UCFA § 2. 4 The second approach, the pro tanto approach, follows the method of the Uniform Contribution Among Tortfeasors Act (UCATA), which reduces the liability of litigants by the dollar amount of third-party settlements. UCATA § 4; see Akzo Nobel Coatings, Inc., 197 F.3d at 307-08. 59 Both of these approaches have distinct advantages and disadvantages. The claim reduction approach requires the court to determine the responsibility of all firms that have settled, as well as those still involved in the litigation. Id. at 307. Such a process can lead to a complex and unproductive inquiry and may be unrealistic in situations where waste was deposited by hundreds of polluters for years, if not decades, prior to the litigation. Id. The claim reduction approach has the benefit, however, of ensuring, in theory, that damages are apportioned equitably among the liable parties. 5 60 In contrast, under the pro tanto approach a litigating defendant's liability will frequently differ from its equitable share, because a settlement with one defendant for less than its equitable share requires the nonsettling defendant to pay more than its share. McDermott, Inc. v. AmClyde, 511 U.S. 202, 212, 114 S.Ct. 1461, 128 L.Ed.2d 148 (1994); see Lewis A. Kornhauser & Richard L. Revesz, Settlements Under Joint and Several Liability, 68 N.Y.U. L.Rev. 427, 474 (1993). Nonetheless, the pro tanto approach is easier to administer and is the approach adopted by CERCLA when there is a settlement between a person and the United States or a State. See 42 U.S.C. § 9613(f)(2). 61 The different approaches to accounting for settling parties can produce different results and, for uniformity purposes, it may be wise to choose one of these two approaches. See McDermott, Inc., 511 U.S. at 207, 114 S.Ct. 1461 (granting certiorari because the courts of appeals had differing approaches for determining how a settlement with less than all of the defendants in an admiralty case affect the liability of non-settling defendants). At this juncture, however, we decline to do so. CERCLA provides the district court with the discretion to allocate response costs among liable parties, and we believe that determining how a settlement affects the liability of the non-settling parties is within that discretion. While it is not unimaginable that the use of one of these approaches might produce a result so inequitable that it would constitute an abuse of discretion, in this case it did not and therefore we do not disturb the district court's utilization of the pro tanto approach.
62 The Capuanos contend that the district court committed clear error by basing its findings of fact on the deposition testimony of Warren Picillo, Sr., rather than on the deposition testimony of Jack and Daniel Capuano. Ultimately, weighing the evidence and assessing the witnesses' credibility is uniquely the province of the district court and when there are two permissible views of the evidence ... the factfinder's choice between those competing views cannot be clearly erroneous. Fed Refinance Co. Inc. v. Klock, 352 F.3d 16, 29 (1st Cir.2003) (citations omitted). The task of assessing witness credibility in this case was a difficult one as both sides produced testimony calling for scrupulous credibility evaluation. On the one hand, the testimony contained in Warren Picillo's deposition was tainted by the fact that he had attempted to extort money from the Capuanos in exchange for his silence or favorable testimony. On the other hand, the testimony of Jack and Daniel Capuano was, in the district court's words, wholly incredible as they openly admitted that their prior deposition testimony contained carefully constructed lies. In the end, the district court had to determine whose testimony was believable by examining the testimony of all the parties in relation to the documentary evidence. After conducting the requisite inquiry, we conclude that the district court did not commit clear error in its factual findings.
63 The Capuanos appeal the district court's conclusion that the Capuanos transported hazardous waste to the Picillo site. CERCLA imposes transporter liability on any person who accepts or accepted any hazardous substances for transport to disposal or treatment facilities, incineration vessels or sites selected by such person from which there is a release of hazardous substances. 42 U.S.C. § 9607(a)(4). The district court concluded that United Sanitation and its officers, Jack and Daniel Capuano, were liable as transporters for 7.94% of the waste delivered to the Picillo site since Jack and Daniel selected the Picillo site and United Sanitation transported 960 55-gallon drums of hazardous waste to the site. 64 The Capuanos argue that the district court's finding was clearly erroneous because (1) United Sanitation did not transport hazardous waste; (2) United Sanitation and the Capuanos had no trucks capable of transporting hazardous waste; and (3) the only Capuano remotely identified with hazardous waste disposal was Anthony Capuano. After examining the record, we find that the district court's conclusion that the Capuanos were transporters was not clearly erroneous. 65 First, Picillo testified that the Capuanos themselves brought their own waste down [to the Picillo site] on their own trucks and that some of the barrels came from Danny Capuano's place. Although this testimony supports the finding that the Capuanos physically transported some of the waste, we have interpreted CERCLA not to impose liability on a transporter who merely follows the directives of a generator. See Davis, 261 F.3d at 55. Rather, for CERCLA liability to attach, a transporter must actively participate in the selection decision or have substantial input in that decision. Id. In this case, the Capuanos had substantial input in the decision, often making the final determination whether to allow waste to be dumped at their own land fill or to send it on to the Picillo site. Further, the Capuanos arranged for employees of the Scientific Chemical Corporation to visit the Picillo site as a possible waste dumping location. After viewing the site, the visitors concluded this would be an ideal spot. 66 Second, according to deposition and trial testimony, trucks carrying hazardous waste would arrive at the Capuanos place of business only to be redirected by the Capuanos, or their employee Louie Falcone, to the Picillo site. Indeed, since the Picillo site was difficult to find, the Capuanos would come to the Picillo site in a pick-up truck in front of the big trucks and show them where the farm was and show them where the dump was, to dump the hazardous waste. See 42 U.S.C. § 9601(26) (defining transportation as the movement of a hazardous substance by any mode). 67 Third, when the drivers arrived at the Picillo site, they would give Picillo, Sr. a bill of lading. At the end of the week, Picillo, Sr. would take the bills of lading to the Capuanos to get paid. The record confirms that Mr. Picillo received United Sanitation checks signed by Jack Capuano and Dan Capuano. Although these payments do not, in and of themselves, prove that the Capuanos transported the waste, the payments do support the inference that the Capuanos were involved with the transportation of waste to the Picillo site.
68 The Capuanos appeal the district court's conclusion that the Capuanos were liable as operators of the Picillo site. CERCLA imposes liability on the owner and operator of a vessel or a facility. 42 U.S.C. § 9607(a)(2). The phrase `owner and operator' is defined only by tautology ... as `any person owning or operating' a facility, § 9601(20)(A)(ii).. . . United States v. Bestfoods, 524 U.S. 51, 56, 118 S.Ct. 1876, 141 L.Ed.2d 43 (1998). The Supreme Court has clarified that, under CERCLA, an operator is simply someone who directs the workings of, manages, or conducts the affairs of a facility. Id. at 66, 118 S.Ct. 1876. More specifically, an operator must manage, direct, or conduct operations specifically related to pollution, that is, operations having to do with the leakage or disposal of hazardous waste, or decisions about compliance with environmental regulations. Id. at 66-67, 118 S.Ct. 1876. 69 The district court's conclusion that the Capuanos were operators of the site was not clearly erroneous. First, the Capuanos approached Warren Picillo with the idea of dumping on his pig farm. Once Warren agreed, he gave the Capuanos exclusive disposal rights at the site and the Capuanos hired a bulldozer to clear the trees and dig a big, big hole. The Capuanos walked the operator of the bulldozer to the site and showed him what to do and how to do it. Such actions are consistent with those of an operator of a facility who directs the workings of, manage, or conducts the affairs of a facility. Id. at 56, 118 S.Ct. 1876 (1999). 70 Second, as discussed earlier, the Capuanos directed the hazardous waste to the Picillo site. If the drivers of the waste did not know how to reach the site, the Capuanos would drive them to the site so they could dump the waste. Further, the Capuanos managed and conducted the affairs of the Picillo site by organizing and implementing its payment structure. The waste generators paid the Capuanos to dispose of their waste and then the Capuanos would give Warren Picillo a share of the money. [O]perator liability requires an ultimate finding of ... involvement with operations having to do with the leakage or disposal of hazardous waste. United States v. Kayser-Roth Corp., 272 F.3d 89, 102 (1st Cir.2001) (internal quotations and citation omitted). The fact that the Capuanos developed the idea for using the site, prepared the site for dumping, arranged for waste to be dumped at the site, showed transporters where to dump on the site, and collected payment and transmitted a share to Warren Picillo for dumping at the site demonstrates that the district court's conclusion that the Capuanos were liable as operators of the site was not clearly erroneous.
71 The Capuanos appeal the district court's conclusion that the Capuanos were liable as arrangers. The district court concluded that the Capuanos were arrangers because their conduct constituted active participation as a broker in the disposal of their customer's waste. The Capuanos argue that arranger liability can only be imposed on a party that owned or possessed hazardous materials, not on a party that brokered the disposal of hazardous material. We review whether arranger liability can attach to a party that brokered the disposal of waste de novo as such review entails statutory interpretation of 42 U.S.C. § 9607(a)(3). See United Techs. Corp., 33 F.3d at 98. We review whether the Capuanos acted as a broker for the disposal of hazardous waste for clear error. An arranger is defined as 72 any person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by such person, by any other party or entity, at any facility ... owned or operated by another party or entity and containing such hazardous substances,. . . . 73 42 U.S.C. § 9607(a)(3) (emphasis added). We begin our inquiry by examining the plain language of the statute. This portion of 42 U.S.C. § 9607(a)(3) can be read two ways, depending on which words the clause by any other party or entity modifies. First, this clause can be read to modify the preceding words owned or possessed by such person, which would make liable any person who arranged for the disposal of a hazardous substance owned or possessed by such person [or] by any other party or entity. See United States v. Mottolo, 629 F.Supp. 56, 60 (D.N.H.1984) (holding that the arranger liability provision clearly states that the person who arranges for disposal or transport for disposal of hazardous substances need not own or possess the waste). Or, second, the clause can be read to modify the words disposal or treatment, which would make the sentence read any person who ... arranged for disposal or treatment... by any other party or entity. The sentence structure of § 9607(a)(3) makes it clear that the latter interpretation is the correct one. The clause by any other party or entity clarifies that, for arranger liability to attach, the disposal or treatment must be performed by another party or entity, as was the case here. 74 Some courts have held parties liable as arrangers even if they did not actually own or physically possess the hazardous waste so long as they had the authority to control the handling and disposal of the hazardous substances. See United States v. Northeastern Pharm. & Chem. Co., 810 F.2d 726, 743 (8th Cir.1986) (holding that requiring proof of personal ownership or actual physical possession of hazardous substances as a precondition of liability . . . would be inconsistent with the broad remedial purposes of CERCLA); Gould, Inc. v. A.M. Battery & Tire Serv., 954 F.Supp. 1020 (M.D.Pa.1997); New York v. SCA Servs., Inc., 844 F.Supp. 926 (S.D.N.Y. 1994); Emergency Technical Servs. Corp. v. Morton Int'l, 1993 WL 210531, 1993 U.S. Dist. LEXIS 8018 (N.D.Il.1993); United States v. Bliss, 667 F.Supp. 1298 (E.D.Mo.1987); Mottolo, 629 F.Supp. at 60; see also Sea Lion v. Wall Chem. Corp., 974 F.Supp. 589, 596 (S.D.Tex.1996) (noting that under definitive and well reasoned authorities, the ownership definition [for arranger liability] is quite broad and includes constructive possession). Most of these cases involved a corporate officer of a generator of hazardous waste claiming he could not be liable as an arranger because he did not personally own or possess the waste. Northeastern Pharm., 810 F.2d at 746 (holding that a corporate officer is liable as an arranger for making corporate decisions about the handling an disposal of hazardous substances); Mottolo, 629 F.Supp. at 60 (discussing the liability of a corporate officer). Thus, these holdings reflect the idea that a corporate officer can be liable as an arranger if he controls the decision to dispose of the waste on behalf of his company that owns the waste. These cases are distinguishable from the case at hand because this case does not involve corporate officers; rather it involves a party that does not own the waste and that arranges for the disposal of others' waste. 75 The case of SCA Services, 844 F.Supp. 926, although similar to this case, is also distinguishable. In SCA Services, a transporter accepted waste for disposal. Subsequent to the pickup, the transporter learned it could not dispose of the waste at its designated site, so the transporter arranged for a different transporter to pick up the waste and dispose of it. Id. at 928. In SCA Services, the first transporter went beyond its role as transporter and effectively became an arranger by taking possession of the waste and making arrangements for the waste to be picked up and disposed of by another company. Id. Unlike the transporter in SCA Services, though, the Capuanos did not take possession of the waste before arranging to have it disposed by another transporter. 76 There is a category of cases, however, that involves defendants similar to the Capuanos, brokers who arranged for a generator's waste to be disposed of illegally. See Gould, Inc. 954 F.Supp. 1020 (a broker who arranged for the disposal of waste, made contact with the site, and received a profit is liable as an arranger); Emergency Technical, 1993 WL 210531, 1993 U.S. Dist. LEXIS 8018 (holding that a broker who was actively involved in the timing, manner and location of the disposal of hazardous substances could be liable as an arranger); Bliss, 667 F.Supp. 1298 (broker liable as an arranger because controlled the place and manner of disposal). These cases involved brokers who did not own or transport hazardous waste but controlled the hazardous waste's disposal. These courts held that a broker could be liable as an arranger, and we agree. 77 When a broker arranges for the disposal of hazardous waste and it does so by exercising control over the waste, such control can amount to constructive possession of the waste. Were we to interpret CERCLA not to impose liability on a party that constructively possessed hazardous waste and arranged for its illegal disposal, then the statute would be subject to a loophole through which brokers and middlemen could escape liability by arranging to have hazardous waste picked up and deposited at an illegal site. In addition to escaping liability, the broker would also profit by charging a fee for his services. Indeed, the Capuanos earned most of their profits in this manner. The Capuanos found a site, the Picillo pig farm, where hazardous waste could be dumped illegally. They then arranged for the waste to be picked up from various waste generators across New England and dumped on the illegal site. A broker should not be able to profit from such activity, much less escape liability. We therefore hold that a broker can be liable as an arranger if the broker controls the disposal of the waste. 78 Since the Capuanos, as discussed above, selected, secured, and directed the waste to the Picillo site, all for a fee, it was not clearly erroneous for the district court to conclude that the Capuanos were liable as arrangers given our interpretation of the statute.