Opinion ID: 728910
Heading Depth: 2
Heading Rank: 2

Heading: Analysis of District Court's CERCLA Interpretation

Text: 28 The coalitions aver that many third party defendants-appellees were granted summary judgment based on an erroneous application of CERCLA and the case law interpreting the statute. We address each claim of error.
29 The district court held, in Murtha II, 815 F.Supp. at 546, that [a]bsent a finding by EPA that a particular product warrants classification as a [hazardous substance] ..., it cannot be found that the product, notwithstanding its constituent elements, is an [hazardous substance] or [hazardous waste]. It later clarified that holding, by explaining that mere presence of an element, a named [hazardous substance], as a constituent of a product does not render the product a [hazardous substance]. Murtha III, 840 F.Supp. at 184. 30 In Murtha I we rejected the contention that a specific mixture or waste solution must be listed within § 9601(14) or incorporated by reference in order to fall within CERCLA's coverage. We explained that [w]hen a mixture or waste solution contains hazardous substances, that mixture is itself hazardous for purposes of determining CERCLA liability. Liability under CERCLA depends only on the presence in any form of listed hazardous substances. Murtha I, 958 F.2d at 1201; see also United States v. Alcan Aluminum Corp., 964 F.2d 252, 259-61 (3d Cir.1992) (rejecting quantitative requirement); Amoco Oil Co. v. Borden, Inc., 889 F.2d 664, 669 (5th Cir.1989) (same). 31 It is enough that a mixture or waste solution contain a hazardous substance for that mixture to be deemed hazardous under CERCLA. The waste product itself need not be listed by name--instead of its constituent components--to fall within the Act. Murtha I, 958 F.2d at 1201; see also Louisiana-Pacific Corp. v. ASARCO Inc., 24 F.3d 1565, 1573 (9th Cir.1994) (holding that even if product not specifically listed as hazardous substance, if components include hazardous substances, product is regulated by CERCLA), cert. denied, 513 U.S. 1103, 115 S.Ct. 780, 130 L.Ed.2d 674 (1995); Eagle-Picher Indus. v. EPA, 759 F.2d 922, 930-31 (D.C.Cir.1985) (rejecting contention that because most mining wastes and fly ash contain some hazardous substances, mining wastes and fly ash must therefore be specifically listed as hazardous substances). 32 Our understanding is also consistent with Congress' plan. Legislative history reveals that the release of any [listed hazardous or toxic substance] or any constituent of them invokes the notice requirements and response provisions and any costs of removal or remedial action or any damages are subject to the liability provisions of the bill. Senate Report at 24-27, Leg.Hist. at 331 (emphasis added). In short, it makes no difference that the specific wastes disposed of by the appellees were not themselves listed as hazardous substances, because so long as their component parts were listed as hazardous substances there may be CERCLA liability. 33 Appellees declare this approach will lead to CERCLA liability if a discarded object had any EPA listed hazardous substance in its chemical genealogy, whether or not the chemical component's characteristics had been unalterably changed in the manufacturing process. Even if this objection is sound in theory, it is not relevant. The instant case involves not only discarded objects like pens or plastic containers that might include a hazardous substance in their chemical make-up. Appellees are accused of dumping waste that contained hazardous substances in separable, identifiable forms. According to an affidavit submitted by the coalitions, the cumulative waste stream discarded in the Murtha's landfills included municipal sludge, incinerator ash, varnishes, paints, tar remover, caulking compounds, pesticides, glues, degreasers, and automotive lubricants. Obviously, disposal of this sort of waste poses a greater threat of releasing hazardous substances than is presented by--to use an example offered by the appellees at oral argument--the disposal of a single plastic pen. 34 In an attempt to avoid this conclusion, appellees invoke Massachusetts v. Blackstone Valley Elec. Co., 67 F.3d 981, 992-93 (1st Cir.1995). Blackstone held that the EPA should make an initial determination of whether ferric ferrocyanide (FFC)--in this case a blue-colored substance on wood chips--is a cyanide and therefore a hazardous substance. The First Circuit ruled that even if FFC contained cyanide as a chemical component, the cyanide might not exist in a form convertible to free cyanide and therefore might not be a CERCLA hazardous substance. Id. at 990-91. However, in this case, the First Circuit focused on whether FFC was a hazardous substance. It did not suggest that were FFC found to be a hazardous substance, liability might be avoided because wood chips--the product allegedly discarded by the polluter--were not in themselves hazardous substances within the Act's definition. In short, the appellees' reliance on Blackstone is misplaced. 35 Thus, those dismissals in the present case that were predicated on the notion that a waste product is not covered by CERCLA unless specifically listed as a hazardous substance--even when its component parts are hazardous substances--misconstrued CERCLA and must be reversed.
36 The trial court ruled further that [t]he absence of evidence of breakdown of products that contain [hazardous substances] ... precludes a finding that disposal of that product constitutes a disposal of [hazardous substances]. Murtha II, 815 F.Supp. at 545. Later, it explained that statement by saying that [l]iability does not lie if the material disposed of would release a [hazardous substance] only on the intervention of another force. Murtha III, 840 F.Supp. at 188. The coalitions believe that these pronouncements were wrong. 37 As noted, to make out a prima facie CERCLA case, a plaintiff must show a release, or a threatened release ... of a hazardous substance. § 9607(a)(4). Accordingly, if a hazardous substance is only used in a non-releasable form in the manufacturing of a product, it may scientifically be impossible for the plaintiff to show a threatened release. Hence, the district court properly required plaintiffs to show a release or threatened release. But, when it required them to show an actual breakdown of products containing hazardous substances, and determined there was no liability if the hazardous substances would only be released by an intervening force, it acted in a manner contrary to precedent. 38 In Alcan, we held that proof that a defendant's waste did not release listed hazardous substances is only relevant to the issue of apportionment of damages, not to the issue of liability. Alcan, 990 F.2d at 722. Independent releasability is not required to establish liability; a defendant otherwise liable may show nonreleasability in order to mitigate its share of damages. It follows logically that a defendant who disposes of hazardous substances that are not independently releasable may still be held liable, even though that defendant may not be required to pay damages when the cost apportionment phase of the litigation is reached. 39 In addition, the trial court's reading of CERCLA is inconsistent with the Act's language, which provides only the four already recited causation-related defenses. 42 U.S.C. § 9607(b). The canon of construction that says expressio unius est exclusio alterius cautions against creating additional exceptions to complex statutory enactments. Cf. Greene v. United States, 79 F.3d 1348, 1355 (2d Cir.1996) (applying this principle in the context of federal tax law). 40 Moreover, if we required a plaintiff to show more than a release or threatened release, we essentially would be asking the plaintiffs to prove that a specific defendant's hazardous substances caused the release of a hazardous substance. No causation is needed, however, to establish liability under CERCLA, see Alcan, 990 F.2d at 721, because it is, as stated, a strict liability statute. See Shore Realty, 759 F.2d at 1042; see also Alcan Aluminum, 964 F.2d at 266 (requiring only that plaintiff prove that hazardous substances were deposited at a site from which there was a release or threatened release that caused response costs to be incurred); Amoco, 889 F.2d at 670 n. 8 ([I]n cases involving multiple sources of contamination, a plaintiff need not prove a specific causal link between costs incurred and an individual generator's waste.). 41 None of the lower court cases upon which the district court relied as precedent for its view regarding releasability is persuasive. See, e.g., United States v. New Castle County, 769 F.Supp. 591, 597 (D.Del.1991); United States v. Serafini, 750 F.Supp. 168, 171 (M.D.Pa.1990). Although appellants must show a release or threatened release in order to make out a prima facie case, the additional releasability requirement of product breakdown finds no support in CERCLA.
42 The coalitions further contend that the district court impermissibly required a showing that appellees disposed of hazardous substances above a threshold amount. It granted summary judgment to an appellee where the amounts of hazardous substances it disposed of were minuscule, Murtha III, 840 F.Supp. at 184, or [n]ominal, Murtha II, 815 F.Supp. at 545. Twice we have said that quantity is not a factor when determining CERCLA liability because had Congress wanted to distinguish liability on the basis of quantity, it would have so provided. Murtha I, 958 F.2d at 1200; see also Alcan, 990 F.2d at 720 (The statute on its face applies to 'any' hazardous substance, and it does not impose quantitative requirements.). The absence of threshold quantity requirements in CERCLA leads logically to the conclusion that the Act's hazardous substance definition includes even minimal amounts. See Alcan, 990 F.2d at 720. The dismissals on these grounds constitute legal error.
43 The trial judge implied, in a few cases, that the EPA's decision not to designate a party as a potentially responsible party is relevant in determining CERCLA liability. See, e.g., Murtha III, 840 F.Supp. at 184 ([Appellee] was not designated as a PRP by the EPA.). In Murtha I, 958 F.2d at 1205, we concluded that EPA policy merely indicates that the EPA presently does not intend to pursue enforcement actions against unnamed parties. However, here the district court weighed the plaintiffs' evidence of liability against the backdrop of the EPA Municipal Policy that a [party] would not be charged as a PRP absent evidence that its waste deposited at the site in question contained specific [hazardous substances]. Murtha III, 840 F.Supp. at 188. 44 EPA enforcement decisions are not helpful in deciding whether a party is properly joined as a defendant in a given action. See Murtha I, 958 F.2d at 1205 (explaining that EPA prosecutes only largest contributors or those with the means to pay, leaving those defendants to seek contribution from other potentially liable polluters). This is consistent with the general understanding that [a]n agency generally cannot act against each technical violation of the statute it is charged with enforcing. Heckler v. Chaney, 470 U.S. 821, 831, 105 S.Ct. 1649, 1656, 84 L.Ed.2d 714 (1985). Congress has explicitly authorized private rights of action independent of EPA enforcement decisions. For these reasons, the agency's decision not to initiate its own enforcement action is irrelevant in determining whether a defendant might be liable under CERCLA. 45 Appellees maintain that no decision was made in any case in exclusive reliance on the EPA policy, and that the court's reference to that policy was merely illustrative. It is difficult to see what the EPA policy illustrated, as we have ruled that the policy is legally irrelevant when determining CERCLA liability. To the extent the district court relied upon an EPA designation in deciding whether to grant summary judgment, it committed error.
46 Several decisions were made regarding the scope of successor liability. In the case of one appellee, it was found that although the successor continued its predecessor's business using its former assets, employees and customers, summary judgment in favor of that appellee on liability was proper. Murtha III, 840 F.Supp. at 185. In another instance, no successor liability was found even when [a] prior sole proprietorship was conducted under a comparable name and the predecessor sold the business and related assets to [a successor]. Id. at 191. A third case was dismissed despite a successor's purchase of assets and continuation of the predecessor's business. Id. at 190. 47 The district court did not explicitly formulate a test for deciding when successor liability exists. See Murtha III, 840 F.Supp. at 185. And, although the question has been addressed in other circuits, we have yet to decide exactly what is required for successor liability under CERCLA, see New York v. N. Storonske Cooperage Co., 174 B.R. 366, 374 (N.D.N.Y.1994) (recognizing that we have not decided this issue). We turn to this question now. 48 We consider first the Act's language, recognizing at the outset that the Act has no provision explicitly governing corporate successor liability. See Smith Land & Improvement Corp. v. Celotex Corp., 851 F.2d 86, 91 (3d Cir.1988) (CERCLA failed to address many important issues, including corporate successor liability.), cert. denied, 488 U.S. 1029, 109 S.Ct. 837, 102 L.Ed.2d 969 (1989); see also United States v. Carolina Transformer Co., 978 F.2d 832, 837 (4th Cir.1992) (explaining that CERCLA is silent on this subject); Louisiana-Pacific Corp. v. Asarco, Inc., 909 F.2d 1260, 1263 (9th Cir.1990) (Congress has not addressed the issue of successor liability under CERCLA.). 49 Nonetheless, most courts have read CERCLA as making successor corporations liable, in certain circumstances, for their predecessors' acts. Carolina Transformer, 978 F.2d at 837; Anspec Co. v. Johnson Controls, Inc., 922 F.2d 1240, 1245 (6th Cir.1991); Louisiana-Pacific, 909 F.2d at 1263; Smith Land, 851 F.2d at 91-92; N. Storonske, 174 B.R. at 374; In Re Acushnet River & New Bedford Harbor Proceedings Re Alleged PCB Pollution, 712 F.Supp. 1010, 1013 (D.Mass.1989) (following Smith Land ). See United States v. Mexico Feed & Seed Co., 980 F.2d 478, 487 (8th Cir.1992) (successor corporations are persons liable under CERCLA). 50 In our view CERCLA imposes successor liability. The plain language of the Act imposes liability on any person who fits within the four categories of liable parties. 42 U.S.C. § 9607(a). Person is defined to include, inter alia, a corporation, association, partnership, consortium, joint venture, [or] commercial entity. § 9601(21). Further, federal law provides a rule of construction that when the word company or association is used, it embrace[s] the words 'successors and assigns of such company or association.'  1 U.S.C. § 5; see Anspec, 922 F.2d at 1247 (applying § 5 in analyzing CERCLA liability). Thus, CERCLA's statutory language, properly read, provides for successor liability. 51 Moreover, the Act's broad remedial purpose would be sharply curtailed if the Act did not encompass successor liability. As the Third Circuit has observed, [t]he concerns that have led to a corporation's common law liability ... for the torts of its predecessor are equally applicable to the assessment of responsibility for clean-up costs under CERCLA. Smith Land, 851 F.2d at 91. In other words, absent successor liability, a predecessor could benefit from the illegal disposal of hazardous substances and later evade responsibility for remediation simply by changing the form in which it does business, thereby subverting the Act's purpose of holding responsible parties liable for cleanup costs. See Murtha I, 958 F.2d at 1198. We will not read § 9607(a) in a manner that would defeat Congress' overall purpose, absent an express statement from the legislature that we do so. See Shore Realty, 759 F.2d at 1045. 52 A number of courts have recognized the importance of national uniformity and applied traditional rules of successor liability, rather than the successor liability law of a given state. See Smith Land, 851 F.2d at 92 (instructing district court to consider national uniformity in resolving successor liability issues under CERCLA); see also Mexico Feed, 980 F.2d at 487 n. 9 (upholding the application of federal law); Louisiana-Pacific, 909 F.2d at 1263 & n. 2 (deeming appropriate a federal rule that relies on traditional common law notions because of the need for national uniformity). But see Anspec, 922 F.2d at 1248 (applying successor liability law of forum state); N. Storonske, 174 B.R. at 375 (applying a mixture of state and traditional norms). The traditional common law rule states that a corporation acquiring the assets of another corporation only takes on its liabilities if any of the following apply: the successor expressly or impliedly agrees to assume them; the transaction may be viewed as a de facto merger or consolidation; the successor is a mere continuation of the predecessor; or the transaction is fraudulent. Carolina Transformer, 978 F.2d at 838; see also Mexico Feed, 980 F.2d at 487; Louisiana-Pacific, 909 F.2d at 1263. Both sides agree that this is the standard. 53 The coalitions contend that when determining whether there is a mere continuation, we should not use the common law test (sometimes referred to as the identity test), which requires the existence of a single corporation after the transfer of assets, with an identity of stock, stockholders, and directors between the successor and predecessor corporations. See Carolina Transformer, 978 F.2d at 838 (explaining traditional rule). Rather, they urge that we employ the continuity of enterprise approach, also called the substantial continuity rule. The Supreme Court has followed this approach in the labor law context by asking if the successor maintains the same business, with the same employees doing the same jobs, under the same supervisors, working conditions, and production processes, and produces the same products for the same customers. Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 43, 107 S.Ct. 2225, 2236, 96 L.Ed.2d 22 (1987); see also Mozingo v. Correct Mfg. Corp., 752 F.2d 168, 175 (5th Cir.1985) (using a slightly different version of substantial continuity test). 54 CERCLA is entitled to a construction that advances its primary goals. Because the substantial continuity test is more consistent with the Act's goals, it is superior to the older and more inflexible identity rule, see Carolina Transformer, 978 F.2d at 838, 840 (endorsing this approach); see also Mexico Feed, 980 F.2d at 487-89 (same); United States v. Western Processing Co., 751 F.Supp. 902, 905 (W.D.Wash.1990) (looking to continuing business test). But see Sylvester Bros. Dev. Co. v. Burlington Northern R.R., 772 F.Supp. 443, 447-49 (D.Minn.1990) (declining to apply the continuing business enterprise test). We therefore adopt the substantial continuity test as the appropriate legal test for successor liability under CERCLA. Cf. Schiavone, 79 F.3d at 255 (recognizing direct operator liability because it is compatible with statutory language and consistent with CERCLA's remedial scheme). 55 The district court spent little time exploring this question. It noted the coalitions' citation to Turner v. Bituminous Casualty Co., 397 Mich. 406, 244 N.W.2d 873, 883 (1976), an early case defining the continuity of the enterprise or substantial continuity approach, yet refused to impose successor liability without convincing authority. Murtha III, 840 F.Supp. at 185. Because an approach quite similar to that used in Turner is the one we follow in determining successor liability, we must reverse those grants of summary judgment where the district court applied a different and more restrictive law of successor liability.
56 Summary judgment also was granted to several alleged transporters of hazardous substances for various reasons, including those we have already discussed. An additional reason was offered for the decision concerning the transporters--they were held not liable because they were directed to the sites or transfer stations by others. Id. Hence, we must address the legal question of whether site-selection is a required element for transporter liability. The Act imposes liability on 57 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, or a threatened release which causes the incurrence of response costs, of a hazardous substance 58 42 U.S.C. § 9607(a)(4). This awkwardly worded provision requires that we decide whether selected by such person modifies the entire phrase disposal or treatment facilities, incineration vessels or sites or only the immediately antecedent word sites. If the latter reading is correct, there is no basis for imposing a site-selection requirement for transporter liability where the substances were, as here, disposed of at a disposal or treatment facility. 59 The appellants offer two principal arguments in support of this reading. First, they point out that the Act elsewhere defines a facility as any site ... where a hazardous substance has been deposited, stored, disposed of, or placed. 42 U.S.C. § 9601(9). They aver that reading the selected by such person language to apply only to sites other than those where hazardous substances have been deposited, stored, disposed of, or placed, is therefore necessary to prevent the word sites from being redundant. See, e.g., Bailey v. United States, --- U.S. ----, ----, 116 S.Ct. 501, 507, 133 L.Ed.2d 472 (1995) (construing statute to avoid making words redundant). Second, they urge that we keep in mind the Act's legislative purpose of making all who profit from pollution pay for their conduct. 60 Recently, a sister Circuit concluded that CERCLA includes a site-selection requirement for transporters. Tippins Inc. v. USX Corp., 37 F.3d 87, 94 (3d Cir.1994). While noting the canon of statutory construction that absent a clear intention to the contrary, a modifier's reference is to the closest noun, id. at 93, the court recognized that this canon need not be followed in all instances. Id.; see also Nobelman v. American Sav. Bank, 508 U.S. 324, 330-31, 113 S.Ct. 2106, 2110-11, 124 L.Ed.2d 228 (1993) (reliance on the rule of the last antecedent is not compelled). Here, following the canon and adopting the appellants' rule would create an odd paradox: A transporter who brought hazardous substances to a disposal facility would be strictly liable, while a transporter who brought hazardous substances to some site other than a facility would not be liable unless the transporter itself selected the site. Tippins, 37 F.3d at 93-94. Thus, the coalitions' reading, while quite sensible as a matter of grammar, Nobelman, 508 U.S. at 330, 113 S.Ct. at 2111, would lead to a curious result. Tippins, 37 F.3d at 93. 61 The Third Circuit's conclusion is consistent with most other courts that have considered the subject. See id. (collecting cases); see also United States v. Hardage, 985 F.2d 1427, 1435 (10th Cir.1993) (requiring site selection for transporter liability); United States v. Petersen Sand & Gravel, Inc., 806 F.Supp. 1346, 1356 (N.D.Ill.1992) (same); Alcatel Info. Sys. v. Arizona, 778 F.Supp. 1092, 1096 (D.Ariz.1991) (same); United States v. Western Processing Co., 756 F.Supp. 1416, 1420 (W.D.Wash.1991) (same). But see Prisco v. New York, 902 F.Supp. 374, 388 (S.D.N.Y.1995) (stating test for transporter liability without noting a site selection requirement); Jersey City Redevelopment Auth. v. PPG Indus., No. CIV.A. 85-2014, 1987 WL 54410, at  5 (D.N.J. Sept. 3, 1987) (finding that selected by the transporter modifies only sites), aff'd without written opinion, 866 F.2d 1410, 1411 (3d Cir.1988). 62 We are persuaded by the reasoning of Tippins and hold that only transporters who select the disposal location are liable under CERCLA. As a consequence, we agree with the district court that unless the transporters selected the facility or disposal site, they cannot be found liable under the Act. However, the meaning of the word selected is hardly clear. Tippins, 37 F.3d at 94, determined that a transporter is properly liable under the Act when it ultimately selects the disposal facility or when its active participation in the decision amounted to substantial input into which facility was ultimately chosen. 63 This view accords with the Act's language and purpose. First, a transporter can be said to select a facility or site when it helps the generator choose a disposal facility by recommending a facility or set of facilities. Second, a transporter who plays an active role in choosing the disposal facility is obviously more culpable and responsible for the resultant harm than a transporter who simply does the bidding of a given generator; the latter has a more attenuated connection to the harm. An active participation standard recognizes the often significant role played by transporters in choosing the disposal site. Hence, in cases of transporter liability, we must vacate the grants of summary judgment and remand for further consideration in light of the above discussion. II Procedural Issues 64 We address next appellants' procedural arguments that are common to a great many of the cases before us. A. Summary Judgment Standard 65 We have recognized in CERCLA's context that summary judgment is a powerful legal tool[ ] that can avoid lengthy and perhaps needless litigation. Alcan, 990 F.2d at 720. This tool is one well adapted to encouraging settlement and speeding remediation. See In Re Cuyahoga Equip. Corp., 980 F.2d at 119 (CERCLA designed to encourage settlement to reduce litigation costs). Its utility in CERCLA litigation is not a license to use it when material facts are genuinely disputed. Just as there is no heightened pleading standard in CERCLA cases, see Warwick Admin. Group v. Avon Prods., Inc., 820 F.Supp. 116, 121 (S.D.N.Y.1993); cf. Leatherman v. Tarrant County Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 168, 113 S.Ct. 1160, 1163, 122 L.Ed.2d 517 (1993) (heightened pleading requirement exists only in cases involving fraud or mistake), the showing required to survive summary judgment also remains the same. 66 We now briefly describe the standard for summary judgment under Fed.R.Civ.P. 56. A party moving for summary judgment has the burden of showing the absence of a genuine issue of material fact. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970). When a court is confronted with facts that permit several different conclusions, all inferences from the underlying facts must be drawn in the nonmovant's favor. Quaratino v. Tiffany & Co., 71 F.3d 58, 64 (2d Cir.1995). The trial court must bear in mind that [c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513-14, 91 L.Ed.2d 202 (1986). 67 If the movant demonstrates an absence of material issues of fact, a limited burden of production shifts to the non-movant, which must demonstrate more than 'some metaphysical doubt as to the material facts, ... [and] must come forward with specific facts showing that there is a genuine issue for trial. '  Aslanidis v. United States Lines, Inc., 7 F.3d 1067, 1072 (2d Cir.1993) (citations and emphasis omitted). Summary judgment, then is granted only when there is an absence of evidence to support the nonmoving party's case, Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2553-54, 91 L.Ed.2d 265 (1986), or, in other words, only if no rational jury could find in favor of the nonmoving party because the evidence to support its case is so slight. Gallo v. Prudential Residential Servs., 22 F.3d 1219, 1224 (2d Cir.1994). The trial court's task is carefully limited to discerning whether there are any genuine issues of material fact to be tried, not to deciding them. Its duty, in short, is confined at this point to issue-finding; it does not extend to issue-resolution. Id. B. Sua Sponte Summary Judgment 68 The district court granted summary judgment sua sponte in a number of cases. A sua sponte grant of summary judgment may be appropriate so long as the losing party was notified prior to its grant and given the opportunity to produce whatever proof it has in opposition. Celotex, 477 U.S. at 326, 106 S.Ct. at 2554; see also FLLI Moretti Cereali S.P.A. v. Continental Grain Co., 563 F.2d 563, 565 (2d Cir.1977) (power to grant summary judgment sua sponte must be exercised with great caution and with care taken to give the parties an opportunity to present materials in opposition). To ensure the parties have notice and an opportunity to be heard, we have established a policy of adhering closely to the ten day notice period specified by Rule 56(c). See Scottish Air Int'l, Inc. v. British Caledonian Group, PLC, 945 F.2d 53, 55 (2d Cir.1991) (per curiam). 69 Notice furthers two important interests. First, it gives the losing party an opportunity to develop the record to demonstrate that genuine material issues are in dispute or that determinative legal questions should be resolved in its favor, and thereby prevents the losing party from suffering procedural prejudice. Second, the parties' development of a complete record facilitates de novo appellate review. See Hispanics For Fair and Equitable Reapportionment (H-FERA) v. Griffin, 958 F.2d 24, 25 (2d Cir.1992) (per curiam). When the non-moving party asserts that it cannot adequately respond to its opponent's motion for summary judgment in fewer than ten days, it should be given the full ten days unless there is good reason to believe that the assertion is a sham. See Gutwein v. Roche Labs., 739 F.2d 93, 96 (2d Cir.1984). Here, the coalitions insist they were denied notice and an opportunity to be heard before the district court granted summary judgment sua sponte against them in a number of cases. 70 Our review of the underlying procedural history indicates that such was the case. On December 20, 1993, the trial court ordered the coalitions to file a list of third parties that the coalitions intended to pursue. Murtha III, 840 F.Supp. at 191. Although it directed the coalitions to be sure that [its prior] rulings ... are fully considered and accommodated, id., this is too vague an admonition to be deemed equivalent to notice. When the coalitions asked for additional time, their request was denied and the prior order was reaffirmed. Three weeks later, on January 10, 1994, the coalitions were again ordered to review their files and list those third party claims each intends to pursue as valid. The district court further explained that [a]ny third party claim not so listed by January 21, 1994, will be dismissed as not intended to be prosecuted further. 71 The district court acknowledged--in an order dated February 5, 1994--that appellants eventually prepared and presented such lists but, rather than simply dismissing those claims the coalitions did not intend to pursue, the district court dismissed a great many others sua sponte. In a case involving some 3000 filings, the coalitions were no doubt dedicating most of their effort between December 20, 1993 and February 5, 1994 to sifting through their records and compiling the list requested by the trial court. The coalitions were not asked to produce supporting papers or legal arguments to undergird their liability claims--they were only directed to submit a list within 11 days of the January 10 order. It is hardly surprising that the coalitions simply submitted the lists and did little else. 72 A more prudent course for the district court would have been to give the coalitions ten days' notice to show good cause why summary judgment should not be granted against them. Such a course also would have given the district court the benefit of the arguments and evidence of both sides and would have provided a more complete record on appeal. See Herzog & Straus v. GRT Corp., 553 F.2d 789, 792 & n. 5 (2d Cir.1977) (notice and opportunity to make arguments are vital to making an informed judgment); cf. Volvo N. Am. Corp. v. Men's Int'l Professional Tennis Council, 857 F.2d 55, 65 (2d Cir.1988) (ruling erroneous a decision to grant motion to dismiss on ground neither raised nor briefed by parties). As the record currently stands, we have no knowledge of the precise reasons for the district court's decision to grant summary judgment sua sponte in those cases where it took that course of action. It said only that there was want of substantiation, a truism that necessarily applies to all grants of summary judgment and which adds nothing to our understanding of the trial court's decision. Because the coalitions' claims are not demonstrably frivolous, the summary judgment dismissals, made sua sponte without ten days' notice, were error.