Court Opinion

ID: 619123
Source: CourtListenerOpinion
Date Created: 2011-12-19 15:52:04+00
Date Added: 2024-06-11T17:50:47.680243
License: Public Domain

10-2026-cv
     State of New York v. Solvent Chemical Co. et al.

                          UNITED STATES COURT OF APPEALS
                              FOR THE SECOND CIRCUIT

                                     SUMMARY ORDER
     RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
     ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
     PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
     DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
     ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
     SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

 1            At a stated term of the United States Court of Appeals
 2       for the Second Circuit, held at the Daniel Patrick Moynihan
 3       United States Courthouse, 500 Pearl Street, in the City of
 4       New York, on the 19th day of December, two thousand eleven.
 5
 6       PRESENT: DENNIS JACOBS,
 7                              Chief Judge,
 8                PETER W. HALL,
 9                GERARD E. LYNCH,
10                              Circuit Judges.
11
12       - - - - - - - - - - - - - - - - - - - -X
13       STATE OF NEW YORK,
14                Plaintiff,
15
16                    -v.-                                        10-2026-cv(L)
17                                                                10-2166-cv(XAP)
18       SOLVENT CHEMICAL COMPANY, INC.,                          10-2383-cv(XAP)
19                Defendant-Third Party
20                Plaintiff-Appellant-Cross
21                Appellee,
22
23       ICC INDUSTRIES, INC.,
24                Defendant-Third Party
25                Plaintiff-Cross Appellee,
26
27                    -v.-
28

                                                  1
 1   OLIN CORPORATION,
 2            Third Party Defendant-
 3            Counterclaimant-Appellee-
 4            Cross Appellant,
 5
 6   E.I. DU PONT DE NEMOURS & COMPANY,
 7            Third Party Defendant-
 8            Appellee-Cross Appellant.
 9
10   - - - - - - - - - - - - - - - - - - - -X
11
12   FOR APPELLANT:             Dennis P. Harkawik, Charles D.
13                              Grieco, Brenda J. Joyce, Jaeckle
14                              Fleischmann & Mugel, LLP,
15                              Buffalo, New York, for Appellant
16                              Solvent Chemical Company, Inc.
17
18   FOR CROSS APPELLEE:        Irwin F. Roth, Law Office of
19                              Irwin Roth, New York, New York,
20                              Robert J. Basil, Collier &
21                              Basil, P.C., New York, New York,
22                              for Cross Appellee ICC
23                              Industries, Inc.
24
25   FOR APPELLEES:             Daniel M. Darragh, Cohen &
26                              Grigsby, P.C., Pittsburgh,
27                              Pennsylvania, for Appellee E.I.
28                              du Pont de Nemours & Company.
29
30                              JoAnn T. Sandifer, Michael H.
31                              Wetmore, Joel B. Samson, Husch
32                              Blackwell LLP, St. Louis,
33                              Missouri, for Appellee Olin
34                              Corporation.
35
36
37        Appeal from a judgment of the United States District
38   Court for the Western District of New York (Curtin, J.).
39
40        UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
41   AND DECREED that the judgment of the district court be
42   AFFIRMED IN PART, VACATED IN PART, REVERSED IN PART, AND
43   REMANDED.

                                  2
 1        Both sides appeal from a judgment entered by the United
 2   States District Court for the Western District of New York
 3   (Curtin, J.), resolving protracted litigation about who
 4   bears liability under the Comprehensive Environmental
 5   Response and Compensation Act (“CERCLA”), 42 U.S.C. §§
 6   9601-9675, for pollution at adjoining industrial sites. New
 7   York v. Solvent Chemical Co., 685 F. Supp. 2d 357 (W.D.N.Y.
 8   2010). In a separate opinion issued today in Docket No. 10-
 9   2026-cv, we reverse the denial of Solvent’s request for a
10   declaratory judgment that the appellees are liable for
11   future contribution costs.
12
13        We assume the parties’ familiarity with the underlying
14   facts, procedural history, and issues presented for review,
15   and here set forth only the most salient aspects of the
16   case.
17
18        For some decades, three companies owned adjoining
19   facilities in the City of Niagara Falls, New York. E.I. du
20   Pont de Nemours & Co. (“DuPont”) owned and operated a
21   chemical facility on water near the Niagara River. Solvent
22   Chemical Company, Inc. (“Solvent”) and Olin Corporation
23   (“Olin”) owned and operated adjoining sites inland of
24   DuPont’s. The Olin property (which is known as the Olin Hot
25   Spot) is bounded by the Solvent property on one side and on
26   the other side by Gill Creek, which continues across the
27   DuPont site into the waterway. An 18-inch drainage pipe,
28   running under the Olin property, carried drainage from the
29   Solvent Site into Gill Creek. During World War II, DuPont
30   operated a chemical facility on what became the Solvent
31   Site.
32
33        In 1983, New York sued Solvent, its parent company, ICC
34   Industries, Inc. (“ICC”), and others for environmental
35   contamination at the Solvent Site (“Solvent I”). Three
36   years later, Solvent filed a third-party complaint against
37   DuPont, seeking contribution from DuPont for pollution
38   generated from DuPont’s operations on the Solvent Site
39   during World War II. New York added DuPont as a defendant
40   soon after. In 1996, the New York Department of
41   Environmental Conservation (“DEC”) issued a Record of
42   Decision (“ROD”) requiring Solvent to undertake remedial
43   action at both the Solvent Site and the Olin Hot Spot as a
44   result of chlorinated benzene contamination. Solvent

                                  3
 1   entered into a consent decree with New York obligating it to
 2   perform the remedies specified in the ROD in settlement of
 3   New York’s CERCLA claims. Solvent began construction of the
 4   remedies in 1999 and continues to operate them today.
 5
 6        DuPont signed a consent decree with New York resolving
 7   its liability for pollution at the Solvent Site stemming
 8   from its own operations on the site during World War II.
 9   The consent decree specifically excluded pollution
10   originating from the neighboring DuPont facility and
11   migrating to the Solvent Site or Olin Hot Spot.
12
13        In 1998, Solvent filed a fifth amended third-party
14   complaint adding Olin as a party and seeking contribution
15   for its response costs incurred under its consent decree
16   with New York. Olin counterclaimed against Solvent and
17   filed a fourth-party claim against ICC seeking to recover a
18   portion of response costs incurred while cleaning up Gill
19   Creek in the early 1990s.
20
21        In 2001, Solvent commenced a new suit against DuPont
22   asserting both cost recovery and contribution claims under
23   CERCLA for the costs incurred under its consent decree with
24   New York that resulted from migration of chlorinated
25   aliphatics from the adjoining DuPont facility onto the
26   Solvent Site and Olin Hot Spot (“Solvent II”).
27
28        Solvent I and Solvent II were consolidated and tried
29   without a jury over 19 days in late 2007. The district
30   court entered judgment on May 14, 2010, awarding Solvent
31   contribution from DuPont in the amount of $2,050,371 and
32   from Olin in the amount of $462,288 for costs incurred prior
33   a date in 2007 (chosen for administrative convenience). It
34   denied Solvent’s prayer for a declaratory judgment that
35   DuPont and Olin were liable for future cleanup costs. The
36   court also ordered Solvent to pay Olin $8,041 for the
37   cleanup of Gill Creek.
38
39        Solvent’s CERCLA Contribution Claim. The judgment
40   requires DuPont and Olin to contribute to the costs incurred
41   by Solvent in cleaning up the Solvent Site and the Olin Hot
42   Spot. We affirm. The Solvent obligation arose under its
43   consent decree with New York. Solvent is therefore entitled
44   to seek contribution from potentially responsible parties

                                  4
 1   (“PRPs”) under CERCLA’s contribution provision. See 42
 2   U.S.C. § 9613(f)(3)(B) [CERCLA § 113(f)(3)(B)] (“A person
 3   who has resolved its liability to the United States or a
 4   State for some or all of a response action or for some or
 5   all of the costs of such action in an administrative or
 6   judicially approved settlement may seek contribution from
 7   any person . . . .”).
 8
 9        DuPont argues that Solvent cannot obtain relief under
10   subsection 113(f)(3)(B) because Solvent’s complaint linked
11   the contribution claim to subsection 113(f)(1). Even if the
12   two subsections constitute separate causes of action for
13   contribution, it is the factual allegations that render a
14   federal complaint viable, not a recitation of statutes. See
15   Albert v. Carovano, 851 F.2d 561, 571 n.3 (2d Cir. 1988).
16   The filing of Solvent’s original complaint (Solvent II) put
17   DuPont on notice that Solvent was seeking contribution for
18   costs it was incurring to clean up the Solvent Site and Olin
19   Hot Spot pursuant to a consent decree with New York. This
20   suffices to state a claim for contribution under CERCLA.
21   Cf. Consol. Edison Co. of N.Y., Inc. v. UGI Utils., Inc.,
22   423 F.3d 90, 104 (2d Cir. 2005) (finding that party
23   adequately pled claim for cost recovery under section 107(a)
24   when it had erroneously cited section 113(f)(1) in its
25   complaint).1 We also find that DuPont failed to preserve
26   any statute of limitations defense that it had to Solvent’s
27   claim by failing to raise it until 2006.
28
29        The district court did not err in concluding that
30   Solvent sustained its burden of proof: (1) DuPont was a PRP
31   under section 107(a); (2) the DuPont plant is a facility
32   under section 101(9); (3) DuPont released hazardous
33   substances at the facility; (4) Solvent incurred some costs
34   in responding to the release; and (5) the costs incurred
35   conform to the National Contingency Plan. See Prisco v. A &
36   D Carting Corp., 168 F.3d 593, 602-03 (2d Cir. 1999).
37   DuPont argues that it cannot have common liability at the
38   DuPont Site or Hot Spot because it released chemicals at a
39   neighboring plant. Not so. See Niagara Mohawk Power Corp.

         1
           We do not express an opinion on whether Solvent may
     proceed on its § 107(a) claim, as that claim is unnecessary
     to Solvent’s recovery here.
                                  5
 1   v. Chevron U.S.A., Inc., 596 F.3d 112, 134-35 (2d Cir.
 2   2010).
 3
 4        DuPont’s Divisibility Defense. DuPont argues that any
 5   liability it might have for harm to the Solvent Site is
 6   “divisible” from that of Solvent and Olin, and that it
 7   should pay only the incremental cost caused by the presence
 8   of chlorinated aliphatics at the Solvent Site and Olin Hot
 9   Spot. Divisibility (or apportionment) is inapplicable to
10   contribution claims under section 113(f); it is a common law
11   doctrine that may be used to blunt the harshness of joint-
12   and-several liability under section 107(a). See Burlington
13   N. & Santa Fe Ry. Co. v. United States, 129 S. Ct. 1870,
14   1882 & n.9 (2009). “[A]pportionment looks to whether
15   defendants may avoid joint and several liability by
16   establishing a fixed amount of damage for which they are
17   liable, while contribution actions allow jointly and
18   severally liable PRPs to recover from each other on the
19   basis of equitable considerations.” Id. (internal quotation
20   marks and alterations omitted).
21
22        Exclusion of Testimony. An Olin employee, James Brown,
23   testified about remediation of Gill Creek undertaken from
24   1990 to 1992, what was cleaned up, and how much it cost.
25   The district court excluded his opinion testimony that
26   Solvent should be responsible for the cost of cleaning up
27   the full length of the creek (rather than just a small
28   portion) because such a cleanup would have been required on
29   account of Solvent’s chlorinated benzene alone. The
30   district court excluded this portion of Brown’s testimony
31   under Fed. R. Evid. 701(c), as testimony based on the
32   witness’s scientific, technical, or specialized knowledge
33   rather than observation.
34
35        We review evidentiary rulings for abuse of discretion.
36   General Elec. Co. v. Joiner, 522 U.S. 136, 139 (1997). We
37   see no such error in the district court’s conclusion that
38   Brown relied on his technical knowledge to (1) link
39   chlorinated benzene pollution throughout Gill Creek to
40   Solvent and (2) assess whether the chlorinated benzene
41   attributable to Solvent alone would have necessitated the
42   removal of sediment throughout the creek. In analyzing the
43   chemicals found in the stream and comparing them to state
44   cleanup standards, Brown no doubt relied on the expertise he

                                  6
 1   had developed in 27 years of working on environmental and
 2   remediation projects. A witness’s application of
 3   specialized knowledge to facts gleaned in an investigation
 4   in order to render an opinion at trial is sufficient to run
 5   afoul of Rule 701(c). See United States v. Garcia, 413 F.3d
 6   201, 216-17 (2d Cir. 2005).
 7
 8        ICC’s Direct Liability Under § 107(a)(2). The district
 9   court ruled that Solvent’s parent company, ICC, is not
10   liable for Solvent’s pollution of Gill Creek. Under CERCLA,
11   a parent company can be held liable for a subsidiary’s
12   environmental harms if it directly “operates” the facility
13   responsible for the harm. See United States v. Bestfoods,
14   524 U.S. 51, 64-65 (1998). In order for a parent to be
15   directly liable under CERCLA, it “must manage, direct, or
16   conduct operations specifically related to pollution, that
17   is, operations having to do with the leakage or disposal of
18   hazardous waste, or decisions about compliance with
19   environmental regulations.” Id. at 66-67. Of course, as
20   the Supreme Court has recognized, “the difficulty comes in
21   defining actions sufficient to constitute direct parental
22   ‘operation.’” Id. at 66.
23
24        Olin cites as evidence of control a series of Solvent
25   consultations with employees of another ICC subsidiary,
26   Dover Chemical. According to the president of Solvent (who
27   was also president of Dover), Dover employees were asked to
28   “look over the [Solvent] plant and give [Solvent]
29   suggestions” based on their expertise. Joint Appendix 229.
30   It cannot be said that by this consultation, ICC exercised
31   control over Solvent’s operations that resulted in
32   environmental harm and that was “eccentric under accepted
33   norms of parental oversight of a subsidiary's facility,”
34   such that it is subject to operator liability under CERCLA.
35   Bestfoods, 524 U.S. at 72.
36
37        Allocation. Dupont and Solvent challenge different
38   aspects of the district court’s allocation of past response
39   costs. We review a district court’s allocation of response
40   costs for abuse of discretion. Goodrich Corp. v. Town of
41   Middlebury, 311 F.3d 154, 168-69 (2d Cir. 2002). A district
42   court abuses its discretion where (1) its decision rests on
43   a legal error or clearly erroneous factual finding or (2)

                                  7
 1   its allocation cannot be located within the range of
 2   permissible outcomes. Id. at 169.
 3
 4        As to the allocation of damages for the Solvent Site,
 5   the district court adopted the framework proposed by a
 6   Solvent expert, James Kohanek, which evaluated each party’s
 7   share of the contamination addressed by each component of
 8   the ROD. Using this framework, and relying on the findings
 9   of other experts, Kohanek found that 68.39% of the
10   groundwater being remediated contained chlorinated
11   aliphatics and 31.61% contained chlorinated benzenes. He
12   attributed 98% of the aliphatics to DuPont, using a “tracer”
13   compound associated with its plant, and 2% to Solvent.    He
14   attributed 98% of the benzene to Solvent and 2% to Olin. He
15   proposed allocating damages strictly along these volumetric
16   lines.
17
18        While adopting Kohanek’s framework, the court found
19   that Kohanek erred in failing to “account for the principal
20   negative environmental impact of the chlorinated benzenes
21   driving the groundwater remedy,” and “for significant
22   concentrations of chlorinated benzene DNAPL[2] found in the
23   soil covering approximately 60% of the Site as well as in
24   the bedrock fractures[.]” Solvent, 685 F. Supp. 2d at 451.
25   The court turned to the allocation proposed by DuPont’s
26   expert, Charles Faust, which used volumes from monitoring
27   wells--rather than pumping wells, as Kohanek did--and then
28   adjusted the volumes by the relative risk of harm each
29   contaminant posed to groundwater. The court averaged Faust
30   and Kohanek’s calculations to conclude that chlorinated
31   benzenes contributed 62.05% to the cost of cleanup and
32   chlorinated aliphatics 37.95%. It discounted DuPont’s share
33   of aliphatic contamination by 10% (giving that portion of
34   liability to Solvent) to account for “the principley

         2
           DNAPL, or dense nonaqueous phase liquid, is a
     heavier-than-water substance that flows through soil and
     into bedrock, where it comes to rest, cannot easily be
     cleaned, and acts as a long-term source of groundwater
     pollution. The DEC selected a long-term containment
     strategy rather than a cleanup strategy because of the
     presence of DNAPL that could not be cleaned up and would
     continue to pollute the groundwater for years.
                                  8
 1   negative environmental impact” of chlorinated benzenes. Id.
 2   at 451. The court ultimately assigned Solvent 65.98% of the
 3   cost, DuPont 33.39% of the cost, and Olin .63% of the cost.
 4
 5        DuPont argues that Kohanek’s proposed allocation of
 6   costs overlooked relative toxicities of chlorinated benzene
 7   and chlorinated aliphatics. However, the court’s allocation
 8   recognizes that Kohanek’s proposed allocation did not
 9   account for toxicity. It also recognized that Faust’s
10   allocation did account for toxicity, and it was therefore
11   part of the overall allocation. There was no abuse of
12   discretion.
13
14        As to the allocation of damages for the Olin Hot Spot,
15   the district court again relied on Kohanek’s framework in
16   allocating remediation costs. Kohanek testified that
17   chlorinated aliphatics constituted 93.52% of the
18   contamination in the Hot Spot groundwater, and chlorianted
19   benzenes constituted 6.48%. He allocated 100% of the
20   aliphatics to DuPont, which the parties do not contest on
21   appeal. He allocated 98% of the chlorinated benzene to Olin
22   and 2% to Solvent. He therefore proposed that DuPont bear
23   93.52% of the cost, Olin 6.35% (98% x 6.48%), and Solvent
24   0.13% (2% x 6.48%).   The district court found the proposed
25   allocation inequitable, reasoning that:
26
27       [T]he undisputed proof at trial established that the
28       DEC’s integrated B-Zone remedy for the Solvent Site
29       included the installation and operations of pumping
30       wells on Olin’s property to achieve hydraulic control
31       at the Hot Spot, based on the determination that the
32       contaminants found in that area were similar to the
33       predominant site indicator chemicals driving the
34       remedy--i.e., chlorinated benzenes--which were likely
35       due in part to migration from the Solvent Site.
36
37   Solvent, 685 F. Supp. 2d at 452 (internal quotation marks
38   omitted). Citing the parties’ inability to “reach any
39   workable consensus as to the reasonable scientific
40   conclusions to be drawn from the vast amounts of data
41   generated at the Site,” the district court concluded that
42   DuPont should bear the same amount of liability for the Olin
43   Hot Spot as it did the Solvent Site (i.e., 33.39%), and that
44   Olin should bear the responsibility proposed by Solvent

                                  9
 1   (6.35%). Id. at 452-53. The court allocated the remaining
 2   60.26% to Solvent. Id. at 453.
 3
 4        The district court failed to adequately articulate a
 5   basis for its allocation. Solvent’s proposal that Olin bear
 6   6.35% of the cleanup costs for the Olin Hot Spot was
 7   premised on the view that 93.52% of the costs resulted from
 8   contamination by chlorinated aliphatics, of which DuPont was
 9   the sole producer. The district court’s rejection of this
10   view in favor of a finding that the remedy was driven
11   primarily by contamination from chlorinated benzenes--which
12   both Olin and Solvent produced--therefore removes the
13   foundation for the 6.35% figure. Moreover, the district
14   court should not, without further explanation, have borrowed
15   for its Hot Spot findings the same percentage of
16   responsibility it had allocated to DuPont for B-Zone
17   contamination at the Solvent Site. There was substantial
18   dispute about the nature and extent of contamination at the
19   Hot Spot, as well as about the similarity (or lack thereof)
20   between the contamination at the Hot Spot and at the Solvent
21   Site. Absent resolution of at least some of these issues,
22   the district court's use of its allocation at the Solvent
23   Site in allocating costs for the Hot Spot is not supported.
24   Although the district court was disserved by the “parties’
25   inability to reach any workable consensus as to the
26   reasonable scientific conclusions” to be drawn from the
27   evidence, id. at 452, the finding made nevertheless lacks
28   support.
29
30        For the foregoing reasons, we AFFIRM in part, VACATE
31   the district court’s allocation of response costs for the
32   Olin Hot Spot, REVERSE the district court’s judgment in
33   favor of Olin and DuPont on Solvent’s prayer for a
34   declaratory judgment for reasons stated in a separate
35   opinion issued today, and REMAND for the district court to
36   reallocate response for the Olin Hot Spot and to enter a
37   declaratory judgment in favor of Solvent not inconsistent
38   with this order.
39
40                              FOR THE COURT:
41                              CATHERINE O’HAGAN WOLFE, CLERK
42
43

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