Court Opinion

ID: 9487079
Source: CourtListenerOpinion
Date Created: 2023-08-05 12:07:42.171859+00
Date Added: 2024-06-11T17:52:05.265509
License: Public Domain

EASTERBROOK, Circuit Judge,
concurring in part and dissenting in part.
The district judge who approved the consent decree concluded that this settlement resolved Aigner’s liability for the entire Fisher-Calo site, activating the rule in § 113(f)(2) of CERCLA, 42 U.S.C. § 9613(f)(2), protecting settling parties from claims for contribution. I do not believe that the judge misunderstood his own decree and therefore would affirm across the board.
Section 113(f)(2) provides:
A person who has resolved its liability to the United States or a State in an administrative or judicially approved settlement shall not be liable for claims for contribution regarding matters addressed in the settlement. Such settlement does not discharge any other potentially liable persons unless its terms so provide, but it reduces the potential liability of the others by the amount of the settlement.
If the subjects for which Akzo claims contribution are among the “matters addressed in the settlement,” then § 113(f)(2) bars the demand. Akzo performed its work on a portion of the Fisher-Calo facility known as Two-Line Road. My colleagues concede that the consent decree covers the whole site, including Two-Line Road. The covenant not to sue contained in the decree makes this doubly clear. The United States and Indiana pledge not to sue the settling defendants for “covered matters,” which include “any and all claims available to the United States under Sections 106 and 107 of CERCLA ... relating to the [Fisher-Calo] Facility, and any and all claims relating to the Facility available to the State under Indiana Code 13-7-8.7 and common law nuisance.”
How then can it be that Akzo’s claims are not “matters addressed in the settlement”? The majority answers: everything is subject to “equitable” adjustments. It plucks some language from § 113(f)(1) and uses this language as a warrant to disregard the scope of the settlement. Section 113(f)(1) gives a court leeway in fixing the amount of contribution; this task is unrelated to the scope of protection offered by the next subsection. Section 113(f)(2) serves a valuable purpose in promoting settlements. Risk that in the name of “equity” a court will disregard the actual language of the parties’ bargain (on which see opinion at 766 n. 8) will lead potentially responsible parties to fight harder to avoid liability (and to pay less in settlements, reserving the residue to meet contribution claims), undermining the function of § 113(f)(2).
There is a second element to the majority’s argument. The consent decree and the covenant not to sue regulate only the settling parties’ liability to the United States and to Indiana. How, my colleagues ask, can language so limited extinguish claims by strangers? The answer is: Because § 113(f)(2) says so. “A person who has resolved its liability to the United States or a State in an administrative or judicially approved settlement shall not be liable for claims for contribution regarding matters addressed in the settlement.” Nothing here about resolving liability to private parties; nothing here implying that the consent decree must contain a separate provision blotting out claims by private actors. Aigner fully resolved its liability to the United States. By “resolv[ing] its liability to the United States” Aigner thereby obtained protection from private parties’ claims for contribution. Dravo Corp. v. Zuber, 13 F.3d 1222 (8th Cir.1994).
Finally, the majority observes that “Akzo’s work stands apart in kind, context, and time from the work envisioned by the consent decree”. Opinion at 767. True enough as a factual matter; the decree does not require duplicative work. Akzo performed some tasks; Aigner agreed to perform additional tasks. But why should this matter? Unless the first attempt at a cure failed, the settlement always will require work distinct from what has gone before. A project-by-project approach drains most meaning from § 113(f)(2). An agreement to carry out a discrete project typically comes with its own provisions for contribution and indemnity. For example, the 20 firms (including Akzo) that agreed to complete the work specified by the 1988 order also agreed to forego any contribution among themselves. The firms *772that signed the consent decree of 1992 similarly abandoned claims among themselves, while preserving claims against any other firms that had not promised to pitch in. The statutory provision, then, must be designed to address contribution for projects outside the scope of the settlement — to block claims by non-parties that, as here, took part in a different project at the same site but reached a settlement covering the whole site.
Section 113(f)(2) permits the EPA to negotiate global settlements — to promise that if certain firms perform projects A and B, they will not be hable for the costs of projects C and D, which other persons have undertaken. The EPA’s ability to make such promises gives it a valuable bargaining chip. The agency may demand that polluters do more as a condition of discharging their full responsibility. Freedom from contribution may be the key to a settlement. Consider a simple illustration. Recycling Industries has two plants, East and West. Toxic substances seep from both plants. The EPA identifies two firms that sent toxic substances to Recycling Industries. PRP # 1 spends $10 million to clean up the East plant. The EPA approaches PRP # 2 with a proposal that it spend $10 million to clean up the West plant. If the “matters addressed” under § 113(f)(2) are project-specific, PRP # 2 would be a fool to agree. For it would spend $10 million to clean up the West plant and then be directed to pay $5 million in contribution to PRP # 1 for cleaning up the East plant. Final position: PRP # 1 pays $5 million, PRP # 2 pays $15 million. (One cannot reply that the $5/ $15 million division in this hypothetical is not “equitable” under § 113(f)(1) without abandoning the project-specific approach that the majority embraces.) To avoid this, PRP # 2 will litigate to the gills and sue PRP # 1 for contribution as well. Each PRP, however, will be willing to do its share, and with less litigation, if the EPA can divide the tasks, assigning one plant to each firm and using § 113(f)(2) to preclude contribution. The majority replies that its interpretation permits this happy outcome; all the parties have to do is “negotiate a global settlement encompassing both East and West plants.” Opinion at 768 n. 14. But that is exactly what these parties did! Aigner and the EPA negotiated a “global settlement” covering the entire Fisher-Calo facility, and the majority says this is not enough. To drive the point home, my colleagues add that even the most explicit language is just a “factor” that does “not foreclose the fact-specific evaluation” it prefers. Opinion at 766 n. 8. Woe unto the drafters, who think their agreement counts. In Key Tronic Corp. v. United States, — U.S. -, 114 S.Ct. 1960, 128 L.Ed.2d 797 (1994), a PRP deemed language equivalent to the release here, see id. at- n. 1, 114 S.Ct. at 1963 n. 1, so clear that it threw in the towel, withdrawing its claim for contribution. By the majority’s lights, it made a big mistake.
Consider, too, the second sentence of § 113(f)(2): “Such settlement does not discharge any other potentially liable persons unless its terms so provide”. This sentence must mean that a settlement may extinguish the liability for contribution even of non-parties, firms that did not agree to do anything. Measuring the scope of immunity by the precise project undertaken does not look at all attractive once we recognize that Congress permitted a settlement to block contribution rights against non-parties that did not take part in any project. The “de minimis defendants” identified in the 1992 consent decree obtained exactly this protection: they chipped in a total of $11 million in exchange for protection against further claims. None of the de minimis defendants performed any work under the 1988 order. I take it as given that Akzo may not pursue them for contribution. Dravo, 13 F.3d at 1225-26. Yet by the majority’s rationale even the de minimis defendants may be liable to Akzo. Their bargain with the EPA has been rendered illusory.
If § 113(f)(2) were nothing but a sop to a powerful interest group, then it might make sense to give it a narrow reading. The majority treats the prospect of disproportionate liability as proof that § 113(f)(2) is undesirable. When contribution is unavailable, some firms’ final accounts may be disproportionate to the wrong. Yet this hardly shows a problem in the statute. The norm in federal litigation is no contribution at all. The common law rule of joint and several liability *773permits victims to collect their whole loss from the wrongdoer of their choice, or in such proportions as they please from multiple offenders. The Supreme Court has been reluctant to create rights of contribution that permit these wrongdoers to collect, in turn, from other persons. See Texas Industries, Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 101 S.Ct. 2061, 68 L.Ed.2d 500 (1981); Northwest Airlines, Inc. v. Transport Workers, 451 U.S. 77, 101 S.Ct. 1571, 67 L.Ed.2d 750 (1981). Firms that have incurred legal liability thus have no general right to a fair distribution of expenses.
Akzo thinks that it has paid more than its share; for all we can tell, the Aigner parties have paid too much and Akzo too little. Finding out who is “really” responsible for how much of the pollution, in order to know who should pay what to whom, could require exhaustive litigation. Section 113(f)(2) enables everyone to avoid such questions. Indeed, the main function of § 113(f)(2) is precisely that private parties’ desire to avoid disproportionately large liability will lead them to settle more quickly and for larger sums. “Congress explicitly created a statutory framework that left nonsettlors at risk of bearing a disproportionate amount of lia-bility_ Disproportionate liability, a technique which promotes early settlements and deters litigation for litigation’s sake, is an integral part of the statutory plan.” United States v. Cannons Engineering Corp., 899 F.2d 79, 91-92 (1st Cir.1990). A general rule of no contribution increases the sums wrongdoers (and potential wrongdoers) will pay to resolve their liability, because a settlement buys peace. When contribution is available, in contrast, settlement is harder to achieve (and the settling parties pay less) because the resolution leaves the party exposed to further liability. See William M. Landes & Richard A. Posner, The Economic Structure of Tort Law 201-15 (1987); Steven Shavell, Economic Analysis of Accident Law 164-67 (1987); Lewis A. Kornhauser & Richard L. Revesz, Sharing Damages Among Multiple Tortfeasors, 98 Yale L.J. 831 (1989). See also In re Oil Spill by the Amoco Cadiz, 954 F.2d 1279, 1314-18 (7th Cir.1992).
Statutes that create rights of contribution generally come with limitations, of which § 113(f)(2) is a good example. Section 113(f)(2) is a variant of the settlement-bar rule that many states have adopted by statute because of its potential to promote peaceful resolution of disputes. Uniform Contribution Among Tortfeasors Act § 4(b) (1955 rev.). Admiralty law permits contribution— but not from defendants that have settled.
[A] right of contribution against the settling defendant is clearly inferior to [other options], because it discourages settlement and leads to unnecessary ancillary litigation. It discourages settlement, because settlement can only disadvantage the settling defendant. If a defendant makes a favorable settlement, in which it pays less than the amount a court later determines is its share of liability, the other defendant (or defendants) can sue the settling defendant for contribution. The settling defendant thereby loses the benefit of its favorable settlement. In addition, the claim for contribution burdens the courts with additional litigation. The plaintiff can mitigate the adverse effect on settlement by promising to indemnify the settling defendant against contribution,.... This indemnity, while removing the disincentive to settlement, adds yet another potential burden on the courts, an indemnity action between the settling defendant and plaintiff.
McDermott, Inc. v. AmClyde, — U.S. -, -, 114 S.Ct. 1461, 1467, 128 L.Ed.2d 148 (1994) (footnote omitted). Notwithstanding the Supreme Court’s conclusion that contribution actions against parties that have settled are undesirable, the majority today goes out of its way to authorize this device. It evidently disagrees with McDermott’s view of the effect of requiring settling parties to pay more money in contribution — a position evident not only from the use of the “equity” language in § 113(f)(1) to modify § 113(f)(2), which lacks such language, but also from the conclusion that cutting off rights of contribution is just plain bad policy. The majority believes that enforcing the statute as written “would leave firms like Akzo in an untenable position.” Opinion at 768-69. This is not a good reason to bend the language of a law; it also happens to be wrong. The statute put*774ting Akzo under pressure is not § 113(f)(2) but § 106(b)(2), which postpones judicial review until after completion of the work the EPA has directed the party to undertake. If the EPA has made a mistake, the affected firm may recover from the United States, 42 U.S.C. § 9613(j)(3); it does not need a right of contribution. Indeed, if the order is mistaken, a right of contribution would do it no good. The EPA’s improper order that Firm A undertake some project offers no warrant for shifting the costs to Firm B, which is equally innocent. Improper or excessively costly orders under § 106 therefore do not give rise to claims for contribution and are unaffected by § 113(f)(2).
If the EPA shares the majority’s disdain for § 113(f)(2) — if like my colleagues it fears that permitting settling parties to cap their liability at the amounts they agree to pay will lead to more litigation by the first party the Agency pursues — it may adopt a policy of defining “matters addressed in the settlement” narrowly. Each settlement specifies the “matters addressed.” It would have been simple to say in this settlement, for example, that work done at Two-Line Road under the 1988 order is not “addressed” by the 1992 settlement. But had the EPA demanded such a limitation, Aigner might have put up more defense or reduced the amount it was willing to pay. Perhaps the EPA wants an option to adopt a Janus-faced position, conveying to PRPs the impression that the settlement is comprehensive and then telling the court something different. Such a trick works only once. Having persuaded us to depart from the language of its settlement with Aigner, because formal agreements are just “circumstances” to be weighed on some conceptual scale (opinion at 766 n. 8), the EPA will have a hard time persuading other PRPs that its promises are credible — and a correspondingly hard time obtaining the maximum value in settlement.
McDermott shows that if Congress had not enacted § 113(f)(2), Aigner would not be liable to Akzo — for federal common law does not permit one joint tortfeasor to obtain contribution from another that has settled. I do not see how the existence of § 113(f)(2), which is designed to protect settling parties’ interest in peace, can make them worse off. Yet this is what the majority concludes.
Firms such as Akzo may find their solace in the last part of § 113(f)(2): a settlement that extinguishes rights of contribution “reduces the potential liability of the others by the amount of the settlement.” They may pursue, as well, other PRPs that have not signed a settlement addressing the entire site. Whát Akzo may not do is wring more money from firms that have definitively settled their liability.