Asarco LLC v. Atlantic Richfield Co.
2016 MT 90
| Mont. | 2016Background
- Asarco operated a lead smelting facility in East Helena; Atlantic Richfield (and predecessor Anaconda) operated a zinc fuming plant there until selling it to Asarco in 1972 and agreed to indemnify Asarco and disclose relevant records under the 1972 Agreement.
- EPA designated the Site a Superfund site in 1984; Asarco conducted and paid for extensive remediation and entered into consent decrees and bankruptcy proceedings, paying roughly $138 million toward cleanup.
- In June 2012 Asarco sued Atlantic Richfield in federal court (Asarco I) seeking CERCLA contribution for cleanup costs; after discovery, the federal district court granted Atlantic Richfield summary judgment in August 2014 on statute-of-limitations grounds.
- After the federal judgment, Asarco filed a state-court action asserting breach of contract, breach of covenant, fraud, negligent misrepresentation, and constructive fraud based on alleged concealment and misrepresentations and breach of the 1972 Agreement.
- Atlantic Richfield moved for judgment on the pleadings in state court, arguing claim preclusion because the state claims were based on the same underlying facts and could have been raised in Asarco I; the state trial court granted the motion and dismissed Asarco’s complaint.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether claim preclusion bars Asarco’s state-law claims | Asarco: claims accrued late due to Atlantic Richfield’s fraudulent concealment; couldn’t timely amend Asarco I; fraud exception should apply | Atlantic Richfield: state claims arise from same facts and could have been amended into Asarco I; allowing new suit would permit improper claim splitting | Held: Claim preclusion applies — state claims arise from same underlying basis and could have been raised in Asarco I; dismissal affirmed |
| Whether subject matter of the suits is the same | Asarco: federal case about contamination; state case about concealment and withheld documents — distinct issues | Atlantic Richfield: both suits concern Atlantic Richfield’s operation, contamination, and concealment; common nucleus of operative facts | Held: Subject matter is the same; both arise from contamination and alleged concealment related to the zinc fuming plant |
| Whether federal court would have exercised supplemental jurisdiction over state claims | Asarco: federal courts generally decline to continue supplemental jurisdiction after federal claims dismissed pretrial; Restatement §25 suggests federal court would have declined | Atlantic Richfield: federal court had authority and Asarco indicated it would seek removal and supplemental jurisdiction if state claims were filed | Held: Court declines to speculate but concludes Asarco could have sought to add the claims in federal court; claim preclusion does not require showing the federal court would have retained jurisdiction |
| Whether alleged fraudulent concealment prevents preclusion | Asarco: fraudulent concealment prevented timely discovery and amendment in federal court | Atlantic Richfield: Asarco had means to develop fraud allegations during federal litigation and could have amended under liberal federal amendment standards | Held: No blanket ‘‘fraud exception’’; Asarco knew or could have discovered key facts before the federal judgment and could have sought amendment, so preclusion applies |
Key Cases Cited
- Asarco LLC v. Atl. Richfield Co., 73 F. Supp. 3d 1285 (D. Mont. 2014) (federal summary judgment decision in the related CERCLA action)
- DaimlerChrysler Corp. v. Cuno, 547 U.S. 332 (2006) (supplemental jurisdiction requires common nucleus of operative fact)
- City of Chicago v. Int’l College of Surgeons, 522 U.S. 156 (1997) (federal jurisdiction and related claims analysis)
- United Mine Workers v. Gibbs, 383 U.S. 715 (1966) (formulation of the common nucleus test for supplemental jurisdiction)
- Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048 (9th Cir. 2003) (presumption in favor of granting leave to amend absent specific prejudice)
- Brilz v. Metro. Gen. Ins. Co., 366 Mont. 78 (2012) (Montana claim preclusion doctrine and elements)
- Firelight Meadows, LLC v. 3 Rivers Telephone Coop., Inc., 344 Mont. 117 (2008) (standard of review for Rule 12(c) motions)
- Baltrusch v. Baltrusch, 331 Mont. 281 (2006) (policy favoring finality and end to litigation under claim preclusion)
- Touris v. Flathead Cnty., 361 Mont. 172 (2011) (subject-matter test for claim preclusion — same underlying basis)
- Olsen v. Milner, 364 Mont. 523 (2012) (same underlying basis analysis)
- Estate of Kinnaman v. Mt. West Bank, N.A., 382 Mont. 153 (2016) (fraud claims barred by claim preclusion when they could have been raised earlier)