934 F.3d 553
7th Cir.2019Background
- Joslyn operated an Indiana steel mill from 1928–1981 and contaminated soil and groundwater; Slater (and later Valbruna Slater Steel) conducted intermittent cleanups beginning in the 1980s.
- Slater sued Joslyn in state court (2000) for indemnification and under Indiana’s ELA statute; the ELA claim was dismissed as not retroactive and the suit later dismissed for want of prosecution.
- Valbruna purchased the site at a 2004 bankruptcy sale, entered a Prospective Purchase Agreement (PPA) with IDEM that involved a $500,000 escrow for cleanup, performed remediation starting in 2005, and sued Joslyn in federal court in 2010 under CERCLA §107 and the ELA.
- District court: granted summary judgment for Valbruna on CERCLA liability, held the ELA claim precluded by the earlier state judgment (privity), found CERCLA claim timely (prior work was removal, not remediation), awarded Valbruna ~$2.03M reduced by $500,000, and apportioned equitable contribution 75% Joslyn / 25% Valbruna.
- Appeals: Joslyn appealed preclusion and statute-of-limitations rulings; Valbruna cross-appealed the ELA preclusion and the district court’s $500,000 reduction and 25% allocation. Seventh Circuit affirmed on all issues.
Issues
| Issue | Plaintiff's Argument (Valbruna) | Defendant's Argument (Joslyn) | Held |
|---|---|---|---|
| Whether the earlier state-court judgment precludes Valbruna’s federal CERCLA claim | State judgment and dismissal bar re-litigation | State judgment precludes relitigation of same cleanup claims | No — Indiana law (per Green/Marrese) requires state-court jurisdictional competency; exclusively federal CERCLA claims are not claim-precluded by state judgments |
| Whether Slater’s earlier cleanup (1980s & 1991) triggered CERCLA’s remedial-action statute of limitations | Earlier work was removals (short-term, limited) so 6-year remedial clock did not start; Valbruna’s 2005 remediation timely | Earlier cleanups were remedial, so suit filed after the 6-year remedial period is time-barred | Held Valbruna timely — prior actions were removals, not remedial actions, so suit within six years of 2005 remediation was timely |
| Whether Valbruna is in privity with Slater for purposes of ELA claim preclusion | No privity — Valbruna acquired the site after judgment and had not incurred costs pre-purchase | Valbruna succeeded to Slater’s interest in the subject matter (the site) and so is in privity | Valbruna is in privity with Slater; ELA claim precluded as to Valbruna |
| Whether district court’s equitable allocation (deduction of $500,000 and 25% Valbruna share) abused discretion | Deduction and 25% allocation unjustified and unsupported; no precedent for such a large share against a no-fault owner | Deduction prevents double recovery (PPA escrow) and 25% reflects purchaser’s knowledge, discount in purchase price, and risk assumption | Affirmed: $500,000 reduction and 25% allocation were rational uses of equitable factors and within district court’s discretion |
Key Cases Cited
- Marrese v. Am. Acad. of Orthopaedic Surgeons, 470 U.S. 373 (U.S. 1985) (state res judicata cannot bar an exclusively federal claim when state court lacked jurisdictional competency)
- Green v. Hendrickson Publishers, Inc., 770 N.E.2d 784 (Ind. 2002) (Indiana endorses Marrese’s rule regarding state-court inability to preclude exclusively federal claims)
- New York v. Next Millenium Realty, LLC, 732 F.3d 117 (2d Cir. 2013) (framework for distinguishing CERCLA removal vs. remedial actions)
- Bernstein v. Bankert, 733 F.3d 190 (7th Cir. 2013) (discussion of CERCLA limitations and operable units)
- NCR Corp. v. George A. Whiting Paper Co., 768 F.3d 682 (7th Cir. 2014) (district court’s equitable allocation under CERCLA reviewed for abuse of discretion)