LITGO NEW JERSEY INC.; Sheldon Goldstein, Appellants v. COMMISSIONER NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION; United States of America; United States Department of Army; United States Department of the Air Force; United States Department of Navy; Alfred Sanzari Enterprises Inc.; Mary Sanzari; David Sanzari, as Executor of the Estate of Alfred Sanzari; Frank Huttle, as Executor of the Estate of Alfred Sanzari; Mian Realty; Kirby Avenue Realty Holdings.
Nos. 12-1288, 12-1418.
United States Court of Appeals, Third Circuit.
Aug. 6, 2013.
Argued Feb. 14, 2013.
725 F.3d 369
The District Court‘s erroneous multiple-terms sentence was prejudicial to Dillon due to its implications for a hypothetical second revocation of his supervised release: a judge at such a hearing may see that Dillon was sentenced to multiple terms at his first revocation and presume that he may also impose multiple terms. Because the type of error made by the District Court is one that “may result in arbitrary differences in sentencing similarly situated defendants,” we will grant Dillon relief “in order to maintain the fairness, integrity, and public reputation of judicial proceedings.” United States v. Vazquez-Lebron, 582 F.3d 443, 447 (3d Cir.2009).
IV.
For the reasons set forth above, we will vacate Dillon‘s sentence and remand to the District Court for resentencing.6
John McGahren [Argued], Andrew McNally, Daniel F. Mulvihill, IV, Patton Boggs, Floor Newark, NJ, Brendan M. Walsh, Pashman Stein, Hackensack, NJ,
Edward Devine, Rachel J. Lehr, A. Paul Stofa, Office of Attorney General of New Jersey, Division of Law, Trenton, NJ, for Defendant Commissioner of the New Jersey Department of Environmental Protection.
Brian C. Toth [Argued], Aaron P. Avila, United States Department of Justice, Environment & Natural Resources Division, Jessica O‘Donnell, Christina L. Richmond, United States Department of Justice, Environmental Defense Section Land and Natural Resources Division, T. Monique Peoples, United States Department of Justice, Environmental Defense Section, Washington, DC, for Appellees/Cross-Appellants Department of Air Force, United States Department of Navy and United States Department of the Army.
Robert A. Bornstein, Berger & Bornstein, Morristown, NJ, David F. Edelstein, Christopher R. Gibson, Archer & Greiner, Haddonfield, NJ, for Defendants.
Kenneth K. Lehn [Argued], Winne, Banta, Hetherington, Basralian & Kahn, Hackensack, NJ, for Appellees/Cross-Appellants Frank Huttle, David Sanzari and Alfred Sanzari Enterprises Inc.
Craig S. Provorny, Anthony J. Reitano, Herold Law, Warren, NJ, for Defendant-Appellee Mian Realty.
Before: HARDIMAN, and GARTH, Circuit Judges and STARK*, District Judge.
OPINION OF THE COURT
HARDIMAN, Circuit Judge.
This appeal comes to us following a seventeen-day bench trial that involved several claims arising under federal and state environmental laws. At issue is which parties bear the responsibility for the removal of hazardous substances present in the soil and groundwater at a parcel of land in Somerville, New Jersey (the Litgo Property or Property). Although this issue is complicated by the fact that the Property has been the site of various private and public concerns since 1910, the District Court engaged in a careful examination of the evidence and the arguments of the parties, and we essentially agree with its adjudication of the case. We disagree with the District Court‘s determination, however, in two respects, and will reverse in part and remand.
I. Background
A. Contamination of the Litgo Property
The Litgo Property is located at 40 Haynes Street in Somerville, New Jersey. During the past century, title to the Property has passed hands many times, and the site has been put to various uses. Somerville Iron Works, a company that operated a sanitary landfill on adjacent tracts of land, owned the Property in the early 1900s and used it to manufacture pipes and fittings. In 1941, the Property was leased to Columbia Aircraft, a manufacturer that machined precision parts for the United States military effort during World War II. Decades later, in 1976, the Property was purchased by Alfred Sanzari, who converted the buildings thereon into warehouses. Those warehouses were then leased to a number of commercial and industrial tenants, including a company known as JANR Transport, Inc.
* Honorable Leonard P. Stark, Judge of the United States District Court for the District of Delaware, sitting by designation.
The contamination most likely began in the 1940s, when Columbia Aircraft leased the Property. Columbia Aircraft machined precision parts on-site for military equipment using some equipment owned by the United States government, including boring mills, grinding machines, lathers, milling machines, and a shaper. After the precision parts were machined, they were cleaned of excess grease as part of the “finishing” process. Columbia Aircraft degreased the precision parts in vapor degreaser tanks, using TCE as the degreasing agent. It then disposed of the TCE by dumping it onto the ground and allowing it to evaporate.
The contamination worsened after a series of accidents that occurred between 1983 and 1987. In 1983, a company known as Signo Trading International was storing both hazardous and non-hazardous waste at a location other than the Litgo Property. Some of this waste had been generated by the United States, which had contracted with Resource Technologies Service (RTS), a then-reputable hazardous waste transporter, for its disposal. RTS had arranged to store the waste at Signo‘s property, but the waste containers were removed under the supervision of the New Jersey Department of Environmental Protection (NJDEP) following a fire in April 1983. Signo was allowed to send non-hazardous substances to a location of its choice, but NJDEP was responsible for ensuring that the hazardous wastes were moved by licensed haulers to licensed facilities. As a result of NJDEP‘s inadequate supervision, thousands of containers of materials were shipped to the JANR warehouse on the Litgo Property, and some of them contained hazardous waste.
In 1984, the Borough of Somerville became aware that hazardous materials were being stored improperly at the JANR warehouse, and that many of the containers were spilling and leaking. An inspection and inventory of the materials at the warehouse revealed that it contained 106 gallons of TCE. NJDEP hired an inexperienced contractor to remediate the site, resulting in significant problems, including spills and leaks. Both TCE and PCE were likely released into the soil and the groundwater during the warehouse cleanup, contributing to the contamination.
Some of the remedial actions that have since taken place at the Litgo Property may have contributed further to the contamination. Sanzari—the owner of the Litgo Property between 1976 and 1990—hired environmental consultants to investigate the extent of the contamination and conduct remedial activities, such as soil excavations. One of the monitoring wells installed on the Property, however, had a faulty seal, a defect that likely increased the zone of contamination on the Property.
Although significant action has since been taken to remediate the soil contamination, groundwater contamination remains a significant problem on the Litgo Property. In this case, the central issue is who should be held responsible for past and future remediation.
The Litgo Property is currently owned by Appellant Litgo New Jersey, Inc., a single purpose entity. Its sole shareholder, Appellant Sheldon Goldstein, first learned about the Property in the 1980s from an acquaintance, Lawrence Seidman, who suggested forming a partnership to develop it. Goldstein, who had previous experience in real estate, intended to have the Property rezoned for residential use, get approvals to build townhouses, and then sell the Property. He entered into an agreement of sale (Sales Agreement) with Sanzari to acquire the Property in August 1985.
Goldstein knew at the time that he entered into the Sales Agreement with Sanzari that there were problems with the site. Sanzari had informed him that there was some soil contamination, and a letter from NJDEP, incorporated by reference into the Sales Agreement, stated that hazardous wastes were being improperly stored at the JANR warehouse and that Sanzari had been ordered to take remedial steps. Goldstein was not, however, aware that TCE was present in the groundwater. Before entering the sale, he neither visited the Property nor further investigated the environmental issues.
The Sales Agreement stated that Sanzari would comply with all of the provisions of the New Jersey Environmental Cleanup Responsibility Act (ECRA), as well as obtain a cleanup plan from NJDEP. It also provided, however, that if the costs of obtaining and processing a cleanup plan were to exceed $100,000, Sanzari would have the option of terminating the Sales Agreement, unless Goldstein agreed to pay all costs in excess of $100,000.
NJDEP rejected Sanzari‘s proposed cleanup plan, and Sanzari—concerned about the potential cleanup costs—attempted to exercise his right to cancel the contract. Goldstein sought specific performance of the Sales Agreement in the Superior Court of New Jersey. During the suit, Goldstein hired an environmental consulting firm, EWMA, to review the compliance documents and cost estimates created by Sanzari‘s environmental consultants. EWMA criticized the reports for not fully disclosing the soil contamination and for failing to address potential groundwater issues. It found that the actual costs of a cleanup could not be accurately estimated based on the present information, and concluded that the actual costs could be far greater than the existing estimate.
Nevertheless, Sanzari and Goldstein reached an agreement regarding the Litgo Property, pursuant to which samples taken from monitoring wells on the Property would be tested for various substances. Goldstein could elect to move forward with the transaction within ten days of receiving the results, and, if he did so, he would assume all ECRA compliance costs in excess of $100,000.
The wells were tested for VOCs, including TCE, as well as metals, PCBs, pesticides, and cyanide. Sanzari received the preliminary results for all of the substances, but sent only the preliminary results for metals, PCBs, pesticides, and cyanide to Goldstein‘s counsel. He also failed to disclose that there were concerns about TCE contamination on a farm near the Litgo Property.
Meanwhile, Goldstein‘s partner, Seidman, decided not to proceed with the sale because of concerns about potential environmental costs. Goldstein nevertheless reelected to proceed with the transaction in June 1989. Thereafter, Goldstein received a report that included the full test results, stating that the TCE levels at the Property exceeded NJDEP guidelines.
Beginning in 1990, Goldstein and Litgo New Jersey (the Litgo Appellants) retained two environmental consultants (first EWMA, and, after a dispute with EWMA, JM Sorge, Inc.) to carry out the cleanup plan. The consultants investigated the soil contamination and conducted remedial activities, including the excavation of contaminated soil. The Litgo Appellants did not, however, conduct comprehensive sampling for VOCs until 1997. Although they have installed multiple wells on or near the Property to determine the extent of the groundwater contamination, they had not, at the time of trial, engaged in any work to remediate that contamination.
C. Prior Litigation
Before filing the present action, Goldstein had been involved in several other lawsuits regarding the contamination at the Litgo Property. In 1996, he filed a lawsuit in the New Jersey Superior Court against multiple parties, including Sanzari, Sanzari‘s environmental consultants, and Dande Plastics, a company that conducted machining and manufacturing operations at a building near the Litgo Property. He alleged, among other things, that Sanzari‘s environmental consultants had failed to properly investigate and remediate the TCE contamination at the Litgo Property. The New Jersey Superior Court granted summary judgment in favor of the consultants. Goldstein also asserted a Spill Act claim against Dande Plastics, asserting that it was a source of contamination at the Property. The District Court granted Dande Plastics’ motion to dismiss in part, and Goldstein and Dande Plastics then settled the remainder of the claims for $105,000.
Goldstein was also involved in a lawsuit against his environmental consultant, EWMA. EWMA sued the Litgo Appellants after they failed to pay their bills, and the Litgo Appellants brought a counterclaim, asserting that EWMA had performed negligently and provided substandard services at the Property.
D. Current Litigation
1. Claims
In June 2006, the Litgo Appellants filed the present action in the United States District Court for the District of New Jersey, which named the Sanzari Appellees and the United States Appellees as defendants.1 The claims asserted in the complaint were aimed at shifting responsibility for the remediation onto the defendants.
First, the Litgo Appellants brought claims against the Sanzari Appellees and the United States Appellees under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA),
Finally, the Litgo Appellants sought rescission of the Sales Agreement under the New Jersey Sanitary Landfill Facility Closure Act and Contingency Fund (Closure Act),
2. The District Court‘s Decisions
The District Court entered summary judgment in favor of the Sanzari Appellees on the Litgo Appellants’ RCRA claim. It found that this claim was barred by New Jersey‘s entire controversy doctrine because it should have been asserted in the 1996 New Jersey Superior Court proceedings. It held a bench trial on the remaining claims, which began on January 19, 2010 and ended on February 12, 2010. For reasons that we shall discuss in more detail, the District Court determined that the Litgo Appellants, the Sanzari Appellees, and the United States Appellees were each liable for the costs of remediation under CERCLA. It then allocated the percentage of costs to be borne by each party, ultimately assigning 70% of the costs to the Litgo Appellants, 27% of the costs to the Sanzari Appellees, and 3% of the costs to the United States Appellees. The District Court also found that the Sanzari Appellees and the Litgo Appellants were liable for the costs of remediation under the Spill Act, and allocated the Spill Act costs based on the same factors that it had considered in allocating the CERCLA costs.
The District Court determined that the United States Appellees were likely liable parties under RCRA, but expressed doubt as to whether injunctive relief would be appropriate. It reserved judgment on that issue until after the damages hearing. Finally, the District Court found that because the Litgo Property had not been used as a landfill, the Litgo Appellants were not entitled to rescission under the Closure Act.
The Litgo Appellants and the United States Appellees entered into a settlement agreement before the damages hearing was held. The Litgo Appellants dismissed their claim for injunctive relief under RCRA, but claimed to have reserved the right to seek litigation costs from the United States Appellees as prevailing parties under RCRA. The parties stipulated that the Litgo Appellants had incurred $1,729,279 in CERCLA response costs, and that the United States Appellees owed $51,878.37 based on their allocation.
The Litgo Appellants appealed, raising a plethora of challenges to the District Court‘s liability determinations, its allocation of costs, and the damages award. With respect to the CERCLA claims, they argue that the District Court: (1) erred when it held them liable as “operators“; (2) erred when it held that the United States Appellees were not liable as “owners” based on their involvement at the Columbia Aircraft site; (3) abused its discretion when it allocated CERCLA costs; and (4) erred when it denied their request for prejudgment interest. In addition, the Litgo Appellants claim that the District Court‘s allocation of costs under the Spill Act was an abuse of discretion. As to their RCRA claims, they argue that the District Court erred in two respects: (1) in granting summary judgment for the Sanzari Appellees based on the entire controversy doctrine; and (2) in denying their request for litigation costs. Finally, they claim that the District Court erred in denying their claim under the Closure Act.
The Sanzari Appellees cross-appealed. Like the Litgo Appellants, they claim that the District Court‘s allocation of CERCLA and Spill Act costs was an abuse of discretion. They also claim that the District Court erred in refusing to grant them a settlement credit for CERCLA damages.
II. Jurisdiction and Standard of Review
The District Court had jurisdiction over the parties’ federal law claims under
III. CERCLA Claims
A. Overview
Congress enacted CERCLA “to promote the timely cleanup of hazardous waste sites and to ensure that the costs of such cleanup efforts were borne by those responsible for the contamination.” Burlington N. & Santa Fe Ry. Co. v. United States, 556 U.S. 599, 602 (2009) (internal quotation marks omitted); see also United States v. Alcan Aluminum Corp., 964 F.2d 252, 257-58 (3d Cir.1992). To accomplish this goal, CERCLA § 107(a) gives private parties the right to recover costs incurred in cleaning up a waste site from “potentially responsible parties” (PRPs)—four broad classes of persons who may be held strictly liable for releases of hazardous substances that occur at a facility. Burlington N., 556 U.S. at 608-09 (citing
Here, the District Court determined that the United States Appellees, the Sanzari Appellees, and the Litgo Appellants were each PRPs. The Sanzari Appellees were liable because they had owned and operated the Litgo Property when hazardous waste was disposed at the JANR warehouse. Litgo New Jersey was liable as the current owner of the Property, and both Litgo Appellants were liable as current operators of the Property. The United States Appellees were liable because they arranged for the disposal of some of the hazardous waste that was ultimately stored at the JANR warehouse. The District Court determined, however, that the United States Appellees did not incur PRP liability based on any releases that had occurred at the Columbia Aircraft site because they did not own any of the relevant facilities; they did not manage, direct, or conduct any of the operations at the Columbia Aircraft site; and they did not own or possess any of the VOCs that were disposed of at the Columbia Aircraft site.
The District Court then turned to the allocation of the remediation costs. It determined that the Sanzari Appellees were responsible for 21% of the costs.3 Although it recognized that Sanzari was not directly involved in the generation, storage, treatment, or disposal of hazardous wastes, it determined that he had nevertheless taken actions that justified assigning the Sanzari Appellees a significant percentage of the costs. For example, Sanzari failed to provide Goldstein with a full set of the preliminary test results from the monitoring wells and with information regarding TCE contamination on a nearby plot of land before Goldstein opted to proceed with purchasing the Property. The Court explained that Sanzari was “the only party that had notice of the full extent of the contamination prior to Goldstein‘s election yet acted in a manner which would ensure that someone else—Goldstein—would have to take the responsibility for the remediation.” Litgo I, 2010 WL 2400388, at *39. Additionally, one of Sanzari‘s environmental contractors installed a monitoring well with a faulty
The District Court found that the Litgo Appellants were responsible for 54% of the response costs. It found them liable as PRPs “based solely on their current ownership and operation of the Litgo Property,” and acknowledged that they had not been directly involved in the generation, storage, treatment, or disposal of hazardous wastes. Id. at *39. It also acknowledged that the Litgo Appellants’ only activities on the site “have been those necessary to remove and remediate the soil and groundwater contamination.” Id. The Court found, however, that the Litgo Appellants had consistently put off taking any steps to remediate the groundwater contamination, and this lack of action may have increased the threat to the environment and the public. Additionally, Goldstein, in the Sales Agreement, had agreed to remediate the Property in accordance with ECRA, and accepted financial responsibility for remediation beyond the first $100,000. Although he did not know specifically that there was TCE contamination, he was aware that there were significant environmental issues, and voluntarily assumed that risk. The District Court also noted that the Litgo Appellants were the only parties that stood to benefit financially from the remediation of the Property.
The United States Appellees, in contrast, were allocated only 2% of the costs. The Court noted that they had previously generated and possessed some of the hazardous substances that were transferred to the JANR warehouse, and that some of those substances may have been released there. However, it explained that the United States Appellees had not been involved in the transportation of the substances to the Litgo Property, in their storage in the JANR warehouse, or in their treatment and disposal. It also found that the United States Appellees had exercised reasonable care regarding the transportation of the substances by entrusting them to a hazardous waste disposal contractor who, at the time, was considered reputable. It explained that, “[a]lthough the United States [Appellees] arranged for the disposal of these wastes, the materials they generated appear to have reached the JANR warehouse only due to the inappropriate and potentially illegal conduct of other third-party actors not involved in the suit.” Litgo II, 2011 WL 65933, at *6.
The District Court then determined that the poor execution of the JANR warehouse cleanup—which had been overseen by NJDEP—had contributed to the contamination at the Litgo Property. Because of Eleventh Amendment immunity, however, NJDEP could not be held liable. The Court thus assigned the NJDEP Commissioner an “orphan share” of 23% of the costs.4 It then distributed these costs among the PRPs. After this recalculation, the Sanzari Appellees were ultimately responsible for 27% of the costs, the Litgo Appellants were responsible for 70% of the costs, and the United States Appellees were responsible for 3% of the costs.
Both the Litgo Appellants and the Sanzari Appellees raise multiple challenges to the District Court‘s analysis of the CER-
B. PRP Liability
1. “Current Operator” Liability
The District Court did not err in finding that the Litgo Appellants were liable as current operators under CERCLA. An operator is “someone who directs the workings of, manages, or conducts the affairs of a facility.” United States v. Bestfoods, 524 U.S. 51, 66 (1998).5 For that role to subject someone to CERCLA liability, the operator must “manage, direct, or conduct operations specifically related to pollution, that is, operations having to do with the leakage or disposal of hazardous waste, or decisions about compliance with environmental regulations.” Id. at 66-67. Here, the District Court found that the Litgo Appellants were actively involved in activities related to the contamination on the Litgo Property: not only did the Litgo Appellants have the actual authority to make decisions about compliance with environmental regulations, they hired environmental consultants to conduct tests and remediation operations on the Litgo Property, and they oversaw that work.
Relying on United States v. Bestfoods, the Litgo Appellants argue that they should not be held liable as current operators because they have only managed remedial activities on the site. That is, they argue, they have not engaged in any operations that caused further contamination, so they have not been involved in “operations specifically related to pollution,” id. at 66. This interpretation reads Bestfoods far too narrowly, and is contrary to CERCLA‘s liability scheme.
Under CERCLA, current operators—like all other classes of PRPs—are held strictly liable for all releases that occur at a facility. See Burlington N., 556 U.S. at 608 (citing
A determination that current operators cannot be held liable unless they have actually engaged in polluting activities would require us to disregard the distinction between past and present operators set out in the statute. See id. at 715 (explaining that Congress must have intended for current owners and operators and past owners and operators to be liable under different circumstances, as it distinguished between the two in the definition of PRP). It would also add a causation requirement that is not found in the text.6 The Supreme Court has recognized that, under CERCLA‘s broad liability scheme, “even parties not responsible for contamination may fall within the broad definitions of PRP,” Atl. Research Corp., 551 U.S. at 136 (citing
This interpretation does not—as the Litgo Appellants suggest—lead to unfair consequences. Although CERCLA‘s strict liability regime may subject “innocent” private parties to liability, see Atl. Research Corp., 551 U.S. at 136, innocent owners and operators do have some protection. After identifying PRPs, courts allocate response costs based on equitable factors. An operator who has participated in remediation without slowing or interfering with that process likely will not be assessed a large share of the remediation costs, if it is assessed any at all. See, e.g., Am. Color & Chem. Corp. v. Tenneco Polymers, Inc., 918 F.Supp. 945, 959-60 (D.S.C.1995) (0% to current owner and operator); Alcan-Toyo Am., Inc. v. N. Ill. Gas Co., 881 F.Supp. 342, 346-47 (N.D.Ill.1995) (10% to current owner). An operator who has delayed with remediation, however, may still receive a share of the remediation costs, see Bedford Affiliates v. Sills, 156 F.3d 416, 430 (2d Cir.1998), abrogated on other grounds by W.R. Grace & Co.-Conn. v. Zotos Int‘l, Inc., 559 F.3d 85, 90 (2d Cir.2009), in accordance with CERCLA‘s purpose of encouraging prompt cleanup, see Burlington N., 556 U.S. at 602.
2. “Past Owner” Liability
The District Court did not err in finding that the United States Appellees are not “past owners” based on their involvement at the Columbia Aircraft manufacturing site; they are PRPs only because they arranged for the disposal of hazardous substances that may have eventually been released at the JANR warehouse.
A party may be liable as a past owner when, “at the time of disposal of any hazardous substance,” it “owned or operated any facility at which such hazardous substances were disposed of.”
(A) any building, structure, installation, equipment, pipe or pipeline (including any pipe into a sewer or publicly owned treatment works), well, pit, pond, lagoon, impoundment, ditch, landfill, storage container, motor vehicle, rolling stock, or aircraft, or (B) any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located.
The Litgo Appellants raise two challenges to the District Court‘s determination. First, they argue that the evidence shows that the government-owned equipment leased by Columbia Aircraft—which clearly falls within the definition of a “facility“—was cleaned using TCE, and this constitutes a disposal of hazardous waste. Second, they claim that the United States Appellees’ ownership of some of the equipment used in Columbia Aircraft‘s manufacturing process is sufficient to subject them to ownership liability.
The Litgo Appellants’ first challenge is meritless. The District Court found that the precision parts manufactured by Columbia Aircraft were degreased using TCE as a solvent, but it rejected the claim
The Litgo Appellants also claim that the United States Appellees were “owners” of a facility where TCE was disposed during the 1940s because they owned part of a “process installation“—that is, they owned machinery and equipment that was a necessary part of the manufacturing process. In particular, the United States Appellees owned some of the equipment that Columbia Aircraft used to manufacture precision parts, and Columbia Aircraft disposed of TCE when it degreased those parts later in the production process, using separate machinery (vapor degreasers). The Litgo Appellants, relying primarily on United States v. Saporito, 684 F.Supp.2d 1043 (N.D.Ill.2010),8 argue that this is enough to subject the United States Appellees to past owner liability. We disagree.
Under the Litgo Appellants’ view, if a party owns any equipment used at a manufacturing site, it can be held responsible for the disposal of hazardous waste that occurs at other pieces of equipment elsewhere at the site, as long as the two pieces of equipment are part of the same overarching “process.” This broad definition of facility finds no support in CERCLA.
The term “process installation” is not used in CERCLA‘s definition of “facility,” although “installation” is mentioned.9 Installation generally means “a thing installed, in particular: a large piece of equipment installed for use.” Concise Oxford American Dictionary 464 (2006); see also Random House Dictionary of the English Language 988 (2d ed.1987) (defining installation as “something installed, as machinery or apparatus placed in position or connected for use“). It is a physical item: a piece of machinery or equipment that has been installed. This fits well with the other types of “facility” listed in the definition, all of which are physical. See Dole v. United Steelworkers of Am., 494 U.S. 26, 36 (1990) (“[W]ords grouped in a list should be given related meaning.“). The Litgo Appellants’ attempt to define “installation” more conceptually—as a process, potentially made up of various discrete pieces of machinery that may or may not be located near each
It may nevertheless be possible for two pieces of equipment to be sufficiently close in relation to each other that they should be considered components in a larger piece of machinery (which may, itself, be “equipment” or an “installation“). See, e.g., Saporito, 684 F.Supp.2d at 1057 (determining that the party was liable based on ownership of necessary equipment in a plating line). Here, however, the District Court reasonably determined that no such relationship between the government-owned equipment and the vapor degreasers existed. There is no suggestion that the equipment owned by the United States Appellees was in any way attached to the vapor degreaser tanks that disposed of waste or used in close connection with them. The only relationship between the vapor degreasers and the United States Appellees’ equipment is that both were used by Columbia Aircraft to manufacture precision parts. They were not, however, used at the same stage of the production process. Accordingly, we will uphold the determination that there was insufficient evidence to connect the equipment owned by the United States Appellees to the disposal or release of hazardous substances, and that the United States Appellees thus were not past owners under CERCLA.
C. Allocation of Costs
The Litgo Appellants and Sanzari Appellees argue that the District Court‘s allocation of costs under CERCLA was an abuse of discretion.10 In our view, the District Court carefully and judiciously compared the parties’ relative fault both in its initial opinion on the merits and upon reconsideration.
First, the parties challenge multiple findings of fact upon which the District Court relied in allocating costs, including: (1) that the Sanzari Appellees’ environmental consultant installed a faulty seal on one of the monitoring wells; (2) that the Sanzari Appellees failed to deliver a full set of preliminary groundwater test results and failed to disclose information about TCE contamination on a nearby property; (3) that the Litgo Appellants deliberately slowed the remediation process; (4) that the Litgo Appellants, unlike the other PRPs, stood to benefit from the remediation; and (5) that the United States Appellees exercised reasonable care in hiring a reputable contractor to transport the waste. They also claim that the District Court should have found that the United States Appellees did not cooperate with NJDEP‘s cleanup of the JANR warehouse.
After carefully reviewing the record, we cannot conclude that any of these findings of fact was clearly erroneous. With respect to the faulty monitoring well, the United States Appellees’ expert testified that the cement seal that was supposed to be around the monitoring well “was miss-
There is also sufficient evidence to support the District Court‘s finding that the Litgo Appellants did not receive a full set of preliminary test results and that the Sanzari Appellees did not disclose information about contamination at a nearby property. At trial, the Litgo Appellants introduced an April 1989 letter from Sanzari‘s attorney to Goldstein‘s attorney. The letter included information about some of the contaminants on the Property but omitted information about VOCs, including TCE. See App. 6192. Although the Sanzari Appellees argue that the relevant information may have been provided shortly thereafter, at a time when Goldstein still had the opportunity to back out of the transaction, the District Court was not required to so find. The Litgo Appellants also presented evidence at trial showing that there was contamination at a well close to the Property that the Sanzari Appellees were aware of, but did not disclose. See App. 5346 (letter to Sanzari from Ken Hortsman stating that he had instructed the environmental consultant not to include information about the alleged existence of groundwater contamination in Bridgewater, New Jersey in his report to NJDEP); App. 4142-46 (testimony regarding the contamination of the nearby property and the Hortsman letter). Again, while the Sanzari Appellees dispute the inferences that may be drawn from these communications and testimony, it was not clear error for the District Court to rely on them.
The record also supports the District Court‘s finding that the Litgo Appellants deliberately slowed the remediation process. For example, Goldstein‘s deposition testimony, used at trial for impeachment purposes, suggests that he instructed the consultants to slow down the groundwater investigation:
[Q:] You‘re saying that [the consultant] recommended to you that you should stall the DEP?
[A:] No. No professional would ever recommend to stall. He felt that we should do what the DEP is saying we should do, but not—not as fast as they‘re looking for, but don‘t stall. I mean, you know, I don‘t think any professional would ever stall the DEP.
. . .
[Q:] Well, wasn‘t he actually recommending to you that you offer as a more aggressive approach to delineate the groundwater in the southeast and propose a mediation technique for—
[A:] I told him that I was not interested at this point in doing and learning how bad this thing is going to be because he was talking astronomical numbers and we should just not get boxed in to where it may cost me five or six million dollars.
See App. 1416; see also App. 1418 (Goldstein wanted to “go very slowly” because the contamination “could be a monstrous thing“). The District Court reasonably found that “groundwater contamination continues to migrate downstream,” and so the Litgo Appellants’ “lack of action over the past twenty years may well have increased the threat to the environment and public health.” App. 126; see also App. 2175-76 (plumes are continuing to migrate).
Nor was the District Court‘s determination that the Litgo Appellants were the
The District Court‘s findings with respect to the United States Appellees were also supported by the record. The Litgo Appellants and Sanzari Appellees claim there was insufficient evidence to show that the United States Appellees exercised reasonable care in disposing of waste. They argue that the only evidence supporting the Court‘s finding was testimony from an NJDEP witness, who stated that NJDEP believed at the time that RTS, the contractor the United States Appellees used, was reputable. This testimony suffices. NJDEP‘s testimony as to its own views about the contractor could support an inference that the contractor had a good reputation at that time. Finally, the record does not mandate a finding that the United States Appellees failed to cooperate with NJDEP in cleaning up the JANR warehouse. As the District Court explained, NJDEP contacted the United States Appellees in an attempt to identify the source of the contaminants in the warehouse, but there was no testimony suggesting that NJDEP ever asked or expected the United States Appellees to help remove the hazardous substances at that time. Thus, the District Court reasonably concluded that the United States Appellees did not “fail to cooperate” with NJDEP.
The Litgo Appellants and the Sanzari Appellees assert further challenges both to the particular factors considered by the District Court and the weight given to each. CERCLA does not specify which factors courts must consider in allocating costs among responsible parties; instead, it provides that, “[i]n resolving contribution claims, the court may allocate response costs among liable parties using such equitable factors as the court determines are appropriate.”
Some of the factors frequently considered by courts, taken from an unsuccessful amendment to CERCLA, are known as the “Gore factors.” See Matter of Bell Petroleum Servs., Inc., 3 F.3d 889, 899 (5th Cir.1993). They include:
- the ability of the parties to demonstrate that their contribution to a discharge, release or disposal of a hazardous waste can be distinguished;
- the amount of the hazardous waste involved;
- the degree of toxicity of the hazardous waste involved;
- the degree of involvement by the parties in the generation, transportation, treatment, storage, or disposal of the hazardous waste;
- the degree of care exercised by the parties with respect to the hazardous waste concerned, taking into account
the characteristics of such hazardous waste; and - the degree of cooperation by the parties with the Federal, State or local officials to prevent any harm to the public health or the environment.
Id. at 899-900 (internal alteration omitted); United States v. Kramer, 644 F.Supp.2d 479, 493 n. 13 (D.N.J.2008).
Courts are not, however, bound to consider each of the Gore factors, nor are they limited to considering only the Gore factors. Beazer E., 412 F.3d at 446; Envtl. Transp. Sys., Inc. v. ENSCO, Inc., 969 F.2d 503, 507 (7th Cir.1992) (
The Court thoroughly compared the role the United States Appellees played in the contamination with that of the Litgo Appellants and the Sanzari Appellees—parties whose active concealment or resistance to remediation may have worsened the conditions at the Litgo Property. The United States Appellees arranged for hazardous waste to be disposed of by what was then considered to be a reputable contractor, and the waste reached the JANR warehouse only because of third-party actors.
Nor did the Court abuse its discretion in declining to consider the United States Appellees’ relationship with Columbia Aircraft in the 1940s. The District Court found that it would be “inappropriate” to assign the United States Appellees additional costs based on conduct that would not subject them to CERCLA liability. The Litgo Appellants and Sanzari Appellees argue that courts have broad discretion in considering equitable factors when allocating responsibility, and these factors could include both the fact that the United States Appellees leased Columbia Aircraft equipment and the fact that Columbia Aircraft was assisting with the war effort. See, e.g., United States v. Shell Oil Co., 294 F.3d 1045, 1060 (9th Cir.2002). Although the United States Appellees’ relationship with Columbia Aircraft may be a factor that the Court could have considered in allocating costs, the decision not to take that factor into account was well within the Court‘s discretion, and is not reversible error.
The Litgo Appellants and the Sanzari Appellees also challenge the significant size of their own shares of responsibility, given that they were deemed PRPs as owners and operators, rather than as parties directly involved in the disposal of waste. As the Litgo Appellants point out, it may be unusual for an owner or operator who played no role in the discharge to be allocated such a large percentage of the costs. See, e.g., Am. Color & Chem. Corp., 918 F.Supp. at 959-60 (0% to current owner); Bedford Affiliates, 156 F.3d at 430 (5% to current owner); Alcan-Toyo Am., Inc., 881 F.Supp. at 346-47 (10% to current owner). In most of the cases they cite, however, the current owners did not take steps to delay the remediation process, or to conceal the contamination problem. Compare Am. Color & Chem. Corp., 918 F.Supp. at 959-60 (owner did not contribute to release and fully cooperated with
The Sanzari Appellees raise several additional equitable claims, which require only brief discussion. First, they claim that the Court should have taken into account the settlement agreements that Goldstein reached with two other parties—Dande Plastics and Wausau Insurance—during the 1996 proceedings. See K.C. 1986 Ltd. P‘ship v. Reade Mfg., 472 F.3d 1009, 1017-18 (8th Cir. 2007) (stating that courts should generally take settlements into account to avoid duplicate recovery). Although the Court did not rely on the settlement agreement in determining the Litgo Appellants’ allocation of responsibility, it did deduct the amount that the Litgo Appellants had received in these settlements from the total remediation costs, which avoided the problem of duplicate recovery.
Second, the Sanzari Appellees claim that the District Court should have considered prior litigation positions taken by Goldstein in its suit against EWMA. The Sanzari Appellees contend that Goldstein‘s allegations of negligence and substandard services were essentially admissions that the Litgo Appellants paid too much for the remedial services that they received, and the District Court should have taken those admissions into account. The Sanzari Appellees point to no case law suggesting that courts are required to take prior inconsistent positions into account in allocating remediation costs. See Alcan-Toyo Am., Inc., 881 F. Supp. at 346-47 (explaining that “estoppel . . . may be considered in the allocation of contribution shares” (emphasis added)). In any event, the Sanzari Appellees ignore that the District Court did take into account the Litgo Appellants’ prior allegations against its own consultant in its damages determination.
Third, the Sanzari Appellees claim that the District Court failed to fully account for the nature of the Sales Agreement between Sanzari and Goldstein. Pursuant to the Sales Agreement, Goldstein agreed to assume Sanzari‘s environmental obligations, and he was assigned the right to pursue claims against Sanzari‘s former tenants and others. He used the assignment to pursue Sanzari‘s insurer, Sanzari‘s environmental consultants, and Dande Plastics in the 1996 litigation. A review of the record shows, however, that the District Court did give weight to Goldstein‘s assumption of risk when it assigned the Litgo Appellants 70% of the remediation
Finally, the Sanzari Appellees contend that the District Court erred in holding them responsible for the costs of soil remediation, in addition to the costs of groundwater remediation. The Sanzari Appellees argue that they were candid with the Litgo Appellants about the possibility of soil contamination. They also claim that, even if they were responsible for the installation of a faulty well, that defect would have only increased groundwater—not soil—contamination. The District Court addressed these arguments in its opinion on the motions for reconsideration. It explained that it “had taken this argument into consideration as one of the factors in its decision to reduce the Sanzari Appellees’ final allocation to 27%,” but that it did not believe that it was necessary to separate the costs. Sanzari‘s failure to disclose had consequences that extended beyond responsibility for the groundwater contamination alone, and the Court did not clearly err in holding the Sanzari Appellees responsible for part of the costs of soil remediation.
D. Settlement Credit
After the hearing on liability and allocation of costs, the United States Appellees and the Litgo Appellants reached an agreement on damages. They stipulated that the Litgo Appellants had incurred $1,729,279 in CERCLA response costs, and that the United States Appellees owed $51,878.37 (3% of the total damages). Following the damages hearing, the District Court determined that the Litgo Appellants actually had incurred $1,566,236.78 in recoverable costs—an amount less than had been stipulated. The Sanzari Appellees argue that they should have received a credit for the 3% difference between the amount stipulated and the amount of the Litgo Appellants’ actual damages. Otherwise, they contend, the Litgo Appellants will be overcompensated for the remediation costs that they incurred.
As the Sanzari Appellees note, CERCLA is designed to permit plaintiffs to recover costs expended, or costs that will need to be expended. It includes certain provisions to ensure that plaintiffs do not receive a windfall. See, e.g.,
Although the District Court did not explicitly state why it refused to award a settlement credit, it clearly recognized the importance of avoiding double recovery, as it subtracted the other settlement awards the Litgo Appellants had received from the total remediation costs. The Court provided a thorough and detailed discussion of other equitable factors that it considered, including the Sanzari Appellees’ conduct, and these other factors may have led the Court to believe that a settlement credit of $4,891.27—less than one percent of the total costs being allocated among the parties—was not warranted. Although the Court should have explained its reasoning in denying the additional settlement credit, this determination was a very small part of the allocation process, and we are confident that the Court recognized the relevant factors and considered them. Cf. Beazer E., 412 F.3d at 446 (district court abused its discretion when it gave one equitable factor undue weight and, in doing so, entirely failed to consider another factor). We thus hold that the District Court‘s refusal to credit the Sanzari Appellees for the United States Appellees’ overpayment is not reversible error.
E. Prejudgment Interest
Although we agree almost entirely with the District Court‘s thorough assessment of the parties’ CERCLA claims, we will reverse its order to the extent that it denied the Litgo Appellants’ request for prejudgment interest under CERCLA
An award of prejudgment interest under
The Sanzari Appellees’ argument mischaracterizes the nature of the proceedings between the Litgo Appellants and Appellees. Because they bore the costs of remediation, the Litgo Appellants were entitled to bring suit to recover costs against the Appellees under
[T]he remedies available under
§§ 107(a) and113(f) complement each other by providing causes of action to persons in different procedural circumstances. Section 113(f)(1) authorizes a contribution action to PRPs with common liability stemming from an action instituted under . . .§ 107(a) . And§ 107(a) permits cost recovery (as distinct from contribution) by a private party that has itself incurred cleanup costs.
551 U.S. at 139, 127 S. Ct. 2331 (internal quotation marks and citations omitted); see also id. at 138-39, 127 S. Ct. 2331 (“The statute authorizes a PRP to seek contribution ‘during or following’ a suit under . . .
Because the imposition of prejudgment interest under
IV. Spill Act Claims
Like CERCLA, the Spill Act permits courts to “allocate the costs of cleanup and removal among liable parties using such equitable factors as the court determines are appropriate.”
Under the Spill Act, if a party owns property at the time of a discharge, they are responsible for that discharge. See N.J. Dep‘t of Envtl. Prot. v. Dimant, 212 N.J. 153, 51 A.3d 816, 829-30 (2012) (citing Marsh v. N.J. Dep‘t of Envtl. Prot., 152 N.J. 137, 703 A.2d 927, 931 (1997)); see also
V. RCRA Claims
RCRA was enacted “to reduce the generation of hazardous waste and to ensure the proper treatment, storage, and disposal of that waste which is nonetheless generated.” Meghrig v. KFC W., Inc., 516 U.S. 479, 483 (1996). To accomplish this goal, RCRA permits citizen suits against any person who has contributed or is contributing to the handling or disposal of waste “which may present an imminent and substantial endangerment to health or the environment,” and authorizes district courts to issue injunctions to alleviate that harm.
The District Court granted summary judgment in favor of the Sanzari Appellees on the Litgo Appellants’ RCRA claim, based on New Jersey‘s entire controversy doctrine. Under that doctrine, all claims which arise from related facts or the same transaction or series of transactions must be joined together. DiTrolio v. Antiles, 142 N.J. 253, 662 A.2d 494, 502 (1995). If a plaintiff could have brought a related claim in a prior state court proceeding and failed to do so, he will be barred from bringing that claim in the future. He would not, however, be barred if the state court lacked subject matter jurisdiction over the claim. See Nanavati v. Burdette Tomlin Mem‘l Hosp., 857 F.2d 96, 112, 115 (3d Cir. 1988). The District Court determined that the RCRA claim was sufficiently related to the claims brought by the Litgo Appellants in the 1996 proceedings that the entire controversy doctrine applied. It concluded that state courts have concurrent jurisdiction over RCRA claims, so the claim could have been brought in the prior proceeding.
The Litgo Appellants’ RCRA claims against the United States Appellees proceeded to trial. The Court found that the United States Appellees were liable under RCRA because they “contributed to the storage and disposal of hazardous wastes which have been linked to the contamination at the Litgo Property.” Litgo I, 2010 WL 2400388, at *32. It expressed doubt, however, as to whether injunctive relief was appropriate. It explained that the United States Appellees were not “currently taking any actions at the site that pose an imminent and substantial endangerment to health or the environment and thus there is no need to ‘restrain’ [them].” Id. at *40. The Court decided not to enter an injunction at that time because it did “not feel that the issue of what injunctive relief would be appropriate has been sufficiently addressed by the parties.” Id. It explained that the issue of what, if any, injunctive relief should be granted could be addressed at the damages hearing.
Before the hearing on damages, the United States Appellees and the Litgo Appellants entered into a settlement agreement. The Litgo Appellants dismissed their claim for injunctive relief under RCRA, but claimed to have “reserve[d] their right to seek litigation costs from the United States [Appellees] as a ‘prevailing party’ under Section 7002(e) of RCRA.” Supp. App. 8. The Litgo Appellants then moved for costs, which were denied.
The Litgo Appellants now challenge the District Court‘s dismissal of their RCRA claim against the Sanzari Appellees and its denial of litigation costs. For the reasons that follow, we will reverse the District Court‘s summary judgment in favor of the
A. Jurisdiction Over RCRA Claims
The District Court granted summary judgment in favor of the Sanzari Appellees on the RCRA claim because it determined that state and federal courts have concurrent jurisdiction over RCRA claims, such that the claim was foreclosed by the entire controversy doctrine. Because we hold that federal courts have exclusive jurisdiction over claims brought under RCRA, we will remand this claim for further proceedings.
RCRA provides, in relevant part:
Any action under paragraph (a)(1) of this subsection [permitting actions against alleged polluters] shall be brought in the district court for the district in which the alleged violation occurred or the alleged endangerment may occur. Any action brought under paragraph (a)(2) of this subsection [permitting actions against the administrator of the Environmental Protection Agency (EPA)] may be brought in the district court for the district in which the alleged violation occurred or in the District Court of the District of Columbia. The district court shall have jurisdiction, without regard to the amount in controversy or the citizenship of the parties, . . . to restrain any person who has contributed or who is contributing to the past or present handling, storage, treatment, transportation, or disposal of any solid or hazardous waste.
Under our federal system, there is a “deeply rooted presumption in favor of concurrent state court jurisdiction.” Tafflin v. Levitt, 493 U.S. 455, 459 (1990); see also Yellow Freight Sys., Inc. v. Donnelly, 494 U.S. 820, 823 (1990). This presumption “is, of course, rebutted if Congress affirmatively ousts the state courts of jurisdiction over a particular federal claim.” Tafflin, 493 U.S. at 459. Congress may divest state courts of jurisdiction “either explicitly or implicitly,” although its intent to do so must be clear. Id. (quoting Gulf Offshore Co. v. Mobil Oil Corp., 453 U.S. 473, 478 (1981)). Thus, exclusive jurisdiction may be conferred “by an explicit statutory directive, by unmistakable implication from legislative history, or by a clear incompatibility between state-court jurisdiction and federal interests.” Id. at 459-60 (quoting Gulf Offshore, 453 U.S. at 478)).
We agree with the majority of courts that have addressed this issue that the language of
A provision stating that plaintiffs must file in federal court is sufficient to establish that federal courts have exclusive federal jurisdiction. See Tafflin, 493 U.S. at 471 (Scalia, J., concurring) (“in the standard fields of exclusive federal jurisdiction, the governing statutes specifically recite that suit may be brought ‘only’ in federal court; that the jurisdiction of federal courts shall be ‘exclusive,’ or indeed even that the jurisdiction of the federal courts shall be ‘exclusive of the courts of the States‘” (emphasis added) (internal citations omitted) (citing the
The Sanzari Appellees, relying on the Sixth Circuit‘s decision in Davis, argue that the Supreme Court has previously determined that language similar to the language in RCRA does not deprive the state courts of jurisdiction. In Yellow Freight, the Supreme Court addressed whether state courts have concurrent jurisdiction over claims arising under Title VII, which provides:
Each United States district court and each United States court of a place subject to the jurisdiction of the United States shall have jurisdiction of actions brought under this subchapter.
The “shall have” language [in Title VII] was not deemed to be sufficient evidence that Congress intended to divest the state courts of jurisdiction over those matters. In the same way, the “shall” language in the RCRA enforcement provision does not grant exclusive jurisdiction to the federal courts in suits brought pursuant thereto.
The similarities between the language at issue in Title VII (“shall have jurisdiction“) and RCRA (“shall be brought in the district court“) are, at best, superficial. The former is merely a grant of authority; nothing in the statement “Each United States district court . . . shall have jurisdiction” is inconsistent with concurrent jurisdiction. See Gulf Offshore Co., 453 U.S. at 479 (“It is black letter law . . . that the mere grant of jurisdiction to a federal court does not operate to oust a state court from concurrent jurisdiction over the cause of action.“). The latter is, by contrast, an order requiring litigants to bring RCRA claims in a district court.16
The Sanzari Appellees argue, and our dissenting colleague agrees, that this phrase could be read to mean that “if citizen suit claim is brought in federal court, then it must be brought in the district where the violation or alleged endangerment occurred, rather than the district where a defendant may be subject to personal jurisdiction,” Sanzari Br. 65 (citing Davis v. Sun Oil Co., 953 F. Supp. 890, 895 (S.D. Ohio 1996)); Dissenting Op. at 403-04
Because the New Jersey state court lacked subject matter jurisdiction over the
B. Litigation Costs under RCRA
The Litgo Appellants also claim that the District Court erred in denying their request for an award of $4,751,201.88 in litigation costs, including attorney‘s fees, against the United States Appellees. Although RCRA gives courts discretion to award a “prevailing or substantially prevailing party” litigation costs, see
To have “prevailed” or “substantially prevailed” on their claims, the Litgo Appellants must have “secure[d] a material alteration of [their] legal relationship” with the United States Appellees—that is, they must have obtained some kind of judicial relief. NAACP v. N. Hudson Reg‘l Fire & Rescue, 665 F.3d 464, 486 n.12 (3d Cir. 2011) (internal quotation marks omitted) (prevailing party); United States v. Craig, 694 F.3d 509, 512 (3d Cir. 2012) (substantially prevailing party); see also Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep‘t of Health & Human Res., 532 U.S. 598, 606, 121 S. Ct. 1835, 149 L. Ed. 2d 855 (2001). A party who “has failed to secure a judgment on the merits or a court-ordered consent decree, but has nonetheless achieved the desired result because the lawsuit brought about a voluntary change in the defendant‘s conduct” is not a prevailing party. Buckhannon Bd., 532 U.S. at 600, 121 S. Ct. 1835 (“[W]e have not awarded attorney‘s fees where the plaintiff has . . . acquired a judicial pronouncement that the defendant has violated the Constitution unaccompanied by ‘judicial relief,‘” id. at 605-06, 121 S. Ct. 1835 (internal citations omitted)); see also Hewitt v. Helms, 482 U.S. 755, 760, 107 S. Ct. 2672, 96 L. Ed. 2d 654 (1987) (“Respect for ordinary language requires that a plaintiff receive at least some relief on the merits of his claim before he can be said to prevail.“).
The District Court found that the United States Appellees were liable parties under RCRA. It did not, however, grant relief on that claim. Instead, it reserved the question of “what, if any, injunctive
VI. Closure Act Claim
Finally, the Litgo Appellants requested rescission of the Sales Agreement under the New Jersey Closure Act, which requires sellers of land to disclose whether the property has ever been used as a landfill in the contract of sale.
We cannot say that the District Court‘s conclusion was clearly erroneous. Although evidence presented at trial demonstrated that there was a landfill on the properties adjacent to the Litgo Property, the evidence was ambiguous as to whether the Property itself had been put to such a use. The District Court listed its reasons for finding that the Litgo Appellants had not shown by a preponderance of the evidence that the Property was used as a landfill, which included: (1) lack of documentary evidence; (2) physical evidence suggesting that the Property had not been used for such a purpose; and (3) physical evidence suggesting that the Property would not have been a good site to use for such a purpose. Because these findings are supported by the record, the District Court did not err in denying the Litgo Appellants’ request for rescission.
* * *
For the reasons discussed herein, we agree with the great majority of the District Court‘s comprehensive and thoughtful consideration of this complex case, and will affirm its judgment in all respects save two: (1) the Litgo Appellants should have been awarded prejudgment interest; and (2) the District Court erred in dismissing the RCRA claim against the Sanzari Appellees. We will vacate the District Court‘s order in those respects and will remand for further proceedings consistent with this opinion.
GARTH, Circuit Judge, dissenting:
There is only one issue in this appeal of true significance. Indeed, it has presented us with an issue of first impression in this Court: whether the individual states have the authority, i.e., concurrent jurisdiction with the federal courts, to regulate pollution of the lands and property within and comprising the state.
The majority opinion in this case proclaims that only the federal courts have jurisdiction to hear Resource Conservation and Recovery Act (RCRA) cases affecting the property and lands of the sovereign states and that the states have no jurisdiction to entertain such cases.1
On this basis, the majority has reversed the District Court‘s order dismissing Litgo‘s RCRA claim. The District Court held that Litgo had been obliged to bring that claim in New Jersey‘s Superior Court, where it had previously brought suit against the Sanzari defendants.2
The majority opinion reaches its conclusion notwithstanding the fact that there is nothing in the text, intent, history, or purpose of RCRA indicating that Congress affirmatively prohibited the states from hearing and deciding cases brought pursuant to RCRA. The majority in its opinion has accordingly defied enduring Supreme Court precedents that go as far back as 1876. See, e.g., Claflin v. Houseman, 93 U.S. 130, 23 L. Ed. 833 (1876); Tafflin v. Levitt, 493 U.S. 455, 459, 110 S. Ct. 792, 107 L. Ed. 2d 887 (1990). Those precedents hold that state courts have the same jurisdiction over claims involving federal law as federal courts do, unless Congress affirmatively and explicitly states otherwise. Congress has not stated otherwise in enacting RCRA.
By failing to give proper weight to the forceful presumption that state courts may exercise jurisdiction over federal-law claims, the majority opinion also undermines the well established primacy of a state in protecting and regulating its own property and ground. Adopting the majority‘s approach “would result in a significant impingement of the States’ traditional and primary power over land and water use,” Solid Waste Agency of N. Cook Cnty. v. U.S. Army Corps of Engineers, 531 U.S. 159, 174, 121 S. Ct. 675, 148 L. Ed. 2d 576 (2001), thus disrupting the balance of state and federal regulation over state, county, and local pollution that both Congress and the Supreme Court have recognized and respected.
I
Presumption in favor of concurrent jurisdiction
I begin by highlighting the core principles that must guide analysis of this issue. The Supreme Court has long abided by the “general rule that the grant of jurisdiction to one court does not, of itself, imply that the jurisdiction is to be exclusive.” United States v. Bank of New York & Trust Co., 296 U.S. 463, 479, 56 S. Ct. 343, 80 L. Ed. 331 (1936). As the Supreme Court has further emphasized, there is in our federalism a “deeply rooted presumption in favor of concurrent state court jurisdiction.” Tafflin, 493 U.S. at 459. This presumption, which the majority recognizes but refuses to follow, is subject to rebuttal only “if Congress affirmatively ousts the state courts of jurisdiction over a particular federal claim . . . ‘by an explicit statutory directive, by unmistakable implication from legislative history, or by a clear incompatibility between state-court jurisdiction and federal interests.‘” Id. at 459-60 (emphasis added) (quoting Gulf Offshore Co. v. Mobil Oil Corp., 453 U.S. 473, 478, 101 S. Ct. 2870, 69 L. Ed. 2d 784 (1981)).
As Justice Stevens explained for a unanimous court in Yellow Freight Sys., Inc. v. Donnelly, 494 U.S. 820, 110 S. Ct. 1566, 108 L. Ed. 2d 834 (1990): “Under our ‘system of dual sovereignty, we have consistently held that state courts have inherent authority, and are thus presumptively competent, to adjudicate claims arising under the laws of the United States.‘” Id. at 823, 110 S. Ct. 1566 (quoting Tafflin, 493 U.S. at 458). The Court looked at Claflin v. Houseman, 93 U.S. 130, 23 L. Ed. 833 (1876) (involving the
The Court went on to say: “to give Federal Courts exclusive jurisdiction over a Federal cause of action, Congress must, in an exercise of its powers under the Supremacy Clause, affirmatively divest State Courts of their presumptive concurrent jurisdiction.” Yellow Freight, 494 U.S. at 823 (emphasis added).
In Yellow Freight, the Court was called upon to apply these principles in the context of Title VII. The plaintiff had complained about discrimination in the action brought in the state court. Her claim was removed to the federal court, and when the Court of Appeals for the Seventh Circuit held that there was exclusive jurisdiction over the Title VII litigation, the Supreme Court granted certiorari. In referring to the text of Title VII, the Court noted that Title VII had been enacted with the provision that:
‘[e]ach United States district court and each United States court of a place subject to the jurisdiction of the United States shall have jurisdiction of actions brought under this subchapter.’
Yellow Freight, 494 U.S. at 823 (quoting
To reiterate, the Court went on to emphasize that “[t]o give federal courts exclusive jurisdiction over a federal cause of action, Congress must, in an exercise of its powers under the Supremacy Clause, affirmatively divest state courts of their presumptive concurrent jurisdiction.” Yellow Freight, 494 U.S. at 823 (emphasis added). Absent such an affirmative divestment, the Court concluded, even a “persuasive showing that most legislators, judges, and administrators who have been involved in the enactment, amendment, enforcement, and interpretation of Title VII expected that such litigation would be processed exclusively in federal courts” was inadequate to support exclusive jurisdiction, as “such anticipation does not overcome the presumption of concurrent jurisdiction that lies at the core of our federal system.” Id. at 826, 110 S. Ct. 1566.
II
Concurrent Jurisdiction in RCRA
In enacting RCRA, Congress acknowledged “the collection and disposal of solid wastes . . . to be primarily the function of State, regional, and local agencies. . . .”
Absent a clearer grant of exclusive jurisdiction, the text of the RCRA cannot be properly read to oust states of their presumptive jurisdiction. As the Sixth Circuit held in Davis v. Sun Oil Co., 148 F.3d 606, 612 (6th Cir. 1998), “the term ‘shall’ as it is used in [RCRA] does not affirmatively divest the state court‘s of their presumptive jurisdiction. . . [T]he ‘shall’ language in the RCRA enforcement provision does not grant exclusive jurisdiction to the federal courts. . . .” Id. at 612 (emphases added).
In determining, contra Davis, that RCRA confers exclusive jurisdiction on the federal courts, the majority opinion emphasizes that “[u]the overwhelming majority of courts that have addressed this issue have read this provision to confer exclusive jurisdiction on federal courts, based on the statute‘s instruction that RCRA claims ‘shall’ be brought in a ‘district court.‘” Maj. Op. at 394. This position rests on two fatally flawed foundational arguments: first, that there is weighty and persuasive judicial authority on this subject, and second, that the phrase “shall be brought in . . . district court” represents a textual grant of exclusive jurisdiction.
“The overwhelming majority of courts”
Of the eight cases cited by the majority for the proposition that there is consensus on this issue, the majority has mustered only a single opinion from a Court of Appeals, Blue Legs v. U.S. Bureau of Indian Affairs, 867 F.2d 1094 (8th Cir. 1989). Blue Legs, an Eighth Circuit Court of Appeals opinion, involves Indian tribes and lands rather than the states and state lands. The opinion limits its discussion to just these two sentences:
Our examination of the RCRA leads us to conclude that exhaustion of tribal remedies is not required in this case.
The RCRA places exclusive jurisdiction in federal courts for suits brought pursuant to
section 6972(a)(1) of the Resource Conservation and Recovery Act. Any action under paragraph (a)(1) of this subsection [as this case is] shall be brought in the district court for the district in which the alleged violation occurred.
Blue Legs, 867 F.2d 1094, 1098 (8th Cir. 1989). Accord Middlesex County Board of [Union] [Chosen] Freeholders v. New Jersey, 645 F. Supp. 715, 719-20 (D.N.J. 1986).
The overwhelming majority of District Courts cited by the majority opinion as overwhelming authority at best echo Blue Legs’ two-sentence decision. Just as Blue Legs provided no careful, thoughtful and meaningful analysis, the District Courts which echo Blue Legs provide none either.
I thus do not regard Blue Legs’ discussion of jurisdiction, nor the District Courts’ discussions which follow Blue Legs’ two-sentence discussion of jurisdiction, to be authoritative—and certainly they are not binding in the area of federal/state jurisdiction.
Venue: the “may“—“shall” distinction
The substantive textual argument advanced by the majority is unconvincing because it fails to appreciate that RCRA‘s requirement that actions “shall be brought
One could read RCRA‘s mandate that citizen suits “shall be brought in the district court for the district in which the alleged violation occurred” as operating subsequent to the decision to bring a claim in state or federal court. Once you have chosen a judicial system, then you must bring your claims in the district court for the judicial district in which the alleged violation occurred. (footnote omitted.)
Examining the provision of RCRA at issue reveals that it concerns venue rather than jurisdiction. First, RCRA,
Second, RCRA does not consistently use the term “shall” when dictating the procedures for filing a citizen complaint. The text immediately following the language at issue, which relates to suits brought against the administrator of the Environmental Protection Agency for failing to perform a non-discretionary action, provides: “Any action brought under paragraph (a)(2) of this subsection may be, brought in the district court for the district in which the alleged violation occurred or in the District Court of the District of Columbia.”
As the Supreme Court has recently made clear, permissive formulations of this sort cannot overcome the presumption of concurrent jurisdiction. Mims v. Arrow Fin. Services, LLC, — U.S. —, 132 S. Ct. 740, 749, 181 L. Ed. 2d 881 (2012) (“Nothing in the permissive language of [the
It cannot be that Congress intended the terms “shall” and “may” as variously used in RCRA,
Third, where Congress has elsewhere used the formulation “shall be brought in the district court for the district in which the alleged violation occurred,” it has done so in provisions expressly concerned with
The majority has thus erroneously decided that Congress has used a statutory formulation for venue to override and trump the Supreme Court‘s instruction and precedent that both state and federal jurisdiction are available under RCRA. Congress in
IV
Pollution regulation—primary state function
There is, moreover, no incompatibility between RCRA and state jurisdiction. Quite to the contrary! When one considers the very subject of RCRA, it is all too evident that the individual states, each of which is defined by property borders, have the primary interest and concern in protecting and shielding their own sovereign lands. RCRA recognizes that “the collection and disposal of solid wastes should continue to be primarily the function of State, regional, and local agencies. . . .”
As the Supreme Court has said, in describing the limits of federal jurisdiction:
Permitting [the U.S. Army Corps of Engineers] to claim federal jurisdiction over ponds and mudflats falling within the “Migratory Bird Rule” would result in a significant impingement of the States’ traditional and primary power over land and water use. See, e.g., Hess v. Port Authority Trans-Hudson Corporation, 513 U.S. 30, 44, 115 S. Ct. 394, 130 L. Ed. 2d 245 (1994) (“[R]egulation of land use [is] a function traditionally performed by local governments“). Rather than expressing a desire to readjust the federal-state balance in this manner, Congress chose to “recognize, preserve, and protect the primary responsibilities and rights of States . . . to plan the development and use . . . of land and water resources: . . .”
33 U.S.C. § 1251(b) .
Solid Waste Agency of N. Cook Cnty. v. U.S. Army Corps of Engineers, 531 U.S. at 174, 121 S. Ct. 675 (emphasis added).
For the same reasons that federal authority cannot excessively intrude on local regulation of land and water, it is essential (absent an express Congressional declaration otherwise) that the states should, through their own courts, be able to enforce the laws governing pollution of their land, even when the source of the law is federal.
Conclusion
I am compelled to part company with my colleagues in the majority because they have failed to adhere to Supreme Court precedent interpreting Congress’ legislation. As I have pointed out, since at least 1867 the Supreme Court has required federal courts to recognize dual jurisdiction in matters such as RCRA. The majority here has not.
Instead of respecting our “system of dual sovereignty,” which requires that state courts have inherent authority and are thus presumptively competent to adjudicate claims under the laws of the United States, the majority has ignored this principle and thus defied Supreme Court precedent. See Tafflin, 493 U.S. at 458, 110 S. Ct. 792 (“Under this system of dual sovereignty, we have consistently held that state courts have inherent authority, and are thus presumptively competent, to adjudicate claims arising under the laws of the United States.“). Instead, the majority opinion, as I have pointed out, has followed the unanalytic path of the solitary Court of Appeals which has held that federal courts have exclusive RCRA jurisdiction. Only the District Courts have adopted this position, following the Eighth Circuit opinion of Blue Legs without any additional persuasive analysis.
The opinions of the District Courts do not follow Supreme Court precedent or employ logic in denying RCRA state court jurisdiction. Rather, they have cited to the Blue Legs position and to one another in superficial treatment of their respective jurisdictional conclusions. Sadly and unfortunately, the majority opinion has followed suit. Accordingly, just as with the opinions it has cited, the majority opinion lacks authoritative precedential analysis and statutory interpretation. The majority opinion, and the courts it has looked to, have thus failed to take into consideration the traditional, generational, and historical principles and precedents of concurrent jurisdiction.
It is for that reason that I must dissent. I cannot join the majority opinion, which has remanded this case to the District Court again—a case which originated in actions taken in the 1940s. Respectfully, therefore, I would adhere to Supreme Court teaching and precedent and hold for the first time in this Court that New Jersey has concurrent jurisdiction in RCRA cases with the federal courts.
In so doing, I would affirm all of the District Court‘s present judgment in all particulars, with the exception of CERCLA prejudgment interest. See note 3, supra.
Connie J. EDMONSON, individually and on behalf of all others similarly situated
v.
LINCOLN NATIONAL LIFE INSURANCE COMPANY.
No. 12-1581.
United States Court of Appeals, Third Circuit.
Argued Nov. 13, 2012.
Filed: Aug. 7, 2013.
Notes
Any action under paragraph (a)(1) of this subsection shall be brought in the district court for the district in which the alleged violation occurred or the alleged endangerment may occur. Any action brought un-der paragraph (a)(2) of this subsection may be brought in the district court for the district in which the alleged violation occurred or in the District Court of the District of Columbia. The district court shall have jurisdiction, without regard to the amount in controversy or the citizenship of the parties, to enforce the permit, standard, regulation, condition, requirement, prohibition, or order, referred to in paragraph (1)(A), to restrain any person who has contributed or who is contributing to the past or present handling, storage, treatment, transportation, or disposal of any solid or hazardous waste referred to in paragraph (1)(B), to order such person to take such other action as may be necessary, or both, or to order the Administrator to perform the act or duty referred to in paragraph (2), as the case may be, and to apply any appropriate civil penalties under section 6928(a) and (g) of this title.
Venue (1) Actions under subsection (a)(1) Any action under subsection (a)(1) of this section shall be brought in the district court for the district in which the alleged violation occurred. (2) Actions under subsection (a)(2) Any action brought under subsection (a)(2) of this section may be brought in the United States District Court for the District of Columbia.Similarly,
Venue (1) Any action under subsection (a) of this section against an owner or operator of a facility shall be brought in the district court for the district in which the alleged violation occurred. (2) Any action under subsection (a) of this section against the Administrator may be brought in the United States District Court for the District of Columbia.
Any action under paragraph (a)(1) of this subsection [permitting actions against alleged polluters] shall be brought in the district court for the district in which the alleged violation occurred or the alleged endangerment may occur. Any action brought under paragraph (a)(2) of this subsection [permitting actions against the administrator of the EPA] may be brought in the district court for the district in which the alleged violation occurred or in the District Court of the District of Columbia.