3rd Circuit Reverses $11M Superfund Judgment

(CN) - Citing the "blurry relationship" between cost recovery and contribution claims, the 3rd Circuit vacated an $11 million judgment against a company relating to toxic waste cleanup at the Boarhead Farms Superfund site in Pennsylvania.

Waste from more than 20 companies was illegally dumped at the site in the early 1970s, leading the Environmental Protection Agency to investigate in the 1980s and conduct cleanup there through the 1990s.

The EPA sued five of the major polluters in 2001, including the Ford Motor Company. In 2002, those five sued 23 other companies under the Comprehensive Environmental Response, Compensation, and Liability Act, to recover a share of the millions of dollars they had already put towards decontamination.

After the trial in 2008, only one defendant was left: Carpenter Technology Corporation. The federal bench trial determined that of the approximately $13.68 million in costs the plaintiffs had incurred by the end of 2007, Carpenter was responsible for 62.6 percent, based on its proportionate volume of waste.

The court added to this 17.4 percent due to Carpenter's lack of cooperation with the EPA and for its having done business with known polluters, making Carpenter responsible for 80 percent of the cleanup, or about $10.94 million.

The Philadelphia-based appellate court reversed the judgment based on several key points.

Alluding to the "magnitude and complexity of the record," the court addressed Carpenter's challenge of the judgment based on a statute of limitations that starts once cleanup work has finished. The 3rd Circuit asked the trial court to determine, as best possible, a date certain for completion of the work.

The appeals court also ruled that plaintiffs should be shielded from contribution counterclaims, but may not pursue cost counterclaims pursuant to consent decrees.

Although the 3rd Circuit upheld the concept of the 17.4 percent penalty, since Carpenter showed "callous disregard" in dealing with the waste companies and EPA, it reversed the lower court's allocation of waste volume. The trial court may not base its decision on a stipulation that Carpenter never signed, the appellate court said, calling this hearsay and a violation of due process.

The 3rd Circuit remanded the case back to the trial court with instructions to issue a new ruling consistent with its own.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit