(CN) – Sherwin Williams lost its 9th Circuit bid to avoid paying $32 million to decontaminate a Superfund site in northern California after it paid $6.5 million to clean up a neighboring site.
The building materials giant had tried to invoke a settlement agreement involving a related site to dodge cross-claims by property owners who had nothing to do with the pollution.
From the 1920s through the 1960s, Sherwin Williams used two sites in Emeryville, Calif., to make, store and distribute pesticides. It settled with Emeryville for $6.5 million in 2001 over cleanup of a parcel called “Site A.” Investigations revealed further pollution at adjacent “Site B” in 2005.
In a separate action, the Emeryville Redevelopment Agency sought $32 million to cover the costs of decontaminating the second site. Individuals who currently own or recently owned the land after it was contaminated intervened, seeking cross-claims for cleanup costs.
The trial court held that, due to the settlement agreement, Sherwin Williams shouldn’t be subject to cross-claims for the first site. But the building company claimed that the 2001 agreement also released it from liability from cross-claims at the second site.
The 9th Circuit disagreed, pointing to a sudden shift in Sherwin Williams’ legal strategy, including some “strained, eleventh-hour” arguments.
Judge Cynthia Hall, writing for the San Francisco-based appellate court, said that although Superfund policy should encourage good-faith settlements, it also should not “ambush” entities in a position such as the intervenors, who are clearly not responsible for the pollution.
Sherwin Williams didn’t notify any neighbors of the first parcel about possible pollution at the second parcel, showing that cleanup there was never contemplated, the court said.
The circuit said it would be “irrational and punitive” to cap the intervenors’ contribution claims.
The 9th Circuit also upheld the lower court’s denial of attorney’s fees on the basis that no party clearly prevailed, as the ruling was mixed.