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Sunday, May 19, 2024 | Back issues
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Court Revives Superfund $16M Settlement Dispute

(CN) - Gear and tool manufacturers that were found liable for groundwater contamination can sue other companies that polluted the same site over their shares of a $16 million settlement to a class action, the 7th Circuit ruled.

Arrow Gear and Precision Brand Products were two of several businesses investigated by the Environmental Protection Agency regarding groundwater pollution by industrial solvents at the Ellsworth Industrial Park in Downers Grove, Ill., a Superfund site.

Residents of the area filed a class action in 2004, which was settled in 2006 for $16 million.

In a series of agreements, the polluting companies split the expenses among each other and released themselves from further contribution claims.

As part of the settlement process, the class action was dismissed with prejudice, meaning the plaintiffs could not refile.

The Chicago-based 7th Circuit consolidated Arrow's and Precision's separate lawsuits against other polluters, but only discussed Arrow's claim since the issues were identical.

Arrow Gear sued Downers Grove Sanitary District in 2008 to recover costs for pollution under the Comprehensive Environmental Response, Compensation and Liability Act.

The trial court agreed with Downers Grove to dismiss the action, since the issue had already been decided when the suit was dismissed. Downers Grove argued that this would constitute piecemeal appealing, something the legal system discourages.

The three-judge appellate panel disagreed, with Judge Richard Posner writing, "This is a 'start over' case."

Although the settlements included such broad language as barring claims against co-polluters "from the beginning of time," Posner wrote this was clearly qualified and the scope narrowly defined.

Since the EPA's investigation is ongoing, the agency can still file claims against the companies, the court pointed out.

The 7th Circuit reinstated the lawsuits, finding that other polluters cannot rely on res judicata - the legal doctrine that prevents litigants from retrying matters that have already been judged - or the claim that the cases were already decided.

In a separate agreement, the polluting companies agreed to provide an alternative water source to communities affected by the pollution, at a cost of more than $4 million.

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