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Full Opinion
United States Court of Appeals
For the First Circuit
No. 03-2143
AMERICAN CYANAMID COMPANY,
Plaintiff,
ROHM AND HAAS COMPANY,
Plaintiff, Appellee,
v.
DANIEL J. CAPUANO, JR.; JACK CAPUANO;
UNITED SANITATION, INC.,
Defendants, Appellants,
A. CAPUANO BROS., INC.; CAPUANO ENTERPRISES, INC.,
Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Mary M. Lisi, U.S. District Judge]
Before
Torruella and Lipez, Circuit Judges,
and Saris,* District Judge.
Mortimer C. Newton, was on brief, for appellants.
John M. Armstrong, with whom Schnader Harrison Segal & Lewis
LLP was on brief, for appellee.
August 18, 2004
*
Of the District of Massachusetts, sitting by designation.
TORRUELLA, Circuit Judge. In 1977, Warren Picillo, Sr.
and his wife agreed to allow part of their pig farm in Coventry,
Rhode Island ("Picillo site") to be used as a disposal site for
drummed and bulk waste. Later that year, after thousands of
barrels of hazardous waste replaced what pigs at one time called
home, a monstrous explosion ripped through the Picillo site. The
towering flames, lasting several days, brought the waste site to
the attention of the Rhode Island environmental authorities. Rhode
Island investigators "discovered large trenches and pits filled
with free-flowing, multi-colored, pungent liquid wastes." Violet
v. Picillo, 648 F. Supp. 1283, 1286 (D.R.I. 1986). Recognizing the
environmental disaster it had discovered, Rhode Island closed the
pig farm and, with the federal government, began the cleanup
process.
In a nutshell, this case involves an action under the
Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLA") §§ 101-405, as amended by the Superfund Amendments
and Reauthorization Act of 1986 ("SARA"), 42 U.S.C. §§ 9601-9675,
brought by a company whose hazardous waste was deposited at the
Picillo site against a group of people who were involved with the
site.
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I. Background
A. CERCLA
CERCLA is a statutory scheme that provides specific
procedures for the remediation of a hazardous site. To understand
this appeal, it is necessary to mention some of these procedures
and define certain terms.
The remediation process at a hazardous site is called a
response action. 42 U.S.C. § 9601(25). A response action involves
removal actions, which "means the cleanup or removal of released
hazardous substances from the environment," id. § 9601(23), and
remedial actions, which "means those actions consistent with
permanent remedy taken instead of or in addition to removal actions
in the event of a release or threatened release of a hazardous
substance into the environment," id. § 9601(24).
When the government performs a response action, it can
bring "a cost recovery action under § 9607 . . . for the costs of
the cleanup [against] a party found to be an owner or operator,
past operator, transporter, or arranger." United States v. Davis,
261 F.3d 1, 28-29 (1st Cir. 2001). "A party found liable under
§ 9607 may in turn bring an action for contribution" against
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potentially responsible parties ("PRPs")1 under § 9613(f). Id. at
29.
B. The parties
Defendants-appellants, Daniel Capuano, Jr.; Jack Capuano;
United Sanitation, Inc.; A. Capuano Brothers, Inc.; and Capuano
Enterprises, Inc. (hereinafter referred to as "the Capuanos"), were
in the business of hauling hazardous waste. Jack Capuano was the
president and sole shareholder of Sanitary Landfill, Inc., a
landfill operation located in Cranston, Rhode Island. Jack Capuano
and Daniel Capuano jointly owned United Sanitation, Inc., a waste
hauling company. Jack Capuano was the president of United
Sanitation and Daniel was the vice-president. In 1977, the
Capuanos reached an agreement with Warren Picillo to dump hazardous
waste on his pig farm.
In 1977, plaintiff-appellee, Rohm & Haas Company ("R&H")
operated research facilities in Spring House and Bristol,
Pennsylvania, which generated hazardous waste. Forty-nine of the
10,000 drums of waste at Picillo were generated by R&H. O'Neil v.
Picillo, 682 F. Supp. 706, 709, 720 (D.R.I. 1988).
These drums ended up at the Picillo site in a round-about
way. R&H's Spring House facility contracted with Jonas Waste
1
PRP's can include "present and past owners and operators of a
contaminated site, transporters who selected the site, and
generators of waste who arranged for disposal of their wastes at
the site." Jeff Civins & Bane Phillippi, New Federal Brownfields
Legislation: Who's Liable Now?, 65 Tex. B.J. 982, 983 (Dec. 2002).
-4-
Removal ("Jonas") to dispose of its waste. Jonas sent the waste to
the Chemical Control Corporation, which later contracted with
Chemical Waste Removal to dispose of the waste. Chemical Waste
Removal disposed of the waste at the Picillo site. R&H's Bristol
facility contracted with Scientific Chemical Processing ("SCP") to
dispose of its waste. SCP later contracted with Daniel Capuano and
United Sanitation to dispose of the waste at the Picillo site.
C. The soil cleanup
In 1983, Rhode Island brought an enforcement action under
CERCLA § 107, 42 U.S.C. § 9607, for cleanup costs at the Picillo
site. This initial action was brought against 35 defendants "who
were either owner/operators of the site, parties who allegedly
transported waste there, parties alleged to have arranged for their
waste to be transported to the site, and parties alleged to have
produced waste deposited at the site." O'Neil, 682 F. Supp. at
709.
Rhode Island settled with twenty of the defendants,
including the Capuanos. The Capuanos agreed to pay $500,000.
Rhode Island went to trial against five of the remaining
defendants, including R&H. After trial, the district court found
R&H and two other companies jointly and severally liable for un-
reimbursed past response costs of $991,937 and for "all future
costs of removal or remedial action incurred by the state . . .
includ[ing] any costs associated with the removal of contaminated
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soil piles." Id. at 731. We affirmed the district court's
holdings. O'Neil v. Picillo, 883 F.2d 176 (1st Cir. 1989).
The United States also sought reimbursement for its
response costs associated with the soil cleanup at the Picillo site
and settled with many parties, including the Capuanos. The
Capuanos agreed to pay $1,500,000. The settling parties received
contribution protection as part of the settlement agreement. See
42 U.S.C. § 9613(f)(2) ("A person who has resolved its liability to
the United States or a State in an administrative or judicially
approved settlement shall not be liable for claims for contribution
regarding matters addressed in the settlement."). In 1989, the
United States filed a cost recovery action under § 9607 against R&H
and another company, American Cyanamid. See United States v.
American Cyanamid Co., 794 F. Supp. 61 (D.R.I. 1990). The district
court entered a judgment against them for $3,339,029 plus interest.
United States v. American Cyanamid Co., 786 F. Supp. 152, 165
(D.R.I. 1992).
D. Groundwater cleanup
In 1987, the United States began developing a Remedial
Investigation and Feasibility Study ("RI/FS") with respect to the
groundwater at the Picillo site. By September 1993, the United
States called for a groundwater cleanup. On March 30, 1994, the
United States issued a "special notice letter" to twenty PRPs,
including the Capuanos and R&H, demanding they implement a
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groundwater remedy and reimburse the Environmental Protection
Agency ("EPA") for the costs related to the RI/FS and enforcement
costs. In response to the United States's letter, two groups of
PRPs made settlement offers. The Capuanos joined neither group.
R&H joined one of the groups making a settlement offer. As a
result, R&H began incurring cleanup costs in late 1994. R&H was
expelled from the settlement group, however, in March 1995 because
it could not agree with the group regarding R&H's contribution.
Without R&H, a group of PRPs settled with the United States and
agreed to implement a groundwater remedy.
In 1998, R&H entered a consent decree with the United
States to pay $4,350,000 to compensate the United States for direct
response costs related to groundwater cleanup, plus $110,000
towards oversight costs, and $69,000 towards natural resource
damage. The consent decree was approved in October 1998.
E. R&H's contribution action
In April 1995, R&H instituted a § 9613(f)(1) contribution
action in the United States District Court for the District of New
Jersey to recover past and future response costs related to
groundwater cleanup. The suit named 52 PRPs, including the
Capuanos. In March 1999, the Capuanos moved to dismiss R&H's
claims against them based on personal jurisdiction and venue
grounds. The District Court of New Jersey concluded it lacked
jurisdiction over the Capuanos. Thus, the District Court of New
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Jersey severed the claims against the Capuanos and transferred them
to the District Court of Rhode Island.
F. The proceedings below
In 2001, the Capuanos filed a motion for summary
judgment, which was denied. In March 2003, the matter was tried
before a district judge who found the Capuanos liable to R&H and
entered judgment for $2,651,838. In September 2003, the district
court amended the judgment to include $507,369 for prejudgment
interest. The Capuanos appeal from this amended judgment and for
the reasons stated below, we affirm.
For ease of discussion, this opinion is organized into
three parts. Part One addresses the affirmative defenses raised by
the Capuanos -- statute of limitations, res judicata, and
contribution immunity. Part Two addresses issues relating to the
trial. Part Three addresses issues relating to the judgment and
the awarding of prejudgment interest.
II. Part One: Affirmative defenses
A. Statute of limitations
CERCLA mandates that:
No action for contribution for any response
costs or damages may be commenced more than 3
years after --
(A) the date of judgment in any action under
this Act for recovery of such costs or
damages, or
(B) the date of an administrative order under
section 122(g) [42 USCS § 9622(g)] (relating
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to de minimis settlements) or 122(h) [42 USCS
§ 9622(h)] (relating to cost recovery
settlements) or entry of a judicially approved
settlement with respect to such costs or
damages.
42 U.S.C. § 9613(g)(3).
Section 9613(g)(3) lists four events that trigger the
running of the statute of limitations: (1) the entry of a
judgment; (2) a § 9622(g) de minimis settlement; (3) a § 9622(h)
cost recovery settlement; and (4) a judicially approved settlement.
The Capuanos contend that R&H's contribution action is time-barred
because a judgment against R&H was entered on April 20, 1988, at
which time R&H was adjudged jointly and severally liable for past
and future costs of remediation at the Picillo site. See O'Neil,
682 F. Supp. at 730-31. If they are correct, any claims for
contribution should have been brought by April 20, 1991, many years
before this case was filed.
To support their argument, the Capuanos first contend
that the plain language of § 9613(g)(3) sets the triggering date
for starting the statute of limitations as the "date of judgment in
any action under this Act." 42 U.S.C. § 9613(g)(3) (emphasis
added). Since O'Neil was a "judgment" in an "action" under § 9607,
the plain language of § 9613(g)(3) would suggest that the statute
of limitations started in 1988. The Capuanos make this argument
acknowledging that response costs relating to the groundwater
remediation had not been identified or incurred at the time of the
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O'Neil judgment. Nevertheless, citing United States v. Davis, 261
F.3d 1, 46 (1st Cir. 2001), the Capuanos argue that costs or
damages need not be identified for a plaintiff in a CERCLA action
to seek an allocation of future response costs.
The Capuanos also argue that an adjudged liable PRP who
is permitted to seek contribution for response costs before its
liability is established, and who can seek an allocation of future
response costs once its liability is established, should not be
able to split its contribution claims into several successive
lawsuits as the cleanup continues and the PRP's costs become fixed.
Splitting contribution suits results in inefficiencies and
conflicting judgments, the antitheses of CERCLA's policy
objectives.
The district court, rejecting the Capuanos' arguments,
held that "whether a PRP can seek contribution ultimately depends
on whether it incurs future costs. Until that occurs, regardless
of whether liability has been assessed against a contribution
defendant, there has been no expenditure or fixing of costs for
which a PRP may seek contribution." We agree with the district
court's holding and reject the Capuanos' arguments for similar
reasons.
We review de novo questions regarding the proper
interpretation of a statute. See United Techs. Corp. v. Browning-
Ferris Indus., Inc., 33 F.3d 96, 98 (1st Cir. 1994). "It is
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apodictic that our first recourse must be to the statute's text and
structure." Id. at 99. The main issue on appeal is whether the
1988 O'Neil judgment qualifies, for purposes of the limitations
period in this action, as a "judgment in any action under this Act
for recovery of such costs or damages." 42 U.S.C. § 9613(g)(3).
It is undisputed that O'Neil was a judgment in an action under
CERCLA. The controversy surrounds whether the O'Neil judgment was
for "recovery of such costs or damages." We believe it was not.
1. The declaratory judgment in O'Neil
The district court, in O'Neil, issued a declaratory
judgment holding R&H "jointly and severally liable for all future
costs of removal or remedial action incurred by the state relative
to the Picillo site." This declaratory judgment did not trigger
the statute of limitations for the groundwater cleanup because
being held jointly and severally liable for all future costs of
removal or remedial action is not a judgment for the recovery of
such costs.
Reaching this conclusion requires us to dissect 42 U.S.C.
§ 9613. Section 9613(g)(2) provides that, in an initial action for
the recovery of costs, "the court shall enter a declaratory
judgment on liability for response costs or damages that will be
binding on any subsequent action or actions to recover further
response costs or damages." 42 U.S.C. § 9613(g)(2)(B) (emphasis
added). The O'Neil judgment was an initial action for the recovery
-11-
of costs associated only with the soil remediation. The district
court also entered a declaratory judgment by holding that "the
defendants are jointly and severally liable for all future costs of
removal or remedial action incurred by the state relative to the
Picillo site." O'Neil, 682 F. Supp. at 730. Although the district
court entered a judgment on liability for future response costs,
the district court did not enter a judgment for the recovery of
such costs. The declaratory judgment is binding on any subsequent
actions to recover response costs or damages, but it is not itself
a judgment for the recovery of such costs or damages.
2. The judgment for past soil remediation response costs
The Capuanos also contend that the O'Neil judgment
triggered the running of the statute of limitations because it was
a judgment for the recovery of response costs. In O'Neil, R&H was
held "jointly and severally liable for past response costs totaling
$991,937.30" for the soil remediation. Thus, the Capuanos argue,
R&H had three years from the date of the O'Neil judgment to bring
a contribution action not only for costs relating to the soil
remediation, but also for any response costs or damages that could
arise in the future.
We disagree and, once again, begin our inquiry by
examining the language of the statute. When interpreting a
statute, "courts must strive to give effect to each subsection
contained in a statute, indeed, to give effect to each word and
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phrase." Browning-Ferris, 33 F.3d at 101. Section 9613(g)(3)
states that "[n]o action for contribution for any response costs or
damages may be commenced more than 3 years after -- (a) the date of
judgment in any action . . . for recovery of such costs or
damages." 42 U.S.C. 9613(g)(3) (emphasis added). There are two
plausible interpretations of subparagraph (a). Under one
interpretation, the term "such costs or damages" refers to any
response costs. Under a second interpretation, the term "such
costs or damages" refers to the costs or damages contained in the
"judgment" mentioned in subparagraph (a).
Several factors favor the latter interpretation. First,
other subsections of § 9613(g)(3) contain the word "such" and use
it to limit and identify a word within the same sentence. For
example, § 9613 (g)(4) states that "[n]o action based on rights
subrogated pursuant to this section by reason of payment of a claim
may be commenced . . . more than 3 years after the date of payment
of such claim." 42 U.S.C. § 9613(g)(4) (emphasis added).
Similarly, § 9613(g)(5) states that "where a payment pursuant to an
indemnification agreement with a response action contractor is made
. . . an action . . . for recovery of such indemnification payment
from a potentially responsible party may be brought at any time
before the expiration of 3 years from the date on which such
payment is made." 42 U.S.C. § 9613(g)(5) (emphasis added). In
both subsections, the word "such" is used to identify a particular
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claim or payment. Similarly, we find that "such costs" in § 9613
(g)(3) refers to the judgment mentioned earlier in the sentence and
identifies a particular claim or payment.2
Our interpretation of other subsections of § 9613 further
supports the interpretation that "such costs" refers to costs
identified in the judgment. Section 9613(g)(2) requires a court to
enter a declaratory judgment on liability and then provides that
subsequent actions for future response costs "may be maintained at
any time during the response action, but must be commenced no later
than 3 years after the date of completion of all response action."
See 42 U.S.C. § 9613(g)(2)(B). Section 9613(g)(2), therefore,
allows for the cleanup and the payment for that cleanup to occur in
phases. When a PRP is forced to pay more than its share of that
cleanup, it turns to § 9613(f), which allows a PRP to "seek
contribution from any other person who is liable or potentially
liable." 42 U.S.C. § 9613(f)(1). We have determined that § 9613
(g)(2)'s declaratory provision applies to § 9613(f)(1), allowing a
PRP to obtain a declaratory judgment in a contribution action.
See Davis, 261 F.3d at 45-46. After obtaining such a declaratory
judgment, a PRP is able to seek contribution from other PRPs in
2
The comparison to the other subsections is not perfect. Indeed,
in §§ 9613(g)(4)&(5) the terms "such claims" and "such
indemnification" refers back to the words "claim" or
indemnification" used earlier in the sentence, whereas in § 9613
(g)(3), we read the term "such costs" to refer back to the costs
contained in a "judgment."
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phases as it incurs costs beyond its pro rata share. By
interpreting "such costs" to refer to those costs contained in a
judgment, a PRP would not lose the ability to seek contribution if
a phase of a cleanup occurs after three years of an initial
judgment.
The Capuanos disagree and contend, citing Davis, that
regardless of when a PRP incurs response costs, a PRP is required
to seek a declaratory judgment in a contribution action for any
future remediation within three years of being held liable for any
type of remediation. Such an argument is self-defeating and proves
why a judgment for soil remediation does not trigger the statute of
limitations for contribution claims relating to the groundwater
remediation. The O'Neil judgment regarding soil remediation
triggered the statute of limitations for a contribution action
regarding soil remediation. Consequently, R&H sought contribution
from other PRPs for the soil remediation. See American Cyanamid v.
King Indus., Inc., 814 F. Supp. 215 (D.R.I. 1993). R&H could not,
however, seek contribution relating to the soil remediation from
the Capuanos because the Capuanos had settled with the government
regarding costs associated with soil remediation and, as discussed
earlier, settling parties are immune from contribution suits
regarding matters addressed in the settlement. See 42 U.S.C.
§ 9613(f)(2). At the time of the O'Neil judgment, R&H was also
unable to seek contribution relating to the groundwater remediation
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because it was uncertain whether groundwater remediation was likely
to occur. See Davis, 261 F.3d at 47-48 (stating that a PRP may
seek a declaratory judgment in a contribution action if the PRP is
likely to incur more than its fair share of future cleanup); see
also Boeing Co. v. Cascade Corp., 207 F.3d 1177, 1192 (9th Cir.
2000) (stating that declaratory relief is appropriate when "there
is a substantial controversy, between parties having adverse legal
interests, of sufficient immediacy and reality to warrant"
declaratory relief (citation omitted)). Indeed, in 1988, Rhode
Island and the United States had not assessed whether there was
groundwater contamination at the Picillo site. On appeal in
O'Neil, we discussed giving Rhode Island and the EPA "time to
conduct further tests" and we discussed the possibility that "after
conducting the necessary tests, the government [could] conclude[]
[that] there was in fact no harm to the area's groundwater."
O'Neil, 883 F.2d at 183. As such, R&H could not seek a declaratory
judgment against the Capuanos after the O'Neil judgment because, at
the time of the O'Neil judgment, R&H did not have a contribution
claim, declaratory or otherwise, against the Capuanos. See Davis,
261 F.3d at 48 (stating that a PRP may seek a declaratory judgment
in a contribution action if the PRP is likely to incur more than
its fair share of future cleanup). Thus, the O'Neil judgment
pertaining to soil remediation could not trigger the statute of
limitations for a contribution action for groundwater remediation.
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This interpretation of § 9613 comports with the
legislative history of the statute of limitations and advances
CERCLA's purpose. See Ortega v. Star-Kist Foods, Inc., 370 F.3d
124, 143 (1st Cir. 2004) ("Resort to legislative history is
appropriate where, as here, the text of a statute is susceptible to
two textually plausible interpretations.").
The legislative history indicates that § 9613
"establishes a three-year statute of limitations for the filing of
an action for contribution for response costs or damages. The
statute of limitations begins to run at the date of judgment for
recovery of response costs or damages or the date of entry of a
judicially approved settlement with respect to such costs or
damages." H.R. Rep. No. 253 (I), 99th Cong., 1st Sess., at *79
(1985). In discussing the statute of limitations, Congress
referred to § 9613(g)(3)(A) and § 9613(g)(3)(B) together. In
subsection (B), the statute of limitations is triggered by the
"entry of a judicially approved settlement with respect to such
costs or damages." 42 U.S.C. § 9613(g)(3)(B). The entry of a
judicially approved settlement provides contribution protection
only "regarding matters addressed in the settlement" and allows a
settling PRP to seek contribution within three years of that
settlement for costs incurred in the settlement. See 42 U.S.C.
§ 9613(f)(2). Similarly, a PRP has three years to seek
contribution for costs contained within a judgment. The statute of
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limitations, however, is not triggered for costs not contained
within the judgment.
Generally, the interpretation of § 9613 implicates two
competing principles. On the one hand, "CERCLA's 'essential
purpose' [is] making 'those responsible for problems caused by the
disposal of chemical poisons bear the costs and responsibility for
remedying the harmful conditions they created.'" Boyd v. Boston
Gas Co., 992 F.2d 401, 405 (1st Cir. 1993) (quoting Dedham Water
Co. v. Cumberland Farms Dairy, Inc., 805 F.2d 1074, 1081 (1st Cir.
1986)). Congress also wanted "to give potentially responsible
parties the explicit right to sue other liable or potentially
liable parties who also may be responsible for the hazardous waste
site." H.R. Rep. No. 253 (I), 99th Cong., 1st Sess., at 15 (1985)
(by enacting SARA, Congress wanted to "protect the interests and
rights of those who may be held liable for . . . clean-ups.").
On the other hand, the Supreme Court has recognized that
statutes of limitations are not disfavored, but rather "'are found
and approved in all systems of enlightened jurisprudence' [and]
represent a pervasive legislative judgment that . . . 'the right to
be free of stale claims in time comes to prevail over the right to
prosecute them.'" United States v. Kubrick, 444 U.S. 111, 117
(1979) (citations omitted). Indeed, by passing SARA, Congress
recognized that "CERCLA currently includes no explicit statute of
limitations for the filing of cost recovery actions [and SARA]
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provides for the timely filing of cost recovery actions, to assure
that evidence concerning liability and response costs is fresh and
to provide a measure of finality to affected responsible parties."
H.R. Rep. No. 253 (I), 99th Cong., 1st Sess., at 15 (1985).
Defining "such costs" to identify those costs contained
in a judgment upholds both principles. First, it ensures those
responsible for environmental damage bear the costs for remedying
the harmful conditions they created. An environmental cleanup
takes many years to complete. To make the cleanup manageable, it
is done in phases. If an initial cost recovery action triggered
the statute of limitations for the recovery of any costs in future
phases, PRPs could manipulate CERCLA to avoid paying their share.
Indeed, by settling with the government for the soil remediation,
the Capuanos received contribution protection for the soil
remediation only. At the time of the soil remediation, the
likelihood of a groundwater cleanup was unknown. Allowing the
immunity the Capuanos's received for the soil remediation to
effectively shield them from contribution relating to future phases
of the cleanup would provide the Capuanos protection for which they
never paid -- a result in conflict with the purpose of CERCLA.
Our interpretation of § 9613 also ensures that evidence
concerning liability and response costs is fresh and provides a
measure of finality to affected responsible parties. To limit
"such costs" to those costs contained in a judgment results in a
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contribution action tracking the statute of limitations for cost
recovery actions. In a cost recovery action, any actions after a
declaratory judgment "must be commenced no later than 3 years after
the date of completion of all response action." 42 U.S.C. § 9613
(g)(2)(B). Thus, the latest a judgment for the recovery of costs
could occur is three years after the completion of a response
action. A PRP would then have three years to commence a
contribution action. The workings of 42 U.S.C. § 9613, therefore,
ensure that evidence concerning liability and response costs is
fresh.
B. Res judicata
The Capuanos argue that, under the doctrine of res
judicata, R&H is precluded from seeking contribution against them.
"The applicability of the doctrine of res judicata is a question of
law subject to plenary review." Bay State HMO Mgmt., Inc. v.
Tingley Sys., Inc., 181 F.3d 174, 177 (1st Cir. 1999). Under the
doctrine of res judicata, "a final judgment on the merits of an
action precludes the parties or their privies from relitigating
issues that were or could have been raised in that action." Allen
v. McCurry, 449 U.S. 90, 94 (1980) (citation omitted). "For a
claim to be precluded, there must be: (1) a final judgment on the
merits in an earlier action; (2) sufficient identity between the
causes of action asserted in the earlier and later suits; and (3)
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sufficient identity between the parties in the two suits." Bay
State, 181 F.3d at 177.
The Capuanos first argue that R&H cannot seek
contribution from them in this case because R&H failed to seek
contribution from them in the King Industries case. See King
Indus., Inc., 814 F. Supp. 215. The King Industries case was filed
after R&H was found liable in O'Neil. In R&H's Second Amended
Complaint in King Industries, R&H alleged that the defendants were
"jointly and severally liable to the plaintiffs for contribution
. . . [for] past and future response costs." R&H entered into
multiple settlement agreements and dismissal agreements, approved
by the district court, with most of the parties sued in King
Industries. See King Indus., Inc., 814 F. Supp. 215. Some of the
settlement agreements included dismissals with prejudice. The
Capuanos contend that the dismissals with prejudice were judgments
on the merits and therefore the doctrine of res judicata should
preclude the suit before us from proceeding. We disagree for
several reasons.
It is true that "a voluntary dismissal with prejudice is
ordinarily deemed a final judgment that satisfies the res judicata
criterion." United States v. Cunan, 156 F.3d 110, 114 (1st Cir.
1998). But, a dismissal with prejudice contained in a consent
decree "is not a ruling on the merits . . . [that] applies to
others under the law of claim preclusion." Langton v. Hogan, 71
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F.3d 930, 935 (1st Cir. 1995) (emphasis added). The Capuanos were
not defendants in King Industries and were not parties to any of
the settlement agreements. Therefore, the dismissal agreements do
not have a res judicata effect over claims against the Capuanos.
Second, at the time of the King Industries suit, R&H
could not pursue a claim against the Capuanos because the
groundwater remediation had not yet occurred and the Capuanos had
contribution immunity for claims relating to the soil remediation.
"[R]es judicata will not attach if the claim asserted in the second
suit could not have been asserted in the first." Mass. Sch. of Law
at Andover, Inc. v. Am. Bar Ass'n, 142 F.3d 26, 38 (1st Cir. 1998);
GonzĂĄlez v. Banco Cent. Corp., 27 F.3d 751, 756 (1st Cir. 1994)
(stating that "principles of res judicata will bar all claims that
either were or could have been asserted in the initial action.").
The Capuanos also argue that R&H is precluded from
seeking contribution because of Fed. R. Civ. P. 41(a)(1), also
known as the "two dismissal" rule. This Rule states that "an
action may be dismissed by the plaintiff without order of court
. . . [and] the dismissal is without prejudice, except that a
notice of dismissal operates as an adjudication upon the merits
when filed by a plaintiff who has once dismissed . . . an action
based on or including the same claim." R&H dismissed two cases:
the King Industries case and a 1995 contribution lawsuit against
the Capuanos filed in the District Court of Rhode Island.
-22-
Nonetheless, the "two dismissal" rule does not apply to this case
because the dismissal in the King Industries case does not count as
a dismissal for purposes of this rule as applied to the Capuanos.
The "two dismissal" rule "is not applicable unless the defendants
are the same or substantially the same or in privity in both
actions." 5 Moore's Federal Practice § 41.04 (2d ed. 1996). The
Capuanos were not defendants in King Industries, nor were they in
privity with the defendants in King Industries. See generally
GonzĂĄlez, 27 F.3d at 757-63. As a result, the "two dismissal" rule
does not preclude R&H's claims against the Capuanos.
C. Contribution Immunity
In 1988, the Capuanos entered settlement agreements with
the United States and Rhode Island. In return for contribution
immunity, the Capuanos paid $1,500,000 to the United States and
$500,000 to Rhode Island. The Capuanos argue that their Consent
Decree provides contribution immunity against R&H's contribution
claims.3 The Capuanos' settlement agreement provided immunity for
"future liability" for past response costs, but it did not provide
immunity for claims related to "groundwater protection or
remediation." The Capuanos argue that R&H failed to prove that the
money R&H paid to the United States, and for which R&H now seeks
3
The Capuanos also argue that their settlement agreements
prohibits all future contribution claims. The Capuanos abandon
this argument, however, after conceding that the "four corners" of
the Consent Decree does not support it.
-23-
contribution, was for groundwater protection or remediation. We
disagree. The Capuanos' argument is nothing more than creative
word play. According to the Capuanos, R&H settled with the
government for "past response costs." R&H's "past response costs"
are costs incurred by the United States through October 25, 1995.
Thus, R&H's "past response costs" would be "future liability" for
past response costs as it pertains to the Capuanos and the Capuanos
have contribution protection for future liability for past response
costs.
Regardless of how the Capuanos choose to phrase the costs
incurred, it is undisputed that the four corners of the Capuanos
Consent Decree does not provide contribution immunity for costs
relating to groundwater protection or remediation. At trial, R&H
introduced documents detailing the work performed by the United
States in regard to the groundwater remediation and introduced the
testimony of an expert that the cost of the groundwater Remedial
Investigation ("RI") and Feasibility Study ("FS") exceeded $4.7
million. The expert testified that the groundwater RI/FS was
different from the soil RI/FS and the $4.7 million did not include
any costs dealing with the soil remediation. R&H ultimately
settled with the United States for $4.35 million and is seeking
contribution for a portion of that amount. The evidence showed,
therefore, that the costs R&H paid to the United States, for which
it now seeks contribution, were for groundwater protection and
-24-
remediation, and the Capuanos do not have contribution immunity for
costs relating to groundwater protection or remediation.
In the alternative, the Capuanos argue that even if there
was proof showing that R&H is seeking contribution for the RI/FS
relating to the groundwater, a RI/FS is part of a "removal action"
and is not "groundwater protection or remediation" and thus it is
not a cost that was excluded from the Capuanos' Consent Decree.
The RI/FS is part of the groundwater protection and
remediation process. "The purpose of the . . . (RI/FS) is to
assess site conditions and evaluate alternatives to the extent
necessary to select a remedy. Developing and conducting an RI/FS
generally includes the following activities: project scoping, data
collection, risk assessment, treatability studies, and analysis of
alternatives. " 40 CFR 300.430. Since the RI/FS is the first step
in groundwater protection and remediation, the RI/FS is not a cost
excluded by this Consent Decree.
III. Issues relating to the trial
In reviewing the appeal of a bench trial, we review the
district court's legal conclusions de novo and its factual findings
for clear error. Cariglia v. Hertz Equip. Rental Corp., 363 F.3d
77, 82 (1st Cir. 2004).
-25-
A. Fed. R. Civ. P. 19 joinder
The Capuanos argued to the district court that Fed. R.
Civ. P. 19(a) required all non-settling PRPs to be joined as
"necessary" parties. The district court held that Rule 19 does not
require joinder of other known solvent PRPs. In their appellate
brief, the Capuanos mention the Rule 19 issue, but do not provide
any arguments as to why Rule 19 requires other PRPs to be joined.
Since the Capuanos failed to develop any argument, we consider this
issue waived. See United States v. Bongiorno, 106 F.3d 1027, 1034
(1st Cir. 1997) ("We have steadfastly deemed waived issues raised
on appeal in a perfunctory manner, not accompanied by developed
argumentation.").
B. Allocation of shares of liability
After trial, the district court concluded that the
Capuanos, as operators, were "liable for the total volume (100%) of
waste dumped at the Picillo site." The Capuanos were also "liable
for a share of the waste dumped at the Picillo site as arrangers
[and they were] liable as transporters for 7.94% of the total
waste delivered to the site." The district court concluded that
R&H was liable for 3.23% of the waste.
Before allocating percentage shares of liability, the
district court informed the Capuanos that it would "consider the
relative fault of non-parties in arriving at an equitable
allocation of liability." The district court did not ultimately
-26-
consider the relative fault of non-parties when allocating
liability because the parties failed to present evidence concerning
the relative fault of non-parties. According to the district
court, the Capuanos' "decision not to present any evidence that may
have mitigated their liability . . . is one they will have to live
with." The Capuanos, not wanting to "live with" it, appealed the
issue, arguing that a district court cannot make a proper
allocation unless it accounts for the shares of all PRPs,
regardless of whether the PRPs are parties to the action and
regardless of whether evidence was presented regarding the absent
PRP's actions.
In resolving contribution claims, a district court has
broad discretion to "allocate response costs among liable parties
using such equitable factors as the court determines are
appropriate." 42 U.S.C. § 9613(f)(1). It is not unprecedented for
a district court to reason "that a fair and equitable allocation
[can] only be achieved by comparing [a defendant's] role as a PRP
to other PRPs." United States v. Consol. Coal Co., 345 F.3d 409,
414 (6th Cir. 2003). However, the decision to allocate response
costs among the named parties or all parties "is within the Court's
discretion to adopt and apply." United States v. Consol. Coal Co.,
184 F. Supp. 2d 723, 745 (S.D. Ohio 2002). Indeed, in some cases
apportioning responsibility among all PRPs is not an attractive
option as it could "complicate an already difficult allocation
-27-
process or saddle firms . . . with excess costs" and "might take
years of trial time." Akzo Nobel Coatings, Inc. v. Aigner Corp.,
197 F.3d 302, 306 (7th Cir. 1999).
R&H provided the district court with evidence indicating
that the Capuanos were liable, as operators, for 100% of the waste
at the Picillo site. The district court did not abuse its
discretion in reaching such a conclusion since the district court
found the evidence to be "credible" and, more important for the
purposes of this discussion, "unrefuted." See, e.g., United States
v. Davis, 31 F. Supp. 2d at 68 (allocating 100% liability among the
parties to the action, even though many other PRPs existed).
C. Accounting for settlements of other PRPs
The district court concluded that R&H paid the United
States government $4,636,725 for groundwater related cleanup costs.
By using a pro tanto approach and subtracting the $382,807 R&H
received in settlements, the district court concluded that the net
total R&H paid to the United States for the groundwater cleanup was
$4,253,918. Since R&H's share of the cleanup, based upon 3.23% of
liability, was $1,602,080, the Capuanos were held liable for
$2,651,838 -- the amount R&H paid in excess of their share.
The Capuanos argue that the district court erred in
making this calculation because the district court should have
determined the equitable pro-rata share of liability of the
settling PRPs rather than deducting the monetary amount of the
-28-
settlements from R&H's costs. CERCLA, as amended by SARA, states
that "[a] person who has resolved its liability to the United
States or a State . . . does not discharge any of the other
potentially liable persons unless its terms so provide, but it
reduces the potential liability of the others by the amount of the
settlement." 42 U.S.C. § 9613(f)(2) (emphasis added). We have
held that this "plain language admits of no construction other than
a dollar-for-dollar reduction of the aggregate liability." United
States v. Cannons Eng. Corp., 899 F.2d 79, 92 (1st Cir. 1990).
CERCLA also allows a private party to seek contribution
from non-settling parties, but, unlike a settlement with the United
States or a State, CERCLA does not instruct a court as to how a
settlement agreement between two private parties affects the
contribution liability of non-settling parties. See 42 U.S.C.
§ 9613(f)(1). Rather, CERCLA charges a district court to "allocate
response costs among liable parties using such equitable factors as
the court determines are appropriate." 42 U.S.C. § 9613(f)(1).
We read this provision to give the district court
discretion regarding the most equitable method of accounting for
settling parties. We believe that the district court did not abuse
its discretion by applying the pro tanto approach given the
circumstances of this case. Courts that have addressed the issue
of a private-party contribution suit involving settling parties
have debated between two approaches. The first approach, the claim
-29-
reduction approach, advanced by the Capuanos, follows the method of
the Uniform Comparative Fault Act ("UCFA"), which provides that the
liability of non-settlers is reduced by the proportionate share of
fault attributed to the settling parties. UCFA § 2.4 The second
approach, the pro tanto approach, follows the method of the Uniform
Contribution Among Tortfeasors Act ("UCATA"), which reduces the
liability of litigants by the dollar amount of third-party
settlements. UCATA § 4; see Akzo Nobel Coatings, Inc., 197 F.3d at
307-08.
Both of these approaches have distinct advantages and
disadvantages. The claim reduction approach "requires the court to
determine the responsibility of all firms that have settled, as
well as those still involved in the litigation." Id. at 307. Such
a process can lead to a "complex and unproductive inquiry" and may
be unrealistic in situations where waste was deposited by hundreds
of polluters for years, if not decades, prior to the litigation.
Id. The claim reduction approach has the benefit, however, of
4
See Pneumo Abex Corp. v. Bessemer & Lake Erie R.R. Co., 936 F.
Supp. 1274 (E.D. Va. 1996); United States v. GenCorp, Inc., 935 F.
Supp. 928 (N.D. Ohio 1996); Hillsborough Co. v. A & E Road Oiling
Serv., Inc., 853 F. Supp. 1402 (M.D. Fla. 1994); Atlantic Richfield
Co. v. American Airlines, Inc., 836 F. Supp. 763 (N.D. Okla. 1993);
Barton Solvents v. Southwest Petro-Chem., Inc., 834 F. Supp. 342
(D. Kan. 1993); City & County of Denver v. Adolph Coors Co., 829 F.
Supp. 340 (D. Colo. 1993); United States v. SCA Serv. of Ind.,
Inc., 827 F. Supp. 526 (N.D. Ind. 1993); King Indus., Inc., 814 F.
Supp. at 215; Comerica Bank-Detroit v. Allen Indus., Inc., 769 F.
Supp. 1408 (E.D. Mich. 1991).
-30-
ensuring, in theory, that damages are apportioned equitably among
the liable parties.5
In contrast, under the pro tanto approach "a litigating
defendant's liability will frequently differ from its equitable
share, because a settlement with one defendant for less than its
equitable share requires the nonsettling defendant to pay more than
its share." McDermott, Inc. v. AmClyde, 511 U.S. 202, 212 (1994);
see Lewis A. Kornhauser & Richard L. Revesz, Settlements Under
Joint and Several Liability, 68 N.Y.U. L. Rev. 427, 474 (1993).
Nonetheless, the pro tanto approach is easier to administer and is
the approach adopted by CERCLA when there is a settlement between
a person and the United States or a State. See 42 U.S.C. § 9613
(f)(2).
The different approaches to accounting for settling
parties can produce different results and, for uniformity purposes,
it may be wise to choose one of these two approaches.
See McDermott, Inc., 511 U.S. at 207 (granting certiorari because
the courts of appeals had differing approaches for determining how
a settlement with less than all of the defendants in an admiralty
5
This benefit varies. For example, assume there are four PRPs,
labelled PRP A-D, and that PRP A settled with the government for
$100,000. Also assume PRP A settled with PRP B for $20,000, but
went to trial against PRP C & D. If, at trial, the court
determined that PRP B was responsible for $40,000, then PRP A, C
& D would be responsible for the $60,000 total remaining. The
$20,000 not awarded would be borne entirely by PRP A. In contrast,
had PRP A settled with PRP B for $50,000, then PRP A would
experience a $10,000 windfall.
-31-
case affect the liability of non-settling defendants). At this
juncture, however, we decline to do so. CERCLA provides the
district court with the discretion to allocate response costs among
liable parties, and we believe that determining how a settlement
affects the liability of the non-settling parties is within that
discretion. While it is not unimaginable that the use of one of
these approaches might produce a result so inequitable that it
would constitute an abuse of discretion, in this case it did not
and therefore we do not disturb the district court's utilization of
the pro tanto approach.
D. The district court's factual findings
The Capuanos contend that the district court committed
clear error by basing its findings of fact on the deposition
testimony of Warren Picillo, Sr., rather than on the deposition
testimony of Jack and Daniel Capuano. Ultimately, "weighing the
evidence and assessing the witnesses' credibility is uniquely the
province of the district court" and when there are "two permissible
views of the evidence . . . the factfinder's choice between those
competing views cannot be clearly erroneous." Fed. Refinance Co.
Inc. v. Klock, 352 F.3d 16, 29 (1st Cir. 2003) (citations omitted).
The task of assessing witness credibility in this case was a
difficult one as both sides produced testimony calling for
scrupulous credibility evaluation. On the one hand, the testimony
contained in Warren Picillo's deposition was tainted by the fact
-32-
that he had attempted to extort money from the Capuanos in exchange
for his silence or favorable testimony. On the other hand, the
testimony of Jack and Daniel Capuano was, in the district court's
words, "wholly incredible" as they openly admitted that their prior
deposition testimony contained "carefully constructed lies." In
the end, the district court had to determine whose testimony was
believable by examining the testimony of all the parties in
relation to the documentary evidence. After conducting the
requisite inquiry, we conclude that the district court did not
commit clear error in its factual findings.
E. Transporter Liability
The Capuanos appeal the district court's conclusion that
the Capuanos transported hazardous waste to the Picillo site.
CERCLA imposes transporter liability on "any person who accepts or
accepted any hazardous substances for transport to disposal or
treatment facilities, incineration vessels or sites selected by
such person" from which there is a release of hazardous substances.
42 U.S.C. § 9607(a)(4). The district court concluded that United
Sanitation and its officers, Jack and Daniel Capuano, were liable
as transporters for 7.94% of the waste delivered to the Picillo
site since Jack and Daniel selected the Picillo site and United
Transportation transported 960 55-gallon drums of hazardous waste
to the site.
-33-
The Capuanos argue that the district court's finding was
clearly erroneous because (1) United Sanitation did not transport
hazardous waste; (2) United Sanitation and the Capuanos had no
trucks capable of transporting hazardous waste; and (3) the only
Capuano remotely identified with hazardous waste disposal was
Anthony Capuano. After examining the record, we find that the
district court's conclusion that the Capuanos were "transporters"
was not clearly erroneous.
First, Picillo testified that "the Capuanos themselves
brought their own waste down [to the Picillo site] on their own
trucks" and that some of the barrels "came from Danny Capuano's
place." Although this testimony supports the finding that the
Capuanos physically transported some of the waste, we have
interpreted CERCLA not to impose liability on a transporter who
merely follows the directives of a generator. See Davis, 261 F.3d
at 55. Rather, for CERCLA liability to attach, a transporter must
"actively participate in the selection decision or have substantial
input in that decision." Id. In this case, the Capuanos had
substantial input in the decision, often making the final
determination whether to allow waste to be dumped at their own land
fill or to send it on to the Picillo site. Further, the Capuanos
arranged for employees of the Scientific Chemical Corporation to
visit the Picillo site as a possible waste dumping location. After
-34-
viewing the site, the visitors concluded "this would be an ideal
spot."
Second, according to deposition and trial testimony,
trucks carrying hazardous waste would arrive at the Capuanos place
of business only to be redirected by the Capuanos, or their
employee Louie Falcone, to the Picillo site. Indeed, since the
Picillo site was difficult to find, the Capuanos would come to the
Picillo site "in a pick-up truck in front of the big trucks and
show them where the farm was and show them where the dump was, to
dump" the hazardous waste. See 42 U.S.C. § 9601(26) (defining
"transportation" as "the movement of a hazardous substance by any
mode").
Third, when the drivers arrived at the Picillo site, they
would give Picillo, Sr. a bill of lading. At the end of the week,
Picillo, Sr. would take the bills of lading to the Capuanos to get
paid. The record confirms that Mr. Picillo received United
Sanitation checks signed by Jack Capuano and Dan Capuano. Although
these payments do not, in and of themselves, prove that the
Capuanos transported the waste, the payments do support the
inference that the Capuanos were involved with the transportation
of waste to the Picillo site.
F. Operator Liability
The Capuanos appeal the district court's conclusion that
the Capuanos were liable as operators of the Picillo site. CERCLA
-35-
imposes liability on "the owner and operator of a vessel or a
facility." 42 U.S.C. § 9607(a)(2). "The phrase 'owner and
operator' is defined only by tautology . . . as 'any person owning
or operatingâ a facility, § 9601(20)(A)(ii). . . . " United States
v. Bestfoods, 524 U.S. 51, 56 (1998). The Supreme Court has
clarified that, "under CERCLA, an operator is simply someone who
directs the workings of, manages, or conducts the affairs of a
facility." Id. at 66. More specifically, "an 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.
The district court's conclusion that the Capuanos were
operators of the site was not clearly erroneous. First, the
Capuanos approached Warren Picillo with the idea of dumping on his
pig farm. Once Warren agreed, he gave the Capuanos exclusive
disposal rights at the site and the Capuanos hired a bulldozer to
clear the trees and "dig a big, big hole." The Capuanos walked the
operator of the bull-dozer to the site and "showed him what to do
and how to do it." Such actions are consistent with those of an
operator of a facility "who directs the workings of, manages, or
conducts the affairs of a facility." Id. at 56 (1999).
Second, as discussed earlier, the Capuanos directed the
hazardous waste to the Picillo site. If the drivers of the waste
-36-
did not know how to reach the site, the Capuanos would drive them
to the site so they could dump the waste. Further, the Capuanos
managed and conducted the affairs of the Picillo site by organizing
and implementing its payment structure. The waste generators paid
the Capuanos to dispose of their waste and then the Capuanos would
give Warren Picillo a share of the money. "[O]perator liability
requires an ultimate finding of . . . involvement with operations
having to do with the leakage or disposal of hazardous waste."
United States v. Kayser-Roth Corp., 272 F.3d 89, 102 (1st Cir.
2001) (internal quotations and citation omitted). The fact that
the Capuanos developed the idea for using the site, prepared the
site for dumping, arranged for waste to be dumped at the site,
showed transporters where to dump on the site, and collected
payment and transmitted a share to Warren Picillo for dumping at
the site demonstrates that the district court's conclusion that the
Capuanos were liable as operators of the site was not clearly
erroneous.
G. Arranger Liability
The Capuanos appeal the district court's conclusion that
the Capuanos were liable as arrangers. The district court
concluded that the Capuanos were arrangers because their conduct
"constituted active participation as a broker in the disposal of
their customer's waste." The Capuanos argue that arranger
liability can only be imposed on a party that owned or possessed
-37-
hazardous materials, not on a party that brokered the disposal of
hazardous material. We review whether arranger liability can
attach to a party that brokered the disposal of waste de novo as
such review entails statutory interpretation of 42 U.S.C. § 9607
(3). See United Techs. Corp., 33 F.3d at 98. We review whether
the Capuanos acted as a broker for the disposal of hazardous waste
for clear error.
An arranger is defined as
any person who by contract, agreement, or
otherwise arranged for disposal or treatment,
or arranged with a transporter for transport
for disposal or treatment, of hazardous
substances owned or possessed by such person,
by any other party or entity, at any facility
. . . owned or operated by another party or
entity and containing such hazardous
substances, . . . .
42 U.S.C. § 9607(3) (emphasis added). We begin our inquiry by
examining the plain language of the statute. This portion of 42
U.S.C. § 9607(3) can be read two ways, depending on which words the
clause "by any other party or entity" modifies. First, this clause
can be read to modify the preceding words "owned or possessed by
such persons," which would make liable any person who arranged for
the disposal of a hazardous substance "owned or possessed by such
person [or] by any other party or entity." See United States v.
Mottolo, 629 F. Supp. 56, 60 (D.N.H. 1984) (holding that the
arranger liability "provision clearly states that the person who
arranges for disposal or transport for disposal of hazardous
-38-
substances need not own or possess the waste"). Or, second, the
clause can be read to modify the words "disposal or treatment,"
which would make the sentence read "any person who . . . arranged
for disposal or treatment . . . by any other party or entity." The
sentence structure of § 9607(3) makes it clear that the latter
interpretation is the correct one. The clause "by any other party
or entity" clarifies that, for arranger liability to attach, the
disposal or treatment must be performed by another party or entity,
as was the case here.
Some courts have held parties liable as arrangers even if
they did not actually own or physically possess the hazardous waste
so long as they had the authority to control the handling and
disposal of the hazardous substances. See United States v.
Northeastern Pharm. & Chem. Co., 810 F.2d 726, 743 (8th Cir. 1986)
(holding that "requiring proof of personal ownership or actual
physical possession of hazardous substances as a precondition of
liability . . . would be inconsistent with the broad remedial
purposes of CERCLA"); Gould, Inc. v. A.M. Battery & Tire Serv., 954
F. Supp. 1020 (M.D. Pa. 1997); New York v. SCA Servs., Inc., 844 F.
Supp. 926 (S.D.N.Y. 1994); Emergency Technical Servs. Corp. v.
Morton Int'l, 1993 U.S. Dist. LEXIS 8018 (N.D. Il. 1993); United
States v. Bliss, 667 F. Supp. 1298 (E.D. Mo. 1987); Mottolo, 629 F.
Supp. at 60; see also Sea Lion v. Wall Chem. Corp., 974 F. Supp.
589, 596 (S.D. Tex. 1996) (noting that "under definitive and well
-39-
reasoned authorities, the ownership definition [for arranger
liability] is quite broad and includes constructive possession").
Most of these cases involved a corporate officer of a generator of
hazardous waste claiming he could not be liable as an arranger
because he did not personally own or possess the waste.
Northeastern Pharm., 810 F.2d at 746 (holding that a corporate
officer is liable as an arranger for making corporate decisions
about the handling and disposal of hazardous substances); Mottolo,
629 F. Supp. at 60 (discussing the liability of a corporate
officer). Thus, these holdings reflect the idea that a corporate
officer can be liable as an arranger if he controls the decision to
dispose of the waste on behalf of his company that owns the waste.
These cases are distinguishable from the case at hand because this
case does not involve corporate officers; rather it involves a
party that does not own the waste and that arranges for the
disposal of others' waste.
The case of SCA Services, 844 F. Supp. 926, although
similar to this case, is also distinguishable. In SCA Services,
a transporter accepted waste for disposal. Subsequent to the
pickup, the transporter learned it could not dispose of the waste
at its designated site, so the transporter arranged for a different
transporter to pick up the waste and dispose of it. Id. at 928.
In SCA Services, the first transporter went beyond its role as
transporter and effectively became an arranger by taking possession
-40-
of the waste and making arrangements for the waste to be picked up
and disposed of by another company. Id. Unlike the transporter in
SCA Services, though, the Capuanos did not take possession of the
waste before arranging to have it disposed by another transporter.
There is a category of cases, however, that involves
defendants similar to the Capuanos, brokers who arranged for a
generator's waste to be disposed of illegally. See Gould, Inc.
954 F. Supp. 1020 (a broker who arranged for the disposal of waste,
made contact with the site, and received a profit is liable as an
arranger); Emergency Technical, 1993 U.S. Dist. LEXIS 8018 (holding
that a broker who was actively involved in the timing, manner and
location of the disposal of hazardous substances could be liable as
an arranger); Bliss, 667 F. Supp. 1298 (broker liable as an
arranger because controlled the place and manner of disposal).
These cases involved brokers who did not own or transport hazardous
waste but controlled the hazardous waste's disposal. These courts
held that a broker could be liable as an arranger, and we agree.
When a broker arranges for the disposal of hazardous
waste and it does so by exercising control over the waste, such
control can amount to constructive possession of the waste. Were
we to interpret CERCLA not to impose liability on a party that
constructively possessed hazardous waste and arranged for its
illegal disposal, then the statute would be subject to a loophole
through which brokers and middlemen could escape liability by
-41-
arranging to have hazardous waste picked up and deposited at an
illegal site. In addition to escaping liability, the broker would
also profit by charging a fee for his services. Indeed, the
Capuanos earned most of their profits in this manner. The Capuanos
found a site, the Picillo pig farm, where hazardous waste could be
dumped illegally. They then arranged for the waste to be picked up
from various waste generators across New England and dumped on the
illegal site. A broker should not be able to profit from such
activity, much less escape liability. We therefore hold that a
broker can be liable as an arranger if the broker controls the
disposal of the waste.
Since the Capuanos, as discussed above, selected,
secured, and directed the waste to the Picillo site, all for a fee,
it was not clearly erroneous for the district court to conclude
that the Capuanos were liable as arrangers given our interpretation
of the statute.
IV. Post-trial issues
A. Measure of contribution entitlement
The district court entered a monetary judgment in favor
of R&H based upon the costs associated with the groundwater
cleanup. The Capuanos contend that any contribution entitlement
should have been based on aggregate response costs, including
monies expended on soil remediation. We review the district
-42-
court's legal conclusion on this issue de novo. Cariglia v. Hertz
Equip. Rental Corp., 363 F.3d 77, 82 (1st Cir. 2004).
In interpreting CERCLA's contribution provisions, this
circuit "give[s] the word 'contribution' its generally accepted
legal meaning." Browning-Ferris Indus., 33 F.3d at 99. When
applied to an environmental case, the term contribution "refers to
an action by a responsible party to recover from another
responsible party that portion of its costs that are in excess of
its pro rata share of the aggregate response costs." Id. at 103
(emphasis added). Focusing on the words "aggregate response
costs," the Capuanos contend that the district court erred by not
calculating the soil remediation costs together with the
groundwater remediation costs. We disagree. Contribution is the
right "of one who has discharged a common liability to recover of
another also liable, the aliquot portion which he ought to pay or
bear." Id. at 99 (quoting Black's Law Dictionary 399 (6th ed.
1990)). In the action before the district court, the Capuanos and
R&H shared common liability for the groundwater remediation only.
Since the Capuanos had contribution immunity for costs relating to
the soil remediation, it was not error for the district court to
conclude that the costs associated with the soil remediation were
not relevant.
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B. Awarding of contribution entitlement
The district court determined that R&H's share of
liability for its hazardous waste at the Picillo site was 3.23%.
R&H paid the United States $4,636,725 in groundwater cleanup costs
and received $382,807 in settlements. Thus, R&H's total net
payment for the groundwater cleanup to the United States was
$4,253,918.
The district court concluded that the total estimated
cost of the groundwater cleanup would be $49,600,000. By
multiplying the total estimated cost of the cleanup ($49,600,000)
by R&H's share of responsibility (3.23%), the district court
concluded that R&H's share of payment for the groundwater
remediation should have been $1,602,080. Since R&H had already
paid $4,253,918, the district court concluded that the Capuanos
were liable for the $2,651,838 that R&H paid over its fair share
($4,253,918 - $1,602,080).
The Capuanos contend that the district court should not
have entered a monetary judgment since the cost of the groundwater
cleanup is unknown and, therefore, it is impossible to calculate
whether R&H paid an amount in excess of its pro rata share. It is
firmly established in this circuit that a party may seek
declaratory relief in a contribution action. Davis, 261 F.3d at
47. By allowing such relief, parties "will know their share of
costs before they are incurred." Id. (citing Boeing Co., 207 F.3d
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at 1191). Indeed, "the more liability can be limited and
quantified, the more practical it is for a party to budget and
borrow to finance it." Boeing Co., 207 F.3d at 1191. Taking this
logic one step further, the district court in this case entertained
estimates of the costs of the groundwater remedy and entered a
judgment based on the submitted evidence. In so doing, the
district court did not abuse its discretion.
R&H presented the district court with three alternatives
for calculating estimated response costs. First, R&H proposed that
the common liability was $5,969,202.52, based upon the response
costs the United States incurred until this litigation in the
district court. As the district court correctly noted, this amount
is only a small fraction of the costs expected to be incurred in
the future. Second, R&H submitted the total costs for the
groundwater remedy as estimated by the EPA's Record of Decision,
which was $22,300,000. Last, R&H submitted the estimate provided
by the Ashland Group, a group of PRPs that has sued R&H for
contribution in the United States District Court for the District
of New Jersey. This estimate was $49,600,000.
In some cases, it may be impossible to estimate the total
cost of a remediation. In other cases, the available estimates may
be too outdated to make an informed calculation. In this case,
however, the district court was presented with a recent estimate
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provided by a group of companies performing the groundwater remedy.
The Capuanos did not challenge the accuracy of this estimate.
The district court acted consistent with CERCLA's goals
by entering a monetary judgment before the remediation was
completed. Entering a monetary judgment fosters an incentive for
timely settlements and provides finality for those parties that
choose to settle. See United Techs. Corp., 33 F.3d at 103 (stating
that CERCLA "was designed to encourage settlements and provide PRPs
a measure of finality in return for their willingness to settle").
By settling with the United States, a PRP pays a portion
of the response costs. By seeking contribution from other PRPs, a
settling PRP seeks to recoup the portion it paid in excess of its
pro rata share. If a PRP is unable to receive a monetary judgment
until the remediation process is complete, then a PRP may be
reluctant to settle knowing it will be unable to recoup any money
it paid in excess of its pro rata share until the remediation is
completed. In contrast, by not settling, a PRP could be held
liable for a percentage of the cleanup in a contribution action but
forestall payment of that percentage until the cleanup is
completed. Thus, a non-settler could avoid payment to the PRP that
did settle for many years, if not decades. Such an approach favors
a non-settling PRP over a settling PRP, the antithesis of what
CERCLA was enacted to achieve.
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Entering a monetary judgment is a double-edged sword for
both parties. For example, in this case, if the response costs are
more than estimated, R&H will receive a windfall at the expense of
the Capuanos. In contrast, if the response costs are less than
estimated, the Capuanos will receive a windfall at the expense of
R&H. In a CERCLA action, the district court is afforded broad
discretion in apportioning liability because it is very difficult
to determine accurately the liability of each party. As a result,
one party may be forced to pay more than its equitable share. See,
e.g., Davis, 261 F.3d at 48-49; United Techs. Corp., 33 F.3d at
102-03; United States v. Charles George Trucking, Inc., 34 F.3d
1081, 1086 (1st Cir. 1994). The fact that the monetary judgment
is entered based on an estimate, therefore, does not on its own
make that judgment unjust. The district court entertained many
possibilities regarding the estimate of total response costs and
both sides had opportunities to suggest whether the estimated
response cost was too low or too high. After reviewing the
possible estimated costs, the district court concluded that
$49,600,000 was the best estimate of total response costs and
entered a judgment using that estimate. We believe it was not
error to do so.
C. Joint and Several Liability
The district court held that "judgment shall enter
against Defendants Jack and Daniel Capuano, and United Sanitation"
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in the amount of $2,651,838. The Capuanos briefly argue that the
district court erred by entering judgment in this manner and that
the district court should have allocated a percentage of
responsibility to Jack and Daniel individually for which they would
have been severally liable. As we stated previously, "we have
steadfastly deemed waived issues raised on appeal in a perfunctory
manner, not accompanied by developed argumentation." See
Bongiorno, 106 F.3d at 1034. The dearth of argumentation not only
deprives this court an explanation of the basis of an argument, it
also confuses one's adversary. Indeed, the Capuanos brief
argumentation on this point produced a tangential line of
argumentation from R&H in response, resulting in the proverbial two
ships passing in the night. Therefore, we will not address this
issue and consider it waived.
D. Pre-judgment interest
The district court awarded R&H prejudgment interest
citing the language of 42 U.S.C. § 9607, which provides that "[t]he
amounts recoverable in an action under this section shall include
interest on the amounts recoverable . . . . Such interest shall
accrue from the later of (i) the date payment of a specified amount
is demanded in writing, or (ii) the date of the expenditure
concerned." 42 U.S.C. § 9607(a). The Capuanos argue that the
district court's reliance on § 9607 was misplaced since this action
was brought pursuant to § 9613, not § 9607. The prejudgment
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interest statute specifically limits itself to amounts recoverable
"under this section." Reviewing this question of statutory
interpretation de novo, we affirm the awarding of prejudgment
interest. See United Techs. Corp., 33 F.3d at 98.
Prior to the passage of SARA, there was "much uncertainty
. . . as to whether a responsible party could recover from other
PRPs the portion of its cleanup costs that exceeded its pro rata
share." Id., at 100 (citation omitted). This uncertainty ended
when Congress adopted 42 U.S.C. § 9613. "A principal goal of
[this] new section 9613 was to clarify and confirm the right of a
person held jointly and severally liable under CERCLA to seek
contribution from other potentially responsible parties . . . ."
Id. (quotation marks and citations omitted). Thus, § 9613 begins
by incorporating provisions of § 9607. See 42 U.S.C. § 9613(f)(1)
(stating that "[a]ny person may seek contribution from any other
person who is liable or potentially liable under section 107(a) [42
U.S.C.S. § 9607(a)]"). Since the prejudgment interest provision of
§ 9607 refers to "actions under this section" and because § 9613(f)
incorporates the liability provisions of § 9607, an action for
contribution also incorporates the prejudgment interest provision.
See Consol. Coal Co., 345 F.3d at 415; Goodrich Corp. v. Town of
Middlesbury, 311 F.3d 154, 177 (2d Cir. 2002); Bancamerica
Commercial Corp., v. Mosher Steel of Kansas, Inc., 100 F.3d 792,
801 (10th Cir. 1996). For some purposes, such as statutes of
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limitations, § 9613 and § 9607 are "distinct, non-overlapping
anodynes." United Techs. Corp., 33 F.3d at 103 (distinguishing
between the different statutes of limitations for a § 9607 and a
§ 9613 action). But, since § 9613 incorporates the liability
provision of § 9607, we believe it also incorporates the
prejudgment interest provision.
As the Tenth Circuit stated, and the Second Circuit
agreed, such a conclusion is consistent with both logic and policy.
Bancamerica Commercial Corp., 100 F.3d at 801; Goodrich Corp., 311
F.3d at 177.
The purpose of contribution is to equitably
apportion response costs among liable parties.
Failure to grant prejudgment interest on
contribution awards may instead result in
inequitable apportionment, because parties
awarded contribution will still have lost the
time value of the money they spent on behalf
of other liable persons, and those persons
will have gained an equal amount. Further,
refusal to grant prejudgment interest is a
disincentive for private parties to
voluntarily undertake cleanup actions because
they will lose the time value of the money
they spend on behalf of other persons.
Indeed, it would create a perverse incentive
for responsible parties to delay involvement
in cleanups, because as they delay, they gain
the time value of the funds they should be
investing in the cleanup.
Bancamerica Commercial Corp., 100 F.3d at 801 (emphasis in
original); see also Goodrich Corp., 311 F.3d at 177.
The conclusion that awarding prejudgment interest was
appropriate does not end our inquiry. The Capuanos also contend
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that prejudgment interest cannot be awarded because R&H waited to
supplement the record after trial -- rather than submitting
evidence during trial -- regarding accrual dates and numbers
required to calculate interest. Other circuits have held, and we
agree, that "because interest determinations are compounded
calculations, it may be impossible for parties to provide accurate
calculations prior to the court's allocation of response cost
liability. In such instances, parties may submit their interest
calculations to the court subsequent to that finding." Bancamerica
Commercial Corp., 100 F.3d at 802 (citing cases); United States v.
Town of Brighton, 153 F.3d 307, 321 (6th Cir. 1998). Therefore,
the district properly awarded prejudgment interest.
Last, the Capuanos argue that the district court erred by
accepting the accrual date submitted by R&H. The district court
calculated prejudgment interest from May 5, 1999, the date when R&H
made a written demand to the Capuanos. The Capuanos argue,
however, that this written demand letter was never presented to the
district court during or after the trial. Attached to R&H's motion
for prejudgment interest was an "Exhibit A" which calculated
prejudgment interest from May 5, 1999 through July 31, 2003. The
district court relied on this exhibit and found that the letter was
sent on May 5, 1999. The Capuanos did not object to this finding.
Therefore, the prejudgment interest award is affirmed. See Town of
Brighton, 153 F.3d at 321 (stating that there was "an adequate
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basis for the district court to calculate prejudgment interest"
when the plaintiff "claim[ed], without refutation, that it issued
a demand letter" on a certain date).
V. Conclusion
For the reasons discussed herein, we affirm the judgment
of the district court.
Affirmed.
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