                                                                                                                           Opinions of the United
2008 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


7-28-2008

Action Mfg Co Inc v. Simon Wrecking Co
Precedential or Non-Precedential: Non-Precedential

Docket No. 06-3679




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                                                NOT PRECEDENTIAL

               UNITED STATES COURT OF APPEALS
                    FOR THE THIRD CIRCUIT
                         ____________

                           No. 06-3679
                          ____________

              ACTION MANUFACTURING CO., INC.;
       ALCOA, formerly known as Aluminum Company of America;
             ARMSTRONG WORLD INDUSTRIES, INC.;
        ABB INC., formerly known as Fischer & Porter Company;
   BECKETT COMPANY, L.P.; GENERAL ELECTRIC COMPANY/RCA;
               GENERAL MOTORS CORPORATION;
  HAMILTON TECHNOLOGIES, INC. (BULOVA TECHNOLOGIES, L.L.C.)
   HAMILTON WATCH COMPANY, INC. (SWATCH GROUP U.S., INC.);
       HANDY & HARMAN; HAYFORK, L.P., formerly known as
              HAMILTON PRECISION METALS, INC.;
             TUBE CO.; HERCULES INCORPORATED;
              J.W. REX; LAFRANCE CORPORATION;
          LUCENT TECHNOLOGIES, INC.; PENFLEX, INC.;
     PLYMOUTH TUBE COMPANY; REILLY PLATING COMPANY;
           SIEMENS ENERGENY & AUTOMATION, INC.,
            formerly known as MOORE PRODUCTS, CO.;
          SUNROC CORPORATION; SYNTEX (USA), INC.;
        UNISYS CORPORATION; VIZ LIQUIDATION TRUST

                                  v.

     SIMON WRECKING COMPANY, INC.; SIMON RESOURCES, INC.;
                MID-STATE TRADING COMPANY, INC.;
 S & S INVESTMENTS, INC.; SCHWAB-SIMON REALTY CORPORATION;
        TRENTON REALTY CORPORATION; QUAKER CITY, INC.;
  J & J SPILL SERVICE & SUPPLIES, INC.; LIGHTMAN DRUM CO., INC.;
      RESOURCE TECHNOLOGY SERVICES, INC.; PETROCON, INC.;
MCCLARIN PLASTICS, INC.; AMETEK, INC.; CSS INTERNATIONAL CORP.;
           EMECO INDUSTRIES, INC.; DAVID K. ROBSON, INC.;
         FAIRFAX VALET, INC., formerly known as Fairfax Cleaners;
     A & J SCREW MACHINE PRODUCTS, INC.; HULLTRONICS, INC.;
               KOSEMPEL MANUFACTURING COMPANY;
             KEYSTONE ENVIRONMENTAL SERVICES, INC.;
           PHILADELPHIA STEEL DRUM CO., INC.; NW CONTROLS, INC.;
                    SINGER SEWING COMPANY; FBF, INC.;
            STEWART GOLEN; RESOURCE RECOVERY ATLANTIC, INC.

                                      Simon Wrecking Company,
                                      and Simon Resources Inc.,

                                                  Appellants
                                      ____________

                      On Appeal from the United States District Court
                         for the Eastern District of Pennsylvania
                                  (D.C. No. 02-cv-08964)
                        District Judge: Honorable Anita B. Brody
                                      ____________

                        Submitted Under Third Circuit LAR 34.1(a)
                                     March 4, 2008

            Before: SCIRICA, Chief Judge, FISHER and ROTH, Circuit Judges.

                                  (Filed: July 28, 2008)
                                      ____________

                               OPINION OF THE COURT
                                    ____________

FISHER, Circuit Judge.

         Defendants Simon Wrecking and its successor Simon Resources (collectively

“Simon”) appeal the District Court’s order finding Simon liable as a transporter of

hazardous wastes and awarding a monetary judgment to the plaintiffs in their contribution

action under the Comprehensive Environmental Response, Compensation, and Liability

Act (“CERCLA”). For the following reasons, we will affirm the order of the District

Court.

                                            2
                                              I.

       We write exclusively for the parties, who are familiar with the factual context and

legal history of this case. Therefore, we will set forth only those facts necessary to our

analysis.

       This litigation arose over the contamination of the Malvern TCE Superfund Site in

Malvern, Pennsylvania, where Chemclene Corporation had previously processed and

stored industrial waste for many years. In 1996, the EPA informed the litigants that they

were potentially responsible parties (“PRPs”) under CERCLA § 107(a). Appellees,

members of the Chemclene Site Defense Group (“CSDG”), entered into a consent decree

with the EPA and the Pennsylvania Department of Environmental Protection, agreeing to

undertake remediation of the site. In 2002, the CSDG brought a contribution action under

CERCLA § 113 against the remaining PRPs, including Simon.

       The District Court ultimately found Simon liable to the CSDG for contribution as a

transporter of hazardous waste under CERCLA §§ 113(f) and 107(a). The District Court

found that the expenses submitted by CSDG, with one exception, were consistent with the

National Contingency Plan (“NCP”) as mandated by CERCLA § 107(a)(4)(B), yielding

$4,224,701 in allocable past costs. Based on the remedies approved in the EPA’s Record

of Decision (“ROD”), the District Court estimated future allocable costs for the site to be

$17,872,964. In addition, the Court found that CSDG would incur $1,000,000 to the EPA

in oversight costs. Thus, the Court determined that the total (past and future) allocable



                                              3
response cost was $23,097,665. CSDG received settlements in the amount of $6,630,670,

resulting in a remaining allocable cost amount of $16,466,995. Based on relative shares

of waste and other factors, the District Court determined that Simon was responsible for

6.25% of the remaining allocable costs. In addition, the District Court applied an

uncertainty premium of 50% to this amount, increasing Simon’s responsibility to 9.38%

of the remaining allocable costs. On July 7, 2006, based on these calculations, the

District Court ordered Simon to pay CSDG $1,544,604.

                                            II.

       We have jurisdiction over this matter pursuant to 28 U.S.C. § 1291. We will set

aside a District Court’s findings of fact only if they are clearly erroneous. FMC Corp. v.

United States Dep’t of Commerce, 29 F.3d 833, 838 (3d Cir. 1994). We exercise de novo

review over the District Court’s conclusions of law. United States v. Dentsply Intern.,

Inc., 399 F.3d 181, 186 (3d Cir. 2005). “A district court’s allocation of CERCLA

response costs in a contribution action is reviewed for abuse of discretion. An abuse of

discretion occurs when the district court’s decision rests upon a clearly erroneous finding

of fact, an errant conclusion of law or an improper application of law to fact.” Beazer

East, Inc. v. Mead Corp., 412 F.3d 429, 446 (3d Cir. 2005) (internal citations and

quotation marks omitted).




                                             4
                                               III.

       Simon argues that (1) Appellees failed to prove that Simon is liable as a transporter

under CERCLA; (2) entry of monetary judgment, rather than declaratory judgment, for

future costs was erroneous, as future costs are unknown, and the “uncertainty premium”

was improperly applied to past costs; and (3) Appellees failed to prove that past costs

were necessary and compliant with the NCP.

       CERCLA § 107 provides that liability may only be imposed on a “responsible

party.” United States v. Alcan Aluminum Corp., 964 F.2d 252, 258 (3d Cir. 1992).

CERCLA § 107(a) defines four categories of responsible parties, including:

       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, or a threatened release which
       causes the incurrence of response costs, of a hazardous substance . . .

Id. § 107(a)(4). Simon does not dispute that it accepted hazardous substances for

transport to the site, or that it did actually transport these substances to the site. It

disputes only that Simon “selected” the site. We have construed transporter liability to

include those parties that actively participated in the decision regarding the location for

disposal of a generator’s waste. Tippins Inc. v. USX Corp., 37 F.3d 87, 94 (3d Cir. 1994)

(“[A] person is liable as a transporter not only if it ultimately selects the disposal facility,

but also when it actively participates in the disposal decision to the extent of having had

substantial input into which facility was ultimately chosen.”).




                                                5
       Appellees adduced a number of pieces of circumstantial evidence that together

show that the District Court did not clearly err when it determined that Simon selected or

actively participated in the selection of the Chemclene site: (1) Chemclene employees did

not know where Simon’s waste originated, indicating that the waste generators had no

relationship with Chemclene. This lack of relationship implies that the waste generators

were unlikely to have specifically selected the Chemclene site as their disposal site; (2) in

a letter regarding Simon’s contract with a particular generator, the President of

Chemclene informed Simon that Chemclene was in compliance with the relevant

regulations, raising the inference that Simon was advising that generator, and thus taking

an active role in site selection; (3) Simon brought many loads of waste to Chemclene over

a period of years for many different customers, supporting the inference that Simon often

had input into site selection; and (4) a contracting officer at one generator with whom

Simon contracted testified that it was that generator’s policy not to tell a transporter

where to take its waste, raising the inference that Simon, and not the generator, selected

Chemclene as the site for that generator’s waste. This evidence is sufficient to support

the District Court’s finding that it was more likely than not that Simon had actively

participated in the selection of the Chemclene site. Therefore, the District Court did not

clearly err in holding Simon liable as a transporter under CERCLA.

       Simon next argues that the District Court erred in awarding a monetary judgment

on this contribution claim, as opposed to declaratory judgment. However, Simon cites no



                                              6
statutory authority for this proposition. CERCLA § 113(g)(2) requires declaratory

judgments for cost recovery actions, but § 113(g)(3), which governs contribution actions,

contains no such requirement. Simon relies primarily on Beazer, 412 F.3d 429, for the

proposition that a declaratory judgment is required in contribution actions. Beazer,

however, does not stand for this proposition. Beazer itself relied in part on a First Circuit

case, United States v. Davis, 261 F.3d 1 (1st Cir. 2001), which held that declaratory

judgments were permitted in contribution actions, but not required. Id. at 46. That circuit

has also held that a monetary judgment may be an applicable remedy in a contribution

action. See Am. Cyanamid Co. v. Capuano, 381 F.3d 6 (1st Cir. 2004). In that case, the

Court held that

       [t]he 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.
       ....
       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 [came to a conclusion regarding] the best estimate of total
       response costs and entered a judgment using that estimate. We believe it
       was not error to do so.

Id. at 26-27. Similarly, monetary relief was appropriate in this case because remediation

could take more than thirty years, and such relief provides finality, as well as a greater

likelihood that Appellees will be able to actually collect on their judgment. In



                                              7
contribution cases, the Court has the power to fashion remedies based on equitable

considerations. CERCLA § 113(f)(1) (“In resolving contribution claims, the court may

allocate response costs among liable parties using such equitable factors as the court

determines are appropriate.”). Thus, the District Court did not abuse its discretion in

awarding monetary relief in this case.

       Simon also takes issue with the “uncertainty premium” applied by the District

Court. As Simon concedes, the ultimate total cost of cleanup “will continue to be a

moving target.” It therefore asserts that the application of an uncertainty premium of fifty

percent to past and future costs is in error, where past costs are known and future costs

are speculative in nature. However, it is precisely because of this uncertainty that the

District Court awarded the premium in this case. The District Court reasoned that the use

of an uncertainty premium is often an effective mechanism to “to ensure that the parties

assuming cleanup are not unduly burdened by unforeseen future costs, and to

acknowledge the benefit settling parties receive in resolving their liability early.” Action

Mfg. Co. v. Simon Wrecking Co., 428 F. Supp. 2d 288, 332 (E.D. Pa. 2006). Because it

found that there was evidence that the ultimate total cost of cleanup could be higher than

originally anticipated and that the cleanup could take thirty years, the District Court found

that an uncertainty premium on total costs was an equitable method of acknowledging the

benefit received by Simon in resolving its liability prior to the completion of the cleanup.

Because the District Court is permitted to allocate costs in such an equitable manner,



                                              8
CERCLA § 113(f)(1), it has not abused its discretion in imposing an uncertainty premium

here.

        Simon finally argues that Appellees have produced no evidence to support the

conclusion that the costs already incurred by the CSDG are “necessary costs of response

incurred . . . consistent with the national contingency plan” as required by CERCLA

§ 107(a)(4)(B). This argument is meritless. As the regulations state,

        For the purpose of cost recovery under section 107(a)(4)(B) of CERCLA:
        ...
        (ii) Any response action carried out in compliance with the terms of an
        order issued by EPA pursuant to section 106 of CERCLA, or a consent
        decree entered into pursuant to section 122 of CERCLA, will be considered
        “consistent with the NCP.”

40 C.F.R. § 300.700(c)(3). Here, the CSDG members have entered into a consent decree

pursuant to CERCLA § 122. As Simon has introduced no evidence that the CSDG has

failed to comply with the terms of the consent decree, the CSDG’s actions are therefore

presumed to be consistent with the NCP. See, e.g., Bancamerica Commercial Corp. v.

Mosher Steel of Kansas, Inc., 100 F.3d 792, 796-97 (10th Cir. 1996). Regardless,

Appellees have introduced evidence that the costs they have incurred are “necessary to

the containment and cleanup of hazardous releases.” Redland Soccer Club, Inc. v. Dep’t

of Army of the United States, 55 F.3d 827, 850 (3d Cir. 1995) (internal citation and

quotation marks omitted). Chris Young, the project manager for the CSDG, testified that

the costs incurred by the CSDG were directed to the investigation and cleanup of the site.

The fact that some of the costs were incurred in the evaluation of less costly alternative

                                              9
remedies does not render such costs unnecessary. Therefore, the District Court did not err

in determining that response costs as calculated by the Court were necessary and

compliant with the NCP.

                                           IV.

      For the foregoing reasons, we will affirm the order of the District Court.




                                           10
