06.02.2022 Limitations Bar Superfund Contribution Action
As a general rule, the law will not allow plaintiffs to sit on legal rights indefinitely. Superfund actions are no exception. The 6th Circuit recently applied this principle, finding a declaratory judgment of liability asserted in a counterclaim could start the three year clock to initiate action, and if the company seeking contribution costs from other potentially responsible parties (PRP) did not act, the action may be barred by a statute of limitations.
In 2010, Georgia Pacific, LLC (GP) initiated legal action against International Paper, LLC (IP), NCR Corporation (NCR), and Weyerhaeuser to recover costs for cleanup of the Kalamazoo River, which had been contaminated with PCBs for decades. A federal district court allowed the case to go forward despite protests from IP and the other defendants, who argued the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) statute of limitations had expired, citing a number of possible events that may have caused the limitations period to begin running. The 6th Circuit Court of Appeals reversed, finding a simple declaratory judgment action is enough to trigger the three year statute of limitations.
Section 113 of CERCLA provides a separate statute of limitations for cost recovery actions and actions for contribution. According to the statute, the statute of limitations bars a CERCLA contribution action if the case is not commenced within three (3) years after a party receives a judgment in a CERCLA cost recovery action or enters an administrative settlement. As a result of a variety of cost recovery actions that started in 1995, the federal district court in this case found GP and other companies liable for remediation costs three separate times: in 1998, 2000, and 2003. IP was not implicated in those cases.
Before the 6th Circuit, GP asserted the 1998 declaratory judgment, as well as two others issued in 2000 and 2003, did not impose recoverable costs or damages, and as a result could not trigger the three (3) year statute of limitations. GP argued declaratory judgments do not cause the statute of limitations period to commence under CERCLA section 113; instead, GP suggested actions for allocation of costs under section 113 do not commence until a judgment, administrative order or consent decree assigns specific costs to the plaintiff.
The 6th Circuit disagreed. First, the court addressed the much-debated differences between CERCLA cost recovery actions under § 107(a) of CERCLA and those under CERCLA § 113 (f). “These two statutory rights under §§ 107 and 113(f) are mutually exclusive, providing causes of action ‘to persons in different procedural circumstances.’ The Supreme Court explained the difference: ‘costs incurred voluntarily are recoverable only by way of § 107(a)(4)(B), and costs of reimbursement to another person pursuant to a legal judgment or settlement are recoverable only under § 113(f).’” Id. at 8 (internal citations omitted).
Next, the 6th Circuit noted these different remedies have separate and distinct statutes of limitations. “Not only do §§ 107 and 113(f) provide different avenues of recovery, but also they provide different statutes of limitations for their different types of actions.” Id. at 8. Quoting in part from the CERCLA statute, the court found:
[C]ost-recovery actions under § 107(a)(4) must be brought within three years “after completion of the removal action” or “for a remedial action, within [six] years after initiation of physical on-site construction.” Actions for contribution under § 113(f), however, must be filed within three years of “(A) the date of judgment in any action under [CERCLA] for recovery of such costs or damages, or (B) the date of an administrative order under [§ 122(g)] (relating to de minimis settlements) or [§ 122(h)] (relating to cost recovery settlements) or entry of a judicially approved settlement with respect to such costs or damages.”
Id. at 9 (internal citations omitted).
Finally, the court evaluated the nature of each underlying action commenced against the plaintiffs in the case. The 6th Circuit agreed with IP’s argument that the 1998 judgment “h[eld] GP liable for past and future response costs pursuant to the defendants’ §§ 107 and 113 counterclaims.” Id. at 15. As a result, the court concluded the 1998 judgment caused the statute of limitations to begin to run for two reasons:
The 1998 order provides that “judgment as to liability is entered . . . against Plaintiff GP (and other parties) on Defendants’ counterclaims.” Id. at 16. This decision “fixed liability” for GP. At that point in time, a judgment was entered against GP as required by the statute of limitations provisions of § 113(f) of CERCLA.
- In addition, the 1998 judgment “assigned liability.” Kalamazoo River Study Grp. v. Rockwell Int’l, 274 F.3d at 1046 (“At the liability stage [in 1998] . . . [t]he district court determined that the KRSG and Rockwell had both released a sufficient amount of PCBs to face liability....”).” Id. Therefore, there was no confusion on what contribution GP may seek from IP.
Thus, the 6th Circuit held the Section 113 claims against IP were barred by the 3-year statute of limitations: “[b]ecause the 1998 KRSG judgment caused the statute of limitations to begin to run, the three-year statute-of-limitations period concluded before GP filed its 2010 action, and we must dismiss GP’s action on limitations grounds.” Id.
GP attempted to save its case by also claiming that, even if its § 113 CERCLA contribution claims were barred by the 1998 judgment, it could still prevail on some of its other claims, which it had brought under § 107. The court rejected the argument, because GP did not have the option of a § 107(a) CERCLA case: “As discussed above, Hobart analyzed the interplay between §§ 107 and 113 [of CERCLA], concluding that ‘if a party is able to bring a contribution action, it must do so under § 113(f), rather than § 107(a).’” Id. at 18 (internal citations omitted). The court went on to comment that section 107(a) of CERCLA provides the avenue for parties who “incur costs on their own,” while § 113(f) is the statutory tool to recover contribution for costs imposed via settlement or judgment, which is the case before the court. Id.