Superfund Contribution Actions: Bad Guys Need Not Apply

Last week, Judge William Griesbach, of the Federal District Court for the Eastern District of Wisconsin, issued an important Superfund contribution decision, which shows just how much equitable discretion judges have in resolving contribution claims. In Appleton Papers v. George Whiting Paper, Judge Griesbach ruled, on summary judgment, that one equitable factor, knowledge of the potential environmental harm caused by PCBs, trumped all others, and that the plaintiffs, who had manufactured carbonless copy paper, or CCP, had no right to contribution from paper companies which used CCP and as a result discharged substantial amounts of PCBs into the Fox River.

The basis for Judge Griesbach’s holding was that “between parties who produced the product and those who merely processed it and recycled it along with all other paper products or water sources, these latter parties are significantly less blameworthy.” (The Judge’s italics, not mine.) This is not necessarily an unreasonable conclusion and probably within the Judge’s discretion to make, but does it follow that that is a sufficient basis to determine, without a trial, that the defendants were – literally – infinitely less blameworthy?

Interestingly, the plaintiffs had produced evidence that the defendants’ discharges had polluted the Fox River, even aside from PCBs. The Judge held that, because such other pollution did not cause response costs, it was irrelevant to the equitable judgment regarding who should pay to clean up PCBs.

The Judge also acknowledged that much of the contamination occurred before the plaintiffs themselves knew of the environmental risks posed by PCBs. Notably, however, the Judge did not discuss whether response costs would have been any different had discharges ceased as soon as the plaintiffs gained knowledge of the risks.

I’m not surprised that the plaintiffs in this contribution action are being held to bear the lion’s share of response costs. I am surprised that, on summary judgment, the court was able to conclude that the defendants’ share, notwithstanding their knowing pollution of the Fox River, and notwithstanding that much of the harm was caused before anyone had knowledge of the risks posed by PCBs, was a big, fat, zero.

What’s the real lesson here? The real lesson is that, while Judge Griesbach both noted that his equitable power is “broad and loose,” and acknowledged that it is “not unfettered,” the emphasis is greatly on the side of “broad and loose,” and less so on the side of “not unfettered.”

I’ve made this point in the past, but lesson one of Superfund contribution actions remains – Get The Judge On Your Side.

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