Making Sense of Superfund: The Third Circuit Gives a Lesson to the Supreme Court

One of the outstanding questions following the Supreme Court decisions in Aviall and Atlantic Research was whether a party which had entered into a consent decree with the United States and incurred direct response costs as a result could bring an action for cost recovery under § 107 of CERCLA or whether such a settling party would instead have a contribution action under § 113. The problem facing practitioners and the courts following Atlantic Research was that the Supreme Court seemed to have backed itself into a corner. By focusing its analysis of § 113 so narrowly on the traditional common law understanding of contribution, it at least suggested that contribution claims under § 113 might be limited to situations in which the plaintiff had paid “reimbursement” to satisfy a “common liability.”

Unfortunately, if a party which settled with the government and paid direct response costs could instead bring an action under § 107, then the defendant in the private action would face the specter of joint and several liability, notwithstanding that the private plaintiff was also liable. The Supreme Court thought it addressed this issue in Atlantic Research by noting that the defendant in a private action under § 107 could bring a contribution counterclaim, thus forcing an equitable allocation. However, as the Third Circuit noted in Agere Systems v. Advanced Environmental Technology, decided earlier this week, the Supreme Court’s solution doesn’t work when the private plaintiff has entered into a consent decree with the government pursuant to which it has protection against claims for contribution under § 113. Can Justice Thomas say “oops”?

What was the Third Circuit’s solution? Like Justice Thomas, it chose the straightforward approach. It simply barred private claims under § 107 where the private plaintiff would otherwise be liable under CERCLA, but, by virtue of contribution protection, would be immune from a counterclaim under § 113. While the holding is certainly right as a matter of policy, as a matter of law it seems largely a case of what we lawyers might call ipse dixit – basically, it’s so because I say so. Because it would be unfair to allow a private liable party to obtain a joint and several verdict against another private party, the court simply forbid it.

Interestingly, the Third Circuit did not address the question whether the plaintiffs had a right to bring a contribution action under § 113; it appeared to assume that they had such a right, without discussing the Supreme Court’s indication that contribution claims might be limited to reimbursement. If forced to face the issue directly, the Third Circuit would presumably have said that, just as we have to be fair to private defendants and not impose joint and several liability on them, we have to be fair to private plaintiffs and give them some kind of remedy. If they don’t have claims under § 107, they simply must have claims under § 113.

Given the practicality of the result, it seems likely that other courts of appeal will follow the Third Circuit’s lead. However, if the issue does somehow make it up to the Supreme Court, I still wouldn’t bet on the outcome there. They have surprised us before with their Superfund jurisprudence.

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