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U.S. v. KRAMER

February 8, 1991

UNITED STATES OF AMERICA, PLAINTIFF,
v.
HELEN KRAMER, ET AL., DEFENDANTS. V. AMERICAN CYANAMID COMPANY, ET AL., THIRD PARTY PLAINTIFFS, V. A. MARIANNI'S SONS, INC., ET AL., THIRD PARTY DEFENDANTS.



The opinion of the court was delivered by: Gerry, Chief Judge:

          OPINION

This matter is before the court on plaintiff's Rule 12(f) motion to strike approximately 200 of nearly 300 affirmative defenses set forth in the answers of 16 of the now 29 defendants. Plaintiff, United States ("the Government"), brought this case pursuant to section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9607, to recover response costs expended at the Helen Kramer Landfill ("the Site") in Mantua, New Jersey. To narrow the issues and reduce the time and expense of discovery, the Government moves to strike all defenses other than those specified by section 107(b), because section 107(a) restricts defendants to the three section 107(b) defenses, making all other affirmative defenses legally insufficient.

The 16 defendants*fn1 whose affirmative defenses are at issue have filed a joint memorandum opposing the striking of their equitable and constitutional defenses.*fn2 They argue first that constitutional defenses may always be asserted and cannot be cut off by statute. Second, because CERCLA must be read as a whole and all of its provisions given effect, defenses are available which arise under those sections of CERCLA and the Administrative Procedure Act ("APA"), 5 U.S.C. § 551 et seq., that are necessary to the implementation of section 107.*fn3 Third, defendants should be permitted to assert all the defenses that courts have held to be relevant to any CERCLA joint and several liability determination.

Moreover, defendants assert that they intend to assert a counterclaim against the Government, should discovery reveal that the Government itself was a significant generator of hazardous substances at the Site. Such a counterclaim, defendants argue, will change the character of the case from a section 107(a) collection action to "a hybrid which possesses features of both CERCLA Sections 107 and 113 . . . [with] a sufficient Section 113 equitable allocation component to allow Defendants to plead equitable defenses." Defendants' Joint Supplemental Memo at 2.*fn4

At oral argument on September 7, 1990, defendants argued that the outcome of the Government's motion to strike non-107(b) affirmative defenses makes no practical difference to the posture of the case, because if the court strikes the defenses, the same arguments will be raised by defendants in their section 113 counterclaims for contribution, brought simultaneously in this suit with the Government's section 107 claim. The Government responded that "the very real and very practical difference" arises on a motion for summary judgment, because a counterclaim is not a defense to liability while affirmative defenses are. Transcript of Oral Argument on September 7, 1990 ("Tr.") at 30, 8-13.*fn5

Were the court to strike the affirmative defenses, the likely practical consequence would be that the Government would be prepared to move for summary judgment on its section 107 claim well before defendants were ready to so move on their section 113 counterclaims. Defendants could be found jointly and severally liable for all response costs long before they would be ready to prove that other potentially responsible parties ("PRPs") — including perhaps the Government itself — were liable for part of those costs. Thus, as the Government argues, whether defendants' affirmative defenses remain part of the Government's section 107(a) claim, or are stricken now and revived later as part of defendants' section 113(f)(2) counterclaims, "is not an artificial distinction, it's a distinction with a very real difference." Tr. 30, 13-14.

For the following reasons we will grant plaintiff's motion and strike all the affirmative defenses before us, with the exception of defenses alleging divisibility of the harm as they pertain to joint and several liability.*fn6

I. BACKGROUND

The Helen Kramer Landfill is an inactive landfill in Mantua, New Jersey. From approximately 1963 to 1981, the 77-acre site was used for the disposal of municipal garbage and industrial waste. The State of New Jersey revoked the landfill registration in early 1981, and on March 3, 1981, a New Jersey state court ordered the landfill to cease operations.

On September 8, 1983, the Environmental Protection Agency ("EPA") placed the Helen Kramer Landfill on the National Priorities List ("NPL"), a list of the nation's most threatening hazardous waste sites. It now ranks fourth on that list. 42 U.S.C. § 9605(a); 40 C.F.R. Part 300, Appendix B.

Pursuant to section 104 of CERCLA, 42 U.S.C. § 9604, EPA conducted a Remedial Investigation and Feasibility Study ("RI/FS") from July 1983 until September 1985 to investigate contamination at the Site, at an alleged cost of over $2 million.

On October 16, 1989, plaintiff filed a complaint against 22 defendants, asserting claims under section 107 CERCLA, 42 U.S.C. § 9601 et seq. The complaint was amended on May 8, 1990 to name additional defendants and change the language regarding the declaratory judgment sought. The first amended complaint ("Am.Comp.") names 29 defendants and seeks: (1) a judgment against all defendants, jointly and severally, for all response costs*fn7 incurred by plaintiff at the Site (alleged to be already at least $4.6 million);*fn8 (2) a declaratory judgment that defendants are jointly and severally liable for all future response costs arising from releases and threatened releases of hazardous substances*fn9 at the Site, pursuant to section 113(g)(2) of CERCLA, 42 U.S.C. § 9613(g)(2); and (3) an award of attorneys' fees and costs.

The amended complaint alleges, among other things, that the 16 defendants whose affirmative defenses are at issue on this motion are liable under section 107(a)(3) of CERCLA, 42 U.S.C. § 9607(a)(3), as persons who arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances at the Site, within the meaning of section 107(a)(3) of CERCLA, 42 U.S.C. § 9607(a)(3). Further, defendants are jointly and severally liable to plaintiff under section 107(a) of CERCLA, 42 U.S.C. § 9607(a).

On November 20, 1990, 13 defendants*fn10 filed a third-party complaint on behalf of themselves and all other defendants in this action,*fn11 naming more than 250 defendants, including 17 local governments. The third-party complaint seeks contribution pursuant to section 113(f) of CERCLA, 42 U.S.C. § 9613(f), and asserts that plaintiffs "have a right of contribution . . . against each and every generator, transporter, owner/operator, and all such persons referenced in § 107(a) of CERCLA." Third-Party Complaint at 9. Some of the local government authorities named are alleged to have contributed "large amounts of liquid sewage sludge containing hazardous substances and properties [to] . . . the Helen Kramer Landfill," including "inorganic chemicals, metals, and organic constituents that are hazardous substances, and have, among other things, significantly caused and/or contributed to the high chemical oxygen demand ("COD") and excessively large amounts of methane gas prevalent at the site." Id., § VI, p. 60.*fn12 Other local governments are named as generators of "large amounts of municipal and industrial wastes containing hazardous substances [which] were transported to and disposed of at the Helen Kramer Landfill." Id., § VII, ¶ H, pp. 63-64.*fn13

The third-party complaint seeks a declaratory judgment that, pursuant to § 113(f) of CERCLA, the third-party defendants are liable to them "for recovery, reimbursement, and/or contribution toward all response costs [including interest] incurred and/or to be incurred by [t]hird-[p]arty [p]laintiffs concerning or relating in any way to the Helen Kramer Landfill Site." Further, plaintiffs seek an order requiring defendants "to immediately pay to . . . [p]laintiffs their share of contribution for response costs thus far incurred by [t]hird-[p]arty [p]laintiffs," including interest, and to pay third-party plaintiffs their "costs of suit, including reasonable attorneys fees," and any other relief the court "may deem equitable and just." Id. § XI, p. 70.

II. FACTS ALLEGED BY DEFENDANTS

In their answers, defendants set forth the following as facts, grouped below as defendants allege they pertain to various defenses. Although described as facts, many of these are conclusions of law, and we have so identified them below. For purposes of completeness we have not excluded these conclusions, but are not bound by them for purposes of this motion.

a) Constitutional Defenses

1. Municipalities located in and outside of New Jersey arranged for the disposal of wastes that contained hazardous substances. (U 8)*fn14

2. The municipalities arranged for the disposal of the bulk of the wastes sent to the subject site. (U 11)

3. EPA has a policy of not asserting CERCLA liability against municipalities which arrange for the disposal of hazardous substances but does assert CERCLA liability against industries that arrange for the disposal of hazardous substances. Defendants allege that this policy deprives them of Equal Protection (a legal conclusion). (A 34, O 17-18, WR 36, GM 30, 31, NL 27, ICI 21, U 8 & 20)

4. The policy to not sue municipalities was adopted without providing defendants notice and an opportunity to comment. Defendants allege that this violates the Administrative Procedure Act and denies their due process right to be heard (legal conclusions). (U 8 & 20)

b) Statutory Defenses

5. No hazardous substances for which defendants are responsible were disposed of at the landfill. (AC 10, A 34, O 10, WR 22, GM 29)

6. Some or all of the present or past costs and future costs, for which plaintiff seeks reimbursement in this action, were incurred by plaintiff as the result of acts or omissions of third parties other than employees or agents of defendants or other than one whose acts or omissions occurred in connection with a contractual relationship, existing directly or indirectly, with defendants. (AC 3 ¶ 1)

7. The costs which the Government seeks to recover are not costs of removal or remedial action response costs as that term is defined in CERCLA. (AC 5, O 5, WR 18, NL 21, ICI 18)

8. The costs were incurred in a manner which was inconsistent with the National Contingency Plan ("NCP"). (Defendants here assert a legal conclusion, but do not set forth the facts upon which it is based.) (AC 6, WR 20, GM 9, NL 17)

9. Some or all of the costs were unreasonable in amount, were duplicative, not cost effective (facts), or were not incurred in accordance with applicable law (legal conclusion). (AC 16, U 16, A 28, WR 23, GM 23, NL 10)

10. Some or all of the costs represent plaintiff's indirect costs (fact), which are not recoverable under CERCLA (legal conclusion). (AC 19)

11. Some or all of the removal or remedial action for which plaintiff allegedly incurred the costs was not in accordance with applicable law (legal conclusion), or was performed improperly, or in an unauthorized or non-cost effective manner (facts), in violation of the NCP (legal conclusion) by plaintiff or by plaintiff's contractors (facts). (AC 16, 19 & 20, NL 14)

12. On September 27, 1985 plaintiff issued a Record of Decision ("ROD") selecting certain remedial actions to be taken with respect to the landfill. (AC 23 ¶ 1)

13. Plaintiff has failed to comply with applicable law with respect to the adoption of the ROD. (Again, this is a legal conclusion couched as a fact.) (U 10)

14. In developing, issuing and implementing the ROD, plaintiff acted arbitrarily, capriciously and unreasonably (a legal conclusion), and some or all of the costs which the government seeks to recover were incurred by plaintiff in developing, issuing or implementing the ROD. (AC 23 ¶¶ 2-3)

15. Plaintiff did not determine that the removal and remedial action for which plaintiff incurred the costs would not be done properly by defendants. (AC 8 ¶ 1)

16. Some or all of the costs were incurred by plaintiff before it entered into a contract or cooperative agreement with New Jersey (fact), which violated section 104(c)(3) of CERCLA (legal conclusion.) (AC 9 ¶ 1)

17. Plaintiff failed to give the parties an opportunity to participate in the remedy selection process (fact), and was required to do so under CERCLA (legal conclusion). (NL 17)

18. Some or all of the costs were incurred by plaintiff before CERCLA became effective, or before the landfill was first listed on the National Priorities List. (AC 13 ¶ 1)

c) Joint And Several Liability And Other Defenses

19. The response costs allegedly expended by plaintiff at the Site were part of ordinary landfill closure costs. (U 8)

20. The harms for which plaintiff allegedly incurred the costs were and are divisible (fact), and therefore joint and several liability is not applicable, there being a reasonable basis for apportionment (legal conclusion). (AC 11, A 29, U 18, GM 24, NVF 15)

21. Plaintiff itself is a person as defined in CERCLA (legal conclusion) (AC 21 ¶ 1), and plaintiff by contract or agreement arranged for disposal or treatment of hazardous substances owned or possessed by plaintiff at the Site. (AC 21 ¶ 2)

22. Plaintiff itself is jointly and severally liable under CERCLA. (This is a pure legal conclusion). (AC 21 ¶¶ 1-4)

23. Defendants did not select the site at which their industrial wastes were disposed or deposited. (U 2)

24. Defendants exercised due care with respect to the hazardous substances referred to in the complaint, taking into consideration the characteristics of such hazardous substances, in light of all relevant facts and circumstances, and complied in full with all applicable laws. (This is a legal conclusion.) (AC 3 ¶ 2, 2, A 31, O 11, WR 15)

25. Defendants took reasonable precautions against the foreseeable acts or omissions of third parties and the consequences that could forseeably have resulted from such acts or omissions. (This is a legal conclusion.) (AC 3 ¶ 3)

d) Equitable Factors

26. Defendants have at all times acted in good faith toward plaintiff and with respect to the Site. (This is a legal conclusion.) (AC 22 ¶ 4a, GM 28, U 19, WR 34, A a33, AC 22, J 20)

27. Defendants' contribution to the alleged harm, if at all, was de minimis, remote, indirect, speculative or transient. (AC 22 4c, A 7, A 22, WR 32, GM 7, NVF 16, ICI 17). (Congress anticipated that de minimis parties could be treated differently, at least for settlement purposes. 42 U.S.C. § 9622(g).)

28. Defendants never owned, operated or had any control over the landfill or its operations. (AC 22 ¶ 4d)

29. The landfill could have been operated in a safe and lawful manner by others, and would have been operated in a safe and lawful manner by others had plaintiff and other regulatory agencies exercised their supervisory authorities in a proper and effective manner, so as to prevent any release or threatened release of hazardous substances from the Site. (This is purely speculative and not a factual assertion.) (AC 22 ¶ 4e)

30. Defendants had a right to rely upon and reasonably did rely upon (legal conclusions), authorized and licensed transporters of hazardous substances, as well as the owners and operators of the landfill, to conduct their business carefully, safely, and without injury in a manner to prevent the release or threatened release of hazardous substances from the Site. (AC 22 ¶ 4(f) & (g).)

31. Defendants reasonably relied upon, and had a right to rely upon (legal conclusions) plaintiff and other regulatory authorities, to select only properly qualified transporters and owners and operators to transport hazardous substances to the Site, and to treat or dispose of hazardous substances at the Site, and to supervise the operation and closure of the Landfill so that those activities would be conducted carefully, safely, and without injury, in accordance with the requirements of applicable law, so as to prevent the release or threatened release of hazardous substances from the Landfill. (AC 22 ¶ 4h)

III. DISCUSSION

a) Standard For Striking Defenses Under Rule 12(f)

Rule 12(f) provides, in part: "Upon motion made by a party . . . the court may order stricken from the pleading any insufficient defense." Fed.R.Civ.P. 12(f). "All well-pleaded facts are taken as admitted on a motion to strike but conclusions of law or of fact do not have to be treated in that fashion. Matter outside the pleadings normally is not considered on a Rule 12(f) motion." 5A Wright & Miller, Federal Practice and Procedure: Civil 2d (Federal Practice) § 1380, pp. 655-656 (1990).

In general, motions to strike are disfavored:

    Motions to strike a defense as insufficient are
  not favored by the courts because of their
  dilatory character. Thus, even when technically
  appropriate and well-founded, they often are not
  granted in the absence of a showing of prejudice
  to the moving party. Nonetheless, they are a
  useful and appropriate tool when the parties
  disagree only on the legal implications to be
  drawn from uncontroverted facts. But even when the
  defense presents a purely legal question, the
  courts are very reluctant to determine disputed or
  substantial issues of law on a motion to strike;
  these questions quite properly are viewed as
  determinable only after discovery and a hearing on
  the merits.

Id., § 1381, pp. 672-678 (1990).

However, motions to strike "serve a useful purpose by eliminating insufficient defenses and saving the time and expense which would otherwise be spent in litigating issues which would not affect the outcome of the case." United States v. Marisol, Inc., 725 F. Supp. 833, 836 (M.D.Pa. 1989). Still, the court's discretion is narrowly circumscribed on a motion to strike affirmative defenses. We may strike only those defenses so legally insufficient that it is beyond cavil that defendants could not prevail upon them. "[A] court should not grant a motion to strike a defense unless the insufficiency of the defense is `clearly apparent.' . . . The underpinning of this principle rests on a concern that a court should restrain from evaluating the merits of a defense where . . . the factual background for a case is largely undeveloped." Cipollone v. Liggett Group, Inc., 789 F.2d 181, 188 (3d Cir. 1986). Here, there has been little or no opportunity for discovery and hence to develop the factual background. It would thus appear premature to strike defenses that have any possible merit, based on the facts alleged in the many answers made by defendants.

b) CERCLA Overview

    "Congress enacted CERCLA in December 1980 `[t]o
  provide for liability, compensation, cleanup, and
  emergency response for hazardous substances
  released into the environment and the cleanup of
  inactive hazardous waste disposal sites,' Pub.L.
  No. 96-510, Stat. 2767 (1980) (purpose clause).
  Congress was aware when it enacted CERCLA that the
  costs of cleanup would exceed the Fund established
  by section 221 of the statute. See, e.g., S.Rep.
  No. 848, reprinted in 1 Legis.Hist. at 325. Thus,
  dollars expended by the federal and state
  governments to clean up hazardous waste sites are,
  whenever possible, to be recovered from responsible
  parties through the liability scheme . . . set
  forth in section 107. 42 U.S.C. § 9607. Section 107
  imposes liability on present site owners and
  operators, owners and operators at the time of
  disposal, and specified categories of generators
  and transporters of hazardous substances.
    In keeping with this broad liability scheme, the
  only substantive affirmative defenses to liability
  under CERCLA are those found in section 107(b).
  The exclusivity of section 107(b) defenses is
  explicitly discussed in section 107(a) which
  provides for liability `[n]otwithstanding any
  other provision or rule of law, and subject
  only to the defenses set forth in subsection (b) of
  this section.' As a result of this unequivocal
  intent, a strong majority of courts have held that
  liability under CERCLA section 107(a) is subject
  only to the limited defenses provided in section
  107(b)."

Kelley v. Thomas Solvent Co., 714 F. Supp. 1439, 1445 (W.D.Mich. 1989) ("Thomas Solvent") (emphasis original). See also United States v. Western Processing Co., 734 F. Supp. 930, 939 (W.D.Wash. 1990) ("Western Processing") ("In summary, the better reasoned decisions and the majority of cases have held that the limited defenses of Section 107(b) are exclusive and that equitable defenses such as unclean hands cannot be asserted because of the clear statutory language and because they would thwart the public interest.").

c) Section 107(a) Response Cost Recovery Claims And Defenses

Section 107(a) of CERCLA imposes liability on four classes of responsible parties for response costs incurred by the United States: 1) the owner and operator of the facility; 2) any person who owned or operated the facility at the time of disposal of any hazardous substance; 3) any person who by contract, agreement or otherwise arranged for disposal or treatment of hazardous substances owned or possessed by that person; and 4) any person who accepted any hazardous substances for transport to disposal or treatment facilities selected by that person. 42 U.S.C. § 9607(a)(1)-(4).

Section 107(a) requires proof of three elements: (1) that there was a release or a threat of a release of a hazardous substance at a facility; (2) that as a result of the release or threatened release, the United States incurred response costs; and (3) that defendants fall within one of the categories of responsible parties set forth above.

Section 107(a) provides that liability shall attach "[n]otwithstanding any other provision or rule of law, and subject only to the defenses set forth in subsection (b) of this section." 42 U.S.C. § 9607(a).

Section 107(b) exempts from liability those who,

  can establish by a preponderance of the evidence
  that the release or threat of release of a
  hazardous substance and the damages resulting
  therefrom were caused solely by —

(1) an act of God;

(2) an act of war;

    (3) an act or omission of a third party other
    than an employee or agent of the defendant, or
    than one whose act or omission occurs in
    connection with a contractual relationship,
    existing directly or indirectly, with the
    defendant . . ., if the defendant establishes by
    a preponderance of the evidence that (a) he
    exercised due care with respect to the hazardous
    substance concerned, taking into consideration
    the characteristics of such hazardous substance,
    in light of all relevant facts and
    circumstances, and (b) he took precautions
    against foreseeable acts or omissions of any
    such third party and the consequences that could
    forseeably result from such acts or omissions;

(4) any combination of the foregoing paragraphs.

42 U.S.C. § 9607(b).

Simply, the section 107(b)(3) defense is the "complete absence of causation." United States v. Monsanto Co., 858 F.2d 160, 168 (4th Cir. 1988), cert. denied, 490 U.S. 1106, 109 S.Ct. 3156, 104 L.Ed.2d 1019 (1989). That defense has three elements. A defendant must prove: (1) the release or threatened release was "caused solely by" an act or omission of an unrelated third party who was not an employee or agent of the defendant and with whom the defendant did not have a "contractual relationship"; (2) defendant exercised due care as to the hazardous substance; and (3) defendant took precautions against foreseeable acts or omissions of that unrelated third party. The Government asserts that no other substantive affirmative defenses beyond those in section 107(b) may be asserted.

The essential question before the court is whether defendants are limited to the section 107(b)(3) defense (since neither an act of God nor an act of war are at issue here). Plaintiff argues that the express language of section 107(a) so limits defendants, which offer a wide variety of affirmative defenses that admittedly fall outside the parameter of section 107(b)(3). Defendants argue that those defenses should not be stricken.

  d) Section 113(g)(2) Requires A Declaratory Judgment In A
     Section 107(a) Response Cost Recovery Action

Before the complaint was amended, defendants cross-moved for judgment on the pleadings on the Government's claim for a declaratory judgment. Once the Government amended its complaint, and changed the language upon which defendants had based their cross-motion, as well as two affirmative defenses, then defendants withdrew their cross-motion. See Case Management Order ("CMO") No. 2, ¶ 28. However, defendants have not withdrawn the two affirmative defenses. They are: failure to state a claim and lack of subject matter jurisdiction regarding plaintiff's declaratory judgment claim. Since the first amended complaint changed the relevant language upon which those affirmative defenses were based, for the following reasons we shall strike them.

However, the first amended complaint seeks "a declaratory judgment that the defendants are jointly and severally liable for all future response costs incurred by the United States in connection with the Site." Id., ¶ 2 of Prayer for Relief, at p. 10 (emphasis added).

Section 113(g)(2), in relevant part, provides:

  In any [action for recovery of the costs referred
  to in section 107] . . . 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) (emphasis added). The amended complaint seeks a declaratory judgment for "all future response costs," as specified in section 113(g)(2), which requires the court in a section 107 response costs recovery action to enter such a declaratory judgment. See United States v. Shaner, Civ. No. 85-1372, slip op. at 26, 1990 WL 115085, 1990 U.S.Dist. LEXIS 6893 (E.D.Pa. June 5, 1990) (section 113(g)(2) "expressly authorizes a court to enter a declaratory judgment on a PRP's liability for further response costs").

Thus, because AC's affirmative defenses of failure to state a claim and lack of subject matter jurisdiction are based on language that is no longer in the complaint, and the amended complaint conforms to the statutory form for the mandatory declaratory judgment in a section 107 cost recovery action, plaintiff states a claim for a declaratory judgment under section 113(g)(2), and the court has subject matter jurisdiction over that claim. Accordingly, both those affirmative defenses will be stricken.

  e)  Section 113 Creates Right To Seek Contribution And
Permits
      Equitable Defenses

To compensate for the potentially unfair burden that section 107 joint and several strict liability might impose on named PRPs, when other PRPs have not been named in an action brought by the government under that section, CERCLA provides a right under section 113 for named PRPs to seek contribution from other PRPs to apportion response costs equitably. It is during this second stage of CERCLA proceedings when equitable considerations are proper.

Section 113(f)(1) provides, in relevant part: "Any person may seek contribution from any other person who is liable or potentially liable under section 107(a) . . ., during or following any civil action under section . . . 107(a). . . . In resolving contribution claims, the court may allocate response costs among liable parties using such equitable factors as the court determines are appropriate." 42 U.S.C. ยง 9613(f)(1) (emphasis added). Thus, defendants need not suffer undue delay in obtaining contribution under section 113, since a section 113 action may be brought "during" the pendency of a section 107(a) action. Indeed, as noted above, defendants have filed a third-party complaint seeking contribution under section 113 against more than 250 third-party defendants, ...


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