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UNITED STATES v. KRAMER

October 31, 1995

UNITED STATES OF AMERICA, Plaintiff,
v.
HELEN KRAMER, et al., Defendants. STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiffs, v. ALMO ANTI-POLLUTION SERVICES CORP., et al., Defendants.



The opinion of the court was delivered by: SIMANDLE

 SIMANDLE, District Judge:

 Presently before the court in this Superfund cost-recovery action is the motion in limine of the plaintiff United States to narrow issues for trial pursuant to Fed. R. Civ. P. 12(f), 16(c), and 57. The plaintiff asks this court to make two findings: 1) that it is the law of this case that defendants' arguments that costs are excessive, unreasonable, duplicative, not cost-effective, and improper do not allege inconsistency with the National Contingency Plan ("NCP"), do not provide a defense to a cost recovery action under section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended, 42 U.S.C. § 9601 et seq, and have been stricken as defenses in this case; and 2) that, as a matter of law, those same arguments do not allege inconsistency with the NCP and therefore do not provide defenses in a cost recovery action under section 107(a) of CERCLA. *fn1"

 This motion thus requires this court to determine what Congress meant when enacting section 107(a) of CERCLA, 42 U.S.C. § 9607(a), which provides in relevant part: "Notwithstanding any other provision or rule of law, and subject only to the defenses set forth in subsection (b) of this section, [a responsible party] shall be liable for all costs of removal or remedial action incurred by the United States Government or a State or an Indian Tribe not inconsistent with the national contingency plan."

 For reasons herein discussed, the plaintiff's motion will be granted.

 BACKGROUND

 The United States and New Jersey brought these consolidated cases pursuant to section 107(a) of CERCLA, 42 U.S.C. § 9607(a), to recover costs incurred at the Helen Kramer Landfill in Mantua, New Jersey. This is a major Superfund site at which the federal and state governments have incurred substantial costs to remedy conditions at the landfill and its environs. There are approximately 30 direct defendants (depending on how several joint entities are counted) which are alleged to be responsible parties as generators and/or haulers of hazardous substances pursuant to section 107(a)(3)&(4), 42 U.S.C. § 9607(a)(3)&(4). Several hundred third-party defendants also have been joined. Because this motion concerns a question of law, *fn2" a precise factual background is not necessary. *fn3"

 We will first consider whether it is the law of this case that the defendants' arguments that costs are excessive, unreasonable, duplicative, not cost-effective, and improper do not allege inconsistency with the NCP, do not provide defenses in a cost recovery action, and have been stricken as defenses to cost recovery. The United States alleges that the 1991 opinion of the late Chief Judge John F. Gerry, United States v. Kramer, 757 F. Supp. 397 (D.N.J. 1991), established the law of the case with respect to these issues, and that the undersigned, to whom this case was reassigned on February 8, 1995, is not free to vary the determination therein.

 The Third Circuit "follows a restrictive view of the circumstances in which the work of one judge may be undone by another. Under the law of the case doctrine, once an issue has been decided, it will not be relitigated in the same case except in unusual circumstances." Geibel v. United States, 667 F. Supp. 215, 219 (W.D.Pa. 1987), aff'd, 845 F.2d 1011 (3d Cir. 1988). See also United States Gypsum v. Schiavo, 485 F. Supp. 46, 55 (E.D.Pa. 1979), aff'd in part, rev in part, 668 F.2d 172 (3d Cir. 1981), cert. denied, 456 U.S. 961 (1982); United States v. Kikumura, 947 F.2d 72, 77 (3d Cir. 1991) ("Under the law of the case doctrine, when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case.") (citing Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 100 L. Ed. 2d 811, 108 S. Ct. 2166 (1988)); Devex Corp. v. General Motors Corp., 857 F.2d 197 (3d Cir. 1988), cert. denied sub nom. Technograph Liquidating Trust v. General Motors Corp., 489 U.S. 1015, 103 L. Ed. 2d 190, 109 S. Ct. 1128 (1989); Cowgill v. Raymark Indus., 832 F.2d 798 (3d Cir. 1987); Harrington v. Lauer, 893 F. Supp. 352 (D.N.J. 1995). Moreover, the Supreme Court has held that once an issue has been decided or "decided by necessary implication[,]" reconsideration of that issue is precluded. Christianson, 486 U.S. at 819. In other words,

 
[a] court has the power to revisit prior decisions of its own or of a coordinate court in any circumstance, although as a rule courts should be loathe to do so in the absence of extraordinary circumstances such as where the initial decision was clearly erroneous and would work a manifest injustice.

 Id. at 817.

 Naturally, this doctrine is not without exception. As the Supreme Court has held, while the "law of the case directs a court's discretion, it does not limit the tribunal's power." Arizona v. California, 460 U.S. 605, 618, 75 L. Ed. 2d 318, 103 S. Ct. 1382 (1983) (citing Southern R. Co. v. Clift, 260 U.S. 316, 319, 67 L. Ed. 283, 43 S. Ct. 126 (1922); Messenger v. Anderson, 225 U.S. 436, 444, 56 L. Ed. 1152, 32 S. Ct. 739 (1912)). The Third Circuit recognizes, for example, the following exceptions to the law of the case doctrine: when a timely motion for reconsideration is made before a second judge when the first judge is not available; when evidence not considered by the first judge becomes available for consideration by the second judge; when a supervening rule of law renders invalid the decision rendered by the first judge; and when the first judge's decision was clearly erroneous and would work a manifest injustice. Schultz v. Onan Corp., 737 F.2d 339 (3d Cir. 1984). With this frame of reference, we will evaluate the law of the case.

 The United States "asks this Court to affirm Judge Gerry's ruling that the NCP imposes no requirement that the United States minimize the cost of implementing a remedy, and that even 'excessive' and 'unreasonable' response costs are recoverable . . . . [and that] 'CERCLA does not impose a duty on the Government to mitigate response costs.'" (Pl. Mem. at 3). In other words, the plaintiff wants this court to affirm Judge Gerry's holding that

 
the only criterion for the recoverability of response costs under CERCLA is whether costs are consistent with the [NCP]. All costs not inconsistent with the NCP are recoverable. Defendants have the burden to prove that response costs are inconsistent with the NCP.

 Kramer, 757 F. Supp. at 436 (citing United States v. Northeastern Pharmaceutical & Chemical Co., 810 F.2d 726, 747-48 (8th Cir. 1986), cert. denied, 484 U.S. 848, 98 L. Ed. 2d 102, 108 S. Ct. 146 (1987) ("NEPACCO")).

 The defendants argue that Judge Gerry did not so hold. Instead, they contend that "Judge Gerry's ruling pertained solely to defendants' affirmative defenses to liability, not to the recovery of damages." (Df. Mem. at 3) (emphasis in original). To support this argument, the defendants cite the following passage of Judge Gerry's opinion: "a defense that the government's response costs are inconsistent with the NCP is only a defense to the recoverability of particular response costs, but not to liability." 757 F. Supp. at 436. The defendants, however, fail to consider the previous paragraph in the opinion which clearly states that arguments that costs are excessive and unreasonable do not challenge the propriety of the response costs. The defendants also omit the word "moreover" which begins the sentence they cite. This word implies that the sentence reinforces the earlier statements and adds emphasis. It does not suggest that the statement which follows is the only or even the main finding.

 In addition, referring to the language of section 107(a) of CERCLA, the defendants argue that "Judge Gerry never decided the meaning of the phrase 'all costs of removal or remedial action not inconsistent with the NCP' in this case." (Df. Mem. at 3). Consequently, they contend that this court does not know whether wasteful or excessive costs are costs of removal or remedial action or whether failure to comply with federal procurement regulations results in inconsistency with the NCP. (Id. at 3-4). The defendants also argue that "Judge Gerry's statement that CERCLA does not impose a duty on the government to mitigate response costs, 757 F. Supp. at 420, was not, and should not be twisted into, a license to squander money." (Id. at 4).

 The defendants further claim that wasteful, unnecessary, unreasonable, or excessive costs may not be recovered by the government because such costs are, as a matter of law, inconsistent with CERCLA and the NCP, and that the law of the case as established by Judge Gerry supports this view. (Id.). The defendants cite no support for any of these allegations. Based on these allegations, however, the defendants claim that their cost arguments still are available as defenses to the recovery of response costs.

 In order to interpret Judge Gerry's opinion, this court must consider what question he was addressing when he held that arguments that costs are unreasonable, duplicative, improper, excessive, and not cost-effective do not state an appropriate challenge and would be stricken. He could have meant that such arguments were not valid defenses to cost recovery, as the plaintiff contends, or he arguably could have meant that such arguments were stricken only with regard to liability, as the defendants assert. When evaluating this question, this court will consider both the plain language of Judge Gerry's opinion and the submissions made by defendants in opposition to the plaintiff's motion to strike which Judge Gerry addressed in the 1991 opinion.

 The defendants first made assertions concerning the excessive, unreasonable, improper, duplicative, and non-cost-effective nature of the costs that the plaintiff seeks to recover as affirmative defenses in their answers to the plaintiff's complaint and amended complaint. As such, the defendants could have intended these arguments as either defenses to liability or defenses to cost recovery, or both. The language of both the submissions and the opinion, however, indicate that these arguments were raised as defenses to cost recovery.

 For example, in its Memorandum of Law in Opposition to the United States' Motion to Strike its Separate Defenses ("Mem. Law Opp.") at 29, defendant Morton International ("MI") interpreted its fifteenth defense as applying to cost recovery. The fifteenth defense provided as follows: "Plaintiff's costs incurred or to be incurred at the Helen Kramer Landfill are unreasonable, duplicative and not cost-effective." (MI Ans. at 5). MI stated its defense could not be stricken as a matter of law for three reasons. (Mem. Law Opp. at 29). First, MI asserted that there were "factual and legal questions as to whether the United States is a liable party. If it is liable, it will not be permitted to recover all of its response costs." (Id.). Second, MI argued that "to the extent that the United States seeks to recover costs which technically may fall within the definition of 'response' costs but which are so poorly documented that they are remote and speculative, they may not be recovered." (Id.). Third, MI contended that "the United States and the State of New Jersey may be seeking to recover the same costs. Clearly, double recovery is not permitted -- even under CERCLA." (Id.). It is apparent from these arguments that MI was not contesting its potential joint and several liability under CERCLA; instead, it intended its affirmative defense to apply to cost recovery issues.

 In addition, in a letter *fn4" to Judge Gerry dated August 31, 1990, explaining the Defendants' Joint Supplemental Memorandum of August 17, 1990, the defendants clearly stated that their costs arguments applied to the plaintiff's ability to recover costs, not to the defendants' liability. (Df. Let. at 10). The defendants responded to the plaintiff's argument that consistency with the NCP should not be considered when determining liability by stating that "this affirmative defense is not raised as an absolute defense to liability." (Id.). Instead, "defendants in this action raise the government's failure to act in a manner not inconsistent with the National Contingency Plan as a defense in contribution to the government's full recovery of response costs." (Id.).

 The defendants also noted that "it is axiomatic that an affirmative defense need not provide defendant with a complete defense to liability in order to be properly asserted in an answer to a complaint -- a partial defense is sufficient." (Id.) (quoting Shenandoah Life Ins. Co. v. Hawes, 37 F.R.D. 526, 529 (E.D.N.C. 1965) (a defense that is not a complete but a partial defense will not be stricken); Folsom v. Dell Publishing Co., 131 F. Supp. 464, 465 (S.D.N.Y. 1955) (partial defense is valid for purposes of mitigating damages)). Because there is joint and several liability under CERCLA, any defense that seeks to mitigate damages paid, reduce contribution, or prevent the full recovery of response costs is, in fact, a defense to cost recoverability, not liability. Regardless of the labels used, it is clear from their own statements and citations that the defendants were not arguing that they had no liability, but rather that the plaintiff could not recover full costs.

 Finally, the plain language of Judge Gerry's opinion indicates that he struck the defendants' arguments as they applied to cost recovery. Judge Gerry stated that

 
the only criterion for recoverability of response costs under CERCLA is whether costs are consistent with the National Contingency Plan (NCP). All response costs not inconsistent with the NCP are recoverable. . . . Therefore terms used by the defendants in their affirmative defenses such as 'proper' or 'improper,' 'remote, speculative and contingent,' and 'unreasonable, duplicative and not cost-effective,' do not state an appropriate challenge to the propriety of the government's response costs, and will be stricken.

 757 F. Supp. at 436. Moreover, earlier in the opinion, Judge Gerry held that "CERCLA does not impose a duty upon the Government to mitigate response costs." 757 F. Supp. at 420. Analyzing the context in which he struck the defenses, i.e., the recoverability of costs, in conjunction with the finding that the plaintiff did not have a duty to mitigate costs, it becomes clear that Judge Gerry intended to strike defendants' ...


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