United States District Court, District of New Jersey, D
May 10, 2002
THE UNITED STATES OF AMERICA, PLAINTIFF,
SPAULDING COMPOSITES COMPANY, INC., DEFENDANT.
The opinion of the court was delivered by: Dennis M. Cavanaugh, United States District Judge.
This matter comes before the Court on motion by Plaintiff The United
States of America*fn1, against Defendant Spaulding Composites Company,
Inc. ("Spaulding") seeking summary judgment pursuant to Rule 56 of the
Federal Rules of Civil Procedure as to the divisibility of costs and harm
at the Caldwell Superfund Site in Fairfield, New Jersey. Oral argument
was heard on this motion on May 3, 2002. After painstakingly reviewing
the detailed submissions both in support of and in opposition to the
present motion, this Court holds that the Government's motion for summary
judgment shall be granted.
Spaulding's Lead Waste
Defendant Spaulding Composites, Inc. operated a manufacturing facility
in Clifton, New Jersey that produced mica products and a slurry waste
by-product containing lead. Between approximately 1958 and 1973, Caldwell
Trucking Company transported lead-containing wastes generated by
Spaulding and its predecessor-in-interest, Mycalex Corporation, and
deposited them at the Caldwell Trucking Superfund Site (the "Caldwell
Site"). Spaulding's waste was a "unique and well-defined by-product that
contained inorganic materials, primarily insoluble lead." See Steven P.
Goldberg Expert Report, dated 8/31/00. Counsel for Spaulding further
described the waste product as a lead frit*fn2 encapsulated in glass.
Oral Arg. Tr. at 14:23-25; 15:1-5. Notably, Spaulding's waste contained
no volatile organic compounds ("VOC"). In fact, Spaulding asserts that it
was incapable of producing VOCs and thus, it should not be responsible
for costs related to remediating VOC contamination.
The Nature and Type of Costs Sought in the Present Motion
The response costs incurred by the EPA can be categorized as (1)
remedial, and (2)
general and enforcement costs. The contamination at
the Caldwell Site was divided into two units, the first addressing soil
and sludge contamination (Operable Unit 1 or OU1) and the second
addressing groundwater contamination (Operable Unit 2 or OU2). See May
3, 2002 Oral Argument Transcript ("Oral Arg. Tr.") at 5:3-6. Since
Spaulding is incapable of producing VOCs, and the OU2 remedy entirely
consists of VOC groundwater cleanup, the Government opted to not attempt
to recover OU2 costs from Spaulding. See Oral Arg. Tr. at 8:16-19;
14:6-11. However, but for one specific contract, the Government argues
that Spaulding must pay for the entire OU1 remedy.
The OU1 remedy required some of the following actions:
Excavation and off-site disposal of California List
Excavation, off-site treatment, and disposal of soils
with VOC concentrations.
In-situ stabilization of contaminated soils.
Placement of two feet of clean soil over the solidified
While the Caldwell Trucking PRP Group performed the OU1 remedy pursuant
to a consent decree, the EPA performed substantial OU1 work at the
Caldwell Site, such as:
Performance of a remedial investigation and feasibility
study to assess the contamination at the Caldwell Site.
Analysis of samples derived from the above-mentioned
remedial investigation and feasibility through the
Contract Laboratory Program.
Performance of remedial design for the OU1 remedy.
Review of EPA's OU1 remedial documents by the State of
Through this motion, the EPA seeks to recover its response costs in
performing remedial efforts on OU1. See Declaration of Jo-Ann Velez
("Velez Decl.") ¶ 23. The EPA has carefully crafted it's motion to
seek only those costs that they believe are incapable of division. In
sum, the Government seeks $6,766,744.22. Supplemental Certification of
Mark A. Gallagher in Support of Motion for Summary Judgment ("Gallagher
Supp. Cert."), ¶¶ 9-10; Velez Decl., ¶¶ 9; Oral Arg. Tr. at
12:24-25, 13:1-7, 18:11-16.
The EPA also claims to have contracted with private entities to perform
work addressing general and enforcement matters at the Site, rather than
soil (OU1) or groundwater (OU2) contamination specifically. These
independent contractors did the following work for the EPA:
Performance of searches for potentially responsible
Assessment of the Site's overall health risks.
Compilation and maintenance of EPA's Administrative
Records for the Site.
Compilation and maintenance of EPA's records regarding
the Site in EPA's records center.
Performance of miscellaneous tasks such as publishing
public notices, duplicating photographs, obtaining
permits, etc. . .
The Government also seeks to recover $223,621.99 in general enforcement
costs incurred by the EPA and $373,745.49 in costs incurred by the
Department of Justice in enforcing aspects of this litigation and
Defendant Spaulding's bankruptcy proceeding. See Oral Arg. Tr. at
Spaulding responds that the costs in this matter are divisible because
their waste stream contained no VOCs and could not promote the further
degradation of other
portions of the Caldwell Site. Spaulding's experts
assert that the waste is incapable of reacting or combining with other
forms of waste and thus, Spaulding suggests that the costs incurred in
remediating its isolated and independent contribution to the Caldwell
Site's contamination can easily be divided and separated from the damage
due to other contaminants.
The January 22, 1997 Holding
In January of 1997, District Court Judge William G. Bassler found
Spaulding liable under Section 107(a) of CERCLA, 42 U.S.C. § 9607(a)
for "at least some" of the costs incurred by the EPA for cleaning the
Caldwell Site where Spaulding's waste was discovered. Judge Bassler
allowed Spaulding the "opportunity to develop a factual record in support
of its contention that the harm to the Site is divisible." U.S. v.
Spaulding Composites Co., No. 94-5451 (D.N.J. Jan. 22, 1997) (order
granting summary judgment in part). Id. According to the Government,
only two issues remained after the January 1997 Opinion:
1. Whether Spaulding can demonstrate that any portion
of the United States' costs are divisible and
should be apportioned to another party?
2. What is the amount of the United States response
A Summation of the Government's Costs
As mentioned during oral argument, the costs in this matter are a
"moving target" and as a result, somewhat difficult to pinpoint. See Oral
Arg. Tr. at 12:9-13. This flux is due to several factors. First, since
the filing of this motion, additional remedial and response costs have
been incurred. Supplemental Declaration of Richard J. Robinson, ¶¶
2-4; [Supplemental] Declaration of Virginia A. Curry, ¶¶ 2-4;
Gallagher Supp. Cert., ¶ 3. Second, pre-judgment interest has
continued to accrue which is recoverable under Section 107(a) of CERCLA,
42 U.S.C. § 9607(a). See Gallagher Supp. Cert., ¶ 5;
Supplemental Declaration of Anne Macaluso, ¶¶ 2-8. Furthermore, the
EPA has received reimbursements for some of its costs during the pendency
of this motion. Gallagher Supp. Cert., ¶¶ 3, 7; Supplemental
Declaration of Jo-Ann Velez ("Velez Supp. Dec."), ¶ 5-7.
Particularly, on December 21, 2001, the EPA received a payment of $50,000
under the terms of a Consent Decree in a matter entitled U.S. v. Baureis
Realty et al., 95-2732 (D.N.J.), a matter also before this Court. Velez
Supp. Dec., ¶ 5. A subsequent payment in that same matter was made
on February 11, 2002 in the amount of 1.6 million dollars. Id.
Furthermore, the settling parties in U.S. v. Carborundum Corp. et al.,
No. 94-1484 (D.N.J.), have made five payments in the amount of
$487,217.05. Velez Supp. Dec., ¶ 6. According to the EPA, 54.34
percent of the EPA's costs can be attributed to OU1 and general
enforcement costs, so the EPA subtracted 54.34% of these reimbursements
(totaling $2,137,217.05), or $1,161,363.74, from its total cost recovery
request. See id. These collected reimbursements have also resulted in a
reduction of the interest sought by the Government in the amount of
$64,934.73. Therefore, the amount to be subtracted from the Government's
total cost request is $1,226,298.48 ($1,161,363.74 $64,934.73).
As demonstrated above, the costs in this matter have frequently
changed. However, as of May 3, 2002, the following total costs were
sought by the Government:
OU1 Contract Costs sought = $1,451,563.69
as of the filing of this motion
Interest on OU1 costs sought = $824,906.61
New OU1 Contract Costs since = $10,141.75
the filing of this motion
Interest on new OU1 costs = $390.24
90% of an Army Corps of
Engineers Contract plus
associated indirect costs = $2,338,393.12
Interest Certain Allocated = $1,322,716.10
Costs (attributable to OU1) = $954,021.66
Interest = $462,460.97
General Enforcement Costs = $159,759.89
Interest = $63,862.10
New General Enforcement = $29,566.68
Interest = $1,514.40
General Enforcement Costs = $315,745.37
Interest = $58,000.12
SUBTOTAL = $7,993,042.70
MINUS ALLOCATED COLLECTIONS = $1,226,298.48
from consent decrees in related
TOTAL PRINCIPAL & INTEREST = $6,766,744.22
These changes in the Government's costs since the filing of the motion
have resulted in a net decrease in the actual amount originally sought to
be recovered. Gallagher Supp. Cert., ¶ 8.
The OU1 Contract Costs sought by the EPA as of the filing of this
motion totaled $1,451,563.69. These costs constitute payments to
contractors that worked entirely on the OU1 cleanup, as identified by
Mr. Robinson — EPA Remedial Project Manager at the Caldwell Site,
plus the indirect costs associated with those payments (such as non-site
specific costs associated with the EPA's operation of the Superfund
Program). These OU1 direct and contract costs, not including prejudgment
interest, are detailed in the following chart. See also [Reply]
Declaration of Jo-Ann Velez ("Velez Reply Decl."), ¶¶ 14-19;
OU1 Contract Costs
EPA Indirect Costs = $12,387.31
Emergency Removal Cleanup = $39,988.26
Contract — O.H. Materials
Corp. (Contract # 68-01-7445)
Interagency Agreement with Army = $14,235.57
Corps of Engineers (Contract #
Interagency Agreement with Army = $21,142.14
Corps of Engineers (Contract #
Remedial Contact with NUS Corp. = $1,347,805.09
(Contract # 68-01-6699)
Technical Assistance Team = $13,727.97
Contract with Roy F. Weston,
Inc. (Contract # 68-01-7367)
Technical Assistance Team = $2,277.35
Contract with Roy F. Weston,
Inc. (Contract # 68-W0-0036)
OU1 Contract Costs Subtotal = $1,451,563.69
The contract costs arising out of a particular contract with the Army
Corps of Engineers related to the OU1 remedy is $2,338,393.12. This
figure represents ninety percent (90%) of the work performed under the
EPA's Inter-Agency Agreement with the Army Corps of Engineers and
indirect costs. This OU1 contract cost, not including prejudgment
interest, is detailed in the following chart. See also Velez Reply
Decl., ¶¶ 14-19; Attachment 4.
Army Corps of Engineers Contract
Interagency Agreement (IAG) with = $2,269,705.88
Army Corps of Engineers (Contact
EPA Indirect Costs = $328,508.70
Subtotal = $2,598,214.58
90% of the Subtotal (indicating = $2,338,393.12
that 90% of this cost is
attributable to OU1)
The total costs arising out of certain allocated costs are
$954,021.66. These costs relate to the OU1 remedy-related portion of
EPA's payroll and travel costs, contract lab program costs, State
Cooperative Agreement costs, plus the indirect costs associated with
those expenditures (such as the payroll and travel costs incurred by EPA
personnel). These OU1 costs, not including prejudgment interest, are
detailed in the following chart. See also Velez Reply Decl., ¶¶
14-19; Attachment 6.
Certain Allocated Costs
Regional Payroll Costs = $607,431.54
Headquarters Payroll Costs = $14,889.64
EPA Indirect Costs = $577,864.48
Regional Travel Costs = $4,097.47
Headquarters Travel Costs = $2560.78
State Cooperative Agreement = $62,222.00
with N.J. DEP
(Contract # 264788)
Contract Lab Program Financial = $486,580.72
Subtotal = $1,755,646.63
54.34% of Subtotal (accounting = $954,021.66
for rounded figures)
The above OU1 contract and allocated costs amount to $4,754,860.20
in total. See Velez Reply Decl., ¶¶ 14-19; Attachment 2.
In addition, the EPA's general and enforcement costs are detailed in
the following chart. See Velez Reply Decl., ¶ 20; Attachments 7-8.
EPA General Enforcement Costs
EPA Indirect Costs (related to = $24,903.42
the Superfund Program in general)
Agency for Toxic Substances & = $31,260.46
Disease Reg. (ATSDR Costs)
Enforcement Support Serv. = $34,554.52
Corp.(Contract # 68-W4-0020)
Environmental Services = $1,177.34
Assistance Teams —
Lockheed Engineering & Sciences
Co. (Contract # 68-D1-0158)
Integrated Support Systems, Inc. = $241.57
(Contract # 68-R2-9904)
Technical Enforcement Support = $276.90
(Contract # 68-01-6769)
Technical Enforcement Support = $39,827.08
Contracts — CDM Federal
(Contract # 68-W9-0002)
Miscellaneous Costs = $27,518.60
TOTAL = $159,759.89
Moreover, the general and enforcement costs of the Department of
Justice are described by William M. Kime, CPA as $315,745.37 in costs and
$58,000.12 in interest, totaling $373,745.49. The Department of Justice
general/enforcement costs were compiled by William M. Kime, CPA of the
public accounting firm of Rubino & McGeehin, who is under contract with
the Dept. of Justice Environment and Natural Resources Division. See
Declaration of William M. Kime, CPA ("Kime Decl."), ¶ 1-3. In his
declaration, Mr. Kime explains that the DOJ incurs three types of costs;
(1) Direct Labor Costs, (2) Other Direct Costs, and (3) Indirect Costs.
See Kime Decl., ¶ 6.
Direct Labor Costs are the actual hours expended by attorneys and
paralegals. Id. Other Direct Costs are expenses specifically connected to
this case such as travel costs, fees for experts and special masters,
costs of transcripts and other litigation support expenses. Id. Indirect
Costs include secretarial and accounting support, record keeping costs,
office space and supplies and fringe benefits. Id. Indirect costs are
attributed to a particular case by assessing the percentage of direct
labor hours spent on a particular case (such as this one) in comparison
to the total amount of direct labor hours worked by DOJ staff in a fiscal
year. This comparison yields a percentage of time (for example 5% out of
100% of DOJ direct labor hours were dedicated to a particular case).
Indirect costs are assessed using the same percentage (using the same
example, 5% of the DOJ's indirect costs would be attributed to this case
because 5% of the DOJ's direct labor hours were dedicated to this case).
According to Mr. Kime, these three categories of costs yield a figure
of $315,745.37. Kime Decl., ¶ 8; Exhibit A (detailing the exact
costs by year and by category). Through 9/30/2000, interest on this
figure is $58,000.12. Kime Dec., ¶ 9(a-i). The Government has not
updated the request for costs or interest with regard to this cost.
I. Summary Judgment.
Summary judgment eliminates unfounded claims without recourse to a
costly and lengthy trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 327
(1986). Under Federal Rule of Civil Procedure 56(c), summary judgment is
proper where "the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that there
is no genuine
issue as to any material fact and that the moving party is
entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The burden
of showing that no genuine issue of material fact exists rests initially
on the moving party. See Celotex, 477 U.S. at 323. A litigant may
discharge this burden by exposing "the absence of evidence to support the
nonmoving party's case." Id. at 325. However, this effort requires more
than "simply show[ing] that there is some metaphysical doubt as to
material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio
Corp., 475 U.S. 574, 586 (1986). In evaluating a summary judgment motion
a court must view all evidence in the light most favorable to the
nonmoving party. See Matsushita Elec. Indus. Co., Ltd., 475 U.S. at 587;
Abraham v. Raso, 183 F.3d 279, 287 (3d Cir. 1999) (citing Boyle v. County
of Allegheny Pa., 139 F.3d 386, 393 (3d Cir. 1998)); Goodman v. Mead
Johnson & Co., 534 F.2d 566, 573 (3d Cir. 1976). The Court's role is not
"to weigh the evidence and determine the truth of the matter, but to
determine whether there is a genuine issue of fact for trial." Anderson,
477 U.S. at 248-49; Abraham, 183 F.3d at 287.
Once the moving party has made a properly supported motion for summary
judgment, the burden shifts to the non-moving party to "set forth
specific facts showing that there is a genuine issue for trial."
Fed.R.Civ.P. 56(e); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48
(1986). The substantive law determines which facts are material. Id. at
248. "Only disputes over facts that might affect the outcome of the suit
under the governing law will properly preclude the entry of summary
judgment." Id. No issue for trial exists unless the non-moving party can
demonstrate sufficient evidence favoring it, such that a reasonable jury
could return a verdict in that party's favor. See id. at 249.
II. Divisibility of Harm under CERCLA.
Under Section 107 of Comprehensive Environmental Response Compensation
and Liability Act ("CERCLA"), 42 U.S.C. § 9607, the United States may
recover any costs incurred in remediating contaminated sites.
Specifically, CERCLA requires that all liable parties pay "all costs of
removal or remedial action incurred by the United States Government . . .
not inconsistent with the national contingency plan."
42 U.S.C. § 9607(a)(4)(A). To recover costs, the Government must
establish that Spaulding falls into one of the responsible party
categories; that Spaulding disposed hazardous waste at the Caldwell
Site; that Spaulding's waste disposal caused the release or threat of
such release of hazardous substances into the environment; and that the
United States incurred response costs as a result. See
42 U.S.C. § 9607(a); New Jersey Turnpike Authority v. PPG Industries
Inc., 197 F.3d 96, 103-04 (3d Cir. 1999); United States v. Alcan Aluminum
Corp., 964 F.2d 252, 258-59 (3d Cir. 1992). Judge William G. Bassler, in
an Opinion dated January 22, 1997 found Spaulding liable for costs to the
United States, but permitted further discovery on the issue of cost
Under CERCLA, a joint and severally liable tortfeasor, like Spaulding,
can diminish the extent of its liability for costs under the divisibility
of harm rule. See Alcan, 964 F.2d at 268. The Third Circuit in Alcan
adopted this rule from section 433A of the Restatement (Second) of Torts
(1965), which provides that:
(1) Damages for harm are to be apportioned among two of
more causes where
(a) there are distinct harms, or
(b) there is a reasonable basis for determining the
contribution of each cause to a single harm.
(2) Damages for any other harm cannot be apportioned
among two of more causes.
This provision requires this Court to address two questions. First, is
the contamination at the Site somehow divisible? Second, are the response
costs incurred by the United States "capable of some reasonable
apportionment[?]" Alcan, 964 F.2d 252
, 270-71 (3d Cir. 1992). The Third
Circuit opined that "common law principles of joint and several liability
provide[d] the only means [to] . . . infuse fairness into the [CERCLA]
statutory scheme without distorting its plain meaning." Alcan, 964 F.2d
at 268. The burden of establishing the divisibility of damages is on the
tortfeasor. Alcan, 964 F.2d at 269. This burden is substantial. See
Alcan, 964 F.2d at 271; O'Neil v. Picillo, 883 F.2d 176
, 183 (1st Cir.
1989); U.S. v. Agway, Inc., 2002 WL 485039, *2 (N.D.N.Y. March 28,
Spaulding argues that divisibility is appropriate in this case
because: (1) Spaulding's waste is unique, well-defined and insoluble; (2)
Spaulding's waste contained no VOCs, only lead; and (3) Spaulding's
experts demonstrate that Spaulding's waste was incapable of acting or
reacting synergistically with other wastes that could exacerbate any
contamination at the Site.
The Government argues that Spaulding cannot show divisibility in this
case for four reasons. First, the "primary goal" of the OU1 remedy was
"remediation of the soil's lead contamination." Expert Report of William
J. Hengemihle on divisibility of harm and Apportionment of Government
Response Costs, dated August 31, 2000, ("Hengemihle Rpt."), ¶ 16.
Second, lead contamination was found in substantial quantities throughout
the Caldwell Site, not merely in discrete or isolated parts of the soil.
Declaration of Richard J. Robinson ("Robinson Decl."), ¶ 17. Third,
lead contamination by itself, created need for special remedial efforts,
unrelated to the efforts required to remove VOCs. Robinson Decl., ¶
14. Fourth, the soil that was contaminated with both lead and VOCs also
"created the need for special and more expensive measures," that neither
"would have required on its own." Robinson Decl., ¶ 13. The
Government argues that due to these factors, the harm caused by the soil
contamination is not divisible and as a result, the Government is
entitled to all of its remedial costs. In addition, the Government claims
to be entitled to general and enforcement costs that are arguably not
capable of apportionment because such costs are not attributable to any
remedy specifically, but are merely investigative in nature.
Spaulding responds that these requested costs are capable of reasonable
apportionment by utilizing a percentage method, similar to the
Government's method of apportioning its indirect costs related to
independent contractors. The Government challenges this assertion because
indirect costs, such as EPA payroll and contract laboratory program costs
are directly related to either OU1 or OU2, while general/enforcement
costs, such as PRP searches, maintenance of an administrative record, and
enforcement actions all relate to the Site as a whole as opposed to OU1
or OU2 specifically. Accordingly, the Government argues that Spaulding
has not met its burden of demonstrating divisibility.
The Court recognizes that Spaulding's divisibility arguments possess
some merit. However, the Government has withdrawn all costs that appear
to be potentially divisible. See Velez Reply Decl, ¶ 23. The
remaining costs challenged by
Spaulding all address OU1 response costs,
which were focused on the investigation, design and remediation of lead
waste produced by Spaulding. Having reviewed the entire record
carefully, this Court is not convinced that Spaulding has met its burden
of proving that the contamination at the Caldwell Site is divisible.
First, Spaulding's arguments do not point to any specific costs that are
arguably divisible, but for the costs that the Government has opted not
to recover through this motion, such as the costs for the OU2 remedy or
the costs arising out of certain contracts related to OU2. Instead,
Spaulding makes generalized arguments citing how Spaulding's waste stream
is unique and non-volatile. These assertions are not sufficient to show
the divisibility of the Government's sought after costs. The Government's
response costs for OU1 at the Caldwell Site were primarily directed
toward remediating the soil's lead contamination. See Hengemihle Rpt.,
¶ 16. Furthermore, the mere presence of Spaulding's slurry lead
waste, found both by itself and commingled amongst other types of waste
at the Caldwell Site, created the need for special remedial measures
unrelated to the removal of VOCs. As a result, this Court finds that the
costs related to OU1 direct, contract, allocated and enforcement
expenditures are not sufficiently distinct to permit reasonable
apportionment of the harm at the Caldwell Site. See Alcan, 964 F.2d at
270-71. In sum, the Government seeks to recover response costs in the
amount of $7,993,042.70 minus $1,226,298.48 in reimbursements that have
been collected during the pendency of this motion. In total, the
Government seeks to recover $6,766,744.22. This Court finds that the
Government is entitled to judgment as a matter of law as to this amount.
The Government's motion for summary judgment on the issue of divisibility
of harm is granted because there are no genuine issues of material fact
regarding a reasonable basis for apportionment of liability.
For the foregoing reasons, the Government's motion is granted. An Order
accompanies this Opinion.
This matter having come before the Court on Plaintiff, The United
States of America's motion for summary judgment as to the divisibility of
costs at the Caldwell Superfund Site, and this Court having heard oral
argument and having reviewed the initial and supplemental submissions
provided by the parties, and this Court having reviewed the applicable law
as evidenced by the herein Opinion, and for good cause shown,
IT IS ON THIS TENTH DAY OF MAY 2002,
ORDERED that the United States' motion for summary judgment is
granted; and it is further
ORDERED that Defendant Spaulding Composites Company, Inc. shall be and
hereby is jointly and severally liable for the costs enumerated in this
Court's Opinion filed herein, which include all of the EPA's unrecovered
response costs at the Caldwell Superfund Site regarding OU1 direct
costs, contract costs, certain allocated costs as to OU1, general
enforcement costs, plus prejudgment interest and all of the Department of
Justice's general and enforcement costs, including interest, which amount
to a total of $6,766,744.22, and it is further
ORDERED that this matter is hereby closed.