{ Banner Image }
Search this blog

Subscribe for updates

Recent Posts

Blog editor

Blog Contributors

California District Court Decision on Statute of Limitations in Contribution Actions Further Complicates Issue for Practitioners

On January 15, the United States District Court for the Central District of California granted Defendants’ Motion for Summary Judgment in Arconic, Inc., et al. v. APC Inv. Co., Case No. CV-14-6456-GW (C.D. Cal. Jan. 15, 2019), ruling that Plaintiffs’ contribution claims under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) Section 113(g)(3) were barred by the applicable three-year statute of limitations. What makes the decision noteworthy is that the Court found that the limitations period began to run ten years before the Plaintiffs entered into the Consent Decree with EPA and the State of California to undertake the remediation giving rise to the contribution claim.

The contaminated site at issue is the Omega Chemical Superfund Site located in Whittier and Santa Fe Springs, California, and the Court’s decision deals specifically with contribution for response costs related to Operable Unit 2 (OU-2), a contaminated groundwater plume emanating from the Omega Chemical Company facility. EPA and the California Department of Toxic Substances Control (DTSC) had sued the Plaintiffs as potentially responsible parties (PRPs) and in 2017 entered into a settlement with a group of more than 50 PRPs requiring them to reimburse past costs and to perform future work (the “2017 Consent Decree”). Previously, however, the same PRPs had settled their liability to EPA for costs incurred in a removal action at the facility site itself and had, in 2007, entered in a judicially-approved settlement of contribution claims against third parties for those costs (the “2007 Settlement Agreement”).  Although the plaintiffs to the 2007 Settlement Agreement had not yet been sued as PRPs for OU-2, the extended groundwater plume, the 2007 Settlement Agreement included a release for “all response costs associated with the Site,” including “regional groundwater contamination alleged to be attributed to the Site.”

CERCLA 113(g)(3) provides that “[n]o action for contribution for any response costs or damages may be commenced more than 3 years after … the date of an … entry of a judicially approved settlement with respect to such costs or damages.” 42 U.S.C.A. § 9613 (West)(emphasis added). On that basis, in their motion for summary judgment, the Defendants in Arconic, Inc. argued that current claims were time barred because the 2007 Settlement Agreement was made “with respect to” the same costs. In response, Plaintiffs argued that the Court should read into Section 113(g)(3) a requirement that the settlement agreement that triggers the limitations period require the party to accept liability or responsibility for the response. As explained by the Plaintiffs, because a claim for contribution under Section 113 only arises when a responsible party takes response actions or incurs response costs, and as the 2007 Settlement Agreement “neither obligated Plaintiffs to perform any future, unknown response actions, including OU-2 work, nor make any payments to anyone,” “the 2007 Settlement cannot . . . trigger the statute of limitations.” Plaintiffs’ Opposition Brief, Doc. No. 770, Arconic, Case No. CV-14-6456-GW at 12.

The key issue actually addressed by the Court was whether the “response costs sought in the present action [were] ‘with respect to’” the 2007 settlement, and therefore time barred. Arconic, Inc., et al. v. APC Inv. Co., Case No. CV-14-6456-GW at *21 (C.D. Cal. Jan. 15, 2019). Plaintiffs argued in their brief that all of the previous lawsuits and settlements were with respect to what is now referred to as OU-1, and that the site of this action, OU-2, was not contemplated by the earlier agreements. In its tentative ruling, the Court had agreed that recovery costs sought by Plaintiffs were not “with respect to” the 2007 settlement (and were therefore viable claims), but it reversed course and in a decision that replaced that tentative ruling, found the CERCLA claims to be time-barred as argued by the Defendants. In doing so, it analogized the 2007 Settlement Agreement in this case to a 1989 settlement agreement at the heart of a Ninth Circuit decision, ASARCO, LLC v. Celanese Chem. Co., (“Celanese”) wherein that court held that “[t]he fact that the full costs were unknown at the time did not mean that the [agreement] was less than comprehensive.” ASARCO, LLC v. Celanese Chem. Co., 792 F.3d 1203, 1213 (9th Cir. 2015). The Court wrote that the 2007 Settlement Agreement was as comprehensive as the one in Celanese and used an expansive definition of the Omega Chemical Superfund Site. Just as importantly, the Court noted that the Plaintiffs were seeking costs dating as far back as 2001, well before the 2007 Settlement Agreement was entered into.

Determining when the statute of limitations is triggered for CERCLA contribution claims under Section 113 has long been fraught with confusion, and this latest ruling only serves to add to that. It raises issues of how one defines a “Site” at any given time, how the limitations period accrues when there is more than one Operable Unit and successive actions and settlements, and how to interpret forward-looking settlement language when the scope of potential liability may be ever-changing. This is particularly true when, as here, one might have a Section 107 cost recovery claim for which a longer statute of limitations applies (for remediation, 6 years from onsite construction or for removal, 3 years from the completion of the removal action), which then matures into a 113 claim, for which a shorter statute applies -- in this case, a shorter statute that the Court evidently found ran before the 113 claim even existed.  For these reasons, on January 28th, Plaintiffs requested that the Court enter final judgment on the dismissed causes of action so that they may be immediately appealed to the Ninth Circuit, and thus we are likely to see this case and these issues again.