There’s More to Solutia Than Meets the Eye

Posted on June 25, 2012 by John Barkett

CERCLA practitioners are familiar with the Eleventh Circuit’s decision in Solutia, Inc. v. McWane, Inc., 2012 WL 695007 (11th Cir. Mar. 6, 2012).  The court of appeals decided that Solutia  & Pharmacia, the plaintiff, was limited to a contribution action for costs incurred in cleaning up lead contamination.  In so holding, the Eleventh Circuit agreed with three other circuits which have held that a person who enters an administrative or judicially approved settlement under Sections 106 or 107 of CERCLA are limited to a contribution claim under Section 113(f).  See Morrison Enter., LLC v. Dravo Corp., 638 F.3d 594, 603 (8th Cir.2011); Agere Sys., Inc. v. Advanced Envtl. Tech. Corp., 602 F.3d 204, 229 (3d Cir.2010), and Niagara Mohawk Power Corp. v. Chevron U.S.A., Inc., 596 F.3d 112, 128 (2d Cir.2010).

While Solutia’s holding is significant, the decision provides an important reminder of the importance of foresight in the outcome of a claim.  Let me explain.

Solutia & Pharmacia had entered into a Partial Consent Decree (PCD) in August 2003.  The PCD referenced two areas of contamination, a PCB site and the “Anniston Lead Site.”  Solutia and Pharmacia reserved their rights in the PCD to seek contribution from parties who could be proven to be liable for the Anniston Lead Site.

In 2005 EPA undermined Solutia & Pharmacia’s reserved contribution rights.  It entered into settlements with a number of parties that provided contribution protection for lead-related cleanup costs.  By motion, Solutia & Pharmacia protested EPA’s action.  The trial court agreed and offered to suspend their obligations under the PCD because of EPA’s breach.  By either inaction or conscious decision, Solution & Pharmacia declined the offer.

In 2006, EPA and Solutia & Pharmacia entered into a “Stipulation Clarifying the Partial Consent Decree.”  Under the Stipulation, Solutia & Pharmacia agreed to clean up certain “zones” around Anniston, labeled as A, B, C, and D, which were contaminated with lead and not just PCBs.   The Stipulation provided that “it shall not be considered an admission of liability and is not admissible in evidence against the Defendants in any judicial or administrative proceeding other than a proceeding by the United States.”

Solutia & Pharmacia argued that because lead contamination was excluded from the PCD, it had a Section 107 claim for its lead-related cleanup costs.  Had the case turned just on the PCD, Solutia & Pharmacia would have been in the same position as Texas Instruments in Agere Sys., Inc. v. Advanced Envtl. Tech. Corp.—even though it signed one consent decree for which it was limited to a contribution action, costs it incurred unrelated to that consent decree could be pursued under Section 107(a).  

The court of appeals, however, agreed with the district court that the Stipulation obligated Solutia & Pharmacia to clean up areas where PCBs were commingled with hazardous substances disposed of the defendants.  Hence the PCD, which was “clarified” by the Stipulation, embraced costs associated with more than remediation of PCBs limiting Solution & Pharmacia to a contribution claim for those costs.

But what of the prohibition on admissibility of the Stipulation into evidence in any judicial proceeding that did not involve the United States?  The prohibition is not self-executing; the Stipulation was admitted in the district court and relied on heavily.  Solutia & Pharmacia apparently decided to wait until its reply brief to argue nonadmissibility.  That was too late.  Because admissibility of the Stipulation was not contested in Solutia & Pharmacia’s opening brief, the argument was waived, the court of appeals held.

The defendants in the action had been awarded summary judgment in the trial court because they had contribution protection from lead-related cleanup costs.  However, Solutia & Pharmacia had spent $14 million in cleanup costs in areas that were not covered by the PCD.  It filed a motion to alter or amend the judgment because the defendants had not sought a summary judgment with respect to these costs.  The argument was rejected in the trial court because it had not been raised before entry of the summary judgment. 

The court of appeals affirmed this exercise of the trial court’s discretion because the defendants’ motion for summary judgment, in fact, had sought dismissal of all of Solutia & Pharmacia’s Section 107 claims, and Solutia & Pharmacia had never argued prior to the grant of summary judgment that they “voluntarily incurred costs unrelated to the Consent Decree.”

The burden is always on counsel to make and preserve arguments.  This is as much a lesson from Solutia as its holding on the Section 107/113 issues.