Judgment Reopened in Fox River Case; NCR Corp. Shares Liability for Entire Site

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By Steven M. Sellers

March 5 — NCR Corp. avoided liability in 2013 for a specific contaminated parcel within the Lower Fox River Superfund site, but a federal court in Wisconsin reversed course March 3 by reopening a final judgment and finding that the company shares liability for contamination at the entire site.

NCR is liable under the Comprehensive Environmental Response, Compensation, and Liability Act for PCB contamination at a parcel known as operable unit 1 (OU-1), even though NCR's facilities were miles downstream at operable unit 2, the U.S. District Court for the Eastern District of Wisconsin said.

The court granted a motion for reconsideration filed by P.H. Glatfelter Co.

The ruling opened a 2013 judgment that had absolved NCR of liability for OU-1—and it excused Glatfelter's failure to appeal that ruling—citing an intervening Seventh Circuit holding that a party responsible for contamination anywhere at a Superfund site can be held responsible for all removal costs (U.S. v. P.H. Glatfelter Co., 768 F.3d 662 (7th Cir. 2014).

“Given the complexity of the issues raised, as well as the underlying uncertainty of CERCLA law, a court should not be over-eager to strictly apply procedural rules that bar arguments, particularly arguments that now seem viable,” the court said.

Apportionment Effects May Be Significant 

Superfund lawyers told Bloomberg BNA March 5 the decision was unusual, and may have greater significance in the future.

“The interesting decision will be the next one,” Seth Jaffe, a Superfund lawyer with of Foley Hoag in Boston, told Bloomberg BNA in an e-mail.

“While NCR might be theoretically liable for upstream OU-1 contamination, it should have a very strong argument under Burlington Northern that the OU-1 costs are divisible and its appropriate share of OU-1 liability should be zero percent. If the court rejects that argument, that decision would be significant,” Jaffe said.

In Burlington Northern, the U.S. Supreme Court clarified the scope of arranger liability and apportionment under CERCLA (Burlington N. & Santa Fe Ry. v. United States, 556 U.S. 599 (2009).

Other Superfund lawyers agreed the decision could significantly affect apportionment of costs among the parties later on.

“The Seventh Circuit held that Glatfelter is a liable party for the entire site because it discharged a hazardous substance at the ‘Site,' and whether it got from OU-1 downstream [to] OU-4 is not relevant for CERCLA liability,” Robert Fox of Manko, Gold, Katcher & Fox in Bala Cynwyd, Pa., told Bloomberg BNA March 5 in an e-mail.

Fox said that conclusion is consistent with CERCLA law that does not require causation as part of the prima facie case for cost recovery or contribution.

“What is different here,” Fox said, “is that NCR is being held as a liable party for contamination in OU-1, which is upstream of their discharges, while the Seventh Circuit held Glatfelter liable for OU-4, which is downstream. In essence, because the Site is OU-1 through OU-4, NCR is also a liable party for the whole site.”

“The way I think this will work out is that if NCR is a liable party for OU-1, they will argue that they are not jointly and severally liable and that as a matter of apportionment their liability for OU-1 is [zero] because it is upstream of NCR,” Fox said.

“The twist is that the burden of proof has shifted from the plaintiff, who can now show NCR to be a liable party for OU-1, to NCR who has the burden of proof on apportionment,” Fox said.

Intervening Appeal Cited 

Glatfelter unsuccessfully argued in the Seventh Circuit appeal that its downstream contamination from OU-1 was of insufficient magnitude to justify CERCLA liability for contamination at another site (OU-4).

“Based on the Seventh Circuit's ruling, Glatfelter now argues that what's good for the goose is good for the gander: if Glatfelter must be held liable for the entire Site—regardless of causation—then so must NCR,” the court said.

Precluding Glatfelter from making that argument, the court said, “could work a manifest injustice because it would mean the parties are not on a level playing field.”

In its original ruling absolving NCR of liability, the court held it wasn't plausible that waste from one parcel would flow upstream from another, and concluded that the designations of specific parcels of the Superfund site was a “bureaucratic happenstance.”

Those conclusions, for purposes of CERCLA liability, were rejected in the Seventh Circuit decision, the court said.

Requests for comment March 5 to counsel in the case weren't successful.

Judge William C. Griesbach wrote the opinion.

The law offices of Greenberg Traurig represented P.H. Glatfelder Co.

Sidley Austin and Cravath Swaine & Moore represented NCR Corp.

To contact the reporter on this story: Steven M. Sellers in Washington at ssellers@bna.com

To contact the editor responsible for this story: Peter Hayes at phayes@bna.com

The opinion is available at http://www.bloomberglaw.com/public/document/APPVION_INC_and_NCR_CORP_Plaintiffs_v_PH_GLATFELTER_COMPANY_et_al.