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United States v. Kayser-Roth Corp.

Citation: 32 ELR 20354
No. No. 00-2038, 272 F.3d 89/(1st Cir., 12/03/2001) Motion to modify denied

The court holds that the U.S. Supreme Court's decision in United States v. Bestfoods, 524 U.S. 51, 28 ELR 21225 (1998), does not render the prospective application of a 1990 declaratory judgment inapplicable within the meaning of Rule 60(b)(5) of the Federal Rules of Civil Procedure. In 1990, a district court found a corporation liable for cleanup costs associated with the release of trichloroethylene (TCE) at its subsidiary's facility and issued a declaratory judgment holding the corporation liable for future response costs. In 1998, the United States sought additional response costs from the corporation incurred since 1990 pursuant to the declaratory judgment. Shortly after the government's action was filed, the Supreme Court decided Bestfoods, which set forth the standard for holding a parent corporation liable for its subsidiary's acts. The corporation contested the government's claim for additional response costs. It argued that Bestfoods changed the liability standards of the Comprehensive Environmental Response, Compensation, and Liability Act applied in the 1990 case and rendered the prospective application of the 1990 declaratory judgment "no longer equitable" under Rule 60(b)(5). The district court denied the corporation's motion, which prompted the instant appeal.

The court first holds that the district court's formulation of Rule 60(b)(5)'s standard was not a legal error. It is appropriate to determine whether the movant possesses a potentially meritorious defense when relief is sought from prospective operation of a declaratory judgment on account of a change in law. The court then holds that Bestfoods would not alter the district court's determination that the corporation was liable as an operator. The district court in the 1990 case expressly found that the corporation directed the subsidiary's activities with respect to environmental matters, in general, and operation of the facility using TCE, in particular. The record, therefore, demonstrates "control" by the corporation in the manner required by Bestfoods. Thus, the district court properly denied the corporation's request for relief under Rule 60(b)(5).

[Prior decisions in this litigation are published at 20 ELR 20349 and 21462 and 26 ELR 21113.]

Counsel for Plaintiff
Joan M. Pepin
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Counsel for Defendant
J. Daniel Berry
Ropes & Gray
One International Pl., Boston MA 02110
(617) 951-7000

Lipez, J. Before Bownes and Lisi, * JJ.

* Of the District of Rhode Island, sitting by designation.