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United States v. Vertac Chem. Corp.

ELR Citation: 27 ELR 21351
Nos. LR-C-80-109, -110, 966 F. Supp. 1491/(E.D. Ark., 05/21/1997) Claims for response costs and contribution

The court holds that claims brought by potentially responsible parties (PRPs) are Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) §113 contribution actions,not §107 cost recovery actions; that jury verdicts in cost recovery actions are merely advisory; that a company that arranged for a product to be manufactured for the company out of material supplied by the company is liable as an arranger; and that a manufacturer that sold polychlors to another manufacturer is not an arranger. The court first holds that claims by a former operator of a contaminated site against two chemical manufacturers are contribution claims governed by CERCLA §113(f). Therefore, the court dismisses the former operator's CERCLA §107 claims against the manufacturers. The court next determines that it is well-established that because a CERCLA cost recovery action constitutes an action for restitution, which lies in equity, no right to jury trial attaches to it. Thus, as the parties agree, the jury verdict as to one manufacturer's liability under §107 is only advisory. Under Fed. R. Civ. P. 39(c), the court finds that the parties have consented to a binding jury verdict on the §113(f) contribution claims. Therefore, unless the evidence does not warrant sustaining the jury verdict, the court will enter judgment on the contribution claims. The court holds that the jury verdict with respect to divisibility of harm is not binding. Divisibility of harm is a defense to joint and several liability, which is imposed with a finding of liability under §107(a), and there is no right to a jury trial on the §107(a) claim.

The court next concludes that evidence establishes that one manufacturer owned the 1,2,4,5-tetrachlorobenzene (TCB) it supplied to a later site operator for processing into 2,4,5-T; that the manufacturer retained an ownership interest in its material during the processing stage; that it owned the 2,4,5-T that was returned to it; that the generation of hazardous substances was inherent during the processing of its material; and that the processing resulted in the release of hazardous substances. Thus, the court holds that the manufacturer is liable as an arranger under CERCLA §107(a)(3).

Because that manufacturer is liable as an arranger, the court finds that there is insufficient evidence to sustain the jury's verdict that it was not liable to the former operator for contribution, and holds that the former operator is entitled to judgment as a matter of law on its claim for contribution against that manufacturer. The court also rejects the former operator's argument that there is no evidence to support the jury's verdict finding it liable to that manufacturer for contribution. The court has already found the former operator jointly and severally liable under §107. There is no doubt that it caused contamination at the site during its years of operation there. Thus, the court enters judgment as a matter of law in favor of the manufacturer on its §113 claim against the former operator.

Regarding divisibility of harm, the court holds that the manufacturer's reliance on volumetric evidence is insufficient to meet its burden of showing that there is a reasonable basis for determining the contribution of each cause to a single harm. Where, as in this case, hazardous substances are commingled, a defendant cannot rely merely on volumetric evidence. Evidence must be produced disclosing the individual and interactive qualities of the substances deposited at the site. The manufacturer did not call any expert witnesses to discuss the relative toxicity, migratory potential, or synergistic effects of the commingled hazardous substances at the site. Also, the manufacturer disregards hazardous substances, beside dioxin, that were produced during the manufacture of its 2,4,5-T. Further, the manufacturer's reliance on the number of drums as a basis for divisibility ignores evidence of leakage, cross-contamination, and commingling.

The court then analyzes in detail whether the other manufacturer, who sold mixed TCBs, also known as trichlorobenzene still bottoms or polychlors, to the later site operator's predecessor-in-interest, is liable under §107(a)(3) as an arranger. The court finds that the evidence clearly supports the conclusion that this manufacturer is not liable. The essential inquiry is whether, by selling the polychlors to the later site operator, it arranged to "get rid of" hazardous substances. The court holds that the record establishes that the transaction involved the sale of a useful product, which does not incur CERCLA liability. That the product required further processing before it could be put to its intended use is a common occurrence in the chemical industry. The court is not persuaded that this manufacturer was attempting to get rid of a byproduct for which it had no use. Furthermore, the polychlors it sold were not waste produced as a result of prior uses of the materials for their intended purpose and the polychlors had substantial economic value in the state in which they were sold. Thus, the court finds that this manufacturer is not liable as an arranger and therefore dismisses the former operator's §113(f) contribution claim against it.

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

Counsel for Defendants
Charles L. Moulton, Ass't Attorney General
Attorney General's Office
200 Tower Bldg.
323 Center St., Little Rock AR 72201
(501) 682-2007