Chesapeake & Potomac Telephone Co. v. Peck Iron & Metal Co.

No. 92-506 (814 F. Supp. 1281, 37 ERC 1970) (E.D. Va. February 2, 1993)

The court rules that private parties may recover attorneys fees in contribution actions under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and that CERCLA § 120(a) waives the U.S.' sovereign immunity from claims for attorneys fees and litigation costs in such actions. Noting that some courts deny attorneys fees and litigation costs to private parties in CERCLA's cost recovery actions under the American rule, which generally bars recovery of attorneys fees absent statutory authorization of such awards, the court rules that CERCLA authorizes awards of attorneys fees by allowing private parties to recover costs of "response" and defining "response" to include "enforcement activities." Rejecting the defendant's argument that private lawsuits are not "enforcement," the court notes that Congress included enforcement activities as a defined element of a private response. In reaching its holding, the court considers CERCLA's purpose to facilitate the expeditious cleanup of environmental waste and impose cleanup costs on responsible parties. By acting pursuant to a government order, cleaning up the site, and seeking contribution from other responsible parties, the plaintiff serves the same function as the government.

The court also rules that CERCLA § 120(a)(1) waives the U.S.' sovereign immunity from claims for attorneys fees and litigation costs in CERCLA contribution actions. Congress plainly intended CERCLA's § 120(a)(1) to hold the government liable to the same extent as private parties.

[A previous decision in this litigation is published at 23 ELR 20648.]

Counsel are listed at 23 ELR 20648.

[23 ELR 20649]

Williams, J.:

Memorandum Opinion

This matter is before the Court on defendant Pocket Money Recycling Company, Inc.'s ("Pocket Money's") motion for judgment on the pleadings. The issue presented is whether Chesapeake & Potomac Telephone Company of Virginia ("C&P"), as a private party plaintiff in this action, is entitled to recover its attorneys' fees and costs of litigation as necessary "response costs" under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §§ 9601 et seq. ("CERCLA"). The United States has briefed this matter to argue further that, should the Court award fees and costs to C&P, there is no waiver of sovereign immunity by the United States as a defendant.

I. Recovery of Attorneys' Fees — The "American Rule"

C&P in its prayer for relief demands judgment "3. For costs, prejudgment interest, post judgment interest, and attorneys' fees against all defendants; . . ." (Complaint at 36.) Pocket Money contends that these costs and fees are not recoverable in this action, relying principally upon the "American Rule" — which states that a party cannot recover attorneys' fees unless they are provided for by contract or statute. Runyon v. McCrary, 427 U.S. 160, 185 (1976); Alyeska Pipeline Co. v. Wilderness Society, 421 U.S. 240, 247 [5 ELR 20286] (1975). C&P does not dispute the applicability of the American Rule, but argues that the language of CERCLA, especially when read in conjunction with its overriding purpose, contemplates recovery of the costs and fees sought by C&P in this lawsuit. As is the case with so many issues arising under CERCLA, legal authority on this issue is divided.¹

A. Does the American Rule Preclude Recovery of the Costs and Fees Sought by C&P?

Pocket Money claims that CERCLA does not provide for the recovery of attorneys' fees or litigation costs by a private party plaintiff and, thus, that the American Rule precludes C&P from recovering these fees and costs in this case. Judge Bryan recently endorsed this position in Board of Supervisors of Fauquier Co. v. Fiberglass Eng'g Co., Inc., C.A. No. 89-1454-A (E.D. Va. 1990). His opinion illustrates how some courts have employed the American Rule to deny attorneys' fees and litigation costs to private party plaintiffs in cost recovery actions brought under CERCLA:

Had Congress wanted to make an allowance of attorneys' fees an entitlement for a successful plaintiff, it could easily have specifically done so. . . . Although — as the court has already noted — an Act like CERCLA is generally liberally construed, it is well settled that an exception to the so-called "American Rule" on attorneys' fees must be specifically carved out in the statute.

Mem. Op. at 6-7.

C&P argues that the costs of "removal or remedial action" that may be collected by the United States, a State, or an Indian tribe, and the costs of "response" that may be recovered by a private party, both include the costs of "enforcement activities."² This argument is predicated on CERCLA § 101(25), which provides:

The terms "respond" or "response" means remove, removal, remedy, and remedial action; all such terms (including the terms "removal" and "remedial action") include enforcement activities related thereto.

42 U.S.C. § 9601(25) (emphasis added). Pocket Money, however, contends that a potentially responsible private party, like C&P, cannot step into the government's shoes and perform "enforcement activities" at all.³

The language of CERCLA, however, simply does not jibe with Pocket Money's argument that private parties cannot perform "enforcement activities." CERCLA § 107(a)(4)(B) allows "any . . . person" other than "the United States Government or a State or an

1. The two judicial circuits to weigh in on this issue have arrived at different results. Compare General Elec. Co. v. Litton Indus. Automation Systems, Inc., 920 F.2d 1415 [21 ELR 20453] (8th Cir. 1990), cert. denied, 111 S. Ct. 1390 (1991) (allowing recovery of attorneys' fees and litigation costs by private party CERCLA plaintiff), with Stanton Road Assoc. v. Lohrey Enterprises, 1993 U.S. App. LEXIS 1272 (9th Cir. Jan. 28, 1993) (denying such relief).

2. The costs of CERCLA "enforcement activities" include attorneys' fees. See, e.g., Pease & Curren Refining, Inc. v. Spectrolab, Inc., 744 F. Supp. 945, 951 (C.D. Cal. 1990).

3. Pocket Money's position receives support from the short-sighted approach taken by the District of New Jersey:

Plaintiff's argument that because response costs include "enforcement activities related thereto" they should be entitled to attorney fees is without merit. While plaintiffs may bring an action for recovery of response costs, they may not bring an action to enforce CERCLA's clean-up provisions against another private entity. Thus, private parties do not incur "enforcement costs" as contemplated by CERCLA.

T&E Indus., Inc. v. Safety Light Corp., 680 F. Supp. 696, 708 n.13 [18 ELR 20926] (D.N.J. 1988).