Utah v. Kennecott Corp.

Nos. 92-4173 et al. (14 F.3d 1489, 38 ERC 1056) (10th Cir. January 31, 1994)

The court holds that it lacks jurisdiction to review a district court's order denying a motion to approve and enter a consent decree that would settle Utah's claim under the Comprehensive Environmental Response, Compensation, and Liability Act against a mining operator for natural resource damages resulting from groundwater contamination. The court holds that it lacks jurisdiction because the order is not a final judgment: It is not a decision on the merits that ends litigation, but rather it ensures that the litigation will continue in district court. The court also holds that the district court's denial of the motion does not fall within the collateral-order exception to the final judgment rule. The order does not conclusively determine the parties' right to settle because the trial court may still consider future settlement proposals. The order also does not resolve any important issue completely separate from the merits of the action. Although without immediate appeal, the parties will lose the opportunity to avoid the costs and risks of trial and protracted litigation, they have not demonstrated a right not to be tried. The court next holds that the case is not sufficiently unique or exceptional to warrant application of the pragmatic finality doctrine, under which an order may be deemed immediately appealable if the danger of injustice from delaying appellate review outweighs the inconvenience and cost of piecemeal review. The court next holds that the order is not entitled to the finality exception in 28 U.S.C. § 1292(a)(1) for orders with the practical effect of granting or refusing an injunction. The consent decree does not contain any equitable or prospective relief, injunctive or otherwise, and the district court order does not affirmatively demand the inclusion of specific terms in subsequent consent decree proposals.

Counsel for Plaintiff
Fred G. Nelson, Ass't Attorney General
Attorney General's Office
236 State Capitol, Salt Lake City UT 84114
(801) 538-1015

Counsel for Defendant
David W. Tundermann
Parsons, Behle & Latimer
One Utah Ctr., 201 S. Main St., Ste. 1800, P.O. Box 11898, Salt Lake City UT 84147
(801) 532-1234

[24 ELR 20799]

Brorby, J.:

Both the State of Utah and Defendant Kennecott Corporation appeal an order of the federal district court denying a motion to approve and enter a consent decree submitted by the parties. The proposal would settle Utah's claim for natural resources damages under § 107 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. §§ 9601-9675. Salt Lake County Conservancy District (District), a permissive intervenor in the proceeding below, cross-appeals the trial court's decision to deny the District intervention as a matter of right. The District also moves to dismiss the appeal of Utah and Kennecott for lack of jurisdiction. We are asked to review a nonfinal order of a district court under various exceptions to 28 U.S.C. § 1291 including (1) the collateral order exception to the finality doctrine, (2) this court's interpretation of pragmatic finality, and (3) an interlocutory order with the practical effect of granting or denying injunctive relief. We grant the motion to dismiss for lack of jurisdiction.

Background

Kennecott, Utah, and various local governments have, since 1983, studied the threat of groundwater contamination from Kennecott's Bingham Canyon mining operations in Salt Lake County. In 1986, Utah filed CERCLA claims, presumably to preserve its rights in light of CERCLA's statute of limitations. At that time, asserted damages were $ 129 million based on potential injury to 109,215 acre feet of groundwater over a 10- to 20-year period. Prior to the 1992 memorandum and order of the trial court,¹ various stays were granted to allow settlement negotiations and the completion of technical studies.

Kennecott's first settlement proposal offered the assignment of their water rights (valued at $ 2 million) plus $ 100 million for remediation of the contaminated water in exchange for dismissal of the lawsuit. Kennecott also proposed to take independent action to reduce continued pollution from the mining operation sources and to remediate heavy metals from the spreading contaminate plume. Utah rejected this offer and stressed that given the tentative knowledge of the plume's content, boundary, and migration, the State could not conclude the settlement would satisfy all public health concerns.

Subsequent negotiations split the issues of natural resources damages and costs of remediation. Utah, Kennecott, and the United States Environmental Protection Agency (EPA) negotiated an Agreement in Principle toward future cleanup and response costs associated with remediating the Kennecott mining operation contamination.² The Agreement expressly disclaimed any effect on Utah's settlement of natural resources damage claims.

With the current proposal, in exchange for monetary recovery of $ 12 million, Utah agreed to release Kennecott from (1) all damages to surface or groundwater in a defined mining impact area, and (2) injunctive relief or response costs associated with plume remediation. The release was limited by a reopener provision, reserving Utah's right to seek additional recovery if the contamination was discovered to be greater than anticipated. The release also expressly preserved potential claims by third parties.

After a period of public comment, the trial court declined to approve the proposed settlement and ordered an evidentiary hearing. The District moved to intervene as a matter of right. The trial court denied this motion but granted permissive intervention for the limited purposes of participating in discovery and evidentiary hearings. Reviewing the proposed consent decree for a settlement that was "reasonable, fair, and consistent with the purposes that CERCLA is intended to serve," the trial court concluded the proposal was deficient. Kennecott, 801 F. Supp. at 567 (citation omitted). Accordingly, the trial court denied approval of the proposed consent decree. Id. at 572. Instead of attending a scheduled case management conference, both Utah and Kennecott separately appealed the trial court's order of denial. The District, a permissive intervenor, cross-appealed the denial of intervention as a matter of right.

After consolidating the appeals, we asked the parties to file memorandum briefs on the issue of jurisdiction pursuant to 10th Cir. R. 27.2.2. Before us is a motion by the District to dismiss the Utah and Kennecott appeals for lack of a "final appealable order" upon which to base 28 U.S.C. § 1291 jurisdiction.³

Discussion

Title 28 U.S.C. § 1291 provides "jurisdiction of appeals from all final decisions of the district courts of the United States." Historically, a "final decision" is a decision by the district court that "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Catlin v. United States, 324 U.S. 229, 233 (1945); see Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 275 (1988). In the instant case, an order denying a motion to approve and enter a consent decree is not a decision on the merits that ends the litigation. Rather, the district court's order ensures that litigation will continue in the district court. Appellants Utah and Kennecott concede as much and argue the trial court's order is immediately appealable under various exceptions to the finality requirement. In particular, Appellants contend jurisdiction is proper under (1) the collateral order exception to § 1291, (2) the pragmatic finality doctrine, or (3) the § 1292(a)(1) statutory exception, an order with the practical effect of granting or denying injunctive relief.⁴

The Supreme Court, beginning with Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541 (1949), has interpreted § 1291 to permit an appeal of a nonfinal order if an order falls within the "narrow exception to the normal application of the final judgment rule, which has come to be known as the collateral order doctrine." Midland Asphalt Corp. v. United States, 489 U.S. 794, 798 (1989). To meet the Cohen exception an order must "[1] conclusively determine the disputed question, [2] resolve an important issue completely separate from the merits of the action, and [3] be effectively unreviewable on appeal from a final judgment." Coopers & Lybrand v. Livesay, 437 U.S. 463, 468 (1978). Unless all three requirements are met, jurisdiction is not available under the collateral order doctrine. Gulfstream, 485 U.S. at 276. The trial court's denial of the proposed consent decree does not satisfy either the first or second prongs.

To first satisfy the Cohen doctrine, the trial court's denial of the consent decree must conclusively determine the parties' ability to settle their claims. Orders that are "inherently tentative" are contrasted with those expected to be the final word on the subject addressed. See Gulfstream, 485 U.S. at 277-78 (rejecting collateral [24 ELR 20800] order review of a denial of a motion to stay as inherently tentative); Coopers & Lybrand, 437 U.S. at 469 & n.11 (holding the collateral order exception does not apply to a pretrial order denying class certification because the order is subject to revision prior to a decision on the merits). Inherently tentative orders are those "to which some revision might reasonably be expected in the ordinary course of litigation." Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 12-13 n.14 (1983). Utah and Kennecott argue the district court conclusively determined the parties' ability to settle by rejecting the technical premises underlying the settlement.

Although noting a conflict in the circuits, the Supreme Court, in Carson v. American Brands, Inc., 450 U.S. 79, 82-83 nn.6 & 7 (1981), declined to decide whether an appeal under the collateral order exception was proper for denials of consent decrees. At least one federal circuit has ruled a district court's refusal to enter a consent decree is not appealable under § 1291, see Seigal v. Merrick, 590 F.2d 35 (2d Cir. 1978), while another has decided such orders are appealable, Norman v. McKee, 431 F.2d 769 (9th Cir. 1970), cert. denied, 401 U.S. 912 (1971).⁵ Other circuits simply reject collateral order jurisdiction in dicta. See Donovan v. Robbins, 752 F.2d 1170, 1172 (7th Cir. 1985) (refusal to approve consent decree is "classic example of a nonfinal order"); New York v. Dairylea Coop. Inc., 698 F.2d 567, 570 n.10 (2d Cir. 1983) (approving of appellant's decision not to raise collateral order grounds, stating the Cohen exception "is to be kept within narrow bounds"); Carson v. American Brands, Inc., 606 F.2d 420, 423-24 (4th Cir. 1979) (approving of Seigal as an analogous case though dismissing on § 1292(a)(1) grounds), rev'd on other grounds, 450 U.S. 79 (1981). We conclude the better reasoned rule finds a denial of a settlement does not conclusively determine the parties' ability to settle.

Similar to the denial of a motion to stay in Gulfstream and the denial of class certification in Coopers & Lybrand, denial of an offer of settlement is commonly open to revision by the trial court prior to a final judgment on the merits. In this case, the parties are free to continue with renewed settlement efforts and further proceedings to secure court approval. Although the trial court concluded that Utah and Kennecott have not yet met their burden of substantive fairness under CERCLA, the trial court did not foreclose future proposed consent decrees.

The Appellants contend even though the trial court may not have expressly barred further negotiation the order impliedly did so by attacking the underlying technical premises of the settlement. In particular, Utah and Kennecott assert the order requires them to undertake additional technical studies and include in the consent decree injunctive provisions requiring Kennecott to protect and restore injured groundwater. This argument reads too much into the trial court's order and too little into the doctrinal requirements of the Cohen exception.

The proper inquiry is whether the trial court is less likely to revise its prior denial as new settlement proposals are offered, not whether the parties feel discouraged and less likely to continue with settlement negotiations. Orders that are inherently tentative characteristically allow or invite reconsideration on the basis of express procedural requirements or, in common experience, are regularly reconsidered. See 15A Charles A. Wright et al., Federal Practice and Procedure § 3911.1, at 375 (1992). Commonly, settlements may be offered during the final hearings on the merits. The trial court's order contains no limitations on the court's ability to reconsider future proposals or the initial order denying the proposed consent decree. Appellants have no right to an unfair consent decree under CERCLA, even if the unfair terms are underlying "technical premises." The trial court's order does no more than permit Appellants to propose a new consent decree within the bounds of substantive fairness. The order does not conclusively determine the ability of the parties to settle.

Utah and Kennecott next argue, since the parties lost the right to settle on the specific terms of the proposed consent decree, they lost an important right that cannot be vindicated effectively after the trial has concluded. Because we recently held a broad and unbounded "right not to be tried" is no grounds for immediate appeal, Appellants fail to satisfy the second Cohen requirement. See Desktop Direct, Inc. v. Digital Equip. Corp., 993 F.2d 755 (10th Cir.), cert. granted, 114 S. Ct. 379 (1993).⁶ Although Utah and Kennecott contend the lost right to settle satisfies the third Cohen prong, we have held the question of an "important issue" — part of the second Cohen prong — is the appropriate analysis in this context. Id. at 758. The original formulation by the Cohen Court examined whether the "decision [fell into] that small class . . . too important to be denied review." 337 U.S. at 546; see Lauro Lines S.R.L. v. Chasser, 490 U.S. 495, 503 (1989) (Scalia, J., concurring) (a right not to be tried, even if unreviewable, must be sufficiently important to overcome the policies militating against interlocutory appeals).

The Supreme Court has cautioned courts "not to play word games with the concept of a 'right not to be tried.'" Midland Asphalt, 489 U.S. at 801. "[I]n some sense, all litigants who have a meritorious pretrial claim for dismissal can reasonably claim a right not to stand trial." Van Cauwenberghe v. Biard, 486 U.S. 517, 524 (1988). The mere possibility that an erroneous ruling at the trial level may result in additional litigation is not sufficient to set aside the finality requirement imposed byCongress. Richardson-Merrell, Inc. v. Koller, 472 U.S. 424, 436 (1985).

The Appellants in Desktop Direct sought review of an order vacating a prior dismissal and rescinding a settlement formerly accepted by the trial court. We rejected the jurisdictional importance of a so-called right not to be tried absent a constitutional or statutory basis. Desktop Direct, 993 F.2d at 760. The Supreme Court's narrow reading of the collateral order doctrine reveals only one situation important enough — qualified immunity for a public official defendant — to allow an interlocutory appeal in the absence of a constitutional or statutory guarantee. In dismissing the appeal, we concluded the Cohen doctrine should not be "expanded without compelling justification." Id. In the case at hand, Utah and Kennecott do not point to a right of review under CERCLA or other statutory or constitutional grounds that would require appellate review of a denied consent decree. The bare desire of Utah and Kennecott to avoid trial is not "important" enough to justify ignoring the § 1291 prerequisite of finality.

Requiring a constitutional or statutory basis for a "right not to go to trial" is sensible. Without clarity in the application of exceptions, the finality doctrine becomes riddled and ineffective. Repeatedly, the Court and commentators encourage the use of statutory exceptions in the face of efforts to stretch the collateral order doctrine. See Van Cauwenberghe, 486 U.S. at 529-30 (conclusion to deny collateral order appeal "fortified by the availability of interlocutory review" under § 1292(b)); Coopers & Lybrand, 437 U.S. at 474 (principal vice of "death knell" doctrine is circumvention of proper use of § 1292(b)); 16 Wright et al., supra § 3929, at 137-38 (vigorous use of § 1292(b) to limit the expansion of other appealability concepts reduces ambiguity that could lead to unnecessary appeals).

Reinforcing the need for definition in appellate review, Congress has recently increased Supreme Court rulemaking authority to define the scope of interlocutory and other nonfinal appeals. See Judicial Improvements Act of 1990, Pub. L. No. 101-650 § 315, 104 Stat. 5089, 5115 (codified as amended at 28 U.S.C.A. § 2072(c) (Supp. 1993)) (power to define "final" for the purposes of appeal under § 1291); Federal Courts Administration Act of 1992, Pub. L. No. 102-572 § 101, 106 Stat. 4506, 4506 (codified as amended at 28 U.S.C.A. § 1292(e) (Supp. 1993)) (power to prescribe new rules for interlocutory appeals not otherwise provided in § 1292).

An obvious statutory basis for appeal in the context of avoiding unnecessary litigation is § 1292(b) certification. A primary purpose of

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1. Utah v. Kennecott Corp., 801 F. Supp. 553 [23 ELR 20257] (D. Utah 1992).

2. More recently, the EPA announced the three parties jointly decided not to pursue the comprehensive cleanup proposal embodied in the Agreement in Principle. U.S. EPA (Aug. 27, 1993) (press release).

3. No party has moved for trial court certification under 28 U.S.C. § 1292(b), nor sought a writ of mandamus, 28 U.S.C. § 1651(a), on their respective issues.

4. The District has stated it will withdraw its cross-appeal in the event we deny jurisdiction to the appeals of Utah and Kennecott. For this reason, we do not analyze our jurisdiction to review an order granting permissive intervention but denying intervention of right. We note that, should the District fail to withdraw its appeal, Stringfellow v. Concerned Neighbors in Action, 480 U.S. 370 [17 ELR 20559] (1987), would require a denial of jurisdiction as well.

5. The persuasive authority of Norman is negligible. Subsequent to Carson, the Ninth Circuit disavowed its prior decision and determined that Norman had been overruled by Carson. EEOC v. Pan American World Airways, 796 F.2d 314, 318 n.7 (9th Cir. 1986), cert. denied, 479 U.S. 1030 (1987).

6. The Supreme Court's recent grant of certiorari in this case will likely resolve the circuits' diverging treatment of pretrial orders refusing to enforce previously granted settlements. Compare Desktop Direct (rejecting a broad reading of a right not to go to trial); Transtech Indus., Inc. v. A & Z Septic Clean, 5 F.3d 51 [24 ELR 20036] (3d Cir. 1993) (same), petition for cert. filed, 62 USLW 3429 (Dec. 16, 1993) (No. 93-960), with Forbus v. Sears Roebuck & Co., 958 F.2d 1036 (11th Cir.) (granting jurisdiction to review a denial of enforcement of a settlement on grounds of a right not to go to trial); cert. denied, 113 S. Ct. 412 (1992); Grillet v. Sears, Roebuck & Co., 927 F.2d 217 (5th Cir. 1991) (same); Janneh v. GAF Corp., 887 F.2d 432 (2d Cir. 1989) (same), cert. denied, 498 U.S. 865 (1990). Our adherence to Desktop Direct in this section does not affect our earlier conclusion that Appellants have not satisfied the first Cohen prong.