Cooper Industries, Inc. v. Aviall Services, Inc. (12/13/2004)

Questions presented:Whether a party that is potentially liable under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. 9601 et seq., for cleanup of property contaminated by hazardous substances, but has not been sued under CERCLA to undertake or to pay for the cost of the cleanup, may nevertheless seek contribution under CERCLA from other jointly responsible parties?

BY KEITH CHU, MEDILL NEWS SERVICE

Helmets, scarves and goggles were still popular accessories for pilots when Southwest Airmotive started repairing engines in 1942 at Love Field, outside Dallas. And just as people at the time had yet to conceive of jumbo jets and stealth technology, they were similarly unfamiliar with the health dangers posed by chemical waste.

Airplane fuel and chemical solvents were standard tools for cleaning engines in the 1940s, 50s, 60s and 70s; spreading these pollutants on the ground was a standard method of disposal. Southwest, which was purchased by Cooper Industries in 1973, also kept the waste in water-filled pits and underground storage tanks that frequently leaked.

In 1981 Aviall Services purchased four engine repair facilities from Cooper, including Love Field. Aviall continued to pollute the sites for several years, until the company discovered extensive pollution from airplane fuel when removing underground storage tanks from one of the sites.

Aviall first notified the Texas Natural Resources Conservation Commission of the pollution in 1986. The commission did not penalize Aviall, but advised the company that it was violating several Texas laws and advised it on appropriate cleanup measures.

Worse news for Aviall came in 1991, when the company found harmful amounts of trichloroethylene or TCE at one of the sites. Breathing small amounts of TCE may cause headaches, lung irritation, dizziness, poor coordination, and difficulty concentrating, according to the Agency for Toxic Substances and Disease Registry. Breathing it for long periods may cause nerve, kidney, and liver damage.

The company later discovered chromium, TCE and other chemicals in the soil and groundwater at all four facilities it purchased from Cooper. To date, the cleanup has cost Aviall millions of dollars. Although Aviall sold the facilities in the mid-1990s, it is still footing the bill for removing the waste.

Aviall filed federal and state suits against Cooper in 1997, asking for Cooper to pay more than 80 percent of the cleanup costs.

Avialls federal suit was based on a provision in a 1986 amendment to the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, that allows one polluter to sue other parties that contributed to the pollution. CERCLA's goal is to quicken the cleanup of hazardous waste sites and to shift the cost of cleanup from taxpayers to the parties responsible for the pollution.

On Jan. 13, 2000, the U.S. District Court for the Northern District of Texas found that Aviall had no right to sue under CERCLA. A divided panel of the 5th Circuit Court of Appeals affirmed a year later.

Both courts ruled that only companies that were ordered or sued by a government agency to clean up a polluted site could sue for contribution under CERCLA. They ruled that the first sentence of the contribution paragraph, that "[a]ny person may seek contribution from any other person who is liable or potentially liable under [CERCLA], during or following any civil action," took precedence over the last sentence, that "[n]othing in this subsection shall diminish the right of any person to bring an action for contribution in the absence of a civil action under [CERCLA]."

"It makes little sense that Congress would codify the Ôduring or following limitation, and then expressly invalidate it within the very same section," Judge Emilio Garza wrote for the majority.

On Nov. 14, 2002, however, the entire 5th Circuit, sitting en banc, held 10 to 3 that Aviall did have a right to sue under CERCLA, relying on precedent and the last sentence of the contribution section.

The seven judges in the en banc majority contradicted virtually every point made by the two judges of the panel that ruled in favor of Cooper.

Writing for the majority, Judge Edith Jones found that the earlier panel wrongly concluded that the paragraphs last sentence was intended to give plaintiffs the ability to sue for damages in state court.

Calling the option to sue in state court " an inferior and questionable remedy for Congress to have embraced," Jones noted that not all states allow contribution before the party seeking contribution has been subjected to judgment, as CERCLA would.

Jones also found that the letter sent to Aviall by the Texas Natural Resources Commission satisfied the "civil action" condition described in the paragraphs first sentence, while the original panel decided the phrase applied only to litigation.

In the dissent, Garza reiterated his earlier opinion that the first sentence, or enacting clause, must outweigh the last sentence, known as the savings clause. "An enacting sentence containing limiting language cannot be trumped by a savings clause purporting to save all other possible causes of action," he wrote.

Cooper appealed to the U.S. Supreme Court. The U.S. Solicitor General supported Cooper's petition for certiorari, writing: "The en banc court's contrary conclusion that CERCLA authorizes responsible parties to bring federal suits for contribution whenever they please endorses errant CERCLA-based contribution suits, subject to no express limitation period, arising out of the many contaminated sites throughout the Nation."

On Jan. 9, 2004, the U.S. Supreme Court accepted the case for review.

The attorney for Cooper Industries, Brad Reynolds, said he sees the case as a matter of tension between the first and last sentence of the disputed paragraph.

"The question is, does the statute in the first sentence restrict the right of contribution in situations when a civil action is not pending?" Reynolds said. "Or is the statute to be read through the savings clause [in the last sentence]?"

One of the lawyers for Aviall, Cynthia Bishop, took a broader view of the case.

"I think it is much wider-reaching than that," Bishop said. "I know of one company that has suspended cleanup operations until they see how this case is decided."

On Dec. 13, 2004, the Court revsered, holding 7-2 that Aviall can't collect money from contributing polluters under CERCLA because the cleanup wasn't government-ordered.

Writing for the majority, Justice Clarence Thomas looked to the wording of both the provision and the statute. In dissent, Justices Ruth Bader Ginsburg and John Paul Stevens noted that Aviall's original complaint actually identified two provisions in CERCLA that when interpreted in tandem would support its claim for contribution.