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Seventh Circuit Says Joint and Several Liability is Alive

Environmental Law Alert Nancy K. Peterson, Peter C. Karegeannes, Arthur A. Vogel, William H. Harbeck, Michael S. Mostow

The Seventh Circuit Court of Appeals has affirmed a preliminary injunction requiring a $70 million cleanup this year of PCB contaminated sediment in the Lower Fox River in Wisconsin. United States v. NCR Corp., No. 12-2069, ___ F.3d ___, 2012 WL 3140191 (Aug. 3, 2012). The United States sought this injunction for 2012 work against NCR Corporation after the company notified U.S. EPA that it would no longer comply with a 2007 unilateral EPA order. The 2007 order, issued to eight companies, requires a decade-long cleanup of portions of the Lower Fox River site - estimated to cost $700 million. At a hearing on the preliminary injunction, NCR claimed that harm at the site is capable of apportionment (meaning that total harm could be divided up among the individual parties that contributed to it) based on the complex scientific analyses of experts. According to NCR, those analyses demonstrate that NCR is only liable for a several 9% share of the pollution - much less than it has already paid - and that it is not jointly and severally liable for the entire cleanup. The district court disagreed that the harm is capable of apportionment and issued the preliminary injunction. The Seventh Circuit affirmed the preliminary injunction in its decision issued on August 3.

The Seventh Circuit's decision has been anticipated with interest because it is that court's first Superfund apportionment case since the U.S. Supreme Court's decision in Burlington N. & Santa Fe Ry. Co. v. United States, 556 U.S. 599 (2009). The Burlington Northern decision has been characterized by some commentators as a watershed ruling, one that might signal the demise of joint and several liability in most Superfund cases. In an amicus brief filed in U.S. v. NCR, the American Tort Reform Association had urged the Seventh Circuit to follow the "modern trend" and reject joint and several liability across the board. The Seventh Circuit eschewed policy arguments as best directed to Congress and instead grounded its decision in the common law.

The court adhered to the Supreme Court's instruction in Burlington Northern to analyze divisibility of harm under the Restatement (Second) of Torts:

[W]hen two or more persons acting independently caus[e] a distinct or single harm for which there is a reasonable basis for division according to the contribution of each, each is subject to liability only for the portion of the total harm that he has himself caused. . . . But where two or more persons cause a single and indivisible harm, each is subject to liability for the entire harm.
Burlington Northern, 556 U.S. at 614 (quoting the Restatement (Second) of Torts §§ 443A, 881, 875) (internal citations omitted).

In situations where multiple parties cause a harm, the Seventh Circuit noted that apportionment is improper "where either cause would have been sufficient in itself to bring about the result, . . ." U.S. v. NCR, 2012 WL 3140191 at *4 (quoting Restatement (Second) of Torts § 433A(2) cmt. i). At the district court, NCR did not refute the government's contention that NCR's contribution of PCBs would, alone, require approximately the same cleanup. The Seventh Circuit concluded that once the concentration of PCBs contributed by a party exceeds the cleanup threshold, the harm that party caused cannot be measured simply on the volume of contamination that party caused. That party is already a sufficient cause of the environmental harm. Its share is not capable of apportionment and the party faces joint and several liability for the entire resulting harm. Stated most simply, "even if NCR contributed no more than 10% of the PCBs, that 10% would require remediation. It was NCR's burden to show otherwise, and it failed to do so." U.S. v. NCR, 2012 WL 3140191 at *19.

In the Seventh Circuit's last Superfund case to mention joint liability before Burlington Northern, the court had characterized divisibility as "a rare scenario." Metropolitan Water Reclamation Dist. of Greater Chicago v. North American Galvanizing & Coatings, Inc., 473 F.3d 824, 827 n3 (7th Cir. 2007). Post-Burlington Northern, the court characterized divisibility as "depending on how the harm that flows from pollution is characterized." U.S. v. NCR, 2012 WL 3140191 at *7. When the facts demonstrate that a party's pollution, alone, is properly characterized as a sufficient cause of the need to clean up the contamination, divisibility will not apply.

For further information on this decision or other environmental litigation questions, please contact Nancy Peterson at (414) 277-5515 /, Peter Karegeannes at (414) 277-5323 /, Tony Vogel at (414) 277-5545 / or Bill Harbeck at (414) 277-5853 / in Milwaukee; Michael Mostow at (312) 715-5158 / in Chicago or your Quarles & Brady attorney. Quarles & Brady LLP represents one of the other parties involved in the Lower Fox River litigation.