Hammond City of v. ASARCO Master Inc

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

HAMMOND DIVISION

CITY OF HAMMOND, INDIANA, and )

CITY OF WHITING, INDIANA, )

)

Plaintiffs, )

)

v. ) Cause No. 2:24-CV-96-PPS-JEM

)

ASARCO MASTER, INC., )

)

Defendant. )

OPINION AND ORDER

According to the complaint in this case, the Cities of Hammond and Whiting

have an environmental calamity on their hands arising out of the operation of a

smelting facility which began polluting their cities nine decades ago. They’re trying to

hold defendant ASARCO Master to account. ASARCO says the Cities’ environmental

claims relating to the operation of the smelting facility were resolved during a

bankruptcy it filed in Texas twenty years ago and the complaint should therefore be

tossed under Rule 12(b)(6). [DE 19]. For the reasons detailed below, I agree with

ASARCO.

Background

Hammond and Whiting allege past and future environmental response costs

related to a release of hazardous substances originating from a smelting facility which

used to operate in Hammond decades ago. From June 1937 to February 1983, Federated

Metals Corporation operated a thirty-six-acre non-ferrous smelting, refining, recovery,

and recycling facility in Hammond. [DE 1, ¶¶ 10, 31, 37–39]. Federated Metals is a

wholly owned subsidiary of American Smelting and Refining Company (“ASARCO”)

which purchased Federal Metals in 1932. [DE 1, ¶¶ 8, 9]. The operations of the

Hammond site over the course of some forty years resulted in the disposal of waste

byproducts and the release of hazardous substances into the air around Hammond and

Whiting. Id., ¶¶ 11–31. More specifically, the facility’s operations allegedly caused a

widespread release of lead into the soil in the Robertsdale neighborhood in Hammond

and Whiting. See id. Despite EPA testing, the extent of this contamination is, as of yet,

unknown. Id., ¶¶ 52–61.

Federated Metals closed the facility in February 1983. [DE 1, ¶ 31]. After shutting

down its Hammond operations, Federated Metals and its parent company, ASARCO,

faced a number of environmental claims that placed a significant strain on the

company’s financial resources. Id., ¶¶ 32–33. In 1992, Federated Metals entered a

consent decree with the EPA, in which it disclosed that it generated hazardous waste at

the facility in the form of toxic dust and waste both of which were byproducts of lead

smelting activities. Id., ¶ 34. In 2005, ASARCO Master, Inc. merged with Federated

Metals and, as a result, assumed Federated Metals’ liabilities, including any

responsibility for contamination caused at the Hammond facility. Id., ¶¶ 37–39.

Based on Federated Metals’ historical polluting activities in the area, the Cities of

Hammond and Whiting, bring claims against ASARCO Master under Indiana’s

Environmental Legal Action Statute (“ELA”), and federal environmental laws—

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specifically, the Comprehensive Environmental Response, Compensation and Liability

Act of 1980 (“CERCLA”) and the Resource Conservation and Recovery Act (“RCRA”).

Noting that soil samples from 2016 and 2017 have confirmed lead contamination in

their communities, Plaintiffs seek to hold ASARCO liable for any costs the communities

have and will incur as a result of the contamination, in addition to attorneys’ fees and

costs incurred in bringing this action. [DE 1 at 15–16]. Plaintiffs also seek injunctive

relief directing ASARCO to “remove all solid and hazardous waste” and otherwise

“remediate” the pollution in Hammond and Whiting “in accordance with a plan

submitted to and approved by this Court.” Id. at 16.

Not so fast says ASARCO who claims their liability, if any, was extinguished in

bankruptcy a decade and a half ago. The Cities acknowledge that in 2005 (presumably

following its merger with Federated Metals), ASARCO Master filed a Chapter 11

bankruptcy. [DE 1, ¶ 35]. The company remained in Chapter 11 for four years, emerging

in 2009. Id. Meeting that defense head on, the complaint blithely asserts that “ASARCO

Master’s bankruptcy did not discharge the claims” at issue in this action. Id., ¶ 36.

ASARCO Master flatly disagrees with this assessment. It has filed a motion to

dismiss the action [DE 19], arguing that its “landmark bankruptcy settlement” resolved

the cities’ environmental claims. [DE 25 at 1; see DE 20 at 10]. In support of this

argument, ASARCO Master directs my attention to several matters of public record

from its Texas bankruptcy case. [DE 20-1 (Amended Consent Decree); DE 20-2 (Consent

Decree Order); DE 20-3 (Order of Confirmation); DE 20-4 (Confirmed Plan of

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Reorganization)]. The Cities note that ASARCO Master’s motion relies on evidence

extraneous to the pleadings and suggests that this “violates basic procedural rules and

warrants outright dismissal of the motion,” or, in the alternative, “it would necessitate

full discovery due to the complex factual issues at play, effectively transforming this

into a summary judgment motion.” [DE 24 at 1].

This argument is entirely misplaced. It is well established that documents of this

type—court records, agency decisions, administrative body reports, and even

government websites—are appropriate subjects of judicial notice. See e.g. Pugh v.

Tribune Co., 521 F.3d 686, 691 n.2 (7th Cir. 2008); United States v. Wood, 925 F.2d 1580,

1582 (7th Cir. 1991); Adams v. Atl. Richfield Co., 2023 WL 6381346, at *4 (N.D. Ind. Sept.

29, 2023). Therefore, when considering the plausibility of the Cities’ complaint, I will

take judicial notice of the fact that the “documents exist, they say what they say, and

they have had legal consequences.” Our Country Home Enters. v. Comm’r of Internal

Revenue, 855 F.3d 773, 782 n.1 (7th Cir. 2017).

On August 9, 2005, ASARCO LLC filed a voluntary petition for relief under

Chapter 11 of the U.S. Bankruptcy Code. See generally In re ASARCO LLC, Cause No. 05-

21207 (Bankr. S.D. Tex. Aug. 9, 2005). In October of that year, ASARCO Master also filed

a voluntary petition for relief in the same bankruptcy court. See generally In re ASARCO

Master Inc., Cause No. 05-21883 (Bankr. S.D. Tex. Oct. 13, 2005). The bankruptcy court

entered an order providing for procedural consolidation and joint administration of

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these two related bankruptcies, organizing the matters under the bankruptcy case of the

lead debtor, ASARCO LLC.

Four years later, in March 2009, ASARCO, the EPA, and several states—

including Indiana—entered an Amended Consent Decree, which established a custodial

trust for certain owned sites in eleven states. [DE 20-1]. Under this agreement, ASARCO

agreed to pay over $70 million to a newly created entity, the ASARCO Multi-State

Custodial Trust, provided the bankruptcy court approved the consent decree and

confirmed a bankruptcy organization plan. Paragraph 10(e)(xi) of the Amended

Consent Decree provides:

e. In settlement and full satisfaction of all claims against Debtors related

to the Designated Properties and the Sites … Debtors shall make a

payment of $10,400,000 for the Custodial Trust Administrative Account and

contributions and accretions totaling $60,555,493… to be allocated as

follows:

[. . .]

(xi) payment of $1.2 million on the Effective Date to fund future

Environmental Actions and certain future oversight costs of the

Governments with respect to the Whiting Site in Lake County,

Indiana, to be deposited in the Custodial Trust Environmental Cost

Account for that site.

Id. at 17-18, 20 (emphasis added). The “Whiting Site” is defined to include “the Whiting

Designated Property, any further description in the proofs of claim, and any location at

which hazardous substances from this property have come to be located” (which would

seem to cover surrounding neighborhoods, like the Robertsdale community in

Hammond and Whiting). Id. at 72. Three months later, on June 5, 2009, the bankruptcy

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court entered an order and judgment (the “Consent Decree Order”), which provided

that the ASARCO Multi-State Custodial Trust “shall receive a settlement payment

totaling $70,955,493 . . . [to] be paid in cash, in full” on the effective date of ASARCO’s

bankruptcy reorganization plan. [DE 20-2 at 2].

In November 2009, a district judge in the Southern District of Texas entered an

order confirming the plan. [DE 20-3]. See DE 79, In re ASARCO LLC, Cause No. 2:09-CV-

177 (S.D. Tex. Nov. 13, 2009). This order confirmed “ASARCO Incorporated and

Americas Mining Corporation’s Seventh Amended Plan of Reorganization for the

Debtors Under Chapter 11 of the United States Bankruptcy Code, as Modified on

August 20, 2009, August 23, 2009, and August 27, 2009.” That’s a mouthful, so I’ll refer

to it as the “Confirmed Plan of Reorganization,” for short. [DE 20-4]. See DE 12728, in re

ASARCO LLC, Cause No. 05-21207 (Bankr. S.D. Tex. Aug. 30, 2009).

The district court’s Order of Confirmation, in Paragraph XII.5, stated that the

terms of the order and Confirmed Plan of Reorganization were binding on all parties

with legal claims against ASARCO:

[O]n the Effective Date, the provisions of the Parent’s Plan and this

Confirmation Order (the “order”), shall bind . . . all holders of Claims and

Demands (whether known or unknown) against and Interests in the

Debtors, including such holders, heirs, successors, assigns, trustees,

executors, administrators, affiliates, officers, directors, agents,

representatives, attorneys, beneficiaries, or guardians, whether or not the

Claims, Demands, or Interests of these entities are impaired under the

Parent’s Plan, whether or not these entities have voted to accept or reject

the Parent’s Plan, and whether or not these entities have filed Proofs of

Claim in the Reorganization Cases.

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[DE 20-3 at 73 (emphasis added)].

The Order of Confirmation then lays out three key provisions bearing on the

scope of liabilities to be discharged and released as part of ASARCO’s bankruptcy.

Paragraph XII.M.81 of the order provides for full satisfaction, discharge, and release of

claims against ASARCO in the relevant states (including Indiana):

Except as otherwise expressly provided in this order or the Parent’s Plan,

the rights afforded in the Parent’s Plan and the treatment of all Claims,

Demands, and Interests shall be in exchange for and in complete

satisfaction, discharge, and release of all Claims, Demands, and Interests

of any nature whatsoever, against any Debtor or its Estate, assets,

properties, or interests in property. Except as otherwise provided herein,

all Claims and Demands against and Interests in the Debtors are hereby

satisfied, discharged, and released in full . . . .

Id. at 96–97 (emphasis added).1 Paragraph XII.M.89. of the order goes on to state:

Except as otherwise provided in the Parent’s Plan or this order, this order

shall as of the Effective Date . . . preclude all Persons from asserting against

the Debtors, Reorganized ASARCO, or any of their Assets any other or

further Claims or Interests based upon any act or omission, transaction,

or other activity of any kind or nature that occurred prior to the Effective

Date, all pursuant to §§ 524 and 1141 of the Bankruptcy Code. This

discharge shall void any judgment obtained against any of the Debtors at

any time, to the extent that such judgment relates to a discharged Claim or

cancelled Interest.

1 To avoid all doubt, the next provision, Paragraph XII.M.82, specifically states: “[T]he discharge

and release set forth in the previous paragraphs shall also operate as an injunction permanently

prohibiting and enjoining the commencement or continuation of any action or the employment of process

with respect to, or any act to collect, recover from, or offset (a) any Claim or Demand discharged and

released in the previous paragraph, and (b) any cause of action, whether known or unknown, based on

the same subject matter as any Claim or Demand discharged and released in the previous paragraph.”

[DE 20-3 at 97].

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Id. at 102 (emphasis added). This language, in tandem with Paragraph XII.5., makes

clear that any claims arising from ASARCO’s pre-bankruptcy conduct (i.e., prior to the

“Effective Date”) are subject to discharge.

Finally, the Order of Confirmation permanently enjoined actions to obtain

discharged, released, and precluded claims under the foregoing provisions:

Except as otherwise expressly provided in the Parent’s Plan or this order,

all entities that have held, currently hold, or may hold Claims or other

debts or liabilities against the Debtors . . . are permanently enjoined, on

and after the Effective Date, from taking any of the following actions on

account of any such Claims, debts, liabilities, Interests, or rights: . . .

commencing or continuing any action in any manner or in any place that

does not comply with or is inconsistent with the provisions of the

Parent’s Plan or this order. . . . Any entity injured by a willful violation

of such injunction may recover actual damages, including costs and

attorneys’ and experts’ fees and disbursements, and, in appropriate

circumstances, may recover punitive damages from the willful violator.

Id. at 103 (Paragraph XII.M.90) (emphasis added).

Based on the foregoing, ASARCO Master argues that the Cities’ claims were

plainly discharged as part of its bankruptcy. [See DE 20-3; DE 20-4]. In so arguing,

ASARCO Master notes a handful of matters in which this district has granted motions

to dismiss in similar circumstances—i.e. where the underlying claims had been satisfied,

discharged, released, precluded, or enjoined. [See DE 20 at 12–13; DE 25 at 5]. ASARCO

Master also cites to various cases where plaintiffs voluntarily dismissed their actions or

did not contest dismissal upon learning of the Texas court orders. [DE 35 at 3 n.2].

The Cities have three responses: (1) they did not receive constitutionally effective

notice of ASARCO’s bankruptcy case; (2) their RCRA claim—because it is equitable in

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nature—is not subject to discharge in bankruptcy; and (3) their claims allegedly arose

after ASARCO’s bankruptcy case. [DE 24 at 10–16].

Legal Standard

Federal Rule of Civil Procedure 12(b)(6) permits a party to move for dismissal if

the complaint fails to state a claim upon which relief can be granted. Fed. R. Civ. P.

12(b)(6). To avoid dismissal under Rule 12(b)(6), a claim for relief must be “plausible on

its face.” Proft v. Raoul, 944 F.3d 686, 690 (7th Cir. 2019) (quoting Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 570 (2007)). Facial plausibility requires the plaintiff to plead

sufficient “factual content that allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Taha v. Int’l Brotherhood of Teamsters,

Local 781, 947 F.3d 464, 469 (7th Cir. 2020) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009)). A complaint riddled with conjecture just won’t do. Sevugan v. Direct Energy

Servs., LLC, 931 F.3d 610, 614 (7th Cir. 2019); Swanson v. Citibank, N.A., 614 F.3d 400, 404

(7th Cir. 2010).

Discussion

ASARCO Master (which I’ll just call ASARCO from this point on) has put forth

two primary arguments for why the Cities’ complaint should be dismissed. First,

ASARCO argues this case should be dismissed because the complaint fails to allege

sufficient facts to state a plausible claim for relief. [DE 20 at 13]. And second, dismissal

is required because the Texas district court’s confirmation order “satisfied, discharged,

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released, and precluded” the Cities’ claims. [DE 20 at 10]. I consider each of ASARCO’s

arguments below.

I. Does the Complaint Allege a Plausible Claim for Relief?

ASARCO argues the complaint does not state a claim because it “fails to do more

than make conclusory legal allegations without well-pleaded facts supporting those

claims.” [DE 20 at 13]. This argument does not hold water. To survive a motion to

dismiss, Plaintiffs need only include a “short and plain statement” of a claim that is

plausible and shows that the plaintiffs are entitled to relief. Fed. R. Civ. P. 8(a)(2);

Kokenis v. Kurywczak, 2023 WL 2207631, at *3 (7th Cir. 2023) (“People in federal court do

not need to plead elements or facts, but they do need to present a story that holds

together in a way that gives adequate notice to the defendants.”). This is not a high bar.

Russell v. Zimmer, Inc., 82 F.4th 564, 570-71 (7th Cir. 2023). Hammond and Whiting have

alleged facts sufficient to support each of their claims.

The complaint asserts three claims against ASARCO: Count I is brought under

Indiana’s Environmental Legal Action Statute (“ELA”); Count II is pursuant to the

Comprehensive Environmental Response, Compensation and Liability Act of 1980

(“CERCLA”); and Count III is brought under the Resource Conservation and Recovery

Act (“RCRA”). [DE 1 at 11-13]. The allegations contained in Plaintiffs’ complaint easily

clear the low bar of providing a short and plain statement of each claim and the

grounds upon which the claims rest.

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To sufficiently plead a CERCLA claim, Plaintiffs must allege (1) the site is a

“facility” as defined by CERCLA; (2) the defendant is a “responsible person” as defined

by CERCLA; (3) there was a release of hazardous substances; and (4) such release

caused the plaintiff to incur response costs. Cont'l Paper Grading Co. v. Nat'l R.R.

Passenger Corp. - Amtrak, 2021 WL 5299772, at *1 (N.D. Ill. Nov. 15, 2021) (citing Env't

Transp. Sys., Inc. v. ENSCO, Inc., 969 F.2d 503, 506 (7th Cir. 1992)). Hammond and

Whiting have successfully pleaded a CERCLA claim here. They allege that (1) the site at

issue in this lawsuit is a “facility” as defined by CERCLA; (2) ASARCO (through

Federated Metals) owned and operated the facility and is a responsible party as defined

by CERCLA; (3) ASARCO (again, through Federated Metals) released and disposed of

hazardous substances into the subsurface soil and groundwater in Hammond and

Whiting and is a responsible party; and (4) they have incurred costs associated with the

removal. [DE 1 at 12-13]. This is all Plaintiffs need to allege to state a plausible CERCLA

claim.

The Cities have also successfully pleaded a claim for relief under Indiana’s ELA

statute. Section 13-30-90-2 of the ELA states:

A person may, regardless of whether the person caused or contributed to

the release of a hazardous substance or petroleum into the surface or

subsurface soil or groundwater that poses a risk to human health and the

environment, bring an environmental legal action against a person that

caused or contributed to the release to recover reasonable costs of a removal

or remedial action involving the hazardous substances or petroleum.

Ind. Code Ann. § 13-30-9-2.

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The Cities allege that ASARCO is a person within the meaning of the statute, that

ASARCO has caused or contributed to the release of hazardous substances into the

subsurface soil and groundwater in Hammond and Whiting, that the contamination

poses a risk to human health and the environment, and that Hamond and Whiting have

incurred and will continue to incur response costs associated with the contamination.

[DE 1 at 11].

Finally, the Cities have successfully pleaded a RCRA claim under 42 U.S.C.

§6972, which is commonly referred to as Section 7002 of the statute. This section of the

act states any person may commence a civil action on his own behalf:

against any person, including the United States and any other

governmental instrumentality or agency, to the extent permitted by the

eleventh amendment to the Constitution, and including any past or present

generator, past or present transporter, or past or present owner or operator

of a treatment, storage, or disposal facility, who has contributed or who is

contributing to the past or present handling, storage, treatment,

transportation, or disposal of any solid or hazardous waste which may

present an imminent and substantial endangerment to health or the

environment;

42 U.S.C. § 6972 (a)(1)(B).

To state a claim under the operative RCRA provision, a plaintiff must allege: (1)

that the defendant is a person, including, but not limited to, one who was or is a

generator or transporter of solid or hazardous waste or one who was or is an owner or

operator of a solid or hazardous waste treatment, storage, or disposal facility; (2) that

the defendant has contributed to or is contributing to the handling, storage, treatment,

transportation, or disposal of solid or hazardous waste; and (3) that the solid or

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hazardous waste may present an imminent and substantial endangerment to health or

the environment. See e.g., Cox v. City of Dallas, Tex., 256 F.3d 281, 292 (5th Cir. 2001).

Plaintiffs allege that ASARCO owned and operated a treatment, storage, and disposal

facility under RCRA, and that during ASARCO’s operation of the facility ASARCO

handled solid hazardous waste material that presents an imminent and substantial

endangerment to health or the environment.2 [DE 1 at 13-15].

Plaintiffs have made a short and plain statement of the claims showing they are

entitled to relief and that is all that is required to allege a cause of action in federal

court. See e.g., Stuhlmacher v. Home Depot U.S.A., Inc., 2011 WL 1792853, at *2 (N.D. Ind.

May 11, 2011) (explaining that it is rudimentary that pleading requirements in federal

courts are governed by the federal rules and federal courts may not impose heightened

pleading requirements).

Because we’ve established the Cities have sufficiently met the federal pleading

standard for each of their claims, I’ll next turn to the more difficult question of whether

these claims are precluded by ASARCO’s bankruptcy proceedings, consent decree, and

related court orders in the Southern District of Texas.

2 Plaintiffs have also complied with the notice and 90-day delay requirement of 42 U.S.C.

§6972(b)(2)(A). [See DE 1 at ¶¶ 102-103].

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II. ASARCO’s Bankruptcy and the Cities’ Claims

A. Notice of the Bankruptcy

ASARCO argues that the Cities’ claims must be dismissed because “any claim

Plaintiffs may have had was resolved in ASARCO’s landmark bankruptcy case.” [DE 20

at 10]. Of course, for ASARCO’s bankruptcy to preclude the claims, the Cities must

have been afforded constitutionally sufficient notice of the bankruptcy. “An elementary

and fundamental requirement of due process in any proceeding which is to be accorded

finality is notice reasonably calculated, under all the circumstances, to apprise

interested parties of the pendency of the action and afford them an opportunity to

present their objections.” In re Smith, 582 F.3d 767, 779 (7th Cir. 2009). ASARCO argues

that because the Cities were “unknown” creditors, they were entitled only to

publication notice of the bankruptcy. [DE 25 at 8]. As explained by the Seventh Circuit,

the issue is not whether the creditor is known but whether the creditor’s name and

address can be readily ascertained. Fogel v. Zell, 221 F.3d 955, 963 (7th Cir. 2000). If a

creditor is “reasonably ascertainable” the creditor is entitled to actual notice, but if the

creditor is not reasonably ascertainable the creditor is only entitled to constructive

notice. In re USA Gymnastics, 40 F.4th 775, 777 (7th Cir. 2022). A creditor qualifies as

“reasonably ascertainable” if the debtor could uncover the creditor's claim and identity

using “reasonably diligent efforts.” Id. at 778.

The Cities of Hammond and Whiting are the entities suing for the environmental

response costs to remedy the contamination in the Robertsdale neighborhood. The

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Cities are bringing this action both on their own behalf and on behalf of their residents.

[DE 36 at 18]. Because the individuals living on contaminated land in Hammond and

Whiting are numerous and unknown, notice by publication was appropriate here. Fogel,

221 F.3d at 963 (explaining that notice by publication may be entirely appropriate when

potential claimants are numerous, unknown, or have small claims). During the

bankruptcy proceedings, ASARCO filed an affidavit listing the numerous publications

in which a notice of the bankruptcy and last day to file was included. These

publications included nationwide publications such as the Wall Street Journal and USA

Today. See DE 2375, In re: ASARCO LLC, Case No. 05-21207, (Bankr. S.D. Tex. June 22,

2006) (“Affidavit by The Trumbull Group, LLC Regarding Publication of the Notice of

Last Day to File General Claims and Asbestos-Related Claims”). ASARCO’s widespread

announcement of the bankruptcy and bar date provided sufficient notice. See e.g.,

Shurland v. Bacci Cafe & Pizzeria on Ogden, Inc., 271 F.R.D. 139, 145 (N.D. Ill. 2010)

(“When individual notice is infeasible, notice by publication in a newspaper of national

circulation ... is an acceptable substitute.).”

ASARCO also published notice of the public comment process related to the

bankruptcy consent decree in the Federal Register. [DE 25 at 8-9]; 74 Fed. Reg. 12379

(“Notice of Lodging of Proposed Settlement Agreement Under the Comprehensive

Environmental Response, Compensation and Liability Act.”). Publication in the federal

register adequately provides notice to non-parties. See e.g., City of Waukegan, Ill. v. Nat'l

Gypsum Co., 2009 WL 674347, at *3 (N.D. Ill. Mar. 12, 2009) (publication in the Federal

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Register is sufficient to protect the rights of non-parties to a CERCLA consent decree);

United States v. Bayer Healthcare, LLC., 2007 WL 4224238, at *4 (N.D. Ind. Nov. 28, 2007)

(finding a consent decree and its formation “procedurally fair” where notice of the

proposed consent decree was published in the Federal Register); Bennett v. Dir., Off. of

Workers' Comp. Programs, U.S. Dep't of Lab., 717 F.2d 1167, 1169 (7th Cir. 1983)

(explaining that it has long been established that publications in the Federal Register

have the legal effect of constructive notice of their contents to all who are affected

thereby).

The Cities argue that it is unreasonable to expect them to “casually peruse the

Federal Register to learn that their rights might be affected.” [DE 36 at 8]. But simply

put, that’s the way publication by notice in the Federal Register works. Fed. Crop Ins.

Corp. v. Merrill, 332 U.S. 380, 384–85 (1947) (“Just as everyone is charged with

knowledge of the United States Statutes at Large, Congress has provided that the

appearance of rules and regulations in the Federal Register gives legal notice of their

contents.”). Thus, to the extent Hammond and Whiting bring this lawsuit on behalf of

their residents, they were provided sufficient notice of the bankruptcy and consent

decree.

The Cities argue that apart from its residents, they should have received notice.

“[T]he Cities own parcels of land within the lead plume, giving them direct standing

under CERCLA, the IELA, and RCRA”. [DE 36 at 18]. As explained by ASARCO, the

State of Indiana is a party to the bankruptcy consent decree and the consent decree was

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signed by Indiana’s Attorney General’s office. [See DE 20-1]. To the extent any

additional or separate notice was required solely for the Cities’ interests, the notice to

the State should be imputed to the Cities. Capdevila v. Sheahan, 1995 WL 399690, at *3

(N.D. Ill. July 6, 1995) (explaining that constructive notice applies when actual notice is

provided to a party who shares an identity of interest with the proper party). Indiana is

a party to the bankruptcy consent decree and the Cities are simply offshoots of the State

of Indiana. Cnty. Dep't of Pub. Welfare of Lake Cnty. v. Stanton, 545 F. Supp. 239, 243 (N.D.

Ind. 1982) (“[A] municipality or any other unit of local government is a creature of the

state and receives all its power from the state.”); Hemphill v. Wabash R. Co., 209 F.2d 768,

769 (7th Cir. 1954) (“Cities and villages are corporate entities existing under and by

virtue of state law and, therefore, are possessed of no inherent power independent of

statute.”).

The interests of the Cities in this suit and the interests of the State of Indiana

when it appeared as a creditor in ASARCO’s bankruptcy proceedings are completely

aligned. Both the Cities and Indiana seek payment for cleanup of the environmental

contamination resulting from the smelting activities at the Whiting Site. And speaking

more pragmatically, I am dubious of the idea that the State of Indiana and its Attorney

General signed the consent decree without informing the local municipalities where the

Whiting Site is located. In this instance, Hammond and Whiting had sufficient notice of

the bankruptcy.

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Because the Cities had sufficient notice of the bankruptcy, I will next consider

whether the bankruptcy, consent decree, and related court orders discharge or preclude

the claims Hammond and Whiting have presented in this suit.

B. The CERCLA and ELA Claims Were Properly Discharged in Bankruptcy

Let’s start with Plaintiffs’ CERCLA and ELA claims as all parties acknowledge

that these are claims which can be discharged during bankruptcy. The Seventh Circuit

has established a test to determine when a party has a CERCLA claim so that failure to

raise the claim during the bankruptcy proceeding bars a suit against the debtor. “In the

Seventh Circuit, a creditor has a contingent CERCLA claim for purposes of bankruptcy

when the potential claimant ‘can tie the bankruptcy debtor to a known release of a

hazardous substance which this potential claimant knows will lead to CERCLA

response costs.’” Ninth Ave. Remedial Grp. v. Allis-Chalmers Corp., 195 B.R. 716, 734 (N.D.

Ind. 1996) (quoting Matter of Chicago, Milwaukee, St. Paul & Pac. R. Co., 974 F.2d 775, 786

(7th Cir. 1992)).

Plaintiffs argue that their “RCRA, CERCLA, and Indiana ELA causes of action

arose years after ASARCO received the discharge from the bankruptcy court in

December of 2009.” [DE 24 at 12]. Plaintiffs say they “did not even become aware of the

contamination in the Robertsdale neighborhood until 2016.” [Id.] However, as admitted

to in the complaint, all of Federated Metals’ contamination took place before ASARCO

entered bankruptcy in 2005. [See DE 1 at ¶ 31]. Moreover, there are numerous facts in

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the Cities’ complaint illustrating that they knew about the release of these hazardous

materials and could tie the release to ASARCO prior to ASARCO’s bankruptcy.

An examination of the facts demonstrating knowledge of contamination in

analogous Seventh Circuit cases help to illustrate the Cities had enough information

that they knew there was a release of a hazardous substance and could tie it to

ASARCO prior to the confirmation of ASARCO’s bankruptcy.

Consider first, Matter of Chicago, Milwaukee, St. Paul & Pac. R. Co., 974 F.2d 775

(7th Cir. 1992) (Chicago I) where the Seventh Circuit held the Washington State

Department of Transportation’s (WSDOT) CERCLA claim was barred because the claim

arose prior to the consummation of the bankruptcy and WSDOT did not file the claim

with the bankruptcy court before the bankruptcy bar date. In Chicago I, a letter and a

phone conversation informed WSDOT of the spill of an extremely hazardous substance

resulting from a train derailment. Id. at 787. WSDOT also took soil samples of the

contaminated area. Id. These events took place prior to the bankruptcy bar date and the

court held that WSDOT’s knowledge of the contamination gave rise to a CERCLA claim

which was properly discharged in bankruptcy. The court noted “any other conclusion

would frustrate the bankruptcy court's interest in having all claims before it, and any

other conclusion would frustrate CERCLA's goal of providing a speedy cleanup of

hazardous sites.” Id.

In a similar case, Matter of Chicago, Milwaukee, St. Paul & Pac. R. Co., 3 F.3d 200

(7th Cir. 1993) (Chicago II) the Seventh Circuit again considered the conflicting goals of

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environmental cleanup and a fresh start for bankruptcy debtors. In Chicago II, the

Seventh Circuit held that a CERCLA claim was barred because the claimant knew of the

contamination prior to the confirmation of the bankruptcy. Indeed, the Court held that

actual knowledge of the contamination is not required, and constructive knowledge of

the contamination is sufficient to bar a CERCLA claim. The district court determined

the CERCLA claimant had constructive knowledge of the contamination because the

site was identified as one of the most contaminated places in the country, a Dames &

Moore report discussing the contamination was readily available, and the EPA notified

the claimant of potential contamination. Id. at 205. Affirming the district court, the

Seventh Circuit held that the district court’s finding of constructive knowledge was not

“clearly erroneous” and that “[o]ur national environmental policy does not permit a

commercial landowner in a tainted area to put on blinders or attempt an ostrich

defense.” Id. at 207.

While the facts of this case are not exactly the same as the “Chicago” cases

discussed above, the facts before me do show that Hammond and Whiting had at least

constructive knowledge of the contamination and could tie the contamination to

ASARCO prior to ASARCO entering bankruptcy in 2005. Like the cases discussed

above, there are numerous facts here which show that the contamination took place

before ASARCO entered bankruptcy and that Hammond and Whiting knew or at least

should have known (unless their head was in the sand) that the contamination could be

attributed to ASARCO.

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Numerous statements and factual assertions in the Cities’ own complaint

illustrate they knew of a release of a hazardous substance, knew it would lead to

response costs, and could tie the release to ASARCO well before the August 1, 2006

bankruptcy bar date. See DE 2050, In re ASARCO LLC, Cause No. 05-21207 (Bankr. S.D.

Tex. Aug. 9, 2005). In their response brief, the Cities’ state that they did not know of the

contamination until 2016 because there were “no visible signs of contamination, no soil

testing was performed, USEPA was not involved, and there were no publicized spills.”

[DE 24 at 15-16]. This argument is a little hard to swallow. The following facts listed in

the Cities’ complaint illustrate at least constructive knowledge of the contamination

prior to 2006.

o In Spring 1939, local residents reported that releases from the Facility were

so harmful that the health issues they caused forced students to miss

school [DE 1 at ¶ 16].

o In April 1939, hundreds of residents complained to the Hammond City

Council that discharges from the Facility damaged roofs of residences,

caused coughing and sneezing, and made it virtually impossible to open

doors or windows. [Id. at ¶ 17]

o A health inspector for Hammond publicly testified regarding such alleged

contamination activity on the “Whiting-Robertsdale community” as early

as 1939 and a Whiting city councilperson publicly commented regarding

the same in 1941 [Id. at ¶¶ 18-19].

o A local church filed a complaint regarding such alleged contamination in

the 1940s [Id. at ¶ 21].

o A local newspaper published an article regarding such activity in the

1970s [Id. at ¶ 27].

o A 1992 Consent Decree between Federated Metals and the EPA

purportedly disclosed that while Federated Metals operated the facility,

they generated hazardous waste in the form of dust, including hazardous

lead waste and sludge from secondary smelting [Id. at 34].

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Moreover, pursuant to the 1992 consent decree, a RCRA corrective action took

place across the entire 36-acre smelter property. “The Corrective Action involved

consolidating slag dredged from adjacent Lake George with contaminated soils

excavated from facility production areas, and non-hazardous baghouse demolition

debris into an existing on-site landfill on the property.”3 Surely, Hammond and

Whiting knew, or should have known, all this activity related to Federated Metals’

contamination was going on right in town for decades before ASARCO’s bankruptcy

bar date. The Cities cannot put on blinders and act as if they did not know they had an

environmental claim related to this contamination before ASARCO entered bankruptcy.

This would be, as described by the Seventh Circuit, an “ostrich defense.” It’s plain that

the Cities could have raised an environmental claim prior to ASARCO’s bankruptcy bar

date but they didn’t. Plaintiff’s CERCLA claim should therefore be considered

discharged by the court order confirming the bankruptcy. Plaintiff’s Indiana ELA claim

should be considered discharged for the same reason.

C. Was the RCRA Claim Discharged in the Texas Bankruptcy?

Let’s turn now to Plaintiffs’ RCRA claim. Claims brought under RCRA for

injunctive relief are not considered claims which can be discharged in bankruptcy. The

term “claim” is defined by the bankruptcy code as:

3 United States Environmental Protection Agency, Federated Metals Corp Whiting Hammond,

IN, https://cumulis.epa.gov/supercpad/SiteProfiles/index.cfm?fuseaction=second.cleanup&id=0501275

(last visited March 25, 2025).

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(A) right to payment, whether or not such right is reduced to judgment,

liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,

undisputed, legal, equitable, secured, or unsecured; or

(B) right to an equitable remedy for breach of performance if such breach

gives rise to a right to payment, whether or not such right to an equitable

remedy is reduced to judgment, fixed, contingent, matured, unmatured,

disputed, undisputed, secured, or unsecured.

11 U.S.C. § 101 (5).

It is well established that only orders which can be turned into a right to

payment are considered dischargeable “claims” for bankruptcy purposes. See AM Int'l,

Inc. v. Datacard Corp., 106 F.3d 1342, 1348 (7th Cir. 1997) (collecting cases). The Seventh

Circuit has made clear that a claim under RCRA is not a claim that can be reduced to a

right to payment and discharged during bankruptcy. See e.g., United States v. Apex Oil

Co., 579 F.3d 734 (7th Cir. 2009); AM Int'l, Inc., 106 F.3d at 1348. See also, Meghrig v. KFC

W., Inc., 516 U.S. 479 (1996) (explaining the RCRA does not allow a party to clean up a

site and sue for response costs in lieu of seeking an injunction).

In Apex, the Seventh Circuit explained that RCRA does not entitle a plaintiff to

demand, in lieu of action by the defendant, payment of clean-up costs, and it does not

authorize any form of monetary relief. Apex Oil Co., 579 F.3d at 736. In other words,

under Apex, the cost of complying with an equitable decree is not a money claim that

should be considered dischargeable. Id. at 737. As explained by the Seventh Circuit

“[a]lmost every equitable decree imposes a cost on the defendant, whether the decree

requires him to do something . . . or as is more common, to refrain from doing

something.” Id. In arriving at that conclusion, the Seventh Circuit distinguished Ohio v.

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Kovacs, 469 U.S. 274 (1985). It is true, as noted in Apex, the Supreme Court “allowed the

discharge in bankruptcy of an equitable obligation to clean up a contaminated site

owned by the debtor.” Apex Oil Co., 579 F.3d at 737. But what made Kovacs different was

the fact that when the debtor failed to comply, a receiver was appointed to take

possession of the debtor’s assets to sell in order to pay for the cleanup costs. In other

words, the receiver was “seeking money rather than an order that the debtor clean up

the contaminated site.” Id.

The facts of Kovacs are very different from the facts before me (just as they were

in Apex). Here, Hammond and Whiting have not already obtained an injunction; they’re

seeking one under RCRA. The Seventh Circuit succinctly summarized the state of the

law regarding when a RCRA claim for equitable relief may be discharged writing:

The sparsity of case law dealing with the discharge of claims . . . together

with the near consensus of the cases . . . in which the issue has arisen,

suggests a general understanding that discharge must indeed be limited to

cases in which the claim gives rise to a right to payment because the

equitable decree cannot be executed, rather than merely imposing a cost on

the defendant, as virtually all equitable decrees do.

Apex Oil Co., 579 F.3d at 738.

ASARCO argues the RCRA claim presently before me should be dismissed

because it can be distinguished from cases in which the Seventh Circuit held that a

RCRA claim cannot be discharged in bankruptcy. ASARCO attempts to distinguish this

case from AM Int'l and Apex by arguing that “this case is not like Plaintiffs’ cited

authority, which assessed the effect of a discharge of pre-bankruptcy claims where

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property was contaminated on a pre-bankruptcy and post-bankruptcy basis.” [DE 25 at

10]. This argument incorrectly states the focus of the Seventh Circuit’s analysis in

deciding whether a RCRA claim is a claim which can be discharged in bankruptcy. The

focus is not whether the site was contaminated pre-bankruptcy and post-bankruptcy

but whether the request for injunctive relief under RCRA can be reduced to a right to

payment such that it is a “claim” under the bankruptcy code.

In AM Int'l, the court mentioned that contamination occurred both pre- and post-

bankruptcy in its discussion of the background facts of the case. While mentioned, it is

not a central focus of the court’s analysis related to the discharge of RCRA claims.

Indeed, the quote provided by ASARCO in its reply brief is found in the opening

section of the opinion well before the court begins its legal analysis. [See DE 25 at 10];

AM Int'l, Inc., 106 F.3d at 1346. Again, the quote pulled from the Apex opinion is not

central to the court’s legal analysis and is a quote from the findings of fact section of the

opinion. [See DE 25 at 10]; United States v. Apex Oil Co., 2008 WL 2945402, at *1-2 (S.D. Ill.

July 28, 2008). ASARCO’s attempts to distinguish this case from controlling Seventh

Circuit precedent fall flat. Plaintiffs’ RCRA claim was not extinguished simply because

it was not raised during ASARCO’s bankruptcy proceedings.

D. The RCRA Claim is Barred by the Consent Decree and Court Orders

But ASARCO gets better traction with its final argument—that even if the Cities’

RCRA claim was not discharged during the bankruptcy, they are enjoined from

bringing the claim by the bankruptcy consent decree and the court orders giving it

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effect. I agree. As discussed above, ASARCO and the State of Indiana entered a consent

decree which created a custodial trust through which ASARCO provided $1.2M to fund

future environmental actions and future oversight costs of the governments in relation

to the effected site. [DE 20-1 at 20]. It was agreed that the creation of the trust and the

funds provided therein would be in “settlement and full satisfaction of all claims against

Debtors related to the Designated Properties and the Sites.” [Id. at 17] (emphasis

added). The Amended Consent Decree was signed on March 2, 2009, by Indiana’s

Attorney General. [Id. at 62].

Although the Cities are not parties to the consent decree, they should be bound

by the decree and the Texas orders confirming and approving the decree. The Cities are

in privity with the State of Indiana because their interests related to the contamination

originating from Whiting Site were adequately represented by the State during

ASARCO’s bankruptcy. “Privity is said to exist between parties who adequately

represent the same legal interests.” Cavalier v. Speedway, LLC, 2024 WL 1363413, at *4

(N.D. Ill. Mar. 29, 2024). See also, Reps. Comm. for Freedom of the Press v. Rokita, 2024 WL

4333137, at *6 (S.D. Ind. Sept. 27, 2024) (“Parties are in privity when there is a

commonality of interest between the two entities’ and when they sufficiently represent

each other's interests.”). Determining that privity exists between two parties is not an

exact science and requires careful consideration of the circumstances of each case.

Cavalier, 2024 WL 1363413, at *4. For a nonparty to be in privity with a party to an

action, they must have such absolute identity of interests that the party to the earlier

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action represented the same legal interest as the non-party to that first action. Ayres v.

Fin., 2018 WL 6606242, at *4 (W.D. Wis. Dec. 17, 2018). When two parties are in privity,

the party whose interests were represented in the action should be bound by the

judgment. See Valbruna Slater Steel Corp. v. Joslyn Mfg. Co., 804 F. Supp. 2d 877, 884 (N.D.

Ind. 2011); Sec'y of Lab. v. Fitzsimmons, 805 F.2d 682, 688 n.9 (7th Cir. 1986).

The interests of the Cities in this suit and the interests of the State of Indiana

when it appeared as a creditor in ASARCO’s bankruptcy proceedings are the same; to

obtain payment for cleanup of the environmental contamination resulting from

smelting activities at the Whiting Site. At the time ASARCO entered bankruptcy, the

cascade of environmental claims facing the company created an extremely difficult

situation for everyone involved. As explained in ASARCO’s motion requesting the

bankruptcy court’s approval to settle environmental claims, ASARCO faced thousands

of claims against their estates and responsibility for environmental contamination at

hundreds of sites totaling approximately $6.5B in known damages and even more in

unknown damages. See DE 10534, In re ASARCO LLC, Cause No. 05-21207 (Bankr. S.D.

Tex. Aug. 9, 2005). Indiana, along with numerous other states, determined that the best

course of action to ensure ASARCO contributed to cleaning up the large amount of

contamination was to enter into a settlement agreement. This compromise and

settlement took the form of the Consent Decree and Custodial Trust, signed by the

Indiana Attorney General, which allocated $1.2M for clean-up efforts at the Whiting

Site. Language from the Amended Consent Decree illustrates that Indiana’s primary

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goal during ASARCO’s bankruptcy proceedings was to obtain funds to assist in the

clean-up of the contamination originating from the Whiting Site. In the “Covenants Not

to Sue” section of the Consent Decree, Indiana agrees to withdraw its claims for three

other sites. “The State of Indiana withdraws its claims for the American Chemical

Services Sites, Conservation Chemicals Site, and Four County Landfill Site . . . and

agrees not to assert any further claims against Debtors or the Reorganized Debtors for

such Sites.” [DE 20-1 at 44]. This was all to ensure ASARCO contributed to efforts to

clean-up the Whiting Site. Obtaining money to address contamination from the Whiting

Site was the clear priority for Indiana. Under these circumstances, I simply cannot

conclude that somehow Indiana did not adequately represent the Cities’ interests in

ASARCO’s complicated bankruptcy proceedings.

Hammond and Whiting may believe that the $1.2M allocated to the Whiting Site

by the consent decree and custodial trust is insufficient to address the contamination

throughout their communities. In fact, recent statements by the EPA tend to say as

much. In their letter regarding efforts to clean up the Whiting Site, the EPA states that

the $1.2M from the ASARCO bankruptcy trust “performed groundwater studies and

assessments and maintains the landfill cap” but was not sufficient to address

contamination beyond the boundaries of the former Federated Metals facility. [DE 36-1

at 2]. However, the EPA signaled that it would take further action to address the

contamination originating from the site. The EPA has added the Whiting Site to the

National Priorities List and has released a schedule for its work at the site with a

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remedial investigation/feasibility study scheduled for Dec 2024-Feb 2025. [DE 35 at 7].

The EPA lists the projected date to start remedial action as Jan-Mar 2026. [Id.] Perhaps

the Cities can look forward to additional assistance from the EPA, but they are barred

from pursuing further contributions from ASARCO.

Because the Cities are precluded from bringing their RCRA claim by the

bankruptcy consent decree and related court orders, I see no need to address the

parties’ arguments regarding whether the RCRA claim should be considered statutorily

barred by 42 U.S.C. §6972(b)(2)(B).

In sum, the claims the Cities have presented in this suit should be dismissed with

prejudice as it would be pointless to amend the complaint. Delisle v. McKendree Univ., 73

F.4th 523, 528 (7th Cir. 2023) (explaining that while plaintiffs are generally entitled to a

chance to amend their complaint, there is no entitlement to amend when an amendment

would be futile or otherwise unwarranted). The Cities failed to raise their CERCLA and

Indiana ELA claims prior to the confirmation of ASARCO’s bankruptcy and are barred

from pursing those claims by the order confirming the bankruptcy. See e.g., In re

Morrow, 495 B.R. 378, 389 (Bankr. N.D. Ill. 2013) (explaining that a creditor who fails to

raise a claim prior to the confirmation of a bankruptcy is barred from pursuing the

claim under principles of res judicata as the confirmation order is a final order); Matter

of Chicago, Milwaukee, St. Paul & Pac. R. Co., 974 F.2d 775, 780 (7th Cir. 1992) (“[A]

creditor who fails to file a preconsummation claim before the applicable bar dates is

forever discharged from raising this claim against the debtor or its successors”). The

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Cities’ RCRA claim is barred by the Texas court orders giving effect to the consent

decree as the Cities are in privity with Indiana regarding their environmental claims

relating to the Whiting Site. United States v. Willard Tablet Co., 141 F.2d 141, 143 (7th Cir.

1944) (“A judgment is res judicata in a second action upon the same claim between the

same parties or those in privity with them.”); In re Pierce, 563 B.R. 698, 703 (Bankr. C.D.

Ill. 2017) (“Generally, res judicata is the doctrine of preclusion that applies to dismissals

with prejudice pursuant to settlement agreements.”).

ACCORDINGLY:

For the reasons explained in this Opinion and Order, Defendant ASARCO

Master, Inc.’s Motion to Dismiss [DE 19] is GRANTED. Count I (Indiana ELA Claim),

Count II (CERCLA Claim), and Count III of Plaintiffs’ Complaint (RCRA Claim) are

DISMISSED WITH PREJUDICE.

SO ORDERED.

ENTERED: March 25, 2025.

/s/ Philip P. Simon

PHILIP P. SIMON, JUDGE

UNITED STATES DISTRICT COURT

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