Pennsylvania, Department of Environmental Protection v. Lockheed Martin Corp.

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 10-4078

COMMONWEALTH OF PENNSYLVANIA,

DEPARTMENT OF ENVIRONMENTAL PROTECTION

v.

LOCKHEED MARTIN CORPORATION

v.

UNITED STATES OF AMERICA; COMMONWEALTH OF

PENNSYLVANIA; DEPARTMENT OF CONSERVATION

AND NATURAL RESOURCES

Lockheed Martin Corporation,

Appellant

On Appeal from the United States District Court

for the Middle District of Pennsylvania

(D.C. No. 1-09-cv-00821)

District Judge: Honorable Sylvia H. Rambo

Argued on September 20, 2011

Before: AMBRO, CHAGARES and ROTH, Circuit Judges

(Opinion filed: June 5, 2012 )

Raymond B. Ludwiszewski, Esquire

Michael K. Murphy, Esquire (Argued)

Daniel E. Schmitt, Esquire

Gibson, Dunn & Crutcher LLP

1050 Connecticut Avenue, N.W.

9th Floor

Washington, DC 20036

David J. Parsells, Esquire

Stevens & Lee

620 Freedom Business Center

Suite 200

King of Prussia, PA 19406

Counsel for Appellant

Julie E. Ravis, Esquire

2

Stevens & Lee

111 North Sixth St.

Reading, PA 19603

Counsel for Appellant

Kimberly A. Hummel, Esquire (Argued)

Office of Chief Counsel

Department of Conservation and Natural Resources

400 Market Street

7th Floor

Harrisburg, PA 17105

Gregory E. Dunlap, Esquire

Office of General Counsel

Commonwealth of Pennsylvania

333 Market Street

17th Floor

Harrisburg, PA 17101

Counsel for Appellee

OPINION

ROTH, Circuit Judge:

This appeal involves a dispute between the Lockheed

Martin Corporation on one hand and the Commonwealth of

Pennsylvania and one of its administrative agencies, the

Department of Conservation and Natural Resources (DCNR),

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on the other. Lockheed appeals the Order of the District

Court, dismissing Lockheed’s third-party complaint against

the Commonwealth and DCNR. Lockheed contends that the

District Court erred by concluding that the Commonwealth

and DCNR retained their Eleventh Amendment immunity

from suit when the Pennsylvania Department of

Environmental Protection (PADEP), another Commonwealth

agency, voluntarily filed a complaint in federal court against

Lockheed pursuant to the Comprehensive Environmental

Response, Compensation, and Liability Act of 1980

(CERCLA), 42 U.S.C. § 9607(a). For the reasons expressed

below, we will vacate the judgment of the District Court and

remand this case with instructions to dismiss for mootness the

third party complaint against the Commonwealth and DCNR.

Because of mootness, we will not address the merits of the

Eleventh Amendment immunity issue.

I. Background

A. Use and Contamination of the Quehanna Facility

In 1957, as an effort to develop the local economy, the

Commonwealth constructed the Quehanna Wild Area Nuclear

Site (Facility) in the Quehanna Wild Area of the Moshannon

State Forest in Clearfield County, Pennsylvania. After the

Facility’s construction, the Commonwealth sold and leased a

portion of the site to the Curtiss-Wright Corporation.

Sometime in the early 1960s, Curtiss-Wright donated the

Facility to Pennsylvania State University. From 1962 through

1967, Martin Marietta Corporation, a Lockheed predecessor,

leased portions of the Facility from Penn State to conduct

work pursuant to Atomic Energy Commission (AEC)

contracts. This work involved experimentation with

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Strontium-90, a radioactive isotope. 1 Throughout the period

that Martin Marietta conducted its research, the AEC, as

licensing authority, and Penn State, as landlord, exercised

oversight over operations at the Facility. In 1966, Penn State

transferred legal title of the Facility to the Commonwealth.

The following year, Martin Marietta’s contract with the AEC

expired, and Martin Marietta terminated its activities at the

Facility. As a prerequisite to the contract’s termination,

Martin Marietta was required, pursuant to the standards

established by the AEC and approved by Penn State, to

partially decontaminate the Facility. According to Lockheed,

at the time that legal title of the Facility transferred to the

Commonwealth, the Commonwealth was aware that unknown

quantities of Strontium-90 remained at the site and could not

be removed without dismantling the entire Facility, an

outcome contrary to its and Penn State’s interests. After

Martin Marietta completed the partial decontamination of the

Facility, its lease terminated, and, with the Commonwealth’s

knowledge, it transferred its license for possession of

Strontium-90 to Penn State.

When Martin Marietta’s involvement with the Facility

ended, the Commonwealth leased the site to several other

companies that are not parties to this suit. The new tenants

continued to use the Facility for activities involving

radioactive materials, including Strontium-90. Lockheed

alleges that as encouragement for one company to lease the

Facility, the Commonwealth and PADEP agreed to assume all

responsibility for any existing Strontium-90.

1

Martin Marietta’s possession and use of Strontium-90

was pursuant to a license from the AEC.

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At some point in the 1990s, the Nuclear Regulatory

Commission 2 (NRC) ordered the Commonwealth, PADEP,

and DCNR to decommission the Facility. This process

required the Commonwealth and PADEP to clean up and

remove all remaining Strontium-90. As a result, PADEP and

the Commonwealth incurred expenses in excess of $20

million.

B. Litigation

In 2009, PADEP, the Commonwealth agency

authorized to administer and enforce CERCLA, filed a

complaint against Lockheed under CERCLA, 42 § U.S.C.

9607(a), and several state statutes for recovery of

approximately $20 million in unreimbursed costs the

Commonwealth and PADEP had incurred in connection with

their decommissioning of the Facility and removal of the

remaining Strontium-90. In its answer to the complaint,

Lockheed raised the affirmative defense of recoupment,

alleging that “[i]n an allocation of responsibility under

CERCLA, Plaintiff should recover less than its demand for

equitable reasons, including, but not limited to, its own

conduct and liability and the doctrines of unclean hands,

estoppel, waiver, laches, and/or other equitable defenses.”

Lockheed also filed a counterclaim against PADEP, asserting

that, if it is liable for PADEP’s cleanup costs, it seeks

contribution under CERCLA and state law. See 42 U.S.C. §

2

The NRC is one of the successor agencies of the

AEC. At the time of its formation, the NRC assumed

responsibility for the AEC’s byproduct material licensing

responsibilities.

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9613(f)(1). 3 Lockheed alleged that PADEP “is liable under

CERCLA as an owner and operator of the Quehanna Facility,

and as a person who arranged for and/or transported

hazardous substances or waste that were disposed of . . . from

the facility,” and that “for decades beginning in the 1960’s,

[PADEP] participated in and made decisions about the use,

handling, storage, and alleged disposal of” Strontium-90 at

the Facility.

In addition to its counterclaim, Lockheed filed a third-

party complaint, which named the Commonwealth, DCNR,

and the United States as defendants and sought contribution

pursuant to CERCLA and state law. 4 See 42 U.S.C. §

9613(f)(1). In the third party complaint, Lockheed repeated

the allegations contained in its counterclaim against PADEP

and argued that, if it is liable for cleanup costs under

CERCLA, it is entitled to contribution from the

Commonwealth and DCNR for their allocable share of any

costs Lockheed must pay PADEP. In other words, Lockheed

asked for relief only if it was found liable; it did not seek an

affirmative judgment against the Commonwealth or DCNR.

3

Section 9613(f)(1) provides:

Any person may seek contribution from any other

person who is liable or potentially liable under section

9607(a) of this title, during or following any civil action

under . . . section 9607(a) of this title. . . . In resolving

contribution claims, the court may allocate response costs

among liable parties using such equitable factors as the court

determines are appropriate

4

The United States is not a party to this appeal.

7

According to Lockheed, it filed the third-party

complaint because it believed that Pennsylvania law required

it to sue the Commonwealth and its agencies in their

individual capacities. In response to Lockheed’s third-party

complaint, the Commonwealth and DCNR moved to dismiss,

arguing that the complaint must be dismissed because, under

the Eleventh Amendment of the U.S. Constitution, they are

immune from suit. The District Court agreed and dismissed

Lockheed’s third-party complaint against the Commonwealth

and DCNR. The court, however, left undisturbed Lockheed’s

recoupment defense and CERCLA contribution counterclaim

against PADEP.

Lockheed then sought a supplemental ruling from the

District Court, asking it to clarify whether the dismissal of its

third-party complaint precluded it “from offsetting its liability

based upon the conduct of all non-PADEP Commonwealth

actors.” In addition, Lockheed requested that the court certify

the order for immediate appeal pursuant to Fed. R. Civ. P.

54(b).

The District Court responded that “[t]he scope of

[Lockheed’s] counterclaims against PADEP is limited to what

is asserted by [Lockheed] in its counterclaims, specifically,

that to the extent [Lockheed] is found liable for clean-up costs

PADEP is also liable for the same.” The court also

reiterated that the remaining issues were PADEP’s claims

against Lockheed, Lockheed’s counterclaim against PADEP,

and Lockheed’s third-party claims against the United States.

The court then certified its order, dismissing the third-party

complaint against the Commonwealth and DCNR, as a final

judgment pursuant to Rule 54(b).

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Lockheed appealed because it believed the District

Court’s order precluded it from seeking

contribution/recoupment from the Commonwealth and

DCNR, and that the exclusion of these two entities would

unfairly prejudice its defense. The basis for Lockheed’s

concern was the fact that PADEP and DCNR were created in

1995 when the Commonwealth split their predecessor agency,

the Pennsylvania Department of Environmental Resources.

Thus, PADEP did not exist at the time the facts underlying

Lockheed’s recoupment/contribution claims allegedly

occurred. Therefore, Lockheed feared that, if it did not join

the Commonwealth and PADEP to this litigation, its “defense

will be materially and improperly impaired because PADEP

may not qualify as a potentially responsible party under

CERCLA, as it did not even exist as an entity when the

materials in question were allegedly released at the facility.”

II. Discussion

Before we can reach the merits of the immunity issue,

we must first determine whether the parties’ briefing and

statements during argument mooted this appeal. If the issues

have become moot, i.e., are no longer “live,” the case will be

moot and therefore nonjusticiable. See Donovan ex rel.

Donovan v. Punxsutawney Area Sch. Bd., 336 F.3d 211,

216 (3d Cir. 2003) (“If a case has become moot after the

district court's entry of judgment, an appellate court no longer

has jurisdiction to entertain the appeal”) (citing Mills v.

Green, 159 U.S. 651, 653 (1895)); see also Rogin v.

Bensalem Twp., 616 F.2d 680, 684 (3d Cir. 1980); In re

Surrick, 338 F.3d 224, 229 (3d Cir. 2003). A case or

controversy requires “(1) a legal controversy that is real and

not hypothetical, (2) a legal controversy that affects an

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individual in a concrete manner so as to provide the factual

predicate for reasoned adjudication, and (3) a legal

controversy with sufficiently adverse parties so as to sharpen

the issues for judicial resolution.” Id.

In the briefing and argument before us, it became

increasingly clear that this appeal arose from a

misunderstanding between the parties. In their brief, the

Commonwealth and DCNR acknowledged that the

Commonwealth was the real party in interest in PADEP’s

lawsuit and that Lockheed’s third-party complaint was not

necessary because Lockheed had already filed defensive

counterclaims against the Commonwealth. With respect to

Lockheed’s claims against DCNR, the Commonwealth also

admitted that Lockheed could raise defensive claims against

DCNR by including those allegations in its counterclaim. In

its reply brief, Lockheed viewed the Commonwealth’s

statements as a concession and opined that “[i]f the

Commonwealth’s brief means what it appears to say, there

should be no real practical dispute remaining between the

parties.”

During argument, both the Commonwealth and

Lockheed acknowledged that no dispute remained before the

Court.

MR. MURPHY: . . . Lockheed

Martin wants to be able to reduce

its liability based on the activities

of the other Commonwealth

agencies and instrumentalities in

response to the PA DEP suit. And

if that happens we’re fine.

10

The Court asked the

Commonwealth:

THE COURT: [C]an

Lockheed reduce its liability to

the Commonwealth by the actions

of other Pennsylvania entities that

caused the environmental damage

here?

MS. HUMMEL: . . . [Y]es,

Lockheed can raise those

defenses, raise those issues of

liability to the extent the district

court finds that in fact there is real

liability associated with that, there

is no immunity to liability of

those claims, yes.

The court can consider that

and reduce the judgment against

Lockheed.

THE COURT: Is it your

position that any recoupment

claim that Lockheed Martin has

against any state actor [and] the

Commonwealth can be recouped

through its counterclaim against

DEP? . . .

THE COURT: Arising from

this transaction, or this incident.

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MS. HUMMEL: It can be

raised, certainly.

* * *

THE COURT: [T]he

question is if you waive by

litigation sovereign immunity as

to a Commonwealth entity, why

don’t you waive by litigation the

sovereign immunity with respect

to other Commonwealth entities

that are involved with regard to

this particular series of incidents?

MS. HUMMEL: In terms of

the . . . district court’s ability to

hear that defense, to consider

owner-operator - - I mean the

issue here is owner-operator

liability. The Commonwealth

owned the site, Lockheed has

asserted that the Commonwealth,

other agencies operated the site.

The district court’s ability to

consider those issues in, in the

defensive mode, it can do that to

offset what DEP is seeking to

recover from Lockheed.

* * *

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THE COURT: [C]an

Lockheed reduce its liability to

the Commonwealth by the actions

of other Pennsylvania entities that

caused the environmental damage

here?

MS. HUMMEL: . . . [Y]es,

Lockheed can raise those

defenses, raise those issues of

liability to the extent the district

court finds that in fact there is real

liability associated with that, there

is no immunity to liability of

those claims, yes. The court can

consider that and reduce the

judgment against Lockheed.

THE COURT: And that’s

across the board for Pennsylvania

--

MS. HUMMEL: Yes.

THE COURT: - - entities

involved - -

MS. HUMMEL: Yes.

THE COURT: - - in what

transpired at this site?

MS. HUMMEL: Yes.

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Lockheed made similar responses to the

court’s questioning:

THE COURT: . . . [I]sn’t the

counterclaim enough? Aren’t you

covered? . . . You heard what she

said here today, and if - - you

could live with that, right?

MR. MURPHY: I could . . ..

Based upon the Commonwealth’s briefing and oral

representations before the court, we conclude that it conceded

that PADEP’s potential recovery can be reduced in proportion

to the liability attributable to the Commonwealth and DCNR.

In other words, the Commonwealth now acknowledges that if

Lockheed is liable for cleanup costs under CERCLA,

Lockheed can recover contribution from the Commonwealth

and DCNR for their allocable share of any costs Lockheed

must pay PADEP. 5 This concession moots the sovereign

immunity issue because it removes the live legal controversy

between the parties. See Weiss v. Regal Collections, 385 F.3d

337, 340 (3d Cir. 2004) (“An offer of complete relief will

generally moot the plaintiff's claim, as at that point the

plaintiff retains no personal interest in the outcome of the

litigation”); see also Rand v. Monsanto Co., 926 F.2d 596,

598 (7th Cir. 1991).

Lockheed repeatedly acknowledged that its primary

concern was whether it could seek recoupment/contribution

5

Lockheed cannot, as it acknowledges, obtain an

affirmative judgment from the Commonwealth or DCNR.

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from the Commonwealth and DCNR and that it was of “no

practice importance” whether it could offset its liability with a

counterclaim or third party complaint. Since the parties now

agree that Lockheed can obtain contribution from the

Commonwealth and DCNR through Lockheed’s

counterclaim, Lockheed does not retain an interest in the

outcome of the immunity issue. The District Court’s order

will, therefore, be vacated 6 and the case remanded to the

District Court with instructions to dismiss the third party

complaint against the Commonwealth and DCNR and for

further proceedings.

III. Conclusion

For the reasons stated above, we will vacate the order

of June 30, 2010, of the District Court and remand this case

for further proceedings consistent with this opinion.

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“The established practice . . . in dealing with a civil

case . . . which has become moot while under review is to

reverse or vacate the judgment below and remand with a

direction to dismiss.” Rendell v. Rumsfeld, 484 F.3d 236, 243

(3d Cir. 2007) (quoting United States v. Munsingwear, Inc.,

340 U.S. 36, 39 (1950)).

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