Petition for Writ of Certiorari — Joslyn Manufacturing Company, et al., Applicants v. Valbruna Slater Steel Corporation, et al.

No. ______

In the Supreme Court

of the United States

___________________

Joslyn Manufacturing Company, LLC, et al.,

Applicant,

v.

Valbruna Slater Steel Corporation, et al.,

Respondent.

___________________

APPLICATION TO STAY FURTHER PROCEEDINGS IN THE DISTRICT COURT

PENDING CERTIORARI

PRELIMINARY STATEMENT

To the Honorable Brett M. Kavanaugh, Associate Justice of the Supreme Court

of the United States and Circuit Justice for the Seventh Circuit:

Joslyn Manufacturing Company, LLC and Joslyn Corporation (hereinafter,

“petitioners” or “Joslyn”) respectfully request an order staying further proceedings in

the district court in this case pending the filing and disposition of a petition for a writ of

certiorari. The petition will seek review of a judgment in which the United States Court

of Appeals for the Seventh Circuit wrongfully denied petitioners’ statute of limitations

defense under 42 U.S.C. § 9613(g)(2)(B) and its claim preclusion defense under Indiana

law and the full faith and credit statute, 28 U.S.C. § 1738. Petitioners also request an

interim stay pending final action on this application.

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Environmental litigation is expensive to do once, but the Seventh Circuit has

subjected petitioners to a second and conflicting “final” judgment on the same cause of

action. It accomplished this result through an unprecedented, expansive reading of the

statutory definition of “removal” action under CERCLA, a construction of the statute of

limitations that all other circuits to consider it have rejected. The circuit court also

allowed two claims to be brought for the exact same injury, one in state court followed

by a second in federal court, a practice that Indiana preclusion law treats as claimsplitting and expressly forbids. It is reasonably probable that this Court will grant

certiorari and reverse. This stay should be granted to preserve the status quo in the

interim.

Petitioners asked the Seventh Circuit to stay its mandate pending the filing and

disposition of a certiorari petition, pursuant to Fed. R. App. P. 41(d)(2)(A), but the court

denied the motion without comment. (A copy of the Seventh Circuit’s order is attached

as Exhibit A.) The case has now returned to the district court for continued proceedings.

A petition for certiorari is due December 5, 2019. Without a stay during the pendency of

the petition, petitioners will be subject to irreparable harm because a monetary

judgment is at issue. Respondents will not be prejudiced by a stay of the mandate

because their judgment is secured by an appeal bond sufficient to pay the judgment and

all accrued post-judgment interest.

FACTUAL AND PROCEDURAL HISTORY

Joslyn owned and operated a steel mill in Fort Wayne, Indiana (the “Site”), for

about fifty years prior to 1981. When respondents’ predecessor and privy, Slater Steel,

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purchased the Site that year, it was a RCRA Treatment, Storage and Disposal (TSD)

facility. Slater wished to close three solid waste management units so it would no

longer be regulated as a TSD, and these included a former surface impoundment that

held hazardous waste. From 1981 to 1987, Slater did a series of excavations to dig up

contaminated soil and sludge and dispose of it offsite in an effort to permanently close

the impoundment.

When it could not dig any deeper because of adjacent railroad tracks, Slater built

a reinforced concrete cap over the impoundment to “landfill” the remaining

contamination in place. This construction was done in November 1991. A groundwater

monitoring system was built around the impoundment in 1992. The Indiana

Department of Environmental Management (IDEM) certified the impoundment as

closed in 1999 after monitoring results showed the cap effectively contained the

contamination. The cap remains in service today.

Beginning in the late 1980s, Slater asked Joslyn to help pay for Site clean-up, but

Joslyn declined because Slater had assumed responsibility for RCRA compliance going

forward by purchasing the Site.1 Joslyn’s employees became Slater’s at the closing, and

no one has ever claimed that Joslyn misrepresented Site conditions.

Slater threatened to sue Joslyn for environmental response costs under CERCLA,

but in 2000 it chose to file suit in Indiana state court and pursue the cause of action

1 It was not until 1984, three years after the sale, that the Resource Conservation and

Recovery Act was amended to require current owner-operators to take corrective action

to address existing contamination at their sites. See Hazardous and Solid Waste

Amendments of 1984, P.L. 98-616, 98 Stat. 3221 (enacted Nov. 9, 1984).

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under the Indiana Environmental Legal Action statute (Ind. Code § 13-30-9-1 et seq.)

(“ELA”) and contract theories.

In 2004, plaintiff-respondent Valbruna2 bought the Site from Slater. The Asset

Purchase Agreement granted Valbruna the option of joining Slater’s pending suit

against Joslyn but it declined to exercise it. A final judgment on the merits was entered

in Joslyn’s favor and against Slater in 2005.

That same year, Valbruna conducted electrical resistance heating treatment to

eradicate TCE contamination at another part of the Site. In 2008, Valbruna entered the

Site in Indiana’s Voluntary Remediation Program to address the remaining

contamination. Valbruna’s Remediation Work Plan described the closure of the former

impoundment as a “key component” of the Site’s overall remedial strategy.

In 2010, almost 20 years after Slater capped and closed the impoundment, and 5

years after judgment was entered for Joslyn in the state court environmental case

brought by Slater, Valbruna filed the present complaint against Joslyn in the Northern

District of Indiana. (DE 1.) Like Slater, Valbruna alleged that Joslyn caused the

contamination during its operation of the Site prior to 1981. Like Slater, Valbruna

sought all of its past and future response costs under the ELA. Unlike Slater, Valbruna

also sought this relief under CERCLA, 42 U.S.C. § 9607(a) and § 9613(g)(2). (DE 1.)3

2 Plaintiffs Valbruna Slater Steel Corporation and Fort Wayne Steel Corporation are collectively

referred to here as “Valbruna.”

3 In the complaint, Valbruna sought declaratory relief under 28 U.S.C. § 2201 and Fed.

R. Civ. Pro. 57. (DE 1 at 7, ¶ 38.) The district court found declaratory relief appropriate

under CERCLA itself, 42 U.S.C. § 9613(g)(2). (DE 124 at 14.)

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Valbruna’s ELA and CERCLA claims are based on the same factual allegations and

share the same prayer for relief.

Joslyn’s motions for summary judgment on the limitations and claim preclusion

issues were denied by the district court. Its request for certification of questions

concerning Indiana’s competent jurisdiction requirement for claim preclusion was

denied, as was Joslyn’s request for interlocutory appeal under 28 U.S.C. § 1292(b). The

case proceeded to trial on Joslyn’s counterclaim for contribution under 42 U.S.C. §

9613(f).4 After trial, judgment was entered in Valbruna’s favor for $1,410,767.20 in past

costs, along with a declaratory judgment that Joslyn is liable for 75% of Valbruna’s

future response costs compensable under CERCLA. Both sides appealed, and the

Seventh Circuit affirmed. (A copy of the Seventh Circuit’s August 8, 2019 decision is

attached as Exhibit B.) Joslyn’s petition for rehearing en banc was denied on September

6, 2019.

STANDARDS FOR GRANTING A STAY

Supreme Court Rule 23.1 provides that “[a] stay may be granted by a Justice as

permitted by law.” A stay pending certiorari should be granted if: (1) there is a

“reasonable probability” that this Court will grant certiorari; (2) there is a “fair prospect”

that this Court will conclude that the decision below was erroneous; (3) irreparable

harm will result from the denial of a stay; and (4) the balance of the equities justifies a

stay.” See California v. American Stores Co., 492 U.S. 1301 (1989) (O’Connor, J., in

chambers). This application satisfies all four criteria.

4 The district court excluded Joslyn’s claim preclusion and limitations defenses from the trial.

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APPLICATION OF THE STAY STANDARDS TO THIS CASE

I.

There is a “reasonable probability” that certiorari will be granted and a “fair

prospect” that the decision below on the CERCLA statute of limitations will be

found erroneous.

A.

The Seventh Circuit’s decision conflicts with the statutory definitions

of“removal” and “remedial” action and the circuit court precedent

applying them.

1.

The hallmark of “removal” action is to address an imminent

threat to public health.

CERCLA defines “removal” as an immediate, temporary response to an

imminent threat to public health. This is apparent from the examples of removal action

set forth in the statutory text:

The term [removal] includes, in addition, without being limited to,

security fencing or other measures to limit access, provision of alternative

water supplies, temporary evacuation and housing of threatened

individuals not otherwise provided for, action taken under section 9604(b)

of this title, and any emergency assistance which may be provided under

the Disaster Relief and Emergency Assistance Act [42 U.S.C. § 5121 et

seq.].

42 U.S.C. § 9601(23).

The circuits have consistently interpreted “removal” in this manner, often noting

that removal actions are usually done offsite where the contamination presents an

imminent threat to public health and safety, e.g., treating contaminated water in a

neighbor’s drinking water well, or removing contaminants from a river that the public

uses for fishing and swimming. The Seventh Circuit noted the general description of

“removal” in its decision: “[R]emoval generally ‘refers to a short-term action taken to

halt risks posed by hazardous wastes immediately.’” Slip Op. at 15, citing Frey v. E.P.A.,

403 F.3d 828, 835 (7th Cir. 2005). Other circuit court decisions are in accord. N.Y. v. Next

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Millenium Realty, LLC, 732 F.3d 117, 124-25 (2d Cir. 2013) (“Removal actions are clean-up

or removal measures taken to respond to immediate threats to public health and

safety.”); NYSE&G v. FirstEnergy Corp., 766 F.3d 212, 230-31 (2d Cir. 2014) (“Removal

actions are generally clean-up measures taken in response to immediate threats to

public health and safety … generally designed to address contamination at its endpoint

and not to permanently remediate the problem.”); Franklin County Conv. Fac. Auth. V.

Amer. Prem. Under., Inc., 240 F.3d 534, 540 n. 3 (6th Cir. 2001) (Removal actions “usually

occur in the context of an emergency, and are considered temporary solutions”);

Minnesota v. Kalman W. Abrams Metals, Inc., 155 F.3d 1019, 1024 (8th Cir. 1998) (removal

actions are those “taken to counter imminent and substantial threats to public health

and welfare”); U.S. v. W.R. Grace & Co., 429 F.3d 1224, 1244 (9th Cir. 2005) (“Courts have

… stressed the immediacy of a threat in deciding whether a cleanup is a removal

action.” (collecting cases)).

As is apparent from these decisions, most removal actions are short-term or

temporary in nature. On rare occasions, a response that takes years and costs millions to

complete may also be a removal action, but only when the signal characteristic of

removal action is present, i.e., the action was instituted to address an imminent threat to

public health and safety. See, e.g., Next Millenium, supra.

2.

The hallmark of “remedial” action is to achieve a long-term fix.

Actions aimed at effecting a long-term or permanent remedy in the absence of an

imminent threat is remedial action. CERCLA defines a “remedial action” as “[t]hose

actions “consistent with permanent remedy taken instead of or in addition to removal

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actions in the event of a release or threatened release of a hazardous substance into the

environment, to prevent or minimize the release of hazardous substances so that they

do not migrate to cause substantial danger to present or future public health or welfare

or the environment.” 42 U.S.C. § 9601(24) (emphasis added).

The circuits have also recognized that, unlike removal action, remedial action is

aimed at achieving a long-term or permanent fix to the contamination at its source and

is not done on an urgent basis to address an imminent threat. Slip Op. at 15, citing

Bernstein v. Bankert, 733 F.3d 190, 201 n. 5 (7th Cir. 2013) (“Remedial actions ‘are longer

term, more permanent responses.’”); NYSE&G, supra, 766 F.3d at 231 (“Remedial actions

are typically actions designed to permanently remediate hazardous waste … generally

long-term or permanent containment or disposal programs.”); Next Millenium, supra,

732 F.3d at 125 (“Remedial actions are generally actions designed to permanently

remediate hazardous waste.”); Schaefer v. Town of Victor, 457 F.3d 188, 195 (2d Cir. 2006)

(remedial actions are “generally long-term or permanent containment or disposal

programs”); California ex rel. Cal. Dep’t of Toxic Substances Control v. Neville Chem. Co., 358

F.3d 661, 667 (9th Cir. 2004) (“remedial actions generally are permanent responses”)

(quoting Geraghty and Miller, Inc. v. Conoco, Inc., 234 F.3d 917, 926 (5th Cir. 2000); U.S. v.

W.R. Grace, supra, 429 F.3d at 1228 (“Remedial actions…are often described as

permanent remedies to threats for which an urgent response is not warranted.”), citing

Pub. Serv. Co. of Colo. V. Gates Rubber Co., 175 F.3d 1177, 1182 (10th Cir. 1999) (“In broad

contrast, a remedial action seeks to effect a permanent remedy to the release of

hazardous substances when there is no immediate threat to the public health.”); Franklin

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County, supra, 240 F.3d at 540 n. 3 (“Remedial actions are consistent with the permanent

remedy taken to prevent or minimize the release of hazardous substances so they do

not migrate to cause substantial danger to present or future public health, welfare or the

environment”).

3.

CERCLA’s limitations regime requires courts to maintain the line

between “removal” and “remedial” action.

Congress enacted different statutes of limitation for removal and remedial

actions. For removal actions, suit must be filed within three years “after completion of

the removal action.” 42 U.S.C. § 9613(g)(2)(A). This encourages parties to address the

imminent threat to public safety first, and sue for costs second.

For remedial actions, suit must be filed within six years after “initiation of

physical on-site construction of the remedial action.” 42 U.S.C. § 9613(g)(2)(B) (italics

added). Why this distinction? As the Seventh Circuit observed in U.S. v. Navistar

International Transp. Corp., 152 F.3d 702 (7th Cir. 1998), Congress enacted the statute of

limitations to promote timely, accurate determinations and provide finality to

potentially responsible parties. Id. at 710. Remedial action can go on for decades, and so

Congress provided for the limitations period to commence with the initiation rather

than the completion of the response action, and compensated for this adjustment by

extending the limitations period to six years.

Given that decades of additional remedial work might be required, Congress

also gave plaintiffs the right to seek declaratory relief or file subsequent actions to seek

future costs, so long as the initial cost recovery action was timely. 42 U.S.C. § 9613(g)(2).

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What CERCLA does not allow is the result in this case: An initial CERCLA cost

recovery action filed more than six years after the initiation of physical on-site

construction of remedial action.

4.

The work done at the surface impoundment was clearly remedial

action.

The work at this Site’s former surface impoundment bears the hallmarks of

remedial action, not removal action. There was no imminent threat to public health. The

work was done to close the impoundment, i.e., to effect a permanent remedy. Slater first

tried to achieve closure by doing a series of excavations over a six-year period. After

four years of relative inactivity, it built a reinforced concrete cap over the impoundment

in 1991 to permanently “landfill” or contain the residual contamination in place. The

Indiana Department of Environmental Management (IDEM) certified the impoundment

as closed after the cap was constructed, and Valbruna has called closure of the

impoundment a “key component” of the overall remedial strategy at the Site.

In Navistar, supra, the Seventh Circuit found that the construction of a defective

clay cover to permanently contain hazardous waste constituted the initiation of physical

on-site construction of remedial action that triggered the six-year limitations period

under 42 U.S.C. § 9613(g)(2)(B). A fortiori, the reinforced concrete cap built in 1991 and

still in service 30 years later did the same.

5.

The Seventh Circuit’s interpretation of “removal” action is

unsupported by the statutory text or circuit court precedent.

The Seventh Circuit found that the reinforced concrete cap over the

impoundment constituted removal rather than remedial action. The decision refers to

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the “threat” that the contamination at the impoundment presented (see Slip Op. at 16),

but every environmental response, including remedial action, responds to a threat.

Congress intended removal actions to be limited to imminent threats to public health

and safety, and there are no facts to support a finding of imminent threat to the public

here. The court below identifies none in its decision, and Valbruna made no claim of an

imminent threat in its brief below.

Given the absence of an imminent threat, the Seventh Circuit’s finding that the

cap constituted removal action necessarily rested on the fact that the cap did not

address the entire site and left further remedial work to be done in other areas. Slip Op.

at 16 (The work at the impoundment “was far from a comprehensive or permanent

action. It was a temporary solution, covering only a part of the plant’s pollution

causes.”).

But nothing in the statutory text supports the conclusion that a response aimed at

achieving a long-term or permanent fix rather than addressing an imminent threat is

removal action. And there is no language in the statute to support the view that a

remedial action becomes a removal action because it only addresses part of a site. Nor

did the Seventh Circuit cite any precedent for an expanded definition of “removal”

action that extends beyond work taken to address an imminent threat.

The Seventh Circuit’s decision thus eliminates the important and very deliberate

distinction Congress made between “removal” and “remedial” action. This creates

uncertainty where it did not previously exist and threatens the CERCLA limitations

regime Congress intended. There are dozens of waste units at industrial sites like this

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one. If remedial action at each unit were deemed a removal action simply because it did

not address the entire site, as here, the six-year limitations period for an initial CERCLA

cost recovery action would never be triggered. The tail of liability thus created would

span decades, if not centuries; the statute of limitations for remedial actions would

effectively be repealed.

6.

This Court found error in a liberal approach to CERCLA’s statute

of limitations in CTS v. Waldburger.

The Seventh Circuit’s decision stripped Joslyn of its limitations defense by an

unprecedented expansion of CERCLA’s definition of “removal” beyond the statutory

text. Some may believe this liberal interpretation serves CERCLA’s remedial purpose of

making the polluter pay, but this Court specifically found error in that approach in CTS

v. Waldburger, 134 S.Ct. 2175 (2014).

In that case, the plaintiffs alleged that the defendant’s industrial operations

contaminated their property. The defendant had ceased operations 24 years earlier, and

North Carolina had a ten-year statute of repose. The Fourth Circuit concluded that 42

U.S.C. § 9658 pre-empted the North Carolina statute and allowed the lawsuit to

proceed, invoking the proposition that remedial statutes should be interpreted in a

liberal manner. Id. at 2185.

This Court reversed, finding it was error to liberally construe the statute of

limitations to achieve CERCLA’s remedial purpose rather than determining

Congressional intent from the statutory text. Id. The same result is appropriate here. As

this Court observed in Waldburger, statutes of limitation “promote justice by preventing

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surprises through revival of claims that have been allowed to slumber until evidence

has been lost, memories have faded, and witnesses have disappeared.” Id. at 2183. The

statutory text of 42 U.S.C. § 9613(g)(2)(B) requires suit to be filed within six years of the

initiation of physical on-site construction of remedial action. This suit came decades too

late.

7.

The Seventh Circuit decision applies an “operable units”

approach to the statute of limitations that other circuits reject.

The district court denied Joslyn’s limitations defense on the alternative ground

that, even if the cap were remedial, it did not prevent Valbruna from recovering

remedial costs incurred at other “operable units.” The Seventh Circuit stated in a

footnote that its finding that the cap constituted removal action made it unnecessary for

it to “delve” into the “operable units” approach to the statute of limitations. Slip Op. at

18, n. 4. However, by finding that the cap was removal action simply because it did not

address the entire site, the Seventh Circuit nevertheless applied the operable units

approach. This presents a clear conflict with other circuits.

“Virtually every court that has considered the issue has agreed” that “there can

only be one remedial action at any given site.” NYSE&G, supra, 766 F.3d at 235-36

(collecting cases); Colorado v. Sunoco, Inc., 337 F.3d 1233, 1241 (10th Cir. 2003); Kelley v.

E.I. DuPont de Nemours & Co., 17 F.3d 836, 843 (6th Cir. 1994). Thus, an initial CERCLA

action to recover the costs of remedial action must be filed within six years of the

initiation of physical on-site construction of any remedial action.

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8.

Under the statutory text and other circuit decisions, the cap

triggered the limitations period as to the whole Site because it

was “consistent with the permanent remedy.”

The Seventh Circuit decision also conflicts with the statutory text and other

circuit court decisions in finding that only a “comprehensive” action addressing the

entire site can trigger the six-year limitations period of U.S.C. § 9613(g)(2)(B). On the

contrary, CERCLA only requires an action to be “consistent with [the] permanent remedy”

to constitute remedial action. 42 U.S.C. § 9601(24) (emphasis added); Gencorp, Inc. v.

Olin Corp., 390 F.3d 433, 444-45 (6th Cir. 2004), citing Geraghty & Miller, supra, 234 F.3d at

917 (5th Cir. 2000) and Navistar, supra, 152 F.3d at 711 (7th Cir. 1998); Schaefer, supra, 457

F.3d at 207 (2d Cir. 2006).

The cap over the impoundment meets this test. IDEM accepted the

impoundment as closed after the cap was built. It is still in service. And Valbruna told

Indiana environmental authorities that closure of the impoundment was a key

component of the overall remedial strategy.

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CONCLUSION

The Seventh Circuit’s holding that the surface impoundment at the Site was

removal action rather than remedial action, when there was no emergent condition or

imminent threat, and solely because the action addressed contamination on only a

discrete portion of the Site, applied the “operable units” approach that every other

circuit has rejected. This approach has not only created a split of authority on the

application of CERCLA’s statute of limitations, it creates an indefinite tail of liability

that does violence to the statutory language and Congressional intent.

For the foregoing reasons, petitioners respectfully request an order staying

further proceedings in this case pending the filing and disposition of the petition for

certiorari. Petitioners also request that an interim stay be granted while this application

is under consideration.

Respectfully submitted,

/s/Joshua G. Vincent

JOSHUA G. VINCENT*

Hinshaw & Culbertson LLP

151 N. Franklin Street

Suite 2500

Chicago, IL 60606

(312) 704-3463

Fax (312) 704-3822

jvincent@hinshawlaw.com

*Counsel of Record

September 20, 2019

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No. ______

In the Supreme Court

of the United States

___________________

Joslyn Manufacturing Company, LLC, et al.,

Applicant,

v.

Valbruna Slater Steel Corporation, et al.,

Respondent.

___________________

CERTIFICATE OF SERVICE

Joshua G. Vincent, counsel for applicant, Joslyn Manufacturing Company, LLC,

et al., and a member of the bar of this Court, hereby certifies that on September 20, 2019,

I caused a copy of the Application to Stay Further Proceedings in the District Court

Pending Certiorari in the above-captioned case to be served by overnight delivery on

the following:

David L. Hatchett

Hatchett & Hauck LLP

150 W. Market Street

Suite 200

Indianapolis, IN 46204-2814

david.hatchett@h2lawyers.com

I further certify that all parties required to be served have been served.

/s/Joshua G. Vincent

Joshua G. Vincent

Hinshaw & Culbertson LLP

HINSHAW & CULBERTSON LLP

151 N. Franklin Street, Suite 2500

Chicago, IL 60606

304365514v1 1001817