# Reply Brief — Monsanto Co. v. United States

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Reply Brief
- **Published:** January 1, 1989
- **Citation:** 490 U.S. 1106

## Text

|. Supreme Court, U.S.
| FyLED

MAY 26 1989

SPANIOL, JR.

vw

CLERK
No. 88-1404 —

—

IN THE
SUPREME COURT OF THE UNITED STATES

October Term, 1988

MONSANTO COMPANY, ALLIED-SIGNAL, INC.
AND EM INDUSTRIES, INC.,
Petitioners,
Was
UNITED STATES OF AMERICA,
SOUTH CAROLINA DEPARTMENT OF HEALTH
AND ENVIRONMENTAL CONTROL,
Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR THE
FOURTH CIRCUIT

REPLY BRIEF FOR THE PETITIONERS

George C. Freeman, Jr.
(Counsel of Record)

Alffred R. Light

Thomas E. Knauer

Hunton & Williams

707 E. Main St.

Richmond, Virginia 23212

(804) 788-8363

May 26, 1989

TABLE OF CONTENTS

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The Implications of the Secret Settlements ...................... 7
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TABLE OF AUTHORITIES

Chan v. Korean Air Lines, 109 S.Ct. 1676 (1989)........ccc0ccc000. 7

Kelly v. United States, 23 Env’t Rep. Cas. (BNA)
DN MMIII, BOPBID oo. 6ssccccsnnseshscsesesscasoonvassedcecanscecs 4

Liberty Mutual Insurance Co. v. Wetzel, 424 U.S. 737 (1976) 1

Mola Development Corp. v. United States,

No. CV82-0819-RMT (C.D. Cal. May 5, 1986) .0.....00..... +
United States v. Distler, No. 88-0201-L (J) (W.D.

aang cssciipechivenduanecieenmianseronias 3
United States v. Halper, 109 S.Ct. 1892 (1989) ..cececeeeeeeeee 10

United States v. Monsanto, 858 F. 2d 160 (4th Cir. 1988)........ 2

United States v. Seymour Recycling Corp., 686 F. Supp.
es ssassnnanawannes 3

United States v. South Carolina Recycling & Disposal, Inc.,
oe i ed ad | | ne 8

Statutory Provisions

Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 (“CERCLA”), as amended by
Superfund Amendments and Reauthorization Act (“SARA”)
Pub.L. No. 99-499, 100 Stat. 1613 (1986), 42 U.S.C.

§§ 9601-9675 (1982 & Supp. IV 1986) oo... passim
Section 101(21), 42 U.S.C. § 9601(21)
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Section 107(a), 42 U.S.C. § 9607(a)
ee 7

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Section 107(a)(3), 42 U.S.C. § 9607(a)(3)

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Section 107 (b)(3), 42 U.S.C. § 9607(b)(3)
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Section 113(f), 42 U.S.C. § 9613(f)
(1982 & Supp. IV 1986) .......... Maucananeninciedien 3
Section 113(f)(1), 42 U.S.C. § 9613((1)
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Section 113(f)(2), 42 U.S.C. § 9613(f)(2)
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Section 114(b), 42 U.S.C. § 9614(b) (1982
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Rules
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Miscellaneous

6 J. Moore, Federal Practice (2d ed. 1988)

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Ca, CUI, FAMINE FE CED dissscoccccennanconconscandcccnaccasecconinas 6
Restatement (Second) Of Torts (1985)..................scccsssccssssseees 4,5
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-ii-

PETITIONERS’ REPLY BRIEF

Pursuant to Rule 22.5, Petitioners respond to (1) Respondents’
restatement of the questions presented, (2) their allegation that the
district court treated Petitioners “claims” against the plaintiffs as
“abandoned”, (3) their claim for preferential treatment simply be-
cause the Government was a plaintiff and (4) the implications of
both governments’ disclosures of their heretofore secret settlements
with each other and their agencies.

The Government’s rewording of the questions presented
shows that it has no substantial defense on the merits to Petitioners’
arguments.

Mandatory Bifurcation

The Government recasts Petitioners’ first question to imply
that Petitioners argue that, as an abstract matter, courts do not have
the power to mandate bifurcation of CERCLA liability and contri-
bution issues into two separate trials. That is a straw man. Petition-
ers’ primary argument is that where the plaintiff also contributed to
the harm, the defendant may assert the plaintiff’s share in causing
the harm as a defense to the scope of defendant’s liability. This
defense is not a severable contribution claim. The court erred in
treating Petitioners’ partial defenses as separate “claims” which did
not have to be considered prior to entry of final judgment. See
Liberty Mutual Insurance Co. v. Wetzel, 424 U.S. 737, 743-44
(1976); 6 J. Moore, Federal Practice J 54.33[2] (2d ed. 1988).

Bifurcation into separate suits was also inappropriate in this
case for three other reasons. First, CERCLA actions are equitable
proceedings and, as Judge Widener said in his dissent, it is the
“universal and unvarying rule that the court will decide all matters in
dispute and decree complete relief.” Second, CERCLA § 113(f)(1)
also commands that:

. since the matter was brought before the

district court, that court had no discretion but to
decide the question. To repeat, the discretion is

ee

in the party to make the claim, not in the district
court to defer decision.

Widener, J., dissenting, 858 F.2d at 177. Pet. App. B-29. Third,
bifurcation into two separate suits was inappropriate because the
plaintiffs were also “responsible parties” under CERCLA and,
applying traditional principles of common law, since they did not
carry the burden of apportionment, defendants should not have been
held liable for all of the costs.

Petitioners’ additional, “fall back,” argument is that even if
their assertion of plaintiffs’ contribution to the harm must be
regarded as a “claim,” while the court had discretion to require two
Separate trials, its discretion was limited by the Federal Rules of
Civil Procedure. The Government concedes that the court did not
make the required certification under Rule 54(b), e.g., “that there is
no just reason for delay,” prior to entry of final judgment. U.S. Br.
10 n.7. Absent this requisite determination, the judgment of the
court of appeals would remain interlocutory however it might be
styled. 6 J. Moore, Federal Practice 9§ 54.28[2], 54.42 (2d ed.
1988). The “judgment” would not be a final judgment within the
meaning of the Federal Rules and the court of appeals would have
lacked jurisdiction to hear the appeal, as the United States concedes.
U.S. Br. 10 n.7.'

: The Government itself invoked the appellate jurisdiction of the Fourth
Circuit in a cross-appeal not the subject of this petition. See United States v.
Monsanio, 858 F. 2d 160, 175 (4th Cir. 1988) (Pet. App. B-26).. But it never
moved to dismiss the counterclaims for contribution or referred to them in the
order it drafted for the district court to which it refers. U.S. Br. 6 n.3 (referring
to Pet. App. G-3). Below, the Government argued, “To the extent that the
generators can be said to have presented contribution claims to the district
court, they were clearly denied, without prejudice to their assertion in a later
action, in the district court’s order of February 23, 1984... That ruling, of
course, was incorporated in the final judgment.” Joint Answer of the United
States and South Carolina Department of Health and Environmental Control to
Petitions for Rehearing and Suggestion for Rehearing in Banc, United States v.
Monsanto, Nos. 86-1261(L), 86-1263, 86-1265 (4th Cir., filed Oct. 8, 1988), at
11 n.4. Having deferred consideration of contribution claims to a separate
action in the 1984 order it drafted for the district court, the Government
apparently saw no need to refer to them in the later order, which it also drafted.

. +

Respondents struggle in separate ways to solve the Rule 54(b)
dilemma that they themselves have created by their mischaracteriza-
tion of Petitioners’ defense as a separate claim. South Carolina
asserts that the Rule 54(b) issue should not be considered because it
was not raised by Petitioners when the plaintiffs moved for sum-
mary judgment on costs issues in the district court.2 The Govern-
ment asserts for the first time that the district court treated Petition-
ers’ claims as effectively abandoned. U.S. Br. at 6 n.3, 10 n.7; see
S.C. Br. 10. But these assertions are without support in the record.

The Government itself drafted the language in the district
court’s orders which the Government refers to in its foomote 3. In
the Fourth Circuit, Respondents argued that the district court had
deferred Petitioners’ “counterclaims” to a subsequent separate con-
tribution action. The district court’s refusal to decide the contribu-
tion questions was a major subject of the briefs in the Fourth Circuit,
including Petitioners’ contention that such deferral was improper
under Rule 54(b).? The Government’s imaginative “abandonment”
argument is simply a thinly veiled attempt to reconstruct the district

. S.C. Br.9. South Carolina also argues that defendants are not prejudiced
because they did not sue third parties for contribution. S.C. Br. 10. But the
plainuffs had settled with most of the private defendants against whom the
defendants might have made claims in contribution and who had made sub-
Stantial contribution of wastes to the Bluff Road site. Assertion of claims
against these parties would have been futile. See 42 U.S.C. § 9613(f)(2). Their
equitable obligations are properly assigned to the plaintiffs under CERCLA §
113(f), but that is a result the plaintiffs seek to avoid by the “two trial”
procedure ordered below and the settlements they reveal for the first time in
their Briefs in Opposition in this Court.

’ The Government litigates cases under CERCLA in federal district
courts throughout the nation. As plaintiff, the Government frequently moves
for severance and/or stay of claims for contribution and indemnity. In some
cases, the Government argues (as it did here below) that the district court must
under the statute dismiss contribution claims for trial in subsequent actions.
United States v. Distler, No. 88-0201-L(J) (W.D. Ky. Feb. 2, 1989) (App. A-
1). In other cases, the Government argues, inconsistently, that a district court
cannot under the statute dismiss contribution claims as unripe. United States
v. Seymour Recycling Corp., 686 F. Supp. 696 (S.D. Ind. 1988). The United
States, as a CERCLA defendant, argues for impleader and against separate
tnals of the CERCLA plaintiffs’ claims against it. See U.S. Br. 12 n9

mo

court opinions it previously drafted in order to avoid issues, which
on reflection it now finds inconvenient to address. Moreover this
“abandonment” argument is inconsistent with other arguments in
the Government's brief. Later the Government attempts to distin-
guish cases cited by Petitioners on the grounds that they do not
discuss “deferral,” the issue involved here, but instead involve
various courts’ refusal “to dismiss some counierclaims against the
governmental plaintiffs based on alleged governmental involvement
at the waste site.” U.S. Br. 12 n.9.

The Burden of Proof

The Government would have the Court collapse Petitioners
second and third questions into a single, second question in order to
avoid (1) the Congressional guideline for determining wien joint
and several liability is appropriate under CERCLA, “principles of
traditional and evolving common law,” and (2) the application of
the Restatement (Second) of Torts. All parties agree that the statute
itself is silent as to when joint and several liability is appropriate and
who has the burden of proof under what circumstances. Turing to
the legislative history, both Petitioners and Respondents have cited
the floor statement of Senator Randolph, one of the principal spon-
sors of the Senate compromise in 1980. Here is what Senator
Randolph actually said:

[w]e have deleted any reference to joint and
several liability, relying on common law prin-
ciples to determine when parties should be sever-
ally liable.

It is intended that issues of liability not resolved
by this act, if any, shall be governed by the
traditional and evolving principles of common

(discussing Mola Development Corp. v. United States, No. CV82-0819-RMT
(C.D. Cal. May 5, 1986)); Kelly v. United States, 23 Env’t Rep. Cas. (BNA)
1500, 1503 (W.D. Mich. 1985).

-4-

law. An example is joint and several liability.
Any reference to these terms have been deleted,
and liability of joint tort feasors will be deter-
mined under common or previous statutory law.

126 Cong. Rec. 30932 (1980); 126 Cong. Rec. $14964, (daily ed.
November 24, 1980). Following this guidance, numerous courts
have turned to Restatement (Second) of Torts for the governing tra-
ditional common law principles. The court of appeals below looked
to Section 433A for when joint and several liability is or is not
appropriate. But as Petitioners have pointed out, it failed to heed
comment g to Section 433A to look to Section 433B for “the burden
of proof, and the effect of failure to produce evidence justifying the
apportionment.” Pet. 24-26.

In trying to cope with Secu’on 433B, the Government does not
dispute the proposition that under the traditional common law the
burden of proof of apportionment is upon the plaintiff, not the
defendant, when both have contributed to the harm. Instead, it seeks
to evade the traditional common law by several manuevers. First, it
excises the words “traditional and” from Senator Randolph’s state-
ment. U.S. Br. 13.* Second, it argues for selective use of only some
of the traditional principles:

Congress’ instruction to the courts to apply
“evolving principles of. common law" was not
tantamount to requiring courts to apply to CER-
CLA every statement and every explanation con-
tained in the Restatement.

4

The Government also argues that the term “the proved tort feasor,” in
comment (d) to Section 443B has no relevance to CERCLA because “the gov-
ernment is not required to make a traditional showing of fault or causation.”
U.S. Br. 15n.11. But “tort feasors” are the very words Senator Randolph used
in the quote above when referring to the common law that was to determine
when joint and several liability was appropriate under CERCLA. Further-
more, the Government’s argument ignores its burden of proving the elements
of statutory liability and the kind of evidence relevant to the availability of
defenses which relate directly to notions of causation and fault. See CERCLA
§ 107(a)(3),(0)(3), 42 U.S.C. § 9607(a)(3), (b)(3).

A

U.S. Br. 14-15 n.11. But the American Law Institute in its restate-
ments Crafts the “black letter” and the comments as a seemless web.
Moreover, the Goverment does not say what is to guide courts in
this case-by-case picking and choosing among traditional common
law pnnciples. The Government’s novel selective acceptance
theory is quintessential “‘standardless delegation.”

The Govermnment’s third reason why it should not bear the
burden of proving apportionment where it is also a “responsible
party” is that a special exception from the common law rules
applicable to other CERCLA plaintiffs should be made where it is
the plainuff. This argument is “Orwellian”. George Orwell in
Animal Farm refers to the rule in that mythical land that

All animals are equal,
But some animals are more equal than others.

Here the Government concedes that CERCLA intends “each depart-
ment, agency, and instrumentality of the United States” can be liable
“persons” under the Act. But then it argues that its agencies become
liable “persons” within the context of the Act’s liability and contri-
bution provisions “only after all questions of liability and remedy
have been resolved.” U.S. Br. 8. As support for this curious
proposition, the Government refers to a statement in the House
Judiciary Committee Report:

The night of the United States to proceed under
§ 106 or 107 is unaffected by its status as an
owner or operator of a facility or a generator of
waste at the site.

U.S. Br. 8. But all this statement does is clarify that the
Government's nght to commence a suit is not inhibited by its own
liability, e.g., the Government’s liability is not a complete defense
analogous to contributory negligence. Moreover, as pointed out in
the Petition, the Senate clearly and decisively rejected the
Government’s pleas for universal bifurcation of liability and contri-
bution issues either in separate suits or separate trials in the same
suit. Pet. 16-17. In any event, in the face of the clear statutory

Sas

language in CERCLA Section 113(f)(1),(2) giving “any person” a
right to seek contribution from any other person who is liable or
potentially liable under section 107(a), during or following any civil
action under. .. section 107(a),” the courts have no power to consult
the legislative history to insert an amendment into the text. (Empha-
sis added.) Cf. Chan v. Korean Air Lines, 109 S.Ct. 1676 (1989)
(Although a treaty’s drafting history might be consulted to elucidate
a text that is ambiguous, courts have no power to insert an amend-
ment into the treaty where the text is clear).

Finally, any notion that the Government can separate itself
into two separate, independent entities (EPA as plaintiff “protector
of the public” and EPA, the Army, and its other agencies as defen-
dant “‘polluters”’) in a single legal proceeding has been disavowed by
the Government elsewhere and rejected by this Court in other
contexts. Pet. 14-15. Indeed, the “potentially liable person”
referred to in the statute is the United States Government. 42 U.S.C.
§ 9601(21).

The Implications of the Secret Settlements

Petitioners have argued that the judgment below should be set
aside because it has not been reduced to reflect setlements among
the plaintiffs and other settling parties. In partial response, South
Carolina reveals that it has made payment to the Goverment for
reimbursement of response costs at Bluff Road. But it concedes
“that the amount paid should result in a reduction of the judgment.”
S.C. Br. 8. Similarly, the Government reveals that EPA has also
accepted payments from certain other federal agencies. U.S. Br. 3
n.1.

The intergovernmental settlements between the Government
and South Carolina and among the govemmmental agencies are in
addition to two settlements of which Petitioners were previously
aware in which the Govemmenit accepted payment for the same
costs covered by the judgment here. Pet. 19-20. The Government
also concedes that these settlements “would reduce the total
amounts due the governments.” U.S. Br. 11.8. This statement is,
however, misleading for two reasons. First, the amount of the
judgment entered by the district court did not reflect all settlements

a

approved by the district court prior to entry of final judgment.*
Second, the Government now reveals that it has accepted payment
trom its own federal agencies. Thus, it will attempt to block Peti-
tioners from recovering payments from these agencies in the contn-
bution action which the Government below maintained was avail-
able. U.S. Br. 3n.1.° The attempt to obtain double recoveries and to
avoid court determination of the fair shares of the Government
departments and agencies as waste generators through self-dealing
is flatly contrary to the statute, see 42 U.S.C. § 9614(b), and equi-
table principles.

Part I, C of the Petition discusses the likely consequences to
Petitioners of the “two actions” procedure forced on them by the
district court. The bottom line is that they probably will end up
saddled with far more than their fairly apportioned share of liability.
The Respondents off-the-record intergovernmental settlements
make this result virtually inevitable.’

; The district court entered a settlement between the Government and
Columbian Organic Chemical Company specifically stating that claims
against the other defendants would be reduced by the amount of the settlement.
United States v. South Carolina Recycling & Disposal, Inc., 653 F. Supp. 984,
1010 (D. S.C. 1985). Although the United States represents that such a
reduction occurred, U.S. Br. 11 n.6, an exainination of the accounting of costs
on which the final judgment was calculated and the amount of that judgment
clearly demonstrates that no such reduction occurred. The settlement with
AquAir Corporation entered by the Fourth Circuit without any hearing, though
one had been requested by Petitioners, dismissed the judgment against AquAir
for $1,561,134.55 in exchange for a payment of $5,000, without reduction of
the judgment against Petitioners. Pet. 19; S.C. Br. 8.

. Joint Answer of the United States and South Carolina Department of
Health and Environmental Control to Petitions for Rehearing and Suggestion
for Rehearing in Banc, United States v. Monsanto, Nos. 86-1261(L), 86-1263,
86-1265 (4th Cir., brief filed Oct. 7, 1988), at 8 n.1 (“Where governmental
agencies resolve their responsibility to reimburse the Superfund they would be
enutled to contribution protection, 42 U.S.C. 9613(f)(2) ....”).

? The Government argues that, “Contrary to the fears expressed by Peti-
uioners . . . district courts can exercise this discretion in a manner that . . . avoids
unfairness where unfairness would otherwise result, a district court could
simply bifurcate the Government’s case-in-chief and contribution claims,

=

Respondents take the position that they can enter into “admin-
istrative” settlements between their “potentially responsible” agen-
cies and thereby extinguish contribution claims against them.’
While respondents asserted this position in the Fourth Circuit, they
did not advise the court or Petitioners of all such settlements. Yet
the lynchpin of the majority opinion’s reason for denying or not
addressing the constitutional arguments raised below was the
court’s assumption that “the Respondents still have the right to sue
responsible parties for contribution and in that action may assert
both legal and equitable theories of cost allocation.”” Pet. App.
B-22. Elsewhere in the opinion, unaware of the off-the-record set-
tlements, the court also stated:

We also observe that the EPA has contributed
upwards of $50,000 to the Bluff Road cleanup,
and that any further claims against EPA and
other responsible government instrumentalities
may be resolved in contribution action pursuant
to CERCLA section 113(f).

Pet. App. B-22 n. 28.

The net effect of the opinion below and the off-the-record
intergovernmental settlements is likely foreclosure of any “‘opportu-
nities for contribution . . . as well as joinder or interpleader of
responsible parties” cited by the majority below as a means of
preventing transformation of an “otherwise constitutional obligation
into one that exacts punishment.” Pet. Br. App. B-25, 26 n.33.

instead of deferring contribution to a subsequent action.” U.S. Br. 10. What
the Government fails to note is that avoidance of unfairness is the precise
reason why Rule 54(b) requires a court to find that “there is no just reason for
delay” before it can require bifurcation into two separate actions. Here it could
not have made such a finding because it needed to maintain control of the
award of the amount of damages so that it could adjust that amount in light of
its apportionment of responsibility for the harm later in the same proceeding.

. See note 6, supra.

Conclusion

The decision below and the newly revealed intergovernmental
settlements portend the ultimate incidence of grossly dispropor-
tional liability in this case and in future CERCLA cases. These
discriminatory results are contrary to the equitable allocation of
CERCLA liability Congress intended. In extreme circumstances, if
the ultimate incidence bears no rational relationship to a defendant’s
fairly allocated contribution to the harm, it may be unconstitutional.
Pet. 21-23. Cf. United States v. Halper, 109 S.Ct. 1892 (1989)
(discussing the constitutional line between permissible civil remedy
and prohibited punishment).

Respectfully Submitted,
George C. Freeman, Jr.
(Counsel of Record)

Alfred R. Light
Thomas E. Knauer

-10-

APPENDIX

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION

UNITED STATES,
PLAINTIFF,

CIVIL ACTION
No. 88-0201 L(J)

V.
DONALD E. DISTLER, et al.,

DEFENDANTS.

MEMORANDUM OPiNION AND ORDER

This matter is before the court on the motion of Kurfees
Coatings, Inc. (“Kurfees”) to file a third-party complaint. The
United States brought this action under the Comprehensive Envi-
ronmental Response, Compensation, and Liability Act (“CER-
CLA”), 42 U.S.C. § 9607 (1988), to recover costs expended in
remedying improper disposal of hazardous wastes in Hardin
County, Kentucky. Jurisdiction is proper pursuant to 28 U.S.C.
§ 1345 (1988).

Kurfees contends that in 1984 it bought the assets of Louisville
Coatings, Inc. As part of the sale agreement, Louisville Coatings
warranted there was no litigation or governmental investigation
pending nor any known basis for any litigation or investigation.
Kurfees contends that Louisville Coatings is liable for contribution
or indemnity of any claim against them, either because of the
contract or because any wrongful acts were committed by Louisville
Coatings. It seeks to add a third-party claim against them.

A-1

The United States objects for two reasons. First, it claims that
because of the strict liability provisions of CERCLA, a third-party
claim would be unwarranted until a judgment has been entered
against Kurfees. Second, the United States contends that allowing
the defendants to lengthen and complicate the proceeding would
defeat the intent of CERCLA, which is to provide a speedy and
efficient mechanism to reimburse the United States for its clean-up
expenses. Neither ground is persuasive.

Fed. R. Civ. P. 14(a) states that “at any time after commence-
ment of the action a defending party, as a third-party plaintiff, may
cause a summons and complaint to be served upon a person not a
party to the action who is or may be liable to the third-party plaintiff
for all or part of the plaintiff's claim against the third-party plain-
uff.” The defendant need not wait until the claim against him is
reduced to a judgment; he may bring a third-party action for contri-
bution or indemnity when it appears the facts give rise to that claim.
6 C. Wright and A. Miller, Federal Practice and Procedure § 1446
(1971). It may be that Kurfees has no claim against Louisville
Coatings, but it is much too early for this court to tell. The third-
party claim is not too speculative or frivolous to file.

Further, the court has other means at its disposal to prevent
third-party claims from delaying or complicating the case. The
court may bifurcate the trial or order discovery undertaken in
different phases. The court is confident that the third-party claim
will not impede a just and expeditious resolution of this action.
Therefore,

IT IS ORDERED that defendant Kurfees Coatings, Inc.’s
motion to file a third-party complaint is GRANTED.

DATED 1-31-89
Edward H. Johnstone, Chief
Judge ~
United States District Court
Entered Feb. 2, 1989

cc: Counsel

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385002_0954%3A4. Public record. Not legal advice.
