Respondents Brief — Key Tronic Corp. v. United States

LP ee ge aR ee Le Re TE

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No. 93-376

—

NOV - 8 1993

ORE OF WE GLERg

In the Supreme Court of the Giited States

OCTOBER TERM, 1993

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P e ois

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KEY TRONIC CORPORATION, PETITIONER

v.

: UNITED STATES OF AMERICA, ET AL.

STANTON ROAD ASSOCIATES, PETITIONER

Vv.

LOHREY ENTERPRISES, INC., ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

|

BRIEF FOR THE FEDERAL RESPONDENTS

Drew S. Days, III

Lots J. SCHIFFER )

Acting Assistant Attorney General

ANNE S. ALMY

DAVID C. SHILTON

M. ALICE THURSTON

Attorneys

Department of Justice «4

Washington, D.C. 20530

(202) 514-2217

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BEST

QUESTION PRESENTED

Whether the provision in Section 107(a) of the Com-

prehensive Environmental Response, Compensation, and

Liability Act, 42 U.S.C. 9607(a), that allows a private

party to recover the “costs of response” to pollution at

designated sites, implicitly authorizes the recovery of

attorney fees.

(1)

TABLE OF CONTENTS

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TABLE OF AUTHORITIES

Cases:

Alloy Briquetting Corporation v. Niagara Vest, Inc., 802

a Cs: Ge GUE AG Hs WEED cccncncensccnsciccsnnnnsesseticndanees

Alyeska Pipeline Service Co. v. Wilderness Society, 421

2 ET

BTR Dunlop, Inc. v. Rockwell International Corporation,

No. 90 C 7414 (N.D. Ill. Feb. 16, 1993) ................. ee

Brarton v. United States, 111 S.Ct. 1854 (1991) ...........

Chesapeake and Potomac Telephone Company v. Peck

Tron & Metal Co., 814 F. Supp. 1281 (E.D. Va. 1993),

appeal pending, No. 93-1903 (4th Cir.) .........cccccccceeee.

Donahey v. Bogle, 987 F.2d 1250 (6th Cir. 1993), petition

for cert. pending, No. SB-4EB .........cccccccscsssssccscccsssccesseees

FMC Corporation v. Aero Industries, Inc., 998 F.2d 842

SE TIES WII aieteradirnetteneeniaieihsinidiegdetebdinnesipigebisundanapiindininatios

General Electric Company v. Litton Industrial Automa-

tion Systems, Inc., 920 F.2d 1415 (8th Cir. 1990), cert.

I GE Wak Ge GED ccccsccccccccscnsccessencsuscnsssssecessons

Hatco Corporation v. W.R. Grace & Co.-Conn., 801 F.

SE SEE TNE TINIE cesicrcccencesasencscnnsnnsnscssusesssnesensons

HRW Systems, Inc. v. Washington Gas Light Company,

DG ee

Juniper Development Group v. Kahn (In re Hemingway

Transport, Inc.), 993 F.2d 915 (ist Cir. 1993), cert.

denied, No. 93-187 (Oct. 12, 1993) ...........cccccccccssessseneeees

(III)

3,5

6-7

IV

Cases—Continued: Page Jn the Supreme Court of the Cited States

Keystone Chemical Co. v. Mayer Pollock Steel Corporat-

ion, No. Civ. A 92-6000 (E.D. Pa. Apr. 7, 1993) ............. 8 re

Leonard Partnership v. Town of Chenango, 779 F. Supp.

ee GE ie TUNED enidtietcdeeidinnnieiivenaeatie te s

New York v. SCA Services, Inc., 754 F. Supp. 995, _ i

(S.D.N.Y. 1991) ssseerecestgnueanateenadenlannseheeepaasbaniattiaineninapadesinanenans 8 KEY TRONIC CORPORATION, PETITIONER

Runyon v. McCrary, 427 U.S. 160 (1976) ..0000.0 0. 3,5

Russello v. United States, 464 U.S. 16 (1983) .....000.00.... 6 v.

T & E Industries, Inc. v. Safety Light Corp., 680 F.

Supp. 696 (D.NiJ. 1988) ..cccccccccccssssccesssessssssssssssseseeooee 8 UNITED STATES OF AMERICA, ET AL.

United States v. Hardage, 982 F.2d 1436 (10th Cir.

STEED ‘scossnecsscsinnsseccettnnesinnimapensuninmbiiiianiindiihat iat ig ai 7

Statutes: STANTON ROAD ASSOCIATES, PETITIONER

Comprehensive Environmental Response, Compensation, v.

and Liability Act, 42 U.S.C. 9601 ef seq.: , i |

JOHREY ENTERPRISES, INC., ET AL.

§ 101(25), 42 U.S.C. 9601(25) o..cccccccccccccsscscesscsssesessssccon 3

$ 104(b), 42 U.S.C. 9604(b) ......c.cccceccescocccsssessessessseoseeees 5

9 OL ae ee 7,8

§ 107(a), 42 U.S.C. 9607(A) o.cccccccecccsccccscesseseosee. idea 2, 3, 6 ON PETITION FOR A WRIT OF CERTIORARI

$ 110(c), 42 U.S.C. 9610(C) .....ccccecceccossecceccsessesecesseseesee. 5 TO THE UNITED STATES COURT OF APPEALS

§ 111(p)(1), 42 U.S.C. 9611(p\(1) (Supp. III 1991) ........ 9 FOR THE NINTH CIRCUIT

§ 122(g)(5), 42 U.S.C. 962205) oocccccccceccccsesesesecscossseee 4

$ B1O(f), 42 U.S.C. 96590f) o..cecccccceccccccccccsscecccsssesesssecece 5

Omnibus Budget Reconciliation Act of 1970, Pub. L. No. BRIEF FOR THE FEDERAL RESPONDENTS

101-508, § 6301, 104 Stat. 1388-319 oo cccccccccccccceececseoseoseee 9

OPINIONS BELOW

The opinion of the court of appeals in the Key Tronic

case (Pet. App. Al-A5) is reported at 984 F.2d 1025. The

opinion of the court of appeals in the Stanton Road case

(Pet. App. C1-C20) is reported at 984 F.2d 1015. The opin-

ion of the district court in the Key Tronic case (Pet.

App. B1-B15) is reported at 766 F. Supp. 865. The opinion

(1)

2

of the district court in the Stanton Road case (Pet. App.

D1-D15) is unreported.

JURISDICTION

The judgments of the court of appeals in both cases

were entered on January 28, 1993. Petitions for rehear-

ing were denied in both cases on June 7, 1993. Pet. App.

E1, Fl. The petition for a writ of certiorari was filed on

September 7, 1993 (a Tuesday after a Monday holiday).

The jurisdiction of this Court is invoked under 28 U.S.C.

1254(1).

STATEMENT

The petition challenges two separate judgments of the

Ninth Circuit, rendered in two separate cases consoli-

dated for argument before the court of appeals. The

United States is a party only in the Key Tronic case.

1. The Stanton Road case arises out of the effects of a

dry cleaning plant owned and operated by the private re-

spondents near property owned by petitioner Stanton

Road Associates.' The private respondents allowed haz-

ardous chemicals from the dry cleaning plant to contam-

inate Stanton Road’s land. Pet. App. C2, D2-D6.

a. Stanton Road filed suit in the United States

District Court for the Northern District of California,

claiming that it was entitled under Section 107(a) of the

Comprehensive Environmental Response, Compensation,

and Liability Act (CERCLA), 42 U.S.C. 9607(a), to re-

cover from the private respondents the costs of remedy-

ing the contamination, including attorney fees. After a

bench trial, the district court ruled in favor of Stanton

Road. Pet. App. D1-D15. The district court ordered the

private respondents to pay Stanton Road $1,100,000 (to be

deposited in an escrow account to cover the costs of rem-

' This brief refers to the respondents in the Stanton Road case

as the private respondents.

3

edying the contamination), together with $126,197.78 for

attorney fees. Jd. at D11.

b. A divided panel of the court of appeals reversed.

Pet. App. C1-C20. Of relevance to the petition, the court

concluded that the district court erred in awarding at-

torney fees. Jd. at C4-C1l. The court reviewed the ap-

plicable statutory language, which authorizes recovery

of the “necessary costs of response” and defines

“response” as “removal, remedy, and remedial action

* * * inelud[ing) enforcement activities related

thereto.” CERCLA §8§ 107(a), 101(25), 42 U.S.C. 9607(a),

9601(25). Although the court of appeals acknowledged

(Pet. App. C5) that the Eighth Circuit had allowed recov-

ery of attorney fees as part of the “necessary costs of re-

sponse” in General Electric Company v. Litton Indus-

trial Automation Systems, Inc., 920 F.2d 1415, 1421-1422

(1990), cert. denied, 499 U.S. 937 (1991), the court of ap-

peals reached a different conclusion. The court noted the

“American Rule” described by this Court in Alyeska

Pipeline Service Co. v. Wilderness Society, 421 U.S.

240, 247 (1975), under which “a prevailing party cannot

recover attorneys’ fees in the absence of congressional

authority.” Pet. App. C6. The court also considered (id.

at C7) this Court’s opinion in Runyon v. McCrary, 427

U.S. 160 (1976), which stated that attorney fees are not

recoverable “absent explicit congressional authoriza-

tion,” id. at 185. Relying on those cases, the court con-

cluded that the reference to “eiiforcement activities” in

Section 101(25) of CERCLA was not sufficiently explicit

to justify an award of attorney fees. Pet. App. C7.”

2 Judge Canby dissented (Pet. App. C15-C20). On the attorney

fee question, he argued that the panel’s conclusion rendered the

reference to “enforcement activities” in 42 U.S.C. 9601(25) super-

fluous, because attorney fees would be the main component of the

costs of enforcement activities. Pet. App. C15-C19.

4

2. The Key Tronic case involves the Colbert Disposal

Site in Spokane County, Washington. During the 1970's,

the operator of that site disposed of hazardous waste it

accepted from several parties, including petitioner Key

Tronic as well as the United States Air Force. When it

was discovered in 1980 that water wells near the site

were contaminated, the Washington Department of Ecol-

ogy (WDOE) and the federal Environmental Protection

Agency (EPA) responded. Eventually, the government

agencies entered into separate settlements with both

Key Tronic and the Air Force. First, a settlement

agreement with the Air Force required it to pay $1.45

million; in accordance with a provision for de minimis

settlements in Section 122(g)(5) of CERCLA, 42 U.S.C.

9622(¢)(5), the agreement provided that the Air Force

would “not be liable for claims for contribution regarding

matters addressed in the settlement.” Second, a consent

decree with Key Tronic required it to pay $4.2 million in

cleanup costs. Pet. App. A2 & n.1, B2.

a. Petitioner Key Tronic Corporation filed suit

against a variety of parties (including the United States)

in the United States District Court for the Eastern

District of Washington, seeking recovery under

CERCLA for the costs it incurred pursuant to its set-

tlement, as well as attorney fees and additional response

costs that it claimed it had incurred independently. The

court resolved a variety of dispositive motions in an opin-

ion issued in 1991. Pet. App. B1-B15. Among other

things, the district court held that the United States

was liable for attorney fees as part of the necessary

costs of response. /d. at B6-B13.

b. A divided panel of the court of appeals reversed.

Pet. App. Al-A5. The relevant portion of the opinion re-

lied entirely on the opinion in the Stanton Road case,

summarized above. Pet. App. A4. Judge Canby dissented,

5

relying on his dissent in the Stanton Road case. Pet.

App. Ad; see note 2, supra.

3. The court of appeals denied petitions for rehearing

and suggestions for rehearing en bane in both cases,

wits no recorded dissent other than that of Judge Canby.

Pet. App. E1, F1.

ARGUMENT

Although we believe the decision of the court of ap-

peals is correct, the question presented by the petition is

an important one on which the courts of appeals are di-

vided. Accordingly, the petition should be granted.

1. As the court of appeals recognized, the question be-

fore the Court must be resolved under the principle, con-

sistently applied by this Court, that attorney fees are

not recoverable in federal courts except as prescribed in

an explicit authorization by Congress. See, e.g., Alyeska

Pipeline Service Co. vy. Wilderness Society, 421 U.S.

240, 247 (1975); Runyon v. McCrary, 427 U.S. 160, 185

(1976). The provisions of CERCLA relevant to these ac-

tions do not refer to attorney fees. Accordingly, peti-

tioners were not entitled to recover attorney fees as part

of the necessary costs of response to the covered envi-

ronmental contamination.

The significance of the absence of any reference to at-

torney fees in the provisions applicable to this action is

underscored by the presence of express references to at-

torney fees in other provisions of CERCLA. See, e.g., 42

U.S.C. 9659(f) (prevailing parties in citizens suits may

recover “costs of litigation (including reasonable attor-

ney and expert witness fees)”); 42 U.S.C. 9610(¢)

(employee-whistleblowers may recover “all costs and ex-

penses (including the attorney's fees)”).’ Accordingly, as

* See also 42 U.S.C. 9604(b) (authorizing federal government to

“undertake such * * * legal * * * studies or investigations as

6

the Ninth Circuit explained, CERCLA is a statute

where “Congress has repeatedly demonstrated that it

knows how to express its intention to create an excep-

tion to the American Rule.” Pet. App. C7. Thus, it also

is a statute where it would be particularly inappropriate

to interpret vague and indefinite language as implicitly

authorizing the recovery of attorney fees.’ Hence, the

Ninth Circuit’s conclusion that CERCLA does not au-

thorize attorney fees in this context is correct.’

2. For several reasons, the question presented by the

petition warrants review by the Court. First, the sev-

eral courts of appeals that have considered the question

have reached conflicting results. Like the Ninth Circuit

in this case, the First Circuit has concluded that the ab-

sence of an explicit reference to attorney fees in the rel-

evant provisions of CERCLA bars any recovery of attor-

ney fees as part of the “necessary costs of response”

under Section 107(a) of CERCLA.® On the other hand,

[it] may deem necessary [and] * * * to recover the costs

thereof”).

' See, e.g., Russello vy. United States, 464 U.S. 16, 23 (1983)

(“Where Congress includes particular language in one section of a

statute but omits it in another section of the same Act, it is gener-

ally presumed that Congress acts intentionally and purposely in

the disparate inclusion or exclusion.”) (brackets omitted).

® If the Court grants review in this case and (contrary to our

submission) reverses the decision of the court of appeals on the at-

torney fee issue presented by the petition, it should remand the

Key Tronic case to the Ninth Circuit for further proceedings on

the question whether Key Tronic nevertheless would be barred

from recovery because of its contribution to the contamination of

the site. Because the court of appeals ruled in the government's

favor on the question presented in the petition, it had no occasion

to consider that argument. Pet. App. A4.

® Juniper Development Group v. Kahn (In re Hemingway

Transport, Inc.), 993 F.2d 915, 934-935 (1993) (“Congress did not

consider, and [CERCLA] did not include, any attorney fee award

7

the Sixth and Eighth Circuits have reached a contrary

conclusion, reasoning that the “necessary costs of re-

‘

sponse” include attorney fees.’ The Tenth Circuit has

adopted an intermediate position, under which attorney

fees that are not incurred in pursuing litigation are re-

coverable, although attorney fees incurred in the Section

107 action itself are not recoverable. FMC Corporation

v. Aero Industries, Inc., 998 F.2d 842, 848 (1993): see also

United States v. Hardage, 982 F.2d 1436, 1447-1448 (1992)

(stating same rule in dictum). The FMC panel reasoned

that attorney fees that are not incurred in pursuing

litigation are not covered by the Alyeska rule, and then

determined that such fees would be “necessary costs of

response” if they were “necessary to the containment

and cleanup of hazardous releases” at the site.” 998 F.2d

at 848.”

amendment applicable to the private cost recovery provision in

[CERCLA Section 107(a)|. We therefore conclude that Congress

has elected not to authorize attorney fee awards in these actions.”),

cert. denied, No. 93-187 (Oct. 12, 1993). The petition for a writ of

certiorari in No. 93-187 did not raise the question presented in this

case.

7 Donahey v. Bogle, 987 F.2d 1250, 1256 (6th Cir. 1993) (“The

court can conceive of no surer method to defeat |Congress’s pur-

pose that Section 107 provide an incentive for parties to remedy

hazardous waste contamination] than to require private parties to

shoulder the financial burden of the very litigation that is neces-

sary to recover these costs.”), petition for cert. pending, No. 93-

428; General Electric Company v. Litton Industrial Automation

Systems, Inc., 920 F.2d 1415, 1421-1422 (&th Cir. 1990) (“Attorney

fees and expenses necessarily are incurred in this kind of enforce-

ment activity and it would strain the statutory language to the

breaking point to read them out of the ‘necessary costs’ that

[Section 107(a)] allows private parties to recover.”), cert. denied,

499 U.S. 9837 (1991).

* Petitioner Key Tronic argues (Pet. 12 n.14) that it would be

entitled under the rule articulated by the Tenth Circuit to recover

some of the attorney fees sought from the Air Force. In our view,

8

The practical consequences of the circuit conflict also

counsel in favor of review by the Court at this time. The

federal government and its various agencies often defend

against suits, such as in the Key Tronic case at issue

here, that seek to recover response costs based on the

contributions of federal agencies to contamination at Su-

perfund sites. The government is currently a defendant

in 22 response cost actions pending in the Eighth Circuit

and in 88 such cases in the Sixth Circuit. To the degree

that plaintiffs have the opportunity to choose between fo-

rums, a continuing disparity in result between those

courts and the First and Ninth Circuits could cause an

increasing number of cases to be brought against the

government in courts Within those circuits.

any recovery of nonlitigation attorney fees permitted by Section

107 necessarily would be limited to fees “necessary to the contain-

ment and cleanup of hazardous releases,” FMC Corp., 998 F.2d at

848; we do not believe that any of the costs sought by petitioner

Key Tronic fall within that category.

* The district courts in circuits that have not addressed the

question at the appellate level also have reached conflicting results,

with district courts disallowing fees in the Second and Third Cir-

cuits, see, e.g., Keystone Chemical Co. v. Mayer Pollock Steel Cor-

poration, No. Civ. A. 92-6000 (E.D. Pa. Apr. 7, 1993); Alloy Bri-

quetting Corporation v. Niagara Vest, Inc., 802 F. Supp. 943, 945-

947 (W.D.N.Y. 1992); Hatco Corporation v. W.R. Grace & Co.-

Conn., 801 F. Supp. 1309, 1333 (D. N.J. 1992); Leonard Partner-

ship v. Town of Chenango, 779 F. Supp. 223, 229-230 (N.D.N_Y.

1991); New York v. SCA Services, Inc., 754 Fr. Supp. 995, 1000-1001

(S.D.N.Y. 1991); T & E Industries, Inc. v. Safety Light Corp., 680

F. Supp. 696, 707-708 (D.N.J. 1988), and allowing fees in the

Fourth and Seventh Circuits, see, e.g., HRW Systems, Ine. vy.

Washington Gas Light Company, 823 F. Supp. 318, 345-346 (D. Md.

1993); BTR Dunlop, Inc. vy. Rockwell International Corporation,

No. 90 C 7414 (N.D. Ill. Feb. 16, 1993); Chesapeake and Potomac

Telephone Company v. Peck Iron & Metal Co., 814 F. Supp. 1281,

1282-1285 (E.D. Va. 1993), appeal pending, No. 93-1903 (4th Cir.).

2 MRS. Sem a te Wem 4

BP > Wins

9

Finally, we disagree with the argument of the private

respondents (Br. in Opp. 4)"° that the petition should be

denied because CERCLA is currently before Congress

for reconsideration and reauthorization. See CERCLA

Section 111(p)(1), 42 U.S.C. 9611(p)(1) (Supp. IIT 1991)

(funding for CERCLA authorized only through fiscal

year 1994). As the Court explained in Braxton v. United

States, 111 S.Ct. 1854 (1991), the possibility that

Congress will resolve a conflict among the courts of ap-

peals on a question of statutory interpretation is not

generally a basis for this Court’s refraining from con-

sidering the question. On the contrary, the Court ex-

plained there that it “[o|rdinarily * * * regard|s] the

task as initially and primarily” the responsibility of the

Court. /d. at 1857. Furthermore, respondents can only

speculate that Congress’s consideration of CERCLA

will resolve the problem at hand. It is entirely possible

that Congress will reauthorize CERCLA without any

amendments whatsoever,'' or with amendments that do

not address the question presented by the petition.”

Accordingly, we believe that it would be appropriate for

the Court to consider the question at this time.

it)

Br. in Opp.” refers to the brief of the private respondents in

opposition to the petition.

'! That was the result the last time funding was extended. See

Omnibus Budget Reconciliation Act of 1990, Pub. L. No. 101-508,

§ 6301, 104 Stat 1388-319.

'" We are not aware of any bill pending before Congress at this

time that would resolve the question presented by the petition.

10

CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted.

DrEWS. DAys, III

Solicitor General

Lois J. SCHIFFER

Acting Assistant Attorney General

ANNES. ALMY

DAVID C. SHILTON

M. ALICE THURSTON

Attorneys

NOVEMBER 1993