Joint Appendix — Key Tronic Corp. v. United States

No. 93-376

In the

Supreme Court of the United States

October Term, 1993

KEY TRONIC CORPORATION,

Petitioners,

Vv.

UNITEDSTATES, ETAL.,

Respondents.

ON A WRIT OF CERTIORARI TO

THE COURT OF APPEALS

FOR THE NINTH CIRCUIT

JOINT APPENDIX

James R. Moore

Drew S. Days, Iil

(Counsel of Record) (Solicitor General)

Mark W. Schneider Department of Justice

Michael Himes Washington, D.C. 20530

PERKINS COIE (202)514-2217

1201 Third Avenue Counsel for Respondents

Seattle, WA 98101-3099

(206) 583-8888

Counsel for Petitioner

Petition for Writ Of Certiorari Filed September 3, 1993

Certiorari Granted December 13, 1993

JOINT APPENDIX

TABLE OF CONTENTS

Relevant District Court Docket Entries

Relevant Circuit Court Docket Entries

Affidavit of David L. Powers, filed June 25, 1990

August 9, 1990 Order re Motions for Summary

Judgment, filed August 9, 1990

Supplemental Declaration of David L. Powers, filed

February 6, 1991

Stipulation between Key Tronic and United States,

filed June 21, 1991

Order Granting Petition for Certiorari

7 The following opinions have been omitted in printing this

joint appendix because they appear on the following pages in

the appendix to the printed Petition for Certiorari:

Opinion of the United States District Court for the

Eastern District of Washington, dated March 19, 1991, as

amended August 12, 1991 B-1

Opinion of the United States Court of Appeals for the

Ninth Circuit, dated January 28, 1993 A-1

. Order of the United States Court of Appeals for the Ninth

Circuit Denying Petition for Rehearing, and Suggestion for

Rehearing En Banc, entered June 7, 1993 E-1

2

RELEVANT DISTRICT COURT

DOCKET ENTRIES—-KEY TRONIC

CORPORATION v. UNITED STATES,

ET AL., NO. 89-CV-694 (E.D. Wa.)

DocketNo. Description

l. COMPLAINT (Summons(es) issued) (sw)[Entry date

10/17/89]

9. ANSWER by defendant USA, defendant USAF (dg)

[Entry date 12/21/89]

22. MOTION by USA to dismiss (Im)

44 Statement of material facts by plaintiff Key Tronic Corp

in support of Key Tronic’s Opposition to Defendant

Schmidt's Motion for Summary Judgment

67. ORDER Re: Motions for Summary Judgment, Inter Alia

by Chief Judge Justin L. Quackenbush (pitf’'s Second,

Third & Fourth Claims for Relief are DISMISSED

WITH PREJUDICE against defts U.S., the Air Force

and Rice; the First Claim for Relief is DISMISSED

WITH PREJUDICE against these defts w/respect to any

costs or obligation incurred by pitf pursuant to the

Consent Decree entered in DOE and EPA v. County of

Spokane And Key Tronic Corp., C-89-033-RJM; these

defts motion to dismiss the First Claim for Relief is

DENIED w/ respect to pitf’s action to recover private

response costs under 42 U.S.C. 9607; the Complaint and

all Claims therein against deft William Schmidt are

DISMISSED WITH PREJUDICE; Key Tronic’s motion

for partial summary judgment is GRANTED IN PART

and DENIED IN PART; the Court grants summary

judgment establishing the liability of the Air Force

under 42 U.S.C. 9607; in all other respects, Key

Tronic’s

92.

115.

125.

134.

137.

138.

3

motion for partial summary judgment is denied; Key 140.

Tronic’s motion to compel discovery from the Air Force

is granted; the Air Force’s motion for a protective order

is DENIED) (cc: all counsel) COB-101-10 (Im)

CONSENT DECREE by Chief Judge Justin L. 146.

Quackenbush (resolving USA’s liability to Key Tronic

for certain claims; USA shall pay to Key Tronic

$185,000.00; see decree for other claims still disputed)

(cc: all counsel) COB- 103-78 (sw)

MOTION by plaintiff Key Tronic Corp for partial

summary judgment that response costs are recoverable

(sw)

USA’s opposition to motion for partial summary

judgment that response costs are recoverable and ‘

supplemental motion to dismiss (sw) :

ORDER re: Pitf’'s Motions for Summary Judgment by

Chief Judge Justin L. Quackenbush (denying motion to

stay as moot [1 13-1]; granting motion for enlargement

of time [107-1]; denying as moot motion for partial

summary judgment that Alumax is a “covered person”

[103-1]; denying as moot motion for partial summary

judgment re contribution claim against Alumax [99-1 };

granting motion for partial summary judgment that

response costs are recoverable [94-1]: Case mgmt ddl set

4/18/91 parties to submit stipulation as to damages

within 30 days of entry of this order) 9cc: all counsel)

(sw)

Stipulation (lm)

ORDER of Final Judgment by Chief Judge Justin L.

Quackenbush (granting motion for entry of final

judgment [135-1]; the Clerk of the Court is directed to

enter a judgment against the United States, the United

States Air Force and Donald B. Rice in favor of Key

Tronic in the amount of $155,500.00) (cc: all counse})

COB-106-23 (im)

JUDGMENT (cc: all counsel!) COB- 106-24 (Im)

4

NOTICE OF APPEAL by defendant Donald B. Rice,

defendant USAF, defendant USA from Dist. Court

decision [137-1] (cc: all counsel and 9CCA) (lan) [Entry

date 09/10/91}

Mandate (CCA: 91-36021] from 9CCA (It is now here

Ordered & adjudged by this Crt, that the judgment of the

said District court in this cause be and hereby is

REVERSED; ) [140-1] (cc: all counsel) (vr)

Docketing

Date

9/24/91

10/1/92

10/13/92

11/2/92

5

RELEVANT CIRCUIT COURT

DOCKET ENTRIES—KEY TRONIC

CORPORATION v. UNITED STATES,

ET AL, NINTH CIRCUIT

NO. 91-36021

Description

DOCKETED CAUSE AND ENTERED

APPEARANCES OF COUNSEL. Sent

appellant(s) civil appeals docketing

statement, setting schedule as follows: CADS

due 10/8/91 for Eileen T. McDonough;

appellant’s designation of RT is due 9/9/91, ,;

appellee’s designation of RT is due 9/18/91;

appellant shall order transcript by 9/30/91, ,;

court reporter shall file transcript in DC by

10/29/91; certificate of record shall be filed

by 11/5/91; appellant’s opening brief is due

12/16/91,,; appellees’ briefis due 1/14/92;

appellants’ reply briefis due 1/28/92, ,; [91-

36021] (rv)

CALENDARED: San Francisco 1 1/2/92 1:30

p.m. Courtroom 2 [91-3602 1] (dd)

Filed, as of 1/13/92, certified record on

appeal in 10 Vols. (total); 10 Clerks Rec, 0

RTs (ORIGINAL) [91-36021] [91-3602] |

(mag)

ARGUED AND SUBMITTED TO Joseph T.

SNEED, ArthurL. ALARCON, William C.

CANBY [91-36021] (ch)

1/28/93

2/11/93

6/7/93

6/15/93

9/17/93

12/20/93

6

FILE OPINION: REVERSED (Terminated

on the Merits after Oral Hearing; Reversed;

Written, Signed, Published. Joseph T.

SNEED; Arthur L. ALARCON, author;

William C. CANBY, dissenting.) FILED

AND ENTERED JUDGMENT. [91-36021]

(ck)

Filed original and 40 copies Appellee Key

Tronic Corp petition for rehearing with

suggestion for rehearing banc 8 p. pages,

served on 2/10/93 (PANEL AND ALL

ACTIVE JUDGES) [91-36021] (sf)

Filed order (Joseph T. SNEED, Arthur L.

ALARCON, William C.CANBY,): The

petition for rhrg is denied & the suggestion

for en banc rhrg is rejected. [91-3602 1] (mhf)

MANDATE ISSUED [91-36021 ] (sf)

Received notice from Supreme Court:

petition for certiorari filed Supreme Court

No. 93-376 filed on 9/7/93. [91-3602 1] (sf)

Filed Supreme Court order (SC Date:

12/13/93) granting certiorari petition to

(PANEL). [2429836-1] [91-36021] (jr)

7

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF

WASHINGTON

KEY TRONIC CORPORATION,

a Washington corporation, NO. C-89-694-JLQ

Plaintiff. AFFIDAVIT OF DAVID

L.POWERS

v.

UNITED STATES OF AMERICA;

THE UNITED STATES AIR

FORCE; DONALDB. RICE, THE

SECRETARY OF THE UNITED

STATES AIR FORCE, inhis

individual capacity; ALUMAX,

INC., a Delaware corporation;

ALUMAX FABRICATED

PRODUCTS, INC., a Delaware

corporation; and WILLIAM

SCHMIDT, an individual,

Defendants.

STATE OF WASHINGTON )

)ss.

COUNTY OF SPOKANE )

DAVIDL. POWERS, being first duly sworn, upon

oath, deposes and says:

1. Iam the Vice President, General Counsel and

Secretary of Key Tronic Corporation. I have held that

position since July 19, 1988. From August 5, 1987 until Jul

18,1988, 1 held the position of General Counsel and :

Secretary. Prior to that time, I held the position of Acting

General Counsel and Assistant Secretary. I have been

responsible for implementing and supervising the potentially

responsible party (“PRP”) search regarding the Colbert

Landfill and negotiating the consent decree.

2. Key Tronic acknowledged that it had taken waste

solvents and other waste chemicals to Colbert Landfill

whenever asked about that issue by county or state officials

over the years. A good example is the survey conducted by

Damon Taam of the county in early 1980, the results of

which are set forth in the letter of June 4, 1980, attached as

Exhibit A to this affidavit. However, other entities that

landfilled chemicals at Colbert Landfill were not, and have

not been, as forthcoming. When it became clear in 1986 that

potential Superfund liability for cleaning up the landfill and

groundwater contaminated by it would be extraordinarily

expensive, Key Tronic began an effort to identify other

entities that contributed to the problem.

3. | With the assistance of the Popham Haik law firm

from Minneapolis, local counsel, Goss, Moe & Sampson, and

A&A Properties, an investigation of potentially responsible

parties wasbegunin__ of 1986. This involved

undertaking numerous witness interviews, filing contribution

lawsuits against various entities believed to have landfilled

chemical wastes at Colbert, and conducting discovery to

determine the extent of responsibility of these entities. The

PRP investigative costs associated with these activities

during 1986 and 1987 were $121,589.36 for Popham Haik

and $9,464.52 for Goss, Moe & Sampson. These costs are

summarized on Exhibit B. Key Tronic does not seek, in this

motion, to recover the fees paid to A&A Properties.

4. Inlate 19861 was promoted to the position of

Acting General Counsel and Assistant Secretary for Key

Tronic. Thereafter, I made the decision to employ the Perkins

Coie law firm and new local counsel, MacGillivray & Jones,

to continue the PRP investigative effort. After familiarizing

themselves with the evidence already gathered, and

9

conducting additional witness interviews, the investigation

was narrowed to several PRPs, including Fairchild Air Force

Base, Alumax and its predecessor companies, William

Schmidt, and several additional private entities (United Paint

which was in bankruptcy, Husky Oil, and Williams

Trucking). The investigation continued via both the

discovery process in the pending state and federal landowner

contribution cases (depositions and document production

from the Air Force and Alumax) and witness interviews

conducted by Perkins Coie lawyers and Robert Bailor, a

private investigator.

>

5. ThePRP investigative fees and costs associated

with the Perkins Coie effort are estimated to have been

$62,492.18. These were estimated by Perkins Coie based

upon a breakout of PRP investigation fees and expenses from

other fees and expenses relating solely to other matters. The

fees and expenses for Robert Bailor were $2,462.21. These

costs are summarized on Exhibit B. Key Tronic does not

seek, in this motion, to receive fees paid to McGillivray &

Jones.

6. In1988, the information developed through this

investigation was shared with US EPA. As aresult, EPA

issued Superfund notice letters to the Air Force and

Alumax—something it had declined to do prior to 1988.

7. During 1987 and 1988, Perkins Coie was also

retained to represent Key Tronic in negotiating a settlement

of the potential Colbert Superfund cleanup case anticipated

to be brought by EPA and DOE to accomplish a final

remedial action at the site. Assisting in that effort on

technical issues were, first, the engineering firm of Dames

and Moore, and later the firm of Landau Associates, Inc.

Landau Associates, Inc. reviewed the reports of EPA and

DOE, conducted independent analyses, evaluated the

efficiency of the proposed remedy, and met with EPA and

DOE officials. The negotiation process culminated in the

Consent Decree executed in 1988, by EPA, DOE, Key

TA —

10

Tronic, and Spokane County. The Air Force participated in

those discussions but concluded its settlement with EPA ina

separate Interagency Agreement finalized in February 1990.

8. The fees and expenses associated with the Perkins

Coie effort with respect to settlement of the case with EPA

and DOE are estimated to have been $160,641.23. These

were estimated by Perkins Coie based upona breakout of

settlement-related fees and expenses from other fees and

expenses relating solely to other matters. The fees and

expenses for Dames and Moore amounted to $22,323.09.

The fees and expenses for Landau Associates amounted to

$126,270.53. These costs are summarized on Exhibit B.

9. Key Tronic has paid $1.3 million to date pursuant

to the Consent Decree. Key Tronic is obligated to pay a total

of $4.2 million under the Consent Decree.

10. Asthecompany executive supervising the PRP

search and negotiation of the Consent Decree I spent

approximately 70% of my professional time from the fall of

1986 to July 1988 and 40% of my professional time from

July 1988 to February 1989 on these and related matters. My

salary in the fall of 1986 was $2710.00 per month. Change of

salary:

1/11/87 -$2940.00 per mo.

4/16/87 -$3195.00 permo.

7/12/87 -$3465.00 per mo.

10/18/87 -$3810.00 per mo.

1/10/88 -$4377.00 per mo.

4/03/88 -$4814.70permo.

6/26/88 -$5296.17 permo.

11. Allofthe above-referenced costs are summarized

on Exhibit B. The underlying cost records have been

maintained and are available for review.

ll

12. Allofthese costs were paid for by Key Tronic.

None of these costs were incurred or paid by the federal

government, EPA or USAF.

13. Thestate, through Carol Thompson, Carol

Kraege, Mike Blum, and Fred Gardner of DOE, and federal

government, through Neil Thompson of EPA, were advised

of Key Tronic’s efforts described above.

14. The public was informed ofand involved in the

response actions undertaken by Key Tronic through various

public meetings held in the Colbert community, in Spokane

at the Washington State Department of Social and Health

Services, inthe County Courthouse’s Commissioners’ public

meeting rooms, through the newspaper and TV media,

newsletters, and through the regularly scheduled Colbert

Cleanup Committee meetings.

15. Theresponse actions described above were cost

effective.

16. Thedefendants were advised of Key Tronic’s

actions and were asked to participate through legal counsel.

/s/

David L. Powers

SUBSCRIBED ANDSWORN tobeforemethis __

day of June, 1990.

Betty A. Traband /s/

NOTARY PUBLIC inand for the State of

Washington, residing at Spokane

My Commission Expires: March 15, 1994

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12

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF

WASHINGTON

KEY TRONIC

CORPORATION, NO. C-89-694-JLQ

a Washington corporation,

ORDER RE: MOTIONS FOR

Plaintiff, SUMMARY JUDGMENT, INTER

ALIA

Vv.

UNITED STATES OF i

AMERICA;

etal.,

Defendants.

On Friday, July 20, 1990, the Court heard oral

argument of the motions discussed below. Kathryn L. Tucker

and Mark W. Schneider represented plaintiff Key Tronic

Corporation. Eileen McDonough appeared on behalf of the

defendants United States, United States Air Force and

Donald B. Rice. Dennis Smith was present for defendant

William Schmidt, and Leslie C. Nellermoe represented

defendants Alumax, Inc. and Alumax Fabricated Products,

Inc. This Order sets forth in formal manner the court’s oral

rulings on the various motions.

I. Factual Background:'

From 1968 to 1986 Spokane County maintained the

Colbert Disposal Site (“Colbert”) in Spokane County,

|“Facts” set forth as background information are either undisputed or are

immaterial to resolution of the various motions before the Court. Where

pertinent, the parties’ specific factual contentions are discussed below.

13

Washington. From the early 1970’s through 1980, the

County contracted to have defendant William Schmidt do the

work necessary to construct, improve and complete the

landfill. In that capacity, Schmidt accepted and disposed of

refuse at Colbert. Key Tronic alleges that between 1975 and

1980, Schmidt accepted liquid chemicals from the United

States Air Force (“USAF”); Alumax Fabricated Products,

Inc. and Alumax Mill Products, Inc. (hereafter collectively

“Alumax”); and Key Tronic Corporation. This Court has

previously found that the USAF disposed of hazardous

chemicals at Colbert.?

In 1980, drinking water wells around Colbert were

found to be contaminated by various chemicals, including

“TCA.” Key Tronic alleges that it incurred, at its own

initiative, expenses totaling $1 ,271,511.10 responding to that

discovery.’

The Washington Department of Ecology (“DOE”) and

the United States Environmental Protection Agency (“EPA”)

also responded to the Colbert situation. These events

culminated in the simultaneous entry of a Complaint and

Consent Decree in DOE and EPA v. County of Spokane and

2See, Key Tronic v. United States, C-87-20-JLQ(E.D. Wa.), transcript

dated November 7, 1989; Ex. | to Plaintiffs Motion for Partial Summary

Judgment (“Plaintiff's Motion”), p. 3.

3$pecifically, Key Tronic alleges that it spent:

1. $115,788.07 investigating the extent and level of contamination;

2. $580,479.99 to provide temporary and then permanent alternative

sources of drinking water to residents of the contaminated area;

3. $196,008.27 in order to locate other entities that disposed of hazardous

waste at Colbert;

4. $70,000.00 in the opportunity cost of Key Tronic’s executive's time;

and

5. $309 234.85 onconsultation and attorneys’ fees to negotiate the

Consent Decree and Scope of Work and to comment on the Remedial

Investigation and Feasibility Study.

r PT ee ee

é

,

4

14

Key Tronic Corp. , C-89-033-RJM(E.D. WA), on January 9,

1989. In the Consent Decree, Spokane county agreed to

implement and finance a final remedial action plan, which

Key Tronic agreed to help fund in the amount of $4.2

million.‘

Concurrent with the entry of the Consent Decree, the

EPA entered an Administrative Order on Consent and

Interagency Agreement (“Order/Agreement”) with the

USAF .5 The Order/Agreement was issued as an “Expedited

Final Settlement” under 42 U.S.C. § 9622, which permits the

EPA to enter into an agreement with potential responsible

parties (“PRPs”) whose proportional contribution to a release

of hazardous substances is deemed by the EPA to have been

de minimis in terms of quantity and relative toxicity. 42

U.S.C. §9622(g)(1 (A). Under the Order/Agreement, the

USAF agreed to pay $1.45 million to the Colbert clean-up

fund. In return, the EPA released the USAF from further

liability. Additionally, the EPA granted the USAF the

“contribution protection” authorized by 42 U.S.C.

§ 9622(g)(5).

In October 1989 Key Tronic filed the instant action.

The Complaint alleges that the USAF, Alumax and Schmidt

are liable to Key Tronic for a portion of the costs Key Tronic

4s discussed below, the Consent Decree also provides that “EPA,

Spokane County and Key Tronic hereby covenant not to sue each other as to all

matters alleged or which could have been alleged in the Complaint with regard to

the Site, ...” The covenant not to sue applies “only to Spokane County and Key

Tronic, including its respective divisions, officials, officers, directors, principals,

agents, servants, employees, successors, and assigns, and not any parent

corporation, subsidiaries and affiliates of the County and Key Tronic.” Ex. 17 to

Plaintiff s Statement of Facts, pp. 55-56.

5See Ex. A. to United States’ Motion to Dismiss.

15

incurred in the Colbert clean-up.® Specifically, the Complaint

alleges that defendants are liable to Key Tronic under three

causes of action:

l. The First Claim for Relief requests damages

under 42 U.S.C. § 9607(a)(4)(B), which

establishes a private right of action against

responsible parties for “any other necessary

costs of response incurred by any other person

consistent with the national contingency

plan”;

2. The Second Claim for Relief seeks

contribution under 42 U.S.C. § 9613(f(1),

which provides that: “[a]ny person may seek

contribution from any other person who is

liable or potentially liable under [42 U.S.C.

§ 9607] during or following any civil action

under [42 U.S.C. §§ 9606 or 9607)”; and

3. The Third Claim for Relief seeks contribution

under Washington law; RCW 4.22.040

(contribution among parties jointly and

severally liable) and RCW 70.105C.040 (joint

and several liability among parties liable fora

hazardous release).

Finally, the Fourth Claim for Relief seeks a declaratory

judgment that defendants are liable for future costs incurred

by Key Tronic in responding to the Colbert release.

The Court shall address the parties’ various motions in

the order in which they were presented.

As discussed above, Key Tronic alleges that it incurred response costs in

two different ways. First, Key Tronic spent $1.2 million in its initial private

response to the release. Second, Key Tronic obligated itself to contribute

$4.2 million to the clean-up trust fund established by the EPA.

oo eee ee oe? OR ee hae

16

Il. The United States’ Motion to Dismiss

The United States, the USAF, and Rice (hereafter

collectively “the USAF”) move for dismissal under the

“contribution protection” provision of 42 U.S.C. § 622(g)(5).

42 U.S.C. §622(g)(1) authorizes the EPA to enter de

minimis settlements with a PRP where the EPA finds both

that (1) the amount of hazardous substances contributed to a

site by the PRP; and (2) the toxic effects of those substances,

are minimal relative to the other hazardous substances at the

site. 42 U.S.C. §622(g)(5) provides: “A party who has

resolved its liability to the United States under this

subsection shall not be liable for claims for contribution

regarding matters addressed in the settlement.” The USAF

notes that the Order/Agreement includes the required

findings, and specifically provides the following contribution

protection:

Subject to the “Reservation of Rights...

of this Consent Order and Agreement, [EPA]

agrees that by entering into and carrying out

the terms of this Consent Order and

Agreement, the Respondent Air Force will

have completely resolved its liability to the

United States of America for Covered Matters

pursuantto...42U.S.C. 9622(g)(5), and

shall not be liable for claims for contribution

for Covered Matters by any other person.

(Order/Agreement, p. 14.)

The Order/Agreement defines “Covered Matters” to

“include any and all civil liability for reimbursement of

response costs or for injunctive relief pursuant to...

42 U.S.C. 9606 or 9607(a), or. ..42 U.S.C. §6973, with

regard to the Site.”

17

The USAF argues that Key Tronic’s claim for

contribution under 42 U.S.C. § 9613(f) is expressly

prohibited by section 9622(g). Additionally , the USAF

argues that Key Tronic’s claim for response costs under

section 9607 is similarly barred by implication, because the

claim is in reality nothing more than an attempt to obtain

contribution under a different guise.

In response to the USAF’s motion to dismiss, Key

Tronic concedes that section 9622(g) prohibits its claim to

recover any portion of the $4.2 million Consent Decree

obligation, under 42 U.S.C. § 9613(f) (contribution), or

42 U.S.C § 9607(a)(4)(B) (private response cost recovery).

Therefore, Key Tronic’s claims against the USAF should

be dismissed with prejudice with respect to the

$4.2 million Key Tronic must pay pursuant to the

Consent Decree.

With respect to its First Claim for Relief, however, Key

Tronic argues that section 9622(g) does not bar its direct

cause of action against the USAF under 42 U.S.C.

§ 9607(a)(4)(B), to recovera portion of the $1.2 million Key

Tronic spent in its initial private response to the Colbert

release. Thus, the issue presented by the USAF’s motion is

whether the contribution protection provided a settling PRP

by 42 U.S.C. § 9622(g)(5) bars a direct action by another

PRP under 42 U.S.C. § 9607(a)(4)(B) to recover initial

response costs privately incurred.

The pertinent language of CERCLA provides some

guidance for resolving the issue before the court. Section

9607(a)(4)(B) provides a private right of action to “any other

person” who incurs “necessary costs of response” to a release

ofa hazardous substance. Section 9622(g)(5) provides that a

PRP “who has resolved its liability to the United States...

shall not be liable for claims for contribution regarding

matters addressed in the settlement.” (Emphasis supplied.)

Thus, to the extent the statutory language is instructive, it

does not favor the USAF’s motion—section 9622(g)(5)

-

:

18

pertains to “liability to the United States” and to “claims for

contribution.” Key Tronic’s action under section

9607(a)(4)(B) is a direct action to recover its own response

costs—it is not technically acontribution claim, nor does it

involve liability to the United States.

The USAF anticipates this quandary , and attempts to

meet it by arguing that the contribution protection provided

by section 9622 must be construed to apply to a PRP’s action

to recover private response costs under section 9607 in order

to effectuate Congress's purpose in empowering the EPA to

give contribution protection to de minimis PRPs who settle.

As stated in SARA, that purpose was “to expedite effective

remedial actions and minimize litigation.” 42 U.S.C.

§ 9622(a). The USAF argues that the EPA’s “carrot” of

contribution protection would be rendered meaningless if

other PRPs could avoid it by simply restyling contribution

actions as actions to recover “response costs” under section

9607. The USAF cites two cases which it claims support this

argument: United States v. Cannons Eng'g Corp., 720F.

Supp. 1027 (D. Mass. 1989), aff'd, 899 F.2d 79 (1stCir.

1990), and Central Ill. Pub. Serv. Co. v. Industrial Oil

Tank & Line Cleaning Serv. , 730 F.Supp. 1498 (W.D. Mo.

1990).

In Cannons, the court considered an indemnification

cross-claim by several nonsettling PRPs against a group of

PRPs that had settled with the EPA and received contribution

protection. Granting a motion to dismiss the cross-claim, the

court stated:

[T]he contribution protection provisions serve

the important function of encouraging early

settlements. Failure to provide similar

protection against suits for equitable

indemnity would encourage defendants to re-

cast their contribution claims as indemnity

claims and injure, if not destroy, the goals to

19

be served by the express contribution

protection provisions of CERCLA.

Id. 720 F. Supp. at 1051-52. The First Circuit Court of

Appeals affirmed under a similar rationale. 899 F.2d at 92.

Industrial Oil Tank also holds that a nonsettling PRP

may not maintain an equitable indemnity claim against a

settling PRP who has obtained contribution protection. The

court adopted the rationale in Cannons verbatim. Id. 730 F .

Supp. at 1506-07.

Cannons and Industrial Oil Tank must be distinguished

from the present case. In those cases, nonsettling PRPs

sought indemnity from settling PRPs for prospective liability

to the United States. Thus, the indemnity claims fell squarely

within the situation that apparently prompted Congress to

pass section 9622. Here, Key Tronic seeks to recovera

portion of the costs it incurred directly, at its own initiative,

in responding to the release at Colbert. That factual

distinction makes the rationale in Cannons and Industrial Oil

Tank inapplicable to this case.

The provision in CERCLA that contribution actions

cannot be maintained against settlor PRPs “was designed to

encourage settlements and provide PRPs a measure of

finality in return for their willingness to settle.” United States

v. Cannons Eng'g Corp., supra, 899 F.2d at 92, citing H.R.

Rep. No. 99-253, Part, 90th Cong., Ist sess. 80(1985),

reprinted in 1986 U.S. Code Cong. & Admin. News 2835,

2862. With respect to a contribution claim by one PRP

against another PRP for liability to the EPA, the effect of

contribution protection is not inconsistent with the overal]

purposes behind CERCLA. Those purposes are (1) to

facilitate prompt cleanup of hazardous releases, and (2) to

place the ultimate burden ofacleanup upon those responsible

for creating the hazard. See Private Response Cost Recovery

Actions Under CERCLA, 34 Kan. L. Rev. 109, 119(1985).

As to liability to the EPA, contribution protection is

20

consistent with CERCLA’ s objectives because all PRPs have

the same incentive to promptly settle the EPA’s claims

against them, and the procedures for EPA settlement tend to

insure a proper allocation of responsibility upon the parties.

See generally, 42 U.S.C. § 9622.

When applied to an action under section 9607(a)-(4)(B)

to recover private response costs, however, the effects of

contribution protection are not necessarily consistent with

CERCLA’s primary objectives.

First, if contribution protection is applied to preclude

recovery of privately incurred response costs, PRPs will be

discouraged from taking initiatives to clean up hazardous

releases. Instead, PRPs would be encouraged to respond only

via EPA settlements, since costs incurred in private response

actions may not be even partially recovered against other

PRPs who do nothing on their own, yet settle with the EPA

and obtain contribution protection.

Second, the application of contribution protection to

private response cost actions would work against proper

allocation of the clean-up burden. Because liability under

CERCLA is joint and several, see United States v. Ottati &

Goss, Inc., 630 F. Supp. 1361, 1395 (D. N.H. 1985), the EPA

might have little incentive to investigate further once it

locates one solvent PRP. Application of contribution

protection to actions for recovery of private investigation

costs will eliminate the incentive 42 U.S.C. § 9607(a)-(4)(B)

provides PRPs to identify and locate other PRPs.

The Court also notes that the USAF’s argument is

founded upon an assumption that may not be valid in the

context of this case. The USAF argues that “[i]f Key Tronic

could evade the contribution protection provided by

[section 9622(g)(5)] simply by styling its claim as a cost

recovery action under [section 9607], instead ofa

contribution action under [section 9613}, section [9622(g)-

(5)] would be deprived of any practical significance and

21

hence any utility to EPA.” (USAF’s Memo., p. 12). Here, the

validity of that argument is not self-evident. Even if actions

to recover private response costs under section 9607 are

permitted, a PRP s/il/ has an incentive to settle with the EPA

under section 9613 or 9622. Settlement with the EPA still

offers the auvantages of avoiding litigation, fixing liability

and precluding contribution vis a vis costs incurred by the

EPA. The facts here are a case in point—the USAF need not

worry about a contribution claim by Key Tronic with respect

to the $4.2 million EPA-Key Tronic settlement. Alumax and

Schmidt, on the other hand, who did not settle, are subject to

Key Tronic’s contribution claim. Thus, the incentives a PRP

has to settle with the EPA under section 9622 are not

necessarily “eliminated” by recognition of the private cause

of action provided in 42 U.S.C. § 9607(a)(4)(B).

From the above, it is evident that the USAF’s argument

imputes an effect to section 9622 that runs contrary to the

overall purposes of CERCLA. Further, the USAF’s position

would create an unnecessary inconsistency between the

various sections of CERCLA. Both of these results are to be

avoided. This court must strive to interpret and apply section

9622 so that it is consistent with the language of CERCLA’s

other sections and with the purposes of the entire statute

considered as a whole. Adams v. Howerton, 673 F.2d 1036,

1040-41 (9th Cir. 1982), cert. denied, 458 U.S. 1111 (1982).

Aside from the analysis above, there is little to assist

the court in deciding the issue before it. It has been noted that

CERCLA as originally passed by Congress was “an

eleventh-hour piece of legislation” drawn in the “final days

ofa lame-duck session.” Private Response Cost Recovery

Actions Under CERCLA, supra, 34 Kan. L. Rev. at 109. “In

general, CERCLA’s sketchy legislative history limits its

interpretative usefulness.” /d., pp. 118-19. Nor does the

legislative history of SARA (which introduced de minimis

settlements and contribution protection under section 9622),

provide any assistance with regard to the issue before the

court. See, Settlement Policy Under the Superfund

}

22

Amendments and Reauthorization Act of 1986, 58 U. Colo.

L. Rev. 599 (1988). It appears that the potential interplay

between sections 9607 and 9622 was not considered by

Congress. See id. (discussing legislative history of SARA).

However, at the time Congress passed SARA, at least two

courts had recognized a private right of action under section

9607(a\(4)(B). See Jones v. Inmont Corp., 584 F. Supp. 1425

(S.D. Oh. 1984); New York v. EXXON Corp. , 633 F. Supp.

609 (S.D.N.Y. 1986) (action by a PRP). It does not seem

reasonable that Congress would intend to eliminate a

recognized direct cause of action for one class of persons

(PRPs) by providing for contribution protection in another

section that applies to settlement with the EPA.

This last point raises yet another issue. Since the USAF

concedes that section 9607 creates a private right of action

for recovery of response costs incurred by a PRP, it must also

confront the logical conclusion of its position—that by

enacting section 9622(g)(5) Congress granted the EPA the

administrative power to eliminate a person’s right to recover

response costs, without even requiring a hearing procedure to

which the affected person is a party. The USAF attempts to

meet that issue by arguing that the Supreme Court “has

established that Congress can foreclose successive litigation

by nonparties pursuant to statutory remedial programs.”

(USAF Memo., p. 15). However, the cases the USAF cites to

support this statement are not on point. Martin v. Wilks, 109

S. Ct. 2180 (1989), recognizes in dicta an exception to the

“general rule” that a “judgment or decree among parties to a

lawsuit resolves issues as among them, but it does not

conclude the rights of strangers to those proceedings.” /d. at

2184. The Court states in a footnote that “where a special

remedial scheme exists expressly foreclosing successive

litigation by nonlitigants, as forexample in bankruptcy or

probate, legal proceedings may terminate pre-existing rights

if the scheme is otherwise consistent with process.” /d. n.2.

Martin cites NLRB v. Bildisco & Bildisco, 465 U.S. 513

(1984), and Tulsa Professional Collection Servs., Inc. v.

Pope, 485 U.S. 478 (1988), which both involve nonclaim

23

statutes (bankruptcy and estate, respectively). These cases do

not suffice to resolve the questions of fairness raised by the

USAF’s argument. In this regard, the court notes that

legislative enactments should never be construed as

establishing statutory schemes thatare illogical, unjust or

capricious. Bechtel Constr., Inc. v. United Bhd. of

Carpenters & Joiners, 812 F.2d 1220, 1225 (9th Cir. 1987).

I find that 42 U.S.C. § 9622(g)(5) does not bar an

action by a PRP under 42 U.S.C. § 9607 (a)(4)(B) to recover

privately incurred initial response costs from a settlor PRP

who has obtained contribution protection from the EPA for

the final clean-up costs. The section 9607 action is not one

for “contribution” of “liability to the United States.”

Construction of the statute to permit such action is consistent

with the overall purposes of CERCLA and SARA, and

avoids internal inconsistencies otherwise drawn into the

statutory scheme. Finally, this construction prevents the

statute from being applied in an unfair, and potentially

unconstitutional, manner. Thus, the USAF’s motion to

dismiss the First Claim for Relief against it should be denied

with respect to the $1.2 million Key Tronic allegedly

incurred in initial private response costs.

Ill. Key Tronic’s State Law Claims

Against the USAF

The USAF contends that Key Tronic’s state law claims

against it are barred by sovereign immunity. Key Tronic did

not dispute that argument in its brief, and conceded the

appropriateness of dismissal at oral argument. Therefore,

Key Tronic’s Third Claim for Relief should be dismissed

with prejudice as against the USAF.

IV. Key Tronic’s Claim for Declaratory Relief

Counsel for Key Tronic stated at oral argument that its

Fourth Claim for Relief, fora declaratory judgment under

CERCLA, pertained only to Consent Decree payments to be

24

made in the future. Because Key Tronic has conceded that

the USAF is not liable for any further costs incurred under

the Consent Decree, the Fourth Claim for Relief should be

dismissed with prejudice as against the USAF.

V. Defendant Schmidt’s Motion for Summary Judgment

of Dismissal

From 1971 to 1983, defendant William Schmidt

(“Schmidt”) contracted with Spokane County to “do all work

and furnish all tools, materials and equipment necessary to

construct, improve and complete” Colbert. (Exhibit B to

Schmidt’s Statement of Material Facts, hereafter “the

Contract.”) Plaintiff alleges that Schmidt’s performance of

the contract qualifies him as an “operator” of Colbert under

CERCLA, as defined in 42 U.S.C. § 9601(20)(A).

(Complaint, #9 8, 14 and 29.) Plaintiff alleges that Schmidt’s

status as an operator of Colbert subjects him to liability under

42 U.S.C. §§ 9607(a) (response cost recovery) and 961 3(f)

(contribution), and under Washington law, RCW 4.22.040

(contribution among joint tort feasors) and RCW

70.105D.040 (parties responsible for a release of hazardous

substances are jointly and severally liable).

Schmidt seeks summary judgment of dismissal based

upon the terms of the Consent Decree between the EPA and

the DOE, onthe one hand, and Spokane County and Key

Tronic, on the other, (Washington Dept. of Ecology v.

Spokane Cy., C-89-033-RJM, E.D. WA). The Consent

Decree provides:

Exceptas specifically provided hereafter, ...

Spokane County and Key Tronic hereby

covenant not to sue each other as to all

matters alleged or all matters which could

have been alleged in the Complaint with

regard to the Site. . . . This covenant not to

sue applies only to Spokane County and Key

Tronic, including its respective divisions,

25

officials, officers, directors, principals, agents,

servants, employees, successors, and assigns,

and not any parent corporation, subsidiaries

and affiliates of the County and Key Tronic.”

(Exhibit 1 to Complaint, pp. 55-56.) Schmidt alleges that he

operated Colbert as Spokane County’s agent, and that

plaintiffs claims against him here pertain to matters which

were or could have been alleged in the previous complaint.

Thus, Schmidt argues that Key Tronic may not maintain this

action against him.

Schmidt avers the following facts to establish his

agency: The contract specified in great detail the operating

instructions for the landfill, including the hours of operation,

the manner of refuse disposal, and the required equipment.

(Defendant’s Statement of Material Facts, 3.) Further,

Spokane County employees inspected Colbert up to five

times a week to insure that Schmidt complied with the

contract’s performance specifications. County employees,

not Schmidt, had responsibility for determining the type of

waste accepted. (/d. J] 5-7.) Also, Schmidt disposed of

refuse at Colbert as directed by Spokane County. (/d.,

{J 8-10, 16.) Finally, the contract expressly provides that

Schmidt operated Colbert subject to Spokane County’s

control. The contract provides:

4. The maintenance and operations of the

disposal site shall be under the control of

Spokane County and all work and methods

performed by the contractor pursuant to this

agreement shall be subject to inspection,

approval and direction of the county engineer

or his agents at any time.

(/d., Ex. B, p.4, citing, Specifications for Operation of

Colbert Disposal Site, § IX. 94, p. 6.)

—

26

Key Tronic disputes Schmidt’s agency claim by an

allegation that Spokane County’s inspectors “did not have

the power to order Mr. Schmidt to take any specific actions,

and Mr. Schmidt retained the right to dispute any of the

inspector’s findings.” (Plaintiffs Statement of Material

Facts, 7.) That allegation, however, is not supported by Key

Tronic’s citations to the record, i.e., Contract, Section IX.”7

7For example, paragraph | of Section [X of the contract specifications

provides that “[c]el! ,ocation, alignment and excavation shall be done in

accordance with the direction of the engineer.” Paragraph 28 of Section IX

provides:

If the engineer finds that the contractor has failed to

perform properly any of the provisions of this contract and

failed to correct such performances within twenty-four (24)

hours after verbal or written notice to the contractor or his

designated agents has been notified to do so [sic], the

engineer may order the contractor to cease all work at the

site and/or may arrange for the necessary work at the site to

be done by others and the cost of so doing shall be deducted

from payments then due or coming due the contractor,

however, in the case of unauthorized fires, the above action

may be ordered if such fires are not extinguished within two

(2) hours after verbal notification to do so by the engineer. In

the case of insufficient or no daily cover, the engineer need

not give the contractor twenty-four (24) hours notice but may

arrange for the needed cover of the refuse by others to

commence any time after 12 o’clock noon on the day

following the improper covering of refuse. At the engineer's

option, a penalty of one hundred dollars ($100) may be

deducted from payments due or coming due for each day or

part thereof in which any improper performance of the

contract is left uncorrected in excess of 24 hours from the

engineer’ § determination time of such improper performance,

except that a fifty dollar ($50) deduction may be made for

insufficient or no daily cover. If the contractor fails to execute

the work described in the provisions of Section IX, the

engineer may terminate this contract as provided by Chapter

1-08.10 of the State of Washington Standard Specifications

for Road and Bridge Construction of 1969.

Taken as a whole, the contract is clear that Schmidt was to “operate” Colbert at

the direction and control of Spokane County.

27

The parol evidence Key Tronic offers in support of its

assertion is similarly unavailing. Key Tronic cites the

following deposition testimony of Mike Senske, an engineer

for Spokane County, who assisted in drafting the contract.

(See Senske Depo., p. 18.)

Q. “You indicated [County landfill inspector]

Howard Hay had daily control over landfill

operation. What exactly do you mean by

‘control’?”

A. If[Hay] saw the contractor had

inadequately performed his duties that were

required the previous day, he had the authority

to tell him you will do this today or you will

do that. Obviously, the contractor had the

right to tell him, you go right to you

know.”

(Senske Depo., p. 26.) This equivocal testimony does not

suffice to create a “genuine”’® issue of fact as to who

controlled the operation of Colbert. That conclusion is

buttressed by the fact that this was the only evidence Key

Tronic could offer on this issue. A quick review of the

balance of Senske’s deposition reveals the true context of the

parties’ relationship as one where Schmidt acted subject to

Spokane County’s control.

8See, Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574 (1986). In

Matsushita, the Supreme Court stated that when the moving party has carried its

burden under Rule 56(c) “its opponent must do more than simply show that there

is some metaphysical doubt as to the material facts.” Jd. at 586. “[I]f the factual

context renders respondent’s claim implausible. . . respondents must come

forward with more persuasive evidence to support their claim than would

otherwise be necessary.” Jd. at 587.

9Senske also testified, inter alia, that “the contract specifically required

that the contractor at that site was to maintain a hazardous waste disposal area”

(p.15); Spokane County decided what substances could be accepted at a particular

landfill (p. 16); Schmidt “was simply retained as a contract employee” (p.18); one

time when Schmidt complained about some “liquid” in drums that was taking

28

Under Washington law, the undisputed facts establish

that Schmidt operated Colbert as Spokane County’s agent.!°

“[A]n agency relationship results from the manifestation of

consent by one person that another shall act on his behalf and

subject to this control, with a correlative manifestation of

consent by the other party to act on his behalf and subject to

his control.” Moss v. Vadman, 77 Wn.2d 396, 402-03, 463

P.2d 159 (1969). See also Matsumura v. Eilert, 74 Wn.2d

362, 368, 444 P.2d 806 (1968) (same); Uni-Com North West

v. Argus Publishing, 47 Wn. App. 787, 796, 737 P.2d 304

(1987) (right of control is the “crucial factor”); Zoda v.

Eckert, Inc., 36 Wn. App. 292, 296, 674 P.2d 195 (1983)

(right of control is “one of the primary requisites” of an

agency).

Key Tronic focuses upon the alleged absence of

another indicium of agency—the “power to alter the legal

relations between the principal and third persons”—to argue

that Schmidt was not an agent of Spokane County. See, Zoda

v. Eckert, Inc., 36 Wn. App. at 296. The simple answer to

that argument is that Schmidt had such power, and exercised

it daily by collecting fees and accepting refuse. (See Schmidt

Depo. Ex. 2 to Plaintiff’ s Statement of Facts, p.3, 16.)

Finally, Key Tronic argues that neither it nor Spokane

County intended the covenant not to sue to apply to Schmidt.

That argument, however, ignores a basic tenet of contract

construction—that the parties’ intent must be gleaned first

from the terms of the agreement. Only ifa contract is

ambiguous may extrinsic evidence of intent be considered.

paint off his equipment, he was told to accept the material, he had no say in the

matter (p.21); and that, with respect to Schmidt’s performance of the contract,

Spokane County was “more than satisfied. He went the extra mile in all ways.”

(p.25).

1 The existence of a principal-agent relationship is a question of fact

unless the facts are undisputed.” Uni-Com N. W. v. Argus Publishing, 47 Wn. App.

787, 796, 737 P.2d 304 (1987).

29

Hastings v. Continental Food Sales, Inc.,60 Wn.2d 820,

823, 376 P.2d 436 (1962); McCombs Constr., Inc. v. Barnes,

37 Wn. App. 91, 93, 678 P.2d 837 (1984). The existence of

ambiguity is a question of law for the court. R.A. Hanson Co.

v. Aetna Ins. Co.,26 Wn. App. 290, 295, 612 P.2d 456

(1980).

Key Tronic’s argument would require the court to first

find ambiguity in the provision of the Consent Decree

releasing Spokane County’s “agents.” The court may not so

find. There is nothing in the Consent Decree to suggest that

the parties intended the word “agents” to have any meaning

other than that ordinarily given it by Washington law. Absent

such an indication, a word’s ordinary meaning must be given

effect. Cobray v. Stevenson, 98 Wn.2d 410, 415, 656 P.2d

473 (1982).

Under the unambiguous terms of the consent decree,

Key Tronic agreed not to sue Spokane County’s agents “as to

all matters alleged or which could have been alleged in the

Complaint with regard to” Colbert. Key Tronic does not

argue that its instant claims against Schmidt could not have

been alleged in the prior complaint. Because Schmidt was

Spokane County’s agent with regard to the operation of

Colbert, Key Tronic’s claims against him may not be

maintained. The Complaint and all Claims therein against

defendant William Schmidt should be dismissed with

prejudice.

VI. Key Tronic’s Motion for Partial Summary Judgment

Key Tronic moves for summary judgment establishing

that all defendants are liable under CERCLA. Key Tronic

also seeks to establish the amount of each defendant’s

exposure. In light of the Court’s rulings above, only the

following issues need be addressed:

30

A. TheUSAF

(i) Liability

Key Tronic moves for partial summary judgment that

the USAF is liable under 42 U.S.C. § 9607(a)(4)(B) fora

portion of the $1.2 million in costs Key Tronic privately

incurred in responding to the Colbert release.

This court has previously held that the USAF disposed

of hazardous waste at Colbert. (Oral Findings of Fact and

Conclusions of Law, Key Tronic Corp. v. United States,

C-88-041-JLQ and C-87-20-JLQ(E.D. WA, Nov. 3, 1989),

p. 2; Ex. 1 to Plaintiff's Statement of Facts.) This fact

establishes the USAF as a “person who... arranged for

disposal or treatment . . .of hazardous substances owned or

possessed by such person...” 42 U.S.C. § 9607(a)-(3). Itis

undisputed that Colbert is a “facility” within the definition of

42 U.S.C. § 9601(9), and that a “release” has occurred at

Colbert within the definition of 42 U.S.C. § 9601(22). Thus,

under 42 U.S.C. § 9607(a)-(4)(B), the USAF is liable fora

portion of “any other necessary costs of response incurred by

any other person consistent with the national contingency

plan.” Key Tronic’s motion for partial summary

judgment that the USAF is liable under 42 U.S.C. § 9607

should be granted.

(ii) Exposure

As discussed above, the USAF is not liable for any

portion of the $4.2 million Key Tronic is obligated to pay

under the terms of the Consent Decree. Therefore, the

question presented here is whether Key Tronic is entitled to

partial summary judgment establishing the amount of its

private cost recovery claim at $1 ,271,511.10.

In order to prevail on this issue, Key Tronic must prove

by undisputed facts that its claimed costs were

(1) “necessary” and (2) “consistent with the national

31

contingency plan.” City of Philadelphia v. Stepan Chemical,

713 F. Supp. 1484, 1490(E.D. Pa. 1989). Necessity and

consistency are questions of fact. Cadillac-

Fairview/California v. Dow Chemical, 840 F.2d 691, 695

(9th Cir. 1988).

Key Tronic’s response cost claim is disputed on several

grounds. Defendants assail the propriety under CERCLA of

several categories of costs claimed, the legitimacy of the

claims made here even if the type of cost is not per se

improper, and the amounts of various cost claims. More

importantly, both the USAF and Alumax argue that they

have been provided no discovery regarding Key Tronic’s

response cost claim. The discovery cut-off date in this action

is December 31, 1990. Defendants should have an

opportunity to examine the nature and amount of the costs

claimed. Therefore, Key Tronic’s motion for partial

summary judgment establishing the amount of its private

cost recovery claim should be denied without prejudice to

renew after reasonable discovery.

B. Alumax

(i) Liability

Key Tronic alleges that Alumax disposed of liquid

chemical wastes, including TCA and TCE, at Colbert

between 1972 and 1980. (Plaintiff's Statement of Facts, 4 3.)

Key Tronic supports this allegation with the testimony of two

former Alumax employees, Russell Parish and Vernon

Peters. Key Tronic asserts that Parish and Peters have

testified that they personally took hazardous waste to

Colbert. (See Ex. 5 & 6 to Plaintiff's Statement of Facts.)

Thus, Key Tronic argues that it has established Alumax’s

liability under State and Federal law.

Alumax disputes plaintiffs allegation by presenting the

declaration of Les Wright, the foreman of Alumax’s “plating

shop.” Wright’s declaration details how he operated a

32

“degreasing vat.” When the vat was full of waste, Wright

would have it cleaned, and the waste would be disposed of.

Wright declares: “During the eleven years that I worked for

Alumax, as far as | know, all of the waste from the vapor

degreaser was taken to the Mica Landfill. I know of none

going to the Colbert Landfill.” (Wright Decl., p. 3.)

The Court notes that Wright’s testimony is not an

affirmative declaration that “I know that none of the vapor

degreaser waste was taken to the Colbert Landfill.” However,

as Alumax points out, Parish’s testimony may be

impeachable, and Peters’s testimony is equivocal (“I believe”

I hauled chemicals to Colbert “once or twice, but I’m not for

sure.”) In light of the fact that Key Tronic bears the burden

of proofon this issue , summary judgment is not appropriate.

Therefore, Key Tronic’s motion for partial summary

judgment that Alumax is liable should be denied.

VII. Discovery Motions

The USAF moved for a protective order pending

disposition of its motion to dismiss discussed above. Key

Tronic countered with a motion to compel the USAF to

answer the discovery.

The USAF’s memoranda on the discovery issue merely

offer excuses for its failure to respond on time (counsel was

sick, substitute counsel was unaware of the outstanding

discovery, etc.) The substantive propriety of the discovery is

not contested.

Key Tronic’s motion to compel should be GRANTED,

and the USAF’s motion for a protective order should be

DENIED. Because the USAF has had the outstanding

discovery requests for over 7 months, the court orally

ordered it to respond thereto by August 9, 1990.

The court finds no substantial justification for the

USAF’ s failure to provide discovery. Therefore, Key Tronic

33

is awarded the reasonable costs and attorneys’ fees of its

motion to compel. Key Tronic may file a statement of its

costs and fees on the motion. The USAF shall have 10 days

from receipt thereof to respond to or oppose the amount

claimed. The court will then determine a reasonable amount.

Based upon the foregoing, IT IS HEREBY

ORDERED:

1. Plaintiff's Second, Third and Fourth Claims for

Relief are DISMISSED WITH PREJUDICE against

defendants United States, the Air Force and Rice. The First

Claim for Relief is DISMISSED WITH PREJUDICE

against these defendants with respect to any costs or

obligation incurred by plaintiff pursuant to the Consent

Decree entered in DOE and EPA v. County of Spokane and

Key Tronic Corp., C-89-033-RJM(E.D. WA, Jan. 9, 1989).

These defendants’ motion to dismiss the First Claim for

Relief is DENIED with respect to plaintiff s action to

recover private response costs under 42 U.S.C. § 9607.

2. The Complaint and all Claims therein against

defendant William Schmidt are DISMISSED WITH

PREJUDICE.

3. Key Tronic’s motion for partial summary

judgment is GRANTED IN PART and DENIED IN

PART. The Court grants summary judgment establishing the

liability of the Air Force under 42 U.S.C. § 9607. In all other

respects, Key Tronic’s motion for partial summary judgment

is DENIED.

4. Key Tronic’s motion to compel discovery from

the Air Force is GRANTED; the Air Force’s motion fora

protective order is DENIED.

34

IT ISSO ORDERED. The Clerk is hereby directed to

enter this Order and furnish copies to counsel.

DATED this 9th day of August, 1990.

/s/

JUSTIN L. QUACKENBUSH

UNITED STATES DISTRICT JUDGE

35

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF

WASHINGTON

KEY TRONIC CORPORATION, a

Washington corporation, NO. C-89-694-JLQ

Plaintiff, SUPPLEMENTAL

AFFIDAVIT OF DAVID L.

v. POWERS

UNITED STATES OF AMERICA;

THE UNITED STATES AIR

FORCE; DONALDB. RICE, THE

SECRETARY OF THE UNITED

STATES AIR FORCE, inhis

individual capacity; ALUMAX, INC.,

a Delaware corporation; ALUMAX

FABRICATED PRODUCTS, INC., a

Delaware corporation,

Defendants.

STATE OF WASHINGTON )

) ss.

COUNTY OF SPOKANE _)

DAVIDL. POWERS, being first duly sworn upon oath,

deposes and says:

1. This Affidavit supplements the affidavit I

executed in June 1990 (“June Affidavit”) in support of Key

Tronic’s previous Motion For Partial Summary Judgment

(“June Motion”). A copy of the June Affidavit is attached as

Exhibit P.

36

2. Attachedas Exhibit A is asummary of the costs

that Key Tronic has incurred or will incur in connection with

the Colbert Landfill for which it seeks summary judgment.

3. Inmy June Affidavit I described the efforts

undertaken by Key Tronic and its attorneys, consultants and

investigator to: 1) identify other Potentially Responsible

Parties; and 2) develop and shape the final remedy for

Colbert. I also identified the costs Key Tronic had incurred

related to these efforts. The identification of costs was based

on my review of the supporting cost documentation which

the company has maintained.

4. Subsequent to the June Motion, Key Tronic was

asked by Alumax to produce all of its cost documentation

supporting its response cost claims. I authorized the

production of these documents and had them sent to Key

Tronic’s counsel, Perkins Coie.

5. Thecostdocuments were further reviewed by

Perkins Coie prior to production. Portions of the documents

reflecting fees and expenses paid to Popham, Haik were

redacted by Perkins Coie, and certain of the documents

reflecting the fees and expenses paid to Goss, Moe &

Sampson were not produced. This was done so that the

produced documents and costs identified in the documents

include only those costs unquestionably linked to the PRP

and Consent Decree efforts. This review and redaction

process resulted in a net reduction in the amount of costs

sought to be recovered in this motion.

6. Priorto the preparation of my June Affidavit and

the conduct of my deposition, I had reviewed the cost

documentation on which I relied to prepare the June

Affidavit. After my deposition and in preparation for this

affidavit, I reviewed the documents that Perkins Coie had

redacted and produced. Based on this review, I believe that

the costs identified in the produced and redacted documents

are the lowest conceivable amount of costs attributable to the

37

PRP and Consent Decree efforts. I continue to believe that

the figures set forth in my June Affidavit are accurate and

properly attributable to the PRP and Consent Decreé work,

but the lower figures were selected for this motion to ensure

that there would be no issue of fact to preclude summary

judgment. In other words, costs sought in the instant motion

are the result of a much more conservative approaeth of

identifying costs attributable to the PRP and Consent Decree

efforts than was used for my June Affidavit.

7. Forpurposes of this motion, Key Tronic seeks to

recover $47,126.12 in fees and expenses for the work

performed by Popham Haik relating to the PRP search. In my

June Affidavit, Popham Haik costs for the PRP effort were

identified as $121,589.36. While $121,589.36 is the amount

of costs actually incurred by Key Tronic for Popham Haik’s

work relating to the PRP effort, we have, for purposes of this

motion, reduced the figure to $47,126.12. This figure

includes only those costs which are specifically, directly and

unquestionably linked to the PRP effort. The Popham Haik

redacted documents which have been produced identify those

PRP costs for which we seek reimbursement. The costs

sought are based on the amount of attorney and legal

assistant time worked on the PRP matter, multiplied by the

hourly billing rate of the individual concerned.

Attached as Exhibit B to this affidavit is asummary of

the fees and expenses sought to be recovered for each

Popham Haik invoice. Attached as Exhibit C are the Popham

Haik invoices and Key Tronic payment records on which the

summary is based.

8. Here is one example of why the figure for

Popham Haik has been reduced. In my June Affidavit, |

included Popham Haik fees and expenses associated with the

preparation of a complaint for contribution. In my view, the

preparation of the complaint was a necessary step so that Key

Tronic could conduct formal discovery against certain PRPs.

The revised figure excludes Popham Haik fees and expenses

38

associated with the complaint. This was done to preclude any

argument that the complaint fees were not recoverable

because the complaint may have served purposes other than

the PRP search. I still believe that such fees are properly

recoverable as PRP search costs, but have not sought such

fees in this motion.

9. lamofthe view that all of Popham Haik’s work

contributed at least indirectly to identification of PRPs. They,

along with Goss, Moe & Sampson, did the first investigation

of PRPs at the Colbert site, identified entities that were likely

to have taken chemical wastes to Colbert, filed complaints in

state and federal court against those entities (including

Alumax and the Air Force), and engaged in substantial

investigation and discovery regarding whether and in what

amounts chemical costs were taken by those entities to

Colbert. Arguably, all of the legal research and drafting

associated with that effort contributes to PRP identification.

Nevertheless, it is possible to take a more narrow view of the

PRP investigative effort and include only those costs directly

associated with investigation, discovery, and document

analysis. For purposes of this motion, we are seeking only

reimbursement of costs specifically and directly related to

such efforts.

10. Key Tronic seeks summary judgment with respect

to $5,215.48 in fees and expenses for the work performed by

Goss, Moe & Sampson relating to the PRP search. In my

June Affidavit, the Goss, Moe costs for the PRP search were

identified as $9,464.52. While $9,464.52 is the amount of

costs actually incurred by Key Tronic for Goss, Moe’s work

related to the PRP search, we have, for purposes of this

motion, reduced the figure to $5,215.48. Again, this figure

includes only those costs which are specifically and directly

linked to the PRP effort. This reflects the same conservative

approach that was taken with respect to the Popham Haik

costs discussed in paragraphs 6 through 9 above. It is based

on the amount ofattorney and paralegal time worked on the

39

PRP matter, multiplied by the hourly billing rate of the

individual concerned.

Goss, Moe documents were not redacted, but only those

invoices which referenced services unquestionably related to

the PRP effort were produced. Even the figures on the

produced invoices were sometimes reduced. For example, the

July 29, 1986 invoice had billed Key Tronic for fees of

$3,086.25 and expenses of $555.26. The amount sought in

this motion for that invoice is only $1,000 in fees and $0 in

expenses. This was done because certain of the entries on the

invoice do not explicitly reference PRP work. The reduction

to $1,000 is the lowest possible amount attributable to PRP

work. A similar reduction and analysis were used for the

August 25, 1986 invoice.

The amounts sought for each of the produced Goss,

Moe invoices are identified in the documents produced.

Attached as Exhibit D is asummary of the fees and expenses

sought to be recovered foreach Goss, Moe invoice. Attached

as Exhibit E are the Goss, Moe invoices and Key Tronic

payment records on which the summary is based.

11. Forpurposes of this motion, Key Tronic seeks to

recover $62,492.18 in fees and expenses relating to Perkins

Coie’s PRP search, and $160,641.23 in fees and expenses

relating to Perkins Coie’s efforts in negotiating the Consent

Decree. These are the same figures that were identified in the

June Affidavit. The figures are based on the amount of

attorney or paralegal time worked on PRP or Consent Decree

matters, multiplied by the hourly billing rate of the individual

concerned.

Each produced invoice identifies the amount of fees

and expenses sought for that invoice. Attached as Exhibit F

is asummary of the fees and expenses sought to be recovered

for each invoice. Attached as Exhibit G are the supporting

Perkins Coie invoices on which the summary is based.

40

The identification of the Perkins Coie costs was

conducted using the same conservative approach that was

used for the Popham Haik costs described above. The

redaction and production were done by Perkins Coie. Based

on my review of the redacted and produced documents, |

agree with the conservative approach taken and believe that

the amounts sought are the lowest possible amounts

attributable to the PRP and Consent Decree efforts.

12. Forpurposes of this motion, Key Tronic seeks to

recover $2,512.24 in fees and expenses for the PRP work

performed by Robert Bailor, an investigator. In my June

Affidavit, the Bailor costs were identified as $2,462.21. The

current figure reflects the total of the charges to Key Tronic

as set forth on all of the Bailor invoices that were produced.

The invoices reference the amounts chargeable to Key Tronic

and the County and the fact that Key Tronic, in most

instances, paid one-half of the invoiced amounts. On one

occasion, Key Tronic paid the entire amount. The change

from $2,462.21 to $2,512.24 resulted from an inadvertent

failure to include one of the Bailor invoices in the June total.

Attached as Exhibit H is asummary of the invoices

which total $2,512.24. Attached as Exhibit I are the Bailor

invoices and Key Tronic payment records on which the

summary is based.

13. Forpurposes ofthis motion, Key Tronic seeks to

recover $129,447.31 in fees and expenses for the work

performed by Landau Associates, Inc. relating to the

negotiation of the Consent Decree and Scope of Work. In my

June Affidavit, the Landau costs were identified as

$126,270.53. Additional review of the documents has

resulted in a higher figure.

The figure of $129,447.31 was arrived at as follows.

The Landau invoices for Colbert which were produced total

$133,139.08. However, Key Tronic is following the same

conservative approach with respect to the Landau costs as it

41

has with respect to other costs. We are not now seeking

recovery for two pieces of work performed by Landau which

related indirectly to the Consent Decree. Subtracting the cost

for those pieces of work from $133,139.08 amounts to

$129,447.31.

Attached as Exhibit J is asummary of the Landau

Associates, Inc. invoices which total $129,447.31. Attached

as Exhibit K are the supporting Landau Associates, Inc.

invoices and Key Tronic payment records on which the

summary is based.

14. Forpurposes of this motion, Key Tronic seeks to

recover $20,903.35 in fees and expenses for the work

performed by Dames & Moore. In my June Affidavit, the

Dames & Moore costs were identified as $22,323.09.

Additional review of the documents has resulted in a lower

figure.

The figure of $20,093.35 was arrived at as follows. The

total amount of fees and expenses identified inthe Dames &

Moore produced invoices was $41,164.69, of which Key

Tronic paid $21,297.75. Key Tronic received acredit from

Dames & Moore of $394.40 because it had paid too much for

one invoice. Subtracting the $394.40 credit from Key

Tronic’s payments of $21,271.75 amounts to $20,903.35.

This is the amount that Key Tronic seeks to recover for the

work performed by Dames & Moore.

In my deposition, I could not recall the nature of the

work performed by Dames & Moore or the sequence of

events leading up to our hiring of Dames & Moore. I have

since reviewed the Dames & Moore documents and have

refreshed my recollection. My refreshed recollection is as

follows. Dames & Moore reviewed the Remedial

Investigation, the Feasibility Study and the reports prepared

by Maddox and Donahue which were issued prior to the

Remedial Investigation and Feasibility Study. Dames &

Moore analyzed the various remedial alternatives proposed in

ae

42

the Remedial Investigation and Feasibility Study to

determine whether the reports included the most cost-

effective remedy. Dames & Moore further analyzed each

alternative set forth in the RI/FS to determine whether the

cost projections for each such alternative were accurate.

After this work was performed, Dames & Moore then

assisted Key Tronic in preparing comments to the United

States and State of Washington on the RI/FS. Those

comments recommended that the United States and State of

Washington select the most cost-effective remedy. The

United States and State of Washington ultimately selected

this remedy.

Attached as Exhibit L is asummary of the Dames &

Moore invoices which indicate the amounts billed and

amounts paid. Attached as Exhibit M are the Dames &

Moore invoices and Key Tronic payment records on which

the summary is based.

15. Key Tronic is obligated to pay $4.2 million

pursuant to the Consent Decree with the United States

Environmental Protection Agency, Washington Department

of Ecology and Spokane County. In my June Affidavit, I said

that Key Tronic had paid $1.3 million pursuant to the

Consent Decree. Key Tronic has now paid $2.25 million

pursuant to the Consent Decrée. Attached as Exhibit N is a

summary of the documents reflecting the payment of

$2.25 million. Attached as Exhibit O are the documents on

which the summary is based.

/s/

DAVIDL. POWERS

43 44

SUBSCRIBED AND SWORN to before me this Ist 7 UNITED STATES DISTRICT COURT

day of February, 1991. FOR THE EASTERN DISTRICT OF

WASHINGTON

Betty A. Traband/s/_ KEY TRONIC CORPORATION

NOTARY PUBLIC in and for the State of ashington corporati -89-694-

Washington, residing at Spokane. ies sie —

My Commission Expires: March 15, 1994. Plaintiff, STIPULATION

Te

UNITED STATES OF AMERICA; THE

UNITED STATES AIR FORCE;

DONALDB. RICE, THESECRETARY

OF THE UNITED STATES AIR

FORCE, in his official capacity;

ALUMAX, INC., a Delaware

corporation; ALUMAX FABRICATED

PRODUCTS, INC., a Delaware

corporation; and ALUMAX MILL

PRODUCTS, INC., a Delaware

corporation,

Defendants.

WHEREAS, Key Tronic Corporation (“Key Tronic”)

has filed this action, pursuant to sections 107(a) and 1 13 of

the Comprehensive Environmental Response, Compensation,

and Liability Act (“CERCLA”), 42 U.S.C. §§ 9607(a) and

9613, against several defendants, including the United States,

the United States Air Force, and Donald Rice, Secretary of

the Air Force (hereinafter referred to jointly as “the United

States”) seeking to recover removal and interim remediation

costs Key Tronic alleges to have incurred in connection with

the remediation of the release of hazardous substances at

Colbert Landfill, Spokane, Washington;

45

WHEREAS, the United States and Key Tronic

previously executed the Consent Decree entered by this

Court on January 11, 1991, in order to resolve the United

States’ liability to Key Tronic for certain of the claims Key

Tronic has asserted;

WHEREAS, the Paragraph 3 of the Consent Decree

provided that the following claims (“the excepted claims”)

remained in dispute between the parties:

A. Costs and fees incurred by attorneys

and investigators for Key Tronic during Key

Tronic’s search for additional potentially

responsible parties and costs and fees incurred

by attorneys related to the negotiation of the

Consent Decree between Key Tronic, the

United States, and the State of Washington in

The State of Washington v. County of

Spokane, Civ. No. 89-033-RJM;

B. The salary of David Powers, Key

Tronic’s General Counsel and Secretary, in

the amount of $70,000, for time spent

supervising the search for additional

potentially responsible parties and negotiating

the Consent Decree identified in A;

C. Attorneys’ fees and costs incurred by

Key Tronic in the prosecution of this action:

and

D. Prejudgment interest on excepted

claims.

WHEREAS, on March 19, 1991, the Court issued a

decision holding that Key Tronic is entitled to recover on the

excepted claims as a matter of law;

46

WHEREAS, the United States and Key Tronic have

entered into this Stipulation to further narrow the issues in

this litigation;

NOW, THEREFORE, it is agreed and stipulated that:

1. The Court shall enter judgment on the excepted

claims in the amount of $155,500.

2. This agreement extends to the quantum of

recovery alone; the United States preserves all rights to

appeal an adverse judgment with respect to the issue of

whether any or all of the excepted claims are recoverable as a

matter of law.

3. Key Tronic reserves the right to seek to recover

attorneys’ fees incurred after June 17, 1991, and interest on

the excepted claims accrved after June 17, 1991, should the

United States appeal this matter.

4. Nothing in this agreement shall affect the rights or

obligations of the United States or Key Tronic established in

the Consent Decree with respect to any issue other than the

quantum of recovery to be awarded on the specified excepted

claims in paragraph | above.

SO AGREED:

RICHARD B. STEWART

Assistant Attorney General

/s/

EILEEN T. MCDONOUGH

Environmental Defense Section

U.S. Department of Justice

10th St. & Pennsylvania Ave.,

N.W.

Washington, D.C. 20530

(202) 514-3126

Counsel for United States

DATED: June 17, 1991

47

/s/

JAMES R. MOORE

Perkins Coie

1201 Third Avenue

40th Floor

Seattle, Washington 98101

(206) 583-8888

Counsel for Key Tronic

DATED: June 19, 1991

*

48

No. 93-376

In the

Supreme Court of the United States

KEY TRONIC CORPORATION,

Petitioner,

v.

UNITEDSTATES, etal.

and

STANTON ROAD ASSOCIATES.

Petitioner,

Vv.

LOHREY ENTERPRISES, INC., ET AL.

ORDER ALLOWING CERTIORARI

Filed December 13, 1993.

The petition herein for writ of certiorari to the United

States Court of Appeals for the Ninth Circuit is granted.

December 13, 1993