Petition for Writ of Certiorari — Outboard Marine Corp. v. United States
Supreme Court brief1986
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AUG 20 1286
semi! F. SPANICL, JR,
CLERK
No.
In THE
Supreme Court of the United States
Octoser Trerm, 1986
OUTBOARD MARINE CORPORATION,
Petitioner,
THE UNITED STATES OF AMERICA and
THE PEOPLE OF THE STATE OF ILLINOIS,
Respondents.
PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
—
RICHARD J. PHELAN * RICHARD J. KISSEL
ROSEANN OLIVER JEFFREY C. FORT
JAN FELDMAN DANIEL F. O'CONNELL
PHELAN, POPE & JOHN, LTD. MARTIN, CRAIG, CHESTER
180 North Wacker Drive & SONNENSCHEIN
Suite 500 115 South LaSalle Street
Chicago, Illinois 60606 Chicago, Illinois 60603
(312) 621-0700 (312) 368-9700
ATTORNEYS FOR PETITIONER
(* Counsel of Record)
|
|
Midwest Law Printing Co., Chicago 60611, (312) 321-0220
i
QUESTION PRESENTED
Whether Rule 41(aX2) of the Federal Rules of Civil Pro-
cedure permits the dismissal of a seven-year-old case in
which the defendant had expended enormous resources
to prepare for trial, and the plaintiff failed to provide an
adequate reason for not proceeding to trial.
il
PARTIES TO THE PROCEEDING
—_—
Parties to the proceedings below are the Petitioner, Out-
board Marine Corporation, and Respondents the United
States of America and the State of Illinois. Monsanto
Company was also a party below.
Petitioner Outboard Marine Corporation has an owner-
ship interest in Adventurent, Inc. Outboard Marine Cor-
poration wholly owns its other subsidiaries. There is no
parent corporation of Outboard Marine Corporation.
ili
TABLE OF CONTENTS
—_
RELEVANT STATUTORY AUTHORITY ....
STATEMENT OF THE CASE ...............
1. Nature Of The Lawsuit ..............
Motions To Dismiss The Complaint ..
ise hove be 6ibssccscecece.
The Government’s Motion to Dismiss ...
The District Court Rulings ...........
The Seventh Circuit Decision .........
REASONS WHY THE PETITION SHOULD
TM noo os ais cc cccccccencee. 9
ES 18
onmannrnrn wp nwo wp eu
Po Fw
iv
APPENDICES:
Opinion, United States, et al. v. Outboard Marine
Corporation, et al., 85-1584, April 22, 1986 (7th
CUD. cc ck bas sucnctes ster sege Vinwhenae cee
Judgment, United States, et al. v. Outboard Marine
Corporation, et al., 85-1584, April 22, 1986 (7th
‘Se err rr er Tyrie ee
Order Denying Rehearing, United States, et al. v.
Outboard Marine Corporation, et al., 85-1584,
May 22, 1986 (7th Cir.) ....----++eseeeeeee
Memorandum Opinion and Order, United States, et
al. v. Outboard Marine Corporation, et al., 78
C 1004, August 30, 1984 (N.D. Serre
Relevant Statutory Authority .......---++++++-
Rule 41(aX2), Fed. R. Civ. P. ....-+----+:
Comprehensive Environmentai Response,
Compensation and Liability Act of 1980,
§ 104(aX1), 42 U.S.C. § 9604(aX1) .....
Comprehensive Environmental Response,
Compensation and Liability Act of 1980,
§ 106(a), 42 U.S.C. § 9606(a) ......---
Comprehensive Environmental Response,
Compensation and Liability Act of 1980,
§ 107(a), 42 U.S.C. § 9607(a) ......---
E-1
E-1
E-2
E-2
MOLEC IAAT AD Ween ata yemeren
CHOTA
¥
TABLE OF AUTHORITIES
TT
CASES:
Armstrong v. Frostie Company, 453 F.2d 914 (4th
SMe SUED Seeh daeceires su culews ero ase
Bamdad Mechanic Company v. United Technologies
Corp., 109 F.R.D. 128 (D. Del. 1985) ......
Bunker Ramo Corp. v. United Business Forms,
Inc., 713 F.2d 1272 (7th Cir. 1983) ........
Cone v. West Virginia Pulp & Paper Company,
SP Tt TN GUD oo. kon oo vn esc vecncen.
Durham v. Florida East Coast Railway Co., 385
F.2d 366 (5th Cir. 1967) ....... eee ee uite
Federated Department Stores, Inc. v. Moitie, 452
Wi WO MEME Scnodvcbessccpecursdoieess,
Ferguson v. Eakle, 492 F.2d 26 (3d Cir. 1974)...
Harper Plastics, Inc. v. Amoco Chemicals Corp.,
657 F.2d 989 (7th Cir. 1981) ..............
J.V. Peters & Co., Inc. v. Administrator, United
States Environmental Protection Agency, 767
F.2d 263 (6th Cir. 1985) ..................
Jones v. Inmont Corp., 584 F. Supp. 1425 (S.D.
I Saye ee i
Kern v. TXO Production Corp., 738 F.2d 968 (8th
Ge ian ee
Lone Pine Steering Committee v. United States
Environmental Protection Agency, 777 F.2d 882
(8d Cir. 1985), cert. denied, 106 S.Ct. 1970
NE norte ee ck ee
PAGE
12
12
15
li
14
15
11-13
15
16
15
13
16
vl
Louis v. Bache Group, Inc., 92 F.R.D. 459 (S.D.
ED oiwnccds oe ceen enc ge Capaabeeens
Manego v. Orleans Board of Trade, 773 F.2d 1 (1st
Cir. 1985), cert. denied, 106 S.Ct. 1466 (1986) .
McCants v. Ford Motor Co., Inc., 781 F.2d 855
(Tith Cir. 1986) .......cccccccesessssseonss
Olmstead v. Amoco Oil Co., 725 F.2d 627 (11th Cir.
SE cc cccencscaee bu dae enewaereeeestenenes
Outboard Marine Corporation v. Illinois, 453 U.S.
917 (1981) (Mem.) .........ccsccccevccesece
Outboard Marine Corporation v. Thomas, 773 F.2d
OER CPA Cir. 19GB) ..... 2. cscccsecsccvesies
Paturzo v. Home Life Insurance Co., 503 F.2d 333
SE Se eer eee oe
Puerto Rico Maritime Shipping Authority v. Leith,
668 F.2d 46 (ist Cir. 1981) .............6.-
Scallen v. Minnesota Vikings Football Club, Inc.,
574 F. Supp. 278 (D. Minn. 1983) .........
Shaffer v. Evans, 263 F.2d 134 (10th Cir. 1958),
cert. denied, 359 U.S. 990 (1959) ...........
State of Illinois v. Outboard Marine Corp., 680
F.2d 473 (7th Cir. 1982) ...........seseee-
State of Ohio ex rel. Brown v. Georgeoff, 562 F.
Supp. 1300 (N.D. Ohio 1983) ............-.
Tyco Laboratories v. Koppers Co., 627 F.2d 54 (7th
‘: rere errr erry rer TT
United States v. Allied Chemical Corp., 587 F.
Supp. 1205 (N.D. Cal. 1984) ..........-.--.
United States v. NEPACCO, 579 F. Supp. 823
2 a: reerrrrrrre eT or
4,17
12-13
4,17
Vii
United States v. Outboard Marine Corp., 104
F.R.D. 405 (N.D. Ill. 1984) ................
United States v. Reilly Tar & Chemical Corp., 546
F. Supp. 1100 (D. Minn. 1982) .............
United States v. Wade, 577 F. Supp. 1326 (E.D.
PE it sy 5 oN E Canvas du wuts ee Pees,
Wakefield v. Northern Telecom, Inc., 769 F.2d 109
Ms Oe cee ee egeseets ls s.,
Wheaton Industries v. United States Environmen-
tal Protection Agency, 781 F.2d 354 (3d Cir.
PN Ce 0 aoe Ve on Rk kaho Hanna coack
Williams v. Ford Motor Credit Co., 627 F.2d 158
WE I noses 66h 5 0456 b0ko ae ocean,
STATUTES AND REGULATIONS:
Federal Rules of Civil Procedure
ee ee ict asa aah ane
reer rr oti Mo Ns 35 4: passim
ee
Clean Water Act, § 309(b), 33 U.S.C. § 1319 ...
Clean Water Act, § 402, 33 U.S.C. § 1342 .....
Vill
Comprehensive Environmental Response, Compen-
sation and Liability Act of 1980, 42 U.S.C.
SOGOL, Cf BOG. 2. cc ccsccccccvswcessccvecce passim
§ 104, 42 U.S.C. $9604 ...........e ee eeeee 7
§ 106, 42 U.S.C. $9606 .............-eeeee 3
$107, 42 U.S.C. $9607 ........-0ee eens 7, 14-15
$118, 42 UBC. S9GIS nnn. cc ccccesccccse 3
MISCELLANEOUS:
1B Moore’s Federal Practice ¢ 0.409 [1.—2] (1984) . 15
Report of Proposed Amendments to Rules of Civil
en teres eee 10
Restatement of Judgments 2d, §25 Comment d
ammo ae was err ee 15
9 C. Wright & A. Miller, Federal Practice & Pro-
cedure, § 2364 at 165 (1971) ............... 10
In THE
Supreme Court of the United States
Octoser Term, 1986
OUTBOARD MARINE CORPORATION,
Petitioner,
¥.
THE UNITED STATES OF AMERICA and
THE PEOPLE OF THE STATE OF ILLINOIS,
Respondents.
eee eeEeEeEeEeEeEeEeEeESES—E™E™ErsS
PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
Outboard Marine Corporation petitions for a writ of cer-
tiorari to review the judgment of the United States Court
of Appeals for the Seventh Circuit in this case.
OPINIONS BELOW
The decision of the Co. t of Appeals for the Seventh
Circuit is reported at 789 F.2d 497 (1986). The district
court decision is reported at 104 F.R.D. 405 (N.D. IIl.
1984).
~
JURISDICTIONAL STATEMENT
——_—__—_———
This Court has jurisdiction over this matter pursuant
to 28 U.S.C. § 1254 and Supreme Court Rule 17. The deci-
sion of the Court of Appeals for the Seventh Circuit was
entered on April 22, 1986. A timely-filed petition for re-
hearing was denied by the Court of Appeals on May 22,
1986.
RELEVANT STATUTORY AUTHORITY
—_———_
See Appendix E, infra.
STATEMENT OF THE CASE
Nature Of The Lawsuit
The Petitioner, Outboard Marine Corporation (“OMC’’),
is a manufacturer of outboard motors, lawn mowers and
industrial and turf-care vehicles. It has operated an in-
dustrial complex on its property near Waukegan Harbor
in Waukegan, Illinois for nearly fifty years. OMC’s manu-
facturing process has included aluminum die casting oper-
ations at its Waukegan facilities since the 1920’s. Begin-
ning in the late 1950’s, that process utilized hydraulic
fluids purchased from the Monsanto Company which con-
tained polychlorinated biphenyls (“PCBs”). OMC utilized
such fluids because of their ability to withstand the ex-
a
tremely high pressures and heat of the die casting process
without causing fires. U.S. Second Amended Compl. 4 10,
12-14; R.A. 471.1
In 1976, the United States Environmental Protection
Agency (“EPA”) and the Illinois Environmental Protec-
tion Agency publicly stated that there were deposits of
PCBs in the innermost slip of Waukegan Harbor. They
later stated that there were also PCB deposits in a drain-
age ditch at the northern end of OMC’s property.
Respondent, the United States of America, on behalf
of the United States Environmental Protection Agency
(hereinafter referred to as “EPA”), filed suit against OMC
on March 17, 1978. R.A. 1.2 The initial complaint stated
that PCBs in OMC’s discharge water had contaminated
“the North Ditch, Waukegan Harbor, and Lake Michigan,
as well as the groundwater underlying and adjacent to
Outboard Marine’s facility, and certain portions of the soils
on OMC’s facility.” R.A. 1. Each of the three counts of
the complaint alieged that the deposits of PCBs had harmed
the environment and threatened public health. Id., 44 20,
27, 31.
Based on those allegations, the complaint attempted to
plead causes of action under the Refuse Act of 1899, 33
U.S.C. § 407, § 402 of the Clean Water Act, 33 U.S.C.
* Citations to documents in the record on appeal in the Seventh
Circuit are cited herein as “R.A.” followed by the number of the
document in the clerk’s List of Documents.
2 In its Second Amended Complaint, the government stated that
it was invoking the court’s jurisdiction “by virtue of 28 U.S.C.
§ 1331, 28 U.S.C. § 1845, Section 30%b) of the Clean Water Act,
33 U.S.C. § 131%b); and Sections 106 and 113 of [the Comprehen-
sive Environmental Response, Compensation and Liability Act],
42 U.S.C.A. §§ 9606 and 9613.” R.A. 471.
sittin
§ 1342, and “common law.” Jd. The government prayed,
inter alia, for injunctive relief against OMC, requiring it
to implement a project to dredge and remove from the
area all sediments containing PCBs. The complaint also
contained counts against Monsanto Company, demanding
the-same relief. Jd.
On August 10, 1978, the State of Illinois filed a com-
plaint against OMC, containing essentially the same fac-
tual allegations. State of Illinois v. Outboard Marine Cor-
poration, 78 C 3187 (N.D. Ill.). At the time the case was
dismissed, the State was an intervening plaintiff assert-
ing state law claims in the case brought by the United
States. R.A. 566.4
In 1982, the government added a claim against OMC
under the Comprehensive Environmental Response, Com-
pensation and Liability Act, 42 U.S.C. § 9601 et seq. (“Super-
fund”). The-government chose not to sue OMC under the
cost-recovery provisions of Superfund, § 107, 42 U.S.C.
§ 9607, for the costs it had already expended or for its
future remedial costs. Instead, it added a count under
Superfund § 106(a), 42 U.S.C. § 9606(a), which provides for
3 On remand from this Court, Outboard Marine Corp. v. Illinois,
453 U.S. 917 (1981) (Mem.), the Seventh Circuit held that the
State’s purported claim under federal common law had been pre-
empted by the Clean Water Act. State of Illinois v. Outboard
Marine ., 680 F.2d 473, 481 (7th Cir. 1982). Based on that
ruling, the district court struck the common law claims brought
by the United States.
4 During most of the proceedings, the State of Illinois did not
take an active role in this case, but instead approved the deci-
sions of the United States. See, e.g., Transcript of Proceedings
March 9, 1988, pp. 13-15, R.A. 713 (remarks of Mr. Hartigan);
Transcript of Proceedings, Feb. 6, 1985, p. 6, R.A. 713. Although
this Petition applies fully to the State, in the interest of brevity,
OMC omits subsequent references to the State except when neces-
sary to clarify the record.
Te
injunctive relief to abate an “imminent and substantial
endangerment to the public health or welfare or the en-
vironment.” R.A. 471.
Motions To Dismiss The Complaint
OMC filed motions to dismiss each of the pending counts
against it in the Second Amended Complaint for failure
to state a claim for which injunctive relief could be
granted. R.A. 407, 458A, 463. Although the district court
initially denied those motions, after reviewing OMC’s mo-
tion for reconsideration, the court stated that it had only
a “sixty percent comfort” in its prior rulings, and it there-
fore urged the government to settle the case. R.A. 713.
Oral argument on OMC’s motion for reconsideration was
rescheduled numerous times over the next two years with
OMC ultimately unable to obtain any ruling from the
court on that motion. R.A. 628, 661, 663.
Discovery
After this case was filed, numerous studies were com-
missioned, and the parties undertook an exhaustive ac-
cumulation of evidence relating to whether PCBs in the
Waukegan Harbor area were harming or threatening human
health or the environment, and whether any such harm
or threat necessitated the removal operation the govern-
ment demanded. R.A. 671. The experts retained in this
case covered a broad range of subject matters: medical
experts concerning the health effects of PCBs, hydrology
and geology experts concerning the flow of water and
sediment, aquatic biologists concerning the effects of PCBs
on Waukegan aquatic life, mathematical modeling experts
to estimate whether PCBs were migrating from their
present locations into the air or into Lake Michigan, and
environmental engineers to propose remedial projects.
<i
During the course « the proceedings, the government
hired and terminated several sets of experts, each of them
proposing radically different remedies ranging in cost from
well over fifty million dollars to under four million dollars.
R.A. 671.
Both the highly technical nature of the evidence, and
the staggering cost of government’s various proposed
remedies, compelled OMC to expend enormous resources
to defend the case. OMC deposed over fifty government
witnesses. R.A. 685 at 4n. OMC also presented eighteen
of its own witnesses, and it deposed thirty witnesses
associated with the Monsanto Company. By the time dis-
covery ceased in 1983, the lawsuit had generated over
60,000 pages of documents and almost 19,000 pages of
transcripts. Id.
When discovery was nearly complete in 1982, the gov-
ernment filed responses to requests to admit which ef-
fectively conceded that it had no evidence that PCBs in
the Waukegan area had harmed the environment or public
health. R.A. 563. The government expressly admitted that
it had no evidence of any person having been harmed in
any way by PCBs from the Waukegan Harbor area. It
further conceded that the air and drinking water in and
around the Waukegan PCB sites “pose[ ] no significant
human health problem attributable to PCBs there.” Id.
Those admissions were made at the conclusion of all the
government’s studies and after PCBs had been in their
present location in the Waukegan Harbor area for at least
thirty years. R.A. 671, 686.
The Government’s Motion To Dismiss
After it filed its responses to the requests to admit, the
government radically altered its strategy and began to
proceed “administratively” to carry out its own remedy
= =
under § 104 of the Superfund Act, 42 U.S.C. § 9604. It
also filed a motion to stay the proceedings pending its
“determmation” of a proper remedy. R.A. 639, 642.5
After numerous delays, the government announced in
1984 that its administrative proceedings were finally com-
pleted. At that time, it issued a “Record of Decision” of
its choice of remedial action in the Waukegan Harbor
area. The government simultaneously moved to dismiss
the lawsuit without prejudice pursuant to Rule 41(aX2),
Fed. R. Civ. P. R.A. 669. The government’s announced
intent was to implement a dredging project costing twenty-
seven million dollars and then to sue OMC under the cost-
recovery provisions o: Superfund, § 107, 42 U.S.C. § 9607,
at some indefinite time in the future for the costs of that
remedy. R.A. 669.
In response, OMC contended that Rule 41(aX2) precluded
the dismissal of this case without prejudice. OMC argued
that the government should not be allowed to dismiss its
injunction case merely because it had now decided to pursue
OMC for damages under the same cause of action. The
pendency of the lawsuit for seven years had resulted in
enormous expense to OMC. OMC argued that it was ac-
cordingly entitled to a final ruling on its liability for the
presence of PCBs in the Waukegan Harbor area. R.A.
~ 671, 686.
OMC argued that the government’s dismissal of the case
on the eve of trial was contrary to the overwhelming
public interest in a determination of what, if any, prob-
lem exists from the presence of PCBs in Waukegan Harbor.
It contended that the government’s dismissal served no
5 The Seventh Circuit incorrectly stated that OMC acceded to
that stay. App. A at A-14, infra. In fact, OMC never assented
to it.
~ o
public purpose except to permit it vastly to increase its
damages before presenting its case in court.
The District Court Rulings
In its August 30, 1984 ruling, the district court granted
the plaintiffs’ motions for voluntary dismissal. United
States v. Outboard Marine Corp., 104 F.R.D. 405 (N.D.
Ill. 1984), App. D, infra. The court recognized the legal
prejudice to OMC that had resulted from the many years
of costly litigation, and it acknowledged the uncertain legal
basis of the government’s case in light of OMC’s motion
to reconsider. App. D at D-6, infra. The court conditioned
dismissal on the plaintiffs’ acceptance of a dismissal of the
pending counts of their complaints with prejudice. App.
D at D-7, infra. When OMC informed the district court
that the cost-recovery action was already ripe, and that
a dismissal with prejudice should therefore bar that claim
as well, it simply reversed itself and dismissed the action
without prejudice to preserve the government’s future
damage action. R.A. 713. The court conditioned that
dismissal on the government’s execution of a covenant not
to sue OMC except under the Superfund cost-recovery pro-
visions. Id. Subsequently, the court awarded OMC a dis-
counted measure of its costs. App. A at A-18 n.12, infra.
The Seventh Circuit Decision
OMC appealed the dismissal, and the Court of Appeals
for the Seventh Circuit affirmed on April 22, 1986. 789
F.2d 497; App. B, infra. Like the district court, the Court
of Appeals accepted without analysis the government’s ex-
planation that it needed to dismiss the case in order to
implement a cleanup project. The Court also gave iio
weight to the extensive trial preparation OMC had con-
ducted, and it in fact blamed OMC for conducting a vigor-
ous defense:
aides.
The appellants have fought the government every
possible inch of the way for over six years in court
concerning the validity of the proposed injunctive
relief action and whether the State of Illinois was a
proper party to this action. A major reason why the
PCB problem has not been resolved at this point in
time is the continuous and protracted litigation of this
case. While we do not fault the appellants for exer-
cising their constitutional right to defend this action
in the manner they believe is most appropriate, it
is ‘too late in the day’ for them to complain that they
somehow have been prejudiced by the delay in this
case in proceeding to trial for they actively partici-
pated in this litigation nightmare which we are sad
to say is far from its final chapter.
App. A at 18, infra.
REASONS WHY THE PETITION
SHOULD BE ALLOWED
This matter raises issues central to the administration
of justice in the federal district courts. The United States
and the State of Illinois sued Outboard Marine Corpora-
tion in 1978, and seven years later that case was dis-
missed without prejudice, allowing the very same matter
to be re-filed at a later date. The rights of a private
litigant to a final resolution of a massive lawsuit against
it have been completely ignored in the name of deference
to agency discretion. That result, especially in the com-
pelling circumstances of this case, demonstrates that the
policy of Fed. R. Civ. P. 41(aX2) is not being followed,
or is being followed inconsistently. The present matter
provides an opportunity for this Court to set guidelines
~~
for the application of Rule 41(aX2) in the context of a
matter of crucial public interest.
Rule 41, Fed. R. Civ. P., provides several mechanisms
whereby a lawsuit can be dismissed. Rules 41(a) and (b)
govern dismissals of first-party actions, with 41(a) govern-
ing voluntary dismissals on the motion of the plaintiff and
41(b) govering involuntary dismissals on the motion of the
defendant. Rule 41(aX1) allows the plaintiff to dismiss an
action without prejudice merely by filing a notice of dis-
missal, if the notice is filed before the defendant has filed
an answer or motion for summary judgment.
Rule 41(aX2) takes effect once the defendant has
answered the complaint or otherwise brought the case to
issue by filing a motion for summary judgment:
By Order of Court. Except as provided in paragraph
(1) of this subdivision of this rule, an action shall not
be dismissed at the plaintiff's instance save upon
order of the court and upon such terms and condi-
tions as the court deems proper. {f a counterclaim
has been pleaded by a defendant prior to the ser-
vice upon him of the plaintiffs motion to dismiss, the
action shall not be dismissed against the defendant’s
objection unless the counterclaim can remain pend-
ing for independent adjudication by the court. Unless
otherwise specified in the order, a dismissal under
this paragraph is without prejudice.
The rule draws a bright line which subjects voluntary dis-
missals to the court’s review once the defendant has ex-
pended “the research and preparation” necessary to file
a motion for summary judgment or answer the complaint.
Report of Proposed Amendments to Rules of Civil Pro-
cedure, 57 (1946). The “purpose of Rule 41(aX2) ‘is primari-
ly to prevent voluntary dismissals which unfairly affect
the other side. . .’.” 9 C. Wright & A. Miller, Federal
Practice & Procedure § 2364 at 165 (1971). T ypically, such
wiles
unfairness results when the defendant has prepared for
trial only to be faced with a Rule 41(aX2) motion filed
without adequate justification. See Cone v. West Virginia
Pulp & Paper Company, 330 U.S. 212, 217 n.5 (1947)
(Rule 41(aX2) requires the plaintiff to show the existence
of a meritorious claim which cannot be resolved in the
pending case).
Unfortunately, the absence of guidance from this Court
has allowed the lower courts to reach widely divergent
results under very similar conditions. In Ferguson v.
Eakle, 492 F.2d 26 (3d Cir. 1974), the lawsuit was four-
teen months old when the plaintiff discovered that his case
required joinder of a defendant who would have destroyed
diversity jurisdiction. Plaintiff therefore moved under Rule
41(aX2) to dismiss without prejudice so that he could re-
file in state court.
The district court granted the motion, but the Third Cir-
cuit reversed and ordered the matter reinstated. The
court noted that the progress of the case had led the
defendants to expect a trial in the near future:
The district court changed all that. Fourteen months
after they became defendants in one case and had
gone to the expense of retaining counsel, six months
after they had gone through pre-trial and at least two
months after they had expected that all discovery had
been completed, they were ordered to defend anew
in another court. This we believe, amounted to prej-
udice—financial prejudice requiring additional counsel
fees for the time and energies to be expended for
the preparation and conduct of new discovery and
proceedings up to trial. They sustained all the emo-
tional and psychological trauma associated with the
experience of having been ready for trial in a fed-
eral court and then told that the proceedings would
be started again in the state court. Most important,
they suffered the non-financial prejudice reflected by
tiie
the uncertainty over their title to the bay front prop-
erty. We believe that the totality of these circum-
stances amounted to a quantum of prejudice to the
defendants so as to characterize the district court’s
action as an abuse of discretion.
Id. at 29 (footnotes omitted).
Similarly, in Paturzo v. Home Life Insurance Co., 503
F.2d 333 (4th Cir. 1974), the case had progressed to the
morning of trial when plaintiff moved to dismiss one count
of the complaint without prejudice. The court noted that
“both parties had prepared extensively for trial,” and it
therefore upheld the denial of the plaintiff's motion “in
view of the advanced state of the proceedings.” Jd. at
335. Other cases have followed Ferguson and Paturzo in
refusing to grant Rule 41(aX2) motions when the case is
ready or nearly ready for trial, when the defendant has
expended substantial resources in defense or when the
plaintiff fails to provide a compelling reason for dismissal.®
6 See, e.g., Wakefield v. Northern Telecom., Inc., 769 F.2d 109,
114 (2d Cir. 1985) (dismissal under Rule 41(aX2) improper on sixth
day of trial when plaintiff failed to give reasons for motion);
Williams v. Ford Motor Credit Company, 627 F.2d 158, 159-60
(8th Cir. 1980) (voluntary dismissal of eighteen-month-old case held
improper when the trial court had indicated it would probably
grant defendant’s motion for judgment notwithstanding the ver-
dict after two day trial); Armstrong v. Frostie Company, 453 F.2d
914, 916 (4th Cir. 1971) (motion for voluntary dismissal denied in
light of advanced stage of apy where motion for s
judgment had been filed); Shaffer v. Evans, 263 F.2d 134, 135 (10t.
Cir. 1958), cert. denied, 359 U.S. 990 (1959) (denial of motion for
voluntary dismissal proper where case pended for six months,
numerous depositions were taken, defendant had made arrange-
ments for medical ei and case was ready for trial); Ba
Mechanic Co. v. United Technologies Corp., 109 F.R.D. 128, 131
(D. Del. 1985) (voluntary dismissal denied to preclude plaintiff from
teen | a meritorious defense); Scallen v. Minnesota Vikings
Football Club, Inc., 574 F. Supp. 278, 280 (D. Minn. 1983) (motion
to dismiss without prejudice denied in view of defendant’s trial
preparation).
—
On the other hand, other cases have permitted Rule
41(aX2) dismissals by ignoring the same factors. For ex-
ample, in Kern v. TXO Production Corp., 738 F.2d 968
(8th Cir. 1984), trial had begun, and plaintiff had presented
four of five witnesses. at trial. At that point, the court
indicated that it would likely direct a verdict in the de-
fendant’s favor. Plaintiff moved for a voluntary dismissal,
and the court granted the motion.
Although it had previously reversed a dismissal with-
out prejudice granted after a verdict for the plaintiff,
Williams v. Ford Motor Credit Co., 627 F.2d 158 (8th Cir.
1980) (see n.6, supra), the Eighth Circuit nevertheless af-
firmed the court’s ruling. It reasoned that the trial was
not quite as advanced as that in Williams, because the
plaintiff had not rested and there was therefore at least
some chance that the plaintiff might have prevailed. 738
F.2d at 971.
Decisions like Kern and the holding below do not pro-
vide defendants the same protections afforded by cases
such as Ferguson v. Eakle, supra, and Paturzo v. Home
Infe Insurance Co., supra. They have permitted volun-
tary dismissals even when the litigation has proceeded
close to (or is actually on) trial, the defendant has ex-
pended substantial resources in defense or the plaintiff
has failed to provide a compelling reason for the dis-
missal.?
7 McCants v. Ford Motor Co. 781 F.2d 855, 857 (11th Cir. 1986)
(dismissal of two-year-old case allowed even though defendant had
conducted extensive discovery and filed a motion for summary
judgment based on statute of limitations); Puerto Rico Maritime
Shipping Authority v. Leith, 668 F.2d 46, 50 (1st Cir. 1981) (volun-
tary dismissal allowed even though parties had completed dis-
covery, and defendant’s motion to dismiss was pending); Tyco Labora-
tories v. Koppers Co., 627 F.2d 54, 56 (7th Cir. 1980) (dismissal
(Footnote continued on following page)
"on
In no other case have the factors weighing against a
dismissal without prejudice been as strong as those in the
present matter. The Seventh Circuit’s ruling in the pres-
ent case shows the stark inconsistency of the results, and
even the rationales in support of those results in this area,
and graphically demonstrates the need for guidance from
this Court.
Acknowledging that Rule 41(aX2) requires the plaintiff
to provide a compelling reason for seeking a dismissal
without prejudice, the government claimed that it needed
to rid itself of this lawsuit before it could proceed with
its cleanup. The Seventh Circuit ignored the requirements
of Rule 41(aX2) and uncritically accepted the government’s
reason, even though it makes no sense.
EPA did not need to dismiss this action in order to im-
plement a cleanup. It could have implemented a cleanup
while simultaneously proceeding against OMC for its clean-
up costs by amending its complaint to seek those costs
under Superfund § 107(a), 42 U.S.C. § 9607(a). At the govern-
ment’s urging, numerous courts have held such actions
ripe as soon as the government has expended any money
(including study costs) at a site, even though the cleanup
is not even substantially completed. The government
7 continued
without prejudice granted even though discovery had progressed
for over a year, and motion for summary judgment was pending),
Durham v. Florida East Coast Railway Co., 385 F.2d 366, 368
(5th Cir. 1967) (voluntary dismissal proper even though the motion
was made after pre-trial conference, the case had been called for
trial, and the witnesses travelled long distances to attend); Louis
v. Bache Group, Inc., 92 F.R.D. 459, 461 (S.D.N.Y. 1981) (volun-
tary dismissal allowed based on precedents allowing dismissals on
eve of trial).
8 See United States v. NEPACCO, 579 F. Supp. 823, 852 (W.D.
Mo. 1984); United States v. Allied Chemical Corp., 587 F. Supp.
(Footnote continued on following page)
= =
routinely brings and prosecutes cost-recovery actions at
the earliest possible date to replenish the Superfund.
The § 107 case would normally have been merged into
the present injunction case, because it is based on the
same underlying factual allegations of environmental harm
and the need for remedial action.® Had the district court
granted OMC’s motion to reconsider the denial of its pre-
vious motions to dismiss (see discussion at p. 5, supra,
and App. D at D-6, infra), the dismissal would have been
with prejudice to the cost-recovery action, unless the gov-
ernment added such a count.!° The dismissal of the pres-
ent case without prejudice thus deprived OMC of a rul-
8 continued
1205 (N.D. Cal. 1984); Jones v. Inmont Corp., 584 F. Supp. 1425
(S.D. Ohio 1984); United States v. Wade, 577 F. Su p. 1326 (E.D.
Pa. 1983); State of Ohio ex rel. Brown v. Georgeoff, 562 F. Supp.
1300, 1316 (N.D. Ohio 1983); United States v. Reilly Tar &
Chemical Corp., 546 F. Supp. 1100 (D. Minn. 1982).
% Federated Department Stores, Inc. v. Moitie, 452 U.S. 394, 398
(1981) (‘A final judgment on the merits of an action precludes the
arties or their privies from relitigating issues that were or could
ave been ied in that action”); Harper Plastics, Inc. v. Amoco
Chemicals Corp., 657 F.2d 939, 945 (7th Cir. 1981) (“prior judg-
ment is conclusive . . . as to every ground of recovery or defense
which might have been presented”); Manego v. Orleans Board of
Trade, 773 F.2d 1 (1st Cir. 1985), cert. denied, 106 S.Ct. 1466 (1986)
(res judicata bars antitrust action premised on the same transaction
as previously adjudicated civil rights action); Olmstead v. Amoco
Oil Co., 725 F.2d 627 (11th Cir. 1984) (res judicata “‘bar extends
not only to the —— legal theory presented in the previous liti-
gation, but to all legal theories and claims arising out of the same
operative nucleus of fact’’); Restatement of Judgments 2d, § 25
Comment d (1980).
10 Bunker Ramo Corp. v. United Business Forms, Inc., 713 F.2d
1272, 1277 (7th Cir. 1983). See also Federated Dept. Stores, Inc.
v. Mottie, 452 U.S. 394, 398 (1981); 1B Moore’s Federal Practice
q 0.409 [1.—2] (1984).
-_
ing on its motion, or of a trial, either of which would have
disposed of the entire matter."
The government’s desire to dismiss this suit cannot,
therefore, be explained by any need to perform a remedy.
The only interest served by the dismissal was the govern-
ment’s desire to increase its damages before presenting
its case to a court. The probable outcome of the govern-
ment’s present case is best evidenced by its record ad-
missions in 1982 that it has no evidence of harm despite
the presence of PCBs in Waukegan Harbor for the last
30 years. See discussion at p. 6, supra. The government
hopes to compensate for this weakness in its factual case
by not going to trial until after it has spent twenty or
thirty million dollars on a remedy. To permit a dismissal
in these circumstances would be to eviscerate the court’s
supervisory authority and to allow the plaintiff to dismiss
for any reason.
i1_ The Seventh Circuit expressed doubts about whether a cost-
revovery case could have been brought in the present action. The
court referred to a body of cases holding that Superfund does not
provide for “pre-enforcement review.” App. A at A-16-17, infra.
“Pre-enforcement review” is a term that loosely refers to actions
brought by persons responsible under Superfund for cleanup costs
to enjoin the government’s “enforcement” —+.e., cleanup—until a
court has reviewed the remedy and decided it can proceed. Wheaton
Industries v. United States Environmental Protection Agency, 781
F.2d 354, 356 (3d Cir. 1986); Lone Pine Steering Committee v.
United States Environmental Protection Agency, 777 F.2d 882,
886-88 (3d Cir. 1985), cert. denied, 106 S.Ct. 1970 (1986); J.V. Peters
& Co., Inc. v. Administrator, Environmental Protection Agency,
767 F.2d 263, 265 (6th Cir. 1985). Those cases held that the Super-
fund Act does not authorize injunction actions against the guvern-
ment brought by potentially responsible parties.
The Seventh Circuit was incorrect in implying that this doctrine
recludes a cost-recovery action before the remedy is complete.
n fact, the government routinely brings such actions. See dis-
cussion at pp. 14-15, supra.
-_
Not only did the Seventh Circuit fail to scrutinize the
government’s reasons for seeking a dismissal, it also com-
pletely negated the other standard for ruling on a Rule
41(aX2) motion—the defendant’s expense and effort in trial
preparation. The Seventh Circuit stated that OMC’s vigor-
ous defense actually precluded it from opposing the gov-
ernment’s Rule 41(aX2) motion brought late in the case.
(See discussion and quotation at pp. 8-9, supra). Thus, the
court chastised OMC for wasting so much of the govern-
ment’s time in its defense.
It cannot be a basis for ignoring the prejudice to a de-
fendant from a 41(aX2) dismissal that the defendant de-
fended himself too vigorously against the plaintiff’s claims.
OMC’s defense of this case can hardly be termed frivolous.
Its position has in fact been sustained on several occa-
sions by this Court and by the Court of Appeals,!2 and,
after reviewing OMC’s motion, the district court expressed
serious doubts about the very legal basis of the govern-
ment’s claims (see p. 5, supra, and App. D at D-6, infra).
The government’s environmentally unsound dredging proj-
ect could force the relocation of OMC’s operations near
Waukegan Harbor, and expose its 2,000 employees to
risks. If OMC is held liable for the costs of this wholly
unnecessary operation, it could threaten the very finan-
cial viability of the company. In these extreme circum-
stances the government’s dismissal for the sole and ob-
vious purpose of strengthening its presently weak case
cannot be justified by blaming OMC for not having capitu-
lated at the outset.
12 Outboard Marine Corporation v. Illinois, 453 U.S. 917 (1981)
(Mem.); Outboard Marine Corporation v. Thomas, 773 F.2d 883
(7th Cir. 1985); State of Illinois v. Outboard Marine Corporation,
680 F.2d 473 (7th Cir. 1982).
=_— =
CONCLUSION
The Seventh Circuit’s decision demonstrates that the
constraints on voluntary dismissals under Rule 41(aX2) are
easily violated. The very factors which in some cases are
cited to preclude a voluntary dismissal were in the pres-
ent case distorted to support the government’s abandon-
ment of this case after seven years of extremely costly
litigation. That action was carried out because the court
gave no credence to OMC’s legitimate interests. Instead,
it deferred completely to the unsupported demands of a
governmental agency, whose case had been discredited by
the absence of evidence for its position and by its numer-
ous changes of position. Rule 41(aX2) does not permit the
rights of a private litigant to be ignored merely because
the plaintiff is a governmental agency.
Basic fairness, environmental considerations and inter-
ests in the effective administration of justice should have
resulted in the denial of the government’s motion to dis-
miss. Rule 41(aX2) motions should not be granted when,
as here, the defendant has been forced into extensive trial
preparation, and when the plaintiff merely desires to im-
prove his chances of success by vastly increasing his dam-
ages. This Court should allow this Petition for a Writ of
=a vom
a
Certiorari to correct the error below and establish work-
able standards for deciding motions under Rule 41(aX2).
Respectfully submitted,
RICHARD J. PHELAN
(Counsel of Record)
Of Counsel:
PHELAN, POPE & JOHN, LTD.
180 North Wacker Drive
Suite 500
Chicago, Illinois 60606
(312) 621-0700
MARTIN, CRAIG, CHESTER
& SONNENSCHEIN
115 South LaSalle Street
Chicago, Illinois 60603
(312) 368-9700
A-1
APPENDIX A
IN THE
UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
No. 85-1584
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
and
THE PEOPLE OF THE STATE OF ILLINOIS,
Intervenors-Appellees,
OUTBOARD MARINE CoRrP.,
Defendant, Third-Party Plaintiff and
Cross-Claim Defendant-Appellant,
and
MONSANTO COMPANY,
Defendant, Third-Party Defendant and
Cross-Claim Intervenor-Appellant.
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 78 C 1004—Susan Getzendanner, Judge.
ARGUED DECEMBER 11, 1985—DECIDED APRIL 22, 1986
Before BAUER and COFFEY, Circuit Judges, and
ESCHBACH, Senior Circuit Judge.
A-2
CorFEY, Circuit Judge. The appellants, Outboard Ma-
rine Corporation (“OMC”) and Monsanto Company (“Mon-
santo”) appeal! a district court order granting the motion
of the United States and the State of Illinois dismissing
their action against the appellants without prejudice, pur-
suant to Fed. R. Civ. P. 41(aX2),3 on the condition that
the United States and State of Illinois agree to execute
a covenant not to again sue the appellants for injunctive
relief. We affirm.
I
This case has a lengthy and tangled history spawning
numerous decisions by this and other courts. See rd
Marine Corp. v. Illinois, 453 U.S. 917 (1981) (Mem.); Out-
board Marine Corp. v. Thomas, 773 F.2d 883 (7th Cir.
1985); State of Illinois v. Outboard Marine Corp., Inc.,
680 F.2d 473 (1982); State of Illinois v. Outboard Marine
Corp., 619 F.2d 623 (7th Cir. 1980). It is unfortunate that
we are unable to write the final chapter at this time and
thus the conclusion of this case will have to await another
day.
A. Procedural History.
OMC manufactures outboard motors, industrial and turf
care vehicles at its industrial complex located adjacent to
the Waukegan Harbor in Waukegan, Illinois. In 1976, the
1 Fed. R. Civ. P. 41(aX2) provides:
‘“(2) By Order of Court. Except as provided in paragraph
(1) of this subdivision of this rule, an action shall not be dis-
missed at the plaintiff's instance save upon order of the court
and upon such terms and conditions as the court deems
er. If a counterclaim has been pleaded by a defendant prior to
the service upon him of the plaintiffs motion to dismiss, the
action shall not be dismissed against the defendant’s objection
unless the counterclaim can remain pending for a
adjudication by the court. Unless otherwise specified in the
order, a dismissal under this paragraph is without prejudice.”
- (Emphasis added).
A-3
government determined that an estimated 1.1 million
pounds of polychlorinated biphenyles (““PCB”’) rested on
the bed of the harbor and were caused by fluids dis-
charged from the OMC plant. Monsanto had been selling
the PCB based fluids to OMC for use in its production
and manufacturing process.
In March, 1978, the United States Government filed a
civil lawsuit against OMC requesting mandatory injunc
tive relief under the Refuse Act, 33 U.S.C. § 407 (Count
I), the Clean Water Act, 33 U.S.C. § 1251 et seg. (Count
IT) and the federal common law tort of nuisance. The gov-
ernment sought to compel OMC to remove the PCB sedi-
ments from the Waukegan Harbor. In November, 1978,
OMC fied a third-party complaint against Monsanto seek-
ing contribution and indemnity if OMC was required to
remove the PCB sediments. Subsequently, the United
States amended its complaint in 1980 to include Monsanto
as a defendant and at this time the State of Illinois was
granted leave to intervene as a plaintiff in this action.?
In December, 1980, the President signed into law tho
Comprehensive Environmental Response, Compensati:
and Liability Act of 1980 (“CERCLA”) 42 U.S.C. § 960.
2 The State of Illinois’ intervention into this case was not by
agreement but with some acrimony. As noted by the district court:
“Tllinois moved to intervene in this action, but its motion was
denied by order dated May 29, 1979. Illinois appealed, and the
Court of Appeals held that Illinois could intervene as of
statutory yy State of Illinois v. Outboard Marine Corpora-
tion, 680 F.2d 473, 480-81 (7th Cir. 1982); see also State of Illi-
nois v. Outboard Marine Corporation, 619 F.2d 623, 630-32
(7th Cir. 1980), vacated and remanded, 453 U.S. 917, 101 S.
Ct. 3152, 69 L. Ed. 2d 1000 (1981). Illinois has also filed its
own action, which the court dismissed without prejudice be-
cause it duplicated Illinois’ claims in this action. State of IIli-
nois v. Outboard Marine Corporaticn, No. 78 C 3187 (N.D.
Ill. Sept. 30, 1982).”
United States v. Outboard Marine Corp., 104 F.R.D. 405, 414
(N.D. Ill. 1984).
A-4
et seqg., better known as the “Superfund” Act, authoriz-
ing the Environmental Protection Agency (“EPA”) to take
action to clean up hazardous waste sites. Pursuant to
section 106 of CERCLA, 42 U.S.C. § 9604, the EPA is
authorized to file an action in federal court to “secure such
relief as may be necessary” if the agency “determines
that there may be an imminent and substantial endanger-
ment to the public health or welfare or the environment
because of an actual threatened release of a hazardous
substance from the facility ....” On January 6, 1982,
the EPA filed its final amended complaint including, along
with its other claims based on the federal statutes and
federal common law theories of liability, a claim under
section 106 of CERCLA requesting that the court order
OMC and Monsanto to remove the PCB from the Wauke-
gan Harbor. In September of 1982, in response to the ap-
pellants’ request for admissions of fact, the government
stated that it had no scientific concrete proof, at that point
in time, that the PCB in the Waukegan Harbor had caused
harm to any human being. It is important to note that
the government did not admit that the PCB would not
present a potential threat to human beings in the future;
nor did the government admit that the PCB in the har-
bor would not pose a risk of future significant environmen-
tal damage to the environs of the harbor, Lake Michigan
and the fish and aquatic life in that area.®
On May 24, 1982, the district court granted OMC’s and
Monsanto’s motion to dismiss the federal common law
nuisance claims in light of the Supreme Court’s decision
in Milwaukee v. Illinois, 451 U.S. 304 (1981) (holding that
the federal common law nuisance action was preempted
by the Federal Water Pollution Control Act Amendments
of 1972), and granted Monsanto’s motion to dismiss all
other claims of the United States against Monsanto. See
3 PCB is listed as a toxic pollutant pursuant to section 307(a) of
the Clean Water Act, 40 C.F.R. 129.4, and is designated as a
hazardous substance pursuant to section 311 of the Clean Water
Act, 40 C.F.R. 116.4.
A-5
United States v. Outboard Marine Corp., 549 F. Supp.
1032 (N.D. Ill. 1982). The district court refused to dismiss
the Refuse Act and the Clean Water Act claims against
OMC (Counts I and II) holding that these statutes autho-
rized the government to seek injunctive relief for the re-
moval of the hazardous substances, such as PCB, from
the Waukegan Harbor. See United States v. Outboard
Marine Corp., 549 F. Supp. 1036 (N.D. Ill. 1982). The
district court also refused to dismiss the section 106
CERCLA claim against OMC. United States v. Outboard
Marine Corp., 556 F. Supp. 54 (N.D. Ill. 1982).4
On November 10, 1982, OMC filed a motion requesting
the district court to reconsider its order denying OMC’s
motion to dismiss the Refuse Act, the Clean Water Act
and the Section 106(a) CERCLA claims. In response to
this motion, the district court judge noted that she had
“about a sixty percent comfort in my prior opinion” and
set a hearing date on OMC’s motion. District Court Hear-
ing November 12, 1982 at 12-13.
Subsequently, in December, 1982, the EPA published
its initial National Priority List (“NPL”) and ranked the
Waukegan harbor 82nd of 540 hazardous waste sites in-
cluded on the NPL. Shortly thereafter the State of IIli-
nois designated the Waukegan harbor as its top priority
“Superfund” site.5 At this time in the litigation history
* OMC alleged that CERCLA section 106 was merely a jurisdic-
tional statute that did not provide for substantive liability; and,
assuming that the statute did allow for substantiative injunctive
relief, the EPA had failed to plead sufficient facts to establish that
the presence of PCB in the Wauke harbor posed an “immi-
nent and substantial endangerment” within the meaning of the
statute. The district court, however, rejected each of these
arguments.
5 The NPL is based upon Hazard Ranking System (“HRS”) that
a a composite score that is “used in evaluating the
relative potential of uncontrolled hazardous substances facilities to
cause health or safety problems, or ecological or environmental
damage.” 47 Fed. Reg. 31220 (1982).
A-6
of this case, the United States determined that given the
amount of discovery still to be completed before trial, and
the fact that the anticipated lengthy trial and the subse-
quent appeal “will likely delay the implementation of re-
~yedial work at the OMC site and in Waukegan harbor
. * an additional three to four years,” the most expedi-
ti 18 manner in which to clean up the PCB now resting
on the bed of the Waukegan harbor would be for the gov-
ernment to remove the PCB, as authorized by section 104
of CERCLA, 42 U.S.C. § 9604, and later sue for the
removal and cleanup costs pursuant to section 107 of
CERCLA, 42 U.S.C. § 9607. On February 25, 1983, the
United States filed a motion with the court to dismiss
its claim under section 106 of CERCLA without prejudice;
and on March 22, 1983 the government filed a motion re-
questing that the court stay the remainder of injunctive
relief action pending the completion of the EPA admin-
istrative proceedings under CERCLA. The appellants ob-
jected to the stay and the proposed dismissal of the ac-
tion without prejudice contending, as they do on appeal,
that the true reason the government commenced the ad-
ministrative proceedings under CERCLA was that it would
be unable to establish its claims at trial. Subsequently the
parties agreed to ask the district court to stay the con-
sideration of these motions until after the EPA had issued
its final plan concerning the proposed cleanup of the Wau-
kegan harbor. The district court granted the motion to
stay the proceedings. During the next year, from March,
1983 to May, 1984, the EPA proceeded with its adminis-
trative hearings and procedures, and conducted feasibility
studies into the cleanup of the Waukegan harbor.* On May
15, 1984, the EPA issued its Record of Decision (“ROD”)
selecting as the appropriate remedy (given the limited
availability of federal funds) a $21 million removal effort
involving the dredging of the harbor with both off-site and
6 The appellants participated in this administrative process, at-
tending the public meetings and submitting their views during the
respective comment periods.
A-7
on-site storage of the PCB contaminated sediments.7 On
May 21, 1984, approximately one week after the issuance
of the ROD, the United States filed a motion with the
district court, pursuant to Fed. R. Civ. P. 41(aX2), re-
questing that its complaint be dismissed without prejudice
as it had decided that when balancing the years of antici-
pated litigation concerning the issue of injunctive relief
against the need for immediate removal of the PCBs from
the harbor, the scales of justice were definitely tilted in
favor of the government proceeding without delay to re-
move the PCB pursuant to the authority granted the gov-
ernment in CERCLA section 104 and later sue for reim-
bursement of the removal costs under CERCLA section
107. Both OMC’s and Monsanto’s briefs, filed with the
court opposing the motion to dismiss, argued that it would
be improper to dismiss the case without prejudice at this
late stage in the litigation given the amount of money al-
ready expended in preparation for trial; they also attacked
the proposed remedy recommended in the EPA’s R.O.D.
and the alleged weakness of the government’s evidence
as to the harm caused by the PCB. OMC and Monsanto
requested the court to either set the case for trial on the
issue of the alleged harm caused by the PCB and the cost-
effectiveness of the proposed solution or, in the alterna-
tive, dismiss the case with prejudice.
B. District Court Decision.
The district court determined that “(tJhis litigation un-
doubtedly has been very costly for the parties to litigate”
and thus ‘{tJhe United States should not be permitted,
at some future time, to move backward and return to its
original approach to the problem.” United States v. Out-
board Marine Corp., 104 F.R.D. 405, 410 (N.D. IIl. 1984).
The district court initially dismissed the counts contained
in the government’s complaint requesting injunctive relief
7 The on-site designation meant that the PCB removed from the
harbor would be stored on OMC’s property; while the remainder
would be stored at another location, not on OMC’s property.
A-8
with prejudice, but with the caveat that dismissal would
be “without prejudice to a future cost-recovery suit,’ in
the event the government should decide to commence such
an action. Jd. at 410-11. The district court also rejected
OMC’s and Monsanto’s request for a bifurcated trial on
the issues of the extent of harm inflicted from the pres-
ence of PCBs in the Waukegan harbor and the proposed
removal remedy ruling that this would necessitate a pre-
removal judicial review of the EPA’s Record of Decision.
The court found that such review is not contemplated in
the statutory scheme of CERCLA, sections 104 and 107,
until such time as the United States sues for recovery
of the sums expended for the removal of the PCB. Id.
at 411. The court also noted that even if it denied the
government’s motion to dismiss the injunctive action, and
ruled in favor of OMC on its motion to reconsider the
dismissal of the government injunctive relief claims, this
“would not bar [the government from pursuing] a future
cost recovery action” since this claim “could not have
been brought in this [injunctive relief] action” and “the
court does not understand the OMC or Monsanto to argue
otherwise.” Jd. at 410-411. The court further stated that
even if it allowed the case to proceed to trial, resolution
of the section 106 CERCLA claim in OMC’s favor would
not bar a subsequent cost recovery action since the re-
quirements of establishing liability under the respective
statutes are vastly different and totally unrelated. Jd. at
ae
After publication of the decision dismissing the claims
for injunctive relief, Outboard Marine Corporation filed
a motion with the court to reconsider its ruling arguing
that the dismissal of the injunctive counts in the govern-
ment’s complaint with prejudice barred the cost recovery
suit based upon the principles of res judicata. In its mo-
8 CERCLA section 106 requires that there be ‘‘an imminent and
substantial endangerment to public health or welfare or the en-
vironment”; on the other hand, CERCLA sections 104 and 107
do not contain this requirement.
A-9
tion responding to OMC’s request for reconsideration, the
United States suggested that in order to preserve the in-
tent of the district court’s decision and “to avoid any ques-
tion of res judicata effect on the cost-recovery claim, while
still protecting defendants from repetitive litigation’ the
court should dismiss the government’s action requesting
injunctive relief and civil penalties without prejudice ‘on
the condition that the government stipulate to refrain
from reinstating the pending claims for injunctive relief
and penalties asserted in Second Amended Complaint.”
The district court adopted this recommendation and dis-
missed the suit without prejudice conditioned upon the
United States and the State of Illinois each executing a
covenant not to sue the appellants except for a possible
cost-recovery action arising from the presence and re-
moval of PCB in the Waukegan harbor.
The issue on appeal is whether the district court abused
its discretion in dismissing this action without prejudice
on the basis that the United States and the State of Illi-
nois execute a covenant not to sue OMC for injunctive
relief.
II
The dismissal of the plaintiff's complaint without preju-
dice, pursuant to Fed. R. Civ. P. 41(aX2), is within the
sound discretion of the district court and may be reversed
only if the appellant demonstrates the district court abused
its discretion. Tyco Laboratories, Inc. v. Koppers Co., Inc.,
627 F.2d 54 (7th Cir. 1980); Stern v. Barnett, 452 F.2d
211, 213 (7th Cir. 1971); 9 C. Wright & A. Miller, Federal
Practice & Procedure § 2364, at 161-62 (1971). The district
court abuses its discretion only when it can be established
the defendant will suffer “plain legal prejudice” as the
result of the district court’s dismissal of the plaintiff’s ac-
tion. See Stern, 627 F.2d at 56. In Pace v. Southern Ex-
press Co., 409 F.2d 331 (7th Cir. 1969), we delineated sev-
eral factors for courts to consider in determining whether
A-10
the defendant has suffered “legal prejudice” as a result
of the dismissal of an action without prejudice.
‘(T]he defendant’s effort and expense of preparation
for trial, excessive delay and lack of diligence on the
part of the plaintiff in prosecuting the action, insuf-
ficient explanation for the need to take a dismissal,
and the fact that a motion for summary judgment
has been filed by the defendant.”
Id. at 334. However, as we noted in Stern, “(t]he enu-
meration of factors to be considered in Pace is not the
equivalent to a mandate that each and every factor be
resolved in favor of the moving party before dismissal is
appropriate. It is rather simply a guide for the trial judge,
in whom the discretion ultimately rests.”’ Stern, 627 F.2d
at 56. As noted in Kern v. TXO Production Corp., 738
F.2d 968 (8th Cir. 1984), “(t]he very concept of discretion
presupposes a zone of choice within which the trial court
may go either way [in granting or denying the motion].”’
Id. at 971. The issue before this court is whether the
district court abused its discretion in dismissing this ac-
tion without prejudice or whether the court’s decision fell
within the permissible ‘“‘zone of choice”’ available to a dis-
trict court properly exercising its discretion.
1. Justification for dismissal without prejudice.
As noted in Pace, the court may consider the plaintiff's
proffered excuse in its assessment of whether the dis-
missal without prejudice is proper. See also Tyco Labora-
tories, Inc., 627 F.2d at 57. Appellants initially argue that
the government has failed to provide sufficient justifica-
tion for pursuing its present remedy of removing the PCB
sediments and later suing to recover the costs resulting
from the removal rather than pursuing the action then
pending seeking injunctive relief. Specifically, they note
that since 1972 the government has had the authority
under the Clean Water Act to remove the PCB and sue
the responsible party for the removal costs, see 33 U.S.C.
§§ 1259, 1265 and 1321, yet the EPA has consciously
A-11
decided to bypass this route in favor of suing for injunc-
tive relief requiring OMC to remove the PCB from the
Waukegan harbor. Appellants also argue that the true rea-
son “for EPA’s change of position is that this litigation
has disclosed the weakness of [the government’s] position
on both the legal and factual issues . . .” in this case.
OMC’s Br. at 25. In regard to the legal issue, OMC states
that “{aJs the district court indicated in its August 30 opin-
ion, OMC’s motion to reconsider the court’s denial of its
previous motion to dismiss presented potentially disposi-
tive arguments against the court’s prior rulings,” and thus
OMC maintains that the court’s August 30 opinion revealed
to the government that it was in danger of having its in-
junctive relief action dismissed on the basis of OMC’s legal
arguments. OMC also states that the “factual case fared
no better” since the EPA would have been unable to
prove at trial that the PCB resting on the bed of the har-
bor posed an immediate threat to human health or that
any alleged harm justified the anticipated cost of removal.
Id. at 25-26.
The appellants essentially charge that the government
was afraid it would be unable to prevail at trial and thus
was acting with less than a sincere motive in requesting
that the court dismiss its action without prejudice in order
that it might remove the PCB from the harbor and later
sue for the cost of removal. From our review of the rec-
ord we are convinced that balancing the delay pending
the years of anticipated litigation over injunctive relief
against the overwhelming interest of the government in
protecting the environment from further irreparable dam-
age to the water and marine life and in protecting citizens
from the potential harmful effects of PCB (for example,
eating salmon or other fish contaminated with PCB) jus-
tifies the government’s decision to proceed with the im-
mediate removal of the PCB sediments and possibly sue
at a later date for the removal costs. Specifically, in
December 1982, the EPA published its National Priority
List and ranked the Waukegan harbor 82nd out of 540
hazardous waste sites throughout the United States. The
A-12
State of Illinois EPA designated the harbor as the top
priority hazardous waste site located in the State of Illi-
nois. Given this level of priority established by two public
agencies with expertise in environmental problems, the
EPA determined that it would be in the public interest
to implement the immediate removal of the PCB sedi-
ments from the harbor rather than waiting for this case
to proceed through the anticipated prolonged litigation
process of years upon years. For this reason, the United
States requested a stay of this action in early 1988, and
commenced the required administrative proceedings, autho-
rized under 42 U.S.C. § 9604(b), before proceeding with
the cleanup of the harbor. Once the administrative process
was completed, the EPA issued its ROD in May 1984 and
moved the court for a dismissal of its actions seeking in-
junctive relief.
The appellants argue that the government was empow-
ered to clean up the harbor and then sue for the removal
costs pursuant to the provisions contained in the Clean
Water Act and thus we should reject the government’s
reasons for pursuing its own cleanup action under the new
Superfund Act, CERCLA. The Congress has given the
EPA the discretion to determine how best to economically
and feasibly expend the government’s limited resources
in remedying the pollution problems at the hazardous
waste sites. CERCLA was enacted in order to provide |
the required funds to enable that the EPA to act prompt- |
ly to remove the hazardous waste. See S. Rep. No. 96-848, |
96th Cong., 2d Sess. 8. Congress even recognized that the
remedial cost to clean up all the potential hazardous waste
sites in the country far exceeded the amount of funds al-
located to the Superfund. State of Ohio v. Georgeoff, 562
F. Supp. 1800, 1313 (N.D. Ohio 1983) (citing comments |
in the Congressional record noting that the anticipated |
cost of cleanup of the toxic waste sites far exceeded the |
amount of money allocated to the Superfund). Thus, given |
the limited funds available for the clean up of the hazar- ;
dous waste sites, the government would certainly prefer )
that the responsible parties clean up the site in the most
A-13
expeditious manner rather than saddle the taxpayers with
the expense of removing the hazardous waste dumped into
the harbor by OMC and Monsanto until such time as the
government might bring an action to collect the funds
from the responsible party for the cleanup. The EPA pos-
sessed the discretion to decide that the gravity of the
problem (as revealed by the NPL and Illinois ranking
given the Waukegan harbor site) necessitated immediate
action and that it would be in the public interest to ex-
pend government resources to remove the PCB sediment
rather than wait for the endless litigation of this case to
take its natural course.
Further, we are puzzled by the appellant’s contention
that the government has not offered a legitimate reason
for requesting a dismissal without prejudice (except for
the covenant not to sue), arguing that the government
could have cleaned up the PCB pursuant to the Clean
Water Act. Essentially the appellants infer that the gov-
ernment could have already removed the PCB pursuant
to the Clean Water Act and that if it had, the parties
would not be in their present position, namely—still in
court, not having as of this time gone to trial, and the
PCB not having as of this time been removed from the
harbor. The appellants have fought the government every
possible inch of the way for over six years in court con-
cerning the validity of the proposed injunctive relief ac-
tion and whether the State of Illinois was a proper par-
ty to this action. A major reason why the PCB problem
has not been resolved at this point in time is the con-
tinuous and protracted litigation of this case. While we
do not fault the appellants for exercising their constitu-
tional right to defend this action in the manner they be-
lieve is most appropriate, it is “too late in the day” for
them to complain that they somehow have been preju-
diced by the delay in this case in proceeding to trial for
they actively participated in this litigation nightmare
which we are sad to say is far from its final chapter. It
was the protracted litigation of this case, and the an-
ticipated lengthy appeals process sure to follow a trial on
A-14
the injunctive relief claims, that caused the government
to request the court to dismiss this action in order that
it might proceed to clean up the potentially dangerous
PCB and sue for the costs at a later point in time. Thus,
the government has offered a legitimate reason for its
abandonment of its injunctive relief action in favor of
pursuing its remedies under sections 104 and 107 of
CERCLA.
Monsanto, in its brief, explicitly argues that the govern-
ment’s motion to dismiss “comes after excessive delay and
lack of diligence.’”’ Monsanto Br. at 18. However, Mon-
santo has failed to point to any specific instances in the
record from which this court might conclude that the
United States government acted in bad faith or caused
unwarranted delays in this case. Further, as noted above,
part of the delay in this case was caused by the defen-
dants challenging the State of Illinois intervention before
the district court and this court, fighting the government’s
theory that it could bring an action for injunctive relief,
and agreeing with the government that this case should
be stayed pending the results of the EPA administrative
studies hearings (that lasted well over a year). Thus, they
knowingly and actively participated in the delay by con-
testing the government’s position taken throughout this
litigation, obviously in the hope of postponing the day of
reckoning as long as possible. The argument that the
government caused the “excessive delay” in this case is
without merit.
2. Pending disposition of this case.
Appellants also argue that had the government not been
allowed to dismiss this case without prejudice, OMC may
have been able to obtain a ruling from the district court
dismissing the government’s action seeking injunctive re-
lief for failure to state a claim. This argument, however,
is at best highly speculative and conjectural. The appel-
lants rely on Pace v. Southern Express Company, 409
F.2d 331 (1969), where we held that the district court
A-15
abused its discretion in dismissing the plaintiffs’ action
without prejudice where it was apparent that the defen-
dant was entitled to summary judgment since the plain-
tiff had failed to file a response to the defendant’s sum-
mary judgment motion. In this case, the district court ex-
pressed a “sixty percent comfort” in its prior rulings
holding that the United States had a proper claim for in-
junctive relief under the Refuse Act, Clean Water Act
and section 106 of CERCLA. Thus from our review
of the record, including the district court’s comments,
we certainly are far from convinced that the appellants
would have obtained a favorable ruling from the district
court. Further, the government agreed to execute a cove-
nant not to sue for any claims other than the recovery
of the cleanup costs, as a condition of dismissal, and
thus is prevented from again bringing another action seek-
ing the same injunctive relief and civil penalties in this
fact situation. The appellants have, in effect, achieved
their purpose in having the injunctive relief claims dis-
missed.
The appellants also argue that had this case proceeded
to trial, they would have prevailed since the government
did not have evidence sufficient to establish that the PCB
in the Waukegan harbor was causing harm sufficient to
justify the expected cost of the removal of the PCB from
the harbor. Specifically, the appellants point to the govern-
ment’s admission in September 1982 that the government
knew of no person who had as of that point in time suf-
fered any ailments due to the PCB in the harbor. Since
our standard of review in this case requires that we af-
firm the district court decision unless we find “that the
discretion of the trial judge was abused”’ in dismissing
this action without prejudice on the condition that the
government execute a covenant not to sue for injunctive
relief, Tyco Laboratories, Inc., 627 F.2d at 56, we are not
in the position to assess the relative merits of either the
appellant’s or the government’s position as to the alleged
harm, or anticipated future harm, caused by the PCB in
A-16
the harbor.® But it is important to note that while the
government did admit that it did not have scientific evi-
dence at that particular point in time that the PCB in
the harbor had caused harm to humans, it did not admit
that the PCB then present would not cause a significant
health problem to humans in the future, or that the PCB
did not present a present risk to the ecological life of the
harbor or Lake Michigan, or that the PCB will not harm
the fish and aquatic life in the area.
Further, even if we acceded to the appeliant’s request
and reversed the district court’s decision to dismiss this
_case without prejudice and the court, on remand, allowed
this case to proceed to trial, we have serious doubts as
to whether a trial on the claims presently before the court
would be proper since the government has commenced
its cleanup effort. Specifically, the government’s complaint
asked for injunctive relief requesting that the appellants
be directed to remove the PCB sediments from the bed
of the harbor immediately; but because of the extensive
litigation and the serious problems (potential harm to
humans and the environment in the future) posed by the
contaminated waste in the water, the government com-
menced the process of removing the PCB sediments from
the harbor. See Outboard Marine Corp. v. Thomas, 773
F.2d 883 (7th Cir. 1985). Thus, there no longer exists a
valid reason for the requested injunctive relief. Converse-
ly, if the government decides to wait until after the pro-
posed trial to commence the removal operation, a serious
question would exist as to the district court’s jurisdiction
over the merits of the appellant’s case that the cost of
the government’s proposed remedy was not justified by
the alleged harm presented by the PCB in the Waukegan
harbor. Courts that have addressed the issue of a trial
court’s jurisdiction to review the appropriateness of the
% Indeed, the parties have not presented the administrative rec-
ord or a summary of the evidence collected to this date concern-
ing the potential harm that may be caused by the PCB.
A-17
EPA’s removal efforts have held that CERCLA does not
authorize pre-enforcement judicial review of the EPA’s
R.O.D. CERCLA does not give the United States District
Courts jurisdiction to review the EPA’s R.O.D. prior to
enforcement. Rather, these courts have held that the
jurisdiction rests with the trial court only after the EPA
has enforced the R.O.D. and the government subsequenty
sues under CERCLA section 107, 42 U.S.C. § 9607, to
recover the cleanup costs incurred in enforcing the R.O.D.
Wheaton Industries v. U.S. E.P.A., 781 F.2d 354, 356 (8d
Cir. 1986) (citing Lone Pine Steering Committee v. U.S.
E.P.A., T77 F.2d 882 (8d Cir. 1985) for the proposition
that “judicial review is not available under CERCLA until
the EPA files suit for reimbursement of its costs, as autho-
rized by section 107, CERCLA, 42 U.S.C. § 9607.”); see
also J.V. Peters & Co., Inc. v. U.S. E.P.A., 767 F.2d 263,
265 (6th Cir. 1985).
Finally, the appellants will not be deprived of any de-
fense if the EPA later sues for recovery of its removal
costs and thus will not be prejudiced if the government
subsequently brings a cost recovery action.1° See Puerto
Rico Maritime Shipping Authority v. Leith, 668 F.2d 46,
50 (1st Cir. 1980). It appears from the record that had
the injunctive relief action proceeded to trial the appel-
lants might have argued in their defense that any alleged
harm from the PCB in the Waukegan harbor did not jus-
tify the anticipated cost of removal. Section 107(a), 42
U.S.C. § 9607(a), (authorizing the government to remove
the hazardous waste) states that the party responsible for
the presence of the hazardous waste shall bear the cost
of removal “not inconsistent with the national contingen-
cy plan.” The national contingency plan is described in
42 U.S.C. § 9605 and requires that the remedial action
10 Indeed, the parties recognized at oral argument that the appel-
lants’ defenses that would have been asserted at the trial assess-
ing the appropriateness of the government’s request for injunc-
tive relief would be availabe if, or when, the government sues
for recovery of its cleanup costs.
A-18
taken by the government be cost-effective. 42 U.S.C.
§ 9605(7). Thus, the procedure used by the government
to recover its cleanup costs pursuant to section 107(a), 42
U.S.C. § 9607(a), will permit the appellants to raise a cost-
effectiveness defense should they desire.
3. Effort and expense in preparing for trial.
The appellants also argue that they have been “‘put to
extraordinary expense and effort’ in defending this law-
suit for the past seven and one-half years. While we note
that the appellants have incurred substantial costs and
attorney fees in defending this action,!! the district court
did impose conditions on the parties to the dismissal in
order to minimize the cost to the appellants. Specifically,
the court awarded Monsanto and OMC costs, pursuant to
28 U.S.C. § 2412(a) in the amount of $45,138 and $68,893,
respectively.!2 Further, the court granted the govern-
ment’s motion to dismiss its complaint without prejudice
only upon the condition that the government and the
State of Illinois each execute a covenant not to sue for
the counts contained in its complaint; thus, the defendants
will not again be forced to litigate the claims seeking in-
junctive relief. Since the materials accumulated during
11 As previously noted, the “cause” of the expense and effort put
forth by the appellants cannot exclusively be attributed to the
federal government.
12 The court awarded costs to OMC pursuant to 28 U.S.C.
§ 2412(a), noting that courts have held a voluntary dismissal
without prejudice is tantamount to a judgment for the defendant
for purposes of awarding costs. See C. Wright & A. Miller, Federal
Practice and Procedure, 179-80 (1978). The court awarded costs
to Monsanto as a prevailing y since it had earlier been dis-
missed as a defendant. See United States v. Outboard Marine
Corp., 549 F. Supp. 1032 (N.D. Ill. 1982). The court, however,
noted that it may have to require a downward adjustment of this
cost award if the appellants are able to use the information ac-
—" through discovery to defend themselves at the cost-recovery
trial.
A-19
discovery and the administrative process are not contained
in the record we are unable to determine which of these
materials may be of use to the defendants should the
government commence an action for the recovery of the
removal costs. But the parties agreed at oral argument
that the anticipated defense at the cost recovery trial
would be similar to the defense that would have been
employed at the trial for injunctive relief. Thus the ap-
pellants’ work product might very well be useful if and
when the government brings its action for recovery of
removal costs and the appellants’ efforts and expenses in-
curred in preparing for the injunctive relief trial will not
have been wasted. See Puerto Rico Maritime Shipping
Authority, 668 F.2d at 50; cf. Cauley v. Wilson, 754 F.2d
769, 772 (7th Cir. 1985).
4. Unfavorable publicity.
The appellants finally argue that for years they have
been forced to endure the unfavorable publicity surround-
ing the allegations that they are responsible for the PCBs
in the Waukegan harbor, and contend that the govern-
ment’s voluntary dismissal ‘‘on the eve of trial eliminated
[their] chance[ ] to obtain a fair hearing on the accusa-
tions.”” OMC Br. at 24. This argument is speculative and,
at best, a red herring. The district court correctly noted
that “{t]his concern, while its importance should not be
underestimated, is not sufficient to justify an unwarranted
trial” at this stage of the proceedings. Outboard Marine
- Corp., 104 F.R.D. at 413; see also Louis v. Bache Group,
Inc., 92 F.R.D. 459, 461 (S.D.N.Y. 1981). Further, the ap-
pellants have failed to provide this court with evidence
in the record demonstrating how they have suffered due
to any unfavorable publicity surrounding this litigation.
Even if we were to accept this assertion of unfavorable
publicity, as noted in this opinion the district court is
granted wide latitude in determining whether or not to
grant a motion to dismiss without prejudice and we cannot
state that the district court abused its discretion simply
because the parties, Monsanto and OMC, who caused the
A-20
PCB problem in the harbor, may suffer unfavorable pub-
licity. Obviously, the courts cannot exercise control over
the media when it exercises its First Amendment Free
Press right to inform the public of the potential harm aris-
ing from the hazardous waste in the harbor. If the appel-
lants are upset with the press’ coverage of this matter,
they can present this argument to the press after the cost
recovery trial.
After reviewing the record in this case, we hold that
the district court did not abuse its discretion in dismiss-
ing the government’s action without prejudice on the con-
dition that the government and the State of Illinois ex-
ecute a covenant not to sue for injunctive relief or civil
penalties.
Ill
In the last section of its brief, OMC contends that the
district court’s “modification of its initial dismissal with
prejudice violated Rule 41(aX2) and was an abuse of dis-
cretion.”” OMC Br. at 29. OMC notes that because of the
—- of litigating this case, the district court initially
re to grant the government’s motion to dismiss with-
out prejudice. Rather, the court stated that the dismissal
would be with prejudice as to the claims contained in the
government’s complaint but that the dismissal would not
affect the government’s subsequent cost-recovery action
since this claim “could not have been brought in this [in-
juctive relief] action.”” Outboard Marine Corporation Co.,
104 F.R.D. at 411. Citing a line of cases holding that the
government may bring an action seeking recovery of costs
for the removal of hazardous waste as soon as it has in-
curred its initial cleanup costs,1* OMC argues that the
district court erred when it assumed that the cost-recovery
action could not have been brought by the government
13 QMC cites New York v. General Electric Co., 21 E.R.C. 1097
(N.D.N.Y. 1984) and United States v. Allied Chemical Corp., 587
F. Supp. 1205 (N.D. Cal. 1984).
A-21
when it filed its second amended complaint requesting in-
junctive relief since the government had already incurred
costs that could be recovered under § 107 of CERCLA.
The appellants also argue a claim for injunctive relief
under section 106 and a claim for recovery of costs under
section 107 of CERCLA are the same for purposes of res
judicata analysis. Thus, OMC argues that “‘any dismissal
of this case under Rule 41 must be with prejudice [and]
[sjuch dismissal would have to include a cost-recovery ac-
tion under Superfund § 107.” OMC Br. at 29. Although
the position taken by OMC in its brief is not entirely
clear, we interpret OMC as requesting that we reverse
the district court decision to dismiss without prejudice,
reinstate its original order dismissing this case with pre)j-
udice, and dismiss the entire action holding that the an-
ticipated cost-recovery action is precluded by the rules
of res judicata.
From our review of the totality of the record in this
proceeding, the district court’s original opinion dismiss-
ing this action with prejudice, except for the reservation
allowing the government to pursue a future cost-recovery
action, and the court’s subsequent modification of that
decision to dismiss the government’s complaint without
prejudice on the condition that the government execute
a covenant not to sue, it is evident that the intent of the
district court was to prevent the government from chang-
ing the course of litigation and again seeking the same
type of injunctive relief from the appellants in the same
fact situation. The court obviously had no intention of
preventing the government from later seeking recovery
costs incurred in the removal of the PCB’s from the Wau-
kegan harbor; thus saving the taxpayers from being sad-
dled with the interim cleanup expense. The mere fact that
the district court allowed the government to later pur-
sue this second action seeking recovery costs is not in
and of itself prejudicial to the defendants. See Quad/
Graphics, Inc. v. Fass, 724 F.2d 1230, 1233 (7th Cir. 1983);
Puerto Rico Maritime Shipping Authority, 668 F.2d at
50; Sterns, 542 F.2d at 214 (noting that “the prospect of
A-22
a second lawsuit should not [in and of itself] bar a volun-
tary dismissal... .’’); cf. Restatement of Judgment (Sec-
ond), § 26(1Xb) (noting that the principles of res judicata
do not apply when the “court in the first action has ex-
pressly reserved the plaintiff's right to maintain the sec-
ond action... .”).
Since the district court’s final decision was to dismiss
this action without prejudice upon the condition that the
government and the State of Illinois execute a covenant
not to sue for injunctive relief based upon the same fact
situation, to reach the res judicata issue we would initially
have to hold that the district court abused its discretion
in dismissing the complaint without prejudice before reach-
ing the issue of whether the dismissal with prejudice of
the section 106 CERCLA claim would bar the section 107
cost recovery action. We previously held that the court
did not abuse its discretion; thus, we need not reach the
issue of whether the section 107 cost recovery action
would be barred by res judicata. Further, since the
district court never explicitly ruled on the res judicata
issue as to the interrelationship between section 106 and
107, this issue is not properly before this court at this
time.
The decision of the district court is AFFIRMED and costs
are awarded to the government on this appeal.
A true Copy:
Teste:
Clerk of the United States Court of
Appeals for the Seventh Circuit
B-1
APPENDIX B
JUDGMENT — ORAL ARGUMENT
UNITED STATES COURT OF APPEALS
For the Seventh Circuit
Chicago, Illinois 60604
April 22, 1986.
Before
Hon. WILLIAM J. BAUER, Circuit Judge
Hon. JoHN L. CoFFEY, Vircuit Judge
Hon. Jesse E. Escusacu, Senior Circuit Judge
No. 85-1584
UNITED STATES OF AMERICA, —
Plaintiff-Appellee,
and
THE PEOPLE OF THE STATE OF ILLINOIS,
Intervenors-A ppellees,
vs.
OUTBOARD MARINE CORPORATION,
Defendant, Third-Party Plaintiff and
Cross-Claim Defendant-Appellant,
and
MONSANTO COMPANY,
Defendant, Third-Party Defendant and
Cross-Claim Intervenor-Appellant.
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 78 C 1004—Susan Getzendanner, Judge.
B-2
This cause was heard on the record from the United
States District Court for the Northern District of Illinois,
Eastern Division, and was argued by counsel.
On consideration whereof, It Is ORDERED AND ADJUDGED
by this Court that the judgment of the said District Court
in this cause appealed from be, and the same is hereby
AFFIRMED, with costs awarded to the Government, in ac-
cordance with the opinion of this Court filed this date.
C-1
APPENDIX C
JUDGMENT — ORAL ARGUMENT
UNITED STATES COURT OF APPEALS
For the Seventh Circuit
Chicago, Illinois 60604
May 22, 1986.
Before
Hon. WILLIAM J. BAUER, Circuit Judge
Hon. JoHn L. Correy, Circuit Judge
Hon. JEssE E. EscHBAcH, Senior Circuit Judge
No. 85-1584
UNITED STATES OF AMERICA, Plaintiff-Appellee,
and
THE PEOPLE OF THE STATE OF ILLINOIS,
Intervenors-Appellees,
vs.
OUTBOARD MARINE CORPORATION,
Defendant, Third-Party Plaintiff and
Cross-Claim Defendant-Appellant,
and
MONSANTO COMPANY,
Defendant, Third-Party Defendant and
Cross-Claim Intervenor-Appellant.
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 78 C 1004—Susan Getzendanner, Judge.
C-2
ORDER
The Opinion of this court issued on April 22, 1986 in
the above-referenced case is amended as follows:
Page 9, fourth line from the top, “affect”? should be
“effect”’;
Page 11, eight lines from bottom “affects” should be
“effects”;
Page 19, fourteen lines from the bottom, “which”
should be ‘“‘while.”’
On consideration of the petition for rehearing and sug-
gestion for rehearing en banc filed in the above-entitled
cause by appellant, no judge in active service has re-
quested a vote thereon, and all of the judges on the
original panel have voted to deny a rehearing. Accord-
ingly,
It Is ORDERED that the aforesaid petition for rehear-
ing be, and the same is hereby, DENIED.
D-1
APPENDIX D
UNITED STATES of America, Plaintiff,
and
The People of the State of
Illinois, Intervenors,
v
OUTBOARD MARINE CORPORATION,
Defendant, Third-Party Plaintiff, and
Cross-Claim Defendant,
and
Monsanto Company, Defendant,
Third-Party Defendant, and
Cross-Claim Plaintiff.
No. 78 C 1004.
United States District Court,
N.D. Illinois, E.D.
Aug. 30, 1984.
MEMORANDUM OPINION AND ORDER
GETZENDANNER, District Judge:
This water pollution suit involves an accumulation of
polychlorinated biphenyls (“PCBs”) in the Waukegan Har-
bor and other navigable waters adjacent to the Waukegan,
Illinois facility of the Outboard Marine Corporation (““OMC”’).
The PCBs allegedly were discharged from OMC’s facil-
ity, and they allegedly came from PCB-bearing industrial
fluids sold to OMC by Monsanto Company. The United
States has sought an injunction requiring OMC and Mon-
santo to clean up the Waukegan Harbor. After several
years of litigation, however, the United States has de-
cided to clean the Harbor up by itself (along with inter-
D-2
venor the State of Illinois), intending to file another suit
at a later date to recover the costs of the cleanup. The
United States, joined by Illinois, now seeks dismissal of
this action. OMC and Monsanto oppose dismissal, OMC
asking alternatively that the case be dismissed with prej-
udice. As explained more fully below, the court will
dismiss this action, and dismissal shall be with prejudice
generally, but without prejudice to a future suit to re-
cover the costs of cleaning up the Harbor. The court’s
ruling does not constitute an endorsement of the proposed
cleanup plan, but rather is based on an acknowledgment
that the United States can proceed with cleanup opera-
tions without obtaining prior court approval.
I. BACKGROUND
The United States filed suit against OMC on March 17,
1978. OMC brought Monsanto in as a third-party defen-
dant on November 16, 1978, and on July 22, 1980 the
United States filed its Amended Complaint, which as-
serted claims directly against Monsanto. The United
States’ claims against Monsanto have been dismissed, but
OMC’s third-party claims remain alive, as do cross-claims
which Monsanto has asserted against OMC. The State of
Illinois is party to the case as intervenor, but for simplic-
ity’s sake the court will defer discussion of Illinois’ role
until the end of this opinion.
The United States’ current complaint is its Second
Amended Complaint, which it filed on February 2, 1982,
for the purpose of adding a count against OMC under
§ 106(a) of the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (““CERCLA” or
“Superfund”’), 42 U.S.C. § 9606(a). The Second Amended
Complaint contains seven counts, four of which have been
dismissed for failure to state a claim upon which relief
can be granted. Counts III (asserted against OMC) and
V (asserted against Monsanto), brought under the federal
common law of nuisance, were dismissed by order dated
May 24, 1982. Counts VI and VII, asserting claims against
D-3
Monsanto under the Illinois common law of products liabil-
ity and under the Refuse Act, § 13 of the Rivers and Har-
bors Act of 1899, 33 U.S.C. § 407, were dismissed by
order dated September 20, 1982. United States v. Out-
board Marine Corporation, 549 F.Supp. 1032 (N.D. II.
1982). The three remaining counts, Counts I, II, and IV,
assert claims against OMC under the Refuse Act, under
§ 309 of the Clean Water Act, 33 U.S.C. § 1319, and under
§ 106(a) of CERCLA. The court denied OMC’s motions
to dismiss these counts in two orders dated October 8,
1982. United States v. Outboard Marine Corporation, 549
F.Supp. 1036, 556 F.Supp. 54 (N.D. Ill. 1982). With the
exception of civil penalties sought only under Count II,
all seven counts seek the same relief—a mandatory clean-
up injunction primarily requiring the removal of accumu-
lated PCBs from the Waukegan Habor.
OMC’s motions to dismiss Counts I, II, and IV argued
mainly that mandatory injunctions generally are not avail-
able to require private parties to clean up accumulated
hazardous substances. The Clean Water Act and CERCLA
both contain provisions under which the United States
may conduct its own cleanup of hazardous substances and
then sue to recover its cleanup costs. 33 U.S.C. § 1321;
42 U.S.C. §§ 9604, 9607. OMC argued that these and other
provisions preclude issuance of mandatory cleanup injunc-
tions under 33 U.S.C. § 1819%b) and 42 U.S.C. § 9606(a).
OMC also argued that the 1972 amendments to the Clean
Water Act preempted the issuance of injunctions to en-
force the Refuse Act, 33 U.S.C. § 407, which does not ex-
plicitly authorize the granting of injunctive relief. The
court rejected these arguments, holding that the re-
quested injunctive relief is available under all three stat-
utes. 549 F.Supp. 1035; 556 F.Supp. 54. On November 12,
1982 OMC filed a motion to reconsider the court’s orders,
again arguing that injunctive relief is not available. The
court informed the parties that it would give OMC’s mo-
tion serious consideration, and, in a departure from its
usual practice respecting pre-trial motions, the court set
the matter for oral argument. The court’s order dated
ie
D-4
February 18, 1983 formulated specific questions to be ad-
dressed during argument, all relating to the availability
of (or to the standards for granting) mandatory injunc-
tive relief under the statutes in question.
At some point along the way, the United States decided
to cease its efforts to obtain a mandatory cleanup injunc-
tion, and instead to conduct its own cleanup, to be followed
by a suit to recover its cleanup costs. On February 25,
1983 the United States filed what purported to be a notice
under Fed.R.Civ.P. 41(aX1Xi), dismissing Count IV, the
CERCLA injunction count, without prejudice. OMC ob-
jected, and at the court’s suggestion the United States
filed an alternative motion to dismiss Count IV under
Fed.R.Civ.P. 41(aX2), without waiving its claim to dismiss
Count IV as of right. On March 21, 1983 the United States,
joined by Illinois, moved for a stay of proceedings dur-
ing the pendency of a government cleanup under § 104
of CERCLA, 42 U.S.C. § 9604. OMC and Monsanto op-
posed the United States’ proposal, and Monsanto filed a
motion to bifurcate under Fed.R.Civ.P. 42(b), requesting
an early trial of certain issues before any government
cleanup. Although these motions were briefed on the
understanding that the court would decide them prompt-
ly, on July 26, 1983, at the parties’ suggestion, the court
stayed consideration of the motions until after the EPA
issued a final version of its proposed government clean-
up.
The EPA proceeded with its administrative determina-
tion, including public meetings and comment periods. On
May 15, 1984 the EPA issued the final version of its re-
port, in the form of a Record of Decision (“ROD”) sup-
porting its selection from among different alternative
cleanup remedies. Within a few days the United States
filed a motion, joined in by the State of Illinois, for volun-
tary dismissal of its suit under Fed.R.Civ.P. 41(aX2). The
United States intends to implement the selected remedy,
probably to be followed by a cost recovery suit. OMC and
Monsanto oppose the United States’ motion. The United
States still maintains that it dismissed Count IV as of
D-5
right, but the court will begin by assuming that the
United States’ purported notice of dismissal was of no
effect; the court will address the notice of dismissal later
in this opinion.
II. VOLUNTARY DISMISSAL
Fed.R.Civ.P. 41(aX2), under which the United States
moves, reads in pertinent part:
Except as provided in paragraph (1) of this subdivi-
sion of this rule, an action shall not be dismissed at
the plaintiff's instance save upon order of the court
and upon such terms and conditions as the court
deems proper. . . . Unless otherwise specified in the
order, a dismissal under this paragraph is without
prejudice.
The purpose of this rule is to prevent voluntary dismissals
which unfairly affect an opposing party. In general, dis-
missal should be allowed, unless the defendant will suffer
some plain legal prejudice beyond the mere prospect of
a second law suit. Stern v. Barnett, 452 F.2d 211, 213 (7th
Cir. 1971). Disposition of a motion under Fed.R.Civ.P. 41
(aX2) is a matter for the sound discretion of the trial court.
The court’s discretion runs not only to the setting of
proper terms and conditions, but also to the question of
whether dismissal will be allowed at all. Grivas v. Parme-
lee Transportation Co., 207 F.2d 334, 336 (7th Cir. 1953),
cert. denied, 347 U.S. 918, 74 S.Ct. 477, 98 L.Ed. 1069
(1954), overruling Bolten v. General Motors Corp., 180
F.2d 379 (7th Cir. 1950). If the court allows dismissal but
sets conditions not requested by the plaintiff, then the
plaintiff may withdraw its motion. GAF Corporation v.
Transamerica Insurance Co., 665 F.2d 364, 367-68 (D.C.
Cir. 1981). Standards for ruling upon motions under Fed.
R.Civ.P. 4i(aX2) are discussed in Tyco Laboratories, Inc.
v. Koppers Co., 627 F.2d 54 (7th Cir. 1980), and Pace v.
Southern Express Co., 409 F.2d 331 (7th Cir. 1969).
In this case OMC and Monsanto both argue that the
court should not dismiss this action, and instead should
set the case for trial on these questions:
D-6
Whether the PCBs in Waukegan Harbor and on the
property of Outboard Marine Corporation pose a risk
of substantial and imminent harm to the public health,
drinking water, or acquatic life in the Waukegan
Harbor area?
What remedy, if any, is appropriate under the circum-
stances? (Monsanto motion for bifurcation filed 3/25/83.)
OMC alternatively asks that the case be dismissed with
prejudice.
A. Dismissal with prejudice
Counts III, V, VI, and VII have been dismissed for
failure to state a claim upon which relief can be granted,
and it appears to be understood by the parties that dis-
miseal of these counts shall be with prejudice. The United
States asks that Counts I, II, and IV be dismissed with-
out prejudice, but it is clear to the court that dismissal
without prejudice potentially could affect the defendants
unfairly. The court was about to take oral argument on
OMC’s motion to reconsider wiien the United States
changed its approach to this case. The court would have
ruled on the motion to reconsider well over a year ago.
While the court does not know how it would have ruled,
there was a serious possibility that the court would have
granted OMC’s motion. Having forestalled a ruling on
OMC’s motion, the United States should not be allowed
the option of reinstating the claims it asserts in Counts
I, II, and IV. The United States suggests that dismissal
with prejudice is unnecessary, pointing out that the stat-
ute of limitations has run on its claim for penalties under
the Clean Water Act, and stating that its claims for in-
junctive relief are mooted by the proposed government
cleanup. The court believes, however, that the defendants
should be protected against even a slim possibility that
the United States might change its plans again. This liti-
gation undoubtedly has been very costly for the parties
to litigate. The United States should not be permitted,
at some future time, to move backward and return to its
original approach to the problem.
D-7
The court therefore will allow dismissal of Counts I, II,
and IV only with prejudice. Such dismissal “is subject to
the usual rules of res judicata.” 9 C. Wright & A. Miller,
Federal Practice and Procedure § 2367 at 185-86 (1971).
The court assumes that dismissal with prejudice will bar
reinstatement of Counts I, II, and IV but will not bar
a future cost-recovery suit, and the court does not under-
stand OMC or Monsanto to argue otherwise. If for no
other reason, a future cost-recovery suit would appear not
to be barred because a claim to recover costs incurred
in the cleanup could not have been joined with this ac-
tion. Res judicata generally does not bar claims that could
not have been brought in the first action. See generally
Marrese v. American Academy of Orthopaedic Surgeons,
726 F.2d 1150 (7th Cir. 1984), cert. granted, ___._ US.
___, 104 S.Ct. 3558, 82 L.Ed.2d 854 (1984). Lest there
be any misunderstanding, the court will state clearly that
dismissal is with prejudice generally, but without prej-
udice to a future cost-recovery suit. Also for the sake of
clarity, the court emphasizes that it is setting dismissal
with prejudice as a condition of voluntary dismissal under
Fed.R.Civ.P. 41(aX2), and the United States may accept
dismissal under this condition or it may withdraw its mo-
tion for voluntary dismissal. The court is not ordering an
involuntary dismissal under Fed.R.Civ.P. 41(b), as sug-
gested by OMC. (OMC memo filed 6/22/84, p. 30.)
B. If dismissal were not allowed
OMC and Monsanto ask the court not to allow dismissal.
Only as an alternative request does OMC ask that dis-
missal be with prejudice. The court does not believe, how-
ever, that refusing to allow dismissal would be an appropri-
ate way of protecting OMC and Monsanto from prejudice.
In the Pace case, cited above, the Court of Appeals
upheld a district court’s refusal to allow dismissal on a
motion under Fed.R.Civ.P. 41(aX2). The defendant’s simple
and meritorious motion for summary judgment was ripe
for decision, and in moving for voluntary dismissal with-
out prejudice the plaintiff apparently hoped to avoid sum-
D-8
mary judgment and proceed with parallel litigation in
state court. The Court held that the defendant was en-
titled to have the litigation “disposed of in a manner that
will protect the defendant against future litigation.” 409
F.2d at 334. Of course, dismissal with prejudice also would
have protected the defendant against future litigation. A
review of Pace suggests that denying the motion for
voluntary dismissal, rather than allowing dismissal with
prejudice, was appropriate for at least two reasons. First,
the motion for summary judgment apparently could be
disposed of easily. Second, granting dismissal with prej-
udice probably would have been a useless exercise, since
the plaintiff could have been expected to reject the con-
dition of dismissal with prejudice, if the court properly
divined her intentions. See id. at 334. In this case, neither
of these factors is present. First, this case could not be
disposed of easily if the court did not allow dismissal. Sec-
ond, it seems likely that the United States will accept the
condition of dismissal with prejudice, since its intention
is not to refile Counts I, II, and IV, but rather to clean
up the Harbor and file a cost-recovery suit, a course of
action which is not barred by dismissal with prejudice.
Other possible reasons for not allowing dismissal require
more discussion.
1. The Record of Decision
OMC’s and Monsanto’s opposition to dismissal plainly
is an attempt to obtain judicial review of the ROD before
cleanup is undertaken. Each defendant has devoted an
overwhelming portion of its memorandum on this motion
to attacking the ROD. Among other points, OMC and
Monsanto argue that the ROD ignores current scientific
literature minimizing the harmfulness of PCBs, and that
the United States’ responses to certain requests for ad-
mission under Fed.R.Civ.P. 36 demonstrate the absence
of any real health hazard. OMC and Monsanto also criti-
cize the proposed remedy. Among other criticisms, OMC
and Monsanto argue that if PCBs do indeed pose a seri-
ous threat, then the proposed cleanup will stir up PCBs
presently buried beneath layers of sediment.
D-9
The statutory scheme does not provide for any judicial
review until such time as the United States sues to re-
cover its cleanup costs, and the defendants have articu-
lated no theory entitling them to pre-cleanup review.
Nonetheless, Monsanto asks the court “to bifurcate and
set for an early trial the two issues that are central not
only to this case but also to full and fair evaluation of
the remedial action proposed in EPA’s recent Record of
Decision.” (Monsanto memo filed 6/22/84, p. 2.) OMC
states that overlap of certain issues between the Second
Amended Complaint and any future cost recovery suit are
sufficient to “permit a trial on all the troublesome ques-
tions raised by the R.O.D.” (OMC memo filed 6/22/84, p.
29.) OMC also states:
The government now wants to dismiss the case en-
tirely so that without public scrutiny it can imple-
ment a Record of Decision which counsel for the EPA
candidly admitted at the last status hearing still has
“a few kinks” in it.
(OMC memo filed 6/22/84, p. 2.)
It is not really accurate, first of all, to say that there
has been no scrutiny of the proposed cleanup plan. The
EPA has held public meetings and taken comments from
the public. It is true that there has been no judicial
review of the ROD, but that is because such review is
not contemplated by the statutory scheme until the
United States sues to recover its costs. If the court re-
fused to allow dismissal of this suit, it still would not be
proper to use this action to conduct a judicial review of
the ROD. Allowing dismissal of this action therefore does
not deprive defendants of a legitimate opportunity to ob-
tain review of the ROD. The United States does not need
permission from the court to proceed with the proposed
cleanup. The court’s role on this motion is to protect the
defendants from legal prejudice. Any inconvenience or
harm flowing from implementation of the proposed clean-
up properly must be characterized as a consequence of
administrative determinations and actions, and not as legal
prejudice resulting from voluntary dismissal of this suit.
D-10
2. Collateral estoppel
If this case were not dismissed, and went to trial, judg-
ment on the merits would not appear to preclude a future
cost-recovery suit under the principle of res judicata, for
the same reasons that dismissal with prejudice would not
bar such a suit—a cost-recovery claim could not have been
brought in this action. Neither defendant has argued to
the contrary.! By requesting trial of certain bifurcated
issues, defendants seem to suggest they could obtain rul-
ings which effectively would bar a future cost-recovery
suit not under the principle of res judicata, but under the
principle of collateral estoppel. The court is not convinced
at all, though, that a trial in this action—with or without
bifurcation—really would allow defendants to obtain a rul-
ing which would be of significant help to them in a future
cost-recovery suit. Dismissal with prejudice therefore
would not deprive defendants of an opportunity to obtain
rulings which would have a substantial collateral estoppel
effect in a future proceeding.
The first question proposed for bifurcation is based on
the standard of “substantial and imminent harm” appear-
ing in § 106(a) of CERCLA, 42 U.S.C. § 9606(a), under
which Count IV seeks injunctive relief. It does not ap-
pear that the United States must prove “substantial and
imminent harm,” or the risk thereof, in a cost-recovery
suit based on release of PCBs, which are a designated
hazardous substance. See 42 U.S.C. § 9604(aX1); 40 C.F.R.
* Strictly speaking, of course, this res judicata question is not
squarely before the court. The court addresses it only in an at-
tempt to determine whether allowing the United States to dismiss
with prejudice deprives defendants of an opportunity to obtain
a judgment which would preclude a future cost-recovery suit. Ad-
dressing the question only in this context, the court relies heavily
on defendants’ failure to articulate any argument in support of
such a res judicata effect. Throughout this opinion the court uses
the term “res judicata” to mean claim preclusion or merger and
bar, and the term “collateral estoppel” to mean issue preclusion.
See Restatement (Second) of Judgments § 18 (merger), § 19 (bar);
§ 27 (issue preclusion) (1982).
D-11
§ 116.4 (1983). The court rejects Monsanto’s possible sug-
gestion to the contrary, which is based only on a supposed
admission by United States Attorney Dan K. Webb. (Mon-
santo memo filed 3/25/83, p. 3.) A ruling that there is no
“substantial and imminent harm,” or risk thereof, there-
fore would not bar a future cost recovery action.
There also is no guarantee that the proposed bifurcated
trial would result in a ruling upon the remedy proposed
in the ROD. It should be noted that the ROD identifies
a $75,000,000 remedy as the “cost-effective” alternative.
(ROD, p. 32.) Because only limited funds are available to
finance cleanup operations, the EPA is required to select
the “fund-balanced” alternative, which in this case is es-
timated to cost $21,300,000. (ROD, pp. 32, 37.) Free from
the requirement of selecting a “fund-balanced” alternative,
the United States might press for an injunction requir-
ing OMC to carry out the $75,000,000 “cost-effective”’
remedy, never placing the $21,300,000 remedy before the
court. Even if the $21,300,000 remedy were before the
court, a decision not to enjoin OMC to carry out the
$21,300,000 remedy would not be equivalent to a ruling
that the United States could not recover its costs after
carrying out the $21,300,000 remedy by itself. Defendants
have not shown, therefore, that their bifurcation proposal
could result in a judgment which would protect them from
a future cost-recovery suit.
It also should be noted that the next step in this law-
suit, if the court refused to dismiss, ordinarily would be
a ruling on OMC’s motion to reconsider. OMC now sug-
gests that the court “hold” its motion to reconsider, pend-
ing trial of the bifurcated issues. (OMC memo filed 6/22/84,
p. 29.) This is part of defendants’ effort to jockey the pres-
ent lawsuit into a posture in which it might serve as a
vehicle for premature judicial review of the ROD. If the
court did proceed first to rule on OMC’s motion to recon-
sider, it is at least a realistic possibility that the court
would grant OMC’s motion. If the court granted OMC’s
motion to reconsider, then the remaining counts of this
case would be dismissed on the basis that a mandatory
D-12
cleanup injunction is not available. Obviously, dismissal
on that basis would not bar a future cost-recovery action.
If the court denied OMC’s motion to reconsider, and set
the case for full—rather than bifurcated—trial, it still
would be highly doubtful that any judgment rendered
would bar a future cost recovery action. In opposing dis-
missal, defendants do not ask for a full trial.
3. Public interest and public perceptions
OMC and Monsanto raise several points with respect
to the public in the Waukegan area. OMC and Monsanto
argue that the public interest will best be served by a
prompt adjudication under the proposed bifurcation. (Mon-
santo memo filed 6/22/84, p. 4; OMC memo filed 6/22/84,
p. 31.) It is clear that local residents and businesses suffer
from continuing uncertainty as to the future of the Wau-
kegan Harbor. They do not know whether there is a genuine
threat to the public health, and they fear that any cleanup
operation may disrupt not only their recreational facilities,
but also, for many, their livelihood. The court is sensitive
to the public’s desire for a prompt resolution of this con-
troversy, but the court believes that the public interest
would not be served by a refusal to dismiss this case. The
EPA has expertise in the field of environmental concerns
which a court simply does not have. Further, the adminis-
trative decision-making process is better able to focus on
the questions of whether a remedy should be undertaken
and, if so, which remedy. The court necessarily must focus
on the questions presented by the legal posture of the
case before it, and it may not reach out to decide other
questions, however important they are to the public inter-
est. It is very possible that a triai in this court would
not result in a satisfactory resolution of the questions with
which the public is concerned; or, much worse, the court’s
judgment might appear generally to have given the Har-
bor a clean bill of health, without really having answered
all the important questions. For instance, the standard
of proof at trial might be one of “imminent and substan-
tial endangerment.” (Monsanto motion filed 3/25/83.) If it
D-13
were determined that there is no imminent danger, the
defendants would win, but the important question of long-
term danger would remain unanswered.
Monsanto also makes this argument:
[I]t must be assumed that the publicity surrounding
this litigation has caused the public generally to rely
on this Court to insure that whatever action EPA
takes is both necessary and reasonable. Granting
plaintiffs Motion to Dismiss will be interpreted by
the public as tantamount to a finding by the Court
that there is a serious public health problem in the
Waukegan area and an endorsement of the reason-
ableness of the Government’s proposed remedy.
(Monsanto memo filed 6/22/84, p. 4.) In response to this
concern, the court will state clearly that neither this rul-
ing nor any other ruling made in this case constitutes a
finding that there is a health problem or an endorsement
of the EPA’s proposed cleanup remedy. The court’s rul-
ing is based, instead, on an acknowledgement that the ex-
ecutive branch of the federal government is empowered
by statute to undertake its own cleanup operations with-
out prior approval from the judicial branch.
OMC and Monsanto also complain that the United
States has been trying its case in the press, inciting the
public to view OMC and Monsanto as environmental vil-
lains. Montanto states that its “only opportunity to vindi-
cate itself is through a prompt trial of the key issues.”
(Monsanto memo filed 6/22/84, p. 3.) This concern, while
its importance should not be underestimated, is not suf-
ficient to justify an otherwise unwarranted trial. E.g.,
Wainwright Securities, Inc. v. Wall Street Transcript
Corp., 80 F.R.D. 103, 105-06 (S.D.N.Y. 1978). The court
will state clearly that its ruling should not be construed
as any reflection on any actions OMC or Monsanto may
have taken, or on the way they have defended this law-
suit. |
D-14
C. Payment of costs, fees, and expenses
Motions for voluntary dismissal under Fed.R.Civ.P.
41(aX2) commonly are granted on the condition that the
plaintiff pay the defendant’s costs or attorney fees. E.@.,
Victory Beauty Supply, Inc. v. La Maur, Inc., 98 F.R.D.
306, 309 (N.D. Ill. 1983). Neither OMC nor Monsanto has
asked for an award of taxable costs, as might be per-
mitted under 28 U.S.C. § 2412(a). See 9 C. Wright & A.
Miller, Federal Practice and Procedure § 2366 at 182
(1971); but see 5 Moore’s Federal Practice 4 41.06 at 41.87
n. 5 (2d ed. 1982). In a brief footnote at the end of its
memorandum, Monsanto makes an unsupported request
for “reimbursement of its fees and expenses pursuant to
28 U.S.C. § 2412.” (Monsanto memo filed 6/22/84, p. 13n.)
The United States replies equally briefly, stating that
there is no authority for such a request. (U.S. memo filed
7/23/84, p. 11 n. 7.)
Monsanto’s use of the phrase “fees and expenses” indi-
cates clearly that it is not asking for costs under § 2412(a).
Further, for several reasons, Monsanto’s request is not
a proper application for fees and expenses under § 2412(d).
It is conceivable that the court could award Monsanto its
attorney fees and expenses as a condition of voluntary
dismissal, under § 2412(b). Monsanto’s brief request is
wholly insufficient to justify such an award, however, so
the court will not condition dismissal upon payment of
Monsanto’s fees and expenses. Similarly, the court will
not condition dismissal upon payment of OMC’s costs or
fees and expenses, as OMC has not even raised the issue.
III. COUNT IV
As noted above, the United States filed what purported
to be a notice dismissing Count IV without prejudice
under Fed.R.Civ.P. 41(aX1Xi). OMC had answered the
original complaint on November 7, 1978, and on January
27, 1981 the court granted OMC’s motion to allow its orig-
inal answer to stand as its answer to the Amended Com-
plaint. Count IV was added with the filing of the Second
D-15
Amended Complaint on February 2, 1982. OMC moved
to dismiss the Second Amended Complaint, and then
moved for reconsideration of the denial of its motion, and
thus it never filed an answer to Count IV. The United
States therefore believes it was entitled to dismiss Count
IV under Fed.R.Civ.P. 41(aX1), which reads, in pertinent
part:
[A]n action may be dismissed by the plaintiff with-
out order of court (i) by filing a notice of dismissal
at any time before service by the adverse party of
an answer or of a motion for summary judgment,
whichever first occurs.
OMC argues that this procedure may be used only to dis-
miss entire actions, not to dismiss only one of several
claims against a defendant. There is little case law ad-
dressing this question, and it is not precisely on point.
See Exxon Corp. v. Maryland Casualty Co., 599 F.2d 659,
662 (5th Cir. 1979); Smith, Kline & French Laboratories
vy. AH. Robins Co., 61 F.R.D. 24, 29 (E.D. Pa. 1973).
These cases generally support OMC’s argument, and the
court agrees. Fed.R.Civ.P. 41(aX1) governs dismissal of
entire actions, not of single claims. Of course, the court
has no occasion to discuss the situation in which a plain-
tiff wishes to dismiss all claims against only one of sev-
eral defendants.
The court believes, further, that it is not of much im-
portance in this case whether the purported dismissal of
Count IV was or was not effective. Even if the notice
did operate to dismiss Count IV without prejudice, refil-
ing of Count IV almost certainly would be barred by the
court’s present dismissal of Counts I and II with prej-
udice, since all three counts seek identical relief on es-
sentially the same set of facts. Any other rule would allow
circumvention of the prohibition of claim-splitting. When
claims which properly may not be split are joined to-
gether, if the plaintiff could dismiss one claim without
prejudice as of right, and then refile that claim after a
decision on the merits of the other claim, then the plain-
tiff effectively could split its claims.
— —
D-16
IV. ILLINOIS
Illinois moved to intervene in this action, but its mo-
tion was denied by order dated May 29, 1979. Illinois ap-
pealed, and the Court of Appeals held that Illinois could
intervene as of statutory right. State of Illinois v. Out-
board Marine Corporation, 680 F.2d 478, 480-81 (7th Cir.
1982); see also State of Illinois v. Outboard Marine Cor-
poration, 619 F.2d 623, 630-32 (7th Cir. 1980), vacated and
remanded, 453 U.S. 917, 101 S.Ct. 3152, 69 L.Ed.2d 1000
(1981). Illinois also had filed its own action, which the
court dismissed without prejudice because it duplicated
Illinois’ claims in this action. State of Illinois v. Outboard
Marine Corporation, No. 78 C 3187 (N.D. Ill. Sept. 30,
1982). OMC has moved to dismiss four state-law claims
which Illinois asserts in its complaint-in-intervention, but
the court has not ruled on OMC’s motion.
On March 18, 1983 Illinois moved for a stay of proceed-
ings pending a government cleanup under CERCLA, an-
ticipating the United States’ similar motion by three days.
More recently, Illinois was granted leave to join in the
United States’ present motion for voluntary dismissal
under Fed.R.Civ.P. 41(aX2). In addition to joining in the
United States’ motion, Illinois has adopted the United
States’ reply brief in support of its motion, stating also
that “the State of Illinois is committed to the remedy con-
tained in the Record of Decision for the cleanup of Wau-
kegan Harbor.” (Illinois memo filed 7/23/84, p. 2.)
On the present motion, the parties have not given any
separate consideration to Illinois’ pending complaint-in-
intervention. The court assumes that Illinois’ joining in
the United States’ motion amounts to a request for volun-
tary dismissal of Illinois’ cwn claims, and the court also
assumes that the foregoing discussion applies equally to
Illinois. Illinois’ claims therefore are dismissed with prej-
udice.
D-17
V. CONCLUSION
A status hearing is set for September 14, 1984. At that
time the United States and Illinois shall inform the court
whether they accept the conditions of dismissal, or whether
they wish to withdraw the motion for voluntary dismissal
and proceed with this litigation. Also at that time the par-
ties shall report to the court on the status of the remain-
ing third-party claim and cross-claim, and on the status
of Outboard Marine Corporation v. Costle, No. 78 C 751.
Accordingly, the court grants the United States’ mo-
tion, joined in by Illinois, for voluntary dismissal under
Fed.R.Civ.P. 41(aX2). Dismissal of the United States’
claims and of Illinois’ claims is granted on the condition
that dismissal shall be with prejudice; however, dismissal
shall be without prejudice to a future cost-recovery suit
after a government cleanup. A status hearing is set for
September 14, 1984.
It is so ordered.
E-1
APPENDIX E
RELEVANT STATUTORY AUTHORITY
Federal Rules of
Civil Procedure 41(a)(2)
By Order of Court. Except as provided in paragraph (1)
of this subdivision of this rule, an action shall not be dis-
missed at the plaintiff's instance save upon order of the
court and upon such terms and conditions as the court
deems proper. If a counterclaim has been pleaded by a
defendant prior to the service upon him of the plaintiff's
motion to dismiss, the action shall not be dismissed
against the defendant’s objection unless the counterclaim
can remain pending for independent adjudication by the
court. Unless otherwise specified in the order, a dismissal
under this paragraph is without prejudice.
The Comprehensive Environmental Response,
Compensation and Liability Act of 1980
Sec. 104. Response Authoritie:
(aX1) Whenever (A) any hazardous substance is released
or there is a substantial threat of such a release into the
environment, or (B) there is a release or substantial threat
of release into the environment of any pollutant or con-
taminant which may present an imminent and substantial
danger to the public health or welfare, the President is
authorized to act, consistent with the national contingency
plan, to remove or arrange for the removal of, and pro-
vide for remedial action relating to such hazardous sub-
stance, pollutant, or contaminant at any time (including
its removal from any contaminated natural resource), or
take any other response measure consistent with the na-
tional contingency plan which the President deems neces-
E-2
sary to protect the public health or welfare or the en-
vironment, unless the President determines that such re-
moval and remedial action will be done properly by the
owner or operator of the vessel or facility from which the
release or threat of release emanates, or by any other
responsible party.
Sec. 106. Abatement Action
(a) In addition to any other action by a State or local
government, when the President determines that there
may be an imminent and substantial endangerment to the
public health or welfare or the environment because of
an actual or threatened release of a hazardous substance
from a facility, he may require the Attorney General of
the United States to secure such relief as may be neces-
sary to abate such danger or threat, and the district court
of the United States in the district in which the threat
occurs shall have jurisdiction to grant such relief as the
public interest and the equities of the case may require.
The President may also, after notice to the affected State,
take other action under this section including, but not
limited to, issuing such orders as may be necessary to
protect public health and welfare and the environment.
Sec. 107. Liability
(a) Notwithstanding any other provision or rule of law,
and subject only to the defenses set forth in subsection
(b) of this section—
(1) the owner and operator of a vessel (otherwise sub-
ject to the jurisdiction of the United States) or a facility,
(2) any person who at the time of disposal of any hazard-
ous substance owned or operated any facility at which
such hazardous substances were disposed of,
(3) any person who by contract, agreement, or other-
wise arranged for disposal or treatment, or arranged with
a transporter for transport for disposal or treatment, of
hazardous substances owned or possessed by such per-
ee ieee rl yy. ee, ee yh he a <n a ~<_—
E-3
son, by any other party or entity, at any facility owned
or operated by another party or entity and containing
such hazardous substances, and
(4) any person who accepts or accepted any hazardous
substances for transport to disposal or treatment facilities
or sites selected by such person, from which there is a
release, or a threatened release which causes the incur-
rence of response costs, of a hazardous substance, shall
be liable for—
(A) all costs of removal or remedial action incurred
by the United States Government or a State not in-
consistent with the national contingency plan;
(B) any other necessary costs of response incurred
by any other person consistent with the national con-
tingency plan; and
(C) damages for injury to, destruction of, or loss
of natural resources, including the reasonable costs
of assessing such injury, destruction, or loss resulting
from such a release.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.