# Reply Brief — Fleet Factors Corp. v. United States, 111 S. Ct. 752 (1991) (No. 90-504) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385020_2869%3A3 ## Record - **Collection:** Supreme Court brief - **Document type:** Reply Brief - **Published:** January 1, 1991 ## Text ’ |] orc 28 1980 No. 90-504 / ” | loserit F. SPANIOL, JR. \ = IN THE Supreme Court of the United States OCTOBER TERM, 1990 FLEET FACTORS CORP., Petitioner, Vv. UNITED STATES OF AMERICA, Respondent. On Petition for a Writ of Certiorari to the United States Court of Appeals for the Eleventh Circuit REPLY BRIEF OF PETITIONER FLEET FACTORS CORP. DouGLas J. Goop GRIFFIN B. BELL LAURICE FIRENZE (Counsel of Record) RUSKIN, SCHLISSEL, MOSCOU, PATRICIA BARMEYER EVANS & FALTISCHEK, P.C. KING & SPALDING 170 Old County Road 1730 Pennsylvania Ave., N.W. Mineola, New York 11502 Washington, D.C. 20006 (516) 248-9500 (202) 737-0500 RICHARD E. MILEY NIXON, YOW, WALLER & CAPERS 1500 First Union Bank Building Augusta, Georgia 30910 (404) 722-7541 Attorneys for Petitioner, Fleet Factors Corp. (AEE EE LOE OIE: ET TE S| TE LO Seal WILSON - Epes PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001 TABLE OF CONTENTS TABLE OF AUTHORITIES STATUTE INVOLVED ARGUMENT I. THE GOVERNMENT DOES NOT DENY THAT THIS CASE PRESENTS A QUESTION OF NATIONAL IMPORTANCE .....WW00000w....... Il. SIGNIFICANT TENSION EXISTS BETWEEN THE ELEVENTH CIRCUIT’S DECISION IN FLEET FACTORS AND THE NINTH CIR- CUIT’S DECISION IN BERGSOE METAL US ceccaneaccucegtciseacin. seskakesanbhcibdbablanncgcapdecmiccindcttnnaensiienice Ill. THE QUESTION PRESENTED IS RIPE FOR gy ie ie y || RE SRI, isiciasbnccitcsininchnceneinicbshioreeninianciageaiinoaniatio jabaiinsiene ii TABLE OF AUTHORITIES Cases Page Arizona v. Maricopa County Medical Soc’y, 457 SE. Se CD ocictecsieeeie eee, 6 Black v. Cutter Laboratories, 351 U.S. 292 (1956)... 6 Brotherhood of Locomotive Firemen and Engine- men v. Bangor & A. R.R., 389 U.S. 327 (1967)... 6 Chan v. Korean Air Lines, Ltd., 109 S. Ct. 1676 TROD xvcnisssisu. suncncuccdestanuiemasbiumenddabasmed ian ie 6 City of New Orleans v. Dukes, 427 U.S. 297 CI sxsnsascsiceica us cessciansecensekesubisueenetacaansiacinetrala tae ne a a 6 Dawson Chem. Co. v. Rohm and Haas Co., 448 U.S. 176, reh’g denied, 448 U.S. 917 (1980) —............ 4 Goodman v. Lukens Steel Co., 482 U.S. 656 (1987)... 6 Hamilton-Brown Shoe Co. v. Wolf Bros. & Co., 240 16 Se | | eens Aen ne stone 6 In re Bergsoe Metal Corp., 910 F.2d 668 (9th Cir. DI sicdiesiicsaisccintitouasioniimndas comonieaaaaae Lia 3, 4,5 United States v. Fleet Factors Corp., 901 F.2d BORO CEE Ge. BOON ccc passim Statutes 28 U.S.C.A. § 1254(1) (West Supp. 1990) ................ 5 42 U.S.C.A. § 9601(20) (A) (West Supp. 1990) ...... passim 42 U.S.C.A. § 9607(a) (West Supp. 1990) 0.0000... _..passim Court Rules Bs Ss Ti DG. sa secinccccisniksneccsncectgvntieaiishateaalamnacenamiiannanens 5 EU. Rs Ts BE COD seesecasisneiiccctdecsenicclapneacceueaeeeias 3 Other Authorities Testimony of Steven A. Seelig, Director of the Di- vision of Liquidation at the FDIC, Before the Subcommittee on Transportation and Hazardous Materials of the Committee on Energy and Com- merce, U.S. House of Representatives (Aug. 2, NMG nM ee RN AE Rl EE 2 Testimony of David C. Cooke, Executive Director of the Resolution Trust Corporation, Before the Subcommittee on Transportation and Hazardous Materials of the Committee on Energy and Com- merce, U.S. House of Representatives (Aug. 2, | SE OMS ee IFFY et Sh waka ae: 2 IN THE Suprenw Court of the United States OCTOBER TERM, 1990 No. 90-504 FLEET FACTORS CoRrP., Petitioner, V. UNITED STATES OF AMERICA, Respondent. On Petition for a Writ of Certiorari to the United States Court of Appeals for the Eleventh Circuit REPLY BRIEF OF PETITIONER FLEET FACTORS CORP. Fleet Factors Corp. (“Petitioner”) the Eleventh Circuit. STATUTE INVOLVED ' The matter before the Court involves several sections of the federal Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”): (20) (A), 107(a) of CERCLA, 42 U.S.C.A. $§ 9601(20) (A), respectfully sub- mits this Reply Brief in support of its Petition for Writ of Certiorari to the United States Court of Appeals for $$ 101 2 9607(a) (West Supp. 1990). These are set forth ver- batim in the Petition for Writ of Certiorari. Petition at 2. In essence, this matter involves the proper inter- pretation of the CERCLA statute’s “secured creditor exemption,” an issue of significant national importance. ARGUMENT I. THE GOVERNMENT DOES NOT DENY THAT THIS CASE PRESENTS A QUESTION OF NA- TIONAL IMPORTANCE The Eleventh Circuit has rendered an incorrect decision on a vitally important question of federal law: whether CERCLA’s “secured creditor exemption” protects a se- cured lender from liability for environmental cleanup costs where the lender neither took title to any of the borrower’s property, nor participated in the day-to-day management of the facility in question. The government’s brief in opposition does not deny the importance of this issue, Indeed, severai of the government’s own agencies have acknowledged the significant and negative impact of the Eleventh Circuit’s decision on the nation’s financial insti- tutions. For example, an official of the Federal Deposit Insurance Corporation recently stated: “The FDIC is very concerned about nonculpable lenders’ potential lia- bility under [CERCLA]. ... The Fleet Factors decision may have an enormous impact on lenders.” Testimony of Steven A. Seelig, Director of the Division of Liquidation at the FDIC, Before the Subcommittee on Transportation and Hazardous Materials of the Committee on Energy and Commerce, U.S. House of Representatives 1, 12 (Aug. 2, 1990). See also Testimony of David C. Cooke, Executive Director of the Resolution Trust Corporation, Before the Subcommittee on Transportation and Hazard- ous Materials of the Committee on Energy and Com- merce, U.S. House of Representatives 4 (Aug. 2, 1990) (“The impact of [CERCLA] is highlighted and, to a 3 great extent, exacerbated by a recent case, United States v. Fleet Factors’). Moreover, the government’s brief acknowledges that the concern of the lending community resulting from the decision has attracted the attention of Congress and the U.S. Environmental Protection Agency (“EPA”). See Brief in Opposition at 18. The government concludes that the Court “might find it advisable to await the outcome of the|se] legislative and administrative proceedings.” Id, at 13. However, the prospect that these activities will correct the erroneous decision of the Eleventh Circuit is speculative at best. CERCLA was reauthorized for a period of three years at existing levels at the conclusion of the 101st Congress. Congress is therefore unlikely to visit CERCLA issues in the near future because it has several other major en- vironmental statutes to reauthorize in the meantime (i.e., the Clean Water Act and the Resource Conservation and Recovery Act). Any rulemaking by EPA construing CERCLA in a manner different from the Eleventh Cir- cuit’s decision will not have the effect of reversing or overruling the Court of Appeals. In addition, an EPA rule different from Fleet Factors presumably would not control a private cost recovery action under CERCLA. Il. SIGNIFICANT TENSION EXISTS BETWEEN THE ELEVENTH CIRCUITS DECISION IN FLEET FACTORS AND THE NINTH CIRCUIT'S DECISION IN BERGSOE METAL CORP. Significant tension exists between the Eleventh Circuit’s decision in the Fleet Factors case and the Ninth Circuit’s decision in the Bergsoe Metal Corp. case. See In re Berg- soe Metal Corp., 910 F.2d 668 (9th Cir. 1990); United States v. Fleet Factors Corp., 901 F.2d 1550 (1ith Cir. 1990). Therefore, review by the Court at this time is warranted. Sup. Ct. R. 10.1(a). 4 An absolute or definitive conflict among the circuits is not necessarily required for the Court to grant review. For example, in Dawson Chem. Co. v. Rohm and Haas Co., 448 U.S. 176, reh’g denied, 448 U.S. 917 (1980), the Court “granted certiorari . . . to forestall a possible con- flict in the lower courts and to resolve an issue of prime importance in the administration of the patent law.” /d. at 185. The Court explained that “|(tjhere |was] no di- rect conflict [in that case], but a number of decisions exhibited] some tension” on the patent issues involved. Id, at 185 n.4, The government has concluded erroneously that “the reasoning of the Ninth Circuit [regarding the “secured creditor exemption”] is entirely consistent with that of the Eleventh Circuit.” Brief in Opposition at 11. The inconsistency of the two circuits’ construction of the stat- ute is evident from the plain language of their decisions. The Eleventh Circuit expressly held the following: [A] secured creditor will be liable if its involvement with the management of the facility is sufficiently broad to support the inference that it could affect hazardous waste disposal decisions if it so chose. 901 F.2d at 1558 (emphasis added). The Ninth Circuit, on the other hand, reached a clearly different and more reasonable approach to CERCLA’s “secured creditor exemption.” Although the Ninth Circuit indicated that it would “leave for another day the establishment of a Ninth Circuit rule,” it went on to hold: What is critical [in deciding whether to impose lender liability] is not what rights the Port had, but what it did. The CERCLA security interest excep- tion uses the active “participating in management.” Regardless of what rights the Port may have had, it cannot have participated in management if it never exercised them. 910 F.2d at 672-73 (emphasis added). 5 Therefore, the Eleventh and Ninth Circuit’s views of when a secured lender falls outside the protection of the “secured creditor exemption” are patently at odds with each other. The measure of liability under the Eleventh Cireuit’s rule is the type of activity which the lender could have engaged in or affected. The measure of lia- bility according to the Ninth Circuit, however, is limited to the activity actually engaged in by the lender. If the two circuits’ approaches were consistent with each other, as the government contends, then the Ninth Circuit would have found the lender in the Bergsove case liable because the loan documents provided the lender with authority to affect the decision of the borrower. See 910 F.2d at 672-73. The question presented to the Court by Petitioner is, as noted above, of prime importance. Tension does exist between the federal circuits’ interpretations of CERCLA’s “secured creditor exemption.” Thus, this case is appro- priate for review by this Court. Ill, THE QUESTION PRESENTED IS RIPE FOR RE- VIEW AT THIS TIME In its opposition, the government focuses on the inter- locutory posture of this case, but fails to recognize that the broad rule announced by the court below is not fact- bound. See Brief in Opposition at 7-10. This is not an interlocutory case resting on disputed facts or conflicting affidavits; rather, this case presents a broad legal ruling that casts uncertainty over the settled commercial expec- tations of secured lenders. Thus, the interlocutory pos- ture of this case does not justify a denial of certiorari. An interlocutory ruling by a United States circuit court, including a denial of summary judgment, is ripe for review by the Court; and the decision to grant or deny a petition for certiorari is firmly grounded in the Court’s discretion. 28 U.S.C.A. § 1254(1) (West Supp. 1990) ; Sup. Ct. R. 10.1, 6 The government incorrectly intimates that a hard and fast litmus test exists for when a writ of certiorari will be granted or denied. Brief in Opposition at 8. The Court frequently grants review of interlocutory rulings regard- ing summary judgment motions. See Chan v. Korean Air Lines, Ltd., 109 S. Ct. 1676, 1678-79 (1989) (review of a denial of summary judgment on a damages limitation issue in a wrongful death action); Arizona v. Maricopa County Medical Soc’y, 457 U.S. 332, 336-37 (1982) (re- view of a denial of summary judgment on the issue of liability in an antitrust action). The cases cited by the government are inapposite, as none of them involved a summary judgment ruling. See Goodman v. Lukens Steel Co., 482 U.S. 656, 658-60 (1987); Brotherhood of Loco- motive Firemen and Enginemen v. Bangor & A. R.R., 389 U.S. 327, 327-28 (1967); Black v. Cutter Labora- tories, 351 U.S. 292, 295-96 (1956); Hami/ton-Brown Shoe Co. v. Wolf Bros. & Co., 240 U.S. 251, 253-54 (1916). The question presented to the Court by Petitioner is in fact particularly ripe for review at this time. The Eleventh Circuit has issued a final ruling which estab- lishes a far-reaching, new legal standard for CERCLA’s “secured creditor exemption.” See City of New Orleans v. Dukes, 427 U.S. 297, 301-03 (1976) ‘(under the anal- ogous but recently repealed § 1254(2), final ruling ripe for review although related issues still to be resolved on remand). Unless this legal standard is reviewed by the Court, the district court must apply this new but erro- neous rule on remand. Contrary to the government's contention, the application of this rule will require the district court to reverse its earlier grant of partial sum- mary judgment for Petitioner on the issue of liability for the time from February 1981 to June 1982. See Petition at 4, 19a-20a; Brief in Opposition at 9. The dispute in this case then is not over factual find- ings as the government intimates. Brief in Opposition ut 2-10. Rather, it is over the Eleventh Circuit’s final 7 and improper interpretation of the “secured creditor exemption” under CERCLA. Therefore, the Court should grant review to correct this substantial legal error before it is perpetuated. CONCLUSION For the substantial reasons stated in this Reply Brief and in Petitioner's Petition for a Writ of Certiorari, Petitioner, Fleet Factors Corp., requests the Court to grant the writ of certiorari to review the judgment of the Eleventh Circuit. Respectfully submitted, Dove as J. Goop GRIFFIN B. BELL LAURICE FIRENZE (Counsel of Record) RUSKIN, SCHLISSEL, Moscov, PATRICIA BARMEYER EvANs & FALTISCHEK, P.C. KING & SPALDING 170 Old County Road 1730 Pennsvivania Ave., N.W. Mineola, New York 11502 Washington, D.C. 20006 (516) 248-9500 (202) 737-0500 RIcHARD FE. MILEY Nixon, Yow, WALLER & CAPERS 1500 First Union Bank Building \urusta, Georgia 30910 (404) 722-7541 Attornens for Petitioner, Fleet Factors Corp. December 28, 1990 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385020_2869%3A3. Public record. Not legal advice.