Appendix — City of Loveland v. Board of Commissioners

Appendix A:

Appendix B:

Appendix C:

APPENDIX

TABLE OF CONTENTS

Opinion and Judgment, United

States Court of Appeals for the

sixth Circuit,

(September 15, 2010)

Opinion and Judgment, United

States District Court, Southern

District of Ohio, Western

Division,

(January 14, 2010) + 5

Order, United States Court of

Appeals for the Sixth Circuit,

(October 27, 2010) .......... 36a

APPENDIX A

RECOMMENDED FOR FULL-TEXT

PUBLICATION

Pursuant to Sixth Circuit Rule 206

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

No. 10-3116

[Filed September 15, 2010]

UNITED STATES OF AMERICA,

Plaintiff,

BOARD OF COMMISSIONERS OF

HAMILTON COUNTY, OHIO,

Platintiff-Appellee,

CITY OF CINCINNATI, OHIO,

Intervenor Plaintiff-Appellee,

VU.

CITY OF LOVELAND, OHIO,

Defendant-Appellant.

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Appeal from the United States District Court

for the Southern District of Ohio at Cincinnati.

Nos. 02-00107; 09-00029—S. Arthur Spiegel,

District Judge.

2a

Argued: August 6, 2010

Decided and Filed: September 15, 2010

Before: GUY and GRIFFIN, Circuit Judges;

HOOD, Senior District Judge.”

COUNSEL

ARGUED: Stephen P. Samuels, SCHOTTENSTEIN,

ZOX & DUNN CO., LPA, Columbus, Ohio, for

Appellant. Anthony L. Osterlund, VORYS, SATER,

SEYMOUR AND PEASE LLP, Cincinnati, Ohio, Louis

L. McMahon, MCMAHON DeGULIS LLP, Cleveland,

Ohio, for Appellees. ON BRIEF: Stephen P. Samuels,

Alan G. Starkoff, Kevin L. Murch, SCHOTTENSTEIN,

ZOX & DUNN CO., LPA, Columbus, Ohio, R. Guy

Taft, JosephJ. Braun, STRAUSS & TROY, Cincinnati,

Ohio, for Appellant. Anthony L. Osterlund, Mark A.

Norman, VORYS, SATER, SEYMOUR AND PEASE

LLP, Cincinnati, Ohio, Louis L. McMahon, MCMAHON

DeGULIS LLP, Cleveland, Ohio, for Appellees.

OPINION

GRIFFIN, Circuit Judge. Defendant City of

Loveland appeals the district court’s grant of judgment

on the pleadings in favor of plaintiff Hamilton County

* The Honorable Joseph M. Hood, Senior United States District

Judge for the Eastern District of Kentucky, sitting by designation.

3a

Board of Commissioners, effectively preventing

Loveland from terminating a 1985 sewage treatment

agreement. Loveland argues that the district court

lacked subject-matter jurisdiction and erred by

granting judgment on the pleadings. We disagree and

therefore affirm.

The City of Loveland, Ohio, is located in the greater

Cincinnati metropolitan area. In 1970, Loveland put

into operation its Polk Run Waste Water Treatment

Plant and sewer system (the “Polk Run System” or

“Polk Run Segment”), which provides services to

residents in three counties, including Hamilton

County. Loveland operated the Polk Run System from

1970 until 1985. In 1985, the City of Loveland and the

Board of County Commissioners of Hamilton County,

Ohio (the “Board”) entered into an agreement (the

“1985 Agreement”) by which the Board, through a

separate agreement with the Metropolitan Sewer

District of Greater Cincinnati (“MSD”), would

“maintain, repair and operate” the Polk Run System.

However, Loveland continued to own the “existing

facilities and improvements’ constituting the Polk Run

System as of the execution date of the 1985

Agreement. Pursuant to the 1985 Agreement, “[t}he

rates to be billed for sewerage service shall be those

rates ...established by the Board, which rates may be

modified by said Board from time to time” and “[t]he

rates for sewerage service shall be uniform throughout

the service area of the [MSD].”

In 2002, the United States, on behalf of the

Environmental Protection Agency, sued the Board and

the City of Cincinnati for violations of the Federal

4a

Clean Water Act. See United States v. Hamilton

County Bd. of Comm’rs, No. 1:02-cv-00107 (S.D. Ohio)

(the “consent decree case”). The State of Ohio joined

the federal action as a plaintiff, alleging violations of

counterpart state laws. The parties entered into a

partial settlement, which required the elimination of

longstanding and substantial sewage discharge from

the MSD-operated sewer system. Thereafter, the

Sierra Club sued the Board, claiming that the partial

settlement did not satisfactorily address the health

and environmental problems caused by the sewer

system. In June 2004, the Sierra Club lawsuit and the

original lawsuit were resolved by two consent decrees

approved by the United States District Court for the

Southern District of Ohio (collectively, the “consent

decree”). The consent decree requires the Board and

the City of Cincinnati to address capacity and

pollution problems within the MSD-operated sewer

system, which includes the Polk Run Segment, by

implementing infrastructure improvements through

the year 2022.

The entry of the consent decree was the

culmination of lengthy and complicated litigation. The

notice of the proposed consent decree, which included

an invitation for public comment, was published in The

Federal Register. Vhereafter, the district court

reviewed all public comments and held a hearing on

the proposed settlement. Following the hearing, the

district court entered the consent decree after ruling

that the settlement was fair, adequate, and in

compliance with the Clean Water Act. Loveland

neither participated in the hearing nor submitted

objections or comments regarding the proposed

settlement. However, as a consequence of the consent

decree, new obligations were imposed upon the MSD-

na

operated sewer system that have resulted in higher

rates for all users, including residents of Loveland,

whose sewer system has been operated by the Board

pursuant to the 1985 Agreement. Under the terms of

the consent decree, the district court “retainled|]

jurisdiction to enforce the terms and conditions and

achieve the objectives of this Consent Decree and to

resolve disputes arising hereunder as may _ be

necessary or appropriate for the construction,

modification, tmplementation or execution of this

Decree.”

In October 2008, Loveland sent a notice to the

Board indicating its intention to terminate the 1985

Agreement, effective December 31, 2009, and to

resume its independent operation of the Polk Run

System. Simultaneously, Loveland filed suit in the

Clermont County, Ohio, Court of Common Pleas

seeking a declaratory judgment, among other things,

and eventually asserting a claim for breach of contract.

City of Loveland, Ohio v. Bd. of Comm’rs of Hamilton

County, Ohto, No. 2008 CVH 02199 (C.P. Clermont

County, Ohio) (the “state court” action). Loveland’s

state court complaint alleged that, between 2003 and

2007, the sewer fees charged by the Board grew

dramatically, nearly double the State of Ohio average,

and would continue to rise because of the funding

necessary to comply with the obligations imposed by

the consent decree. Loveland also alleged that the

increased rates “disproportionately and_ unfairly

overcharged customers” in Loveland because the cost

of improvements required for the Polk Run Segment

were substantially less than the cost of improvements

nceded for the other sewer systems in the MSD

6a

The Board responded by filing the present action 1n

the United States District Court for the Southern

District of Ohio, seeking a declaratory judgment that

Loveland could not unilaterally terminate the 1985

Agreement and thereby acquire control over the MSD

Polk Run Segment. Loveland moved to dismiss the

Board’s complaint for lack of subject-matter

jurisdiction, arguing that it did not raise a federal

question and involved only a contract dispute arising

under Ohio law. Loveland argued that “any issues

related to the reasonableness of the termination of the

1985 Agreement will be addressed by the State Court

action,” and the federal suit constituted improper

“forum shopping.” The district court denied the motion

to dismiss, ruling that it possessed subject-matter

jurisdiction under 28 U.S.C. § 1331, holding that

“Loveland’s current efforts to modify its relationship

with MSD is directly related to its concerns about the

implementation of the Consent Decrees” and that the

Board “properly selected this forum to seek declaratory

judgment... .”

Thereafter, the state and federal suits proceeded on

parallel tracks. The Board moved to dismiss the state

suit, or alternatively, to stay the state action pending

the outcome of the federal case. In September 2009,

the Ohio Court of Common Pleas granted the Board’s

motion to dismiss. The state court ruled that Loveland

failed to state a claim either for a declaratory

judgment or for breach of the 1985 Agreement. It also

commented on the Board’s alternative request for a

stay, stating:

While the Court is not making a finding on the

motion to stay since it is now moot, the Court

would note that the issues involved in this case

Ja

are exactly the same as those involved in the

federal case. The federal court has clearly

accepted jurisdiction of Hamilton County’s

declaratory judgment action since it directly

affects the Consent Decrees in the previous

case. That declaratory judgment action asks the

federal court to resolve the same issue that

Loveland is asking this Court to resolve, 1.e.,

whether Loveland can terminate the 1985

agreement and regain control over the Polk Run

System. Since both courts are being asked to

resolve the same issue, the Court believes that

judicial economy and the risk of inconsistent

results mandate that only one court determine

that issue. The Court further believes that the

federal court is in a better position to make that

determination since any decision that this Court

would make would directly affect the Consent

Decrees, over which the federal court has

retained jurisdiction. Therefore, since federal

consent decrees are at issue, it would make

sense to have that court also resolve any issues

that have a direct impact on the implemen-

tation of those consent decrees.

Therefore, while not determining the motion to

stay, the Court strongly feels that the federal

court is currently in a _ better position to

determine those issues that have a direct

impact on the Consent Decrees. Had this Court

not dismissed the case, it would not have

considered the remaining state claims, if any,

until the resolution of the current federal

action.

8a

Loveland appealed the order of dismissal to the Ohio

Court of Appeals, where the appeal remains pending.

In the present case, the district court granted the

Board’s motion for judgment on the pleadings on

January 14, 2010. The court ruled that “Loveland’s

desire to cancel the 1985 agreement amounts to a

collateral attack on the Consent Decree|], to which it

never objected in 2004 when it had the opportunity to

do so.” The district court also noted “without question

that Loveland’s desire to terminate the 1985

agreement is rooted in the desire to insulate its

ratepayers from rate increases due to remediation

costs that under the Consent Decree[] will be borne

across the MSD system.” However, it held that the

doctrines of laches and equitable estoppel prevented

Loveland’s collateral attack on the consent decree

because Loveland had constructive notice of the

consent decree in 2004 but failed to object or comment,

and plaintiffs “have relied upon the assumption that

Loveland ratepayers were part of MSD’s global

system” in “craftling] the complex, multi-year

infrastructure improvements that have begun the

implementation of the remedies required by the

Consent Decree[].” Accordingly, the district court

granted the Board’s motion for judgment on the

pleadings; declared that Loveland “shall not be

permitted to unilaterally terminate its 1985 agreement

with the Board”; and enjoined Loveland “from

attempting to modify the Consent Decree in this

matter by collateral attack, through termination of the

1985 Agreement or otherwise, while Consent Decree

obligations are pending.” Loveland timely appeals.

9a

II.

On appeal, Loveland challenges the district court’s

subject-matter jurisdiction and its grant of judgment

on the pleadings. First, Loveland argues that the

district court lacked subject-matter jurisdiction over

the present action. It contends that the Board’s

request for declaratory relief involves no federal

question because it is a state-law contract dispute in

which the Board “is only seeking a determination that

Loveland may not unilaterally terminate the 1985

Agreement.” (internal quotation marks omitted). In

support of this argument, Loveland relies on City of

Warren v. City of Detroit, 495 F.3d 282 (6th Cir. 2007),

which it characterizes as “nearly identical to this case.”

In City of Warren, Warren filed a complaint in the

Circuit Court for the County of Macomb, Michigan,

alleging that Detroit, which provided Warren’s water,

breached its contractual obligation to charge

“reasonable” rates by raising its rates to pay for costs

associated with the obligations it assumed in a consent

decree with the EPA; Warren also alleged that Detroit,

in so doing, violated Mich. Comp. Laws § 123.141(2),

which required water rates to be based on the actual

cost of service as determined under the utility basis of

rate-making. Jd. at 284. Warren sought damages for

breach of contract, an injunction to prevent Detroit

from charging unreasonable rates, and an order

requiring Detroit to make an accounting of all factors

included in establishing the water rates. Id.

Detroit removed the case to the United States

District Court for the Eastern District of Michigan,

arguing that Warren’s action arose under the

judgments and orders entered pursuant to the federal

Clean Water Act and the federal Clean Air Act in

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United States v. City of Detroit, No. 77-71100, 2000 WL

371795 (E.D. Mich. Feb.7, 2000) and that removal was

necessary to protect the integrity of the orders in that

case. Id. at 285. Warren moved to remand to state

court. The district court denied Warren’s motion,

reasoning that the case was properly removed to

federal court pursuant to 28 U.S.C. § 1441(b) as

arising under federal law because Warren sought relief

that had an adverse effect upon or was inconsistent

with the federal consent decree. Jd. On appeal, this

court reversed. The City of Warren panel noted that

“folnly state-court actions that originally could have

been filed in federal court may be removed to federal

court by the defendant,” id. at 286 (quoting

Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987)),

and that Warren’s action could not have been

originally filed in federal court because it stated a

contract claim and a claim for violation of state

statute, id. We also concluded that having an adverse

impact on a consent decree was not enough to

establish federal question jurisdiction because, under

that logic, “a slip-and-fall case would be removable to

federal court because a damage award would affect

DWSD’s finances and consequently its ability to

comply with the consent judgment, a result that would

abrogate the well-pleaded complaint rule set forth in

Caterpillar and Franchise Tax Board.” Id.

The City of Warren panel concluded that there was

no substantial federal question jurisdiction because

“Warren’s contract claim alleges that Detroit has

included certain costs in the water rates that are not

reasonable, as required by the contract” and “Warren’s

statutory claim alleges that Detroit has included costs

in the water rates that are not included in the actual

cost of service as determined under the utility basis of

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rate-making, as required by Michigan statute.” Id. at

287. It explained that “[nJeither of these claims raises

a question of federal law because the consent

judgments entered in the EPA case lack the power to

supersede Warren’s contractual rights or the Michigan

statute.” Id. at 287. Finally, the court considered

whether Warren’s claim was “really” one of federal

law, i.e., an attempt “to defeat removal by omitting to

plead necessary federal questions in a complaint,” and

it concluded that it was not. Jd. (quoting Franchise Tax

Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 22

(1983)). The reason, the court explained, was that

there was “no allegation that Warren’s claims are

identical to federal claims, or are completely

preempted by federal law .. .” Jd. at 287.

We find City of Warren distinguishable. Here, in

contrast to City of Warren, the Board’s complaint

neither asks the court to interpret the terms of the

contract nor alleges a violation of a state statute;

rather, the Board seeks a determination that Loveland

may not terminate the 1985 Agreement in its entirety

because of the consent decree. Moreover, this case

involves more than simply the economic consequence

of the consent decree on non-parties; it involves the

attempted removal of property, the Polk Run Segment,

from the consent decree obligations. Cf Syngenta Crop

Protection, Inc. v. Henson, 537 U.S. 28, 33-34 (2002),

overruling Bylinski v. City of Allen Park, 169 F.3d

1001, 1002-03 (6th Cir.1999) (holding that there was

jurisdiction since suit “pose[d] an imminent threat to

the integrity of the [orders] because it could adversely

affect the financing mechanism in those orders”)

(emphasis added).

12a

To be sure, Loveland was not a party to the consent

decree. However, it cannot escape the district court’s

jurisdiction over its consent decree through artful

pleading and argument. Whether Loveland may

terminate the 1985 Agreement and escape the

financial impact of the consent decree as a non-party

is an issue to be resolved on the merits rather than by

a challenge to the district court’s jurisdiction. Unlike

City of Warren, which was a removal case for which

federal question jurisdiction under the well-pleaded

complaint rule was determined by reference to

Warren’s state court complaint, jurisdiction in this

case is based on the Board’s federal complaint for

declaratory judgment which requests that the district

court enforce its consent decree. Because the district

court retains jurisdiction to police its consent decrees,

Waste Mgmt. of Ohio, Inc. v. City of Dayton, 132 F.3d

1142, 1144-46 (6th Cir. 1997), we hold that the Board’s

complaint presents a federal question.

Furthermore, subject-matter jurisdiction properly

hes under the substantial federal question doctrine. In

Mikulski v. Centerior Energy Corp., 501 F.3d 555, 568

(6th Cir. 2007) (en banc) (citing Grable & Sons Metal

Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 314

(2005)), this court explained that a federal court has

subject-matter jurisdiction where: “(1) the state-law

claim ... necessarily raise[s] a disputed federal issue;

(2) the federal interest in the issue [is] substantial; and

(3) the exercise of jurisdiction [does] not disturb any

congressionally approved balance of federal and state

judicial responsibilities.” This case satisfies all three

criteria. The first factor is met because, insofar as this

declaratory judgment action is the inverse of

Loveland’s state law claim, it necessarily raises a

disputed federal issue: whether the federal Clean

l3a

Water Act consent decree requiring upgrades to the

Polk Run Segment can be modified by removal of that

portion of the sewer system from the consent decree

obligations. Because the consent decree applies to the

Polk Run Segment, it is impossible to resolve

Loveland’s request to terminate the 1985 Agreement

and the Board’s request for declaratory relief without

analyzing and interpreting the consent decree.

The second factor regards the substantiality of the

federal interest. In making this determination, we

consider whether: (1) the case includes a federal

agency; (2) the federal question is important; (3) the

decision on the federal question will resolve the case;

and (4) the decision will affect other cases. Mikulski,

501 F.3d at 570 (citation omitted). Here, there is a

substantial federal interest because (1) federal

agencies negotiated the consent decree upgrades to the

Polk Run System; (2) the consent decree was and is

intended to comply with a federal statute and impacts

thousands of ratepayers throughout the Cincinnati

metropolitan area; (3) the resolution of Loveland’s

obligations, if any, under the consent decree will

resolve the case because whether Loveland may

terminate the 1985 Agreement or terminate or modify

its obligations under the consent decree are

dispositive, not incidental, issues; and (4) the decision

on the federal question will have a broad impact

because, depending on the outcome of this litigation,

other entities may seek to circumvent consent

agreements entered into between the federal

government and cities around the nation to enforce the

Clean Water Act.

Finally, under the last prong of the substantial

federal question inquiry, we must “inquire into the

14a

risk of upsetting the intended balance by opening the

federal courts to an undesirable quantity of litigation.”

Mikulski, 501 F.3d at 573. In the present case, the

district court’s exercise of jurisdiction does not disturb

any congressionally approved balance of federal and

state judicial responsibilities. Because federal courts

are already charged with enforcing the Clean Water

Act, and federal consent decrees, by definition, stem

from a matter already within the court’s jurisdiction,

the district court’s exercise of jurisdiction over this

matter would not open the floodgates of litigation that

might overwhelm the federal courts. Indeed, a contrary

holding that the district court lacks jurisdiction could

allow litigants to use the state courts as a vehicle to

undermine a federal court’s ability to police its consent

decrees when the state-court action is, in Loveland’s

words, “the exact inverse” of the federal court action.

Moreover, at this juncture, the state court action has

been dismissed, although the judgment has been

appealed. As the state court explained when it

dismissed Loveland’s complaint:

“(T]he federal court is in a better position to

[decide the issues here] since any decision that

this Court would make would directly affect the

Consent Decrees, over which the federal court

has retained jurisdiction. Therefore, since

federal consent decrees are at issue, it would

make sense to have that court also resolve any

issues that have a direct impact on the

implementation of those consent decrees.”

15a

For these reasons, we hold that the district court

properly exercised subject-matter jurisdiction.’

Il.

Next, Loveland argues that the district court erred

in granting the Board’s motion for judgment on the

pleadings. Loveland asserts that it was not a party to

the consent decree and accordingly is not bound by it.

Further, it claims that the doctrines of laches and

equitable estoppel are “fact intensive” inquiries

inappropriate for disposition on the pleadings, and

such defenses are state law affirmative defenses more

properly asserted in a state action.

We review a district court’s grant of judgment on

the pleadings under Rule 12(c) using the same de novo

standard of review applicable to orders of dismissal

under Rule 12(b)(6). Tucker v. Middleburg-Legacy

Place, 539 F.3d 545, 549 (6th Cir. 2008). “For purposes

of a motion for judgment on the pleadings, all well-

pleaded material allegations of the pleadings of the

opposing party must be taken as true, and the motion

may be granted only if the moving party is

nevertheless clearly entitled to judgment.” Jd. (quoting

JPMorgan Chase Bank, N.A. v. Winget, 510 F.3d 577,

581 (6th Cir. 2007)). In this circuit, laches is “a

negligent and unintentional failure to protect one’s

* Loveland also argues that the All Writs Act, 28 U.S.C. § 1651,

and the Federal Declaratory Judgment Act, 28 U.S.C. §§ 2201 &

2202, did not confer jurisdiction upon the district court. In view of

our disposition of the case, and because we do not read the district

court’s opinion to rely on the All Writs Act or the Federal

Declaratory Judgment Act as a basis for subject-matter

junisdiction, we find it unnecessary to address these issues.

16a

rights.” Elvis Presley Enters., Inc. v. Elvisly Yours,

Inc., 936 F.2d 889, 894 (6th Cir. 1991). “A party

asserting laches must show: (1) lack of diligence by the

party against whom the defense is asserted, and (2)

prejudice to the party asserting it.” Herman Miller,

Inc. v. Palazzettt Imports & Exports, Inc., 270 F.3d

298, 320 (6th Cir. 2001). Equitable estoppel requires a

showing that there was: “(1) [a] misrepresentation by

the party against whom estoppel is asserted; (2)

reasonable reliance on the misrepresentation by the

party asserting estoppel; and (3) [a] detriment to the

party asserting estoppel.” Premo v. United States, 599

F.3d 540, 547 (6th Cir. 2010).

In this case, the district court ruled that judgment

on the pleadings was warranted in favor of the Board

because the doctrines of laches and equitable estoppel

barred Loveland from challenging the effects of the

consent decree. The court explained that Loveland

“has proffered no evidence demonstrating excusable

delay in asserting its claim, beyond attempting to

argue it lacked notice, while as a matter of law,

publication in the Federal Register constituted notice.”

United States v. Bd. of County Comm’rs of Hamilton

County, Ohio, Nos. 1:02-CV-00107, 1:09-CV-00029,

2010 WL 200326, at *5 (S.D. Ohio Jan. 14, 2010)

(citations omitted). It also concluded that

“[t}he parties to the Consent Decrees reasonably

relied on Loveland’s silence as they crafted the

complex, multiyear infrastructure improve-

ments that have begun the implementation of

the remedies required by the Consent Decrees

.... {and that] Loveland’s silence . . . misled

Defendants into relying on Loveland’s

participation in the global remedies called for by

l7va

the Consent Decrees, the Court finds Loveland

should be equitably estopped from withdrawing

from MSD until after full implementation of the

Consent Decrees.”

Id. Accordingly, the district court found that an

injunction was necessary because “inequity would

result if Loveland were permitted to enforce its now-

stale claim to terminate the 1985 agreement as such

termination would affect the implementation of the

Consent Decrees.” Id. We agree.

Loveland’s contention that it is not bound by the

consent decree, while accurate, is immaterial. For the

reasons detailed by the district court, Loveland

forfeited its rights to contest the effects of the consent

decree by unreasonably sitting on its rights. Loveland’s

actions of not objecting to the proposed consent decree,

declining to participate in the pre-approval hearings,

and allowing the expansion of the MSD Polk Run

Segment while obtaining its benefits for four years,

weigh heavily against Loveland’s claim of relief.

Loveland’s additional argument that the district court

erred in granting judgment on the pleadings because

laches and equitable estoppel are usually “fact

intensive” inquiries, see, e.g., Kourtis v. Cameron, 419

F.3d 989 (9th Cir. 2005) (overruled on other grounds);

Axcan Scandipharm Inc. v. Ethex Corp., 585 F. Supp.

2d 1067 (D. Minn. 2007), is similarly unpersuasive.

Here, there was no need for discovery, let alone a trial,

because it is undisputed that Loveland had

constructive notice of the proposed consent decree,

waited five years to bring its claim, and prejudiced the

Board by its delay.

l8a

Finally, Loveland asserts that laches and equitable

estoppel are affirmative defenses under state law that

the Board should assert in a state action. Assuming

arguendo that laches and equitable estoppel are state-

law affirmative defenses, Loveland has failed to

successfully challenge the federal judgment at issue.

The state court action was dismissed in favor of the

Board. Our review is not of the state court judgment,

but of the district court’s judgment. For purposes of

our review, the defenses of laches and equitable

estoppel were properly raised by the Board and ruled

upon by the district court.

IV.

For these reasons

district court.

we affirm the judgment of the

?

19a

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

No. 10-3116

[Filed September 15, 2010]

UNITED STATES OF AMERICA,

Plaintiff, )

BOARD OF COMMISSIONERS OF _ )

HAMILTON COUNTY, OHIO,

Plaintiff - Appellee,

CITY OF CINCINNATI, OHIO, )

Intervenor Plaintiff - Appellee, _)

Vv )

CITY OF LOVELAND, OHIO, )

Defendant - Appellant

Before: GUY and GRIFFIN, Circuit Judges; HOOD,

Senior District Judge

JUDGMENT

On Appeal from the United States District Court

for the Southern District of Ohio at Cincinnati

THIS CAUSE was heard on the record from the

district court and was argued by counsel

IN CONSIDERATION WHEREOF, it is ORDERED

that the judgment of the district court is AFFIRMED

20a

ENTERED BY ORDER OF THE COURT

/s/ Leonard Green _

Leonard Green, Clerk

APPENDIX B

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

[Filed January 14, 2010]

NO. 1:02-CV-00107 / NO. 1:09-CV-00029

UNITED STATES OF AMERICA, et al., _

Plaintiffs,

v.

BOARD OF COUNTY COMMISSIONERS

OF HAMILTON COUNTY, OHIO, et al.,

Defendants.

BOARD OF COUNTY COMMISSIONERS

OF HAMILTON COUNTY, OHIO,

Plaintiff,

V.

CITY OF LOVELAND, OHIO, et al.,

Defendants.

wee ee” a ~— ~—— ee ee ee

22a

OPINION AND ORDER

This matter is before the Court on the Board of

Commissioners of Hamilton County Ohio (the “Board”)

and the City of Cincinnati’s (“Cincinnati”) Motion for

Judgment on the Pleadings in Case No. 1:09-CV-0029

(doc. 373), Defendant City of Loveland’s (“Loveland”)

Response in Opposition (doc. 390), and the Plaintiffs’

Reply (doc. 392). Also before the Court is the Board’s

Motion for a Protective Order Staying Discovery

Pending a Decision on the Board’s Motion for

Judgment on the Pleadings and Motion to Amend

Pretrial Schedule (doc. 386), Cincinnati’s parallel

motion (doc. 387), Loveland’s Response in Oppostion

(doc. 391), and the Plaintiffs’ Replies (docs. 393, 394).

For the reasons indicated herein, the Court GRANTS

Plaintiffs’ Motion for Judgment on the Pleadings and

ENJOINS Defendant City of Loveland from

attempting to modify the Consent Decree in this

matter by collateral attack, through termination of the

1985 Agreement or otherwise, while Consent Decree

obligations are pending. The Court further DENIES as

MOOT the Plaintiffs’ Motions for Stay because its

judgment on the pleadings terminates the Loveland

matter, NO. 1:09-CV-00029, completely.

I. Background

On June 9, 2004, the Court entered Consent

Decrees' in United States v. Board, Case No.

' The Court entered two decrees: 1) the Consent Decree on

Combined Sewer Overflows, Wastewater Treatment Plants and

Implementation Capacity Assurance Plan for Sanitary Sewer

Overflows, and 2) the Interim Partial Consent Decree on Sanitary

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1:02-CV-00107, (the “sewer” case), which set in place

a framework for insuring that Defendants in such

case, the Board, Cincinnati, and the Metropolitan

Sewer District of Greater Cincinnati (“MSD”), address

capacity and pollution problems with their sewer

system, through the implementation of infrastructure

improvements through the year 2022 (docs. 129, 130,

131). The entry of the Consent Decrees came after a

long process, that included notification about the

Decrees by the United States through publication in

the The Federal Register, which solicited public

comment (doc. 129). After the Court reviewed all

comments, it conducted a hearing on the Consent

Decrees, finding them fair, adequate, and _ in

complhiance with the Clean Water Act (Id.).

Defendants’ sewer system currently includes the

Polk Run Waste Water Treatment Plant and Loveland

Service Area, which by a 1985 agreement with the

Board was consolidated into the MSD, modernized and

enlarged, and which is now known as the “MSD Polk

Run Segment” (doc. 343). There is no dispute that the

MSD Polk Run Segment is subject to the Consent

Decrees’ mandated improvements and repairs (Id.). On

October 29, 2008, the City of Loveland filed a

Complaint in the Clermont County Court of Common

Pleas, in which it alleged that compliance with the

Decrees will result in increased rates for all users (Id.).

Loveland sought declaratory judgment sanctioning

termination of the 1985 agreement, as well as the

grant of easements to the extent necessary such that

it could operate the Polk Run Segment (Id.).

Sewer Overflows. The Court uses the terms “Consent Decree” and

“Consent Decrees” interchangeably within this Order.

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On January 14, 2009, the Board brought suit in

this Court, Case No. 1:09-CV-00029, (the “Loveland”

case), seeking declaratory judgment on the issue of

whether Loveland could secede from the MSD and

obtain the Board’s interest in property subject to the

Consent Decree. The Court consolidated the Loveland

case and the sewer case on June 3, 2009, finding that

Loveland was “seeking to gain control over assets

directly involved in the Consent Decrees” (doc. 354).

On September 28, 2009, the Clermont County Court of

Sommon Pleas dismissed Loveland’s state court

action, holding that Loveland had failed to state a

claim for breach of the 1985 agreement, and that

because Loveland’s action directly affected the Consent

Decrees, judicial economy and the risk of inconsistent

results mandated that only one court rule on the

matter (doc. 386).

On September 14, 2009, the Board and Cincinnati

filed the instant motion for judgment on the pleadings

in Case No. 1:09-CV-00029, arguing that because

Loveland failed to object to the Consent Decrees

during the 2004 public comment period, it should be

enjoined from attempting to modify the Decrees by

removing its ratepayers from overall Consent Decree

obligations (doc. 373). Loveland has responded (doc.

390), and the Board and Cincinnati have replied (doc.

392), such that this matter is ripe for the Court’s

consideration.

Il. Applicable Legal Standard

The Court may grant a party’s motion for judgment

on the pleadings under Federal Rule 12(c) if it

determines that the moving party is entitled to

judgment as a matter of law. In arriving at such

va

determination, “all well-pleaded material allegations

of the pleadings of the opposing party must be taken

as true, and the motion may be granted only if the

moving party is nevertheless clearly entitled to

judgment.” Tucker v. Middleburg-Legacy Place, 539

F 3d 545, 549 (6™ Cir. 2008). In its evaluation, the

Court may consider the “pleadings, which consist of

the complaint, the answer, and any written

instruments attached as exhibits.” Felix v. Dow

Chemical Co., No. 2:07-CV-971, 2008 WL 207857, *1

(S.D. Ohio Jan. 23, 2008). The Court may also

“consider materials in addition to the pleadings

without converting the motion to one for summary

judgment if the materials are public records or are

otherwise appropriate for the taking of judicial notice.”

Id. at *1.

II. Analysis

Movants contend that Loveland’s present attempt

to terminate the 1985 agreement between it and the

Board is nothing but a collateral attack on the Consent

Decrees so as to avoid the obligations of such Decrees

(doc. 373). Citing Loveland’s state court Complaint,

Movants contend Loveland’s stated goal is to avoid

rate increases made necessary by the Board’s

obligations under the Consent Decrees, by terminating

the 1985 agreement (Id.). Movants further contend

Loveland failed to submit public comments in 2004

regarding the Consent Decrees, nor did it participate,

file any submissions, or appear at the Court’s May

2004 hearing regarding entry of the Consent Decree

(Id.). In Movants’ view, there is no question based on

Loveland’s state court complaint, and further, based

on its public statements, of its intention to extract a

portion of MSD from the Board’s unified efforts to

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comply with the Consent Decrees (Id.). If Loveland

would be allowed to terminate the 1985 agreement,

argue Movants, then there would be less money

available for MSD operations and Consent Decree

projects, which would likely result in undesired

extensions to completion of such projects (Id.).

Therefore, argue movants, the Court should issue an

Order, based on the Consent Decrees, the pleadings in

this matter, and the doctrines of laches and estoppel,

declaring that Loveland cannot modify the Consent

Decrees by terminating the 1985 agreement, or

otherwise, while the Consent Decrees are pending

(Id.).

Movants argue that by its express terms, the

Consent Decrees do not allow modification by a

non-party, and there is no dispute that Loveland is not

a party to such Decrees (Id.). They also contend that

because any termination of the 1985 agreement would

cause a change in “interest in or operating role with

response to” the MSD Polk Run Segment, the Consent

Decrees would necessarily require modification so as

to make Loveland a party subject to Consent Decree

requirements (Id.). Because none of the current parties

to the Consent Decrees are seeking to modify the

Consent Decrees in the manner that Loveland seeks,

and because Loveland is not a party to such Decrees,

Movants argue Loveland should not be able to force

any modification during the pendency of the Decrees

(Id.).

Movants argue their position is supported by the

doctrine of laches, as Loveland “sat silently for nearly

five years,” while the Board and Cincinnati made

substantial commitments to develop and implement

measures to ensure compliance with the Decrees (1d.).

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In movants’ view, “a party may not, by silence, create

an impression of acquiescence that leads others to

make substantial commitments” (Id. quoting Hadix v.

Johnson, 66 F.3d 325 (6th Cir. 1995). Similarly,

movants argue that Loveland’s silence during the

notice and public comment period should give rise to

equitable estoppel barring Loveland from terminating

the 1985 agreement (Id. citing Great North Savings

Co. v. Ingarra, 66 Ohio St. 2d 503 (1981), First Federal

Sav. & Loan Ass’n of Toledo v. Perry’s Landing, Inc.,

463 N.E. 2d 636, 647 (Ohio Ct. App. 1983)).

Loveland responds that though it does not dispute

that it did not make any formal objection to the

Consent Decree, that fact alone should not preclude it

from terminating the 1985 agreement and resuming

control of the sewage plant, which it owns (doc. 390).

Loveland argues there is no evidence in the record

contradicting its assertion that it will do everything

required by the Consent Decree, including becoming a

party thereto (Id.).

Loveland argues movants make numerous

statements of purported fact that are unsupported by

the record, including that Loveland seeks to modify the

Consent Decree, carve out MSD ratepayers, and that

Loveland received notice of the Consent Decree (Id.).

Loveland contends the movants merely conjecture

about what “may” or “might” happen in the future such

that they are not entitled to judgment as a matter of

law (Id.).

Loveland states it is not seeking to modify the

Consent Decrees, but that it “will voluntarily become

party to the Consent Decree. . .and [it] will satisfy any

and all obligations related to the Polk Run Plant and

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the Polk Run System” (Id.). Loveland argues the terms

of the Consent Decree allows for a successor-in-

interest, a role that it could take in assuming Polk Run

obligations (Id.).

Loveland argues movants improperly invoke the

doctrine of laches, as there is no authority supporting

movants’ contention that Loveland may not terminate

a private contractual agreement like the 1985

agreement due to a failure to comment on the Consent

Decrees (Id.). Loveland argues there is no evidence it

was aware of the Federal Register notice, and in any

event, such notice provided only a general overview of

the history leading up to the Decree and contract

information for any comments (Id.).

Even if the doctrine of laches applies, Loveland

contends, the Court would have to resolve factual

issues regarding the requisite “proof of lack of

diligence,” on Loveland’s part (Id.). Moreover, argues

Loveland, it should be given the opportunity to explain

why it did not participate in the public comment period

in 2004 (Id.).

As for equitable estoppel, Loveland similarly argues

that several issues of fact preclude judgment on the

pleadings (Id.). Loveland contends that the issue of

movants’ reliance on Loveland’s lack of objection is an

issue of fact (Id.). Loveland reiterates its position that

there is no evidence it had notice of the Consent

Decree (Id.). In any event, Loveland argues the

comment period in 2004 should not be considered the

time-frame for notice, as the parties to the Consent

Decree did not file until June 8, 2009, the Wet

Weather Improvement Plan, which details the projects

to be performed, the schedule, and the costs (Id.).

29a

Movants reply that Loveland does not dispute any

material fact set forth in the Complaint (doc. 392). As

Movants see it, there is no dispute that the Polk Run

Plant and Segment are part of the Consent Decree,

that Notice of the Consent Decree was provided in the

Federal Register, that Loveland submitted no

comments nor participated in the Court’s hearing on

the motion for entry of the Consent Decree, and that

Loveland is now trying to terminate the 1985

agreement so as to remove its ratepayers and insulate

them from planned rate increases resulting from the

Consent Decrees (Id.). Movants further argue there is

no dispute that Loveland is not party to the Consent

Decree, that any change of interest or operating role

with regard to the Polk Run Plant/Segment would be

governed by the Consent Decree and would require

modification thereof, and that no party to the Consent

Decree has moved to modify the Consent Decree (Id.).

Movants argue that Loveland attempts to

manufacture factual disputes that are all simply

immaterial to the question of whether Loveland, which

failed to object during the Consent Decree comment

period, can terminate the 1985 agreement and require

modification of the Consent Decree (Id.). Movants

argue the doctrine of laches is indeed applicable to this

case, as laches is “the neglect to assert a right or a

claim,” something which Loveland failed to timely

accomplish in failing to assert its claimed right to

terminate the 1985 agreement (Id. quoting Kansas v.

Colorado, 514 U.S. 673, 687 (1985)). Movants further

argue that Loveland’s contention regarding a lack of

evidence that it received notice of the Consent Decrees

falls flat because publication of such notice in the

Federal Register constitutes notice as a matter of law

(Id. citing 44 U.S.C. § 1507, Wolfson v. United States,

30a

204 Ct. Cl. 83, 492 F.2d 1386, 1392 (1974)(publication

in the Federal Register provides legal notice of an

action to all who may be affected thereby)). Movants

argue they have performed substantial Consent Decree

duties, over the course of five years, based on the

assumption that the Polk Run Plant and Segment

would be part of MSD, and that the resulting revenues

would be available to help fund the Consent

Decree-required capital improvements (Id.). Movants

argue that allowing Loveland to raise its asserted

contract rights at this point would be extraordinarily

prejudicial (Id.).

Having reviewed this matter, the Court finds

movants’ position well-taken that Loveland’s desire to

cancel the 1985 agreement amounts to a collateral

attack on the Consent Decrees, to which it never

objected in 2004 when it had the opportunity to do so.

The Court therefore finds the doctrines of laches and

of equitable estoppel applicable to this case, for all of

the reasons articulated by movants. Even the sewer

case Plaintiff, the United States, when the Court was

considering consolidation of the sewer case with the

Loveland matter, stated “the regulators believe that

the appropriate time for Loveland to have raised these

issues was during the consent decree negotiation

process, or at least during one of the two public notice

and comment periods for the decrees. Yet Loveland did

not” (doc. 346, fin. 1).

Aithough Loveland is correct that the Consent

Decree envisioned the possibility of successors-in-

interest to the Board, it is not correct that any

non-party could acquire such an interest without the

consent or action of a party to the Decree. Here, no

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party to the Consent Decree seeks the changes

proposed by Loveland.

The Court finds without question that Loveland’s

desire to terminate the 1985 agreement is rooted in

the desire to insulate its ratepayers from rate

increases due to remediation costs that under the

Consent Decrees will be borne across the MSD system.

Loveland’s state court complaint and its _ public

statements, of which the Court takes judicial notice,

establish as much. Even Loveland’s statement that it

has no intent to modify the Consent Decree rings

hollow because although it states it “will satisfy any

and all obligations related to the Polk Run Plant and

the Polk Run System,” its current obligations under

the Consent Decree, which were forseeable in 2004,

are larger. The Court finds no genuine dispute that

Defendants in the sewer case have relied upon the

assumption that Loveland ratepayers were part of

MSD’s global system. It is further without question

that as a matter of law, Loveland had notice of the

Consent Decrees in 2004, but failed to comment or

participate at such time. Under these circumstances,

the Court finds movants entitled to declaratory

judgment as a matter of law, barring Loveland from

seeking to terminate the 1985 agreement or in any

other way modifying the Consent Decrees, during their

pendency.

1V. Conclusion

The Court finds that even while taking Loveland’s

arguments as true, the movants in this matter are

entitled to judgment on their pleadings. Inequity

would result if Loveland were permitted to enforce its

now-stale claim to terminate the 1985 agreement as

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such termination would affect the implementation of

the Consent Decrees. Loveland has proffered no

evidence demonstrating excusable delay in asserting

its claim, beyond attempting to argue it lacked notice,

while as a matter of law, publication in the Federal

Register constituted notice. 44 U.S.C. § 1507, Wolfson

v. United States, 204 Ct. Cl. 83, 492 F.2d 1386, 1392

(1974). Loveland had notice of the Consent Decrees in

2004 and did nothing. The parties to the Consent

Decrees reasonably relied on Loveland’s silence as they

crafted the complex, multiyear’ infrastructure

improvements that have begun the implementation of

the remedies required by the Consent Decrees. As

such, doctrine of laches applies to this matter. Gardner

v. Panama R.R. Co., 342 U.S. 29, 30-31 (1951). For the

same reasons, especially Loveland’s silence that

innocently misled Defendants into relying = on

Loveland’s participation in the global remedies called

for by the Consent Decrees, the Court finds Loveland

should be equitably estopped from withdrawing from

MSD until after full implementation of the Consent

Decrees. First Federal Sav. & Loan Ass’n of Toledo v.

Perry’s Landing, Inc., 463 N.E. 2d 636, 647 (Ohio Ct.

App. 1983).

Accordingly, the Court GRANTS the Board of

Commissioners of Hamilton County Ohio and the City

of Cincinnati’s Motion for Judgment on the Pleadings

in Case No. 1:09-CV-0029 (doc. 373), DECLARES that

the Defendant City of Loveland shall not be permitted

to unilaterally terminate its 1985 agreement with the

Board, and ENJOINS the City of Loveland from

attempting to modify the Consent Decree in this

matter by collateral attack, through termination of the

1985 Agreement or otherwise, while Consent Decree

obligations are pending. The Court further DENIES as

Ja

MOOT the Plaintiffs’ Motions for Stay (docs. 386, 387)

because its judgment on the pleadings terminates the

Loveland matter, NO. 1:09-CV-00029, completely. The

Clerk ts directed to dismiss Case No. 1:09-CV-0029

from the Court’s docket

SO ORDERED

Dated: January 13, 2010 s/S. Arthur Spiegel

5. Arthur Spiegel

United States

senior District Judge

34a

A0450 (Rev. 5/85) Judgment in a Civil Case

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

Case Number: 1:09-CV-000029

[Filed January 14, 2010]

BOARD OF COUNTY COMMISSIONERS

OF HAMILTON COUNTY, OHIO,

Plaintiff

V.

CITY OF LOVELAND, OHIO, et al.,

Defendants.

we ee ee a a a — — ~~ Se

JUDGMENT IN A CIVIL CASE

O Jury Verdict. This action came before the Court

for a trial by jury. The issues have been tried and

the jury has rendered its verdict.

Yi Decision by Court. This action came to trial or

hearing before the Court. The issues have been

tried or heard and a decision has been rendered.

IT IS ORDERED AND ADJUDGED

..the Court GRANTS the Board of Commissioners of

Hamilton County Ohio and the City of Cincinnati's

Motion for Judgment on the Pleadings in Case No.

35a

1:09-CV-0029 (doc. 373 in Case No. 1:02-cv-00107),

DECLARES that the Defendant City of Loveland shall

not be permitted to unilaterally terminate its 1985

agreement with the Board, and ENJOINS the City of

Loveland from attempting to modify the Consent

Decree in this matter by collateral attack, through

termination of the 1985 Agreement or otherwise, while

Consent Decree obligations are pending. The Court

further DENIES as MOOT the Plaintiffs’ Motions for

Stay (docs. 386 and 387 in Case No. 1:02-cv-00107)

because its judgment on the pleadings terminates the

Loveland matter, NO. 1:09-CV-00029, completely. The

Clerk is directed to dismiss Case No. 1:09-CV-0029

from the Court’s docket.

- _ 1/14/2010 JAMES BONINI, CLERK

Date Clerk

s/ Kevin Moser ___

(By) Deputy Clerk

APPENDIX C

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

No. 10-3116

[Filed October 27, 2010]

UNITED STATES OF AMERICA.

Plaintiff,

BOARD OF COMMISSIONERS

OF HAMILTON COUNTY, OHIO, )

Plaintiff-Appellee, )

CITY OF CINCINNATI, OHIO,

intervenor Plaintiff-Appelle¢

CITY OF LOVELAND, OHIO,

Defendant-Appellant

aon

ofa

ORDER

BEFORE: GUY and GRIFFIN, Circuit Judges; and

HOOD, District Judge.”

The court having received a petition for rehearing

en banc, which was circulated to all active judges of

this court, none of whom requested a vote on the

suggestion for rehearing en banc, the petition for

rehearing has been referred to the original panel. The

panel has further reviewed the petition for rehearing

and concludes that the issues raised in the petition

were fully considered upon the original submission and

decision of the case. Accordingly, the petition is denied.

ENTERED BY ORDER OF THE COURT

/s/ Leonard Green

Leonard Green, Clerk

* Hon. Joseph M Hood, Senior United States District Judge for

the Eastern District of Kentucky, sitting by designation