Opposition Brief — Gurley v. United States

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No. 94-2009

4 CLERK

_ Sn the Supreme Court of the Gnited States

a OcTOBER TERM, 1995

WILLIAM M. GURLEY, PETITIONER

oe v.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

‘a BRIEF FOR THE UNITED STATES IN OPPOSITION

i Drew §. Days, Ill

+s Solicitor General

ciyhe Lois J. SCHIFFER

ie Assistant Attorney General

Ss J. CAROL WILLIAMS

JEFFREY P. KEHNE

Attorneys

2 Department of Justice

“ Washington, D.C. 20530

iy (202) 514-2217

QUESTION PRESENTED

Whether the court of appeals correctly held that an

earlier action under the Clean Water Act, 33 U.S.C.

1251 et seq., in which petitioner was not a party, did

not preclude a subsequent action against petitioner

under the Comprehensive Environmental Response,

Compensation, and Liability Act of 1980, 42 U.S.C.

9601 et seq.

(I)

TABLE OF CONTENTS

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TABLE OF AUTHORITIES

Cases:

Dandridge v. Williams, 397 U.S. 471 (1970) ..................

Dedham Water Co. v. Cumberland Farms Dairy, Inc.,

Se Be EE Ae GRE MID Sn ciiccevcccepeeceeccossecconcienccceee

Drier vy. Tarpon Oil Co., 522 F.2d 199 (5th Cir. 1975) ....

Headley v. Bacon, 828 F.2d 1272 (8th Cir. 1987) ...........

Kaiser Aluminum & Chem. Corp. v. Catellus Dev. Corp.,

SE SE IE CE, RIMMED sovicsh ascsvsvesvaissessosecccesncsccveess

Montana v. United States, 440 U.S. 147 (1979) ............

Nevada v. United States, 463 U.S. 110 (1983) ...........0...

New York v. Shore Realty Corp., 759 F.2d 1032 (2d Cir.

1985) ....... as a a abanadeenteneeecde

Pennsylvania v. Union Gas Co., 491 U.S. 1 (1989) ........

Riverside Market Dev. Corp. v. International Bldg.

Prods., Inc., 931 F.2d 327 (5th Cir.), cert. denied,

Neen oa cca eetentnhinbcsesinedneces

Roy v. City of Augusta, 712 F.2d 1517 (1st Cir. 1983) ..

Sidag Aktiengesellschaft v. Smoked Foods Prods. Co.,

Be re Be ee Ge FOOD oi ericsccncccscssisecccccnsenesssneseccons’e

Sidney S. Arst Co. v. Pipefitters Welfare Educ. Fund,

ME NE PEM UD pcre cdandcncnvedencscsorccedsnasocerscoses

Singleton v. Wulff, 428 U.S. 106 (1976) .............. cece eee

Teltronics Services, Inc., In re, 762 F.2d 185 (2d Cir.

i iain ocdblilieteabddiesunstdteotevereersoenes

United States v. Aceto Agric. Chems. Corp., 872 F.2d

i sad cenvsesinhonsnceindiesttbence

(111)

Cases—Continued: Page

United States v. Caldwell, No. J-C-83-399 (E.D. Ark.

Pek. IR, SED savccnnsnco csv haasnaeantoleelaiiaaaeieie 4,5, 11

United States v. Mendoza, 464 U.S. 154 (1984) ............. 12

United States v. New York Telephone Co., 434 U.S. 159

CRG ED viasinnccsdcusweincesuunanipenanacransecin anaemic tale 8

United States v. Northeastern Pharmaceutical & Chem.

Co., 810 F.2d 726 (8th Cir. 1986), cert. denied, 484 U.S.

BEG CIGSDD viccvschescdgticsieclende abit aes 9

United States v. Ottati & Goss, Inc., 900 F.2d 429 (1st

CO: TOD caciinddssidiseshickssascdocndannscaina ae 2

Statutes and regulation:

Comprehensive Environmental Response, Compensation,

and Liability Act of 1980, 42 U.S.C. 9601 et seq. ............ 2

SFG a ie ee tarde scat ecrertintieaacscticn ane 2

S TIDY SE UB BOND anne ccbssciscciccessensiesazecess 6

Federal Water Pollution Control Act, 33 U.S.C. 1251

et seq.:

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Be Teas ID -oblnacihciakpehenes Maat kaksichicebnasbrgsinabanctnahinniomiens 3

a Pasian acne bibs cissdntapnntins exteiannceiinis Vibeniininaain 3

Miscellaneous:

1B J. Moore & J. Lucas, Moore’s Federal Practice

LIST ccousccsechichetsthstebasiosbadioicuskagebnishin delisiarniiabadiiiantchasintaaabetbaieathenaciiaten 13

Restatement (Second) of Judgments (1982):

TUE: Hh sada ovinsith SGibinienensaicev aochdieandeiaaadtaneiaecustahaaadenaabneiantins 11

Ps Ie aiid denicacetiediidictseitadiaesteaiviattlbaibiahapaitenaliatibinnaiiitestlagiiianbitiire 14

18 C. Wright, A. Miller & E. Cooper, Federal Practice

inde FCRNIS CIGE P scccicacereses soncnsccinasstsaesecessistiassensiins 7, 11

In the Supreme Court of the Giuted States

OCTOBER TERM, 1995

No. 94-2009

WILLIAM M. GURLEY, PETITIONER

UNITED STATES O \MERICA

ON PETITION FOR A WR. CERTIORARI

TO THE UNITED STATES COv ° OF APPEALS

FOR THE EIGHTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. A1-

A29) is reported at 43 F.3d 1188. The district court’s

memorandum and order entering judgment against

petitioner (Pet. App. A52-A81) is reported at 788 F.

Supp. 1473. The district court’s memorandum and

order granting partial summary judgment against

petitioner (Pet. App. A30-A51) is unreported.

JURISDICTION

The judgment of the court of appeals was entered on

December 28, 1994. A petition for rehearing was

denied on March 9, 1995. Pet. App. A838. The petition

for a writ of certiorari was filed on June 6, 1995. The

jurisdiction of this Court is invoked pursuant to 28

U.S.C. 1254(1).

(1)

STATEMENT

The Comprehensive Environmental Response,

Compensation, and Liability Act of 1980 (CERCLA),

42 U.S.C. 9601 et seqg., establishes a _ uniform

framework for addressing the problem of inactive

hazardous-waste sites throughout the United States.

“CERCLA both provides a mechanism for cleaning up

hazardous-waste sites, 42 U.S.C. §§ 9604, 9606 * * *,

and imposes the costs of the cleanup on those re-

sponsible for the contamination, § 9607.” Pennsyl-

vania v. Union Gas Co., 491 U.S. 1, 7 (1989). The

President’s authority under CERCLA, most of which

has been delegated to the Environmental Protection

Agency (EPA), includes the power to compel clean-

up actions by responsible parties or to undertake

a federal response and recover expenses from re-

sponsible parties. 42 U.S.C. 9604, 9606-9607 (1988 &

Supp. V 1993); see also United States v. Ottati &

Goss, Inc., 900 F.2d 429, 433 (1st Cir. 1990) (describ-

ing federal response options). “CERCLA places the

ultimate responsibility for clean up on ‘those

responsible for problems caused by the disposal of

chemical poisons, ” by authorizing the United States,

as well as any other party that incurs eligible

response costs, to recoup expenses through cost-

recovery actions against liable parties identified in

Section 107(a) of CERCLA, 42 U.S.C. 9607(a). United

States v. Aceto Agric. Chems. Corp., 872 F.2d 1373,

1377 (8th Cir. 1989) (quoting Dedham Water Co. v.

Cumberland Farms Dairy, Inc., 805 F.2d 1074, 1081

(1st Cir. 1986)); accord Kaiser Aluminum & Chem.

Corp. v. Catellus Dev. Corp., 976 F.2d 1338, 1340 (9th

Cir. 1992).

Liability under Section 107(a) extends to several

classes of responsible parties, including persons who

have owned or operated facilities at times when

hazardous substance disposal occurred. “Persons”

liable under Section 107(a)(2) include individuals

who operate hazardous-waste facilities on behalf of

corporations.’

1. Petitioner is president and principal shareholder

of the Gurley Refining Company, Inc. (GRC or the

Company). For several years, ending in 1975, GRC

re-refined used oil at a plant in West Memphis,

Arkansas. Pet. App. A38, A30-A31. Wastes from the

re-refining process contained barium, lead, zinc, poly-

chlorinated biphenyl compounds (PCBs), and sulfuric

acid, all of which are classified as hazardous sub-

stances under CERCLA, 42 U.S.C. 6903(5); 40 C.F.R.

116.4. Pet. App. A3. In 1970, after state regulators

ordered GRC to cease discharging its wastes into the

Mississippi River and other Arkansas waterways,

GRC negotiated a lease with R.A. Caldwell to dispose

of its wastes on Caldwell’s property near Edmondson,

Arkansas. Ibid.

The disposal site, known as the Gurley Pit, is

located about 200 yards from Fifteen Mile Bayou, a

tributary of the St. Francis and Mississippi Rivers.

Pet. App. A31. In 1975, shortly after GRC was con-

victed in state court for illegally pumping contam-

1 See, e.g., Sidney S. Arst Co. v. Pipefitters Welfare Educ.

Fund, 25 F.3d 417, 420 (7th Cir. 1994); New York v. Shore

Realty Corp., 759 F.2d 1032, 1052 (2d Cir. 1985); see also

Riverside Market Dev. Corp. v. International Bldg. Prods., Inc.,

931 F.2d 327, 330 (5th Cir.) (corporate officers personally liable

if they qualify as CERCLA operators), cert. denied, 502 U.S.

1004 (1991).

inated water from the pit (7d. at A56-A57; U.S. C.A.

App. 6), the Company altered its operations to

cease generating the acidic sludge and contaminated

filtering material that it had been sending to the

Gurley Pit (U.S. C.A. App. 8, 72-74). GRC then closed

the pit and terminated its lease. Pet. App. A3. Prob-

lems with releases of hazardous substances at the

site continued, however. Overflows of contaminated

water from the Gurley Pit occurred in 1978 and 1979,

polluting nearby surface water and damaging wildlife

habitat. Ibid.

2. In early 1978, federal and state inspectors no-

tified GRC and site-owner Caldwell that a discharge

had occurred and asked them to take prompt action to

clean up and contain the wastes. When GRC and

Caldwell failed to act, EPA performed the work

pursuant to its limited removal authority under

Section 311 of the Federal Water Pollution Control

Act (Clean Water Act or CWA), 33 U.S.C. 1321 (1988

& Supp. V 1993). See Pet. App. A3, A31. In spite of

EPA’s initial CWA response, however, heavy rains in

April 1979 caused a second overflow. During the

second incident, nearly 500,000 gallons of oily wastes

were released from the Gurley Pit, triggering a

second round of EPA containment, cleanup, and

disposal efforts pursuant to the CWA. 7d. at A5, A31,

A57.

In late 1983, the United States filed suit against

Caldwell and GRC under Section 311(f)(2) of the

CWA, seeking to recover the costs of the federal

cleanup efforts. In October 1985, the district court

granted the United States’ cost-recovery claim.

United States v. Caldwell, No. J-C-83-399 (E.D. Ark.

Oct. 30, 1985) (reprinted in Pet. C.A. Br. Adden. 37-

45). The district court ruled that GRC and Caldwell

were jointly and severally liable under Section

311(f)(2) for response costs totalling $76,758.60, and

that GRC was responsible for Caldwell’s share under

the terms of an earlier indemnification judgment.

Slip op. 8-9 (Pet. C.A. Br. Adden. 44-45). There was no

appeal.

3. Following its initial cleanup and containment

actions under the CWA, EPA acted, pursuant to its

broader response authority under CERCLA, to im-

plement a more permanent remedy for the persistent

environmental threats posed by the Gurley Pit. EPA

added the pit to its National Priorities List for

CERCLA cleanups in August 1983 (Pet. App. A4,

A58), and in May 1985, the agency completed a

Remedial Investigation that provided a detailed

evaluation of the nature and magnitude of the threat

(7d. at A58). In April 1986, EPA completed a

Feasibility Study that evaluated alternative ap-

proaches to the containment of remaining wastes.

The approach adopted by EPA called for stabilization

of contaminated sludges and soils, followed by on-site

disposal in a secure landfill. Jd. at A58-A59.

4. In November 1987, the United States filed the

present action under CERCLA to establish liability

for the Gurley Pit remedy and to recover its response

costs. GRC and petitioner were among the defen-

dants. The complaint sought reimbursement for

response costs already incurred under CERCLA, and

a declaration that the defendants also would be liable

for future costs. On June 14, 1990, the district court

entered a final opinion and order disposing of a

number of issues in advance of trial. Pet. App. A30-

A5l. The order rejected arguments by GRC and

petitioner that the judgment in United States v.

Caldwell, the earlier CWA action, barred the

CERCLA claims against them under principles of

claim preclusion. /d. at A37-A38. The court ruled that

the CWA and CERCLA actions were distinct for

claim preclusion purposes and that, in any event,

CERCLA specifically authorizes successive cost-

recovery actions. I[bid.; see also id. at A64 (reaffirm-

ing claim preclusion ruling in later order). In March

1992, following a bench trial, the court entered an

opinion and order rejecting the defendants’ remaining

liability defenses and their challenges to EPA’s cost

claims. Jd. at A52-A81. The court found GRC,

petitioner, and defendant Larry Gurley jointly and

severally liable for the United States’ past and future

CERCLA response costs at the Gurley Pit.

5. The court of appeals affirmed in part, reversed in

part, and remanded. Pet. App. Al-A29. A majority of

the panel agreed with GRC’s contention that the

United States’ CERCLA suit pressed the “same cause

of action” against GRC that had been decided against

the Company in United States v. Caldwell. The

majority rejected the United States’ arguments that

its CWA and CERCLA claims should be considered

distinct for claim preclusion purposes, and that

Section 113(g)(2) of CERCLA, 42 U.S.C. 9613(g)(2),

removed any common law restrictions on claim

splitting as a bar to its CERCLA action. Section

113(g)(2), the majority concluded, is strictly limited to

successive CERCLA actions for the recovery of

CERCLA response costs. Pet. App. A17-A18. Accord-

ingly, the majority reversed the district court’s impo-

sition of CERCLA liability on GRC?

2 Judge Gibson, in partial dissent, argued that the United

States’ CERCLA claim against GRC could not properly have

been raised in the CWA litigation and, therefore, could not be

The court of appeals unanimously upheld the

CERCLA judgment against petitioner, rejecting his

contention that the United States’ CERCLA claim

was similarly precluded as to him. The court first

observed that, because petitioner was not a party to

the earlier CWA action (in which GRC and Caldwell

were defendants), he could assert the defense of res

judicata “only if he is a ‘privy’ to GRC.” Pet. App.

A19-A20 (citing Montana v. United States, 440 U.S.

147, 153 (1979)). As a “general rule,” the court added,

“{clorporations are treated as entities separate from

their officers, directors, and shareholders for pur-

poses of preclusion just as for other purposes.” Id. at

A20 (quoting 18 C. Wright, A. Miller & E. Cooper,

Federal Practice and Procedure § 4460, at 533

(1981)). The court acknowledged a limited exception

to that rule, under which corporate agents and

owners who are “named as defendants solely in their

[corporate] capacity” may assert a claim preclusion

defense based on an earlier judgment against the

corporation. /bid. (internal quotation marks omitted).

The court concluded, however, that it was

“undisputed” that the district court had found

petitioner liable “not in his capacity as principal

shareholder, president, and director, but as an

individual who meets [CERCLA Section 107(a)(2)]’s

definition of ‘operator.’” Ibid. Accordingly, the court

of appeals ruled, the CWA judgment against GRC

barred by that litigation’s preclusive effect. The dissent ob-

served that the United States’ CERCLA response at the Gurley

Pit was in its early stages when the CWA action concluded, and

that statute-of-limitations concerns had required the filing of the

CWA action before the dimensions of the CERCLA response

were known. Pet. App. A28-A29.

could not protect petitioner from the personal

liability that he incurred under CERCLA by acting

as an “operator” of the Gurley Pit.

ARGUMENT

The court of appeals correctly determined that the

CWA suit, to which petitioner was not a party, did not

bar the present CERCLA action as to petitioner. The

court’s ruling against petitioner, moreover, turns

largely on the facts of this case and does not conflict

with any decision of this Court or of another court of

appeals. Further review is therefore not warranted.

1. Petitioner contends (Pet. 20) that the court of

appeals erred by considering, in ruling on petitioner’s

claim preclusion defense, legal arguments first raised

by the United States in its brief as appellee. That

contention lacks merit. “[{A] prevailing party may

defend a judgment on any ground which the law and

the record permit that would not expand the relief it

has been granted.” United States v. New York

Telephone Co., 434 U.S. 159, 166 n.8 (1977); see also

Dandridge v. Williams, 397 U.S. 471, 475 n.6 (1970).

Accordingly, “(t]he matter of what questions may be

taken up and resolved for the first time on appeal is

one left primarily to the discretion of the courts of

appeals, to be exercised on the facts of individual

cases.” Singleton v. Wulff, 428 U.S. 106, 121 (1976).

There is no indication that the court of appeals abused

its discretion in this case, and, in any event, the

court’s case-specific action on this issue does not

warrant this Court’s review.

2. Petitioner also contends (Pet. 21-30) that the

court of appeals implicitly resolved disputed factual

matters against him in determining (1) that the

district court had found him tiable under CERCLA

Section 107(a)(2) in his personal capacity rather than

as a representative or agent of GRC, and (2) that

petitioner was not entitled to share GRC’s claim

preclusion defense on the basis of privity with the

Company. Each of those issues was properly resolved

by the court of appeals.

a. As the court of appeals correctly observed (Pet.

App. A20), it was “undisputed” before that court “that

the district court imposed liability on [petitioner] not

in his capacity as principal shareholder, president, and

director, but as an individual who meets [CERCLA

Section 107(a)(2)]’s definition of ‘operator.’” (Emphasis

added).* In response to the United States’ argument

(U.S. C.A. Br. 20) that petitioner was sued “in his

personal capacity” and, therefore, could not claim

privity with GRC, petitioner argued only that the law

in fact recognized privity as to those in his position

(e.g., Pet. C.A. Reply Br. 11, 23); he nowhere disputed

that he had been sued in his personal capacity. Having

found the personal nature of the CERCLA claim

against petitioner to be undisputed, the court of

appeals properly resolved that issue in the United

States’ favor.

In any event, the pleadings and orders in this case

unequivocally demonstrate that petitioner was sued

and adjudged liable under Section 107(a) of CERCLA

% CERCLA’s imposition of personal liability for such conduct

“is distinct from the derivative liability that results from

“piercing the corporate veil” ’ where {courts} hold the owners of

a less than bona fide corporation responsible for corporate acts.”

Riverside Market Dev. Corp. v. International Bldg. Prods.,

Inc., 931 F.2d 327, 330 (5th Cir.) (quoting United States v.

Northeastern Pharmaceutical & Chem. Co., 810 F.2d 726, 744

(8th Cir. 1986), cert. denied, 484 U.S. 848 (1987)), cert. denied,

502 U.S. 1004 (1991).

in his personal capacity, based on his role in the

creation and operation of the Gurley Pit. The United

States’ complaint in the CERCLA action alleged that

“William Gurley, at all times relevant herein, was

responsible for the conduct and management of the

Gurley site” (Pet. App. A86), and petitioner’s second

amended answer responded by denying that “William

Martin Gurley, in his individual capacity, was at

any time responsible for the conduct and management

of the Gurley Site” (id. at A96 (emphasis added)). The

personal nature of the claim against petitioner is

similarly evident from the district court briefs and

orders. See, e.g., U.S. Motion for Partial Summary

Judgment 15-19 (June 29, 1989) (ascribing liability to

petitioner under CERCLA authority holding “that

corporate officials who participate in the day-to-day

activities of hazardous waste disposal are personally

liable”). The court of appeals correctly determined

that the United States’ CERCLA claim against

petitioner went to his status as an_ individual

“operator” subject to liability under Section 107(a)(2)

of CERCLA by virtue of his own conduct, not to his

status as a representative of GRC.

b. Petitioner also contends (Pet. 23-24) that the

court of appeals improperly prevented him from de-

veloping facts demonstrating that he was in priv-

ity with GRC in the CWA action. According to

petitioner, evidence of a close relationship between

his interests and the interests of GRC at the time of

the CWA action would establish the viability of his

claim preclusion defense to CERCLA liability, re-

gardless of the capacity in which he was sued and

adjudged liable under CERCLA.

Petitioner’s assertions regarding allegedly undis-

covered facts are not pertinent. As discussed above,

United States v. Caldwell, the CWA judgment

against GRC and the owner of the Gurley Pit,

imposed no personal liability on petitioner. Petitioner

was neither named in his individual capacity as a

violator of the CWA, nor pursued individually under

a theory that GRC functioned as his alter ego.

Accordingly, petitioner’s alleged de facto partici-

pation in the CWA litigation—and his status as

director, officer, and shareholder—could shield him

only from subsequent litigation in which he is named

in his capacity as a representative of the Company.

See 18 C. Wright, A. Miller & E. Cooper, Federal

Practice and Procedure § 4449, at 414 (1981)

(“participation in a prior action in one legal capacity

should not preclude relitigation of the same issues in

a different legal capacity”); see generally 1 Restate-

ment (Second) of Judgments § 36, at 359 (1982) (same).

The personal defense petitioner seeks to assert in

this case is foreclosed by the claim preclusion

doctrine’s well-established requirement of mutuality.

18 C. Wright, et al., Federal Practice and Procedure,

supra, § 4464, at 588 (discussing the “general

assumption” that nonmutual claim preclusion “is not

ordinarily available”).

Contrary to petitioner’s contention (Pet. 17, 30),

the court of appeals’ decision that, in the absence of

mutuality, petitioner could not assert the preclusive

effect of the prior action against GRC, is consis-

tent with this Court’s decisions. As the Court has

stated, “[w]hile mutuality has been for the most

part abandoned in cases involving collateral estop-

pel, it has remained a part of the doctrine of res

judicata.” Nevada v. United States, 463 U.S. 110,

143 (1983) (citations omitted). Accord, e.g., Sidag

Aktiengesellschaft v. Smoked Foods Prods. Co., 776

F.2d 1270, 1275 (5th Cir. 1985) (“identity, or ‘mu-

tuality’ is in this circuit clearly a prerequisite to the

broad bar of relitigation that characterizes claim

preclusion”); Headley v. Bacon, 828 F.2d 1272, 1276-

1279 (8th Cir. 1987) (“litigation involving officials in

their official capacity does not preclude relitigation in

their personal capacity”); Roy v. City of Augusta, 712

F.2d 1517, 1521 (1st Cir. 1983) (same).

Petitioner’s contention (Pet. 23) that, if given the

opportunity, he would demonstrate that he “partici-

pated in and dominated the litigation in the first pro-

ceeding,” confuses claim preclusion principles with

the doctrine of issue preclusion. Such evidence might

be used to establish, under issue preclusion

principles, that petitioner is bound by, and entitled to

the benefit of, the court’s resolution of issues

adjudicated in United States v. Caldwell. See, e.g.,

Drier v. Tarpon Oil Co., 522 F.2d 199, 200 (5th Cir.

1975). Because direction of GRC’s defense in the

4 The Nevada decision recognized an exception to the usual

requirement of mutuality in the claim preclusion context.

There, water users who had not participated in an earlier water

rights adjudication were permitted to invoke that judgment as a

bar to the United States’ attempt to relitigate the same rights.

That result, however, “obtained in the unique context of ‘a

comprehensive adjudication of water rights intended to settle

once and for all the question of how much of the Truckee River

each of the litigants was entitled to.’” United States v.

Mendoza, 464 U.S. 154, 163 n.8 (1984) (quoting Nevada, 463 U.S.

at 143). Petitioner here cannot invoke the exceptionally strong

reliance interests and expectations of finality that gave rise to

the narrow exception to the mutuality requirement recognized

in Nevada.

CWA action could not have given rise to any risk of

personal liability for petitioner,’ however, evidence as

to his role in that litigation could not correct the

nonmutuality problem that defeats his claim pre-

clusion defense. See Montana v. United States, 440

U.S. 147, 154 (1979) (preclusion applicable to non-

parties as a result of their control of earlier litigation

“falls under the rubric of collateral estoppel [issue

preclusion] rather than res judicata [claim preclu-

sion] because the latter doctrine presupposes identity

between causes of action”); 1B J. Moore & J. Lucas,

Moore’s Federal Practice { 0.411[6], at III-249 to

ITI-250 (1995) (to the same effect).°

5 Petitioner cites In re Teltronics Services, Inc., 762 F.2d

185 (2d Cir. 1985), for the proposition that direction of GRC’s

defense in United States v. Caldwell bound him in his personal

capacity to the judgment in that action and entitles him now to

invoke its preclusive effect. See Pet. 14.10. In Teltronics, a

corporation president, a participating nonparty in earlier liti-

gation initiated by his corporation, sought to relitigate issues

that the corporation had lost. The corporation president was

precluded from reasserting “the same cause of action” that the

corporation had asserted at his direction. 762 F.2d at 192. The

decision contains no suggestion that a judgment on claims assert-

ed against the corporation in the initial action would have been

treated as binding on the company president in his personal

capacity.

§ To the extent that petitioner’s assertion that GRC func-

tioned as his “alter ego” (Pet. 12 n.8, 23, 31) is intended to

suggest an alternative cure for the nonmutuality problem, it

is similarly without merit. If petitioner had incurred personal

liability in the CWA action on an alter-ego or “veil piercing”

theory, an argument might have been made that the United

States was obliged to raise its claim against petitioner under

Section 107(a)(2) in conjunction with its CWA claims. Although

we do not believe that such an argument would be correct,

petitioner is not in a position to make it. Absent notice that the

CONCLUSION

The petition for a writ of certiorari should be

denied.

Respectfully submitted.

DReEw S. Days, III

Solicitor General

Lois J. SCHIFFER

Assistant Attorney General

J. CAROL WILLIAMS

JEFFREY P. KEHNE

Attorneys

AUGUST 1995

United States sought to impose personal liability under an alter-

ego or “veil piercing” theory in the CWA action, the judgment

there could not create personal liability. See, e.g., 2 Restatement

(Second) of Judgments § 59(5), at 95 (1982) (a judgment against

a corporation that functions as the alter ego of an individual

imposes personal liability on that individual only if the

individual receives “notice that such liability is sought to be

imposed and fair opportunity to defend the action resulting in

the judgment”).

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