Petition for Writ of Certiorari — Town of Middlebury, Connecticut v. Goodrich Corp., Fka B. F. Goodrich Co.

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Sunrem Coyrt, U.S.

FitED

02148 5 APR 8 - 2003

No.

In The

Supreme Court Of The United States

TOWN OF MIDDLEBURY, et al.,

Petitioners,

GOODRICH CORP., et al.,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

JOHN B. FARLEY

(Counsel of Record)

Ann M. Catino

Ralph W. Johnson, III

Lori D. DiBella

HALLORAN & SAGE LLP

225 Asylum Street

Hartford, CT 06103

(860) 522-6103

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PEP NE TORR RETIN OT LS, SORE RIOR pn MA ae RE EY

LALO AL LOOT IRIN L! FOM

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SR oe tal ea as

QUESTIONS PRESENTED

Le The Ninth Circuit has held that a

factfinder’s allocation of response costs under CERCLA §

113(f) is reviewed for abuse of discretion in the selection of

equitable factors to apply, and for clear error on the

allocation made according to those factors. The Second

Circuit rejected that standard of review and upheld the

district court’s reallocation of response costs, despite a

special master’s determination that no allocation was

appropriate, and without finding that the special master’s

underlying factual conclusions were erroneous under any

standard. Is the standard of review articulated by the

Ninth Circuit, and rejected in this case below, applicable to

the conclusions of a special master?

r Does Rule 53(e)(2) of the Federal Rules of

Civil Procedure require a hearing before a district court

rejects a special master’s report finding that no allocation

should be imposed under CERCLA § 113(f) and then

issues a ruling allocating millions of dollars in response

costs to municipalities?

LIST OF PARTIES AND

PARTIES TO PROCEEDINGS BELOW

In addition to the party named in the caption, the

following parties appeared below and are petitioners here:

Town of Hamden, Town of Orange, Town of Seymour, ~

Town of Westport and City of New Haven. In addition to

the party named in the caption, the following appeared

below and are respondents here: Crompton Manufacturing

Co., Reynolds Metal Co., Naugatuck Glass Co., Naugatuck

Treatment Co., Cadbury Beverages Inc., Coltec Industries

Inc., B.P. Amoco, Risdon Corp., Unisys Corp. and Kerite

Co.

The following parties were named below as

plaintiffs:

General Electric Company and Subsidiaries; Chase

Brass & Copper, Cheesebrough-Pond’s, Inc.; E.I. Dupont

De Nemours & Co.; Elco Industries, Inc.; Condec Corp.,

Guilford Gravure, Inc., Hemingway & Bartlett

Manufacturing Co.; Humphrey Chemical Co.; Keller &

Long, Inc.; Colt Industries; Plastiglide Manufacturing

Corp.; Robertshaw Controls Co.; Textron, Inc.; Treadwell

Corp.; Ware Chemical Corp.; Waterbury Plating Co.;

Philips Medical Systems, Inc.; Upjohn Co.; Dow Corning

Corp.; Environmental Waste Resources, Inc.; White

Consolidated Industries; Hoechst Celanese Corp.; Ken-

Chas Reserve Co.; United States of America; State of

Connecticut.

The following were named below as defendant-

appellees:

Borough of Naugatuck; John Betkoski; George

Clark; Armstrong Rubber Co.; Thomas Ashmore; Bristol

;

—

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Flowed Gasket Co.; Connecticut Resources Recovery

Authority; CRRA, Dee’s, Inc.; also known as Dee’s Refuse,

Inc.; Derby Tire Co.; Eastern Co.; General Roofing & Sheet

Metal Co., Inc.; Gerald Metals, Inc.; C.R. Gibson Co.;

Hospital Marketing Services Co., Inc.; Ideal Manufacturing

Co.; Jacob Brothers, Inc.; Litton Systems, Inc.; also known

as Winchester Electronics; Manafort Brothers, Inc.;

NASCO, Inc.; New Haven Housing Authority; Northeast

Utilities; Perrotti, Frank & Sans, Inc.; Quality Rubber Co.;

Sanitary Refuse Co., Inc.; Seymour Brass Truning Co.;

Sperry Rand Corp.; Stauffer Chemical Co.; Town of

Thomaston; Town of Woodbury Co., Inc.; Watertown

Housing Authority Zollo Drum Co., Inc.; Atlantic Richfield

Co.; Adam’s Service Station; Armand’s Auto Service; High

Ridge Apartments; Ashmore Trucking; Beacon Outing

Club; Brass Rail Restaurant; Coffee Shop; Crelan Constr.

Co.; CT. Sheet Metal/Wood Co.; Daddio’s; David Rupsis;

Edward Betowski; Elk’s Lodge #967; George’s Floor

Covering; Horizon Homes; Korvette Services, Latella

Carting Co.; Lombard Bros., Inc.; Long Meadow Café;

McDonald’s Restaurant; Meyers & Schwartz, Neal’s Coffee

Shoppe; Nelson Mendes; Portanova Trucking Co.,

Portuguese Club, Ray’s Hardware, Shore’s Auto Parts;

Steve's Tires, Stop & Shop; Triangle Services; Trowbridge

Apartments; Valley Motor Trailer Sales; Valley Mobile

Homes Park; Vieira Agency; Waterbury Pressed Metals;

Town of Bethany; City of Waterbury; Town of

Killingworth; Town of Beacon Falls; Naugatuck Y.M.C.A.;

E. Eric Arsan Refuse; John Ashmore; Joseph Betkoski;

Connecticut Pharmacare, Inc.; doing business as Ford

Pharmacy; First National Supermarkets, Inc.; P. Francini

Co.; Jetzon Tire Co.; City of Milford; NRS Carting Co., Inc.;

Peter Paul Cadbury; Town of Plymouth; Town of

Stratford; Town of Watertown.

The following were named below as defendants:

Harold Murtha; Murtha Enterprises, Inc.; Murtha

Waste Control Corp.; Murtha Trucking, Inc.; Beacon

Heights, Inc.; Rubber Avenue Enterprises; Clearwater

Pools, Inc.; Plume & Atwood Industries, Inc.; Town of

Ansonia; CVS; A.C. Hampson Printing Co.; ACCO

Industries, Inc.; American Chain & Cable Co., Inc.;

ACMAT Corp.; A.M. International, Inc.; A.R. Deburring;

Inc.; Aetna Life and Casualty Co.; Albaitis Brothers, Inc.;

All Brite Chemical Corp.; American Chemical & Refining

Co., Inc.; American Refuse Co.; Ansonia Copper & Brass,

Inc.; W.R. Archer & Co.; Ashland Oil, Inc.; Auto-Swage -

Products, Inc.; B & W Tool, Inc.; Bailey’s Express, Inc.;

Reliable Warehouse Co.; Charles Batchelder Co., Inc.;

Bemore Manufacturing Corp.; Better Formed Metals,

Bosco’s Automotive Center, Inc.; Buckmiller Brothers

Funeral Home, Inc.; CIPCO Manufacturing, Inc.; Call

Peter, Inc.; Capeheart Corp.; Carpet Barn, Inc.; Central

Manufacturing Co.; Charles Fisher; Chemical Laman Tank

Lines, Inc.; City of Shelton; City of Stamford; Cole Screw

Machine Products, Inc.; Colonial Tool & Die Co., Inc.;

Combustion Equipment Associates, Inc.; Compaction

Systems Corp.; Concentric Tool & Manufacturing Co., Inc.;

Connecticut Manufacturing Co., Inc.; Cooper Industries,

Inc.; Copes Rubbish Removal; Consolidated Rail Corp.;

Custom Cables Corp.; Danberg Chemical Co., Inc.; R.T.

Delaney Co.; Inc., Diversified Industries; Doval Tool &

Manufacturing, Inc.; Frank Elshire; Engineered Sinterings

& Plastics, Inc.; Ensign-Bickford Co.; Eyelematic

Manufacturing Co.; Fairmont Corp. of CT; Federal

Equipment Co.; Ford Instrument Co; G & R

Manufacturing Co.; Inc.; GTE Products Corp.; GEM

Manufacturing Co.; Harbor Petroleum Products, Ltd.;

Frank Hill; Hill Tool & Manufacturing; Hoff

Manufacturing Co.; Illinois Tool Works; Industrial

Disposal Services, Inc.; International Tire Warehouse, Inc.;

J & K Electric Co., inc.; John P. Cleary; W.A. Krueger Co.;

Leader Oil Co., Inc.; Maho Machine Tool Corp.; MIR, Inc.;

Magic Maintenance, Inc.; Naugatuck Daily News, New

Haven Copper Co.; Nu-Tech Precision Metals, Inc.;

Nutmeg Builders, Inc.; Oxford General Industries, Inc.;

Frank Perrotti & Sons, Inc.; Prime Screw Machine

Products, Inc.; Puritan Marine Flotation, Inc.; Quantum,

Inc.; Quantum Chemical Corp.; Revere Corporation of

America; Rondo of America, Inc.; SCR Electric, Inc.;

Sanitas, Inc.; Schiavone Corp.; Schick Companies, Inc.;

Scovill, Inc.; Sealectro Corp.; Sheehy & Sons, Inc.;

Speedmaster Corp.; Sperry Corp.; Steven J. Jacksis; Robert

Johnson; Super Retread Tire Co.; B. Swirsky & Co., Inc.;

TRW, Inc.; Thinsheet Metals Co.; Time-Mist, Inc.; Tire

Shak, Inc.; Town Fair Tire Centers, Inc.; Town of

Southbury; Union Carbide Corp.; United States Army;

Department of Defense, Washington, D.C.; U.S. Navy;

United States Postal Service; Vermont American Corp.;

Virginia Industries, Inc.; WPM, Inc.; Waltec American

Floorings, Inc.; Waterbury Buckle Co.; Waterbury Rolling

Mills; American Cyanamid Co.; Bristol Socket Screw Co.;

Colt Ind. Operating Corp.; Connecticut Paper Corp.; GTE

Products of Connecticut Corp.; Kennecott Mining Corp.;

Monsanto Co.; Prizer, Inc.; Scovill Manufacturing Corp.;

Remington Technology, Inc.; AW Sandora & Sons; Action

Refuse; Action Moving Co.; Adley Express Co.; Al Corsino;

Al Griffiths; American Auto Parts; American Roofing Co.;

American Thread; Amodeo’s Market; Anderson Auto

Electric; Ann Sawicki; Annelli Construction Co.; Ansonia

Steel Fabrication; Anthony Julian Construction; Art Conn

Building, Apollo Co.; Avenue Glass & Aluminum; Harold

Wheeler; Beacon Auto Wrecking; Beacon Luncheonette;

Bethany Tree Service; Bill Marino; Bob Markovic; Bob The

Builder; Borghesi Construction Breen’s; Bridgeport Brass

(Quantum Chem); Bristol Co.; Bruce Lacharity; A.M.

Bruning Div.; Bunker Hill Market; Buskey Tires, Highland

Homestead; Carl G. Peterson, Inc.; Carolyn’s Ice Cream;

Carvel Ice Cream; Celantano Properties; Century Tire Co.;

Charles Bruning; Charlie Woodland; Chris’s Gift Shop;

Christopher Columbo; Clancey’s Remodeling; Clarence

Bowley; Colonial Bank; Connecticut Water Co.;

Connecticut Waste Processing; Consolidated Lithograph;

Continental Catering Service; Cotton Hollow Condo;

Cowles Co.; Crelan Construction Co.; Cumberland Farms,

Inc.; Dauria Enterprises; Dean’s Restaurant; Del Glass Co.;

Derby Hospital; Derby Oil Corp.; Dex Co.; Discount

Furniture; Doctor’s Assoc.; Donald House; Donovan's

Pharmacy; Double A Meat Packing; E.R. Smith, Inc.;

Eastern Freightways; Eastern Association; Inc.; Edgar R.

Citvello; Edward Rostowsky; Elmer Rob Illard; Endeavor

Dev. Corp.; Hobby Shop; F. Perrotti & Sons; Family Shoe

Center; Farer Transportation; Fassett’s Farm; Fernando

Preta; Flex-Van Truck Rental; FNS-Naugatuck; Ford's

Drug Store; Fortin’s Restaurant; Freddy’s Diner; Friction

Material’s Co.; G & L Excavating, Inc.; Garafola & Sons,

Inc.; Gary Brown Roofing; Gasland Services Station;

General Reinsurance Corp.; Home Market; Gerald

Noonan; Good Hope Industries, Inc.; Goodyear Truck Tire;

Gordon Plumbing; GTE/Sylvania; Guggenheim

International; H. Chamberlain & Son; H.V. Simpson;

Hamden Telephone Handy Stop Food Shop; Hickory

Builders; Housatonic Lodge; Howard Johnson Hotel;

Howard Packer; Indian Rock Realty Co.; Interstate

Industrial; Irene’s Variety Store; Jack Stanczyk, Inc.; James

W. Melborne; Jeff Lima; John Macinone; Johnson Sheet

Metal; Johnson’s Refuse Service; Jones Nursing Home;

Junion Screw Machine; Kalart Victor; Kem-Blo Corp.;

King’s Dept. Store; Laticrete Co; L.H. Racke, Inc.;

Lachallet-Millat; Litton-Winchester; Long Hill Lumber; M

& M Transportation; M & J Trucking Co.; M.J. Papa Assoc.;

Vii

Marjan, Inc.; Marmal Finishers; Marshall McCann;

Massimo Trucking; MGM Treads; Mattatuck Manor

Apartment; Maxies; Michael Schiavone; Michael's Carpet,

Inc.; Micro-Etch Products; O.F. Morsbug & Sons;

Mountainview Plaza Coffee Shop; Mountainview

Laundramat; Mrs. Matthew Scully; Nancy Robinski;

Naugatuck Hardware; Naugatuck Farmer’s Market;

Neelco, Inc.; Neil Hennessey; New England Masonry; New

England Aircraft; New Britain Machine; Nite Life Lunge;

Norwalk Refuse Service; Nutmeg Baker’s Supply;

O’Toole’s Pharmacy; Old Coroner Café; Papparazzo

Management Co.; Park City Builders; Parva Buckle Co.,

Inc.; Patterson Tire/Oil Co.; Pepperidge Tree Shop; Phil's

Restaurant; Plastic Sciences; Pond Hill Pet Salon; Prospect

Manor Apartments; Quality Sheet Metal; R.A. Civitello &

Co.; Rafferty & Brown; Ray Alder, Inc.; Ray’s Grocery

Store; Raybestos Manhattan; Reliable Industrial Waste

Disposal Res-Land, Inc.; Rhea Carpet; Richard Foley;

Richard’s Carpet; Rick’s Service Center; Rita’s Bakery;

Robert's Construction Co.; Roosties; Root & Boyd; Rose

Hurst Dairy; Rossi Shoe Store; Roy Yoland; Ruth Borgnis;

S. Anderson Construction; S.P. Skinner Co., Inc.; Sargent &

Co.; Savelle Ford, Inc.; Seal Manufacturing; Sears Roebuck

& Co.; Sikorski/Shore-Line Tires; Southern New England

Theatres; Southwood Apartments; Sperry Automatics;

Sponge Rubber Prod.; St. Francis Church; Stamford Refuse

Co.; State National Bank; Stephen E. Brosius; Steve Repko;

Sugar Loaf Baker; Summit Chem. Co.; Super Print; Techni-

Chem; Tee Jay Manufacturing; Texaco Service Station;

Thrifty Market; Tocco’s Restaurant; Tom Owens; Tom

Mott; Total Music Store; Traver Electric Motor; Tribuny.

Tennis; Turbo Products; Valley View Construction; W,].

Megan, Inc., Walt’s Liquor Store; Waterbury Truck Service;

Waterbury Sand & Gravel; Waterbury Auto Works; West

Hill Apartments; Whelan’s Drug Store; Whip-It Tire Co.;

Whitman’s Carpet Co.; Widder Corp.; Wigglesworth, Inc.;

Vili

Wilshire Industry; Yale’s, Inc.; Zicon Corp. Ziggie

Kobylenski; Zimmerman Refuse; Terrence Murtha; Laurel

Park, Inc.; Lea Manufacturing, Co.

iA Nts Sah MLR RR IBM doe Sth AN A Ni

TABLE OF CONTENTS

PAGE

QUESTIONS PRESENTED o.oo. cececescssscecesecsosecscececeseececece. at

LIST QF PARTIES AND PARTIES TO THE

FP RLU LAWN cxscesccseccsscccevescsonevevesneesseosocessecesseeses. ii

TABLE OF AUTHORITIES. ..crcvsececcccccesesceccsovesesescecscssesesessesese x

PETITION FOR WRIT OF CERTIORARI ooeccccececccsecececeoeeeee. 1

ara IIIT nesiccstncicecsicichindcbecuncienilicstabeeipictee tee 1

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RELEVANT CONSTITUTIONAL

AND STATUTORY PROVISIONS. .......cccccccccseccccececccseceeceees, 1

STATEMENT OF THE CASE ......0:cccccsescccosesecesesssseseseseceoeeees 2

REASONS FOR GRANTING THE WRIT oncecccccccsecocesceeeee. 13

I. CERTIORARI IS WARRANTED

TO RESOLVE THE SPLIT IN

THE CIRCUITS REGARDING

THE STANDARD FOR REVIEWING

THE APPLICATION OF EQUITABLE

FACTORS TO ALLOCATE

RESPONSE COSTS UNDER CERCLA

cS: ,

Il. | CERTIORARI IS WARRANTED

TO REVIEW THE SECOND CIRCUIT'S

HOLDING THAT RULE 53(E)(2)’s

PLAIN LANGUAGE DOES NOT

REQUIRE A HEARING TO BE HELD

BEFORE A DISTRICT COURT

ACCEPTS, MODIFIES OR REJECTS

A SPECIAL MASTER'S REPORT .............. 20

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TABLE OF AUTHORITIES

CASES PAGE

Acushnet Co. v. Mohasco Corp., 191 F.3d 69

I Settle NTT -seseniicensinessipssnicsieasihdeasiiaeipssdnssiiiausianatiideagiiaits 17,18

Amsden v. Moran, 904 F.2d 748 (1st Cir. 1990) .......ccccseee0 23

Bedford Affiliates v. Sills, 156 F.3d 416

Is ED siiveriticcstisitaetaicorsinaseninlvudiitantdatiecanssdnasiiniieidentii 14

Boeing Co. v. Cascade Corp., 207 F.3d 1177

TE Malic MND eciniesineeiathnlipabanisaniieniensesibiebiasiesissiieabiotiaeih 16,17

Cleveland Bd. Of Educ. v. Loudermill, 470 U.S. 532

105 S. Ct. 1487, 84 L. Ed. 2d 494 (1985) ......cccssessssessssesseeees 23

Connecticut Nat'l Bank v. German, 503 U.S. 249,

112 S. Ct. 1146, 117 L. Ed. 2d 391 (1992) .......c.c-.ceccsceccessseses 22

Environmental Transp. Systems, Inc. v. ENSCO,

SOR g FOP Fs GOO CF OR. TOTES sccesesvsiesscisonsnssenesensiensiniiins 14

Gottlieb v. Barry, 43 F.3d 474 (10th Cir. 1994) ........c.ccscsseee 14

In re Bell Petroleum Servs., Inc. (EPA v. Sequa

Corp.), 3 F.3d 889 (Gth Cir. 1993) ....ccccssossvssvscsscesessessessesvosees 16

In re Chicago Milwaukee, St. Paul & Pacific

R.R. Co., 739 F.2d 1169 (7th Cir. 1984) ........sccscsssssssssesssseeee 21

In re Wonderbowl, 424 F.2d 178 (9 Cir. 1970) .....essssssesseseeees 21

Xli

Kieffer v. Sears, Roebuck & Co., 873 F.2d 954

BE dicienn pati ocon ees 20,22

Livas v. Teledyne Movible Offshore, Inc.,

607 F.2d 118 (Sth Cir. 1979) ..ecssssssssssssssssssssesesssseessssensesen 21,23

Market Co. v. Hoffman, 101 U.S. 112,

BP Nee Bs FRE CTD seseineversinieneniernintencininmnentnciensainnuiiietinninas

Matthews v. Eldridge, 424 U.S. 319, 96 S. Ct. 893,

GF Tan ER. BE TP OD enrerscecccionseniasenentenmnnicnininnianmennins

Morris Plan Indus. Bank v. Henderson, 131 F.2d 975

GREE A PUD ‘shicsivirssconsptitinioniniihiniatintiiiecgiaiietliiisdaiaaiiiaieabaaianiadal

Quenzer v. United States (In re Quenzer),

Be ee RE Es BUND siccnscssnsenncseisiocisiceititibaiiampuiiiaaniaian

Southern Natural Gas Co. v. Land, Cullman

County, 197 F.3d 1368 (11th Cir. 1999) .............ccccsssssssesereee

Tosco Corp. v. Koch Industries, Inc.,

ae FU OO CREE, FOGG) cireteeresininrncinmnssinitcannestianiiiniaias

United States v. Alcan Aluminium, 990 F.2d 711

CREE Siails OPTED cnccessenpsinisowsiinsinscinbacecliantniticsiessieidamanialatiganneameiaal

United States v. R.W. Meyer, Inc., 932 F.2d 568

SRW AD: TOD cisnsnisnisisitissniinniiniainlaeniahiaibisbacsssinitiiiléaaaiumaaial

United States v. Hercules, 247 F.3d 706

(8th Cir. 2001), cert. denied sub nom.

Crompton Co./Cie v. U.S., 534 U.S. 1065,

122 S. Ct. 665, 151 L. Ed. 2d 579 (2001) ...........recscsccssersssscers

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RULES

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STATUTES

Cee cscs asscsnessesesenrerenes 1

LSA 1,2

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OTHER AUTHORITIES

9A Charles Alan Wright & Arthur R. Miller,

Federal Practice and Procedure Civil 2d,

Ne cc csssecansscrsseres 21

Ee EE Ss ae, a ee eee ee 2

PETITION FOR WRIT OF CERTIORARI

Petitioners, the Towns of Middlebury, Hamden,

Orange, Seymour and Westport and the City of New

Haven, respectfully petition for a writ of certiorari to

review the judgment of the United States Court of Appeals

for the Second Circuit.

OPINIONS BELOW

The opinion of the Second Circuit at issue (Pet.

App. 1a-40a) is reported at 311 F.3d 154. The orders of the

district court ruling on the report of the special master and

the objections thereto and ruling on the motions for

reconsideration (Pet. App. 41a-91a) are unpublished.

JURISDICTION

The Second Circuit's opinion was entered on

October 29, 2002. A timely petition for rehearing en banc

(Pet. App. 129a) was denied on January 10, 2003. This

Court has jurisdiction under 28 U.S.C. § 1254(1). The

plaintiffs’ complaint alleged jurisdiction pursuant to 28

U.S.C. § 1331 and 42 U.S.C. §§ 9601, 9613.

RELEVANT CONSTITUTIONAL AND STATUTORY

PROVISIONS

The relevant provisions of the Comprehensive

Environmental Response, Compensation, and Liability Act

of 1980 (“CERCLA”), 42 U.S.C. §§ 9601-75, as amended by

the Superfund Amendments and Reauthorization Act of

1986 (“SARA”), Pub. L. No. 99-499, 100 Stat. 1613 (1986)

and Federal Rule of Civil Procedure 53 are reproduced in

the appendix (134a-141a).

STATEMENT OF THE CASE

The respondents commenced this action against the

petitioners and others in an effort to recoup response costs

they incurred for remediation, pursuant to CERCLA §

113(f), 42 U.S.C. § 9613(f). They alleged jurisdiction under

28 U.S.C. § 1331 and 42 U.S.C. §§ 9601, 9613. Section 113(f)

permits a private party who is responsible for the cost of

remediating a “Superfund” site to seek contribution from

other potentially responsible parties. In this case,

following a six month trial, a special master appointed

under Fed. R. Civ. P. 53 concluded that no response costs

should be allocated to the six petitioner municipalities.

The district court, without specifying any standard of

review, rejected the special master’s conclusion and,

without conducting a hearing, allocated approximately

$5.5 million to the municipalities, whose sole contribution

to the landfills was municipal solid waste (“MSW”). The

Second Circuit upheld that decision, creating a conflict

within the circuits on the applicable standard of review

and establishing new precedent on the requirement of a

hearing under Fed. R. Civ. P. 53.

a Beginning in the 1940s and proceeding through the

1980s, two Connecticut landfills, named Beacon Heights

and Laurel Park, accepted industrial waste, e.g., liquid

chemical wastes, deposited by industrial and commercial

entities, and accepted MSW deposited by several

Connecticut municipalities, including the petitioners.

Subsequently, the Environmental Protection Agency

(“EPA”) designated the landfills as Superfund sites on the

National Priority List under CERCLA.

The EPA then began identifying parties that it

believed were responsible for causing the conditions

existing at each landfill, pursuant to CERCLA § 107, 42

U.S.C. § 9607. Among others, it identified Terrance and

Harold Murtha, and several corporations controlled by

them (collectively, the “Murthas”), who owned and

operated Laurel Park from 1961 until 1987 and owned and

operated Beacon Heights from 1970 to 1987. The EPA also

identified several companies that had dumped waste at the

landfills as potentially responsible parties (“PRPs”).

Two coalitions comprised of corporate polluters,

the Beacon Heights Coalition (“BHC”) and the Laurel Park

Coalition (“LPC”), eventually emerged and entered into

separate consent decrees with the EPA. Under the consent

decrees, the coalitions agreed to remediate the

environmental conditions at each of the landfills.

The Murthas settled the claims brought against

them by the United States, the State of Connecticut and the

BHC, and assigned to the BHC any contribution claims

they had against other third-party defendants. Although

the LPC had not been formed when the consent decree

with the Murthas was negotiated, the parties agreed that

should an industrial coalition form within eighteen

months of the entry of the Murthas’ consent decree, the

coalition would receive a portion of the funds for the

remediation of Laurel Park. The LPC was formed within

the time period and received the allotted funds.

Thereafter, the BHC and the LPC pursued claims

against hundreds of third-party defendants, including the

petitioners, seeking contribution toward the cost of the

cleanup, pursuant to CERCLA § 113(f), 42 U.S.C. § 9613(f).

The coalitions’ contribution claims against the petitioners

are based on the presence of hazardous substances, as

constituent parts of consumer and industrial products, that

is found in the MSW waste stream.

2. After the coalitions had settled their claims against

a large number of the third-party defendants, the district

court referred the coalitions’ contribution claims against

the petitioners and other third-party defendants to a

special master. The referral was first for the purpose of

mediation and, then, if necessary, an evidentiary hearing.

Upon the conclusion of a hearing, the special master was

to file a report pursuant to Fed. R. Civ. P. 53(e).

The July 21, 1997 Order of Reference charged the

special master with “finding facts, drawing conclusions

and recommending what, if any, contribution the involved

Third-Party Defendant, or potentially responsible party,

should be required to make under CERCLA as it has been

interpreted by the Second Circuit Court of Appeals.” The

Order of Reference also required the special master’s

report to “recite the factors on which a recommended

equitable allocation of the remediation cost as to a Third

Party Defendant or potentially responsible party is based.”

Anticipating potential objections to the report, the Order of

Reference provided that, “Any objection will be decided

de novo on the legal issues ... Any factual objection will

be decided on whether the finding or recommendation is

clearly erroneous.”

After the special master’s mediation efforts,

approximately forty third-party defendants remained in

| the contribution action, including the petitioners. In

: proceeding to the merits of the coalitions’ contribution

: claims, the special master held an evidentiary hearing over

: a six-month period. During this time, 41 witnesses

testified and over 500 evidentiary exhibits were

introduced.

After the parties submitted their proposed findings

of fact, the special master filed his report on March 1, 1999.

In sum, based on the equitable factors he identified, the

special master recommended that the district court allocate

no remediation costs to the municipal defendants.

In response to the special master’s report, the

coalitions submitted extensive objections. The municipal

defendants filed submissions urging the district court to

adopt the report with minor modifications.

3. On September 28, 1999, the district court issued its

ruling (Pet. App. 41a) on the parties’ objections to the

report (“First Ruling”). The district court later amended

certain of its findings on April 13, 2000 in response to the

parties’ motions for reconsideration (“Second Ruling”).

a. In its First Ruling, the district court made

independent factual findings, reviewed the equitable

factors selected by the special master, approving nearly all

of them, and reviewed the special master’s findings

rejecting very few of them. Then, relying on its own

independent factual findings and an independently

established set of equitable factors, the court proceeded to

reach its own conclusions and derive its own allocation.

The district court first reviewed the history of each

landfill and independently found facts relating to the

volume of waste each municipal defendant disposed of at

each landfill, accepting in large part the volume amounts

suggested by the coalitions. The court also established for .

itself the amounts and types of wastes sent by the

coalitions. Within the district court’s recitation of these

facts, it did accept those findings of the special master

relating to the quality of the BHC and LPC’s waste streams

as industrial, highly toxic, releasable and mobile,

particularly in its liquid form. It also accepted the findings

that the coalition member’s waste at each site had an

adverse affect on leachate quality. Assessing evidence

concerning the relative presence of hazardous substances

in the municipal defendants’ MSW, the district court

accepted the special master’s findings that: (1) a typical

town’s MSW will not necessarily comport to the general

national profile relied upon exclusively by the coalitions;

(2) the record reflected, at most, that the concentration of

hazardous substances in MSW is between 0.1% to 0.4%; (3)

that comparison of this amount to the hazardous

substances found in the coalition’s waste was an properly

considered equitable factor; and (4) that any response costs

attributable to the municipalities could be considered a

lesser included cost in the total cost necessary to correct

the coalitions’ contamination.

After reviewing the special master’s findings and

making its own new findings, the district court proceeded

to reject the report's recommended allocation, without

explaining why it was “clearly erroneous.” While

recognizing that the special master declined to credit the

expert testimony presented by the coalitions, the court

4. a

merely stated that the municipal defendants’ “experts’

evidence suggests that some allocation was appropriate.”

The district court then set forth a list of equitable factors it

thought should apply in allocating the parties’

contribution shares. Among other factors, the district

court considered: (1) the total volume of waste deposited;

(2) the portion of the waste constituting hazardous

substances; (3) the form of the hazardous substances - i.e.,

liquid or solid; (4) whether it was deposited in free form or

as a constituent part of a product or substance; (5) the

releaseability (decomposition) of the hazardous

substances; (6) the mobility of the hazardous substances in

each party’s waste; (7) whether the hazardous substance

required leachate treatment; and (8) the comparative

impact of MSW and industrial waste on leachate quality.

After making further independent findings of fact

on the cost of remediation, the district court proceeded to

make its own allocation of costs without explaining what

was wrong with the special master’s finding that no

allocation should be made. All told, it calculated BHC’s

recoverable response costs as $40,664,785.77 and LPC’s

recoverable response costs as $13,865,428.91. The district

court then subtracted from these figures the total

settlement proceeds the coalitions previously received

from other third-party defendants. The resulting totals -

$33,446,500 for BHC and $7,069,541 for LPC (after

adjusting for the Naugatuck credit) - were the amounts

against which the municipal defendants’ percentage

contribution shares were assessed.

To determine each municipal defendant's -

contribution share of the costs, the district court fashioned

an allocation model of its own creation and settled on four

factors, which incorporated: (1) the combined total volume

of waste deposited by the coalitions and municipal

defendants at the respective landfills; (2) the volume of

MSW from each municipality; (3) a toxicity factor for each

coalition’s liquid and industrial waste as contrasted with

its members’ and each municipal defendant’s MSW and (4)

a discount factor for two municipalities based on a prior

settlement by their waste transporter. Applying this

formula, the district court in its First Ruling allocated

contribution shares among the petitioning municipal

defendants as follows:

e For response costs incurred by the LPC: (1) Orange

- 3.63%; (2) Seymour - 3.1%; and (3) Middlebury -

4.8%.

. For response costs incurred by the BHC: (1) Orange

- 2.26%; (2) Seymour - 1.52%; (3) Westport - 6.51%;

(4) Hamden - 0.27%; and (5) New Haven - 0.45%.

. The district court also allocated a 1.1% share to

Naugatuck at Beacon Heights, but held, as an

equitable factor, that its contribution payment

would be offset by $325,000 to reflect a settlement

payment the Naugatuck Treatment Company

(“NTC”) made to the BHC using funds that

belonged to Naugatuck.

b. In its Second Ruling, the district court denied the

petitioners’ request for a hearing on the allocation of

response costs. It did not believe that it had to review the

evidence firsthand. Instead, the district court stated that

the special master’s role had been to simply create the

record. It characterized its own role as looking “to the

existence in the record of substantiation of findings

recommended by the SM. If not substantiated, based on

the record created before the SM the court makes its own ~

findings.”

As part of its Second Ruling, the district court

granted the coalitions’ request for pre-judgment interest,

addressed additional cost arguments and corrected errors

from the First Ruling. The court rejected the coalitions’

request for compound interest, opting instead to apply

simple interest.

C. On August 2, 2000, the district court entered an

order (Pet. App. 119a-120a) again revising its cost

estimates and entering its final judgment. On the BHC’s

contribution claims, the court awarded the following

amounts and percentage of liability, inclusive of pre-

judgment interest: (1) Middlebury -- $186,779.94 (.45%); (2)

Westport -- $2,702,083.23 (6.51%); (2) New Haven -

$186,779.94 (.45%); (4) Orange - $938,050.39 (.27%); (5)

Seymour -- $630,901.16 (1.52%); (6) Hamden $112,067.97

(2.26%) and (7) Naugatuck -— $46,933.87. The court

awarded the LPC the following amounts, inclusive of pre-

judgment interest: (1) Orange - $239,471.69 (3.63%); (2)

Seymour -- $204,507.50 (3.1%); and (3) Middlebury --

$316,656.78 (4.8%). Later, the district court amended its

judgment regarding the LPC’s claims to include a

declaratory judgment establishing the municipal

defendants’ liability for LPC’s future response costs. (Pet.

App. 119a-120a)

4. The petitioners appealed the district court's rulings.

In sum, they argued they should not be required to

contribute any share of the response costs, as the special

master had concluded. They also maintained that the

district court erred by failing to hold a hearing prior to

ruling on the coalitions’ objections to the special master’s

report.!

5. The Second Circuit issued an opinion affirming the

district court in relevant part on October 29, 2002. It began ~

its analysis by addressing the standard of review, which it

found to be “determinative” of the case. It held that the

district court’s rulings were entitled to the deferential

standard of abuse of discretion. The court made four

relevant findings in rejecting the petitioners’ arguments to

the contrary.

a. First, the Second Circuit held that the clause in the

Order of Reference establishing the standard that the

district court would apply when it reviewed the special

master’s report did not govern. The Order of Reference

stated that “[a]ny factual objection will be decided on

whether the finding or recommendation is clearly

erroneous based on the record before the special master.”

The Second Circuit held that this clause did not bind the

district court to the special master’s recommended

equitable factors and allocation of response costs, subject

to the court’s deferential review. Instead, based on a

different section of the Order of Reference discussing the

' The LPC appealed from the district court's denial

of its claim to certain response costs and the court's

interest awards. The BHC appealed, asserting that the

district court erred by allowing Naugatuck to offset its

contribution share.

mediation stage of the litigation,? and the special master’s

statements during the hearing, the Second Circuit

concluded that the district court had reserved to itself the

power to allocate response costs among the parties

according to the equitable factors found appropriate by it

and not by the special master.

b. Second, the Second Circuit rejected the petitioners’

argument that the allocation of liability under CERCLA §

113(f) is a question of fact, and that the court of appeals

had to review the special master’s recommended

allocation directly, for clear error. The court

acknowledged that it had to review the special master’s

factual findings for clear error, whether or not the district

court accepted them. It held, however, that the allocation

of response costs under § 113(f) was not a question of fact.

Instead, it held that the allocation was an “equitable

determination based on the district court's discretionary

selection of the appropriate equitable factors in a given

case.”

C. Third, the Second Circuit also refused to ignore the

district court's allocation of response costs and, instead,

directly review the special master’s recommended

allocation for abuse of discretion.

: The section of the Order of Reference that the

Second Circuit relied on stated that “the success of

mediation depends on the acknowledgment by each party

that the decision after a hearing cannot be predicted. That

uncertainty arises from the ‘equitable factors’ to be applied

by the court as ‘appropriate’ in accordance with CERCLA

§ 113(f).”

d. Finally, the Second Circuit rejected the petitioners’

argument that the district court had to accept the special

master’s recommended allocation absent a determination

that the master had abused his discretion. Instead, the

court held that a district court need only give “some

deference” to a special master’s recommendation even

where the special master has “direct and extensive’”

knowledge about the particular circumstances of a given

case.

e. Turning to the merits of the petitioners’ claims, the

Second Circuit held that the district court gave due

deference to the special master’s recommendation and did

not abuse its discretion in allocating contribution shares

among the municipal defendants. To the extent that the

district court supplemented the factors suggested by the

special master or, conversely, did not apply factors

recommended by the special master, the Second Circuit

found that the district court had acted within its discretion.

In addressing the district court’s allocation

analysis, the Second Circuit rejected the petitioners’ claim

that the district court erred by supplementing the special

master’s findings. Specifically, the court rejected the

petitioners’ argument that the district court was not in a

position to make independent findings of fact. It

maintained that this argument was contrary to Fed. R. Civ.

P. 53(e)(2), which permits a district court to “modify” a

special master’s report. In sum, the Second Circuit

concluded that the district court gave enough deference to

the special master’s report and did not abuse its discretion

in allocating contribution shares to the municipal

defendants.

ee ee ee ee mey es

f. The Second Circuit also rejected the petitioners’

argument that under Fed. R. Civ. P. 53(e)(2) a hearing is

mandatory and that the district court should not have

ruled as it did on the special master’s report without

holding a hearing. It concluded that even if the plain

language of Rule 53(e)(2) entitles an objecting party to a

hearing, the petitioners had no right to a hearing because

they had not objected to the special master’s report.

Moreover, the court held that the petitioners waived any

right to a hearing by failing to request a hearing on the

special master’s report.

g. Based on its analysis, the Second Circuit affirmed

the district court’s decision insofar as it allocated shares of

the coalitions’ response costs to the municipal defendants

but vacated the district court’s award of pre-judgment and

post-judgment interest regarding the LPC’s claims and

award of a lump-sum for the BHC’s future recovery costs.

6. Subsequently, the petitioners filed a timely petition _

for rehearing en banc. It was denied on January 10, 2003.

REASONS FOR GRANTING THE WRIT

The Petition for a Writ of Certiorari should be

granted for two reasons:

I. Certiorari Is Warranted To Resolve The Split In

The Circuits Regarding The Standard For Reviewing The

Application Of Equitable Factors To Allocate Response

Costs Under CERCLA Section 113(f)

CERCLA § 113(f) provides that “[aJny person may

seek contribution from any other person who is liable or

potentially liable under [42 U.S.C] § 9607 .... In resolving

contribution claims, CERCLA § 113(f) directs courts to

allocate cleanup costs between responsible parties “using

such equitable factors as the court determines are

appropriate.” 42 U.S.C. § 9613(f)(1). Thus, the statute

employs a two-part inquiry. First, the court must

determine whether the defendant is “liable” under

CERCLA § 107(a). Second, the court must allocate

response costs among liable parties in an equitable

manner. See United States v. R.W. Meyer, Inc., 932 F.2d 568,

572 (6th Cir. 1991). CERCLA § 113(f) does not limit a

court to any particular set of factors. Instead, the courts

have discretion to select factors appropriate to the

particular facts of a case. Bedford Affiliates v. Sills, 156 F.3d

416, 429 (2d Cir. 1998); Environmental Transp. Systems, Inc.

v. ENSCO, Inc., 969 F.2d 503, 509 (7th Cir. 1992). See also

Tosco Corp. v. Koch Industries, Inc., 216 F.3d 886, 894 (10th

Cir. 2000). In this case, the district court delegated the

allocation task to a special master pursuant to Fed. R. Civ.

P. 53.

Generally speaking, in cases where a special master

is employed, the special master’s legal conclusions are

reviewed de novo. Gottlieb v. Barry, 43 F.3d 474, 486 (10th

Cir. 1994). The special master’s factual findings “shall” be

accepted unless they are clearly erroneous. Id.; Fed. R. Civ.

P. 53(e). See Morris Plan Indus. Bank v. Henderson, 131 F.2d

975, 976-77 (2d Cir. 1942)(L. Hand, J.). Where the district

court rejects a factual finding by a special master, a

majority of the courts of appeal have held that that they

must “directly review the findings of the special master,

thereby effectively ignoring the district’s court review of

the master’s findings.” Gottlieb, 43 F.3d at 486-87 (citing

cases).

In the instant case, following a six month trial, the

special master identified the equitable factors that ought to

apply and applied them to the facts as he found them,

concluding that there should be no allocation of response

costs to the petitioners. Upon reviewing the special

master’s conclusion, the district court did not hold that the

factors chosen or the facts found were erroneous under

any standard. Nevertheless, after identifying additional

equitable factors and making additional factual findings,

the district court rejected the special master’s report and

allocated millions of dollars in response costs to the

petitioners.

The Second Circuit acknowledged that the question

of what standard of review governed was a “hotly

debated” issue between the parties that was

“determinative” of the case. The Second Circuit then

decided to review the district court's treatment of the

special master’s report under an abuse of discretion

standard. Consequently, the Second Circuit did not

directly review the special master’s conclusions. Nor did it

find that the special master’s identification of equitable

factors, findings of fact or application of the factors was

erroneous under any standard. Instead, it affirmed the

district court’s ruling based on the conclusion that the

district court needed only to give the special master’s

report “some deference” and that its allocation of

contribution shares to the petitioners was not an abuse of

discretion.

In affirming the district court, the Second Circuit

held that the allocation of response costs under CERCLA §

113(f) is not a question of fact. Rather, it held that the

allocation was “an equitable determination based on the

district court’s discretionary selection of the appropriate

equitable factors in a given case.” In reaching this

conclusion, the Second Circuit found the Ninth Circuit's

Boeing Co. v. Cascade Corp., 207 F.3d 1177 (9th Cir. 2000)

opinion on this issue, to be “unpersuasive.” Boeing held

that while the fact finder’s choice of equitable factors is

reviewed for an abuse of discretion, its “allocation

according to those factors” is reviewed for clear error. 207

F.3d at 1188. The Second Circuit rejected the standard of

review established by Boeing because the two cases that it

cited, United States v. Alcan Aluminum, 990 F.2d 711 (2d Cir.

1993) and In re Bell Petroleum Servs., Inc. (EPA v. Sequa

Corp.), 3 F.3d 889 (5th Cir. 1993), were CERCLA § 107

cases. It concluded that unlike allocation under § 113(f), §

107’s ““divisibility of harm inquiry ... is guided not by

equity ... but by principles of causation alone.’” (Pet. App.

at 23a quoting United States v. Hercules, 247 F.3d 706, 718

(8th Cir. 2001)).

The Second Circuit should have applied the

standards of review articulated by the Ninth Circuit in

Boeing to the special master’s report. Like this case, Boeing

was a CERCLA § 113(f) case. In it, an airplane parts

manufacturer sued a nearby landowner for contribution

for costs involved in cleanup of a contaminated aquifer.

Following a bench trial, the district court allocated past

and future costs. On appeal, the Ninth circuit recognized

that § 113(f) gives district courts discretion “to decide what

factors ought to be considered, as well as the duty to

allocate costs according to those factors.” Boeing, 207 F.3d

at 1187. It held that reversal was appropriate “only for an

abuse of discretion [in] select[ing] factors or for clear error

in the allocation according to those factors.” Id. (footnotes

omitted).

Applying this standard, the Ninth Circuit

concluded that the district court’s selection of volume as

the primary or exclusive basis for allocation was within its

discretion. Id. at 1188. It also held that the district court's

allocation of seventy percent liability to the landowner and

thirty percent to the manufacturer, i.e. the application of

the equitable factors, was not clearly erroneous. Id.

Specifically, it recognized that ““[w]here there are two

permissible views of the evidence, the fact finder’s choice

between them cannot be clearly erroneous.” Id. (footnote

omitted). Thus, merely because the testimony before the

fact finder could support a different conclusion did not

make the application of the factors clearly erroneous. Id

The First Circuit took the same approach in

Acushnet Co. v. Mohasco Corp., 191 F.3d 69 (1st Cir. 1999).

Acushnet was also a CERCLA § 113(f) case. In it,

potentially responsible parties (“PRPs”) who entered into a

consent decree with the EPA regarding the cleanup of a

landfill brought an action seeking contribution from PRPs

who were not targeted by the EPA . The district court

granted summary judgment for one defendant. Upon the

completion of the plaintiffs’ case-in-chief, the district court

granted a motion for judgment for the other defendants.

On appeal, the First Circuit affirmed, finding that

“the record was insufficient to permit meaningful

equitable allocation of remediation costs against any of the

defendants under § 9613(f).” Acushnet, 191 F.3d at 72. As

part of its analysis, the First Circuit recognized that the

“standard for [§ 113(f)] contribution liability is the same as

that under § 9607(a) [§ 107].” Id. at 75. Moreover, it

rejected the plaintiff's argument that causation is irrelevant

to the contribution analysis. Id. at 79. To the contrary, it

acknowledged that “[q]uestions of causation and

appropriate allocation of response costs involve

quintessential issues of facts.” Id. See Quenzer v. United

States (In re Quenzer), 19 F.3d 163, 165 (5th Cir.

1993)(“equitable considerations are largely fact driven.”).

Although the First Circuit affirmed the district court's

judgment as a matter of law, it noted that had the district

court made actual allocations under § 113(f), “his equitable

determinations would not have been overturned unless he

abused his discretion in some fashion, and any underlying

findings of fact would be subject to clear error.” Acushnet,

191 F.3d at 80 n.10.

In the case at bar, the special master was the fact

finder charged with the duty of identifying the appropriate

equitable factors and applying those factors to the facts

found after an evidentiary hearing. The district court

delegated this authority to the special master via the Order

of Reference. Upon the issuance of the special master’s

report, the district court assumed a role analogous to that

of an appellate court. Under either Boeing or Acushnet and

Rule 53(e)(2), absent a finding that the special master’s

selection of factors or application of the factors was

somehow erroneous, the district court was obliged to

adopt the special master’s determination that there should

be no allocation of any response costs to the petitioners.

Given the different approaches employed by the Second

Circuit on the one hand and the Ninth and First Circuits

on the other hand, the Court should review the Second

Circuit's opinion in order to resolve the split between the

circuits.

Review is also appropriate because of the nature of

the cases affected by the split in authority. CERCLA cases

are complex and involve significant liability. They satisfy

the “exceptional” class of cases for which special masters

are properly employed. Under the standard adopted by

the Second Circuit, the use of a special master in a

CERCLA case improperly separates the decision-making

and fact-finding processes. This Court can resolve the

conflict between these approaches and ensure the utility

and integrity of the use of special masters in CERCLA

cases by granting this petition.

The Second Circuit should have held that the

district court abused its discretion by engaging in

independent factfinding, substituting its view of the

significant equitable factors for that of the special master

and by thereafter allocating contribution shares to the

petitioners. Neither the Second Circuit nor the district

court ever concluded that the special master’s application

of the equitable factors he identified constituted error

under any standard. Rather, the district court substituted

its own opinion and engaged in independent fact finding.

Absent a finding that the special master’s selection

or application of the equitable factors was erroneous, the

district court could not reject the special master’s findings.

Even if the district court had concluded that the special

master abused his discretion in the selection of equitable

factors to apply, a conclusion the district court also never

reached, the application of any new equitable factors had

to be done by the special master as part of a remand.

Alternatively, the district court could have ordered a new

hearing before itself or another trier of fact. The district

court’s chosen course, eschewing the application of an

appropriate standard of review and substituting its

decision for that of the trier, an approach now

countenanced by the Second Circuit, is untenable.

II. Certiorari Is Warranted To Review The Second

Circuit’s Holding That Rule 53(e)(2)’s Plain

Language Does Not Require A Hearing To Be

Held Before A District Court Accepts, Modifies

Or Rejects A Special Master’s Report

Rule 53(e)(2) of the Federal Rules of Civil

Procedure provides as follows:

In an action to be tried without a jury the

court shall accept the master’s findings of

fact unless clearly erroneous. Within 10

days after being served with notice of the

filing of the report any party may serve

written objections thereto upon the other

parties. Application to the court for action

upon the report and upon objections thereto

shall be by motion and upon notice as

prescribed in Rule 6(d). The court after

hearing may adopt the report or may

modify it or may reject it in whole or in part

or may receive further evidence or may

recommit it with instructions.

(emphasis added).

| It is well-established that under Rule 53(e)(2), a

party who objects to a special master’s report is entitled to

a hearing before the district court adopts the report. Kieffer

v. Sears, Roebuck & Co., 873 F.2d 954, 955 (6th Cir. 1989); In

re Chicago Milwaukee, St. Paul & Pacific R.R. Co., 739 F.2d

1169, 1171 (7th Cir. 1984); Livas v. Teledyne Movible Offshore,

Inc., 607 F.2d 118, 119 (5th Cir. 1979)(per curiam); In re

Wonderbow!l, 424 F.2d 178, 180 (9th Cir. 1970). See 9A

Charles Alan Wright & Arthur R. Miller, Federal Practice

and Procedure Civil 2d, § 2612 at 692 (1995 & Supp. 2002).

The issues of : (1) whether a non-objecting party has a right

to a hearing before the district court rejects a special

master’s report; and (2) assuming such a right exists,

whether the non-objecting party waives the right unless it

moves for a hearing, are issues of first impression.

In the instant case, the special master filed his

report on March 2, 1999. Without holding a hearing, the

district court issued its ruling on the special master’s

report on September 28, 1999 and rejected the special

master’s conclusion that the petitioners not be held liable

for any response costs. The district court then found the

petitioners liable for millions of dollars. The petitioners

filed a motion to alter and amend and requested a hearing.

The district court denied the petitioners’ motion in 2 ruling

filed on April 13, 2000.

On appeal, the Second Circuii rejected the

petitioners’ argument that the plain language of Rule

93(e)(2) mandated that the district court hold a hearing

before ruling on the special master’s report. It

acknowledged that the Sixth, Seventh and Ninth Circuits

had recognized that a party objecting to a report has a

right to a hearing and assumed for the sake of its analysis

that their holdings were correct. (Pet. App. 36a-39a)

Nevertheless, the Second Circuit concluded that the

petitioners had not objected to the report and had no right

to a hearing on the coalitions’ objections. (Id. 40a)

Moreover, it held that by not moving for a hearing on the

special master’s report, the petitioners waived any right

they may have had. (Id.)

Contrary to the Second Circuit's holding, the plain

language of Rule 53(e)(2) requires that a hearing be held

before a special master’s report is adopted, modified or

rejected. The requirement is mandatory. It is not limited

to circumstances where a party requests a hearing. The

hearing requirement gives the party against whom a

judgment is to be entered an opportunity to press its

serious arguments to the court. See Kieffer, 875 F.2d at 956.

The denial of a hearing is “inconsistent with substantial

justice and therefore, [i]s not harmless error.” Id.

In interpreting rules and statutes, it has long been

established “that significance and effect shall, if possible,

be accorded to every word.” Market Co. v. Hoffman, 101

USS. 112, 115-16 (1879). Morcover, “courts should disfavor

interpretations of statutes that render language

superfluous.” Connecticut Nat'l Bank v. German, 503 U.S.

249, 253 (1992). Thus, the plain reading of the “after

hearing” language in Rule 53(e)(2) supports the conclusion

that a hearing is required in all cases.

The language of Rule 53(e)(2) does not require a

party who prevails before the special master to either

object or move for a hearing before the district court. Nor

should this be the accepted practice under the rule. The

better practice and the practice consistent with the rule’s

plain language is to require a hearing by the district court

before it adopts, modifies or rejects a special master’s

report. Accord Southern Natural Gas Co. v. Land, Cullman

County, 197 F.3d 1368, 1371 (11th Cir. 1999)(district court

held hearing if either party objected). Accordingly, the

Second Circuit erred (Pet. App. 38a-40a) when it held that

the petitioners waived any right to a hearing by not filing a

motion for a hearing. See Livas, 607 F.2d at 119.

Moreover, due process requires that notice and an

opportunity to be heard at a meaningful time and in a

meaningful manner be afforded before there is a

deprivation of property or liberty. See Cleveland Bd. of

Educ. v. Loudermill, 470 U.S. 552, 546 (1985); Mathews v.

Eldridge, 424 U.S. 319, 333 (1976); Amsden v. Moran, 904

F.2d 748, 753 (1st Cir. 1990). The Second Circuit's

conclusion that the petitioners waived their right to a

hearing is inconsistent with due process and fundamental

fairness. It ignores the undisputed fact that one of the

petitioners, the Town of Seymour, requested oral

argument in connection with its motion to adopt and

overlooks the fact that all of the petitioners requested a

hearing in connection with their motion for

reconsideration.

Review is warranted to establish the appropriate

procedure under Rule 53(e)(2). Review is further

warranted by the likely impact of the procedure condoned

by the Second Circuit. Under such a procedure, a party

that prevails before a special master in a large, complex

case can have its successful result taken away and suffer

the imposition of millions of dollars in liability without

any opportunity to be heard by the district court. Such a

result requires review and reversal.

CONCLUSION

For the foregoing reasons, the petition for a writ of

certiorari should be granted.

Dated: April 8, 2003

Respectfully submitted,

John B. Farley

(Counsel of Record)

Ann M. Catino

Ralph W. Johnson, Ill

Lori D. DiBella

HALLORAN & SAGE LLP

225 Asylum Street

Hartford, CT 06103

Tel. No.: (860) 522-6103

Fax No.: (860) 548-0006

No.

In The

Supreme Court Of The United States

TOWN OF MIDDLEBURY, et al.,

Petitioners,

GOODRICH CORP,, et al.,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

APPENDIX

APPENDIX TABLE OF CONTENTS

Opinion of the United States Court of

Appeals for the Second Circuit

I a aiininsdcienennensennosccosecosesocecoczcoconecrcseee la

District Court’s Ruling on Report of Special

Master and Objections Thereto filed

IE A I rccectrccicnsesesceesvvencserevesorereeevecovensnssssonseees 4la

District Court’s Ruling on Pending Motions

Re MEE I II aerrrensarncersiccnccnncscevsccescvcsnevecevecscoseveveresesees 76a

Order Re: Appointment of Special Master;

Mediation, Fact Finding and Request dated

Nee ccccnescsssecenn man... 92a

Report of the Special Master filed March 2,

SE ain ainaeennntnnininaabassaetnememinnesinnecceneesveneeverecceceecoserees 96a

District Court's Judgment on Decision By

The Court filed on August 2, 2000 .........ccsesseeseseeeeeeeees 119a

District Court’s Order filed on August 2,

I iets aditmiindelllalannaiienintansinicarecceronceneesescenesenesess 121a

Judgment filed August 2, 2000 .........ssssessesesessereeerenenenees 123a

District Court’s Order Granting Motion to Alter

or Amend Judgment filed December 12, 2000 .............. 125a

Amended Judgment filed January 5, 2001 ................+. 127a

Second Circuit’s Order on Rehearing filed

Jamuary 10, 2003 ...........c.cscessccscsrsrsssresessssssnsesesescesesecesoeeee 129a

42 U.S.C. § 9607(a) ...csssseescsserssesesssenessensseeennenensneneneenesserses 13la

42 U.S.C. § 9613 (f) ...ececesesceserereenseenecscnssessnesasnenenasessssensenens 133a

Fed. R. Civ. P. 53 c..cccccscssscsssssscssscesssscceesessssssssssonsscersensennes 135a

United States Court of Appeals,

Second Circuit.

August Term, 2001

(Argued: April 12, 2002 Decided: Oct. 29, 2002.)

Docket Nos. 01-6014, 01-6016, 01-6018.

GOODRICH CORP. (f/k/a B.F. GOODRICH CO.),

CROMPTON MANUFACTURING CO. (f/k/a

UNIROYAL CHEMICAL CO., INC.), REYNOLDS METAL

CO. (f/7k/a REYNOLDS ALUMINUM BUILDING

PRODUCTS CO.), NAUGATUCK GLASS CO.,

NAUGATUCK TREATMENT CO., CADBURY

BEVERAGES, INC., COLTEC INDUSTRIES, INC., B.P.

AMOCO (f/k/a KEN CHAS RESERVE CO.), RISDON

CORP., UNISYS CORP., AND KERITE CO.,

Plaintiffs-A ppellants-Cross-Appellees,

-V,-

TOWN OF MIDDLEBURY, TOWN OF HAMDEN, TOWN

OF ORANGE, TOWN OF SEYMOUR, TOWN OF

WESTPORT, CITY OF NEW HAVEN,

Defendants-Appellees-Cross-Appellants,

BOROUGH OF NAUGATUCK,

Defendant-Appellee.

Before: McLAUGHLIN, POOLER and, B.D.

PARKER, Jr., Circuit Judges.

Two corporate coalitions appeal and several

Connecticut municpalites cross-appeal from an order of

contribution issued by the United States District Court for

the District of Connecticut (Doresey, J.) allocating among

various polluters, including several municipalities,

response costs for environmental damage at two

Connecticut landfills, pursuant to 42 US.C. § 9613 (f).

AFFIRMED in part, VACATED and REMANDED in part.

DAVID E. ROSENGREN, Pepe & Hazard LLP,

Hartford, CT, for Plaintiffs-Appellants-Cross-

Appellees Goodrich Corp., Crompton

Manufacturing Co., Inc. and Reynolds Metal Co.

CHRISTOPHER P. McCORMACK, Tyler Cooper &

Alcorn, LLP, New Haven, CT (Robert W. Allen,

Robert B. Flynn, Timothy P. Jensen, Matthew A.

Sokol, on the brief), for Plaintiffs-Appellants

Members of the Laurel Park Coalition.

ANN CATINO, Halloran & Sage LLP, Hartford,

Connecticut (Lori D. DiBella and John C. Huggins,

Halloran & Sage LLP, Hartford Connecticut, and

Nicholas J. Harding, Kosloff & Harding, West

Hartford Connecticut, on the brief), for Defendants-

Appellees-Cross-Appellants the Towns of Hamden,

Middlebury, Orange, Seymour and Westport and

the City of New Haven.

KEVIN MCSHERRY, McSherry Law Office,

Naugatuck, CT, for Defendant-Appellee Borough

of Naugatuck.

McLAUGHLIN, Circuit Judge:

The shades of Jarndyce & Jarndyce stalk this

litigation. Charles Dickens, Bleak House. For the third

time in a decade, we enter the legal morass created by a

half-century of dumping hazardous waste at two

Connecticut landfills, named Beacon Heights and Laurel

Park, respectively. This time around, we consider, among

other things, to what extent several municipalities must

contribute to response costs that two coalitions of

corporate polluters incurred cleaning up the mess.

BACKGROUND

We have set forth this case's background in

exhaustive detail in two prior opinions. See B.F. Goodrich

v. Betkoski, 99 F.3d 505 (2d Cir. 1996) ("Betkoski"); B.F.

Goodrich Co. v. Murtha, 958 F.2d 1192 (2d Cir. 1992)

("Murtha"). We presume some familiarity with these

opinions and state only the facts pertinent to this appeal.

A. Procedural History

The Beacon Heights and Laurel Park landfills

accepted industrial wastes, e.g., liquid chemical wastes,

deposited by commercial entities and accepted municipal

solid waste ("MSW") deposited by several Connecticut

municipalities. After the evidence confirmed that leachate!

was escaping from the landfills-a condition that

threatened the local water supply--the Environmental

Protection Agency ("EPA") designated the landfills as

"Superfund" sites on the National Priority List under the

' The EPA defines leachate as "any liquid, including any

suspended components in the liquid, that has percolated

through or drained from hazardous waste." 40 C.F.R. §

260.10 (2002).

Comprehensive Environmental Response, Compensation,

and Liability Act of 1980 ("CERCLA"), 42 U.S.C.§§ 9601-

75, as amended by the Superfund Amendments and

Reauthorization Act of 1986 ("SARA"), Pub.L. No. 99-499,

100 Stat. 1613 (1986).

The EPA began to identify the parties it believed

were responsible for causing the mess. The EPA

identified, among others, Terrance and Harold Murtha,

and several corporations controlled by them (collectively,

the "Murthas"), who owned and operated Laurel Park

from 1961 until 1987 and owned Beacon Heights from 1970

to 1987. The EPA also identified several companies that

had dumped waste at the landfills as potentially

responsible parties ("PRPs").

Two eponymous coalitions comprising corporate

polluters, the Beacon Heights Coalition? (the "BHC") and

the Laurel Park Coalition? (the "LPC", eventually

emerged, entering into separate consent decrees with the

EPA. Betkoski, 99 F.3d at 512. Under the consent decrees,

the Coalitions agreed to "remediate" (ie., clean up) the

environmental damage to their namesake landfills. Id.

Remediation at each landfill required placement of a cap

over each landfill and extraction and treatment of dump

2 Only three of the BHC's thirty-two members are

participating in this appeal--Goodrich Corporation

(f/k/a BF. Goodrich Company), Crompton

Manufacturing Company (f/k/a Uniroyal Chemical

Company, Inc.) and Reynolds Metal Company (f/k/a

Reynolds Aluminum Building Products Company).

3 The following nine of the LPC's nineteen members are

participating in this appeal--Crompton Manufacturing

Company, Kerite Company, Unisys Corporation, Risdon

Corporation, Cadbury Beverages, Inc., Coltec Industries,

Inc., Naugatuck Glass Company, Naugatuck Treatment

Company and BP Amoco.

leachate and groundwater from the landfills.

As we explained in Betkoski the Murthas settled

the claims brought against them by the United States, the

State of Connecticut and the BHC, and assigned to the

BHC any contribution claims they had against other third-

party defendants. Id. Although the Laurel Park Coalition

had not been formed when the Murtha consent decree was

negotiated, the parties agreed that should an industrial

coalition form within 18 months of the entry of the

Murthas' consent decree, the coalition would receive a

portion of the funds. The LPC formed within that time

period and received the allotted funds. Id.

Thereafter, the Coalitions pursued claims against

hundreds of third party defendants, including several

Connecticut municipalities, seeking contribution toward

the costs of the-cleanup, pursuant to CERCLA § 113(f), 42

US.C. § 9613(f). The Coalitions' contribution claims

against the municipalities are posited on the presence of

hazardous substances, as constituent parts of consumer

and industrial products, in the MSW that the

municipalities dumped into the landfills.

In Murtha, we considered the municipalities'

appeal from the district court's denial of their motion for

summary judgment on the contribution claims brought

against them, the BHC, and the Murthas+ The

municipalities argued that: (1) MSW did not fit within

CERCLA's definition of "hazardous substance"; (2) the

exemption for household hazardous waste under the

Resource Conservation and Recovery Act ("RCRA"), 42

U.S.C. § § 6901-6992k, was incorporated into CERCLA;

and (3) we should defer to the EPA's interpretation of

CERCLA, which purportedly excluded MSW from the

definition of "hazardous substance." Murtha, 958 F.2d at

1199, 1201, 1205. We rejected each of these contentions,

The LPC had not yet formed at this time.

holding that "the definition of hazardous substance under

CERCLA includes municipal solid waste if that waste

contains a hazardous substance, found in any amount, that

is listed in any of the subsections" of 42 U.S.C. § 9601(14).

Murtha, 958 F.2d at 1206.

On remand, the municipalities again moved for

summary judgment, this time seeking dismissal of the

contribution claims brought by both BHC and LPC. The

district court granted the municipalities’ motion, holding

that they bore no liability whatsoever for contribution

under CERCLA because: (1) while products found in their

MSW may have contained components or elements

identified as hazardous substances under CERCLA, the

products were not themselves listed as hazardous

substances under the Act; (2) the hazardous substances

contained in the products were not in releaseable form;

and (3) they dumped only negligible amounts of

hazardous substances. B.F. Goodrich Co. v. Murtha, 815 F.

Supp. 539, 545-46 (D.Conn. 1993).

On appeal, we reversed the district court's grant of

summary judgment to the municipalities, holding that: (1)

a mixture or waste solution containing any hazardous

substance, even if contained only as a constituent element

of a product, is deemed "hazardous" under CERCLA; (2) a

defendant who disposes of hazardous substances that are

not independently releaseable when the waste is dumped

may still be held liable under CERCLA; (3) CERCLA's

"hazardous substance" definition includes even minuscule

or nominal amounts; and (4) genuine issues of material

fact precluded summary judgment on whether there were

hazardous substances contained in the solid waste the

municipalities deposited at the landfills. Betkoski, 99 F.3d

at 515-16, 526-27. Accordingly, we remanded the case to

the district court for further proceedings.

By this juncture, the Coalitions had settled their

claims against the vast majority of third-party defendants.

On remand, the district court referred the Coalitions'

contribution claims against the remaining municipalities

and other third-party defendants to a Special Master (the

"Master"), for mediation and, if necessary, an evidentiary

hearing followed by a report and recommendation (the

"Report") pursuant to Fed.R.Civ.P. 53(e). The Order of

Reference charged the Master with "finding facts, drawing

conclusions and recommending what, if any, contribution

the involved Third- Party Defendant, or potentially

responsible party, should be required to make under

CERCLA as it has been interpreted by the Second Circuit

Court of Appeals." Moreover, the Order of Reference

required the Master's report to "recite the factors on which

a recommended equitable alivcation of the remediation

cost as tc a Third Party Defendant or potentially

responsible party is based."

B. Proceedings Before the Master

Trough the Master's mediation efforts, a few more

third-party defendants settled the Coalitions' contribution

claims against them. Thus, when the Master's mediation

efforts concluded, only a handful of third-party defendants

remained in the contribution action, including defendants

the Towns of Hamden, Middlebury, Orange, Seymour and

Westport and the City of New Haven (collectively, the

"Municipal Defendants"), and defendant-appellee the

Borough of Naugatuck. Accordingly, the Master

proceeded to the merits of the Coalitions' contribution

claims against these parties.5

The Master held an evidentiary hearing over a six-

month period, during which 41 witnesses testified and

. The Town of Plymouth, Jacob Bros., Inc. George Clark,

John Betkoski and Zollo Drum Co. also remained as

defendants, though they are not parties to this appeal.

Accordingly, we omit discussion of issues that pertain

solely to them.

over 500 evidentiary exhibits were introduced. We

summarize the testimony of the parties' key witnesses

below.

The Coalitions relied extensively on the testimony

of Dr. Kirk W. Brown, a Professor of Soil and Crop

Sciences at Texas A & M University, to support their claim

that the Municipal Defendants’ MSW contained hazardous

substances that were eventually released into dump

leachate. Dr. Brown testified that MSW typically contains

partially-spent containers of common household and

industrial products, the contents of which contain some

hazardous substances. According to Dr. Brown, the

hazardous components of such products are eventually

released from their containers and find their way into

leachate at landfills. He compared the "contaminants of

concern" which the EPA said were in the dump leachate at

both landfills with the hazardous substances typically

found in MSW. Dr. Brown concluded that hazardous

substances released from the Municipal Defendants’ waste

were likely a major source of hazardous substances found

in leachate at the landfills. He did not undertake a site-

specific analysis of the MSW dumped at each of the

landfills. Rather, he relied on studies by the EPA and

others, which he believed showed that the amount of

hazardous substances present in a given town's MSW

generally will comport with a national profile.®

Additionally, the LPC and BHC each presented

allocation experts who submitted recommended allocation

formulas for the court to apply in assessing contribution

shares. The LPC elicited testimony from Austin Carey,

Esq., an attorney who had participated in the formation of

LPC. Carey explained that the LPC members, with the help

of a neutral consultant, had created an allocation formula

6 He also referred to samples he had taken from seeps of

other MSW--only landfills which he claimed confirmed

the presence of hazardous substances in MSW.

: ee pS IME sss “ nt Siem

to apportion responsibility for response costs among its

members. The LPC's allocation model incorporated the

volume of waste each party deposited, adjusted by: (1) a

hazard factor designed to account for the relative toxicity

of each party's waste and the relative mobility of the

hazardous substances contained therein; and (2)

compaction and burning factors to account for changes in

the waste's volume after it was dumped.” Using this

model, Carey allocated percentage shares of response costs

for Middlebury, Orange and Seymour as 4.72%, 3.41% and

3.22%, respectively.8

As its allocation witness, the BHC presented

Richard Lane White, a director of the consulting

firm Putnam, Hayes & Bartlett, Inc. ("Putnam

Hayes"), who submitted an expert report allocating

response costs among the parties alleged to be

liable for response costs at Beacon Heights. The

BHC's "cost-causation" model was based on the

volume of waste each party deposited, adjusted by:

(1) compaction and burning factors; and (2) a cost-

’ As used by the parties in this case, "toxicity" refers to the

relative presence of a hazardous substance in a party's

waste, whereas "mobility" refers to a hazardous

substance's propensity to find its way through the

landfill into dump leachate.

® The model did not incorporate the total volume of waste

disposed by all polluters; rather, it used data limited to

LPC members and the defendants who had not settled

with the LPC at the time the model was applied.

10a

causation factor? designed to account for the

specific response costs incurred by the party's

waste. Using this formula, White allocated the

Municipal Defendants’ percentage share of

response costs for Orange, Seymour, Westport,

Hamden, New Haven and Middlebury as 8.9256%,

5,8077%, 32.2511%, 2.1040%, 2.8554% and 1.9640%,

respectively.

Additionally, the Coalitions sought to establish the

volume of waste disposed of by the Municipal Defendants.

Among other evidence, they relied on the Municipal

Defendants’ responses to discovery orders and _ the

testimony of Terrance Murtha, who testified about the

Murthas' business practices in hauling and disposing of

waste.

The Coalitions also presented extensive evidence

concerning the costs they incurred cleaning up the

landfills. These costs were tremendous: the BHC claimed

it spent over $50 million for remediation of Beacon

Heights, while the LPC claimed it spent over $30 million

for remediation of Laurel Park.

The Municipal Defendants countered Dr. Brown's

testimony with testimony from Dr. Robert K. Ham,

Professor Emeritus of Civil & Environmental Engineering

° For purposes of this factor, Mr. White separated the

BHC's response costs into five categories: (1) excavation

and capping of the landfill; (2) venting and treatment of

methane; (3) leachate treatment; (4) leachate collection;

and (5) offsite groundwater contamination. With respect

to categories (1) through (4), Mr. White opined that

because allocation based on adjusted volume adequately

reflected cost-causation, all wastes should be treated

similarly. Because Mr. White believed that liquid wastes

were more likely to have incurred the response costs

associated with category (5), he assigned a multiple of 15

to liquid waste shares.

lla

at the University of Wisconsin Madison. Dr. Ham testified

generally that: (1) the hazardous substances found in

MSW are far less releaseable and mobile than those found

in industrial waste; (2) the most releaseable and mobile

hazardous substances deposited at the landfills were

liquid wastes deposited by Coalition members; (3) the

hazardous constituents contained in MSW are released

only after their containers decompose, which occurs over a

long period of time; and (4) such hazardous constituents

will not pose a threat to the environment if they bond with

other chemicals present in the landfill and form new,

nonhazardous substances before they escape from the

landfill. Nevertheless, Dr. Ham conceded that MSW

contributed to groundwater contamination at the landfills.

Additionally, the Municipal Defendants presented an

alternative to the Coalitions’ recommended allocation

formulas. This they did through testimony from their

allocation expert, Muriel Robinette, a Vice President of

Haley & Aldrich, Inc. ("Haley Aldrich"). Not surprisingly,

Ms. Robinette advocated apportionment of response costs

to the Municipal Defendants in lower percentage than the

Coalitions' experts' allocation. Her allocation models,

which were substantially similar for each landfill, were

based on the total volume of waste dumped by each party,

adjusted by compaction, burning, cost- causation, toxicity,

mobility and persistence factors. Ms. Robinette allocated

percentage shares of response costs at Laurel Park for

Middlebury, Seymour and Orange as 1.29%, 0.62% and

0.54%, respectively. She allocated the percentage shares of

response costs at Beacon Heights for Orange, Seymour,

Westport and Middlebury as 0.3989%, 0.2639%, 1.3576%

and 0.0149%, respectively! These lower percentages

1¢ Ms. Robinette used the term "persistence" to refer to the

length of time a hazardous substance could continue to

exist in a recognizable state.

12a

reflected her view that the hazardous substances in the

Municipal Defendants’ wastes were not significant

"drivers" of many of the response costs undertaken by the

Coalitions. For example, she opined that had MSW alone

been deposited in the landfills, a less costly cap would

have been required to control leachate, and that

groundwater and leachate extraction would not have been

required. Nevertheless, she conceded that the amount of

waste dumped at a landfill will affect the size and

attendant cost of the cap.

The Municipal Defendants countered the

Coalitions's response cost evidence through, among other

things, testimony from Jeffrey A. Klaiber, also a Vice

President of Haley & Aldrich. Mr. Klaiber focused his

opinion on whether the response costs claimed by the

Coalitions were necessary and whether they conformed to

the national contingency plan (the "NCP") under CERCLA

§ 107(a)(4)(B). According to him, the BHC's and LPC's

recoverable response costs were limited to approximately

$20 million and $19 million, respectively. Like Ms.

Robinette, he opined that had Beacon Heights and Laurel

Park accepted only the Municipal Defendants’ MSW, the

landfills would have been covered with far less expensive

caps.

a The Master's Report

After the parties submitted their proposed findings

of fact, the Master submitted his Report.

The Master provided only scant details of the volume of

waste dumped by the Coalitions, limiting his findings in

this regard to the amount of waste dumped by BHC

member Uniroyal Chemical Company ("Uniroyal") at

Beacon Heights from 1947 to 1976. For the better part of

n Ms. Robinette did not allocate percentage shares to

Hamden and New Haven, claiming she lacked sufficient

data concerning the volume of waste dumped by these

defendants.

13a

his Report, he did not differentiate between Beacon

Heights and Laurel Park, and he spoke of the Coalitions

and their wastes in general terms. He characterized the

Coalition members as "major corporations" whose "wastes

consist of by-products of their manufacturing process."

Throughout his Report, the Master referred to the

Coalitions' waste as "liquid and other chemical wastes,"

and "highly mobile and toxic chemical waste." In general,

he found the Coalitions' waste to be more toxic as a whole,

and the hazardous substances found therein more mobile

and more releaseable, as compared to the Municipal

Defendants' waste.

Curiously, the Master never mentioned the volume

of waste dumped by the Municipal Defendants, focusing

instead on its characteristics. In this regard, he rejected Dr.

Brown's assertion that MSW comports to a national profile.

Rather, he found that MSW “has no definition which is

applicable universally to the waste streams of each and

every municipality. Its components vary with the

demographic makeup of the community which generates

it." The Master criticized Dr. Brown for failing to

undertake a site-specific analysis to determine whether the

Municipal Defendants' waste contained partially spent

containers of the products he referred to in his expert

report and testimony and for failing to analyze whether

the Municipal Defendants had implemented sorting and

separation policies for waste disposal whereby certain

household products containing hazardous substances

would have been excluded from the MSW the Municipal

Defendants dumped at the landfills. The Master further

noted that the sources and studies Dr. Brown relied on for

his definition of "general" MSW showed that hazardous

substances comprised only 0.1% to 0.4% of the MSW's

volume.

The Master also noted that the hazardous

substances in MSW are not found in pure form; rather,

14a

they are constituent elements in consumer products that

remain in the products' containers after the products have

been used. He credited Dr. Ham's testimony, finding that

such hazardous substances release slowly over time, as the

containers and the substances contained therein

decompose. The Master further noted that even if the

hazardous constituent elements found in these products

are released, they will not pose a threat to the environment

if they bond with other chemicals and "form new and

different compounds."

Evaluating these and other factors, the Master

recommended that the district court allocate no

responsibility whatsoever to the Municipal Defendants.

Having thus found that the Coalitions were not entitled to

any recovery, he saw no need to make any fact findings

regarding the amount of response costs the Coalitions

incurred.

D. The District Court's Allocation of Response Costs

Predictably, the Coalitions submitted extensive

objections to the Report. And equally predictably, the

Municipal Defendants filed submissions urging the district

court to adopt the Report, albeit with minor modifications.

Thereafter, the court issued its ruling (the "First Ruling")

on the parties' objections to the Master's Report. The Court

later amended certain of its findings in response to the

parties' motions for reconsideration (the "Second Ruling").

The court adopted the Master's findings regarding

the high toxicity of the Coalitions' waste and the mobility

and releaseability of the hazardous constituents found in

their liquid waste. The court went on to supplement the

Master's Report with extensive findings describing the

pe and volume of waste dumped by the Coalitions at

each landfill and the effect that burning the waste had on

reducing the waste's residual volume. In this regard, the

court found that the Coalitions dumped both liquid and

hazardous wastes at their respective landfills. Notably,

iSa

however, the court found that while LPC members

deposited large amounts of liquid hazardous wastes at

Laurel Park, "the greater bulk was comparable to MSW."

The court also supplemented the Master's findings

by determining the volume of MSW dumped by each

Municipal Defendant, accepting, in large part, the amounts

suggested by the Coalitions. The court found that the

Municipal Defendants dumped MSW as follows: (1)

Hamden--4,770,009 gal.; (2) New Haven--6,473,583 gal.;

(3) Orange--20,235,349 gal.; (4) Seymour-- 13,166,688 gal.;

(5) Westport--73,116,636 gal., reduced after burning to

286,066 cu. yds.;!2 and (6) Middlebury—19,796 cu. yds.

Regarding Laurel Park, the district court accepted

the LPC's estimates and found that the Municipal

Defendants dumped MSW at the landfill as follows: (1)

Orange--177,407 cu. yds.; (2) Seymour--143,577 cu. yds.

compacted and an additional 47,651 cu. yds. uncompacted;

and (3) Middlebury--228,854 cu. yds. compacted and an

additional 47,651 cu. yds. uncompacted.

The court also assessed the Master's findings

regarding the quality of the Municipal Defendants' MSW.

Assessing evidence concerning the relative presence of

hazardous wastes in the Municipal Defendants' MSW, the

court accepted the Master's observations that: (1) a typical

town's MSW will not necessarily comport to a general

national profile; and (2) the Coalitions failed to account for

any sorting and separation procedures the Municipal

Defendants may have implemented to reduce the presence

of hazardous substances in MSW. While the court found

that these concerns were equitable factors for its

consideration, it was unimpressed with the Municipal

Defendants' sorting and separation procedures, finding

i According to the district court's conversion method,

which was advocated by the BHC's allocation expert, 1

cu. yd. = 201.98 gal.

16a

them "neither uniform nor all-encompassing over the

period of waste disposal in question..." In the end, the

court affirmed the Master's finding that the record

reflected, at most, a concentration of hazardous substances

in the Municipal Defendants’ MSW of 0.1% to 0.4%.

Ultimately, however, the court rejected the Report's

recommended allocation, finding that the Municipal

Defendants' "experts' evidence suggests that some

allocation was appropriate." The court then set forth the

list of equitable factors it applied in allocating the parties'

contribution shares. Among other factors, the court

considered: (1) the total volume of waste each party

disposed; (2) the amount of hazardous substances

contained in each party's waste; (3) the form of the

hazardous substances—i.e., liquid or solid; (4) the

releaseability of the hazardous substances, including the

amount, if any, of decomposition required and the effect of

the substances' interaction with other matter such that

new, non-hazardous, compounds form; and (5) the

mobility of the hazardous substances in each party's waste.

The district court was also impressed by each Coalition's

decision to enter into the Consent Decrees and to

remediate their respective landfills. The court believed

that their cooperation with the Government entitled them

"to some benefit of the doubt as to the equitable factors

and factual uncertainty in allocating [response costs.]"

To determine each Municipal Defendant's

contribution share, the court fashioned an allocation model

of its own creation, which incorporated: (1) the combined

total volume of waste deposited by the Coalitions and

Municipal Defendants at the respective landfills; (2) the

volume of MSW each Municipality dumped; and (3) a

toxicity factor for each Coalition's liquid and industrial

waste as contrasted with its members' and each Municipal

Defendant's MSW.

Applying _ this formula, the court allocated

17a

contribution shares among the Municipal Defendants as

follows:

e For response costs incurred by the LPC: (1)

Orange--4.29%; (2) Seymour-- 3.1%; and (3)

Middlebury--4.8%.

e For response costs incurred by the BHC: (1)

Orange-2.26%; (2) Seymour-- 1.52%; (3) Westport-

~6.51%; (4) Hamden--0.27%; (5) New Haven-

0.45%; and (6) Middlebury--0.45%.13

, ¢ The court also allocated a 1.1% share to Naugatuck,

i but held, as an equitable factor, that its contribution

payment would be offset by $325,000 to reflect a

settlement payment the Naugatuck Treatment

Company ("NTC") made to the BHC using funds

that belonged to Naugatuck.

The court also issued findings regarding the

Coalitions' response costs in its initial and subsequent

decisions. All told, the court calculated BHC's recoverable

response costs as $39,818,648.26 and LPC's recoverable

response costs as $14,005,975.27. The court then subtracted

from these figures the total settlement proceeds the

Coalitions previously received from other third- party

defendants.'4 The resulting totals--$32,600,263.26 for BHC

- ” The district court did not allocate any of the BHC's

response costs to Middlebury in its First Ruling,

erroneously believing the BHC had settled its claims

against that defendant. The court corrected its error in

& its Second Ruling.

a The district court noted the absence of evidence in the

record concerning the volume and type of waste

disposed of by other parties that had settled with the

Coalitions. Accordingly, the court assumed that the

4 settlement amounts paid by these non-parties

: adequately reflected their allocable share of the

ES Coalitions' response costs.

ated

18a

and $5,237,587.37 for LPC-were the amounts against

which the Municipal Defendants’ percentage contribution

shares were assessed.

In its Second Ruling, the court granted the

Coalitions' request for pre- judgment interest. The court

rejected their claim of entitlement to compound interest,

opting instead to apply simple interest. Thereafter, on

August 2, 2000, the court entered its final judgment on the

BHC's contribution claims in the following amounts,

inclusive of pre-judgment interest: (1) Middlebury--

$186,779.94; (2) Westport--$2,702,083.23; (3) New Haven--

$186,779.94; (4) Orange--$938,050.39; (5) Seymour--

$630,901.16; and (6) Naugatuck--$46,933.87. In the same

judgment, the court awarded the LPC the following

amounts, inclusive of pre-judgment interest: (1) Orange--

$239,471.69; (2) Seymour-- $204,507.50; and (3)

Middlebury—-$316,656.78. Later, however, the court

amended its judgment regarding the LPC's claims to

include a declaratory judgment establishing the Municipal

Defendants' liability for LPC's future response costs.

The Municipal Defendants appeal the district

court's allocation, arguing they should not be required to

contribute any share of the response costs. They also

contend the court erred by failing to hold a hearing prior

to ruling on the Coalitions’ objections to the Master's

Report.

The LPC appeals from the district court's denial of

its claim to certain response costs and the court's interest

awards.

The BHC also appeals, asserting that the district

court erred by allowing Naugatuck to offset its

contribution share.

DISCUSSION

I. The District Court's Allocation

‘ Overview

CERCLA § 113(f) provides: "Any person may seek

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contribution from any other person who is liable or

potentially liable under § 9607(a).... In resolving

contribution claims, the court may allocate response costs

among liable parties using such equitable factors as the

court determines are appropriate." 42 U.S.C. § 9613(f)(1).

Thus, the statute envisions a two- part inquiry: First, the

court must determine whether the defendant is "liable"

under CERCLA § 107(a); Second, the court must allocate

response costs among liable parties in an equitable

manner. See Kalamazoo River Study Group v. Menasha

Corp., 228 F.3d 648, 656-57 (6th Cir. 2000). The party

seeking contribution bears the burden of proof at both

prongs of the court's inquiry. See, e.g., Minyard Enters.,

Inc. v. Southeastern Chem. & Solvent Co., 184 F.3d 373, 385

(4th Cir.1999); H.R.Rep. No. 99-253(III), at 19 (1985) ("Of

course, the burden of proof is on the ... party seeking

apportionment to establish that it should be granted.").

As we explained in Betkoski, (the last time these parties

were before us), a finding of liability under § 107(a)

requires proof that:

(1) the defendant is within one of the four

categories of responsible parties enumerated in §

9607(a); (2) the landfill site is a facility as defined in

§ 9601(9); (3) there is a release or threatened

release of hazardous substances at the facility; (4)

the plaintiff incurred costs responding to the

release or threatened release; and (5) the costs and

response actions conform to the national

contingency plan.

99 F.3d at 514. The district court held that the Municipal

Defendants are liable under this test, and they do not

appear to contest that finding on appeal. In any case, the

district court was clearly correct.

With regard to the first element of this test, those

who arrange for disposal of hazardous substances are

among the "responsible parties" covered under § 9607(a).

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And, as we first explained in Murtha, "[w]hen a mixture or

waste solution contains hazardous substances that mixture

is itself hazardous for purposes of determining CERCLA

liability.". Murtha, 958 F.2d at 1201. The Municipal

Defendants acknowledge that their MSW contained

hazardous substances, conceding that "[f]rom the

testimony of Dr. Ham ... this fact or conclusion was

inescapable." The Municipal Defendants also concede the

remaining elements of the liability test, i.e., that hazardous

substances were released from the landfills, and that the

Coalitions incurred response costs and undertook response

actions that conform to the NCP.!5 Accordingly, we turn

to the Municipal Defendants' objections to the district

court's allocation.

2. Standard of Review

We begin with our analysis by settling upon the

standard of review, an issue that is hotly debated by the

parties-and well it should because we find it

determinative. As we have stated before, because "[Section

113(f)'s] expansive language ... affords a district court

broad discretion to balance the equities in the interests of

justice... We will not overturn the district court's

[allocation of response costs] absent an abuse of that

discretion." Bedford Affiliates v. Sills, 156 F.3d 416, 429 (2d

Cir.1998) (emphasis added) (citations omitted).

"A district court 'abuses' or 'exceeds' the discretion

accorded to it when (1) its decision rests on an error of law

(such as application of the wrong legal principle) or a

clearly erroneous factual finding, or (2) its decision-

though not necessarily the product of a legal error or a

clearly erroneous factual finding-cannot be located within

15 While the Municipal Defendants quarrel over the district

court's determination of the amount of response costs

incurred by the BHC, which we address in Part II, supra,

they do not dispute that the BHC incurred at least some

necessary response costs consistent with the NCP.

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the range of permissible decisions." Zervos v. Verizon New

York, Inc., 252 F.3d 163, 169 (2d Cir.2001). The Municipal

Defendants raise several arguments seeking to avoid this

deferential standard of review. We address each argument

in turn.

The Municipal Defendants' first argument rests on a clause

in the Order of Reference stating the standard the district

court would apply when it reviewed the Master's Report:

Any factual objection will be decided on

whether the finding or recommendation is

clearly erroneous based on the record

before the Special Master.

(emphasis added). The Municipal Defendants assert that

this clause extended to non-factual members and,

accordingly, bound the district court to the Master's

recommended equitable factors and allocation of response

costs among the parties unless there was clear error. This

loose reading of the Order's standard of review is

inconsistent with the Order's terms and even with the

Master's understanding of his role in the case.

A separate section of the Order of Reference

discussing the mediation stage of the litigation states: "The

success of mediation depends on the acknowledgment by

each party that the decision after a hearing cannot be

predicted. That uncertainty arises from the ‘equitable

factors' to be applied by the Court as ‘appropriate’ in

accordance with CERCLA § 113ff]." (emphasis added).

Thus, in referring the case to the Master, the district court

clearly reserved to itself the power to allocate response

costs among the parties according to the equitable factors

it, not the Master, found appropriate to the case.

tic Master himself acknowledged this on several

occasions. For example, he advised the parties that "the

ultimate question to be decided in this case, under §

113[f], is almost unpredictable, except to the extent that

you can judge what Judge Dorsey believes to be a

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reasonable set of equitable factors. . . ." (R. 1/29/1998 at

198:19-24.) Likewise, the Master stated "I don't decide

what equitable factors are equitable factors... [T]he statute

places the broadest discretion in the hands of judge

Dorsey and not me. And the statute specifically says

equitable factors that he deems to be appropriate, not that I

deem to be appropriate." (R. 4/1/1998 at 204:11-16.) Thus,

the Master clearly understood what the Order of Reference

made apparent: that the district court reserved the right to

determine the appropriate equitable factors to apply, and

the appropriate allocation of response costs among the

parties, unbridled by the clear error standard of review.

Next, the Municipal Defendants claim that, because

allocation of liability under CERCLA is a question of fact,

we must review the Master's recommended allocation

directly, for clear error. This is a none too subtle begging

of the question. It is true that we review a master's factual

findings for clear error, whether or not the district court

accepts them. Morris Plan Indus. Bank v. Henderson, 131

F.2d 975, 976-77 (2d Cir.1942); see also Fed.R.Civ.P.

53(e)(2). | However, we are not persuaded that the

allocation of response costs under § 113(f) is a question of

fact. Rather, it is an equitable determination based on the

district court's discretionary selection of the appropriate

equitable factors in a given case.

See Bedford Affiliates, 156 F.3d at 429.16

16 The Municipal Defendants cite our decision in United

States v. Alcan Aluminum Corp., 990 F.2d 711 (2d

Cir.1993), and the Fifth Circuit's decision in In re Bell

Petroleum Servs., Inc. (EPA v. Sequa Corp.), 3 F.3d 889

(5th Cir.1993), for the proposition that allocation of

response costs is a question of fact. Both these cases,

however, concerned apportionment of damages under

the divisibility of harm defense available to defendants

in a § 107(a) cost recovery action. See Bell Petroleum, 3

F.3d at 896; Alcan Aluminum, 990 F.2d at 722. In such

i a NOGGEI li eB Dr iO Min Pc Nila at

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The Municipal Defendants also maintain that we

are required to ignore the district court's allocation of

response costs and instead review directly the Master's

recommended allocation for abuse of discretion, citing Van

Gemert v. Boeing Co., 739 F.2d 730 (2d Cir.1984). In Van

Gemert, we reviewed the district court's equitable

distribution of the unclaimed balance of a judgment

cases, a potentially responsible party may avoid joint

and several liability if it can prove the environmental

harm at a site is divisible. Upon such a showing, the

party will be held liable only for the harm the court finds

it caused. Bell Petroleum, 3 F.3d at 901-02; Alcan

Aluminum, 990 F.2d at 722. Admittedly, the district

court's apportionment of damages in such cases is a

finding of fact. Bell Petroleum, 3 F.3d at 896; see also

Alcan Aluminum, 990 F.2d at 722 ("[A]pportionment

itself is an intensely factual determination."). However,

unlike allocation of response costs under § 113(f), §

107(a)'s "divisibility of harm inquiry ... is guided not by

equity ... but by principles of causation alone." United

States v. Hercules, Inc., 247 F.3d 706, 718 (8th Cir.2001).

This difference renders Alcan Aluminum and Bell

Petroleum inapposite.

In Boeing v. Cascade Corp., 207 F.3d 1177 (9th Cir.2000),

a § 113(f) case cited by the Municipal Defendants, the

court held that while the district court's choice of

equitable factors is reviewed for abuse of discretion, its

"allocation according to those factors" is reviewed for

clear error. Id. at 1187; see also id. at 1188 ("We review

the district court's allocation as a finding of fact for clear

error."). As support for its holding, however, the court

cited Alcan Aluminum and Bell Petroleum. See Boeing

Co., 207 F.3d at 1187 & n. 33, 1188 & n. 39. As we

explained above, we find the standard of review

provided in Alcan Aluminum and Bell Petroleum

inapposite to the standard of review in a § 113(f) case.

For the same reasons, we find Boeing unpersuasive.

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entered against the defendant. In determining whether the

district court abused its discretion in returning the

unclaimed funds to the defendant, we looked to the special

master's report and recommendation, which the district

court had adopted in full. Id. at 733, 736-38. Thus, Van

Gemert stands for the unremarkable proposition that

where a district court charged with making an equitable

determination adopts a master's recommendation on that

issue, we review the master's report and recommendation

to determine whether the district court abused its

discretion. Id. at 738. Of course, that is not the case here--

the district court rejected the master's recommended

allocation and allocated response costs according to the

equitable factors it determined were appropriate under the

circumstances of the case. Accordingly, Van Gemert is

inapposite.

Finally, the Municipal Defendants claim that the

district court was required to accept the Master's

recommended allocation absent the Master's abuse of

discretion, citing Gottlieb _v. Barry, 43 F.3d 474 (10th

Cir.1994). In Gottlieb, the court considered whether the

district court abused its discretion in choosing the

appropriate method for determining attorneys' fees in a

securities class action where the district court rejected the

master's recommendation on that issue. The court noted

that because the way to calculate fees depended on the

"particular circumstances of the case," the district court

should have "given some deference" to the master's

recommendation, which resulted from his special

knowledge of the case. Gottlieb, 43 F.3d at 487. Finding

that the district court had "simply rejected" the master's

recommendation "for reasons largely unrelated to the

particular circumstances of [the] case," the court reversed

the district court's decision and found that attorneys' fees

should be calculated as the master recommended. Id.

Consistent with Gottlieb, we hold that a district

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court must give "some deference" to a master's

recommendation where the master has "direct and

extensive" knowledge about the particular circumstances

of a given case. Id. at 487 & n. 10; see also Cook v. Niedert,

142 F.3d 1004, 1010 (7th Cir.1998). "A district court that

extends some deference to the master will consider his

recommendation and the factors influencing it, but will not

regard the recommendation as the alpha and omega of the

... analysis." Id.

3. Analysis

Turning to the merits of the Municipal Defendants’

claims, we believe the district court gave appropriate

deference to the Master's recommendation and did not

abuse its discretion in allocating contribution shares

among the Municipal Defendants. The court undertook a

painstaking analysis of the Master's Report, accepted most

of the equitable factors suggested therein, and

incorporated them into its allocation model. Moreover, to

the extent the court supplemented the factors suggested by

the Master or, conversely, did not apply factors

recommended by the Master, we find that it acted within

its discretion. We address the district court's allocation

and the Municipal Defendants' objections thereto below.

The district court cited the volume of waste

disposed of by the parties as an equitable factor and used

his findings on the parties' respective waste volumes as the

starting point of his allocation formula. The Municipal

Defendants do not deny that the volume of waste each

party disposed of is a legitimate equitable factor. Indeed,

their own allocation expert opined that it is a logical

starting point in cases of this type.

Nevertheless, the Municipal Defendants claim the

district court erred in supplementing the Master's findings

on the volume of MSW they disposed of. First, they argue

that the district court is powerless to make supplemental

findings of fact, even where the Master failed to make any

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findings on an issue. We reject this contention as contrary

to the Federal Rules of Civil Procedure, which expressly

rmit a district court to "modify" a special master's report.

Fed.R.Civ.P. 53(e)(2); cf. United States _v. Tampa_ Bay

Garden Apartments, Inc., 294 F.2d 598, 603 (5th Cir.1961)

("We do not think the power to modify [under Rule

53(e)(2)] is to be narrowly construed or applied. The

power to modify is a power to alter or change, and to

enlarge and add to as well as to limit, restrict or reduce.").

Next, we reject their claim that the Master's failure

to render any findings on the volume of waste they

dumped is tantamount to a factual determination that the

Coalitions did not carry their burden of proof on this issue.

We find nothing in the Master's Report to support this

suggestion. Moreover, the Municipal Defendants'

argument is specious, when it is recalled that they

expressly admitted in their proposed findings of fact that

they each dumped a significant volume of MSW at one or,

in some cases, both of the landfills.

The Municipal Defendants also claim that the

district court clearly erred by preferring the Coalitions’

estimates of the volume of waste each Municipal

Defendant dumped over the municipalities' own estimates.

In this regard, the Municipal Defendants do not contend

that the district court relied on inadmissible evidence;

rather, they simply assert that the court should have

accepted their own estimated waste volumes. However,

"(t]he mere fact that there was evidence to support an

inference contrary to that drawn by the trier of fact does

not mean that the findings were clearly erroneous." Cifra

vy. GE. Co., 252 F.3d 205, 213 (2d Cir.2001); see also

Anderson v. Bessemer City, 470 U.S. 564, 574, (1985)

("Where there are two permissible views of the evidence,

the factfinder's choice between them cannot be clearly

erroneous."). | Accordingly, we reject the Municipal

Defendants’ contention that the district court's volume

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findings resulted from clear error.

Next, the Municipal Defendants argue that the district

court improperly ignored the Master's finding that MSW

will not necessarily comport with a national profile in

terms of the hazardous waste contained therein. Yet their

own expert witness, Dr. Ham, testified:

My point is that municipal solid waste is

also very varied in composition. Yet as

you look at the way we live, the way we

all have a certain number of grocery stores

per capita throughout the country and the

grocery stores generally produce the same

kinds of wastes and so forth, when you

look at general MSW, it's amazing how

similar it is from one part of the country to

the other, with the only real difference

being the amount of yard waste and when

that yard waste occurs. So even though

municipal solid waste is heterogeneous, it

is, in fact quite uniform in character and

predictable.

(R. 1/23/1998 at 24:1-11.) (emphasis added).

The Municipal Defendants also argue that. the

district court failed to account for sorting and separation

policies adopted by the Municipalities that supposedly

reduced the amount of hazardous substances in their

MSW. Although the Master chastised Dr. Brown for failing

to take this factor into account, he did not render any

specific findings regarding the Municipal Defendants'

implementation of such policies. And while the district

court cited sorting and separation policies as an equitable

factor to be considered, it found that the Municipal

Defendants policies were neither "uniform nor all-

encompassing over the period of waste disposal in

question..." The record confirms this finding.

The Municipal Defendants also claim the district

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court did not give appropriate deference to the Master's

findings regarding the relative mobility and releaseability’”

of the parties' waste and abused its discretion by allocating

response costs based on volume and toxicity alone. We

reject this contention. Our review of the district court's

decision reveals that the court carefully considered the

relevance of these factors in determining how to allocate

costs among the parties. While the court's ultimate

methodology may have been imprecise, we cannot say it

amounted to an abuse of discretion. Cf. Control Data

Corp. v. $.C.S.C. Corp., 53 F.3d 930, 937 (8th Cir.1995)

("CERCLA, in the allocation stage, places the costs of

response on those responsible for creating the hazardous

condition. Allocating responsibility based partially on

toxicity does just that because those who release

substances that are more toxic are more responsible

(affirming allocation based for the hazardous condition.");

see also Bancamerica Comm. Corp. v. Mosher Steel, 100

ad The Master found, per Dr. Ham's testimony, that the

"preponderance of scientific evidence ... proves that such

releases as may have occurred" of hazardous substances

in the Municipal Defendants’ MSW "formed new

chemical compounds." This finding overstates Dr.

Ham's testimony. Dr. Ham testified that some

hazardous substances found in MSW may decompose

and join with other elements found in MSW to form a

new, non- hazardous, compounds. But, significantly, he

did not testify that this process would occur all of the

time. Rather, he admitted on cross- examination that, in

his belief, MSW contributed to groundwater

contamination at the landfills. Thus, Dr. Ham's

testimony, taken as a whole, leads at most to a

conclusion that some, but not all, of the hazardous

substances found in MSW decomposed to form other

compounds. The Master clearly erred by extrapolating

an impermissible inference from Dr. Ham's testimony.

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F.3d 792, 802-03 (10th Cir.1996) (affirming allocation based

on volume and relative toxicity). |

Finally, the Municipal Defendants argue that the

district court ignored the Master's concerns over the lack of

direct proof that releases of hazardous substances from

their MSW added to the costs incurred by the Coalitions.

In the district court's view, the Coalitions were entitled to

some benefit of the doubt given their cooperation with the

government. We are untroubled by this view. By entering

into consent decrees with the government, the Coalitions

ensured that the landfills would be remediated in an

expeditious manner and relieved the government of future

litigation costs. See Betkoski, 99 F.3d at 526 (CERCLA §

9622(a) urges the government to enter into "settlements in

order to expedite effective remedial actions and minimize

litigation."). The district court did not abuse its discretion

in taking this factor into account. Cf. United States v. R.W.

Meyer, Inc., 932 F.2d 568, 573 (6th Cir.1991) ("I do not

believe Congress intended to require meticulous findings

of the precise causative contribution each of several

hundred parties made to a hazardous site. In many cases,

this would be literally impossible. Rather ... Congress

intended the court to deal with these situations by creative

means, considering all the equities and balancing them in

the interests of justice.").

In sum, we believe the court gave appropriate

deference to the Master's recommendation and did not

abuse its discretion in allocating contribution shares to the

Municipal Defendants.

II. Objections to Response Costs and Offsets

1. Response Costs

As we stated earlier, CERCLA § 113(f) provides:

"Any person may seek contribution from any other person

who is liable or potentially liable under § 9607(a).... In

resolving contribution claims, the court may allocate

response costs among liable parties using such equitable

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factors as the court determines are appropriate." 42 U.S.C.

§ 9613(f)(1). In turn, under CERCLA § 107(a)(4)(B), a

plaintiff may recover "any ... necessary costs of response

incurred ... consistent with the national contingency plan."

42 U.S.C. § 9607(a)(4)(B); 40 C.F.R. § 300.700(c)(2).

A. The LPC's Litigation Costs

The district court deducted $8,768,387.00 from

LPC's total response costs to arrive at the net recoverable

response costs against which the Municipal Defendants’

percentage contribution shares were assessed. The LPC

contends that the court should have excluded

$3,592,258.12—the amount the LPC expended in litigation

costs settling those claims-from the total settlement

proceeds to accurately reflect the amounts available to be

expended on remediation. The district court rejected this

argument as a back-door attempt to recover attorneys' fees,

which are generally not recoverable under § 113(f). We

agree.

"Neither CERCLA § 107, the liabilities and

defenses provision, nor § 113, which authorizes

contribution claims, expressly mentions the recovery of

attorney's fees." Key Tronic Corp. v. United States, 511

U.S. 809, 815 (1994). Thus, "expenses incurred solely in

preparation for litigation" cannot be recovered as response

costs "unless they ‘significantly benefitted the entire

cleanup effort and served a statutory purpose apart from

the reallocation of costs.' " Gussack Realty Co. v. Xerox

Corp., 224 F.3d 85, 91-92 (2d Cir.2000) (quoting Id. at 820).

The LPC does not argue that the attorneys' fees it incurred

significantly benefitted the cleanup effort. Rather, it claims

Key Tronic only precludes an "award" of litigation

expenses, and should not apply where a party seeks to

decrease an offset to its recoverable response costs. We fail

to see any distinction. As the district court reasoned, if the

litigation costs are not excluded from LPC's total response

cost, the Municipal Defendants will wind up footing part

IOLA SE SAE Maes

Pe TE CES Seve Aas

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of the bill-which would be akin to an award of fees.

Accordingly, we affirm the district court on this issue.18

B. The BHC's Response Costs

The Municipal Defendants claim the district court

erred by failing to articulate its findings on the BHC's

response costs. In its First Ruling, the court held that the

BHC incurred recoverable response costs totaling

$40,664,785.77, despite the BHC's claim to have spent more

cleaning up the landfill. The court did not set forth a

detailed list of each response cost it found to be

recoverable; rather, it addressed only certain response

costs, regarding the remaining costs as uncontested.

The Municipal Defendants moved for

reconsideration of the First Ruling, seeking an articulation

of the court's findings as to each recoverable response cost.

In response to the Municipal Defendants' motion, the BHC

alerted the court that the $40,664,785.77 figure overstated

the court's actual allowance of the BHC's response costs.

Accordingly, the BHC set forth a two-column table

illustrating in one column each cost it claimed in its

proposed findings of fact and, in the second column, the

deductions, if any, to each cost as per the First Ruling.

Using this table, the BHC calculated its recoverable

response costs as $39,818,648.26.

In its Second Ruling, the court adopted this revised

figure, specifically referring the parties to the table

provided by the BHC. Additionally, the court appended an

unannotated adding tape, intended to reflect the court's

correction of its mathematical error. While we agree with

the Municipal Defendants that the district court's adding

tape was not particularly illuminating, we hold that its

findings were sufficiently articulated to put the Municipal

a We also affirm the district court's denial of LPC's claim

to response costs concerning: (1) drinking water supply

line; (2) leachate alleviation; (3) "costs to complete";

and (4) EPA-directed construction supervisor.

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Defendants on notice of the response costs allowed.

We also note that, except as discussed below, the

Municipal Defendants failed to identify on appeal any

BHC response cost erroneously allowed by the district

court. Instead, the Municipal Defendants invite us to

ferret out their objections by sifting through their

submissions to the district court. We decline their

invitation.

Finally, the Municipal Defendants claim, and the

BHC concedes, that the district court erred by awarding

BHC a lump-sum payment of $4,314,485.00, allocated

among the various Municipal Defendants, representing the

future discounted contingent operations and maintenance

costs for the Beacon Heights site. In Gussack Realty Co. v.

Xerox Corp., we held the "proper remedy for future

response costs is not a present lump-sum payment of

anticipated expenses but instead a declaratory judgment

award dividing future response costs among responsible

parties." 224 F.3d 85, 92 (2d Cir.2000) (per curiam ); see

also 42 U.S.C. § 9613(g)(2) ("[T]he court shall enter a

declaratory judgment on liability for [future] response

costs or damages...."). Here, as in Gussack Realty, "the

district court provided a remedy not available under

CERCLA." Gussack Realty, 224 F.3d at 92. Accordingly,

we remand the case to the district court for entry of a

declaratory judgment consistent with § 9613(g)(2).

2. Naugatuck Treatment Company's Settlement with

the BHC

Naugatuck Treatment Company ("NTC")~a

wholly-owned subsidiary of BHC member Uniroyal--is

one of the many third-party defendants who settled with

the BHC prior to trial. NTC--in exchange for a complete

release from any further liability--paid the BHC

$325,000.00 in 1993.

Five years later, during the proceedings before the

Master, the Borough of Naugatuck produced evidence

> aa

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showing that the $325,000.00 NTC gave to the BHC for the

release was taken from a reserve fund held by NTC in

escrow for the benefit of the Borough. The Borough's

witness explained that the reserve fund was earmarked for

major capital improvements at the Borough's treatment

facility, not for paying down NTC's CERCLA liability.

After the hearings before the Master concluded, the

Municipal Defendants argued in their papers that any

contribution share attributable to the Borough for the

BHC's response costs should be reduced by the NTC

settlement. The Municipal Defendants claimed that NTC

used the Borough's funds "without any approval from the

Borough's governing body, its Mayor and Borough

Burgesses...." Because the Master did not allocate any

contribution share to the Borough, he saw no need to

render any findings on the circumstances of NTC's

settlement.

In its First Ruling, the district court rejected the

Master's recommendation as to the Borough's liability for

contribution. Instead, the court allocated the Borough a

1.1% share of responsibility for BHC's response costs,

resulting in liability amounting -to $361,862.92 "minus

$325,000 that involved [NTC], a net of $46,465.05."19 The

district court offered no explanation for the offset.

Undeterred, the BHC asked the court to reconsider

its ruling, contending that certain Borough officials knew,

prior to NTC's settlement with BHC, that the reserve fund

would be tapped to pay the settlement. Yet they did

nothing to stop the payment. The district court upheld the

offset, explaining "[w]hether payment was made with

knowledge of [Borough] officials does not resolve BHC's

argument. The question is not the propriety of the

payment ... but rather whose money was used. As BHC

i The Borough's contribution share was later reduced to

$36,862.92 to reflect the court's recalculation of BHC's

response costs.

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has not shown to the contrary, [Borough] funds are found

to have been used. Thus the credit is proper."

BHC now appeals the court's decision, urging us to

hold as a matter of law that § 113(f)'s "equitable factors"

are limited to "those factors directly related to the harm to

the environment, the parties’ causal relationship to that

harm, and the parties' ability to contribute to

remediation..." As we held in Bedford Affiliates, however,

Section 113(f) "does not limit courts to any particular list of

factors." 156 F.3d at 429. Instead, "(t]he statute's expansive

language ... affords a district court broad discretion to

balance the equities in the interests of justice." Id see aiso

Envtl. Transp. Sys., Inc. v. ENSCO, Inc., 969 F.2d 503, 509

(7th Cir.1992) (declining to limit equitable factors); United

States v. R.W. Meyer, Inc., 932 F.2d 568, 572 (6th Cir.1991)

("[T]he court may consider the state of mind of the parties,

their economic status, any contracts between them bearing

on the subject, any traditional equitable defenses as

mitigating factors and __any other factors deemed

appropriate to balance the equities in the totality of the

circumstances.") (footnote omitted) (emphasis added).

Accordingly, we reject the BHC's invitation to curb the

district court's discretion to consider any equitable factors

it deems appropriate.

The BHC also contends that the district court

abused its discretion because the equities favor the BHC,

not the Borough. As already noted, the BHC claims that

certain Borough officials in charge of overseeing the

Borough's operating agreement with NTC knew about

NTC's planned use of the reserve fund but did nothing to

stop it. It follows, BHC argues, that the Borough should

not be rewarded for sitting on its rights.

Admittedly, the evidence before the Master

suggests that members of the Naugatuck Water Pollution

Control Board (the "WPCB")--i.e., the board that oversaw

the operating agreement--did indeed know of NTC's

oy pth HORA Soy seas. aie Fi chara DIY OT Re PEON Ne eeepc ‘ .

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35a

planned use of the reserve fund before the settlement.

However, the evidence also showed that the WPCB was

controlled at the time by Uniroyal employees. Thus, it is

hardly shocking that the WPCB did nothing to stop the

transaction, which enriched Uniroyal at the Borough's

taxpayers’ expense and permitted Uniroyal's wholly-

owned subsidiary to escape liability for any cleanup costs.

In short, we believe the district court acted within

its discretion by applying the credit, notwithstanding the

WPCB's knowledge of NTC's planned use of the fund.

Accordingly, we affirm the district court's decision to

offset NTC's settlement amount against the Borough's

allocated share of the BHC's response costs.

Ill. The District Court's Interest Calculations

1. Pre-Judgment Interest

The LPC argued to the district court that it was

entitled under § 107(a)(4) to an award of compound

prejudgment interest on the response costs for which the

court held the Municipal Defendants liable. The district

court disagreed, asserting that the right to pre-judgment

interest, if any, is committed to the court's equitable

discretion under § 113(f). The court then awarded the

LPC simple, rather than compound interest. LPC claims

the district court erred by: (1) treating pre-judgment

interest under § 113(f) as discretionary; and (2) failing to

award compound pre-judgment interest. As explained

below, we agree with LPC on both counts.

We review these questions of _ statutory

interpretation de novo. See Gussack Realty, 224 F.3d at 91.

This Court has never addressed the availability of pre-

judgment interest under CERCLA § 113(f), yet we find

Bancamerica Comm. Corp. v. Mosher Steel, 100 F.3d 792

(10th Cir.1996), persuasive, and adopt its analysis. See id.

at 799-803. Thus, we agree that "prejudgment interest

must be awarded in § 113(f) cases just as it is in § 107(a)

cases." Id. at 800.

36a

Under § 107(a), pre-judgment interest is

mandatory. 42 US.C. § 9607(a)(4) ("The amounts

recoverable in an action under this section shall include

interest on the amounts recoverable ....") (emphasis added).

Thus, we agree with the LPC that the district court erred in

treating pre-judgment interest as a discretionary award

under § 113(f).

Next, we must determine whether the LPC is

entitled to compound interest. Again, we look to 8

107(a)(4), which provides:

The rate of interest on the outstanding unpaid

balance of the amounts recoverable under this

section shall be the same rate as is specified for

interest on investments of the Hazardous Substance

Superfund established under subchapter A of

chapter 98 of Title 26.

Id. In turn, the rate of interest on investments of the

Hazardous Substance Superfund:

[S]hall be at a rate determined by the Secretary of

the Treasury (as of the close of the calendar month

preceding the month in which the advance is

made) to be equal to the current average market

yield on outstanding marketable obligations of the

United States with remaining periods to maturity

comparable to the anticipated period during which

the advance will be outstanding and shall be

compounded annually.

26 USC. § 9507(d)(3)(C) (emphasis added). A

straightforward reading of these statutory provisions

reveals that the district court was without discretion to

grant anything other than compounded interest at the

applicable rates set forth by the Secretary of the Treasury.

Bancamerica, 100 F.3d at 802.

Thus, we direct the district court on remand to

recalculate pre-judgment interest on LPC's response costs,

at the rates specified by the Secretary of the Treasury

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37a

compounded annually, accruing from the latter of the date

LPC made its demand on the Municipal Defendants ox tie

date of the expenditure concerned. See 42 U.S.C. § 9607(a)

("Such interest shall accrue from the later of (i) the date

payment of a specified amount is demanded in writing, or

(ii) the date of the expenditure concerned.")20

y a Post-Judgment Interest

The district court initially entered judgment on the

LPC's contribution claims on August 2, 2000 and ordered

that post-judgment iriterest "shall accrue from the date of

judgment. .. .". On January 5, 2001, the district court

entered an amended judgment, which added a declaratory

judgment regarding the Municipal Defendants’ liability for

the LPC's future response costs. The amended judgment

was silent regarding post-judgment interest, though it

stated that "[i]n all other aspects the [Initial] Judgment

remains the same." The LPC argues that the district court

should have expressly provided that post- judgment

interest runs from the date of its first judgment.

Under 28 U.S.C. § 1961(a), a plaintiff is entitled to

post-judgment interest calculated as of the "date of the

entry of the judgment. ..." Id. Such relief is "designed to

compensate the plaintiff for the delay it suffers from the

time damages are reduced to an enforceable judgment to

* The record reveals that on August 18, 1995, LPC issued a

written demand on each Orange, Seymour and

Middlebury. The court accepted this demand as valid in

its Second Ruling and invited the LPC to submit detailed

information on its post-August 18, 1995 response costs.

In response to the district court's suggestion, the LPC

submitted a list delineating its post-August 18, 1995

response costs. It is not clear whether the district court

accepted the dates set forth therein in calculating LPC's

pre-judgment interest on a simple interest basis. We

leave it to the district court to determine the dates from

which the interest shall accrue and to ascertain the

applicable Treasury rates.

38a

the time the defendant pays the judgment." Andrulonis v.

United States, 26 F.3d 1224, 1230 (2d Cir.1994). Thus,

"post-judgment interest commences from the date a

judgment is ascertained in a meaningful way" and

"supported by the evidence." Greenway v. Buffalo Hilton

Hotel, 143 F.3d 47, 55 (2d Cir.1998) (quoting id. at 1233)

(internal quotation marks and alteration omitted).

Here, the district court's judgment on the LPC's

past response costs was ascertained in a meaningful way

on August 2, 2000. To the extent its amended judgment

precluded interest from August 2, 2000, forward, the

district court erred. Accordingly, we remand for

appropriate recalculation of post-judgment interest on the

LPC's past response costs.

IV. Failure to Hold a Hearing

The Municipal Defendants complain that the

district court should not have ruled on the Master's Report

without hearing oral argument on the parties’ submissions.

We disagree.

Rule 53(e)(2) states, in relevant part:

Within 10 days after being served with

notice of the filing of the report any party

may serve written objections thereto upon

the other parties. Application to the court

for action upon the report and upon

objections thereto shall be by motion and

upon notice as prescribed in Rule 6(d). The

court after hearing may adopt the report or

may modify it or may reject it in whole or in

part or may receive further evidence or may

recommit it with instructions.

Fed.R.Civ.P. 53(e)(2) (emphasis added). The Municipal

Defendants claim the above-underlined text mandates an

oral hearing, an issue of first impression in this Court.

Several of our sister Circuits have weighed in on

the issue and have uniformly found that there is a right to

39a

an oral hearing at the behest of the objecting party. See,

e.g., Kieffer v. Sears, Roebuck & Co., 873 F.2d 954, 956 (6th

Cir.1989) ("[W]Je hold that when a district court is

presented with objections to the report of a special master,

the objector has a right to a hearing ....") (emphasis added);

In re Chicago, Milwaukee, St. Paul & Pac. R.R. Co., 739

F.2d 1169, 1172 (7th Cir.1984) ("One who files objections to

the report of a Special Master thus has a right to be heard

on those objections before the court acts on the report.")

(emphasis added); In re Wonderbowl, Inc., 424 F.2d 178,

180 (9th Cir.1970) ("[Ol[bljectors to a _ referee-special

master's report have a right to be heard before the

bankruptcy court acts on the report.") (emphasis added).

Even if we were to agree that the plain language of Rule

93(e)(2) entitles an objector to an oral hearing, this does not

help the Municipal Defendants. As they readily admit in

their appellate brief, they did not object to the Report;

indeed, they requested its adoption.27 Accordingly, they

had no right to oral argument on the Coalitions' objections.

Additionally, counsel for the Municipal Defendants

admitted at oral argument that the Municipal Defendants

did not move for a hearing on the Master's Report. Thus,

even if they did possess any rights to a hearing, they

waived such rights by failing to ask for one. Cf. Golden

Door Jewelry Creations, Inc. v. Lloyds Underwriters Non-

a Although the Municipal Defendants filed "exceptions" to

the Master's Report, they did not object in any

meaningful way. Rather, they simply referred the court

to their proposed findings of fact and urged the court to

accept their findings to the extent the were not reflected

in, or conflicted with, the Master's Report. Additionally,

the Town of Seymour filed an "Application for Adoption

of the Special Master's Report with Modifications"

urging the court to modify the report to specifically

adopt the Municipal Defendants' allocation model.

40a

Marine Ass'n, 8 F.3d 760, 768 (11th Cir.1993) ( "This court

will not overturn the district court's adoption of the special

master's report on a procedural technicality consignors

have discovered only on appeal.").

we have considered the remaining arguments

raised by the Coalitions in their appeals and the Municipal

Defendants in their cross-appeal and find them to be

without merit.

CONCLUSION

For the reasons stated herein, we AFFIRM the

district court's decision insofar as it allocated shares of the

Coalitions’ response costs to the Municipal Defendants,

but VACATE the district court's:

° award of pre-judgment and post-judgment

interest regarding the LPC's claims; and

e award of a lump-sum for the BHC's future

recovery costs.

We REMAND the case for further proceedings not

inconsistent with this opinion.

4la

FILED

SEP 28 12:17 PM '99

Pe ieee bree 5 ak 3 Nath

US. DISTRICT COURT

NEW HAVEN, CONN

‘ UNITED STATES DISTRICT COURT

DISTRICT OF CONNECTICUT

: B.F. GOODRICH ET AL

j -vs-

: HAROLD MURTHA : DOCKET NO.

: 3:87CV52(PCD)

ALL CASES,

; CONSOLIDATED

. -Vs-

RISDON ET AL

i CADBURY BEVERAGES,

INC., ET AL

r -Vs-

f A.J. OSTER ET AL

RULING ON REPORT OF SPECIAL MASTER AND

OBJECTIONS THERETO

REE SPIO TO AN OY

The generation of trash and its removal was long

treated as out of sight, out of mind. Dumps were a

necessity but a problem only to one in whose backyard it

was located. Dump day, in small towns, was a social event

after which, with a little picking in the process, every one

went to homes sufficiently removed to be blessed with

42a

untainted air. As living space approached areas allocated

to trash disposal and trash was found to contain wastes

hazardous to the health of those living in proximity to the

dump sites, concern heightened and prompted community

regulation. The past came to haunt the present. Dump

leachate containing hazardous wastes (HW) required

remediation. Environment focus created the

Environmental Protection Agency (EPA) and Connecticut

Department of Environmental Protection (DEP). The

mandate to clean up sites of past indulgence was enacted

in 1980, the Comprehensive Environmental Response,

Compensation and Liability Act, 42 U.S.C § 9601 et seq

(CERCLA), administered in conjunction with the

Superfund Amendments and Reauthorization Act of 1986,

Pub.L. No. 99-499, 100 Stat. 1613 et seq and the Resource

Conservation and Recovery Act 42 U.S.C. § 6901 et seq

(RCRA).

Before these laws were enacted, two sites that are

the subject of this litigation received wastes, Beacon

Heights (BH) and Laurel Park (LP), bucolic names

substantially out of character with the problems posed. As

wastes were dumped, little thought was given as to

whether it would remain out of sight and out of mind.

Hazardous Substances (HS) found their way onto adjacent

property and into underground water and attracted EPA's

and DEP's attention. Each site warranted designation as

Superfund sites requiring substantial remediation of HS

spewing from their bowels.

The problem called for prompt remediation, a

quick and fair identification of responsible parties, and a

just response cost (R.C.) allocation, ultimately relegated to

litigation.

To their credit, whatever their motivation, the

apparently most responsible parties formed coalitions

Se al

- roy SY Oa RAR he

Ry Ata A ly. bat PILE ODN NALA ED

Bt oct ae a ee ee

43a

(BHC and LPC). They allied to remediate the sites, 2

entitling each to some benefit of the doubt as to the

equitable factors and factual uncertainty in allocating R.C.

Factual uncertainty suggests a lack of clarity as to PRPs'

responsibility for appropriate contribution, a concern

addressed over 10 years ago in the court's encouragement

of settlement of all claims as the best method of achieving

a just resolution. The court has no knowledge of the

negotiations between the coalitions and the PRPs. Thus

equity cannot be said to favor any party on the issue of

contribution.

Each coalition claims contribution to R.C. by

potentially responsible parties (PRPs), for which they have

the burden of proof. U.S. v. Colorado & Eastern R. Co., 50

F.3d 1530, 1536 (10th Cir. 1995), citing H.R. Rep. No. 99-253

(III), 99th Cong. 1st Sess. 19 (1986), reprinted in, 1986

U.S.C.C.A.N. 2835, 3038, 3042. See U.S. v. R.W. Meyer,

Inc., 889 F.2d 1407, 1507-08 (6th Cir.) cert. den., 494 U.S.

1057 (1990). The largest number of such claims have been

resolved by agreement or legal disposition, leaving a

Special Master (SM), appointed absent a showing of cause

to the contrary by the remaining parties, to determine

preliminarily the contributions to R.C. By order dated July

21, 1997, William J. Cousins was appointed S.M., one of his

duties being to conduct hearings and report his findings as

to the lawful contribution to be allocated to any remaining,

unresolved PRP, in accordance with CERCLA and

particularly 42 U.S.C. §§ 9613 (f) and 9607 (a). The S.M. has

now reported, doc. # 3066. The remaining alleged PRPs

seek acceptance of the report. The coalitions have taken

exception ruled on herein.

22 Thirty-two corporations constituted the Beacon Heights

coalition and entered into a consent decree for the

remediation of that site. Nineteen corporations

constituted the Laurel Park coalition and entered into a

consent decree for the remediation of that site.

FACTS:

i. PARTIES:

The report springs from the costs identified by the

coalitions as to each site. The propriety of the remediation

undertaken was not challenged, either as compliant with

the consent decree, see 42 U.S.C. § 9622, or the National

Contingency Plan. See 42 U.S.C. § 9607(a)(4)(B); 40 C.F.R. §

300.700(c)(3)(i). As prescribed by CERCLA, the coalitions

undertook remediation at the two sites and have incurred

costs to remediate each site. Each sought contribution

under § 9613(f) from hundreds of defendants, allegedly

PRPs as defined by CERCLA based on HW disposal. After

a 12 year processing, trial came down to allocation of R.C.

to eight municipalities, Naugatuck, Orange, Middlebury,

Plymouth, Hamden, Seymour, Westport and New Haven;

John Betkowski, Beacon Heights operato: from 1950 to

1970; George Clark, owner of Beacon Heights for 7 days in

1970; Jacob Brothers, Inc., disposer of unguantified tires

there from 1963-66 and May 1973 to Novenber, 1974; and

Zollo Drum Company, Inc., which allegedly disposed of

unspecified amounts of HW from 1967 to 1976.

2. BHC COSTS:

BHC claims contributions to its R.C. less a sales tax

rebate:

Design/ construction: $24,886,755.66

EPA 595,462.60

Leachate collection/ treatment 1,309,267.35

Discharge Permit 6,225.00

Potable water supply 1,369,946.88

Project management 4,648,003.77

Miscellaneous 105,224.40

Testing/ Consultants 283,648.23

Property acquisition 468,375.00

BHC asserts expenses related to Non-PRP

litigation, penalties, PRP identification end contributions

45a

of $1,910,175.12. Operation and maintenance of the site for

thirty (30) years, 1997 to 2027, is claimed to have cost and

require further expenditure of $11,947,766. For collection of

PRP contributions, legal fees of $2,340,733, S.M. fees of

$239,200 and accounting fees of $32,260.55 are claimed.

BHC asserted 386 PRP claims, settled 157 for

$7,217,285 and abandoned the rest, except those tried, as

unmerited or uncollectible.

3. LPC COSTS:

LPC has presented its costs as follows:

Remediation to date $20,398,626.51

Design, construction, EPA/ DEP

oversight, property acquisition

Projected costs, 6/1/98 to date

Operation/ maintenance of site $11,564,250.00

It has settled PRP claims for $8,395,887.90 at a cost,

including attorneys' fees, of $3,592,258.12 and would credit

its net recovery of $4,803,629.78 against its total

remediation cost of $31,962,876.51, thus including

collection costs.

4. RECOVERABLE AMOUNTS:

The R.C. claimed, except as found otherwise herein,

were and are necessary and consistent with the National

Contingency Plan.

5. WASTE DISPOSAL:

a) Beacon Heights (BH)

Until 1970 BH was a six acre open dump where

waste was mostly burned, reducing waste to under 10% of

the volume deposited. The pre-1970 Ueposits were about

22% of the total to 1979 and after burning amount to under

2% of what remains. Uniroyal and Goodrich were the

largest pre-1970 depositors, largely of industrial and

chemical wastes.

Beginning in 1970, the Murthas (who have settled

with the coalitions, but in amounts which are not reflected

46a

in the record for either site) owned and operated the site,

enlarging it to 30 acres and expanding to hundreds of

depositors. Some operations were changed in 1970, but it

continued to receive HW, some in liquid form from

coalition members. Liquid wastes, over 4,000,000 gallons,

were entirely the responsibility of BHC members,

particularly Uniroyal and B.F. Goodrich, depositors of 56%

of the entire disposal. The total BHC volume, liquid and

solid, was some 363,914,415 gallons of wastes containing

HS subject to CERCLA. P.Ex. 37A. The S.M. found high

toxicity (HW content) and a propensity of that waste,

particularly in liquid form, to find its way into the site's

leachate, a finding documented and sustained.

The volume and character of the settling PRPs’

waste is not in the record. Disposal by 64 non-BHC totaled

163,698,879 gallons.

Seven municipalities and four other remaining

alleged PRPs, from which contribution is sought, disposed

of solid waste at BH as follows:

i) Hamden's MSW was delivered to

Connecticut Resource Recovery Authority

(CRRA) which, with DEP approval,

arranged transport by Connecticut Waste

Processing, Inc. (CWPI) to BH from

December 1978 to June 1979, of about

4,770,009 gallons. CRRA and CWPI, both

sued as PRPs, partly based on that MSW,

have seemingly _ settled, apparently

providing BHC with some contribution for

Hamden's MSW. To allocate a contribution

to Hamden for that MSW _ without

allowance for other contributions for the

same MSW would be inequitable. BHC

allocates Hamden 2.1040%.

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47a

ii) Naugatuck incinerated waste and,

through Murtha, sent an_ estimated

9,922,184 gallons of MSW to BH from 1976

to 1979 when LP closed. BHC allocates it

4.3766%.

iii) New Haven, through the CRRA with

DEP approval, sent about 6,473,583 gallons,

from December 1978 to June 1979. Its MSW

is subject to the observations in i) above.

BHC allocates New Haven 2.8554%.

iv) Orange disposed of MSW, commercial

and construction waste, through Murtha,

from 1970 to 1979, an estimated 20,235,349

gallons. BHC allocates it 8.9256%.

v) Plymouth, a town of under 12,000

residents, through Murtha, may have

deposited about 4,449,088 gallons or 33,400

cu. yds. BHC allocates it 1.9625%.

vi) Seymour, through Murtha, deposited

MSW at BH from 1973-79, 13,166,688

gallons. BHC allocates it 5.8077%.

vii) Westport disposed of 73,116,636 gallons,

361,999 cu. yds., of MSW from 1971-77, to

which BHC allocates 32.35%. As the MSW

deposited from 1967 through 1969 was

burned, the residual volume would be

287,066 cu. yds.

viii) Betkoski operated the site before 1970

as a burn operation. That resulted in the

waste deposited being reduced to under 2%

48a

of the volume. There was no evidence of

precise measurement of waste deposited

other than that of the BHC, nor could the

HS be calculated precisely. Four of BHC

contributed about 50% of the volume, of

which 4.3% was liquid.

ix) George Clark owned BH for .06% of its

operation time.

x) Jacob Bros. Inc. scrapped tires at BH from

1963-66, when they were burned, and

1973-74. An HS is a constituent of tires. The

total deposit was estimated to be 1440 tons

of which 75%, 1080 tons, were burned to a

residue of 108 tons. The total remaining on

site then would be 468 tons.

xi) Zollo Drum incorporated in 1986.

Successor liability was claimed in order to

attribute liability for drums bought, cleaned

and sold. Waste was not handled. If deemed

to have transported waste otherwise

generated, including by BHC members,

which contributions therefor have been

achieved, BHC would allocate Zollo .6832%.

b) Laurel Park

Waste was burned at LP until 1964, substantially

reducing residual volume and HS. Before LP was finally

closed, its negative environmental impact caused

significant concern to Naugatuck, Middlebury, Orange,

Seymour and Plymouth officials.

Uniroyal's Chemical Division deposited 76,000,000

pounds of chemical and industrial waste as of 1960 and

another 172,000,000 pounds as of 1976, apart from the

49a

waste from its other divisions. Its total waste deposited

was 1,642,583 cu. yds. with a hazard factor (used for

comparison purposes in the allocation to which LPC

members agreed) from .4 to 10. This included large

amounts in liquid form but the greater bulk was

comparable to MSW. It totaled 77% of the LPC waste at LP.

Others in the LPC contributed a total of 657,776 cu. yds.

with a hazard factor from .4 to 10. The report found that

these substantially contributed to the toxic quality of the

leachate. The finding of the amount and quality of LPC

HW is documented and is sustained.

The volume and character of the waste of the PRPs

who have settled was not placed in the record.

The defendants’ waste at LP was as follows:

i) Naugatuck deposited MSW,

governmental waste and bulky waste at LP,

except in 1976 to 1979, when it was closed,

and in 1983 to 1984. Until 1967 it was

uncompacted and became fully compacted

in 1969. It paid Murtha a flat fee. No volume

or weight was measured. From CRRA's

weight in 1989, LPC extrapolated per

annum weight for 1950, estimating a total

from 1950 to 1987 of 174,487 tons of

compacted waste, or 581,624 cu. yds., and

129,834 tons of uncompacted waste, or

2,996,694 cu.yds., of which 2,115,531 cu.

yds. were burned and thus reduced in

volume by 90%. Naugatuck's MSW was not

limited to household waste and thus was

likely to include more HS than the average.

Bulky waste and construction waste was

not shown to contain HS. LPC would

allocate 31% of the R.C. to Naugatuck.

50a

ii) Orange's MSW was calculated to be

177,407 cu. yds. to which LPC would

allocate 3.4% of R.C.

iii) Plymouth disposed of 107,054 to 151,398

cu. yds of MSW, a mean of 129,226, for

which LPC would allocate 2.9% of R.C.

iv) Seymour disposed of 143,577 cu. yds of

compacted and 47,651 cu. yds. of

uncompacted MSW to which LPC would

allocate 3.2% of R.C.

v) Middlebury disposed of 228,854 cu.yds of

compacted and 32,42 cu. yds. of

uncompacted MSW to which LPC would

allocate 4.7%

6. QUALITY OF WASTE

The same facts apply in this respect to both sites.

The report finds that the form, nature, toxic quality,

mobility, magnitude, and HS of the coalitions' waste

disposed of at the two sites, with the resulting release or

threatened release of HS from the sites, required

remediation (i.e. response costs) as undertaken by the

coalitions under their respective consent decrees, a finding

fully documented in the record and sustained.

The S.M. found that the characterization of

municipalities!’ MSW as a major source of HS by the

coalitions' expert, Dr. Brown, was not credible. It was

found that HS existent in MSW, a generic fact, are not

present in pure form. Rather, they are constituent

elements in consumer products and remain in minute

residue in containers after the products with such elements

are removed and used. It was also found per Dr. Brown

that, at most, hazardous substances were .1 to .4% by

ss Sictibhipebrld egrapetcnr a be

Phils Leia Miheg SAU

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volume of MSW. No empirical MSW study was done at

either site, even by sample. Though statistically sound, the

generic approach leaves open the question of whether a

municipality's MSW conforms to a national profile. HS in a

product or container could not be released and/or find its

way into leachate except by deterioration of the product or

container and preservation of the HS. There was no

evidence that any MSW HS could be demonstrated to

follow that course and process and thus be traced to a

presence in the leachate or ground water from either site.

Dr. Brown offered the theory that generically all MSW

contained HS which found their way out of a disposal site

eventually to present a CERCLA problem. He did not

find, nor see as necessary, a causal connection between a

disposal of HS in MSW and a movement thereof from the

site as to necessitate remediation. Mr. White did consider

it. Such movement and relation to remediation he took as

a given, a proposal rejected by the S.M. as a question of

fact. Although the coalitions, through proof of liability

based on the existence of HS in MSW, have no burden of

proving HS from a specific source is released from the site,

in the face of PRPs' evidence challenging such a finding,

the absence of countering evidence is appropriate in

considering claims for contribution.

if CONVERSION:

One cubic yard equals 201.98 gallons. One pound

of solid waste equals .75 gallon (1650 gallons per ton). One

pound of liquid waste equals .12 gallon (264 gallons per

ton).

DISCUSSION:

i. CERCLA LIABILITY

Faced with a history of indiscriminate disposal of

HW with monumental environmental damage, Congress

opted for a scheme of absolute liability for disposers of

HW. The EPA first identifies parties to be responsible for

the cost of a site's remediation in an administrative

52a

proceeding. As is the case here, one or more responsible

parties can, by consent, assume responsibility for clean up

of a Superfund site. The coalitions have done so here. They

have further settled their claim of responsibility as to the

Murthas. 42 U.S.C.§9613(f) authorized claims for

contribution by BHC and LPC against any party who

disposed of HW at a site (PRP). That assured the

maximum assumption and imposition of liability for a

site's remediation. Equitable factors were to be the

standard for allocation of R.C. among those responsible.

The S.M. noted the claims for contribution as based

on disposal by each third party defendant of wastes

containing HS designated by EPA. Clearly disposal of HS

was treated as a given. The report does not discuss

liability. Under CERCLA, disposal of HS constitutes

liability. The report does not focus on liability, nor does it

ultimately excuse the alleged PRPs for their involvement.

Rather it focuses on how much of R.C. each PRP should be

allocated in accordance with § 9613(f). R.C. may be

allocated "among liable parties." Id. Allocation can only

follow a finding of liability. The suggestion that the S.M.

improperly failed to find liability is

without merit.

As a remedial statute CERCLA is construed

liberally and in furtherance of its corrective purposes. B.F.

Goodrich v. Betkoski, 99 F.3d 505, 514 (2d Cir. 1996)

(Murtha II). It set criteria for identification of those to be

liable to correct the contamination, and when found,

absolute liability applied. B.F. Goodrich v. Murtha, 958

F.2d 1192, 1198 (2d Cir. 1992)(Murtha I).

2. EQUITABLE FACTORS:

The report discusses equitable factors applied in

determining allocations as to the PRPs, in keeping with

"such equitable factors as the court determines are

appropriate." Id. As illustrated in its dealing with the

question of releasability, one who is liable by reason of the

53a

disposal of HS possibly may not be required to pay

damages when the cost apportionment phase of the

litigation is reached. Murtha il, 99 F.3d at 517. The S.M.

considered a number of equitable factors and found that

no R.C. should be allocated to the PRPs before him. The

factors discussed in the report and rejection of PRP

contribution based thereon, will be reviewed seriatim.

The exhaustive and selective analysis of data and

methods of apportionment demonstrates that no formula

is scientifically nor objectively invulnerable to criticism. A

reasonably fair allocation considering all relevant equitable

factors complies with CERCLA's purpose and language. If

the remaining parties are not satisfied with the result, they

had their opportunity to devise a negotiated allocation

which they were told, over ten years ago, would be more

agreeable than a court allocation subject to the frailties in

selecting and weighing the myriad of asserted equitable

factors.

a) A finding of the presence of HS in MSW

could be based on Dr. Brown's testimony or on the

testimony of the PRPs' experts. Dr. Brown did not inspect

either site. He was not a chemist and did no empirical

studies of MSW. He relied on reports of HS in MSW from

a number of municipalities. He concluded that all MSW

contains HS. He did not consider any steps taken by

municipalities to preclude HS from their MSW.

Regulation of MSW and any steps taken to control HS in

MSW led Dr. Brown to note that the composition of

particular MSW streams may not correlate to a national

profile of MSW. Any such regulation, though not

controlling nor treated by the S.M. as such, and neither

uniform nor all-encompassing over the period of waste

disposal in question, was properly considered as an

equitable factor relevant to the claimed presence of HS in

MSW. The unproven claim that all MSW should be treated

as comporting to a nationwide profile of MSW without

54a

inquiry as to the makeup of particular MSW is a legitimate

equitable factor. Also to be considered is evidence that

MSW-only landfills have generated HS in leachate.

b) MSW arguably contained HS in products

essentially consumed but present in minuscule residues in

the product containers. There was no evidence of the

propensity or prospect of such HS escaping from the

containers nor of the rate or susceptibility of various types

of containers to degrade and permit the escape of such HS.

There was evidence of HS being affected by interaction

with other elements as to alter their character as HS. All

these, and related, questions pertaining to HS in MSW in

such form, and the answers, or lack of answers, were

legitimately considered by the SM as relevant equitable

factors. Such HS hardly impacts, environmentally, as

greatly as highly concentrated HS in liquid form that

almost immediately is "released" to migrate into ground

water and into leachate. Such forms of HS would,

equitably, warrant varied allocation of R.C.

c) MSW can be made up of many materials,

some of which are in turn absorbent of liquids present.

Without observation of the MSW of a particular

community, the percentage of absorbent material, and thus

the capacity of the MSW to hold liquid carrying HS, cannot

be assessed. The evidence bearing on such questions is

relevant to equitable consideration of its impact on

remediation.

d) As a constituent element in "routinely

distributed consumer products" HS would only be a

remediation factor if it came to be released, or was a threat

to be released. If such products did not break down into

their constituent elements in a free state, then it could be

found that such were not released nor a threat thereof at

any particular point in time. To assess the role of such HS

in the immediate or foreseeable need for remediation,

evidence as to such products rate of and propensity to

5Sa

breakdown would be pertinent. Absent such evidence, it

would be difficult to determine the actual or threatened

release of HS. Through products subject to degradation or

decomposition, elements which constitute HS were

properly found to attenuate or to form, with other

elements, new compounds which did not migrate into

underground water nor off the site. Comparing PRPs' HS's

impact on leachate with that of plaintiffs' HS is a valid

equitable consideration. See U.S. v. Alcan Aluminum

Corp., 964 F.2d 252, 267-71 (3d. Cir. 1992); U.S. v_ Alcan

Aluminum Corp., 990 F.2d 711, 717, 722 (2d. Cir 1993). A

"release," for CERCLA purposes, does not require HS to

find its way into leachate. The evidence does not permit

the conclusion that HS from one or more particular waste

streams caused or necessitated specific remediation.

Causation is not a factor as to liability but it is a valid

equitable factor in determining R.C. allocation.

e) Contribution liability is imposed based on

the claimed contributor being liable or potertially liable

under § 9607(a). The latter casts liability on a person in

relation to a site in terms of a "release, or a threatened

release [of HS] which causes the incurrence of response

costs." Id. Assessment of evidence offered as to a claim for

contribution, including the credibility of the witnesses who

are the source of such evidence, is a proper factor to be

considered. It is clear that the S.M. accepted the premise

that inclusion of some HS in MSW mandates a finding of

liability. See Murtha I, 958 F.2d at 1201. It does not

mandate allocation of R.C. to one found liable. The

circumstances of disposal by one found liable is an

appropriately considered equitable factor.

f) A factor discussed in the report is mobility

of HS. One seeking contribution is not obliged to prove

that the HS found in leachate from the site includes HS

deposited by a particular source, to be entitled to a

contribution from that source. The report notes Dr.

56a

Brown's view that it is adequate to require a particular

PRP to contribute if its HS shows in the leachate from the

site. The PRPs offered evidence which disputed their HS'

mobility. That raised credibility issues which the SM

resolved in favor of the PRPs' witnesses, as part of his

consideration of what R.C. should be allocated to

remaining PRPs. Rejection of Dr. Brown's opinion was not

a basis for finding that the PRPs were not liable as the S.M.

did not so find. Using the term mobility as reflective of the

propensity of HS in the MSW to migrate into the ground

water and off the sites, the S.M. credited the evidence of

the PRPs' witnesses and not the views of Dr. Brown in this

respect. That credibility assessment and a finding as to

mobility of HS in MSW were equitable factors properly

considered in deciding the issue of contribution. These

factors would not preclude a contribution for want of

proof that a PRP's HS necessitated particular remediation

and its attendant cost.

g) The report discusses whether PRPs caused

incurrence of R.C. It suggests that though a person may

dispose of HS at a site, if that HS does not cause incurrence

of R.C., equitably that person should not be allocated part

of those costs. Put another way, the report suggests that

based on the evidence, the coalitions' HS were of a nature

and extent to have been released, or to have threatened a

release such that remediation of those HS, alone,

necessitated the full response costs incurred or to be

incurred. Based on that finding, the SM did not allocate a

share of the R.C. to the PRPs. Crediting the PRPs' experts

and not Dr. Brown, the SM found that HS of the PRPs did

not add to the R.C. The coalitions' HS was found to have

necessitated the full R.C. Any R.C. attributable to PRPs' HS

was found to constitute a lesser included cost in the total

cost necessary to correct the coalitions' contamination.

That was properly considered, though not a determinative

factor.

57a

h) The reasons cited for the SM's rejection of

the views of Dr. Brown are found to be relevant in the trier

of the facts' determination of Dr. Brown's credibility.

i) At most the record reflects a concentration

of HS in MSW of .1% to .4%. The consideration, by the

S.M., of that concentration as opposed to the nature, form

and extent of the coalitions' HS was proper as an equitable

factor. See Acushnet Co. v. Coaters Inc., 948 F.Supp 128,

141 (D.Mass. 1996). A thimble full of HS would have far

less negative environmental impact than would a gallon.

The disposer of the thimble full, though properly found to

be liable, could properly be deemed to have caused such

negligible negative environmental impact as to be obliged

to contribute to the R.C. on the basis of a comparison

between the impact caused by his HS and that of others.

Comparison of the amount of PRP HS to that disposed of

by the coalitions is a valid and properly considered

equitable factor. The coalitions' claims that the PRPs's HS

"added to the concentration of contaminates" assumed,

without basis, according to the S.M., that the addition, no

matter the amount, added to the necessary remediation

and in turn to the R.C. BHC and LPC were not obliged to

prove that HS of one liable under CERCLA caused specific

remediation or R.C. Murtha II, 99 F.3d at 526. Evidence

that the remediation necessitated by the coalitions' HS was

not altered nor the cost thereof increased by PRPs' HS was

not improperly considered by the S.M. as an equitable

factor in determining PRPs' contribution.

j) The foundation of the opinions of Dr.

Brown was properly considered in assessing the weight of

his testimony on the asserted allocation of R.C. to PRPs.

His assumption that characteristics of the seepage from

several sites was attributable to MSW, withou

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