# Petition for Writ of Certiorari — Town of Middlebury, Connecticut v. Goodrich Corp., Fka B. F. Goodrich Co. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_1415%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 2003 - **Citation:** 539 U.S. 937 ## Text Sunrem Coyrt, U.S. FitED 02148 5 APR 8 - 2003 f © No. In The Supreme Court Of The United States 2 TOWN OF MIDDLEBURY, et al., Petitioners, v. GOODRICH CORP., et al., Respondents. 4 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 Ne come eT PEP NE TORR RETIN OT LS, SORE RIOR pn MA ae RE EY LALO AL LOOT IRIN L! FOM eee ees SR oe tal ea as i 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? il 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 ; . j 4 2 # 4 ¥ ; 3 — nO SONS Metin eee et te NE tala ore TOE, ste Pt ene 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. iv 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 Vv 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 vi (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 ix 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 te CRE ee 1 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: , ee xX 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 INLUIIIN cccceveesessesersnecvcesenocsoccessenssveneesnossnsvsssnsonsecnssseenes 24 PPT, ccccccsenesvesnssereeesionensnesinnnevenatninsosncanssnsnssnsensenes la-141la ; ‘ \ } ; x1 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 ee ee ae ee Xili RULES EE ST 2,14 EEE 4,14 i sasesscccccsesersees passim STATUTES Cee cscs asscsnessesesenrerenes 1 LSA 1,2 CE 1,2 eee setdscncnssscnccessesesesenscersececseseses 3 EE passim 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 l 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) 2 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 3 (“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. 4 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.” 5 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 7 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 8 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 9 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 10 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. 11 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).” Ee 12 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 13 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 14 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). 15 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 16 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 17 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 18 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. 19 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 20 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 21 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 22 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 23 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. 24 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, v. 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 la 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. 2a 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. 3a 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). 4a 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. Sa 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. 6a 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. 7a 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. 8a 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 9a 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 ee - ” 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 19a 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). 20a 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. 2la 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 22a 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 23a 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. 24a 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 25a 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 26a 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 27a 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 28a 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. PSE TESS RIE ERO RG eco ¢ SEY ee ee at 3 Prot Lee Pa SEAT BU ihe NS ET ON SARIN 42 Rta RS Cd Gin OF be SSeS ten ee se aa ERS Wee RUM ARY Sita ems CLE pu Tach SAS 29a 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 30a 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 31a 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. 32a 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 33a 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. 34a 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 ‘ . Lge ORIG EOS BY AWG A Te MS ig OSS EE REESS. a cage we acts oe a ad ae Na aI ALT — Pe PE Ee eS ok etn SUSLeescapin ik hess AI Soe EH AA AIT Sa tS Bae nee RAD RELA Soa eS Ign ee Nom SA. aE Sate SRE SBMS 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 expl [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_1415%3A1. Public record. Not legal advice.