Submitted May 8, 2017 Pasadena, California
from the United States District Court for the Southern
District of California Cathy Ann Bencivengo, District Judge,
Presiding Argued and D.C. No. 3:07-cv-00787-CAB-BGS
Randall M. Levine (argued), Douglas A. Hastings, and Bryan M.
Killian, Morgan Lewis & Bockius LLP, Washington, D.C.;
James J. Dragna, Morgan Lewis Bockius LLP, Los Angeles,
California; for Plaintiffs-Appellants.
E. Heron (argued), Dustin J. Maghamfar, Mark A. Rigau, Lewis
M. Barr, Ellen J. Durkee, and Aaron P. Avila, Environment and
Natural Resources Division, United States Department of
Justice, Washington, D.C., for Defendants-Appellees.
B. Wolff, Alexander M. Fenner, and Mark W. Schneider, Perkins
Coie LLP, Seattle, Washington; Shane R. Swindle, Perkins Coie
LLP, Phoenix, Arizona; for Amicus Curiae National Defense
Before: J. Clifford Wallace, Morgan Christen, and Paul J.
Watford, Circuit Judges.
panel reversed the district court's judgment in favor of
the United States in an action brought by a plaintiff
military contractor under the Comprehensive Environmental
Response Compensation and Liability Act ("CERCLA"),
seeking contribution from the government for its equitable
share of the cleanup costs of plaintiff's aeronautical
manufacturing plant located in San Diego, California.
imposes strict liability on potentially responsible parties
("PRP") for the cleanup costs of an environmental
hazard. Plaintiff and the federal government were PRPs for
the cleanup at issue, and plaintiff argued that the district
court abused its discretion when it allocated all of the
cleanup costs to plaintiff.
panel rejected plaintiff's suggestion that the district
court erred by misconstruing the concept of "fault,
" or misunderstanding CERCLA's strict liability
statutory scheme. The panel further held the district court
did err, however, in its analysis and application of the two
most on-point decisions - United States v. Shell Oil
Co., 294 F.3d 1045 (9th Cir. 2002), and Cadillac
Fairview/California, Inc. v. Dow Chem. Co., 299 F.3d
1019 (9th Cir. 2002) - that considered how CERCLA cleanup
costs should be allocated between military contractors and
the federal government. The panel held that the district
court erred in concluding that Shell Oil and
Cadillac Fairview were not comparable, and in
allocating zero percent of clean-up costs to the government,
particularly in light of the parties' prior course of
dealings and the government's requirement that plaintiff
use two of the hazardous chemicals at issue. The panel
remanded for additional proceedings.
Watford concurred. He agreed that the record did not support
allocating 100% of the clean-up costs to plaintiff, but in
his view the record did support something close to that.
CHRISTEN, CIRCUIT JUDGE:
TDY Holdings, LLC, TDY Industries, LLC, and its predecessor,
the Ryan Aeronautical Company (collectively, TDY), operated a
forty-four-acre aeronautical manufacturing plant located in
San Diego, California, from 1939 to 1999. TDY derived between
90 and 99 percent of its business from military contracts
with the U.S. government. Over time, certain chemical
substances used in the course of manufacturing operations
were released, contaminating the soil and groundwater in and
around the plant and requiring TDY to incur substantial
remediation expenses. In 2007, TDY filed a complaint under
the Comprehensive Environmental Response Compensation and
Liability Act (CERCLA), seeking contribution from the
government for its equitable share of the cleanup costs.
After a twelve-day bench trial, the ...