TDY Holdings v. United States, No. 15-56483 (9th Cir. 2017)
Annotate this CaseTDY filed a complaint under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA), 42 U.S.C. 9613(f)(1), seeking contribution from the government for its equitable share of the cleanup costs. The Ninth Circuit reversed the district court's grant of judgment in favor of the United States, which allocated 100 percent of past and future CERCLA costs to TDY. The panel agreed with the district court that some deviation from the allocation affirmed in Shell Oil Co., 294 F.3d at 1049, and Cadillac Fairview, 299 F.3d at 1022–23, was warranted by distinguishing facts. However, the panel held that encumbering a military contractor with 100 percent of CERCLA cleanup costs that were largely incurred during war-effort production was a 180 degree departure from the panel's prior case law, and the out-of-circuit authority that the district court relied upon did not warrant such a sharp deviation. In this case, the district court did not adequately consider the parties' lengthy course of dealings and the government's requirement that TDY use two of the hazardous chemicals at issue. Accordingly, the court remanded for additional proceedings.
Court Description: CERCLA. The 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. CERCLA 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. The 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 TDY HOLDINGS V. UNITED STATES 3 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. Judge 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.
The court issued a subsequent related opinion or order on March 20, 2018.
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