United States District Court, E.D. Michigan, Southern Division
FORD MOTOR COMPANY, and AK STEEL CORPORATION, Plaintiffs/Counter-Defendants,
MICHIGAN CONSOLIDATED GAS COMPANY, Defendant/Counter-Plaintiff, Cross-Plaintiff, UNITED STATES OF AMERICA, Defendant/Cross-Defendant.
OPINION AND ORDER GRANTING UNITED STATES' MOTION FOR JUDGMENT ON THE PLEADINGS (ECF NO. 162) AND GRANTING PLAINTIFFS' AND UNITED STATES' MOTION TO CERTIFY THE SCHAEFER ROAD AREA CONSENT DECREE FOR APPEAL (ECF NO. 154)
PAUL D. BORMAN, District Judge.
I. INTRODUCTION AND PROCEDURAL HISTORY
Now before the Court is the United States' Motion for Judgment on the Pleadings pursuant to Federal Rule of Civil Procedure 12(c) which was filed on June 4, 2014. (ECF No. 162). Previously, on January 23, 2014, this Court denied the United States' Motion to Dismiss MichCon's Third-Party Complaint. (ECF No. 148). Thereafter, the United States filed its Answer and a Counterclaim to MichCon's Third-Party Complaint. (ECF No. 159)
On June 18, 2014, Michigan Consolidated Gas Company ("MichCon") filed a Motion to Strike the United States' Motion for Judgment on the Pleadings contending the motion was duplicitous of its previous motion to dismiss. (ECF No. 165). After briefing, the Court issued an Opinion and Order denying MichCon's Motion to Strike and establishing a briefing schedule. (ECF No. 171). MichCon filed a Response to the Motion for Judgment and the United States filed its Reply. (ECF Nos. 175, 178).
Also before the Court is the United States' request that the Court certify the Schaefer Road Area Consent Decree for appeal pursuant to FED. R. CIV. P. 54(b). (ECF No. 120). The United States made the request in its previous motion to dismiss pursuant to FED. R. CIV. P. 12(b)(6). The Court declined to address the issue at that time. Plaintiffs Ford Motor Company and AK Steel Corporation have filed a separate motion also seeking to certify that decree for appeal. (ECF No. 154). MichCon filed a response and Plaintiffs thereafter filed a reply. (ECF Nos. 156, 157).
The Court previously set forth a brief recitation of the history of the Rouge Manufacturing Complex and Schaefer Road Area relevant to these proceedings:
In the late 1910s, Ford Motor Company ("Ford") built the Rouge Manufacturing Complex ("RMC") in Dearborn, Michigan. The RMC was a vertically integrated automotive production plant. The operations at the plant were "comprehensive and encompassed all phases of production, from the processing of raw materials through the manufacture and assembly of finished products." (Third-party Complaint ("T-P Complaint"), Dkt. No. 71, ¶ 8).
Among other things, the RMC engaged in coke oven production (utilizing up to 183 coke ovens) involving the destructive distillation of coal from 1919 through 1987. (T-P Compl. ¶ 10). The operation of these coke ovens resulted in the production of gas and by-products. (T-P Compl. ¶ 10). Currently, the RMC is being regulated as an "active and ongoing corrective action facility under the Resource Conservation and Recovery Act ("RCRA") and the Natural Resources and Environmental Protection Act ("NREPA"). (T-P Compl. ¶ 11).
MichCon, or its predecessor, once owned a parcel of land located immediately west of the RMC and the original River channel. (T-P Compl. ¶ 12). From 1968 until 1973, the Army Corps of Engineers ("Army Corps") rechanneled the River in response to a 1947 flood. (T-P Compl. ¶ 14). In 1968, prior to the River being rechanneled, MichCon sold 22 acres of its land parcel to Ford. (T-P Compl. ¶ 13). Prior to the rechanneling project, these 22 acres were located on the west side (the "MichCon" side) of the original River channel, however, the rechanneling caused those acres to be relocated on the east side (the "Ford" side) of the new River channel. (T-P Compl. ¶ 14). The 22 acres are now part of a larger area known in this litigation as the Schaefer Road Area ("SRA"). (T-P Compl. ¶ 13). MichCon retains ownership of the land to the west of the new River channel. (T-P Compl. ¶ 15).
MichCon alleges that during the rechanneling of the River, the Army Corps "excavated through an open dump operated by the City of Melvindale, a portion of MichCon's former waste water ponds, sediments in the former River channel, and one of Ford's SRA sludge ponds that Ford had operated since 1954." (T-P Compl. ¶ 16). MichCon contends that the Army Corps' activities "disrupted, displaced, and relocated substantial volumes of contaminated material" and that contaminated material was then used as "fill" in other areas of the SRA. (T-P Compl. ¶ 16). MichCon further alleges that the Army Corps installed a concrete channel, pea gravel bed, dewatering pipe and pressure relief vents that created a "preferential pathway" which allowed contamination to more easily migrate. (T-P Compl. ¶ 17). MichCon asserts that due to the detection of hazardous substances and metals being detected on the SRA in excess of applicable cleanup criteria, the SRA is a "facility" under CERCLA, § 101(9).
MichCon alleges that it has incurred and will continue to incur "necessary response costs" including the retention of environmental consultants who have: (1) analyzed the SRA property; (2) analyzed nearby properties; (3) analyzed the extent of the contamination at or emanating from the SRA and nearby properties; (4) investigated and evaluated the releases and the causes of contamination at the SRA and nearby properties requiring the remediation as a result of releases by the United States and other parties; (5) evaluated any migration to MichCon's current property; (6) analyzed potential remedial measures; (7) analyzed response activities proposed by Ford and [AK Steel], and (8) provided comments to the Michigan Department of Natural Resources and Environment on the scope and adequacy of the investigations and effectiveness of the Proposed Remedy. (T-P Compl. ¶¶ 37, 39).
(Opinion and Order, ECF No. 148, *3-5).
A. Ford and AK Steel's Claims against MichCon
Ford and AK Steel (collectively, "Plaintiffs") are involved in designing a permanent remedy for the contamination of the SRA and are under the oversight of the Michigan Department of Environmental Quality ("MDEQ"). (T-P Compl. ¶¶ 39, 40). Plaintiffs are incurring and will continue to incur costs as a result these activities. (T-P Compl. ¶ 23; see also Ex. A, Pl.'s First Am. Compl.). To this end, in 2000, Ford entered in to a Corrective Action Consent Order ("CACO") with the MDEQ to address the contamination at the SRA. (Id. at ¶ 28).
In August 2008, Plaintiffs filed the underlying action against MichCon (and the genesis of all litigation between the Plaintiffs, MichCon and the United States since) seeking, in relevant part, cost recovery and contribution pursuant to the sections 107(a) and 113(f) of Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. §§ 9607(a), 9613(f), from MichCon relating to the remediation of contamination at the SRA in accordance with the CACO. (ECF No. 1). In December 2011, in the face of MichCon's first motion to dismiss (ECF No. 13), Plaintiffs amended their complaint and set forth claims for cost recovery and contribution from MichCon under CERLCA §§ 107(a), 113(f), claims of contribution and cost recovery pursuant to NREPA, as well as a claim of common law indemnification all relating to Plaintiffs' costs incurred in the clean up of the SRA. (ECF No. 16). After Plaintiffs' amended their complaint, MichCon filed a second motion to dismiss arguing that Plaintiffs could not seek cost recovery pursuant to CERCLA, § 107 (and its Michigan counterpart, NREPA) because its costs were not incurred "voluntarily". (ECF No. 21). MichCon also argued that Plaintiffs' contribution claims pursuant to CERCLA, § 113 (and its Michigan counterpart, NREPA) should be dismissed because the CACO did not qualify as a judicial or administrative settlement pursuant to § 113(f)(3)(B).
On September 29, 2009, United States District Judge Robert Cleland issued an Opinion and Order ("the 2009 Opinion") that mooted MichCon's first motion to dismiss, and granted in part its second motion to dismiss. See 2009 Opinion, No. 08-13503, 2009 WL 3190418 (E.D. Mich. Sept. 29, 2009) (available on the docket at ECF No. 36). In its Opinion, the Court examined the then recent Supreme Court decision of Atlantic Research, stating that the Supreme Court had held that potentially responsible parties under CERCLA "could maintain a cause of action under either § 107(a) or § 113(f), depending on the particular procedural circumstance[ ]'." Id. at * 5 (quoting United States v. Atlantic Research Corp., 551 U.S. 128, 131 (2008). Significantly, the Court held that Plaintiffs' cost recovery claim pursuant to CERCLA § 107(a) could continue, finding that
the focus of the Atlantic Research court's reasoning is determining the type of costs sought to be recovered. If the party is seeking recovery of direct costs incurred in cleaning a site, the claim must be brought under § 107. If the party is seeking to recover indirect costs incurred in reimbursing another party for their costs, the claim must be brought under § 113.
Id. at *7 (citing United States v. Atl. Research Corp., 551 U.S. 128, 139 (2007)). In a footnote, the Court also harmonized its reasoning with ITT Industries, Inc. v. BorgWarner, Inc., 615 F.Supp.2d 640 (W.D. Mich. Mar. 31, 2009) (Bell, J.) (hereinafter " ITT Industries II "). 2009 Opinion, at *7 n. 4.
In ITT Industries II, United States District Judge Robert Holmes Bell explained:
Atlantic Research held that "the remedies available in §§ 107(a) and 113(f) compliment each other by providing causes of action to persons in different procedural circumstances.' Consistent with the language of the statute and the case law, the relevant procedural circumstances are whether the plaintiff has been subject to an enforcement action under § 106 or § 107. If it has, then the plaintiff is limited to a § 113(f) contribution claim. If it has not, the plaintiff can bring a § 107 claim.
Id. at 647 (internal citation omitted). Judge Cleland acknowledged this reasoning and harmonized it with its finding, noting that in the present action "there was no indication" that Plaintiffs had been subject to a § 107 claim, therefore, Plaintiffs' own § 107 claim was not foreclosed by Judge Bell's reasoning. Id. Judge Cleland also found there was nothing in the text of CERCLA that indicated that a party could not seek non-voluntary costs in addition to voluntary costs through a § 107(a) claim, and that construing the Amended Complaint in a light most favorable to Plaintiffs, Plaintiffs had adequately alleged that they had incurred voluntary costs in cleaning up the SRA that were not a result of the CACO. 2009 Opinion, at *8-9.
Judge Cleland also held in the 2009 Opinion that Plaintiffs' contribution claim failed to state a claim upon which relief could be granted because Plaintiffs failed to plead facts sufficient to show that the Plaintiffs' agreement with the State regarding the clean up of the SRA qualified as a judicial or administrative settlement pursuant to CERLCA. See 2009 Opinion, at *11-14. Specifically, the Court found that the Sixth Circuit's holding in ITT Industries, Inc. v. BorgWarner, Inc., 506 F.3d 452 (6th Cir. 2007) (hereinafter " ITT Industries I "), that held an agreement pursuant to § 122(a) did not qualify as an "administrative or judicially approved settlement". 2009 Opinion, at *11 (quoting ITT Industries I, 506 F.3d at 460). Judge Cleland noted that this reasoning was also consistent with Judge Bell's recent ITT Industries holding because in this instance where the Plaintiffs did not have a § 113(f) claim but had adequately pleaded their § 107 claim, there was no potential for overlap in recoveries for Plaintiffs. 2009 Opinion, at *7 n. 4.
B. MichCon's Counterclaim against Ford and AK Steel
On October 30, 2009, MichCon filed its Counterclaim against the Plaintiffs (ECF No. 40). In its counterclaim, MichCon set forth a contribution claim pursuant to CERCLA §113(f), a cost recovery claim pursuant to CERCLA § 107, and the corresponding NREPA provisions. (Id. ). Thereafter, on November 15, 2009, Plaintiffs filed a partial motion to dismiss MichCon's Counterclaims. (ECF No. 42).
In December 2009, the parties attempted private facilitation, but the attempt was not fruitful. On August 27, 2010, Judge Cleland issued an opinion and order granting Plaintiffs' partial motion to dismiss MichCon's Counterclaims. (ECF No. 55). However, following a motion for reconsideration, the Court allowed MichCon to file an Amended Counterclaim against the Plaintiffs which reasserted its CERLCA claims and corresponding NREPA claims. (ECF Nos. 69, 70).
C. Consent Decrees and claims against the United States
In an earlier, separate case before United States District Judge Bernard A. Friedman in 2004, Ford Motor Co. v. United States, No. 04-72018 (E.D. Mich.) (" Ford I "), Ford and the United States engaged in settlement negotiations regarding the Rouge Manufacturing Complex ("RMC") and the Schaefer Road Area ("SRA"). (Dkt. No. 115, Opinion and Order Granting Consent Decree at 6-7). Two proposed consent decrees were agreed upon by Ford, AK Steel and the United States. (Id. ). The Ford I consent decree resolved the United States' liability as to all liability regarding contamination at or emanating from the RMC except for the liability attributable to the Army Corps' rechanneling project. (ECF No. 120, Ex. 2). This consent decree regarding the RMC was approved and entered by Judge Friedman in Ford I. However, Judge Friedman declined to enter the second consent decree addressing the SRA because it is the subject of this litigation, and he directed the parties to file the consent decree regarding the SRA in this action. (Id. ).
It appears that settlement discussions between Ford, AK Steel, the United States, as well as MichCon were on-going at the end 2009 and throughout 2010. However, MichCon was unable to settle its issues with the Plaintiffs or the United States. Therefore, MichCon was granted leave to file a third-party complaint in this action which set forth a contribution claim and a cost recovery claim pursuant to CERCLA against the United States for their alleged involvement in exacerbating pollution in the SRA. (ECF Nos. 61, 62).
Eventually through a series of stipulations in December 2011, the Plaintiffs filed a Third Amended Complaint (which is the currently pending and still live complaint in this matter) against MichCon and the United States. (ECF No. 105). Plaintiffs asserted a § 107(a) cost recovery claim against MichCon and also asserted a new contribution claim pursuant § 113(f)(1) against MichCon based on MichCon's § 107 counterclaim against the Plaintiffs. (ECF No. 105, Third Am. Compl. at ¶¶ 44-52). Plaintiffs also asserted cost recovery and contribution claims under CERCLA against the United States. The same day Plaintiffs filed their Third Amended Complaint, they contemporaneously filed a motion for entry of the SRA consent decree. (ECF No. 106). The Court granted Plaintiffs' motion to enter the consent decree (over MichCon's objections) on September 28, 2012 (ECF No. 115), and on October 9, 2012, the Consent Decree ("SRA CD") was entered in this action ...