Fox Team Notches Appeals Court Win in Superfund Remediation Dispute

September 17, 2020 – Press Releases

Fox Rothschild LLP Partners Jeffrey Pollock and Robert Rohrberger prevailed in the 3rd U.S. Circuit Court of Appeals, clearing the way for their client ― a landfill contractor and trucking company facing significant federal environmental cleanup expenses ― to go to trial with a claim against the owner of a landfill for a portion of remediation costs.

The decision reverses a 2018 U.S. District Court ruling that barred Compaction Systems from suing Carter Day Industries and Combustion Equipment Associates (the real owners of the Combe Fill South Landfill), to recover remediation expenses because the landfill owner had reached a previous cleanup settlement with the state of New Jersey.

The three-judge federal appeals court panel determined that Carter Day Industries' earlier settlement with the New Jersey Department of Environmental Protection pertained only to claims arising from the state's expenditures at the site and not expenditures by the federal government. The federal claims were not resolved because the Carter Day settlement did not resolve those claims.

Carter Day Industries' predecessor purchased Combe Fill South in 1978 and hired Compaction Systems to manage and haul hazardous materials to the landfill. In 1980, Carter Day filed for Chapter 11 bankruptcy and in 1981, the landfill, which had been in operation since 1948, was closed.

The state of New Jersey filed a claim against the landfill, but the bankruptcy court denied it. In 1983, the federal and state governments launched a joint remediation project to address ground water contamination at the 65-acre landfill, which was declared a Superfund site.

In 1991, Carter Day sought a determination from the U.S. Bankruptcy Court for the Southern District of New York that New Jersey's claim had been discharged in bankruptcy. The result was a settlement between Carter Day and the New Jersey Department of Environmental Protection declaring all landfill-related claims discharged.

In 1998, the federal government (which was responsible for 80% of expenditures at the site, as compared to the state's 20%) sought to recover cleanup costs from two dozen responsible parties. Compaction Systems reached a settlement requiring it to pay $11 million to the federal government, $1.5 million to the state and $900,000 a year for 30 years to cover site maintenance and operation.

It then proceeded with a third-party lawsuit seeking a contribution from Carter Day Industries. In 2018, the trial court dismissed the lawsuit, ruling that Carter Day's previous settlement with the state of New Jersey prevented Compaction Systems for seeking a contribution toward its settlement with the federal government.

In reversing the trial court, the 3rd U.S. Circuit Court of Appeals relied on a 1994 7th Circuit decision that requires settlements in Superfund-related cases to be explicit when barring future contributions for cleanup costs involving other entities.

"As counsel for Compaction Systems, we look forward to trying this case to verdict before the District Court and are prepared to proceed as soon as the Court's schedule permits," Pollock told the New Jersey Law Journal.