Quote of the Day - Chuck brings a lot to the band. He has a history with us and he's a terrific arranger and keyboardist.
What Liability Do Arrangers And Owners Have On Superfund Sites?
Supreme Court Agrees To Tell All
It's difficult to parse a 191-page District Court ruling and a 78-page Ninth Circuit ruling down to something easy to understand, but here's my attempt. Note in the last link that the the actual opinion starts on the 37th page - the first part is the dissent. Shell and several railroads, the Burlington, Northern & Santa Fe Railroad, the Atchison, Topeka & Santa Fe Railroad and the Union Pacific Railroad were involved in a toxic contamination site. It's located in Arvin, California just southeast of Bakersfield in an agricultural area, and the United States Environmental Protection Agency and the California DTSC (Department of Toxic Substances Control) have attempted to clean it up. The Arvin site isn't completely clean yet, and both agencies may have to spend more money to clean it up. The chemicals stored on the site were nematocides, which are designed to kill nematodes, microscopic worms that attack the roots of crops.
After their initial cleanup, the two agencies sued Shell and the railroads for the cost under CERCLA (the Comprehensive Environmental Response, Compensation, and Liability Act, the federal statute more commonly known as Superfund) that imposes strict and joint and several liability on the potentially responsible parties. Based on various factors such as time, ownership, size of the parcels and fractions of the hazardous chemicals found on the parcels, the District Court apportioned the cleanup costs, but the manner of apportionment didn't allow the agencies full recovery of the money they spent on the cleanup. The District Court held the railroads only nine percent liable and Shell only six percent liable.
The agencies appealed, and the Ninth Circuit determined that the District Court did not apportion the cost properly, instead assessing the entire cost of cleanup to both Shell and the railroads under CERCLA's strict and joint and several liability scheme. The companies appealed, and the Supreme Court has now agreed to hear the case, which will most likely occur next term in 2009 since their docket is full for the 2008 term. So we probably won't know the outcome until sometime in 2010.
But let's get back to the case. First, the Ninth Circuit majority opinion held Shell liable with the following language: "Shell arranged for the sale and transfer of chemicals under circumstances in which a known, inherent part of that transfer was the leakage, and so the disposal, of those chemicals." Under CERCLA, an entity that "arrange[s] for disposal or treatment . . . of hazardous substances" is strictly liable for the clean-up costs. 42 U.S.C. § 9607(a)(3). The Free Dictionary defines strict liability as: "absolute legal responsibility for an injury that can be imposed on the wrongdoer without proof of carelessness or fault." Shell argues it was not an arranger. Shell's potential liability arises from its delivery of the chemicals to the site, but it contends it has no liability for the cleanup.
Not everyone on the Ninth Circuit agrees that Shell is liable, however, which makes the matter into a horse race. The dissent argued with the majority's finding of liability for Shell, saying: "the panel [improperly] imposes ‘arranger' liability on Shell Oil for agricultural fertilizers that were spilled on the site by the buyer of Shell's product, shipped by a common carrier in non-defective truck tankers, F.O.B. [Free on Board at the] delivery point. The [majority] panel's imposition of arranger liability on a mere seller, which relinquished control over its products upon delivery and before spillage occurred, goes far beyond the statutory language and creates inter- and intra-circuit splits." The Court notes that FOB means "when the term is F.O.B. the place of destination, the seller must at his own expense and risk transport the goods to that place and there tender delivery of them." U.C.C. § 2-319(1)(b). Even so, CERCLA has provisions for transporter liability, which is not yet an issue in this case.
Part of the problem the court faces is the absence of a major player at the Arvin site. The site's operator, Bryant & Bryant is now defunct, but "owned and operated an agricultural chemical distribution facility" for 29 years, and about 15 years into its operations, leased just less than an acre of land from the railroads. That 0.9 acre lease for 14 years drew the railroads into the lawsuit and made them a potentially responsible party liable for the cleanup costs under the statute. The railroads are owners of the site, which makes them liable for the cleanup, a point universally agreed to in the opinion. The question for the railroads revolves around the amount of their liability.
Here's how CERCLA lays out liability according to the Court: "Under its provisions, parties can be liable for cleaning up toxic chemicals if they fit into one or more of the four PRP categories set out in § 9607(a):
(1) the owner and operator of . . . a facility,
(2) any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of,
(3) any person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by such person . . . , and
(4) any person who accepts or accepted any hazardous substances for transport to disposal or treatment facilities . . . . "
The next question, then, becomes how does the court apportion the liability of those liable? Apportionment is a common law tort remedy, however, not a statutory remedy. Part of the problem in developing the apportionment lies in the statutory remedy afforded by CERCLA - the round hole of common law divisions normally used in typical tort cases don't easily handle the square peg of CERCLA. For example, the causation issue is particularly troublesome. There's nothing that an owner of the property does to "cause" the contamination. Likewise, the delivery of the chemicals didn't cause the contamination. It was the poor handling of the chemicals - spills during transfer and leaking tanks that actually caused the contamination. Nevertheless, CERCLA holds both parties equally responsible. The rub here then is the missing operator who is, under common law, "more liable."
Likewise, the concept of harm has the same round-hole, square-peg problem. The harm to be divided is not the actual contamination, as you would first think, but rather the payment for someone else's remedy of the harm. Then there's the question of equity - how to divide and according to what factors - time, amount of contribution to the contamination or other reasonably applicable measures. Not an easy thing to do between an owner and an arranger. Finally, there's the question of strict liability - the responsibility for the whole amount of the cleanup - something difficult to achieve when the remaining defendants have so far been held to be 15% responsible, especially when the Court says Congress originally intended to collect the cost of cleanup from those who are more responsible than the government, who so far is the only one who paid to clean the site.It's obviously a mess that will take the Supreme Court a few hundred pages to sort out. MIPTC will keep its ear to the ground and you informed of the outcome in a few years, but in the meantime, I'll go out on a limb and predict that Shell will be kept in and the amount of liability paid by Shell and the railroads will be a lot closer to 100%.
Lawyer2Lawyer Internet Radio Celebrates Its Third Anniversary
Here's a special edition of Lawyer2Lawyer, which marks our third anniversary and our 150th show! We have covered a lot of legal stories over the course of three years. Please join me and my fellow Law.com blogger and co-host Bob Ambrogi as we talk to returning guests and play clips from some stand-out shows with guests who have inspired, educated and even made us laugh.
As part of this show, Bob and I welcome back Professor Eugene Volokh, professor at the UCLA School of Law and blogger for the Volokh Conspiracy and Attorney/musician Larry Savell of Chadbourne & Parke to discuss his new album, "The Lawtunes: Live At Blackacre" and introduce a new theme song made especially for Lawyer2Lawyer! And extra thanks must go to you, our audience, for making Lawyer2Lawyer one of the top legal podcasts in the legal community. Give a click on the icon below to listen to the show.
LawTunes' Larry Savell Serenades Lawyer2Lawyer On Our Third Anniversary
This week marks our 150th podcast on Lawyer2Lawyer, and in honor of our third anniversary, Bob Ambrogi and I had Larry Savell of LawTunes back on the show, and he did us the great honor of composing and singing a song for the show. You can click on the link below to listen to the song, and here are the lyrics:
Lawyer2Lawyer - Copyright © 2008 Lawrence Savell - All Rights Reserved
Thanks to Larry Savell for permission to post the song and the links. You can visit Larry at LawTunes and buy his other music, including his latest release, Live at Blackacre.
Anonymous Artist Refuses To Authenticate Works; Auction Fails
Does His Hairdresser Know For Sure?
Britain is apparently home to a cult graffiti artist, Banksy, who prefers to remain anonymous. Although few actually know him, his art fetches quite a price. According to Reuters, auction house Lyon & Turnbull planned to sell five of his artworks (actually removed intact with the walls where he spray painted or stenciled the artwork). According to the article, "a painting attributed to Banksy on a wall in London [ ] fetched 208,100 pounds ($383,000) in an online sale. The cost of removing the wall and replacing it was not included."
No one showed up, however, at the planned sale and none of the pieces sold after Banksy's verification arm (not literally), a website called Pest Control, refused to authenticate the pieces as his. Banksy, apparently, does not want his artwork removed from its original site. Lyon & Turnbull had verification from a site called Vermin, but the attempted sale netting nothing given the controversy.
Unless, of course, you're Christina Aguilera who bought three Banksy prints for £25,000. Otherwise, a set of Kate Moss paintings sold at Sotheby's auction and set a record for Banksy's work - some £50,000.
Spend some time visiting Banksy's site and think about his art and messages. It's worth the effort. Meanwhile, ponder this question: how does an anonymous artist authenticate his works or otherwise prevent them from bring authenticated?
I'm waiting to see him paint/draw/stencil a fallen tree and listen for the sound. I bet we'll all hear something.
One Confidential Mediation Settlement That Didn't Make It Into Evidence
There's been much in the Courts lately about the admissibility of settlement agreements reached in mediation, and MIPTC has written about one such case before. Now, there's another one to add to the mix.
Let's go over the details first, and then you'll see why the Court ruled as it did. Apparently Tony Rael, Jr. was a wealthy man, worth over $6,000,000, partly as a result of owning a liquor store. Tony married and had three children. Tony divorced his wife and remarried Cruz Rael.
The children were apparently not happy and sued their father to appoint a conservator. Under the probate rules of the Los Angeles Court, the parties, which included Tony, Cruz and Tony's children had to go to mediation to see if they could work out their differences.
They went to the mediation, but one of Tony's children, Mark, didn't attend the last mediation when the rest of the parties signed a settlement agreement. The mediation agreement even included the required "waiver of inadmissibility," which is needed to get a confidential mediation agreement into evidence in court. Ultimately, Mark refused to sign the agreement and the matter went to trial.
Tony and Cruz, however, were signatories to the mediation agreement, and under that agreement, Tony promised to appoint Cruz as his executrix, among other things. Here's how the court put Tony's promises to Cruz (with some significant editing to make it more readable):
‘Tony named Cruz a beneficiary in his will and trust. Specifically, Tony left the following to Cruz: (A) his liquor store business and the liquor license, (B) the right to occupy space in one of his properties in order to operate the liquor store on a rent-free basis for two years after he died, and (C) up to $100,000 to pay off the balance of the Cruz's mortgage on her personal residence. The remainder of Tony's assets went equally to his three children.'
As you can probably guess by now, that's not how Tony's assets actually got divided. Not happy with the actual division, Cruz sued Tony's estate and claimed she was entitled to the deal that Tony promised her. As proof, she sought to introduce the agreement she and Tony signed in mediation.
Unfortunately for Cruz, the Court ruled that since everyone anticipated Mark would be a party to the mediation agreement and because he refused to sign it, there was no agreement. Therefore, the Court excluded the agreement from evidence, and Cruz simply lost her bid to enforce Tony's promises to her.
Latest Financial News: Microsoft And Apple Take Over Failed Government Treasury Funds
After the US Government announced yesterday that it was not able to print money fast enough to save Wall Street brokerage houses, international insurance companies and U.S. Banks, Microsoft teamed with arch-rival Apple Computer to bail out the failed government treasury funds. The United States government had first turned to the bankruptcy courts for relief, but were rebuffed when Bankruptcy District Court Judge Imoutta Moni refused to take jurisdiction over government coffers.
Spokesmen John Hodgman, aka the PC geek, and Justin Long, aka the cool Apple guy, said they finally decided to work together to save the country. "Obviously, Bush, Paulson and Cox haven't been doing their jobs, or this would have never happened," said Long. For his part, Hodgman said it was time to work together in a bipartisan fashion and put aside class differences. "I've always wanted to run the Apple OS," he said, "and now's my chance. Looking at the vista, the big picture, we expect to post our plan in an online spreadsheet."
Bill Gates authorized the Board of Microsoft to commit his shares in the company to offset the government's losses. "We all know Bill's got more money than God," one Board member was heard to say. Steve Jobs, on the other hand, was busy at work on the drawing board and was unavailable for comment.
Long-term plans for the economy involve an influx of cash into banks, tax cuts for the middle class and a chicken in every pot.
Lawyer 2 Lawyer Internet Radio Discusses the Aftermath of Hurricane Ike
When Hurricane Ike hit the Texas coast, many were left to deal with the devastation of the storm which toppled businesses, firms and homes. Please join me and my fellow Law.com blogger and co-host Bob Ambrogi as we speak to Bill Livesay, Executive Director from Andrews Kurth LLP and Miriam Rozen, staff reporter from Texas Lawyer, to get their personal accounts of Hurricane Ike. On Lawyer2Lawyer, you'll hear how it has affected law firms and look at what firms are doing to assist their employees, their clients and those in need.
* If you would like to help those affected by Hurricane Ike, you can donate here at the Gulf Coast Ike Relief Fund.
Nine Points Of The Law
Possession may be nine-tenths of the law, but you'll need more than that to win your case. You'll also need these nine points:
1. A good deal of money;
2. A good deal of patience;
3. A good cause;
4. A good lawyer;
5. Good counsel;
6. Good witnesses;
7. A good jury;
8. A good judge; and last but not least,
9. Good luck.
(From Schott's 2008 Almanac.)