Ga.-Pac. Consumer Prods. LP v. NCR Corp.

32 F.4th 534

GEORGIA-PACIFIC CONSUMER PRODUCTS LP; Fort James Corporation; Georgia-Pacific LLC, Plaintiffs-Appellees,

v.NCR CORPORATION, Defendant,Weyerhaeuser Company, Defendant-Appellee,International Paper Company, Defendant-Appellant.

No. 18-1806

United States Court of Appeals, Sixth Circuit.

Argued: October 28, 2021

Decided and Filed: April 25, 2022

ARGUED: John D. Parker, BAKER & HOSTETLER LLP, Cleveland, Ohio, for Appellant. Mark W. Schneider, PERKINS COIE LLP, Seattle, Washington, for Appellee Weyerhaeuser Company. Michael R. Shebelskie, HUNTON ANDREWS KURTH LLP, Richmond, Virginia, for Georgia-Pacific Appellees. ON BRIEF: John D. Parker, BAKER & HOSTETLER LLP, Cleveland, Ohio, for Appellant. Mark W. Schneider, Kathleen M. O'Sullivan, Margaret Hupp, PERKINS COIE LLP, Seattle, Washington, Scott M. Watson, WARNER NORCROSS & JUDD LLP, Grand Rapids, Michigan, for Appellee Weyerhaeuser Company. Michael R. Shebelskie, Douglas M. Garrou, George P. Sibley, III, J. Pierce Lamberson, HUNTON ANDREWS KURTH LLP, Richmond, Virginia, Peter A. Smit, VARNUM LLP, Grand Rapids, Michigan, for Georgia-Pacific Appellees.

Before: MOORE, KETHLEDGE, and DONALD, Circuit Judges.

KAREN NELSON MOORE, Circuit Judge.

Decades of pollution in western Michigan led the EPA to designate the Kalamazoo River and Portage Creek as a high priority for cleanup. Decades of litigation followed, including many actions filed under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"). In this dispute, two parties found liable on a CERCLA contribution claim raise a statute of limitations defense. Holding that defense to be meritorious, we REVERSE the judgment of the district court.

I. BACKGROUND

A. The Kalamazoo River

Since the late 1860s, paper mills have dotted the banks of the Kalamazoo River, and its tributary, Portage Creek, in southwestern Michigan. Elmer B. Hess, The Kalamazoo Valley Paper Industry , 69 PROC. OF THE IND. ACAD. OF SCI. 224, 226 (1959). Kalamazoo presented the ideal location for paper manufacturing, offering ample water and a prime location for nationwide distribution. Id. at 229–34. Paper played a major role in the region's development: by 1954, paper mills in Kalamazoo County registered sales of almost $175 million annually and accounted for 17% of the county's total household incomes. HAROLD T. SMITH , THE POSITION OF THE PAPER INDUSTRY IN THE ECONOMY OF KALAMAZOO COUNTY , MICHIGAN , IN 1954 1 (1958).

This major industry was not to last. At the end of the twentieth and into the twenty-first century, mills were closing at a rapid pace. See, e.g. , G-P Set to Dismantle Kalamazoo Mill , RECYCLING TODAY (Feb. 20, 2001), https://www.recyclingtoday.com/article/-b-g-p-set-to-dismantle-kalamazoo-mill--b-/ ("The area has seen the closing or planned closing of five paper mills since last fall.").

The mills left, but their environmental legacy remained. In the 1950s, researchers had already started raising concerns over the paper industry's environmental impact on the Kalamazoo River. SMITH , THE POSITION OF THE PAPER INDUSTRY IN THE ECONOMY OF KALAMAZOO COUNTY 7–8. That same decade, the river's environmental problems worsened substantially when paper mills undertaking carbonless copy-paper recycling began releasing polychlorinated biphenyls ("PCBs") into the river and surrounding land. Damage Assessment, Remediation, and Restoration Program: Kalamazoo River , NAT ’ L OCEANIC & ATMOSPHERIC ADMIN . (last updated Oct. 21, 2021), https://darrp.noaa.gov/hazardous-waste/kalamazoo-river. PCBs produce a host of negative health effects, including possibly increasing exposed individuals’ risk of cancer. Polychlorinated Biphenyls (PCBs) , ILL. DEP ’ T OF PUB. HEALTH (Feb. 2009), http://www.idph.state.il.us/envhealth/factsheets/polychlorinatedbiphenyls.htm.

The environmental devastation caused by the proliferation of PCBs led the EPA in 1990 to add the Kalamazoo River to the National Priorities List ("NPL"), which identifies the most important Superfund sites. ENV ’ T PROT. AGENCY , HISTORIC PRESERVATION AND MIXED - USE SUPERFUND REDEVELOPMENT : THE PLAINWELL PAPER MILL IN PLAINWELL , MICHIGAN 2 (2014). Litigation surrounding the contamination of the Kalamazoo River has since spanned decades, see, e.g. , Kalamazoo River Study Grp. v. Menasha Corp. , 228 F.3d 648 (6th Cir. 2000), and spawned hundreds of millions of dollars in cleanup costs, see, e.g. , DEP ’ T OF JUST. , EPA AND JUSTICE DEPARTMENT ANNOUNCE $245 MILLION AGREEMENT FOR

CLEANUP AT THE ALLIED PAPER INC. / PORTAGE CREEK / KALAMAZOO RIVER SUPERFUND SITE (Dec. 11, 2019).

B. Environmental Litigation Regarding the Kalamazoo River

Today's litigation involves several firms and successors to firms that played a role in the manufacture of paper along the Kalamazoo River and Portage Creek in the mid-twentieth century. There are four relevant firms in this matter: International Paper ("IP"), Weyerhaeuser, Georgia-Pacific ("GP"), and NCR Corporation ("NCR"). R. 432 (Phase I Op. at 1) (Page ID #12726).

In 1990, the same year that the EPA added this portion of the Kalamazoo River to the NPL, GP and two other paper companies—HM Holdings, Inc./Allied Paper Inc. and Simpson Plainwell Paper Company—formed the Kalamazoo River Study Group ("KRSG"),¹ which entered an Administrative Order on Consent ("AOC") with Michigan requiring KRSG to perform a site-wide remedial investigation and feasibility study. R. 737-1 (1990 AOC) (Page ID #21681–715); Kalamazoo River Study Grp. v. Rockwell Int'l Corp. , 355 F.3d 574, 578 (6th Cir. 2004).

In 1995, KRSG initiated a cost-recovery action under CERCLA § 107,² amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), seeking response costs from several firms that it alleged had released PCBs into the Kalamazoo River. R. 741-12 (KRSG Complaint) (Page ID #22142–209). IP was not one of the named firms.³ KRSG sought a declaratory judgment that the defendants were liable for "any response costs that may be incurred by Plaintiff in the future in connection with the Site." Id. at 2 (Page ID #22143). Two defendants counterclaimed, asserting that the KRSG members were responsible for the PCB contamination at the site. R. 741-17 (KRSG 1998 Order at 6) (Page ID #22287). The district court held a trial concerning both sides’ claims. Id. Its opinion, issued in 1998, found the KRSG members—including GP—liable "for the PCB contamination of the [relevant site]." Id. at 10, 12 (Page ID #22291, 22293). The same opinion also found one defendant—Rockwell—"liab[le] for the release of PCBs to the Site." Id. at 42 (Page ID #22323); see also Kalamazoo River Study Grp. v. Rockwell Int'l , 107 F. Supp. 2d 817, 819 (W.D. Mich. 2000).

In its 1998 opinion, the district court found another defendant—Eaton—not liable for any PCB discharges from its Battle Creek facility. R. 741-17 (KRSG Order at 31) (Page ID #22312). We reversed the district court's decision as to Eaton's liability, holding that the district court applied the incorrect legal standard. Kalamazoo River Study Grp. v. Menasha Corp. , 228 F.3d at 650. On remand, the district court found that Eaton was liable for the PCB releases at some facilities along the Kalamazoo River, but not others. Kalamazoo River Study Grp. v. Eaton Corp. , 142 F. Supp. 2d 831, 859 (W.D. Mich. 2001) (finding Eaton liable for PCB releases at Battle Creek and Kalamazoo facilities but not liable at its Marshall facility).

The 1998 KRSG judgment came at the end of the liability phase of the trial between KRSG and the defendants it sued. Kalamazoo River Study Grp. v. Rockwell Int'l , 107 F. Supp. 2d at 819. After the 1998 judgment and the Sixth Circuit's partial reversal, the district court proceeded to allocate response costs among the three groups that had been held liable: KRSG, Rockwell, and Eaton. In 2000, the district court declined to allocate any response costs to Rockwell, reaffirming the KRSG members’ responsibility for "the entire cost of response activities relating to the NPL site" on this stretch of the Kalamazoo River. Id. at 840 (emphasis added). We affirmed this decision. Kalamazoo River Study Grp. v. Rockwell Int'l Corp. , 274 F.3d 1043 (6th Cir. 2001). In a subsequent decision, the district court held Eaton liable for a small portion of the costs of investigating parts of the NPL site but wrote "that it would not be equitable to require Eaton to share in the remediation of the NPL Site." Kalamazoo River Study Grp. v. Eaton Corp. , 258 F. Supp. 2d 736, 760 (W.D. Mich. 2003). We again affirmed. Kalamazoo River Study Grp. v. Rockwell Int'l Corp. , 355 F.3d at 578.

To sum up, the federal district court confirmed the KRSG members’ liability for remediation costs three times: in 1998, 2000, and 2003.

C. Today's Dispute

Now, we turn to this case. In 2010, GP filed an action under §§ 107(a) and 113(f) against NCR and IP to recover its response costs involving the affected area. R. 1 (Compl.) (Page ID #1–33). GP later amended its complaint to add Weyerhaeuser as a defendant. R. 80 (First Am. Compl.) (Page ID #1202–40). GP argued that IP and Weyerhaeuser were liable under § 107(a)(1) and (2) as successors to companies that owned and operated mills that discharged PCBs, and brought § 113(f) contribution claims against both firms. Id. at 28–38 (Page ID #1229–39); R. 1 (Compl. at 26–31) (Page ID #26–31). (Weyerhaeuser itself also owned a mill during the relevant time period.) (R. 80 (First Am. Compl. at 21) (Page ID #1222). GP alleged that NCR faced liability under §§ 107 and 113 because it arranged the disposal of PCB-containing substances at the affected area. R. 1 (Compl. at 20–25) (Page ID #20–25).

Weyerhaeuser, in its answer, did not contest that it owned a PCB-discharging facility at the NPL Site, while reserving the right to contest claims in the litigation and asserting twenty affirmative defenses. R. 105 (Weyer. Answer at 32, 55–57) (Page ID #1537, 1560–62). NCR denied liability. R. 29 (NCR Answer at 2) (Page...