The aftermath of Key Tronic: implications for attorneys' fee awards.
|Mullins, Robert A.
INTRODUCTION 1515 II. PRIVATE PARTY RESPONSE ACTIONS UNDER SECTION 107 OF CERCLA 1517 A. Private Party Response Actions 1517 B. Elements of a CERCLA Recovery Suit 1518 1. Defendant Is a Responsible Party Under Section 107(a)(1)-(4) 1519 2. There Has Been a Release or Threatened Release of a Hazardous Substance 1520 3. Plaintiff Has Incurred Response Costs 1521 4. Response Costs Are Consistent with the National Contingency Plan 1523 C. Summary 1525 III. BASIC ARGUMENTS FOR AND AGAINST ATTORNEY'S FEES UNDER SECTION 107 1525 A. Introduction: Statutory Language 1525 B. Prior Decisions: Split on the Issue of Awarding Attorney's Fees 1527 C. Argument For Awarding Attorney's Fees 1529 1. "Enforcement Activities" Include Attorney's Fees Incurred in Recovering Removal and Remedial Costs 1529 2. Policy Objectives Support Awarding Attorney's Fees 1531 D. Argument Against Awarding Attorney's Fees 1533 1. Legislative History Supports Denial of Attorney's Fees 1533 2. Attorney's Fees Are Not Explicitly Provided for in Private Party Response Actions 1535 IV. KEY TRONIC CORP. V. UNITED STATES: ATTORNEY'S FEES ARE NOT RECOVERABLE IN PRIVATE PARTY RESPONSE ACTIONS 1536 A. Litigation Attorney's Fees Are Barred 1538 B. Nonlitigation Attorneys' Fees Are Recoverable 1540 V. IMPLICATIONS OF KEY TRONIC 1541 A. Critique 1541 1. A Private Party Response Action Is an Implied Cause of Action 1542 2. SARA Added Two Express Provisions for Attorney's Fees 1548 3. The Phrase "Enforcement Activities" Does Not Include Attorney's Fees 1550 4. The Award of Nonlitigation Fees Furthers the Cleanup Objectives of CERCLA 1555 B. Government Attorney's Fees Under Section 107 1559 1. Is the Section 107 Government Response Action an Express Cause of Action? 1561 2. What Impact Do the Two SARA Amendments (Sections 310(f) and 106(b)(2)(E)) Have on Government Response Actions? 1562 3. It Would Stretch the Plain Meaning of the Phrase "Enforcement Activities" Too Far to Determine that Enforcement Activities Include Attorney's Fees 1565 C. The American Rule: Where Does Key Tronic Leave Us? 1566 1. Implied Rights of Action Do Not Merit Attorney's Fee Awards 1567 2. Common Benefit or Fund Exception Does Not Apply to Private Party Response Actions 1569 3. The Magic Phrase "Attorney's Fees" Should Be Used by Congress 1570 VI. SUMMARY 1571 I. INTRODUCTION
In Key Tronic Corp. v. United States,(1) the Supreme Court held that attorney's fees incurred from litigation of private party response actions under section 107 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA)(2) are not recoverable.(3) Nonlitigation attorney's fees, on the other hand, may still be recoverable. Key Tronic did not determine the ability of the government to recover fees under section 107, but under the Court's analysis of the American rule, the decision could nevertheless affect the determination of government attorney's fees and render them unrecoverable. Finally, the Key Tronic decision significantly revised the boundaries of the American rule and makes an explicit legislative directive necessary for the recovery of attorney's fees.
Litigation-related attorney's fees are no longer recoverable in CERCLA private party response actions. On June 6, 1994, the United States Supreme Court in a 6-3 decision held that there is no explicit congressional authorization allowing attorney's fees under CERCLA section 107, and, consequently, the American rule of attorney's fees as set forth in Alyeska Pipeline Service Company v. Wilderness Society(4) and Runyon v. McCrary(5) prohibits the award of attorney's fees.(6) The result of this decision is that a private party forced to remediate contamination cannot recover attorney's fees when seeking to recover its response costs expended in remediation from parties responsible for the contamination.(7)
The Supreme Court denied private party attorney's fees for three reasons. First, the private party response action is an implied cause of action and thus receives suspect treatment under Alyeska.(8) Consequently, it would be "unusual if not unprecedented" for the explicitness required by Alyeska to be fulfilled.(9) Second, Congress's addition of two CERCLA provisions explicitly allowing recovery of attorney's fees, section 310(f) of the citizen suit provision(10) and section 106(b)(2)(E)(11) of the Attorney General abatement action, indicate congressional intent not to allow attorney's fees in private party response actions because there was no corresponding provision for section 107.(12) Third, "it would stretch the plain terms of the phrase 'enforcement activities' too far to construe it as encompassing" attorney's fee awards in private party response actions.(13)
The Supreme Court provided a new standard for determining when nonlitigation attorney's fees are recoverable in private party response actions. It allowed nonlitigation attorney's fees expended in identifying other potentially responsible parties, but rejected fees incurred by Key Tronic in negotiating a consent decree with the Environmental Protection Agency (EPA). To be recoverable, attorney's fees incurred must be for nonlitigation purposes, and the work performed must significantly benefit the cleanup, separate and distinct from reallocation of costs or protection of the private party's interest as a defendant.(14)
Key Tronic's distinction between litigation and nonlitigation attorney's fees will greatly affect not only private party response actions but also government response actions under section 107. Key Tronic's clear holding explicitly bars attorney's fee awards in private actions. The not-so-clear implication is that extending Key Tronic's analysis will likely prevent government attorney fee awards.
Resolution of future nonlitigation attorney fee awards in private party response actions will be evaluated pursuant to the key Tronic analysis. Moreover, the Key Tronic analysis revises the scope of the American rule. If a cause of action is deemed to be only implied, it will be virtually impossible to meet the explicitness required by the American rule. It appears that Congress must use the magic words "attoreny's fees," or reference a provision that does, to overcome the American rule.
After reviewing the elements of the private party response action, this article examines the basic arguments for and against awarding attorney's fees in private party response actions in order to enable a thorough analysis of the Key Tronic opinion. It then discusses and critiques the Key Tronic opinion, and finally, it presents Key Tronic's implications on government attorney's fees under section 107 and on the American rule in general.
PRIVATE PARTY RESPONSE ACTIONS UNDER SECTION 107 OF CERCLA
Private Party Response Actions
CERCLA section 107 establishes a private right of action for recovery of response costs.(15) Private party response actions are litigation efforts taken by non-government actors to recover costs incurred in removing or remedying releases or threatened releases of hazardous waste. The party seeks contribution from other persons who may be statutorily liable.(16) The suits include, for example, actions by a current owner of contaminated property against the former owner responsible for the property's contamination after the EPA has forced the current owner to remediate the site, actions by one responsible party against other responsible parties after the EPA has forced the responsible party to remediate a contaminated site such as a landfill, and actions by landowners against adjoining landowners for costs incurred in remediating and preventing the migration of contamination onto their property.
A good example of a private party response action is found in General Electric Co. v. Litton Industrial Automation Systems.(17) In this case, General Electric Company (GE) brought an action against Litton Industrial Automation Systems, Inc. (Litton) for response costs incurred by GE in remediating contamination caused by Litton. In 1970, GE purchased a nineteen-acre tract of land from Litton in Springfield, Missouri. After discovering contamination, the Missouri Department of Natural Resources required GE, the current owner of the site, to clean up the contaminated land. Investigation revealed that the site had been contaminated with cyanide-based electroplating wastes, sludge, and other pollutants during the operation of a typewriter plant on the property between 1959 and 1962 by Litton's predecessor corporation. GE incurred over $940,000 in remediating the site. Subsequently, it sued Litton in a private party response action to recover its response costs as well as its attorney's fees and expenses which were in excess of $419,000.
The General Electric case, decided prior to the Supreme Court's decision in Key Tronic Corp., underscores the reason why courts have been divided on the issue of attorney's fees in private party response actions. If the plaintiff is not allowed to recover attorney's fees, it will often be forced to bear a substantial expense in forcing the responsible party to reimburse it for remediating the responsible party's contamination. It is this inequity that has been most problematic for the courts.
Elements of a CERCLA Recovery Suit
The authority for the private party response action is found in section 107(a)(4)(B), which provides that a private party may recover "necessary costs of response" from a responsible party if such response costs are consistent with the national contingency plan.(18) The elements of a CERCLA section 107 private party response action are presented to better understand the Key Tronic decision and its ramifications. To establish a prima facie case for response cost, the plaintiff must show: 1) the defendant is a responsible party; 2) there has been a release or threatened release of a hazardous substance at a facility;(19) 3) the plaintiff incurred response costs in responding to the...
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