Following a 2007 settlement concerning the allocation of investigation and remediation costs incurred due to environmental contamination at an industrial complex, the parties agreed to resolve the litigation between the parties and arbitrate the allocation of certain environmental costs. The parties engaged in arbitration from May 2017 to May 2019. The panel issued a final unanimous award assigning 100% of the allocable costs to the plaintiff. The plaintiff sought to vacate the award on the basis that: (1) the arbitrators exceeded their powers by imposing the burden of proof on the plaintiff in violation of the 2007 settlement agreement; (2) the arbitrators manifestly disregarded the legal principle that rejects incremental cost allocation; and (3) the award violated public policy requiring polluters to pay for the environmental harm they cause. The court disagreed with the plaintiff’s arguments and confirmed the award.

As to the plaintiff’s first argument concerning the burden of proof, the court concluded that the settlement agreement was silent as to which party should bear the burden of proof at arbitration. Additionally, the section cited by the plaintiff merely established the procedure by which the parties may initiate arbitration and required “the initiating party to state the amount of Allocable Costs it contends should be assigned to each party, including a brief statement in support of that allocation, presumably to notify the other party what issues will be arbitrated.”

As to the plaintiff’s second argument as to incremental cost allocation, the court found that the panel did not disregard any legal principal but simply found that the plaintiff failed to prove that the defendant “had actually contributed in any material way to the contamination at the Site, or that [the defendant’s] activities were the cause of any of the costs at issue.”

As to the plaintiff’s third argument regarding public policy, the panel found that the “evidence did not establish the amount of contamination caused by [the defendant’s] alleged poor remediation, or the fact or amount of any cost for remediation of any such contamination” for which the defendant would be financially responsible. Thus, 100% of the allocable costs were assigned to the plaintiff, which was not in violation of any public policy.

PolyOne Corp. v. Westlake Vinyls, Inc., No. 5:19-cv-00121 (W.D. Ky. Feb. 11, 2020).