Post Aviall Settlement Jurisprudence -- Back to the Future

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[author: Robert S. Sanoff]
Over the first two decades of CERCLA, the rule gradually emerged that parties which settled their liability were restricted to contribution claims under Section 113(f)(1) and would be entitled to contribution protection under Section 113(f)(c)(2).  Moreover, in order to ensure the effectiveness of that settlement scheme, courts routinely ruled that claims against settling parties were all barred by contribution protection regardless whether those claims had been asserted in the form of direct CERCLA cost recovery claims under Section 107 or as common law tort claims for negligence, nuisance, or trespass.  E.g., Cannons Engineering

In 2004, the Supreme Court in Cooper Industries v. Aviall  threatened to turn upside down all of that established jurisprudence by declining to extend contribution protection to a party which voluntarily cleaned up contamination without having first been sued by the government.  One commentator somewhat hyperbolically asked at the time whether Aviall was The End of CERCLA as We Know it?

Eight years later, the chaos unleashed by Aviall has now been resolved.  The denial of contribution protection in Aviall has been narrowly limited to those relatively rare instances where a party voluntarily incurs response costs without governmental or judicial coercion.  As to virtually all other situations, the case law has reverted back to what it was prior to Aviall.   Indeed, the Eleventh Circuit yesterday in Solutia Inc. v. McWane, Inc. became the fourth appellate court to return to pre-Aviall days.  Specifically, the Eleventh Circuit held that settling parties who entered into a judicially approved consent decree cannot bring a direct cost recovery claim under Section 107 but rather are limited to a Section 113(f) contribution action.  Moreover, the court went on to rule that the contribution protection obtained by settling parties cannot be circumvented by creative pleadings which seek to recast a contribution claim as a Section 107 claim.

The case law has come full circle.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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