Pennsylvania, Department of Environmental Protection v. Lockheed Martin Corp. , 681 F.3d 503 ( 2012 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 10-4078
COMMONWEALTH OF PENNSYLVANIA,
DEPARTMENT OF ENVIRONMENTAL PROTECTION
v.
LOCKHEED MARTIN CORPORATION
v.
UNITED STATES OF AMERICA; COMMONWEALTH OF
PENNSYLVANIA; DEPARTMENT OF CONSERVATION
AND NATURAL RESOURCES
Lockheed Martin Corporation,
Appellant
On Appeal from the United States District Court
for the Middle District of Pennsylvania
(D.C. No. 1-09-cv-00821)
District Judge: Honorable Sylvia H. Rambo
Argued on September 20, 2011
Before: AMBRO, CHAGARES and ROTH, Circuit Judges
(Opinion filed: June 5, 2012 )
Raymond B. Ludwiszewski, Esquire
Michael K. Murphy, Esquire (Argued)
Daniel E. Schmitt, Esquire
Gibson, Dunn & Crutcher LLP
1050 Connecticut Avenue, N.W.
9th Floor
Washington, DC 20036
David J. Parsells, Esquire
Stevens & Lee
620 Freedom Business Center
Suite 200
King of Prussia, PA 19406
Counsel for Appellant
Julie E. Ravis, Esquire
2
Stevens & Lee
111 North Sixth St.
Reading, PA 19603
Counsel for Appellant
Kimberly A. Hummel, Esquire (Argued)
Office of Chief Counsel
Department of Conservation and Natural Resources
400 Market Street
7th Floor
Harrisburg, PA 17105
Gregory E. Dunlap, Esquire
Office of General Counsel
Commonwealth of Pennsylvania
333 Market Street
17th Floor
Harrisburg, PA 17101
Counsel for Appellee
OPINION
ROTH, Circuit Judge:
This appeal involves a dispute between the Lockheed
Martin Corporation on one hand and the Commonwealth of
Pennsylvania and one of its administrative agencies, the
Department of Conservation and Natural Resources (DCNR),
3
on the other. Lockheed appeals the Order of the District
Court, dismissing Lockheed’s third-party complaint against
the Commonwealth and DCNR. Lockheed contends that the
District Court erred by concluding that the Commonwealth
and DCNR retained their Eleventh Amendment immunity
from suit when the Pennsylvania Department of
Environmental Protection (PADEP), another Commonwealth
agency, voluntarily filed a complaint in federal court against
Lockheed pursuant to the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980
(CERCLA), 42 U.S.C. § 9607(a). For the reasons expressed
below, we will vacate the judgment of the District Court and
remand this case with instructions to dismiss for mootness the
third party complaint against the Commonwealth and DCNR.
Because of mootness, we will not address the merits of the
Eleventh Amendment immunity issue.
I. Background
A. Use and Contamination of the Quehanna Facility
In 1957, as an effort to develop the local economy, the
Commonwealth constructed the Quehanna Wild Area Nuclear
Site (Facility) in the Quehanna Wild Area of the Moshannon
State Forest in Clearfield County, Pennsylvania. After the
Facility’s construction, the Commonwealth sold and leased a
portion of the site to the Curtiss-Wright Corporation.
Sometime in the early 1960s, Curtiss-Wright donated the
Facility to Pennsylvania State University. From 1962 through
1967, Martin Marietta Corporation, a Lockheed predecessor,
leased portions of the Facility from Penn State to conduct
work pursuant to Atomic Energy Commission (AEC)
contracts. This work involved experimentation with
4
Strontium-90, a radioactive isotope. 1 Throughout the period
that Martin Marietta conducted its research, the AEC, as
licensing authority, and Penn State, as landlord, exercised
oversight over operations at the Facility. In 1966, Penn State
transferred legal title of the Facility to the Commonwealth.
The following year, Martin Marietta’s contract with the AEC
expired, and Martin Marietta terminated its activities at the
Facility. As a prerequisite to the contract’s termination,
Martin Marietta was required, pursuant to the standards
established by the AEC and approved by Penn State, to
partially decontaminate the Facility. According to Lockheed,
at the time that legal title of the Facility transferred to the
Commonwealth, the Commonwealth was aware that unknown
quantities of Strontium-90 remained at the site and could not
be removed without dismantling the entire Facility, an
outcome contrary to its and Penn State’s interests. After
Martin Marietta completed the partial decontamination of the
Facility, its lease terminated, and, with the Commonwealth’s
knowledge, it transferred its license for possession of
Strontium-90 to Penn State.
When Martin Marietta’s involvement with the Facility
ended, the Commonwealth leased the site to several other
companies that are not parties to this suit. The new tenants
continued to use the Facility for activities involving
radioactive materials, including Strontium-90. Lockheed
alleges that as encouragement for one company to lease the
Facility, the Commonwealth and PADEP agreed to assume all
responsibility for any existing Strontium-90.
1
Martin Marietta’s possession and use of Strontium-90
was pursuant to a license from the AEC.
5
At some point in the 1990s, the Nuclear Regulatory
Commission 2 (NRC) ordered the Commonwealth, PADEP,
and DCNR to decommission the Facility. This process
required the Commonwealth and PADEP to clean up and
remove all remaining Strontium-90. As a result, PADEP and
the Commonwealth incurred expenses in excess of $20
million.
B. Litigation
In 2009, PADEP, the Commonwealth agency
authorized to administer and enforce CERCLA, filed a
complaint against Lockheed under CERCLA, 42 § U.S.C.
9607(a), and several state statutes for recovery of
approximately $20 million in unreimbursed costs the
Commonwealth and PADEP had incurred in connection with
their decommissioning of the Facility and removal of the
remaining Strontium-90. In its answer to the complaint,
Lockheed raised the affirmative defense of recoupment,
alleging that “[i]n an allocation of responsibility under
CERCLA, Plaintiff should recover less than its demand for
equitable reasons, including, but not limited to, its own
conduct and liability and the doctrines of unclean hands,
estoppel, waiver, laches, and/or other equitable defenses.”
Lockheed also filed a counterclaim against PADEP, asserting
that, if it is liable for PADEP’s cleanup costs, it seeks
contribution under CERCLA and state law. See 42 U.S.C. §
2The NRC is one of the successor agencies of the
AEC. At the time of its formation, the NRC assumed
responsibility for the AEC’s byproduct material licensing
responsibilities.
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9613(f)(1). 3 Lockheed alleged that PADEP “is liable under
CERCLA as an owner and operator of the Quehanna Facility,
and as a person who arranged for and/or transported
hazardous substances or waste that were disposed of . . . from
the facility,” and that “for decades beginning in the 1960’s,
[PADEP] participated in and made decisions about the use,
handling, storage, and alleged disposal of” Strontium-90 at
the Facility.
In addition to its counterclaim, Lockheed filed a third-
party complaint, which named the Commonwealth, DCNR,
and the United States as defendants and sought contribution
pursuant to CERCLA and state law. 4 See 42 U.S.C. §
9613(f)(1). In the third party complaint, Lockheed repeated
the allegations contained in its counterclaim against PADEP
and argued that, if it is liable for cleanup costs under
CERCLA, it is entitled to contribution from the
Commonwealth and DCNR for their allocable share of any
costs Lockheed must pay PADEP. In other words, Lockheed
asked for relief only if it was found liable; it did not seek an
affirmative judgment against the Commonwealth or DCNR.
3
Section 9613(f)(1) provides:
Any person may seek contribution from any other
person who is liable or potentially liable under section
9607(a) of this title, during or following any civil action
under . . . section 9607(a) of this title. . . . In resolving
contribution claims, the court may allocate response costs
among liable parties using such equitable factors as the court
determines are appropriate
4
The United States is not a party to this appeal.
7
According to Lockheed, it filed the third-party
complaint because it believed that Pennsylvania law required
it to sue the Commonwealth and its agencies in their
individual capacities. In response to Lockheed’s third-party
complaint, the Commonwealth and DCNR moved to dismiss,
arguing that the complaint must be dismissed because, under
the Eleventh Amendment of the U.S. Constitution, they are
immune from suit. The District Court agreed and dismissed
Lockheed’s third-party complaint against the Commonwealth
and DCNR. The court, however, left undisturbed Lockheed’s
recoupment defense and CERCLA contribution counterclaim
against PADEP.
Lockheed then sought a supplemental ruling from the
District Court, asking it to clarify whether the dismissal of its
third-party complaint precluded it “from offsetting its liability
based upon the conduct of all non-PADEP Commonwealth
actors.” In addition, Lockheed requested that the court certify
the order for immediate appeal pursuant to Fed. R. Civ. P.
54(b).
The District Court responded that “[t]he scope of
[Lockheed’s] counterclaims against PADEP is limited to what
is asserted by [Lockheed] in its counterclaims, specifically,
that to the extent [Lockheed] is found liable for clean-up costs
PADEP is also liable for the same.” The court also
reiterated that the remaining issues were PADEP’s claims
against Lockheed, Lockheed’s counterclaim against PADEP,
and Lockheed’s third-party claims against the United States.
The court then certified its order, dismissing the third-party
complaint against the Commonwealth and DCNR, as a final
judgment pursuant to Rule 54(b).
8
Lockheed appealed because it believed the District
Court’s order precluded it from seeking
contribution/recoupment from the Commonwealth and
DCNR, and that the exclusion of these two entities would
unfairly prejudice its defense. The basis for Lockheed’s
concern was the fact that PADEP and DCNR were created in
1995 when the Commonwealth split their predecessor agency,
the Pennsylvania Department of Environmental Resources.
Thus, PADEP did not exist at the time the facts underlying
Lockheed’s recoupment/contribution claims allegedly
occurred. Therefore, Lockheed feared that, if it did not join
the Commonwealth and PADEP to this litigation, its “defense
will be materially and improperly impaired because PADEP
may not qualify as a potentially responsible party under
CERCLA, as it did not even exist as an entity when the
materials in question were allegedly released at the facility.”
II. Discussion
Before we can reach the merits of the immunity issue,
we must first determine whether the parties’ briefing and
statements during argument mooted this appeal. If the issues
have become moot, i.e., are no longer “live,” the case will be
moot and therefore nonjusticiable. See Donovan ex rel.
Donovan v. Punxsutawney Area Sch. Bd., 336 F.3d 211,
216 (3d Cir. 2003) (“If a case has become moot after the
district court's entry of judgment, an appellate court no longer
has jurisdiction to entertain the appeal”) (citing Mills v.
Green, 159 U.S. 651, 653 (1895)); see also Rogin v.
Bensalem Twp., 616 F.2d 680, 684 (3d Cir. 1980); In re
Surrick, 338 F.3d 224, 229 (3d Cir. 2003). A case or
controversy requires “(1) a legal controversy that is real and
not hypothetical, (2) a legal controversy that affects an
9
individual in a concrete manner so as to provide the factual
predicate for reasoned adjudication, and (3) a legal
controversy with sufficiently adverse parties so as to sharpen
the issues for judicial resolution.” Id.In the briefing and argument before us, it became
increasingly clear that this appeal arose from a
misunderstanding between the parties. In their brief, the
Commonwealth and DCNR acknowledged that the
Commonwealth was the real party in interest in PADEP’s
lawsuit and that Lockheed’s third-party complaint was not
necessary because Lockheed had already filed defensive
counterclaims against the Commonwealth. With respect to
Lockheed’s claims against DCNR, the Commonwealth also
admitted that Lockheed could raise defensive claims against
DCNR by including those allegations in its counterclaim. In
its reply brief, Lockheed viewed the Commonwealth’s
statements as a concession and opined that “[i]f the
Commonwealth’s brief means what it appears to say, there
should be no real practical dispute remaining between the
parties.”
During argument, both the Commonwealth and
Lockheed acknowledged that no dispute remained before the
Court.
MR. MURPHY: . . . Lockheed
Martin wants to be able to reduce
its liability based on the activities
of the other Commonwealth
agencies and instrumentalities in
response to the PA DEP suit. And
if that happens we’re fine.
10
The Court asked the
Commonwealth:
THE COURT: [C]an
Lockheed reduce its liability to
the Commonwealth by the actions
of other Pennsylvania entities that
caused the environmental damage
here?
MS. HUMMEL: . . . [Y]es,
Lockheed can raise those
defenses, raise those issues of
liability to the extent the district
court finds that in fact there is real
liability associated with that, there
is no immunity to liability of
those claims, yes.
The court can consider that
and reduce the judgment against
Lockheed.
THE COURT: Is it your
position that any recoupment
claim that Lockheed Martin has
against any state actor [and] the
Commonwealth can be recouped
through its counterclaim against
DEP? . . .
THE COURT: Arising from
this transaction, or this incident.
11
MS. HUMMEL: It can be
raised, certainly.
* * *
THE COURT: [T]he
question is if you waive by
litigation sovereign immunity as
to a Commonwealth entity, why
don’t you waive by litigation the
sovereign immunity with respect
to other Commonwealth entities
that are involved with regard to
this particular series of incidents?
MS. HUMMEL: In terms of
the . . . district court’s ability to
hear that defense, to consider
owner-operator - - I mean the
issue here is owner-operator
liability. The Commonwealth
owned the site, Lockheed has
asserted that the Commonwealth,
other agencies operated the site.
The district court’s ability to
consider those issues in, in the
defensive mode, it can do that to
offset what DEP is seeking to
recover from Lockheed.
* * *
12
THE COURT: [C]an
Lockheed reduce its liability to
the Commonwealth by the actions
of other Pennsylvania entities that
caused the environmental damage
here?
MS. HUMMEL: . . . [Y]es,
Lockheed can raise those
defenses, raise those issues of
liability to the extent the district
court finds that in fact there is real
liability associated with that, there
is no immunity to liability of
those claims, yes. The court can
consider that and reduce the
judgment against Lockheed.
THE COURT: And that’s
across the board for Pennsylvania
--
MS. HUMMEL: Yes.
THE COURT: - - entities
involved - -
MS. HUMMEL: Yes.
THE COURT: - - in what
transpired at this site?
MS. HUMMEL: Yes.
13
Lockheed made similar responses to the
court’s questioning:
THE COURT: . . . [I]sn’t the
counterclaim enough? Aren’t you
covered? . . . You heard what she
said here today, and if - - you
could live with that, right?
MR. MURPHY: I could . . ..
Based upon the Commonwealth’s briefing and oral
representations before the court, we conclude that it conceded
that PADEP’s potential recovery can be reduced in proportion
to the liability attributable to the Commonwealth and DCNR.
In other words, the Commonwealth now acknowledges that if
Lockheed is liable for cleanup costs under CERCLA,
Lockheed can recover contribution from the Commonwealth
and DCNR for their allocable share of any costs Lockheed
must pay PADEP. 5 This concession moots the sovereign
immunity issue because it removes the live legal controversy
between the parties. See Weiss v. Regal Collections, 385 F.3d
337, 340 (3d Cir. 2004) (“An offer of complete relief will
generally moot the plaintiff's claim, as at that point the
plaintiff retains no personal interest in the outcome of the
litigation”); see also Rand v. Monsanto Co., 926 F.2d 596,
598 (7th Cir. 1991).
Lockheed repeatedly acknowledged that its primary
concern was whether it could seek recoupment/contribution
5
Lockheed cannot, as it acknowledges, obtain an
affirmative judgment from the Commonwealth or DCNR.
14
from the Commonwealth and DCNR and that it was of “no
practice importance” whether it could offset its liability with a
counterclaim or third party complaint. Since the parties now
agree that Lockheed can obtain contribution from the
Commonwealth and DCNR through Lockheed’s
counterclaim, Lockheed does not retain an interest in the
outcome of the immunity issue. The District Court’s order
will, therefore, be vacated 6 and the case remanded to the
District Court with instructions to dismiss the third party
complaint against the Commonwealth and DCNR and for
further proceedings.
III. Conclusion
For the reasons stated above, we will vacate the order
of June 30, 2010, of the District Court and remand this case
for further proceedings consistent with this opinion.
6
“The established practice . . . in dealing with a civil
case . . . which has become moot while under review is to
reverse or vacate the judgment below and remand with a
direction to dismiss.” Rendell v. Rumsfeld, 484 F.3d 236, 243
(3d Cir. 2007) (quoting United States v. Munsingwear, Inc.,
340 U.S. 36, 39 (1950)).
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