A California Court of Appeal has held that a party’s ability to bring a contribution suit under California’s State Superfund law is not affected by the U.S. Supreme Court’s recent holding in Cooper Industries v. Aviall Services, Inc., 125 S.Ct. 577 (2004). The decision means that those who have or may incur investigative or cleanup costs in association with contaminated properties or groundwater may still have a viable vehicle for obtaining cost recovery, even in the absence of a prior lawsuit determining that they are a liable party.
In Cooper Industries, a property owner conducted clean up activities to address contamination on its property, and later sought to recover its cleanup cost by bringing a contribution claim against a prior owner of the property under the federal Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"). In December 2004, the U.S. Supreme Court held that plaintiffs were barred from bringing such contribution claims where no prior civil action had been brought against the plaintiff. The Court based its holding on language in the CERCLA which states that "[a]ny person may seek contribution . . . during or following [a government or private enforcement action under CERCLA]." Based on this provision, the Court reasoned, contribution under CERCLA may only be sought "during or following" a civil action and, hence is not available to a party that had voluntarily incurred investigative or cleanup expenses. The Supreme Court did not reach the question in Cooper Industries of whether receipt of a government cleanup order would be a sufficient basis for a CERCLA contribution claim, although that case may present itself in the near future.
In the recent California appellate case, Johnson v. City of San Diego, Cal. Ct. App., 4th App. Dist., Div. 1, No. D043448 (March 4, 2005), plaintiffs brought suit against the City of San Diego and prior owners of contaminated property which they had purchased, alleging, in part, that these parties were liable for cleanup costs under California’s Hazardous Substance Account Act ("HSAA"), which is modeled to some degree on the federal CERCLA/Superfund statute. Generally speaking, if hazardous substances are found on private property, the HSAA permits a private party to seek contribution from other responsible parties, even absent a prior enforcement action. Unlike its federal counterpart, the HSAA, with certain exceptions, allows "[a]ny person who has incurred removal or remedial action costs in accordance with this chapter or [CERCLA]" to seek contribution or indemnity from any person liable under the HSAA. Cal. Health & Safety Code § 25363(c).
In Johnson, the California Court of Appeal reasoned that the U.S. Supreme Court’s holding in Cooper Industries was not applicable because, unlike CERCLA and some other state Superfund statutes, the HSAA does not contain language requiring that contribution claims be brought only during or following a specified civil action. Rather, in an unpublished decision, the Court of Appeal held that the test in California is simply whether a plaintiff has incurred removal or remedial action costs.
Although the Johnson decision cannot be cited as precedent, the apparent result, that no prior civil action is required prior to filing a contribution suit in California, appears to flow directly from the language of the HSAA. Therefore, other courts facing this question are likely to reach the same conclusion. However, the Johnson case leaves open the question of precisely what are "removal or remedial action costs in accordance with" the HSAA. Future litigation will therefore be likely to address this question. For example, it is not clear whether a plaintiff can prevail on a contribution claim without explicit authorization or approval from the Department of Toxic Substances Control ("DTSC"). The Court of Appeal expressly declined to address this issue, stating that "the issue whether a party can incur ‘removal or remedial actions costs,’ as broadly defined in the statute , without the DTSC’s direct involvement, presents a factual question."