Emhart Industries, Inc. v. New England Container Company, Inc et al

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
___________________________________
)
EMHART INDUSTRIES, INC., 	)
)
Plaintiff and Counterclaim 	)
Defendant, 	)
)
v. 	) 	C.A. No. 06-218 WES
)
NEW ENGLAND CONTAINER COMPANY, 	)
INC.; et al., 	)
)
Defendants and Counterclaim )
Plaintiffs. 	)
___________________________________)
)
EMHART INDUSTRIES, INC., 	)
)
Plaintiff and Counterclaim 	)
Defendant, 	)
)
v. 	) 	C.A. No. 11-023 WES
)
UNITED STATES DEPARTMENT OF THE 	) 	CONSOLIDATED
AIR FORCE; et al., 	)
)
Defendants, Counterclaim 	)
Plaintiffs, and Third-Party )
Plaintiffs, 	)
)
v. 	)
)
BLACK & DECKER, INC.; et al., 	)
)
Third-Party Defendants. 	)
___________________________________)
ORDER
In 	this 	long-lived 	litigation1, 	the 	United 	States 	moves 	to
dismiss two counterclaims brought by CNA Holdings LLC. 	See United
1 This Order assumes familiarity with those that precede it.
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States of America’s Mot. to Dismiss CNA Holdings’ Countercl. (“Mot.
to Dismiss”) 2-3, ECF No. 740.2 	For the reasons below, the Motion
is GRANTED as to both claims.
The 	first 	counterclaim 	seeks 	contribution 	from 	the
government. 	See Answer and Countercl. of CNA Holdings LLC to Am.
Third 	Party 	Compl. 	of 	the 	Unites 	[sic] 	States 	(“Countercl.”) 	22,
ECF No. 617. 	However, the Consent Decree bars such claims. 	See
Consent Decree ¶¶ 84-85, ECF No. 715. 	Resisting dismissal anyway,
CNA Holdings attacks the validity of the Consent Decree. 	See CNA
Holdings LLC’s Mem. in Opp’n to the United States’ Mot. to Dismiss
3-5, ECF No. 742. 	At the time of briefing on the instant Motion,
an 	appeal 	of 	the 	Consent 	Decree 	was 	pending 	before 	the 	First
Circuit, 	and 	this 	Court 	accordingly 	held 	the 	Motion 	in 	abeyance
pending resolution of that appeal. 	See Oct. 17, 2019 Text Order.
The First Circuit recently affirmed this Court’s ruling approving
the Consent Decree, see generally Emhart Indus., Inc. v. U.S. Dep’t
of 	the 	Air 	Force, 	988 	F.3d 	511 	(1st 	Cir. 	2021); 	with 	that, 	CNA
Holdings is left with no defense of its contribution counterclaim,
and so it is dismissed.
The 	second 	counterclaim 	seeks 	recovery 	of 	costs 	relating 	to
two 	administrative 	agreements 	between 	the 	EPA 	and 	CNA 	Holdings
2 All docket numbers refer to Case No. 11-023.
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(along with other parties)3: the first from September 2003 and the
second from August 2013. 	Countercl. 21-22; see Mot. to Dismiss 7
n.1. 	Acting 	under 	these 	agreements, 	CNA 	Holdings 	performed
specific response actions. 	Now, through this counterclaim against
the 	government, 	CNA 	Holdings 	seeks 	to 	recover 	the 	costs 	that 	it
expended in doing so. 	Countercl. 22.
Importantly, 	though, 	each 	agreement 	includes 	(functionally
identical) covenants not to sue. 	See Mot. to Dismiss Ex. 1 (“Sept.
2003 	Order”) 	¶ 	102, 	ECF 	No. 	740-1; 	Mot. 	to 	Dismiss 	Ex. 	2 	(“Aug.
2013 Order”) ¶ 69, ECF No. 740-2. 	Ordinarily, those clauses would
bar 	CNA 	Holdings’ 	counterclaim. 	But 	the 	government 	sued 	CNA
Holdings 	in 	September 	2012; 	that 	Third 	Party 	Complaint, 	CNA
Holdings 	argues, 	nullified 	the 	covenants, 	and 	its 	counterclaim
therefore 	survives. 	See 	Sept. 	2003 	Order 	¶ 	103 	(carving 	out
exception 	to 	covenant 	not 	to 	sue 	if 	“the 	United 	States 	brings 	a
cause 	of 	action”, 	“but 	only 	to 	the 	extent 	that 	[CNA 	Holdings’]
claims 	arise 	from 	the 	same 	response 	action, 	response 	costs, 	or
damages that the United States is seeking”); Aug. 2013 Order ¶ 70
(same).
CNA 	Holdings’ 	argument 	assumes 	that 	its 	counterclaim
“arise[s] 	from 	the 	same 	response 	action, 	response 	costs, 	or
3 It is appropriate for the Court to consider these agreements
at the motion-to-dismiss stage. 	See In re Fid. Erisa Fee Litig.,
990 F.3d 50, 53-54 (1st Cir. 2021).
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damages” 	as 	the 	government’s 	suit. 	See 	Sept. 	2003 	Order 	¶ 	103;
Aug. 2013 Order ¶ 70. 	The government says no: its 2012 suit falls
outside the scope of the covenants not to sue, so the prohibition
remains in place.
For this reason, it is important to lay out the specifics of
the relevant claims. 	As pleaded, CNA Holdings’ counterclaim seeks
recovery 	for 	costs 	it 	expended 	in 	performing 	discrete 	work 	under
these 	agreements. 	Countercl. 	21-22. 	Specifically, 	the 	work
performed pursuant to the September 2003 Order involved a removal
action, generally including “(1) control of storm drain runoff and
sedimentation 	entering 	the 	tailrace; 	and 	(2) 	construction 	and
short-term maintenance of a protective cap over the tailrace area.”
Sept. 	2003 	Order 	¶ 	53; 	see 	also 	Countercl. 	21. 	And 	the 	work
performed pursuant to the August 2013 Order involved a pre-design
investigation, 	which 	included, 	”inter 	alia, 	the 	performance 	of 	a
physical 	survey 	of 	soil 	and 	potential 	buried 	waste
characterization 	in 	the 	Source 	Area 	of 	the 	Site, 	including 	test
pits/trenching 	and 	sampling 	for 	dioxin 	and 	other 	contaminants.”
Aug. 	2013 	Order 	¶ 	31; 	see 	also 	Countercl. 	22. 	The 	government’s
2012 claims against CNA Holdings (now dismissed, see July 11, 2019
Text 	Order) 	sought 	recovery 	for 	“all 	response 	costs 	incurred 	by
the United States to date relating to the Site.” 	Am. Third Party
Compl. 22, ECF No. 112. 	Examples of work for which the government
sought response costs included “conducting sampling for hazardous
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substances” and “overseeing response actions.” 	Id. at 21 (giving
other examples of actions for which the government incurred costs).
On 	its 	face, 	CNA 	Holdings’ 	counterclaim 	does 	not 	arise 	from
the 	same 	response 	action, 	response 	costs, 	or 	damages 	that 	the
government 	sought 	in 	its 	2012 	suit. 	For 	one, 	the 	government’s
suit 	sought 	recovery 	of 	its 	costs 	expended 	related 	to 	the 	Site,
while 	CNA 	Holdings’ 	counterclaim 	seeks 	recovery 	of 	costs 	that 	it
expended 	under 	the 	agreements. 	And, 	as 	pleaded, 	the 	response
actions 	performed 	by 	each 	are 	distinct. 	The 	government’s 	suit,
having to do with a different response action and different costs,
did 	not 	void 	the 	covenants 	not 	to 	sue. 	Remaining 	in 	effect, 	the
covenants 	bar 	CNA 	Holdings’ 	cost 	recovery 	counterclaim, 	which 	is
therefore 	dismissed 	because 	it 	fails 	to 	state 	a 	claim 	upon 	which
relief can be granted.4 	See Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007).
4 	CNA 	Holdings 	requests 	a 	chance 	to 	amend 	its 	counterclaims
to 	address 	deficiencies, 	but, 	based 	on 	the 	defects 	necessitating
dismissal, 	it 	is 	hard 	to 	see 	how 	an 	amendment 	could 	cure 	these
deficiencies.
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The 	Court 	GRANTS 	the 	United 	States 	of 	America’s 	Motion 	to
Dismiss CNA Holdings’ Counterclaim, ECF No. 740.
IT IS SO ORDERED.
William E. Smith
District Judge
Date: 	July 14, 2021
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