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Friday, January 11, 2008

Ind. Decisions - "Court tackles Studebaker cleanup"

Updating this ILB entry from Mon., Jan. 10th, Jeff Parrott of the South Bend Tribune reports today on yesterday's oral argument before the Supreme Court in the case of Cooper Industries, LLC v. City of South Bend. Some quotes:

The Indiana Supreme Court must decide what the General Assembly meant by "retroactive application" when it passed a 1998 environmental cleanup law.

At stake is $15 million to $20 million the city of South Bend expects to spend cleaning up the former Studebaker site for private redevelopment as a light industrial park. Under a 2003 lawsuit, the city is trying to recoup its costs from Cooper Industries, a company the city alleges is Studebaker's corporate successor.

The state's high court heard oral arguments Thursday from attorneys for the city and Cooper Industries. * * *

The 25-block, 104-acre site lies just south of the downtown area. In his arguments before the five justices, Cooper Industries attorney Tom Heiden traced the site's history back to 1852, when a blacksmith shop operated there. The Studebaker brothers made wagons during the Civil War era, produced some of the first automobiles in the early 1900s, churned out military vehicles and parts during the world wars, and finally, built more cars there until Studebaker's closure in 1963.

Cooper Industries, which in 2004 merged with McGraw-Edison, Studebaker's liability insurance carrier, was involved in none of that activity, Heiden told the high court.

But Indianapolis attorney George Plews, representing the city, told the justices that Cooper Industries persuaded the Internal Revenue Service and Georgia state revenue officials that McGraw-Edison and Cooper were indeed the same entity -- when that finding resulted in a $51 million tax deduction.

But both sides focused their 20-minute arguments mainly on the statute of limitations, and whether it applies to municipalities seeking recovery of brownfield site cleanup costs.

Cooper Industries' Heiden argued that Indiana's Environmental Legal Action law, one of the laws under which the city has brought suit, required the city to file its lawsuit within six years of learning of the contamination.

The Indiana Court of Appeals, reversing a Marion County trial court's ruling, in April ruled for Cooper, finding that the city knew of the contamination as early as 1991 -- 12 years before filing suit against McGraw-Edison in 2003.

Under that rationale, the city had until 1997 to file suit. The city has argued, and the Marion County trial court agreed, that it couldn't have met the six-year deadline if the ELA law didn't even exist yet. The city has argued that the statute of limitations could not start running until 1998, when the ELA law took effect.

But in its April ruling, the appeals court cited a recent federal district court ruling finding that the General Assembly intended for the ELA law to be applied retroactively, meaning it is applicable to a cause of action that began even before the law took effect.

"Under the city's position, any costs for removal of contamination, no matter when occurred, would now be recoverable under the ELA," the appeals court wrote. "The number of ELA suits that would follow from such an interpretation cannot, absent a legislative expression to the contrary, be presumed to have been within the intention of the legislature ..."

The ILB points out that the question of how the Indiana Supreme Court would rule is currently awaiting a decision by the 7th Circuit, while the Indiana Supreme Court itself is now considering how it will rule. The federal district court ruling is Commercial Logistics Corp. v. ACF Indus., Inc., 2006 U.S. Dist. WL 3201916, at *8 (S.D. Ind. July 18, 2006). Here is a link to that opinion, by Judge Sarah Evans Barker.

The case has been appealed to the 7th Circuit. Oral argument was held 9/28/07 and is available for listening here. The briefs are available here.

Here is the "Statement of issues for review" in the Appellees' 7th Circuit brief:

1. Whether the District Court correctly predicted the Indiana Supreme Court would hold that Indiana’s six-year statute of limitations and the discovery rule apply to a private right of action pursuant to the Indiana Environmental Legal Action statute, Indiana Code §§ 13-30-9-1 et seq. (“ELA”).
2. Whether the District Court correctly predicted the Indiana Supreme Court would hold that, applying the discovery rule, CLC’s ELA claim was timebarred.
3. Whether the District Court’s grant of summary judgment for ACF Industries, Inc. (“ACF”) should be affirmed on the alternative ground that the ELA does not apply retroactively.
And from the Appellants' 7th Circuit brief:
(1) Whether the district court erred in predicting that the Indiana Supreme Court would hold that the limitations period started running on a private cause of action under the Indiana Environmental Legal Actions statute, IND. CODE §§ 13-30-9-1 et seq. (the “ELA”) – an environmental remediation statute that applies retrospectively to pre-enactment conduct – years before the Indiana Legislature had even created that cause of action by enacting the ELA.
(2) Whether the district court erred in predicting that the Indiana Supreme Court would hold that ELA actions are governed by Indiana’s six-year limitations statute for injuries to real property, rather than its ten-year catch-all limitations statute, when the Indiana Supreme Court has previously held that private actions under the Indiana Underground Storage Tank (“UST”) statute, IND. CODE §§ 13-23-1-1 et seq. – an environmental remediation statute complemented by the ELA, and that also applies retrospectively to pre-enactment conduct – are governed by the State’s ten-year catch-all limitation statute.

Posted by Marcia Oddi on January 11, 2008 08:39 AM
Posted to Upcoming Oral Arguments