Plaintiffs-James Kotrous and Adobe Lumber-brought two separate actions to recover costs associated with cleanup of soil and groundwater contamination caused by prior landowners and site users. Plaintiffs incurred the costs voluntarily and sought contribution under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).[1] Relying on the Ninth Circuit's holding in Pinal Creek Group v. Newmount Mining Corp. (Pinal Creek),[2] which entitled potentially responsible parties (PRPs) to seek contribution under section 107 of CERCLA,[3] the district courts in both actions denied defendants' motions for dismissal.[4] Defendants filed separate interlocutory appeals.[5] Addressing both appeals in a single opinion, the Ninth Circuit concluded that the United States Supreme Court's recent decision in United States v. Atlantic Research Corp.[6] overruled the Ninth Circuit's previous holding in Pinal Creek. Under Atlantic Research, PRPs not subject to a CERCLA section 106 or 107 action who voluntarily incur cleanup costs may seek recovery from other PRPs under section 107 but may not seek contribution under section 113.[7] Consequently, the Ninth Circuit vacated the district court judgments denying the defendants' dismissal motions and remanded the cases for further proceedings.

Section 107(a) of CERCLA authorizes suits against statutorily defined "responsible parties" to recover costs incurred in cleaning up hazardous waste sites. CERCLA also expressly provides a cause of action for contribution from responsible parties and PRPs under section 113.[8] In Pinal Creek, the Ninth Circuit held that section 113 merely clarified an existing claim for contribution implied by section 107 and that PRPs could only seek contribution, but not cost recovery, from other PRPs under section 107. In 2004, the Supreme Court decided Cooper Industries, Inc. v. Availl Services, Inc. (Cooper Industries),[9] holding that a private party who has not been sued under sections 106 or 107(a) could not sue for contribution under section 113 from other PRPs. Cooper Industries, however, left open the question of whether section 107(a) provides PRPs with a cause of action to recover costs from other PRPs.[10] The Supreme Court later answered that question in the affirmative in Atlantic Research, holding that any private party, including a PRP, who has not been subject to a section 106 or 107 action is entitled to seek cost recovery under section 107.[11] Atlantic Research thus undermined the Ninth Circuit's holding in Pinal Creek "that an action between PRPs is necessarily for contribution" and prompted the court to reexamine CERCLA jurisprudence in the circuit.[12]

Plaintiffs Koutrous and Adobe Lumber, landowners of sites contaminated by operations of dry cleaning businesses and other PRPs, but who were not themselves the subject of CERCLA suits, brought separate actions under sections 107 and 113 prior to the Supreme Court's decision in Atlantic Research. Koutrous sought recovery of contribution and costs under section 107(a), and contribution under section 113. The district court rejected defendant's motion for judgment on the pleadings, concluding that, under Pinal Creek, Koutrous had stated a claim for contribution under CERCLA section 107(a). The district court, however, granted defendant's motion for interlocutory appeal on the issue of whether Kotrous, as a PRP, could request contribution under section 113 without first being sued under sections 106 or 107(a). Similarly, Adobe Lumber, plaintiff in the second action, sought contribution for costs under sections 107 and 113. The district court, noting that several similar CERCLA cases had reached the Ninth Circuit, denied defendants' motion to dismiss, but granted defendants' motion for an interlocutory appeal and stayed discovery proceedings.

On appeal, the Ninth Circuit reviewed the district courts' statutory interpretations and decisions regarding dismissal and judgment on the pleadings de novo.[13] Noting that the Supreme Court's holding in Atlantic Research that a PRP may sue for cost recovery under section 107 undermined the holding in Pinal Creek that an action between PRPs is necessarily for contribution, the Ninth Circuit held that Atlantic Research had effectively overruled Pinal Creek. Under Atlantic Research, a PRP that incurs costs voluntarily, without being sued under sections 106 or 107, may bring a suit for recovery of its costs under section 107(a). However, such a PRP must seek recovery under section 107, not contribution under section 113, because section 113 grants an explicit right to contribution only to PRPs with liability stemming from an action under sections 106 and 107(a). Consequently, the court held that Kotrous could seek cost recovery under section 107, but was not entitled to seek contribution under section 113. Similarly, Adobe's claim for contribution under section 107 could no longer stand under Atlantic Research. The court vacated the orders of the district courts and remanded for proceedings consistent with its holdings, noting that plaintiffs should, on remand, be granted leave to amend their complaints.

In conclusion, the Ninth Circuit consolidated both appeals for review, vacated the district courts' orders denying defendants' motions to dismiss, and remanded the cases to the district courts for proceedings consistent with the Ninth Circuit's holding, based on Atlantic Research, that PRPs that incur costs voluntarily may bring a suit for recovery of its costs under CERCLA section 107(a), but may not seek contribution under section 113.