Non-Settling CERCLA Defendants Beware: Ninth Circuit Provides Lower Courts with Discretion to Allocate Liability Using Equitable Factors

There is a split of authority on how credits for settlements under the Comprehensive Response, Compensation and Liability Act (“CERCLA”) are allocated to non-settlors.  Some courts have applied the proportionate share approach, under the Uniform Comparative Fault Act (“UCFA”), and others have applied the pro tanto approach, under the Uniform Contribution Among Tortfeasors Act (“UCATA”).  In Ameripride Services Inc. v. Texas Eastern Overseas Inc, the Ninth Circuit declined to dictate that either approach is required and instead found the court has discretion to determine the most equitable method of account for settlements between private parties.

In making this finding, the Court focused on the lack of any statutory provision specifying how a settlement between potentially responsible parties (“PRPs”) should affect the liability of non-settling PRPs.  In contract, the Court noted the specific provisions of Section 9613(f)(2), which provides that a settlement agreement between the state or federal government and a PRP reduced the potential liability of the non-settling PRPs by the amount of the settlement, applying the UCATA pro tanto approach.  The Court concluded that the lack of any specific requirement in the statute for settlements involving only private PRPs indicates that Congress did not intend to impose a uniform requirement.  The Court directed the district court to “allocate response costs among liable parties using such equitable factors as the court determines are appropriate,” apparently leaving it up to the lower court to determine the most equitable method of accounting for prior settlement.

The Ninth Circuit’s decision in Ameripride adds to the uncertainty that PRPs face when litigating under CERCLA.  The case leaves complete discretion in the hands of the lower courts as to whether the UCFA or UCATA will be used to determine how settlements will be allocated.  How the lower courts will apply the equitable factors to make this decision remains to be seen.