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City of Waukegan, Illinois v. National Gypsum Co.

September 8, 2008


The opinion of the court was delivered by: Matthew F. Kennelly, District Judge


Waukegan Harbor has long been contaminated with polychlorinated biphenyls (PCBs) that were discharged by the now-defunct Outboard Marine Corp. (OMC), a marine products manufacturer. In the 1980's, the United States Environmental Protection Agency (EPA) put the harbor and some of the surrounding land on the National Priorities List, which guides the agency in determining which sites warrant further investigation. In 1992, OMC completed a remediation project that involved dredging, treating, and disposing of around a million pounds of PCB-contaminated sediments. OMC closed its plants in the area of the harbor in 2000 and filed for bankruptcy.

The City of Waukegan, which later acquired title to land adjoining the harbor, alleges that despite the remediation, the harbor remains contaminated with PCBs at levels in excess of current regulatory limits. It also alleges that deep-draft vessels entering the harbor have stirred up and redistributed PCBs located on or near the bed of harbor, causing "releases" within the meaning of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Waukegan alleges that this has caused it to incur "response costs" within the meaning of CERCLA, including costs for design of a dredging project aimed at removal of PCBs from the harbor.

In this suit, Waukegan has sued several entities that own land adjoining the harbor and/or that have caused deep-draft vessels to traverse the harbor. Waukegan's suit is brought under CERCLA and a similar Illinois statute. Waukegan alleges that each of the defendants is jointly and several liable for response costs Waukegan has incurred to date and should be declared liable for future response costs.

All of the defendants (including then-defendant Waukegan Port District) moved to dismiss Waukegan's complaint under Federal Rule of Civil Procedure 12(b)(6). The Court denied defendant Bombardier Motor Corp. of America's motion on the ground that Waukegan had sufficiently alleged that Bombardier was an "operator" of the site, one of the bases upon which liability for response costs may be imposed under CERCLA. The Court granted the motions to dismiss filed by all of the other defendants, holding that Waukegan had not alleged sufficiently that any of them was either an "owner" or an "operator" of the site. See City of Waukegan v. Nat'l Gypsum Co., 560 F. Supp. 2d 636 (N.D. Ill. 2008).

After the ruling, Waukegan filed a second amended complaint seeking to overcome the defects in the complaint the Court had noted in its ruling. Since then, Bombardier has answered Waukegan's claims, and Waukegan has voluntarily dismissed its claims against the Waukegan Port District. The remaining defendants have moved to dismiss the second amended complaint for failure to state a claim.

The defendants assert numerous arguments in support of dismissal, but the Court need address only one of them: the argument that Waukegan's claims are barred by the applicable statute of limitations. Because the statute of limitations is an affirmative defense, an argument that a complaint is time-barred typically cannot be decided on a motion to dismiss for failure to state a claim, because a plaintiff is not required to anticipate potential affirmative defenses in its complaint. See, e.g., U.S. Gypsum Co. v. Indiana Gas Co., 350 F.3d 623, 626 (7th Cir. 2003). In some cases, however, the complaint's allegations establish that the plaintiff's claims are time-barred and that there is no way around the time-bar (such as disputes about when the plaintiff's claims accrued or the applicability of limitations-extending doctrines like equitable tolling or estoppel). In those situations, a Rule 12(b)(6) motion is an appropriate vehicle for addressing the limitations issue. See, e.g.,Small v. Chao, 398 F.3d 894, 898 (7th Cir. 2005); Kauthar SDN BHD v. Sternberg, 149 F.3d 659, 670 n.14 (7th Cir. 1998).

This case, the Court concludes, gives rise to one of these relatively unusual situations. For the reasons stated below, the Court determines that Waukegan's CERCLA claims against all the remaining defendants are time-barred. In this regard, the Court considers not just the allegations in the second amended complaint itself, but also the documents referenced in it, which include a consent decree entered in earlier litigation involving OMC. Both sides agree that a court may appropriately consider, on a Rule 12(b)(6) motion, documents that the plaintiff has referenced chosen to attach to its complaint. See, e.g., EEOC v. Concentra Health Servs., Inc., 496 F.3d 773, 778 (7th Cir. 2007).

CERCLA contains the following limitations provision: Actions for recovery of costs An initial action for recovery of the costs referred to in section 9607 of this title must be commenced --

(A) for a removal action, within 3 years after completion of the removal action, except that such cost recovery action must be brought within 6 years after a determination to grant a waiver under section 9604(c)(1)(C) of this title for continued response action; and

(B) for a remedial action, within 6 years after initiation of physical on-site construction of the remedial action, except that, if the remedial action is initiated within 3 years after the completion of the removal action, costs incurred in the removal action may be recovered in the cost recovery action brought under this subparagraph.

In any such action described in this subsection, the court shall enter a declaratory judgment on liability for response costs or damages that will be binding on any subsequent action or actions to recover further response costs or damages. A subsequent action or actions under section 9607 of this title for further response costs at the vessel or facility may be maintained at any time during the response action, but must be commenced no later than 3 years after the date of completion of all response action. Except as otherwise provided in this paragraph, an action may be commenced under section 9607 of this title for recovery of costs at any time after such costs have been incurred.

42 U.S.C. § 9613(g)(2).

Because Waukegan's suit is indisputably an action to recover costs under 42 U.S.C. ยง 9607, section 9613(g)(2) supplies the relevant statute of limitations. The question is which part of section 9613(g)(2) applies. Defendants argue that costs Waukegan seeks to recover in the present case are those related to what ...

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