Case: 09-20487 Document: 00511238444 Page: 1 Date Filed: 09/20/2010
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 09-20487
FILED
September 20, 2010
Lyle W. Cayce
CELANESE CORPORATION, Clerk
Plaintiff-Appellant,
v.
MARTIN K EBY CONSTRUCTION COMPANY INC.,
Defendant-Appellee.
Appeal from the United States District Court
for the Southern District of Texas (Houston Division)
Before JONES, Chief Judge, and HIGGINBOTHAM and ELROD, Circuit
Judges.
JENNIFER WALKER ELROD, Circuit Judge:
At issue is whether Eby is liable as an “arranger” under the Comprehen-
sive Environmental Response, Compensation, and Liability Act (CERCLA), 42
U.S.C. § 9607(a)(3), and the Texas Solid Waste Disposal Act (SWDA), Tex.
Health & Safety Code § 361.344. We hold that Eby is not an arranger, and we
AFFIRM the district court’s final judgment, denying recovery to Celanese, and
we AFFIRM the district court’s denial of Celanese’s motion to alter that
judgment pursuant to Federal Rule of Civil Procedure 59(e).
I.
The parties tried the CERCLA claim to the bench and the SWDA claim to
the jury. Under SWDA, litigants are entitled to have a jury act as the fact-finder.
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See R.R. Street & Co. Inc. v. Pilgrim Enter., Inc., 166 S.W.3d 232, 237 (Tex.
2005). In a CERCLA case, the findings of a jury are only advisory. See id. Unless
otherwise indicated, the relevant facts regarding the underlying events are
taken from the jury’s findings and the district court’s findings. They are
uncontested on appeal.
In 1979, the Coastal Water Authority of Texas (CWA) contracted with Eby
to install an underground water pipeline from Clear Lake, Texas to Bayport
Marine Terminal in Harris County, Texas. The pipeline was to cross several
underground pipelines, including Celanese’s methanol pipeline. To accomplish
this, Eby first excavated an area to install a pipeline segment, thereby
uncovering the pipelines in that area. Eby then ran its own pipeline underneath
those pipelines. After installing a segment, Eby backfilled that area and
repeated the process with the next segment.
While excavating the area containing Celanese’s pipeline, an Eby
employee struck and damaged that pipeline with a backhoe. That employee did
not know what he had struck, and there was no contemporaneous report of the
incident. Neither Eby nor any of its employees knew that the work on the CWA
pipeline had damaged the Celanese pipeline.
According to Celanese, “Over the years, the dented areas of the pipe
deteriorated in a process known as stress corrosion cracking. Eventually, one of
the cracks in the dented area penetrated the wall of the pipe, allowing methanol
to leak from the pipe during each methanol transfer.” Celanese discovered the
leak on October 1, 2002, when someone observed and reported a patch of dead
grass at the site. Soon after discovering the leak, Celanese fixed the pipeline.
Celanese also worked with state and federal agencies to clean up the site and to
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prevent the contamination of nearby groundwater. As of mid-November 2008,
Celanese had removed and disposed of over 232,028 gallons of methanol from the
subsurface at the site. The exact amount of released methanol is unknown.
Celanese sued Eby under CERCLA and SWDA to recover its clean-up
costs. Liability hinges on whether Eby was an arranger under those statutes.
Both the jury and the district court found that “[t]he release at the Site would
not have occurred but for the 1979 damage to the Celanese methanol line.” The
court nonetheless held that Eby was not liable as an arranger under CERCLA
or SWDA because Eby did not know that it had damaged the Celanese pipeline
and because “Eby is not a person responsible for solid waste under the SWDA.”
Accordingly, the court entered a take-nothing final judgment on Celanese’s
claims.
Celanese filed a motion under Rule 59(e) to alter or amend that judgment,
which the district court denied. Celanese timely appealed the final judgment and
the denial of its Rule 59(e) motion. On appeal, Celanese contends that the
common law of negligence, industry custom and practice, and Eby’s contract
with the CWA “imposed on Eby the obligation to investigate what it hit in a
pipeline corridor and rectify any damage.” According to Celanese, Eby
“consciously disregarded” that obligation by failing to investigate the incident
and is therefore liable under CERCLA and SWDA as a matter of law. Celanese
does not challenge any factual findings of the district court or the jury.
II.
Because the sole issue here is whether the district court erred as a matter
of law regarding arranger liability, our review is de novo. See Cox v. City of
Dallas, 256 F.3d 281, 288 (5th Cir. 2001) (citation omitted). Although this court
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generally reviews a decision on a motion to amend or alter the judgment for
abuse of discretion, insofar as the decision reconsidered a question of law, our
review is de novo. Elementis Chromium L.P. v. Coastal States Petroleum Co., 450
F.3d 607, 610 (5th Cir. 2006) (citations omitted). Such motions “cannot be used
to raise arguments which could, and should, have been made before the
judgment issued and cannot be used to argue a case under a new legal theory.”
Id. (citation and internal quotation marks omitted).
As a threshold matter, we find that Celanese has waived its conscious-
disregard argument. Furthermore, even if the argument were not waived, Eby
still would not be liable as an arranger under CERCLA or SWDA because it did
not plan or take any intentional steps to release methanol from the Celanese
pipeline.
A.
Celanese did not try its case before the district court on a conscious-
disregard theory; thus the argument is waived. The general rule of this court is
that arguments not raised before the district court are waived and will not be
considered on appeal. See AG Acceptance Corp. v. Veigel, 564 F.3d 695, 700 (5th
Cir. 2009). The Joint Pretrial Order and the Verdict Form show that Celanese
did not seek a finding on conscious disregard. Rather, as the Joint Pretrial Order
demonstrates, Celanese tried this case on an entirely different theory — that
Eby had actually known that it had struck and damaged the Celanese pipeline
and then attempted to cover it up. Along the same lines, Celanese did not
propose any questions to the jury regarding conscious disregard. Instead, the
jury questions focus on (1) whether “the Celanese methanol line was damaged
as a result of the actions of Eby in 1979,” (2) whether “Eby knew that it damaged
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the Celanese methanol line in 1979,” and (3) whether Eby “decided to backfill the
excavation . . . knowing that the 1979 damage to the Celanese methanol line
could result in a leak.”1 For this reason alone, Celanese cannot prevail.
B.
Alternatively, we hold that Celanese’s conscious-disregard allegations do
not establish arranger liability under CERCLA. Congress enacted CERCLA to
address the “serious environmental and health risks posed by industrial
pollution,” and CERCLA “was designed to promote the ‘timely cleanup of
hazardous waste sites’ and to ensure that the costs of such cleanup efforts were
borne by those responsible for the contamination.” Burlington N. & Santa Fe Ry.
Co. v. United States, — U.S. —, 129 S. Ct. 1870, 1874 (2009) (citation omitted).
To accomplish this, CERCLA imposes strict liability for environmental
contamination upon four broad classes of potentially responsible parties:
(1) the owner and operator of a vessel or a facility,
(2) any person who at the time of disposal of any hazardous
substance owned or operated any facility at which such hazardous
substances were disposed of,
(3) any person who by contract, agreement, or otherwise
arranged for disposal or treatment, or arranged with a transporter
for transport for disposal or treatment, of hazardous substances
owned or possessed by such person, by any other party or entity, at
1
The district court ruled on this case prior to the Supreme Court’s decision in
Burlington N. & Santa Fe Ry. Co. v. United States, — U.S. —, 129 S. Ct. 1870, (2009). At the
time, the prevailing rule of this circuit for arranger liability required “a nexus” between the
defendant’s conduct and the disposal of the hazardous substance. Geraghty & Miller, Inc. v.
Conoco Inc., 234 F.3d 917, 929 (5th Cir. 2001). The district court’s ruling — that Celanese
must demonstrate that Eby actually knew about the disposal — was based on Geraghty. As
explained in greater detail below, Burlington rejected this lesser standard and held that
arranger liability requires an intent to dispose. See 129 S. Ct. at 1879-80. Having waived its
conscious-disregard argument under Geraghty, Celanese has also waived its argument under
the more demanding standard of Burlington.
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any facility or incineration vessel owned or operated by another
party or entity and containing such hazardous substances, and
(4) any person who accepts or accepted any hazardous
substances for transport to disposal or treatment facilities, incinera-
tion vessels or sites selected by such person, from which there is a
release, or a threatened release which causes the incurrence of
response costs, of a hazardous substance . . . .
42 U.S.C. § 9607(a). This appeal concerns only the third category — whether Eby
“arranged for disposal” of methanol, which the parties agree is a “hazardous
substance.” CERCLA does not specifically define what it means to “arrang[e] for”
the disposal of a hazardous substance. Accordingly, we must interpret that
phrase according to its ordinary meaning. Burlington, 129 S. Ct. at 1879
(citation omitted).
In Burlington, the Supreme Court addressed this very question with
respect to a chemical supplier that had used common carriers to ship hazardous
substances to its customers. See id. at 1875. During these shipments, leaks and
spills of the chemicals often occurred, which the supplier knew about. See id.
Because the supplier arranged the deliveries and knew that chemical leaks and
spills would occur as a result, the Ninth Circuit held that the supplier was liable
as an arranger under CERCLA even though it had not specifically intended to
dispose of the product: “Thus, an entity can be an arranger even if it did not
intend to dispose of the product. Arranging for a transaction in which there
necessarily would be leakage or some other form of disposal of hazardous
substances is sufficient.” United States v. Burlington N. & Santa Fe Ry. Co., 520
F.3d 918, 949 (9th Cir. 2008), rev’d, Burlington, 129 S. Ct. 1870.
The Supreme Court reversed this holding because the Ninth Circuit’s
interpretation of “arranged for” conflicted with the plain language of the statute.
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See Burlington, 129 S. Ct. at 1879-80 (“[CERCLA] liability may not extend
beyond the limits of the statute itself.”). The Court explained,
In common parlance, the word “arrange” implies action directed to
a specific purpose. See Merriam-Webster’s Collegiate Dictionary 64
(10th ed.1993) (defining “arrange” as “to make preparations for:
plan[;] . . . to bring about an agreement or understanding concern-
ing”); see also Amcast Indus. Corp., 2 F.3d, at 751 (words “‘arranged
for’ . . . imply intentional action”). Consequently, under the plain
language of the statute, an entity may qualify as an arranger under
§ 9607(a)(3) when it takes intentional steps to dispose of a hazard-
ous substance. See Cello-Foil Prods., Inc., 100 F.3d, at 1231 (“[I]t
would be error for us not to recognize the indispensable role that
state of mind must play in determining whether a party has
‘otherwise arranged for disposal . . . of hazardous substances’”).
Id. at 1879. Accordingly, the Supreme Court held that an entity’s knowledge that
its action will result in a spill or leak is insufficient, by itself, to establish
arranger liability; instead, the entity must “take[] intentional steps” or “plan[]
for” the disposal of the hazardous substance. Id. at 1879-80. Hence, under
Burlington, Eby is liable as an arranger only if it took intentional steps or
planned to release methanol from the Celanese pipeline.
The record does not support such a finding. The district court found, and
Celanese does not dispute, that Eby did not intentionally damage the pipeline.
In fact, Eby did not even know that it had struck a pipeline; it only knew that it
had struck something with a backhoe. Still, Celanese insists that Eby intention-
ally took steps to dispose of methanol by disregarding its obligations to
investigate the incident and backfilling the excavated area where the incident
had occurred. In other words, Celanese argues that Eby’s conscious disregard of
its duty to investigate is tantamount to intentionally taking steps to dispose of
methanol. Burlington, however, precludes liability under these circumstances.
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In Burlington, the Court declined to impose arranger liability for a defendant
with more culpable mens rea. The defendant had actually arranged to ship
hazardous chemicals under conditions that it knew would result in the spilling
of a portion of the hazardous substance by the purchaser or common carrier. See
Burlington, 129 S. Ct. at 1880. Given that there was no arranger liability under
those circumstances, we fail to see how we can impose such liability here when
Eby did not even know that it had struck the Celanese pipeline. Therefore, we
hold that Eby is not liable as an arranger under CERCLA.
Because we find that Eby is not liable as an arranger under CERCLA, we
also find that it is not liable as an arranger under SWDA, the Texas “counter-
part” to CERCLA. R.R. Street & Co. Inc. v. Pilgrim Enter., Inc., 166 S.W.3d 232,
238, 241 (Tex. 2005). The Texas Supreme Court has yet to consider SWDA
arranger liability in light of Burlington. Therefore, we must determine how the
Texas Supreme Court would likely resolve the issue post-Burlington. See Chaney
v. Dreyfus Serv. Corp., 595 F.3d 219, 229 (5th Cir. 2010) (citation omitted). Here,
the Texas Supreme Court has explicitly instructed that we should look to“federal
case law for guidance in interpreting the term ‘otherwise arranged’ to dispose of
solid waste, which is not defined in either SWDA or CERCLA.” R.R. Street, 166
S.W.3d at 241. In light of this instruction, which this court must of course heed
in making an Erie guess, we are confident that the Texas Supreme Court would
apply Burlington to Celanese’s SWDA claim. Accordingly, consistent with our
CERCLA analysis above, we also hold that Eby is not liable as an arranger
under SWDA.
AFFIRMED.
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