Case: 10-40515 Document: 00511409472 Page: 1 Date Filed: 03/14/2011
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
March 14, 2011
No. 10-40515 Lyle W. Cayce
Clerk
DEL-RAY BATTERY COMPANY; GOLDEN EAGLE BATTERY, INC.,
Plaintiffs – Appellants
v.
DOUGLAS BATTERY COMPANY; INTERSTATE BATTERY SYSTEMS OF
AMERICA, INC.,
Defendants – Appellees
Appeal from the United States District Court
for the Eastern District of Texas
Before KING, DAVIS, and SOUTHWICK, Circuit Judges.
KING, Circuit Judge:
Appellants, battery recyclers, were sued under the Texas Solid Waste
Disposal Act (the “SWDA”) in Texas state court for contribution to
environmental clean-up costs incurred by Appellees. Appellants asserted in
their defense that the Superfund Recycling Equity Act (the “SREA”)—an
amendment to the federal Comprehensive Environmental Response,
Compensation, and Liability Act (“CERCLA”) that exempts certain recyclers
from liability for clean-up costs under CERCLA, and awards costs and fees to
any recyclers improperly sued for contribution under CERCLA—applied to
protect them from the state court action brought pursuant to the SWDA. After
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Appellees non-suited the state court case, Appellants brought this federal court
action requesting declaratory relief as to the SREA and seeking, under the
SREA, the attorneys’ and experts’ fees they incurred in defending the state court
action. They now appeal the district court’s judgment dismissing their
complaint. For the reasons stated below, we affirm.
BACKGROUND
Appellants Del-Ray Battery Company and Golden Eagle Battery, Inc.
(together, “Plaintiffs”) and Appellees Douglas Battery Company and Interstate
Battery Systems of America, Inc. (together, “Defendants”) are battery recyclers
that sold intact, spent lead acid batteries to a recycling facility in Tecula, Texas
until the Environmental Protection Agency (“EPA”) declared the facility a
Superfund site and closed it down. The Texas Commission on Environmental
Quality (“TCEQ”), the state’s counterpart to the EPA, identified Defendants,
among other battery recyclers, as potentially responsible parties and directed
them to perform a remedial investigation/feasibility study at the Tecula site.
The EPA ultimately paid $4 million in removal and remediation costs to clean
up the site, but neither the EPA nor the TCEQ brought suit against any of the
battery recyclers to recover the costs of this clean-up.
Defendants later sued Plaintiffs in state court under § 361.344(a) of the
Texas Solid Waste Disposal Act, Tex. Health & Safety Code Ann. § 361 (Vernon
2010), seeking contribution for the costs they incurred to clean up the Tecula
site.1 Defendants did not raise any federal claims in that action. Plaintiffs
asserted in their defense that the Superfund Recycling Equity Act, 42 U.S.C. §
9627 (2006)—an amendment to the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. § 9601 et seq. (2006), that exempts
1
The parties contest whether Defendants actually paid part of these clean-up costs at
the direction of the TCEQ, or whether they simply conducted the required investigation and
study. However, it is not necessary for us to resolve that question here.
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certain recyclers from CERCLA clean-up liability, and awards costs and fees to
recyclers who are forced to defend against improper contribution actions—also
exempted them from liability under the SWDA, and entitled them to recover the
costs of defending the state court action.
The state court granted partial summary judgment for Defendants as to
each element of cost recovery under § 361.344 of the SWDA, but did not order
Plaintiffs to pay Defendants any damages on their claims for contribution.
Defendants thereafter successfully moved to non-suit the case for reasons that
are not explained in the record.
Plaintiffs then brought this federal court action asserting five separate
claims: a claim under the SREA seeking recovery of their attorneys’ and experts’
fees incurred in defending the state court lawsuit, and four declaratory judgment
claims requesting the district court to declare that (1) the SREA applies to
Plaintiffs and protects them from all lawsuits for contribution, including the
state court action brought by Defendants; (2) Plaintiffs are entitled to their
attorneys’ and experts’ fees under the SREA; (3) the SREA “is unconstitutional
if applied in a manner which precludes equal protection, due process [and] open
courts to bonafide battery recyclers”; and (4) the state court’s interpretation of
the SREA was unconstitutional. Defendants moved to dismiss.
The district court dismissed the fourth declaratory judgment claim for lack
of subject matter jurisdiction, reasoning that it lacked the power to review a
state court decision under the Rooker-Feldman doctrine. The court dismissed
the first and second declaratory judgment claims, as well as the claim for fees,
for failure to state a claim because it found that the SREA does not exempt
Plaintiffs from contribution actions under the SWDA. Finally, the court
dismissed the third declaratory judgment claim regarding the constitutionality
of the SREA for failure to state a claim because it could not discern a legal basis
for that claim. This appeal followed.
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STANDARDS OF REVIEW
We review de novo a district court’s grant of a motion to dismiss for lack
of subject matter jurisdiction, applying the same standards as the district court.
Rodriguez v. Christus Spohn Health Sys. Corp., 628 F.3d 731, 734 (5th Cir. 2010)
(citations omitted). Where, as here, the district court determined its jurisdiction
based on the complaint alone, appellate review is “limited to determining
whether the district court’s application of the law is correct.” Id. (citation and
internal quotation marks omitted).
We also review de novo a district court’s grant of a motion to dismiss for
failure to state a claim under Rule 12(b)(6). In re Katrina Canal Breaches Litig.,
495 F.3d 191, 205 (5th Cir. 2007). A plaintiff fails to state a claim when the
complaint does not contain “enough facts to state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
“Factual allegations must be enough to raise a right to relief above the
speculative level, on the assumption that all the allegations in the complaint are
true (even if doubtful in fact).” Id. at 555 (citations and internal quotation
marks omitted).
ANALYSIS
The heart of this federal action, as the district court identified, is
Plaintiffs’ claim that the SREA’s exemption and cost shifting provisions apply
to claims asserted under state law. As discussed below, the merits of this
argument can be straightforwardly rejected: the plain language of the SREA
makes clear that it applies to CERCLA actions only, and does not apply to state
law actions. However, Defendants assert several new challenges to subject
matter jurisdiction on appeal, which must be addressed before reaching the
merits of the case. See Steel Co. v. Citizens for a Better Env., 523 U.S. 83, 94
(1995) (requiring jurisdiction to be established as a threshold matter before
reaching the merits); Edge Petroleum Operating Co. v. GPR Holdings, L.L.C. (In
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re TXNB Internal Case), 483 F.3d 292, 298 n.6 (5th Cir. 2007) (holding that
federal subject matter jurisdiction may be challenged at any time on appeal).
I. Subject Matter Jurisdiction
A. Mootness
Defendants argue that Plaintiffs’ first declaratory judgment claim—that
the SREA applies to protect them from all contribution lawsuits, including the
state court lawsuit brought by Defendants—is not justiciable insofar as it
requests a specific declaration as to the non-suited state court lawsuit. In other
words, they argue that mootness divested the district court of jurisdiction over
that particular portion of the claim.
The party asserting mootness bears the “heavy burden of persuading the
court that the challenged conduct cannot reasonably be expected to start up
again.” Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167,
189 (2000) (citation and internal quotation marks omitted). The non-suit order
entered by the state court dismissed all parties’ claims without prejudice.
Without any information in the record or the briefs as to the reasons for the non-
suit, or as to their future intent, Defendants have not carried their burden to
show that the alleged harm will not recur, i.e., that they will not re-file their
state law action. The claim thus withstands Defendants’ challenge for mootness.
B. The Rooker-Feldman Doctrine
Defendants next argue that the Rooker-Feldman doctrine bars Plaintiffs
from “relitigating their defenses in federal court.” The Rooker-Feldman doctrine
bars “cases brought by state-court losers complaining of injuries caused by
state-court judgments rendered before the district court proceedings commenced
and inviting district court review and rejection of those judgments.” Exxon
Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005). Thus, a
losing party may not seek what amounts to appellate review of a final state court
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judgment in a federal district court. See Lance v. Dennis, 546 U.S. 459, 463
(2006).
We have previously held that “the Rooker-Feldman bar generally should
not extend to state decisions that would not be given preclusive effect under
doctrines of res judicata and collateral estoppel.” Ingalls v. Erlewine (In re
Erlewine), 349 F.3d 205, 210 (5th Cir. 2003); see also Union Planters Bank Nat’l
Ass’n v. Salih, 369 F.3d 457, 460–61 (5th Cir. 2004). The federal full faith and
credit statute requires federal courts to give state court judgments the same
preclusive effect that they would enjoy in the courts of the rendering state. See
28 U.S.C. § 1738 (2006); Marrese v. Am. Acad. of Orthopaedic Surgeons, 470 U.S.
373, 380 (1985). We therefore look to Texas law to determine whether the Texas
judgments in this case would be accorded res judicata effect.
A party seeking to assert res judicata in Texas courts must prove, inter
alia, “a prior final determination on the merits by a court of competent
jurisdiction.” Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010)
(emphasis added). The partial summary judgment orders in this case were not
final judgments. They establish each of the elements necessary to state a claim
under the SWDA, but stop short of concluding that Plaintiffs are liable for any
contribution costs. They do not award any damages to Defendants, who had
sued to recover contribution to their clean-up costs, nor do they dispose of
Plaintiffs’ claim for fees under the SREA. A judgment is not final when
outstanding issues remain in the action. See In re Burlington Coat Factory
Warehouse of McAllen, Inc., 167 S.W.3d 827, 829–31 (Tex. 2005); McGowen v.
Huang, 120 S.W.3d 452, 461 (Tex. App.—Texarkana 2003, pet. denied) (“If a
summary judgment does not mention nor refer to issues still pending, then those
issues remain unadjudicated, and the summary judgment is not final.”). More
specifically, a partial summary judgment on the issue of liability alone, without
addressing the amount of damages, is not a final judgment. See Tex. R. Civ. P.
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166a(a) (describing such a judgment, which does not address the amount of
damages, to be “interlocutory in character”). Finally, a non-suit does not convert
a partial summary judgment into a final judgment on the merits when there are
outstanding issues remaining in the action. See McGowen, 120 S.W.3d at
461–62 (citing Chase Manhattan Bank, N.A. v. Lindsay, 787 S.W.2d 51, 53 (Tex.
1990)).
Because the interlocutory summary judgment orders in this case would
not enjoy res judicata effect, the Rooker-Feldman doctrine does not apply to bar
their review. We nevertheless affirm the district court’s dismissal of the fourth
declaratory judgment claim (requesting the court to declare the state court’s
interpretation of the SREA to be unconstitutional) for lack of jurisdiction. As the
Supreme Court has stated many times, “[f]ederal courts are courts of limited
jurisdiction. They possess only that power authorized by Constitution and
statute . . . . It is to be presumed that a cause lies outside this limited
jurisdiction, and the burden of establishing the contrary rests upon the party
asserting jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375,
377 (1994) (citations omitted). Plaintiffs have not asserted any basis for federal
jurisdiction over their claim to declare a state court’s interlocutory judgment to
be unconstitutional, nor can we independently conceive of any grounds for
jurisdiction to review such a claim. The claim was therefore properly dismissed
for lack of subject matter jurisdiction.
C. Federal Question
Finally, Defendants argue that there is no federal jurisdiction over the
remaining declaratory judgment claims in this case because the federal question
that would give rise to jurisdiction is asserted in Plaintiffs’ defense to a state law
cause of action. This argument has merit as to the district court’s original
jurisdiction over the declaratory judgment claims. See Pub. Serv. Comm’n of
Utah v. Wycoff Co., 344 U.S. 237, 248 (1952) (“Where the complaint in an action
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for declaratory judgment seeks in essence to assert a defense to an impending
or threatened state court action, it is the character of the threatened action, and
not of the defense, which will determine whether there is federal-question
jurisdiction in the District Court.”); New Orleans & Gulf Coast Ry. Co. v. Barrois,
533 F.3d 321, 329 (5th Cir. 2008). However, Defendants fail to consider that the
district court could have exercised supplemental jurisdiction over those claims
pursuant to 28 U.S.C. § 1367(a), which provides in part that
in any civil action of which the district courts have original
jurisdiction, the district courts shall have supplemental jurisdiction
over all other claims that are so related to claims in the action
within such original jurisdiction that they form part of the same
case or controversy under Article III of the United States
Constitution.
The district court had original jurisdiction over Plaintiffs’ claim for
attorneys’ and experts’ fees raised pursuant to the SREA, a federal statute. And
the declaratory judgment claims are so related to the SREA fees claim that they
form part of the same case or controversy; indeed, the resolution of the
declaratory judgment claims is entirely correlated with the resolution of the
claim for fees, because they all turn on the same question: whether the SREA
applies to the SWDA.
Nor did the district court’s dismissal of the SREA fees claim divest it of
supplemental jurisdiction over the declaratory judgment claims. “[W]hen a court
grants a motion to dismiss for failure to state a federal claim, the court generally
retains discretion to exercise supplemental jurisdiction, pursuant to § 1367, over
pendent state-law claims.” Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006);
see 28 U.S.C. § 1367(c) (“The district courts may decline to exercise supplemental
jurisdiction over a claim . . . if . . . the district court has dismissed all claims over
which it has original jurisdiction” (emphasis added)). Therefore, “ ‘the court’s
determination may be reviewed for abuse of discretion, but may not be raised at
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any time as a jurisdictional defect.’ ” Carlsbad Tech., Inc. v. HIF Bio, Inc.,
— U.S. —, 129 S. Ct. 1862, 1866 (2009) (citation omitted).
We therefore conclude that the district court had jurisdiction over all of
Plaintiffs’ claims save the fourth declaratory judgment claim, which requested
the district court to declare the state court’s interpretation of the SREA to be
unconstitutional. Having addressed the subject matter jurisdiction challenges
raised by Defendants, we turn to the remainder of Plaintiffs’ claims.
II. Failure to State a Claim
A. Constitutional Violations
Plaintiffs requested declaratory judgment on their claim that failure to
apply the SREA exemption to claims under Texas law violates their
constitutional rights to equal protection, due process, and open courts. However,
Plaintiffs do not explain how these rights have been violated, nor do they state
any legal basis for their complaints of constitutional violations. The district
court therefore properly dismissed this claim because Plaintiffs have not pled
sufficient facts to “state a claim to relief that is plausible on its face,” Twombly,
550 U.S. at 570.
B. Preemption
Plaintiffs’ remaining claims—the claim for fees under the SREA and the
first two declaratory judgment claims—turn on whether the SREA exempts
battery recyclers from liability under the SWDA. We hold that it does not.
1. CERCLA, the SREA, and the SWDA
CERCLA is the federal statute that governs cleanup of hazardous
industrial waste and charges the costs of cleanup to those responsible for the
contamination. Burlington N. & Santa Fe Ry. Co. v. United States, — U.S. —,
129 S. Ct. 1870, 1874 (2009). Two provisions of CERCLA—§§ 107(a) and
113(f)—allow private parties to recover expenses associated with cleaning up
contaminated hazardous waste sites from other potentially responsible parties.
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42 U.S.C. §§ 9607(a), 9613(f); see United States v. Atl. Research Corp., 551 U.S.
128, 131 (2007).
The SREA amended CERCLA by adding a limited exemption from liability
under CERCLA for recyclers of hazardous materials, including battery recyclers,
that meet certain standards. 42 U.S.C. § 9627(a)(1), (e). The SREA also allows
recyclers sued in violation of the exemption to recover their attorneys’ fees and
experts’ fees from the party that brought the improper action. Id. § 9627(j).
The SWDA is the Texas counterpart to CERCLA. R.R. Street & Co. v.
Pilgrim Enters., Inc., 166 S.W.3d 232, 238 (Tex. 2005). Like CERCLA, the
SWDA contains a provision that permits private parties to bring contribution
actions against other potentially responsible parties. See id. at 238. That
provision states that “[a] person who conducts a removal or remedial action that
is approved by the [TCEQ] and is necessary to address a release or threatened
release may bring suit in a district court to recover the reasonable and necessary
costs of that action and other costs as the court, in its discretion, considers
reasonable.” Tex. Health & Safety Code Ann. § 361.344(a). This is the provision
under which Defendants sued Plaintiffs in Texas state court.
2. The SREA Does Not Apply to the SWDA
The plain language of the SREA conclusively establishes that it applies
only to claims asserted under CERCLA. Section 127(a) of the SREA provides
that “a person who arranged for recycling of recyclable materials shall not be
liable under sections 9607(a)(3) and 9607(a)(4) of this title [CERCLA] with
respect to such material.” 42 U.S.C. § 9627(a). Section 127(k) of the
SREA—which is entitled “Relationship to liability under other laws”—states:
“Nothing in this section shall affect . . . liability under any other Federal, State,
or local statute or regulation promulgated pursuant to any such statute . . . .”
Id. § 9627(k)(1). We conclude from this language that the SREA exempts battery
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recyclers from liability under CERCLA, but does not affect liability under a state
law like the SWDA.
Plaintiffs cite to the purpose of the SREA—to “promote the reuse and
recycling of scrap material”—in support of their argument that Congress
intended to protect battery recyclers like themselves, and therefore must have
intended that the SREA apply to the SWDA. Pub. L. No. 106-113, Title VI, §
6001(a), 113 Stat. 1536, 1501A-598 (Nov. 29, 1999). However, as the Supreme
Court stated in interpreting CERCLA: “Given the clear meaning of the text,
there is no need . . . to consult the purpose of CERCLA at all. As we have said:
‘[I]t is ultimately the provisions of our laws rather than the principal concerns
of our legislators by which we are governed.’ ” Cooper Indus., Inc. v. Aviall
Servs., Inc., 543 U.S. 157, 167–68 (2004) (quoting Oncale v. Sundowner Offshore
Servs., Inc., 523 U.S. 75, 79 (1998)) (second alteration original). Plaintiffs’
argument therefore fails in the face of the plain language of the SREA.
Plaintiffs also assert that the SWDA itself recognizes that it is subject to
the SREA. However, the Texas Supreme Court held in an analogous situation
that an action brought exclusively under § 366.344(a) of the SWDA—the very
provision under which Defendants sued Plaintiffs—was not subject to another
liability-limiting provision that existed only in CERCLA. R.R. Street, 166
S.W.3d at 239–40 n.6. Similarly, there is no SREA equivalent in the SWDA that
exempts battery recyclers from clean-up liability under the SWDA. Therefore,
the defense contained in the SREA that may have been available to Plaintiffs,
had they been sued under CERCLA, is not available to them in a suit brought
pursuant to the SWDA.
3. CERCLA Does Not Preempt the SWDA
Plaintiffs are also incorrect in their argument that CERCLA itself
preempts state law. Again, we look first and foremost to the text when
interpreting a statutory provision. United States v. Alvarez–Sanchez, 511 U.S.
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350, 356 (1994). CERCLA explicitly states in several different sections that it
does not preempt state law. The general saving clause, § 152(d), provides in
part:
Nothing in this chapter shall affect or modify in any way the
obligations or liabilities of any person under other Federal or State
law, including common law, with respect to releases of hazardous
substances or other pollutants or contaminants.
42 U.S.C. § 9652(d). Section 107(j), the section of the Act that creates liability
for clean-up costs, provides in pertinent part:
Nothing in this paragraph shall affect or modify in any way the
obligations or liability of any person under any other provision of
State or Federal law, including common law, for damages, injury, or
loss resulting from a release of any hazardous substance or for
removal or remedial action or the costs of removal or remedial
action of such hazardous substance.
42 U.S.C. § 9607(j). The savings clause of CERCLA’s express contribution
provision, § 113(f)(1), states in relevant part:
Nothing in this subsection shall diminish the right of any person to
bring an action for contribution in the absence of a civil action under
section 9606 of this title or section 9607 of this title.
42 U.S.C. § 9613(f)(1). And finally, § 114(a), the section of CERCLA that deals
with CERCLA’s relationship to other laws, states:
Nothing in this chapter shall be construed or interpreted as
preempting any State from imposing any additional liability or
requirements with respect to the release of hazardous substances
within such State.
42 U.S.C. § 9614(a). The statute is therefore clear on its face that Congress did
not intend CERCLA to preempt state law.
It is also clear from case law that CERCLA and the SWDA co-exist as
regulatory regimes. See Cooper, 543 U.S. at 166–67 (holding that the portion of
§ 113(f)(1) cited above “rebuts any presumption that the express right of
contribution provided by the enabling clause is the exclusive cause of action for
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contribution available to a [potentially responsible party]”); MSOF Corp. v.
Exxon Corp., 295 F.3d 485, 491 (5th Cir. 2002) (“This court and other courts have
construed the CERCLA saving clauses in accordance with their plain meanings
and have held that they preserve parties’ rights arising under state law.”).
Because the SREA on its face does not apply to state law causes of action, and
because CERCLA does not preempt the SWDA, the district court properly
dismissed the remainder of Plaintiffs’ claims.
CONCLUSION
For the foregoing reasons, we AFFIRM the judgment of the district court.
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