Faced with an issue of first impression in the Circuit, the Court of Appeals for the Third Circuit in Litgo New Jersey Inc. v. Comm'r New Jersey Dep't of Envtl. Prot., Nos. 12-1288 and 12-1418 (3d Cir.), has joined the majority of other Federal Courts in concluding that Federal District Courts in the District where a contaminated site is located have exclusive jurisdiction over claims under the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. § 6972 et seq. Amongst other causes of action, RCRA permits citizen suits against any person who has contributed to the handling or disposal of waste that "may present an imminent and substantial endangerment to health or the environment," and authorizes courts to issue injunctions to reduce harm and, under certain circumstances, to award costs of litigation to the prevailing or substantially prevailing party. The Third Circuit's ruling in Litgo shuts the door to State Court—which is often a desired and favorable forum—to plaintiffs seeking to hold alleged polluters responsible for contamination under RCRA.
The District Court Action
In Litgo, the current owner of a contaminated property in Somerville, New Jersey (the "Property") and its sole shareholder (collectively, "Litgo") sued a former owner of the Property and related parties (the "Sanzaris") and the United States of America, claiming that those parties are responsible for the remediation of contaminants in soil and groundwater at the Property under RCRA, the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et seq., the New Jersey Spill Compensation and Control Act ("Spill Act"), N.J. Stat. Ann. § 58:10-23.11 et seq., and the New Jersey Sanitary Landfill Closure Act and Contingency Fund ("Closure Act"), N.J. State. Ann. § 13:1E-100 et seq. Since the early 1900s, the Property has been owned and operated by numerous parties and used exclusively for manufacturing, commercial, and industrial purposes. During the 1940s, the Property was leased by a manufacturer who produced machined precision parts for the United States military. That manufacturer allegedly cleaned and degreased the parts with trichloroethylene ("TCE")—a toxic industrial solvent—and disposed of the TCE by dumping it onto the ground at the Property. As a result of this and other commercial activity that occurred over time at the Property, both the soil and groundwater became contaminated with various metals, petroleum hydrocarbons, and volatile organic compounds, including TCE. That contamination was compounded by improper storage of hazardous wastes at the Property and poor remediation practices. Groundwater beneath the Property remains contaminated today.
The District Court in Litgo entered summary judgment against Litgo on its RCRA claim against the Sanzaris, reasoning that the claim was barred by New Jersey's entire controversy doctrine and should have been asserted in a lawsuit previously filed by Litgo against the Sanzaris and their environmental consultants in New Jersey Superior Court. Litgo alleged in the State Court case that the Sanzaris and their consultants failed to properly investigate and remediate TCE contamination at the Property. Under the entire controversy doctrine, all claims that arise from related facts or the same transaction or series of transactions must be joined together in a state court action and cannot be brought in a later suit unless the State Court lacked subject matter jurisdiction over the related claims. The District Court in Litgo found that the RCRA claim against the Sanzaris was sufficiently related to the claims brought by Litgo in the state court action and therefore Litgo was barred from bring the claim in the federal court action. In making this ruling, the District Court concluded that State Courts and Federal District Courts have concurrent jurisdiction over RCRA claims.
Following a bench trial on the remaining claims, the District Court ruled that Litgo, the Sanzaris, and the United States were each "potentially responsible parties" and liable for costs of remediation under CERCLA and the Spill Act and allocated percentages to each party. The District Court also concluded that the Sanzaris and Litgo were liable for the costs of remediation under the Spill Act and assigned costs to both parties. The District Court rejected the Litgo's claim against the United States under the Closure Act and reserved judgment on the RCRA claim against the United States until after a damages hearing (Litgo and the United States entered into a settlement agreement before the hearing occurred). Following the damages hearing, the District Court calculated the costs recoverable by Litgo under CERCLA and the Spill Act and denied Litgo's request for prejudgment interest.
Appeal to the Third Circuit
The Majority Opinion
Litgo appealed the District Court's ruling on several grounds, including that the District Court erred in granting summary judgment on the RCRA claim to the Sanzaris based on New Jersey's entire controversy doctrine. The Sanzaris cross-appealed. The Third Circuit affirmed the District Court's judgment in all but two respects. First, the Third Circuit held that Litgo should have been awarded prejudgment interest. Second, the Third Circuit reversed the District Court's order determining that the entire controversy doctrine applied to Litgo's RCRA claim against the Sanzaris and held that Federal District Courts have exclusive jurisdiction over RCRA claims.
In concluding that only Federal Courts may decide RCRA claims, the Third Circuit adopted a textualist approach and relied heavily on a plain reading of the relevant RCRA provision, namely, 42 U.S.C. § 6972. That provision provides, in pertinent part:
42 U.S.C. § 6972(a) (emphases added).
The Third Circuit read the foregoing provision—and in particular, the language indicating that RCRA claims "shall be brought in the district court for the district in which the alleged violation occurred or the alleged endangerment may occur"—to mean that Congress has explicitly conferred exclusive jurisdiction over claims under that statute to Federal District Courts. This conclusion is consistent with that of the majority of other Federal Courts who have addressed the issue, with the Court of Appeals for the Sixth Circuit's decision in Davis v. Sun Oil Co., 148 F.3d 606 (6th Cir. 1998), being the most prominent outlier in finding concurrent jurisdiction under RCRA. According to the Third Circuit in Litgo, the "shall be brought" language is most naturally read as mandatory language; in other words, the action "must be brought" in a Federal District Court. Moreover, when written in the United States Code, the term "district court" means federal courts. Likewise, other federal statutes that direct parties to file lawsuits in "district courts," such as CERCLA, concern federal, not state, claims. Although a presumption exists in favor of concurrent state court jurisdiction, the Third Circuit noted that the presumption is rebutted where, as here, Congress has statutorily conferred jurisdiction on Federal Courts. Therefore, the Third Circuit held that the District Court in Litgo erred in dismissing Litgo's RCRA claim against the Sanzaris based on the entire controversy doctrine because the New Jersey Superior Court in the state court action filed by Litgo lacked subject matter jurisdiction over the RCRA claim.
The Dissent
Circuit Judge Leonard Garth wrote a spirited dissent regarding the RCRA jurisdictional issue, perhaps signaling that an appeal to the United States Supreme Court is forthcoming. Judge Garth concluded that nothing in the text, legislative history, or purpose of RCRA shows that Congress affirmatively and explicitly prohibits State Courts from deciding RCRA claims. Relying on the Sixth Circuit's reasoning in Davis, he stated that the term "shall" under RCRA does not expressly oust State Courts of their presumptive concurrent jurisdiction. He further reasoned that RCRA's requirement that actions "shall be brought in the district court for the district in which the alleged violation occurred" imposes a venue restriction applicable only if a party opts to file in Federal Court, not a jurisdictional requirement.
Judge Garth noted that, unlike CERCLA and other federal statutes conferring exclusive jurisdiction, RCRA does not include the term "exclusive jurisdiction." Instead, Congress used a nonrestrictive jurisdictional provision that preserved the presumption of concurrent State Court jurisdiction. He added that the term "shall" is not consistently used in the RCRA provision prescribing procedures for filing citizen claims, since RCRA also provides that suits brought against the administrator of the United States Environmental Protection Agency ("EPA") "may be brought in the district court for the district in which the alleged violation occurred." 42 U.S.C. § 6972(a) (emphasis added). In Judge Garth's view, this sort of permissive language is insufficient to overcome the presumption of concurrent jurisdiction. Judge Garth believes the majority opinion's interpretation of the term "shall" would lead to the nonsensical result of permitting suits against EPA to be filed in State Court, while requiring actions against private parties to be brought in Federal District Court.
Finally, Judge Garth reasoned that the majority opinion will "'result in a significant impingement of the States' traditional and primary power over land and water use,' thus disrupting the balance of state and federal regulation over state, county, and local pollution that both Congress and the Supreme Court have recognized and respected."
Conclusion
While the Third Circuit's decision in Litgo does not necessarily prevent States from enforcing their own environmental laws in toto, it does foreclose State Courts from exercising any authority over claims under RCRA. Likewise, following Litgo, plaintiffs wishing to assert RCRA claims can no longer forum shop and will be forced to file such claims in the Federal District Court in which the property at issue is located. It remains to be seen whether an appeal will issue to the United States Supreme Court and, if so, whether the Court will see a sufficient need and purpose to resolve the current split in authority within the Courts of Appeals and Federal District Courts to accept the appeal, albeit a split that is very heavily weighted in support of the Third Circuit's ruling.
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