BERREY v. ASARCO INC., 439 F.3d 636 (10th Cir. 2006)

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and Blue Tee Corporation, sued as: Blue Tee Corp.; Gold Fields Mining Corporation, LLC, sued as: Gold Fields Mining Corp., Defendants-Counter-Claimants-Appellees.

No. 04-5131.United States Court of Appeals, Tenth Circuit.
February 22, 2006.

Appeal from the United States District Court for the Northern District of Oklahoma, Sven Erik Holmes, Chief Judge.

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Stephen R. Ward (Shelley L. Carter, with him on the briefs), Conner
Winters, LLP, Tulsa, OK, for Plaintiff-Counter-Defendant-Appellant.

Stanley D. Davis, Shook, Hardy Bacon, LLP, Kansas City, MO (Kirk F. Marty, Rebecca J. Schwartz, Barbara M. Smith, Shook, Hardy Bacon, LLP, Kansas City, MO; Robert J. Joyce, Joyce, Paul McDaniel, P.C., Tulsa, OK, with him on the brief), for Defendants-Counter-Claimants-Appellees.

Before HENRY, McWILLIAMS and MURPHY, Circuit Judges.

MURPHY, Circuit Judge.

I. Introduction

Plaintiff-Appellant Quapaw Tribe brought suit against Defendants-Appellees Blue Tee Corporation and Gold Fields Mining, alleging Defendants and their predecessors in interest caused environmental contamination on Quapaw lands as a result of their mining activities in the 1900s. Defendants asserted counterclaims for contribution and indemnity. The Tribe filed a motion to dismiss Defendants’ counterclaims, arguing they were barred by tribal sovereign immunity. The district court denied the motion. It concluded the Tribe had waived its immunity as to Defendants’ counterclaims, which sounded in recoupment, by filing suit. The Tribe appealed. We have jurisdiction pursuant to 28 U.S.C. § 1291. See Osage Tribal Council v. United States Dep’t of Labor, 187 F.3d 1174, 1179 (10th Cir. 1999). Because a tribe waives its sovereign immunity as to counterclaims sounding in recoupment by filing suit, and Defendants’ counterclaims for common law contribution and indemnity are claims in recoupment, we affirm.

II. Background

The issue on appeal is the propriety of an order denying a motion to dismiss Defendants’ counterclaims. We thus recite the facts largely as alleged in the counterclaims. The United States allotted to the Quapaw lands located in the far northeastern corner of Oklahoma along Tar Creek. Lead and zinc ores were discovered in the area in the late 1800s and a period of extensive mining began. The Tribe and the United States Department of Interior (“DOI”) negotiated mining leases with various companies, including Defendants’ predecessors in interest. Many of the mining leases required debris from mining processes, known as chat, to be deposited in piles where it became the property of the landowner. The Tribe profited from the sale of this chat for use as road base, surface material, and railroad ballast in the Tar Creek region and elsewhere. Mining ended in the 1970s, and in 1983, the Tar Creek Superfund Site was placed on the National Priorities List. Among the environmental hazards alleged to exist at the site are contaminated water runoff from chat piles and former floatation ponds, acid mine drainage, subsidence of the ground, air pollution, erosion, and migration of contaminated water and sediment into downstream rivers and lakes.

The Quapaw Tribe owns in fee approximately eighty acres of the Tar Creek Superfund Site and has an undivided fifty-one percent interest in an additional forty acres. To initiate a cleanup of the site, the Tribe and several individual Tribe members brought suit against former mine owners and operators and their successors in interest.[1] The Tribe asserted claims of

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public and private nuisance, trespass, unjust enrichment, strict liability, and deceit by false representations, nondisclosure, and/or concealment. Subsequently, the Tribe amended its complaint to add claims under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. § 9607, and the Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C. §§ 6924, 6972, and for administrative action in violation of law.

Defendants filed counterclaims for common law contribution and indemnity, and contribution under CERCLA. The Tribe filed a motion to dismiss Defendants’ counterclaims, arguing they were barred by tribal sovereign immunity. The district court denied the motion and a subsequent motion to reconsider, concluding the Tribe waived its sovereign immunity as to claims in recoupment by suing Defendants. Moreover, the district court determined Defendants’ counterclaims are claims in recoupment under the test established in FDIC v. Hulsey, 22 F.3d 1472, 1487 (10th Cir. 1994).

III. Discussion
A. Jurisdiction

As an initial matter, Defendants argue the Tribe’s appeal is jurisdictionally barred for failure to file a timely notice of appeal. The Federal Rules of Appellate Procedure require a notice of appeal to be filed “within 30 days after the judgment or order appealed from is entered,” except when the United States is a party. Fed.R.App.P. 4(a)(1). The district court denied the Tribe’s motion to dismiss on May 18, 2004. The Tribe’s motion to reconsider was denied on June 21, 2004. The Tribe filed an untimely notice of appeal on August 27, 2004. Prior to this filing, however, the Tribe filed a motion to certify the district court’s order denying dismissal.[2] The motion to certify was filed on July 21, 2004, the thirtieth day after the district court entered its order denying reconsideration.[3] A footnote in the motion stated

[s]hould this Court determine that the Tribe’s appeal is by right under the Collateral Order doctrine, the Tribe requests that the Court and the parties treat this motion as a notice of appeal, and advise the Tribe and Defendants of their obligation to proceed before the Circuit Court, tolling all filing requirements until such order is made. This motion is filed within the thirty day period for taking appeal, and therefore notice of appeal is timely if the Court determines that the Collateral Order doctrine applies.

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ROA, Vol. II at 619. The Tribe argues its motion to certify is the functional equivalent of a notice of appeal.

“An appeal must not be dismissed for informality of form or title of the notice of appeal.” Fed.R.App.P. 3(c)(4). A filing that is “technically at variance with the letter of [Rule 3]” satisfies the rule if it is the “functional equivalent of what the rule requires.” Smith v. Barry, 502 U.S. 244, 248, 112 S.Ct. 678, 116 L.Ed.2d 678 (1992) (quotation omitted). A document is the functional equivalent of a notice of appeal if it contains the three elements of notice required by Rule 3(c). See United States v. Smith, 182 F.3d 733, 735 (10th Cir. 1999). Rule 3(c) requires that a notice of appeal specify (1) the party taking the appeal, (2) the order being appealed, and (3) the name of the court to which the appeal is taken. Fed.R.App.P. 3(c)(1). The purpose of Rule 3(c)’s requirements is to provide all parties and the court with sufficient notice of a litigant’s intent to seek appellate review Barry, 502 U.S. at 248, 112 S.Ct. 678.

The Tribe’s motion to certify met all the requirements of Rule 3(c) and put Defendants and the district court on notice of its intent to appeal. The Tribe’s motion stated the Tribe was seeking certification to the Tenth Circuit Court of Appeals to appeal the district court’s order denying dismissal based on tribal sovereign immunity. The motion also provided that if certification was unnecessary because of the collateral order doctrine, the motion to certify was to be treated as a notice of appeal. Because the Tribe’s motion to certify is the functional equivalent of a notice of appeal and was timely pursuant to Fed.R.App.P. 4(a)(1), we have jurisdiction to consider the merits of the Tribe’s appeal.[4]
B. Tribal Sovereign Immunity

The Tribe argues Defendants’ counterclaims are barred by tribal sovereign immunity. Specifically, the Tribe contends the doctrine of equitable recoupment

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does not permit claims against a tribe, like the Quapaw Tribe, that has not waived its immunity from suit by legislative enactment. Questions of tribal sovereign immunity are reviewed de novo. E.F.W. v. St. Stephen’s Indian High Sch., 264 F.3d 1297, 1303 (10th Cir. 2001).

It is well established that Indian tribes possess the common-law immunity from suit traditionally enjoyed by sovereign powers. Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58, 98 S.Ct. 1670, 56 L.Ed.2d 106
(1978). This immunity includes exemption from suit without congressional authorization or waiver by the tribe. Jicarilla Apache Tribe v. Andrus, 687 F.2d 1324, 1344 (10th Cir. 1982). Generally, tribal sovereign immunity is deemed to be coextensive with the immunity of the United States. Ramey Constr. Co., Inc. v. Apache Tribe of Mescalero Reservation, 673 F.2d 315, 319-20 (10th Cir. 1982).

The Supreme Court has recognized that when the United States brings suit, it impliedly waives its immunity as to all claims asserted by the defendant in recoupment. Bull v. United States, 295 U.S. 247, 260-63, 55 S.Ct. 695, 79 L.Ed. 1421 (1935). Claims in recoupment arise out of the same transaction or occurrence, seek the same kind of relief as the plaintiff, and do not seek an amount in excess of that sought by the plaintiff. Hulsey, 22 F.3d at 1487. The waiver of sovereign immunity is predicated on the rationale that “recoupment is in the nature of a defense arising out of some feature of the transaction upon which the [sovereign’s] action is grounded.” Bull, 295 U.S. at 262, 55 S.Ct. 695. I Jicarilla, we extended application of the recoupment doctrine to Indian tribes; thus, when a tribe files suit it waives its immunity as to counterclaims of the defendant that sound in recoupment. 687 F.2d at 1344 see also Rosebud Sioux Tribe v. Val-U Const. Co., 50 F.3d 560, 562 (8th Cir. 1995).

The Tribe urges us to reconsider our precedent applying the doctrine of recoupment as a waiver of tribal sovereign immunity in light of United States v. Dalm, 494 U.S. 596, 110 S.Ct. 1361, 108 L.Ed.2d 548 (1990). The Tribe argues the Supreme Court severely limited the applicability of the recoupment doctrine in Dalm by holding the doctrine cannot be used to permit a claim against the United States that is otherwise barred by the statute of limitations. Id. at 608. Dalm, however, is contextually inapplicable. In Dalm, the plaintiff filed a claim against the United States for a tax refund, and the district court concluded it lacked jurisdiction because the claim was outside the applicable statute of limitations. Id. at 608-09, 110 S.Ct. 1361 (noting “the United States . . . is immune from suit, save as it consents to be sued . . . and the terms of its consent . . . define [the] court’s jurisdiction to entertain the suit”) (quotations omitted). The plaintiff argued her claim was timely under the doctrine of equitable recoupment. Id. at 600, 110 S.Ct. 1361. The Court rejected the plaintiff’s argument, distinguishing her case fro Bull, where the Court held a claim for recoupment could be asserted notwithstanding the statute of limitations. Id. at 604-08, 110 S.Ct. 1361. The Court noted that the recoupment claim in Bull was asserted by a defendant as a defense to an income tax deficiency claim by the government; the Court had jurisdiction because the government’s original claim was properly within the jurisdiction of the Court. Id. at 606, 110 S.Ct. 1361. The plaintiff in Dalm, on the other hand, initiated the suit against the government, and because of the statute of limitations, there was no jurisdiction over the plaintiff’s claim. Id. at 609-10, 110 S.Ct. 1361. Thus, the plaintiff’s claim was barred even

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though she characterized it as a claim in recoupment. Unlike the plaintiff in Dalm, Defendants here assert recoupment claims in response to the Tribe’s original suit. Thus, Dalm is in apposite, and Bull an Jicarilla control.[5]

The Tribe also misunderstands the scope of the waiver of immunity under the doctrine of recoupment. The Tribe contends the United States only waives immunity when claims asserted in recoupment are of the same kind as claims for which Congress has previously abrogated sovereign immunity.[6] Thus, the Tribe argues, tribal sovereign immunity should only be waived for claims in recoupment that are of the same kind as claims for which the Tribe has legislatively waived immunity or Congress has abrogated tribal immunity. Waiver under the doctrine of recoupment, however, does not require prior waiver by the sovereign or an independent congressional abrogation of immunity. If the defendant’s counterclaims are already permitted under an independent congressional abrogation of immunity, there would be no need for implied waiver under the recoupment doctrine. Therefore, in Jacarilla, we stated,

when the sovereign sues it waives immunity as to claims of the defendant which assert matters in recoupment — arising out of the same transaction or occurrence which is the subject matter of the government’s suit, and to the extent of defeating the government’s claim but not to the extent of a judgment against the government which is affirmative in the sense of involving relief different in kind or nature to that sought by the government or in the sense of exceeding the amount of the government’s claims.

687 F.2d at 1344 (quotation omitted and emphasis added). The scope of the waiver under the doctrine of recoupment, thus, is limited only by the requirements for a recoupment claim, i.e. that the claim arise

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from the same transaction as the plaintiff’s claim, seek the same relief as the plaintiff’s claim, and seek an amount not in excess of the plaintiff’s claim. Therefore, the district court did not err in concluding the Tribe waived its immunity as to any of Defendants’ counterclaims sounding in recoupment.

C. Defendants’ Counterclaims for Contribution and Indemnity

As an alternative ground for dismissal, the Tribe argues Defendants’ counterclaims for common law contribution and indemnity do not sound in recoupment. To constitute a claim in recoupment, a defendant’s claim must (1) arise from the same transaction or occurrence as the plaintiff’s suit; (2) seek relief of the same kind or nature as the plaintiff’s suit; and (3) seek an amount not in excess of the plaintiff’s claim Hulsey, 22 F.3d at 1487.

Defendants’ counterclaims allege that, under the mining leases, Defendants were required to leave any debris from mining processes, including chat, on the land mined, where it became the property of the landowner. Because of the lease terms, Defendants assert, the Tribe owned and controlled chat deposited on Tribal land and sold or distributed it in the Tar Creek region for use as road base, surface material, and railroad ballast. Thus, Defendants claim the Tribe contributed to any contamination caused by chat. Additionally, Defendants allege, to the extent the Tribe was a lessor under the mining leases, it was responsible for the terms of those leases, including, inter alia, provisions for the disposition of chat. Because the Tribe dictated Defendants’ actions through lease terms, Defendants assert the Tribe must indemnify Defendants if they are held liable for contamination caused by disposing of chat in accordance with lease terms.[7]

Defendants’ counterclaims satisfy the first prong of Hulsey’s test for claims in recoupment because they arise from the same transaction or occurrence as the Tribe’s claims. Counterclaims arise from the same transaction or occurrence if they are compulsory counterclaims under Rule 13(a) of the Federal Rules of Civil Procedure. See Hulsey, 22 F.3d at 1487.

A counterclaim is compulsory if: (1) the issues of fact and law raised by the principal claim and the counterclaim are largely the same; (2) res judicata
[i.e., claim preclusion] would bar a subsequent suit on defendant’s claim; (3) the same evidence supports or refutes the principal claim and the counterclaim; and, (4) there is a logical relationship between the claim and counterclaim.

Id.

Defendants’ counterclaims are compulsory under Rule 13(a). First, the issues of fact and law raised by the Tribe’s claims and Defendants’ counterclaims are largely the same. The common factual issues include the terms of the mining leases, whether the terms were dictated by DOI or the Tribe, the identity of parties to the leases, ownership and control of mining debris, and the cause of the contamination. The legal issues raised by both claims include the rights and responsibilities of various parties under the mining leases and the identification of parties legally responsible for the contamination of

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the Tar Creek site. Second, claim preclusion would bar a subsequent suit by Defendants against the Tribe alleging claims similar to those asserted as counterclaims here.[8] Third, the same evidence will be used to support or refute the Tribe’s claims and Defendants’ counterclaims. Both the Tribe and Defendants will rely on the terms of the mining leases, evidence of DOI’s or the Tribe’s influence in dictating those terms, and evidence regarding contamination caused by chat. Finally, there is a logical relationship between the Tribe’s claims and Defendants’ counterclaims. The Tribe is attempting to hold Defendants liable for contamination in the Tar Creek area as a result of Defendants’ and their predecessors’ mining activities. Defendants argue they are not responsible for contamination caused by chat because mining leases dictated how Defendants were to dispose of the chat, and some chat was owned and controlled by the Tribe. Thus, the claims of both parties are logically related. Because Defendants’ counterclaims are compulsory, they satisfy the first prong of Hulsey.[9]

Defendants’ counterclaims also seek the same kind of relief as the Tribe’s claims. We have interpreted the second requirement of Hulsey “to mean that if the plaintiff is seeking monetary relief, the defendant’s counterclaims must also seek monetary relief.” Id. There is no requirement that the defendant also seek injunctive relief merely because the plaintiff is seeking an injunction. In the present case, the Tribe seeks remediation, an injunction, and monetary damages. Because Defendants also seek monetary damages, their counterclaims satisfy the second requirement for a claim in recoupment.

Finally, Defendants’ counterclaims satisfy the third prong of Hulsey
because they do not seek an amount in excess of that sought by the Tribe. Claims for contribution and indemnity, by their very nature, are limited to the amount of any judgment in favor of the injured party. Because Defendants’ counterclaims arise from the same transaction or occurrence as the Tribe’s claims and seek relief of the same kind or nature, but not in excess of the amount sought by the Tribe, they are claims in recoupment.

D. Defendants’ Counterclaims under CERCLA

The Tribe also argues Defendants’ counterclaims for contribution under CERCLA should be dismissed.[10] CERCLA

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permits a party to seek contribution from any other “person” who is liable or potentially liable as an owner or operator of a facility from which hazardous substances have been released. 42 U.S.C. § 9613(f)(1). The Tribe contends Defendants’ counterclaims are not permitted under this provision of CERCLA because the definition of “person” in the statute does not include Indian tribes. Id. § 9601(21). Because we lack jurisdiction over this issue, we do not address the Tribe’s argument.

Under 28 U.S.C. § 1291, this court only has appellate jurisdiction over “final decisions” of district courts. Although the district court has not issued a final decision in this case, under the collateral order doctrine, some district court orders are considered “final” even though they are entered before a case has been fully resolved. E.g., Osage Tribal Council, 187 F.3d at 1179 (concluding a denial of tribal sovereign immunity is an immediately appealable collateral order). The collateral order doctrine does not apply to the Tribe’s assertion that CERCLA does not permit counterclaims against an Indian tribe, however, because the Tribe’s argument is based on statutory interpretation, not tribal sovereign immunity. Thus, this issue is not immediately appealable.

Nevertheless, this court has discretion to exercise pendent appellate jurisdiction over nonappealable issues once we have asserted jurisdiction over other appealable issues in the same case. Garrett v. Stratman, 254 F.3d 946, 953 n. 9 (10th Cir. 2001). The exercise of pendent jurisdiction, however, “is generally disfavored.” Moore v. City of Wynnewood, 57 F.3d 924, 929 (10th Cir. 1995). It is appropriate to exercise pendent appellate jurisdiction only where resolution of the appealable issue necessarily resolves the nonappealable issue, or where review of the nonappealable issue is necessary to ensure meaningful review of the appealable one. Id. at 930. Here, our determination that tribal sovereign immunity does not bar Defendants’ counterclaims for contribution and indemnity does not resolve the issue of whether Defendants’ counterclaims under CERCLA are statutorily barred. Nor is it necessary for us to reach the Tribe’s CERCLA argument to assess the appropriateness of the district court’s order denying dismissal of Defendants’ contribution and indemnity counterclaims. Therefore, we decline to assert pendent appellate jurisdiction over the Tribe’s contention that Defendants’ CERCLA counterclaims are not authorized by the statute.[11]

IV. Conclusion

For the foregoing reasons, this court AFFIRMS the district court’s order denying the Tribe’s motion to dismiss.

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