Wastewater Plant Has Right to Jury Trial in Oil Spill Cleanup Costs Litigation

In United States v. ERR, LLC, the Fifth Circuit recently held that the Seventh Amendment guarantees a right to jury trial for claims brought by the US Government for reimbursement of funds paid under the Oil Pollution Act (OPA) related to oil spill cleanup costs.

Congress enacted OPA in 1990 in response to the Exxon Valdez oil spill. The purpose of OPA was to streamline federal law to provide quick and efficient cleanup of oil spills, compensate victims of such spills, and internalize the costs of spills within the oil industry.

A key component of OPA provides a way for those cleaning up an oil spill to get paid quickly. First, the entity cleaning the spill must  submit a claim to the party directly responsible for the spill. Then, if not paid within 90 days—or if the responsible party denies liability—the claimant may elect to sue that party or seek repayment from the National Pollution Funds Center (the NPFC), which administers the Oil Spill Liability Trust Fund (the Fund). The NPFC may then seek recoupment from the responsible party.

ERR, LLC owns and operates a wastewater treatment facility on the west bank of the Mississippi River in Louisiana. In May 2015, ERR received a transfer of oily water from a slop-oil barge. After the barge left ERR’s facility, there were reports of oil in the Mississippi River. The Coast Guard and the State of Louisiana ultimately concluded ERR was responsible for the spill.

ERR contracted with Oil Mop, LLC to perform oil removal and soil remediation. In July 2015, Oil Mop submitted its bill to ERR for the services provided, but ERR refused to pay. After 90 days passed, Oil Mop submitted a claim to the NPFC for reimbursement of removal costs. The NPFC reimbursed Oil Mop from the Fund and billed ERR for the reimbursement costs. Once again, ERR refused to pay, and the Government sued ERR for the reimbursement costs, its administrative-adjudication costs, attorney’s fees, and interest.

ERR demanded a jury trial. The Government moved to strike the jury demand, arguing that the relief requested (restitution) sounded in equity rather than at common law and thus that the Seventh Amendment’s right to jury trial did not apply. The district court agreed with the Government and ultimately held a four-day bench trial. The district court awarded the Government the relief it sought, and ERR appealed.

The Fifth Circuit disagreed that the Government’s relief was equitable and therefore beyond the bounds of the Seventh Amendment’s right to a jury trial. The court held that the Government’s lawsuit brought pursuant to OPA was a quasi-contract dispute wherein it sought reimbursement from a party the Government alleged was liable. The court reiterated that the Seventh Amendment applies not only to common-law causes of action, but also to actions brought to enforce statutory rights analogous to common-law causes of action. The Government’s claim for recoupment, the court held, was akin to restitution at law.

The case was remanded to the district court for a jury trial.

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