Cadillac Fairview/California, Inc. v. Dow Chemical Company

During World War II, to address a critical shortage of synthetic rubber, the United States conscripted the use of manufacturing facilities to supply rubber for the war effort. The government contracted with Dow Chemical Company (defendant) to build and operate one such plant. Under the contract, the government assumed all ownership, control, expense, and risk, and it agreed to indemnify Dow and hold Dow harmless for any damages. The government was aware that the rubber production made toxic waste but declined to divert resources to deal with it, and instead the government approved Dow’s use of disposal pits, which polluted the soil and water. After the plant closed, the property was eventually acquired by Cadillac Fairview/California, Inc. (Cadillac) (plaintiff), which sued Dow and the United States in federal district court under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for expenses related to the soil pollution. The United States cross-claimed against Dow, and Dow filed a counterclaim against the United States for indemnity and contribution. The district court granted partial summary judgment for Cadillac and then addressed the issue of whether the United States should be liable for some portion of the remedial costs. The district court concluded that the United States was liable for 100 percent of the costs, and the United States appealed.