The Comprehensive Environmental Response, Compensation, and Liability Act—better known as CERCLA—provides potentially responsible parties (PRPs) with causes of action for cost recovery and contribution, which allow PRPs to recover environmental cleanup costs and allocate those costs among other PRPs. When asserting a claim under CERCLA, PRPs will often include causes of action under state law, and in particularly state corollary environmental statutes.

In New Jersey, that statute is the Spill Compensation and Control Act, commonly referred to as the Spill Act, which allows PRPs to seek contribution to recover cleanup costs. While similar in many ways, key differences between CERCLA and the Spill Act can under certain circumstances magnify the importance of a PRP's Spill Act claims. For example, unlike under CERCLA, claims for contribution by private PRPs under the Spill Act are not subject to a statute of limitations.

Practitioners evaluating such claims must consider New Jersey's Entire Controversy Doctrine, "an equitable preclusionary doctrine" designed "to encourage comprehensive and conclusive litigation determinations, avoid fragmentation of litigation, and promote party fairness and judicial efficiency." Pressler & Verniero, Current N.J. Court Rules, comment 1 to R. 4:30A (2020).  Subject to considerations of fairness, that doctrine generally requires that all aspects of the controversy between those who are parties to the litigation be included in a single action. See Dimitrakopoulus v. Borrus, Goldin, Foley, Vignuolo, Hyman & Stahl, 237 N.J. 91, 108 (2019) (citing Cogdell v. Hosp. Ctr. at Orange, 116 N.J. 7 (1989)).

Developed at common law and eventually adopted as R. 4:30A, the Entire Controversy Doctrine was broadly interpreted for decades. More recently, the Supreme Court has reinterpreted its scope, resulting in revisions to the relevant Court Rules that limited the doctrine's scope to mandatory joinder of claims, and no longer imposing mandatory party joinder. See Pressler & Verniero, Current N.J. Court Rules, comment 1 to R. 4:30A. A separate Court Rule, R. 4:5-1(b)(2), was adopted to address joinder of parties. That rule demands only disclosure, explicitly leaving it to the court to decide whether to require that notice of the action be served on any non-party identified or to compel that party's joinder. Id.

If federal litigation is related to state law claims, the Entire Controversy Doctrine requires all state causes of action to be pled by invoking supplemental jurisdiction. This is necessary to preserve the state causes of action for later adjudication in state court if the federal court declines to exercise supplemental jurisdiction. See Blazer Corp. v. N.J. Sports & Exposition Auth., 199 N.J. Super. 107, 112 (App. Div. 1985) (holding that "a plaintiff who brings an action in federal court is obliged to include in his complaint all claims authorized under state law arising out of the same controversy or he will be barred by the single controversy doctrine from thereafter asserting the state claims in state court."); Rycoline Prods. v. C&W Unlimited, 109 F.3d 883, 887 (3d Cir. 1997) ("[a] federal court hearing a federal cause of action is bound by New Jersey's Entire Controversy Doctrine, an aspect of the substantive law of New Jersey, by virtue of the Full Faith and Credit Act"). Importantly, "[t]he single controversy doctrine is available to bar plaintiff's claims … only if the federal court had the 'power' to exercise pendent jurisdiction over those claims." Blazer Corp., 199 N.J. Super. at 112.

However, "[w]hen a federal court declines to exercise jurisdiction over state claims that must be asserted under the single controversy doctrine, the doctrine will not bar reassertion of those claims in a state court. [The Appellate Division has] held that plaintiffs who asserted related federal and state claims in federal court were free to reassert in state court the state claims that the federal court declined to adjudicate." Id. (internal citation omitted). This exact scenario arose recently the CERCLA context in Stahl v. Bauer Automotive, 2019 WL 3712175 (Aug. 7, 2019).  There, the district court dismissed the CERCLA claims on summary judgment and declined to exercise supplemental jurisdiction over Spill Act claims, which were then dismissed without prejudice. Id. As a result of pleading the Spill Act claims in the federal court, the plaintiff preserved its ability to reassert its state law claims in state court.

In Mortgagelinq Corp. v. Commonwealth Land Title Ins., 142 N.J. 336 (1995), the New Jersey Supreme Court addressed whether New Jersey courts are obliged to entertain claims against parties that could have been joined with substantially similar claims pursued by the same plaintiffs elsewhere. There, Mortgagelinq sued certain parties in the Eastern District of Pennsylvania, and subsequently filed a complaint in New Jersey state court against a different set of defendants. The allegations in the New Jersey state court complaint involved the same transactions that formed the basis of the allegations contained in the Eastern District of Pennsylvania complaint.

Finding that the issues, facts, causes of action and transactions in both cases were virtually identical, and that the plaintiffs had deliberately withheld their claims in the first action, the New Jersey trial court dismissed the action with prejudice, holding that "the entire controversy doctrine operates to bar suits against parties which could and should have been joined in a previous suit despite the fact that the earlier suit was brought in another state or in federal court." Id. at 341. The Appellate Division affirmed. The Supreme Court affirmed that the New Jersey action was barred by the Entire Controversy Doctrine, id. at 345 ("New Jersey courts need not necessarily grant relief when parties deliberately refrain from seeking relief in other jurisdictions when doing so would have been much fairer to all parties involved"), but reversed on the ground that dismissal should have been without prejudice.

Notably, only a judgment on the merits will preclude a later action on the same claim. A dismissal based on procedural grounds will not preclude a subsequent action on the same claim. See, e.g., Watkins v. Resorts Int'l Hotel & Casino, 124 N.J. 398 (1991) (holding that where only federal claims were pled in an action dismissed by a federal court for lack of standing, a subsequent state court action raising state claims arising out of the same facts is not barred); Milone v. Nissan Motor Corp., 250 N.J. Super. 371 (App. Div. 1991) (if the federal claim is dismissed without an adjudication on the merits by settlement and the federal court is thus left without independent jurisdiction over the state claim, which lacked diversity, the Entire Controversy Doctrine will not bar subsequent state litigation of the state claim).

Generally, the Entire Controversy Doctrine requires all state causes of action arising out of the same controversy to be pled in a federal litigation to preserve the state causes of action for later state adjudication. See, e.g., Blazer Corp., 199 N.J. Super 107; Rycoline Prods., 109 F.3d 883.  Thus, when a private party files a CERCLA contribution action against other PRPs, it should assert any viable supplemental Spill Act claims against those PRPs. This may also apply to parties against whom the contribution plaintiff has viable Spill Act claims but against whom they do not have CERCLA contribution claims. See Mortgagelinq, 142 N.J. at 345 ("New Jersey courts need not necessarily grant relief when parties deliberately refrain from seeking relief in other jurisdictions when doing so would have been much fairer to all parties involved"); R. 4:5-1(b)(2).

Conversely, because a Spill Act contribution action does not accrue until cleanup and removal costs are incurred, Morristown Assocs. v. Grant Oil Co., 220 N.J. 360, 380 (2015), the contribution plaintiff will not be required to assert a contribution claim for cleanup and removal costs—for future discharges—that have yet to be incurred. See Lanziano v. Cocoziello, 304 N.J. Super. 616, 627 (App. Div. 1997) (although a common law right to contribution existed at the time the original suit was settled, "it [could not] be authoritatively said that a right to contribution against [the prior owner] existed under the Spill Act at the time of the [earlier] litigation."); A&S Russo Real Estate v. Chrysler, 2015 N.J. Super. Unpub. LEXIS 2217 (App. Div. Sept. 21, 2015) (finding that the Entire Controversy Doctrine did not bar the Spill Act contribution claim because cleanup of the contaminated area had not been undertaken at the time of the earlier litigation). However, if the cleanup and removal costs for future discharges are incurred during the pendency of federal CERCLA contribution action, the contribution plaintiff should consider amending its complaint to include supplemental Spill Act contribution claims seeking those costs.

The Entire Controversy Doctrine requires a party bringing a CERCLA action to plead Spill Act claims arising out of the same controversy. Doing so is necessary to preserve the Spill Act claims for later adjudication in state court in the event the federal court declines to exercise supplemental jurisdiction over the Spill Act claims.

Charles J. Dennen is an associate in Archer & Greiner's Environmental Law Group. He has experience in all areas of toxic tort and environmental law, and has been involved in all stages of litigation in complex multi-party matters in both federal and state courts.