Argued: August 1, 2019
from the United States District Court for the Western
District of Kentucky at Paducah. No. 5:18-cv-00107-Thomas B.
Russell, District Judge.
Josephine Mason Petrick, HANSON BRIDGETT LLP, San Francisco,
California, for Appellant.
A. Super, BRACEWELL LLP, Washington, D.C., for Appellee.
Josephine K. Mason, Gary A. Watt, Davina Pujari, Lawrence M.
Cirelli, Samir J. Abdelnour, HANSON BRIDGETT LLP, San
Francisco, California, Brent R. Baughman, Mark S. Riddle,
BINGHAM GREENEBAUM DOLL LLP, Louisville, Kentucky, for
A. Super, BRACEWELL LLP, Washington, D.C., Samuel D. Hinkle
IV, Adam T. Goebel, Angela S. Fetcher, STOLL KEENON OGDEN
PLLC, Louisville, Kentucky, for Appellee.
Before: GUY, THAPAR, and NALBANDIAN, Circuit Judges.
NALBANDIAN, CIRCUIT JUDGE.
Corporation and Westlake Vinyls have long disputed their
share of the cleanup costs at a Superfund site in Kentucky.
So the parties entered a settlement agreement
("Agreement") in 2007. Though that Agreement did
not end the conflict, it provides some structure to the
parties' recurring disputes about the cleanup costs.
Under the Agreement, PolyOne must reimburse Westlake for 100%
of "allocable costs," and every five years, either
party may demand arbitration to modify the amount or
allocation of costs.
appeal concerns an unusual provision in the Agreement. Under
§ 6.3, the judicial-relief provision, either party may
file a complaint in federal court for a "de novo
judicial determination" of which costs are allocable,
after the arbitration panel has issued an award
allocating costs. The arbitration award becomes null-and-void
upon the filing of a complaint, and the Agreement prohibits
either party from even admitting the arbitration award into
evidence. As far as the federal court is concerned, it is as
though the arbitration never happened.
has requested a declaration that the judicial-relief
provision is invalid under the Federal Arbitration Act
("FAA") and that the Agreement's other
arbitration provisions are unenforceable, along with an
injunction to enjoin the most recent arbitration proceeding
that began in 2017. On the merits, PolyOne has a strong case.
But PolyOne's prior conduct does not align with its
present position. Twice, PolyOne demanded arbitration to
determine which costs are allocable. Indeed, PolyOne seeks to
enjoin the very arbitration it demanded in 2017.
withhold judgment on whether PolyOne has waived its ability
to challenge the Agreement's arbitration provisions for
all time. But by demanding the 2017 arbitration that led to
this litigation, PolyOne has waived its ability to obtain
declaratory and injunctive relief-at least for that
arbitration. We AFFIRM the district court's dismissal of
dispute is about a clause in an agreement, but the origin of
that dispute is less abstract. Goodrich Corporation operated
three chemical-manufacturing plants at an industrial site in
Calvert City, Kentucky. In 1988, the Environmental Protection
Agency designated that site a "Superfund Site"
subject to the Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA").
Westlake Vinyls, Inc. v. Goodrich Corp., 518
F.Supp.2d 918, 927 (W.D. Ky. 2007). After that designation,
Goodrich sold the plants to Westlake in two separate
transactions-one in 1990, the other in 1997. Goodrich and
Westlake executed asset transfer agreements requiring that
(1) Goodrich indemnify Westlake for environmental costs
attributable to Goodrich at the Calvert City plants; and (2)
Westlake indemnify Goodrich for environmental costs
attributable to Westlake at those same plants. After a
corporate spinoff in 1993, PolyOne assumed Goodrich's
rights and responsibilities under the two agreements, so
PolyOne is responsible for liabilities attributable to
Goodrich, and PolyOne can claim indemnification for
liabilities attributable to Westlake.
Settlement Agreement. For four years, PolyOne and
Westlake litigated their respective shares of the cleanup
costs at the Calvert City site before executing the Agreement
in 2007. Under the Agreement, PolyOne agreed to pay 100% of
future "allocable costs" related to the
environmental remediation at the three plants. But the
parties seem to have expected that they would dispute which
costs are allocable. Indeed, the Agreement contains a
provision allowing either party to demand arbitration to
determine which costs are allocable:
Either Westlake or PolyOne can request the other Party to
modify the initial allocation of Allocable Costs set forth in
Section 3.1 or subsequent allocations made under Section 4 by
submitting to the other Party a notice of arbitration as
provided for in Exhibit C to this Agreement.
(Agreement at § 4.1.) The parties may demand arbitration
only once every five years. (Id.)
arbitration panel does not necessarily have the last word.
Under § 6.3 of the Agreement, either party may file a
complaint in federal court, within 90 days after the panel
issues an award, seeking a "de novo judicial
determination of (1) the amount of the Allocable Costs,
and/or (2) the appropriate dollar division of the Allocable
Costs between the Parties." (Id. at §
6.3.) Filing a complaint is a unilateral act: under the
Agreement, the non-filing party "shall not dispute a
Party's right to bring a claim for judicial relief."
(Id. at § 6.3(c).) Importantly, if a party
files a complaint under § 6.3, the arbitration ...