09-1509, 09-4030 Arrow Gear Co. v. Downers Grove Sanitary District

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Civil Procedure
Res judicata

In an environmental action, where the total liability is uncertain, a partial settlement resulting in dismissal without prejudice does not bar subsequent suits.

“When the Muniz case was settled, the EPA, moving with the majestic deliberateness characteristic of government agencies, was still investigating contamination by the firms that had been defendants in that case (which include Arrow and Precision) and was expected to impose additional costs on them, and may continue doing so because its investigative activities have not concluded. Already it is seeking $1 million to reimburse it for the cost of investigating. And because the Muniz settlement did not address the contamination of the class members’ water supply, the defendants in that suit have, separately from the $16 million settlement of the Muniz suit, agreed to connect the houses of the class members to another water-supply system at a cost of some $4 million.”

“It would have been difficult to settle all possible claims by the cross-claiming defendants before their total liability was determined. So claim splitting-allocation of the $16 million first, and of the additional $5 million (which will doubtless grow) second-made sense, and the district court should not have forbidden it. True, the order dismissing Muniz had not mentioned the settlements, and some of them had postdated the dismissal. But as parties to the settlements the defendants were bound by them regardless of when they were made and whether they were mentioned in a judicial order.”

Reversed.

09-1509, 09-4030 Arrow Gear Co. v. Downers Grove Sanitary District

Appeals from the United States District Court for the Northern District of Illinois, Darrah, J., Posner, J.

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