Wisconsin Central Ltd. v. Soo Line Railroad Company

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 19-3129
WISCONSIN C ENTRAL LTD.,
Plaintiff-Appellant,
v.
SOO LINE RAILROAD C OMPANY,
Defendant-Appellee.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:16-cv-04271 — Andrea R. Wood, Judge.
____________________
A RGUED SEPTEMBER 25, 2020 — D ECIDED MARCH 31, 2021
____________________
Before R IPPLE , BRENNAN, and ST . EVE , Circuit Judges.
BRENNAN, Circuit Judge. Decades ago, railroad company
Wisconsin Central, Ltd. entered into an agreement that
included the purchase of rail lines from Soo Line Railroad
Company. Part of that agreement allocated responsibility for
future environmental liabilities. Years later, contamination
was discovered near one of those lines in Ashland, Wisconsin
on the shore of Lake Superior.

-- 1 of 30 --

2 No. 19-3129
The railroads jointly defended and settled responsibility
for the investigation and remediation of that site. Then they
each sought indemnification from the other. The district court
awarded summary judgment to Soo Line for damages, attor-
neys’ fees, and costs.
On appeal, the railroads dispute when a claim was first
asserted, and how much of the cost of defending and settling
the matter was related to the rail lines and their operation. In-
demnification under the agreement turns on both issues.
I.
In a 1987 Asset Purchase Agreement (“Agreement”) Wis-
consin Central purchased various assets of Soo Line’s Lake
States Transportation division, including physical rail lines in
Minnesota, Wisconsin, and Michigan (“LST”).1 The Agree-
ment provided for a detailed allocation of liability and indem-
nification of each party by the other. An initial version of the
Agreement had provided that Wisconsin Central would
assume all of Soo Line’s liability for environmental claims ex-
cept those arising out of Soo Line’s acts or omissions. But Wis-
consin Central’s lenders threatened to withdraw from the
deal out of concern that future environmental claims might
threaten Wisconsin Central’s ability to repay them. In order
to assure the lenders and allow the deal to go forward, Soo
Line agreed to retain liability and indemnify Wisconsin
1 The Agreement does not use the phrase “Lake States Transportation”
and instead lists “LST”—defined only as the lines of railroad listed in an
exhibit—as one of the many assets sold to Wisconsin Central. Both parties
agree the overall contract was for the sale of assets of the Lake States
Transportation division.

-- 2 of 30 --

No. 19-3129 3
Central for “all claims for environmental matters relating to
ownership of the Assets or the operation of LST that are as-
serted” within ten years of the closing of the deal (the “claim
period”).2 This window appears to have been derived from
the repayment period of the loans plus extra time to be safe
from clawbacks under the bankruptcy code. After the end of
the claim period, Wisconsin Central would in turn assume all
liability and indemnify Soo Line for any such claims, regard-
less of whether Soo Line was at fault. The deal finally closed
on October 11, 1987, and the claim period ran through Octo-
ber 11, 1997.
A few years into the Agreement, local and state authorities
discovered contamination in Ashland in what used to be an
industrial area but is now a public recreational area called
Kreher Park. Running through the park is a railroad right-of-
way purchased by Wisconsin Central under the Agreement.
The Wisconsin Department of Natural Resources (“WDNR”)
identified an old manufactured gas plant as the likely source
of the contamination, and the agency issued a “potentially re-
sponsible party” (“PRP”) letter to its owner, Northern States
Power Company (“Northern States”), requiring it to investi-
gate and potentially clean up the contamination.
Upon being named a PRP for the Kreher Park contamina-
tion, Northern States undertook an extensive campaign to
shift responsibility to the railroads. It hired an investigator
who searched historical records and conducted interviews.
Some residents remembered that rail cars regularly dumped
2 Although the briefs and the district court record refer to two separate
claim periods, we refer to “claim period” as that time span between the
Agreement’s closing through its ten-year anniversary.

-- 3 of 30 --

4 No. 19-3129
waste onto the ground, and those who had lived in the area
as children recalled seeing coal tar while playing near the
tracks. Northern States officials spoke to the local press, ex-
pressing their belief that the railroads shared liability for the
cleanup. Northern States urged the WDNR to name the rail-
roads as PRPs “as soon as possible.” Representatives from
Northern States even delivered a presentation to the WDNR
titled “WISCONSIN CENTRAL LIMITED Is a Responsible
Party At This Site” with subheadings such as “Has Successor
Liability Just Like [Northern States Power]” and “Owns Prop-
erty Contaminated With Hazardous Substance.”
In addition, Northern States tried to convince Wisconsin
Central to voluntarily join the clean-up effort. It sent Wiscon-
sin Central a report summarizing its interviews of former area
residents. Northern States and Wisconsin Central met to dis-
cuss the railroad’s “potential responsibility for environmental
issues at Kreher Park.” At this meeting, Northern States again
presented its case that the railroads were responsible for the
environmental contamination. Northern States tried its best
to persuade the railroads that action by the WDNR was inev-
itable and that it would behoove them to voluntarily involve
themselves in the cleanup.
Wisconsin Central kept Soo Line apprised of the situation.
It faxed Soo Line the press article in which Northern States
had claimed that the railroads shared responsibility for the
contamination. It wrote to Soo Line before and after its meet-
ing with Northern States. In one letter, Wisconsin Central’s
in-house counsel told Soo Line she believed that even if
Northern States’s efforts to get the WDNR to include the rail-
roads were unsuccessful, at some point Northern States
would “have to get us involved.”

-- 4 of 30 --

No. 19-3129 5
At one point during the claim period, Wisconsin Central’s
in-house counsel met with her Soo Line counterpart to discuss
the circumstances.3 Both parties allegedly agreed that they
should take a cooperative stance with Northern States and the
WDNR, but that it would be a mistake to affirmatively seek a
PRP letter. Wisconsin Central went on to meet with Northern
States’s representatives, who presented their evidence tying
the railroads to the environmental issues at Kreher Park. But
at no point during the claim period did Northern States or the
WDNR threaten to take legal action against either railroad
company.
Perhaps anxious about the impending shift in liability,
Wisconsin Central sent notification to Soo Line in January
1997—nine months before the end of the claim period—that
it was seeking indemnification for various environmental
matters, including at Kreher Park. Soo Line did not agree to
indemnify or defend Wisconsin Central. 4
Years later, in 2002, the Environmental Protection Agency
became involved and designated an area including Kreher
Park as a Superfund site under the Comprehensive Environ-
mental Response, Compensation, and Liability Act
(“CERCLA”), 42 U.S.C. § 9601, et seq. Northern States, contin-
uing its campaign to shift responsibility to the railroads,
3 Soo Line’s attorney does not remember whether this meeting, which
allegedly took place at some point before Wisconsin Central met with
Northern States representatives, occurred. Even if the meeting happened
as Wisconsin Central’s attorney recalls it, it would not affect our decision,
as we explain below.
4 Many years after the EPA became involved, the parties reached a set-
tlement as to indemnification for the other environmental matters but left
the Kreher Park matter unresolved.

-- 5 of 30 --

6 No. 19-3129
began lobbying the EPA with the same evidence that it had
previously presented to the WDNR. Finally, in 2011, the EPA
issued formal notice to Wisconsin Central, Soo Line, Northern
States, and others, that they were PRPs for the Superfund site.
In 2012, Northern States initiated its own legal action in fed-
eral court, filing suit against Wisconsin Central, Soo Line, and
the City of Ashland for recovery of the expenses it had in-
curred cleaning up the Kreher Park area. For the benefit of the
parties’ settlement discussions, the EPA relayed it had credi-
ble evidence that the railroads engaged in two activities con-
tributing to the contamination: the dumping of waste from
rail cars at the site and the dredging around two docks at the
site (the commercial dock and the ore dock). The EPA also
mentioned a third activity—the treating of rail ties—for
which it had evidence but had not yet reached a conclusion.
Wisconsin Central and Soo Line ultimately signed a consent
decree and settled the claims by the EPA and Northern States
for a combined $10.5 million plus interest, with each railroad
paying half of that amount and reserving the right to seek in-
demnification from the other. Northern States continued to
try to recover the rest of its investigation and remediation ex-
penses from other parties.
Wisconsin Central then filed this breach of contract action
against Soo Line, arguing that the environmental claims were
asserted during the claim period and that Wisconsin Central
was entitled to indemnification for the entire amount that it
paid in the settlement, plus interest, fees, and costs. Soo Line
brought a counterclaim for the same, arguing that no claim
was asserted until after the claim period had expired. The dis-
trict court granted summary judgment to Soo Line, finding
that no claim had been asserted against the railroads during
the claim period and that, as a result, Soo Line was entitled to

-- 6 of 30 --

No. 19-3129 7
indemnification by Wisconsin Central. The district court
promptly entered judgment on behalf of Soo Line.
Following this entry, Wisconsin Central moved to
withdraw the court’s judgment under Federal Rules of Civil
Procedure 59(e) and 60(a). For the first time, Wisconsin
Central argued that it should not be responsible for the
portion of the environmental claims attributable to operations
and land owned by Soo Line or its predecessors in the Kreher
Park area but not purchased by Wisconsin Central. Wisconsin
Central contended that its duty to indemnify was limited to
the percentage of Soo Line’s historic holdings in the Kreher
Park area that it had acquired. 5 Under a proper allocation of
liability, Wisconsin Central asserted it should be responsible
for only a small percentage—about $431,000 out of almost
$5.3 million—of Soo Line’s half of the parties’ settlement with
the EPA and Northern States. Wisconsin Central also
maintained that Soo Line’s attorneys’ fees—about $5.1
million—were excessive and should be reduced to about $1.3
million.
Soo Line expressed surprise at Wisconsin Central raising
the damages allocation issue when it did. Discovery for dam-
ages was to follow the adjudication of liability, but Soo Line
argued that was meant just for the final calculation of attorney
fees, costs, and the like, not for a substantive contest about the
5 On appeal, Wisconsin Central focuses on the dredging—cited by the
EPA as contributing to the environmental contamination—of the commer-
cial dock on this site once owned by Soo Line but deeded to a third-party
several years before the Agreement at issue here.

-- 7 of 30 --

8 No. 19-3129
extent of indemnification and associated dollar amount.6 Soo
Line accused Wisconsin Central of trying to relitigate what it
lost at summary judgment. Nonetheless, the district court en-
tertained Wisconsin Central’s argument. 7 After consideration,
the district court again ruled against Wisconsin Central be-
cause it was “undisputed that the Superfund claims arose
from the operation of the Lake States Transportation divi-
sion.” The court awarded Soo Line damages of $10,799,427,
plus prejudgment interest, as well as $1,776,764 for attorneys’
fees for the present case.
Wisconsin Central now appeals. It insists that the environ-
mental claims against the railroads were first asserted during
the claim period and that Soo Line must therefore indemnify
6 This sequence leads us to remind district courts not to enter judgment
orders until the parties’ claims are fully resolved. If the entry of judgment
does not make clear what the prevailing party is entitled to—here, no dol-
lar amount had been set—then piecemeal and potentially wasteful ap-
peals may follow. Health Cost Controls of Illinois, Inc. v. Washington, 187 F.3d
703, 708 (7th Cir. 1999).
The question of whether judgment was properly entered can put par-
ties in a difficult position. An appeal could be dismissed for lack of finality.
But waiting for the district court to correct the judgment risks waiving
their right to appeal altogether if the entry of judgment is held to have
been proper. Id. (“As bad as multiple appeals in the same case is uncer-
tainty when and whether an appeal is possible.”).
7 Soo Line questions Wisconsin Central’s maneuver to raise this issue af-
ter summary judgment was granted. While we caution against the entry
of a premature judgment, on that question here we defer to the district
court’s “broad discretion to manage” its docket. See A. Bauer Mech., Inc. v.
Joint Arbitration Bd. of Plumbing Contractors’ Ass’n, et al., 562 F.3d 784, 790
(7th Cir. 2009).

-- 8 of 30 --

No. 19-3129 9
it for the entire cost of the claims. Even if the environmental
claims were not asserted until after the claim period, Wiscon-
sin Central submits it should be responsible for only the por-
tion of the environmental damages attributable to the exact
land and operations that it bought from Soo Line.
II.
We review a district court’s decision on summary judg-
ment de novo, construing all facts and drawing all inferences
in the light most favorable to the non-moving party. Egan Ma-
rine Corp. v. Great Am. Ins. Co. of New York, 665 F.3d 800, 811
(7th Cir. 2011). Summary judgment is appropriate if there is
no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a).
Both parties agree that Minnesota law governs the inter-
pretation of the Agreement. 8
A.
The relevant part of the Agreement’s indemnification
clause states:
“… [Wisconsin Central] shall assume the following li-
abilities and obligations of Soo [Line]: …all claims for
environmental matters relating to the ownership of the
Assets or the operation of LST that are asserted after
the tenth anniversary of the Closing Date …”9
8 Agreement § 31, Supp. App’x 25. The district court had diversity juris-
diction under 28 U.S.C. § 1332, and this court has jurisdiction to review
the district court’s judgment under 28 U.S.C. § 1291.
9 Agreement (as amended) § 4(a)(v)(3), Supp. App’x 34.

-- 9 of 30 --

10 No. 19-3129
Liability under this clause depends on whether a “claim”
was “asserted” against the railroads within the claim period.
The parties debate what constitutes a “claim” under Minne-
sota law, and whether actions by Northern States or environ-
mental regulators satisfied that definition.
1.
Wisconsin Central argues that Minnesota law takes a
broad view of the actions and communications that qualify as
“claims,” especially in the environmental context. It points to
various cases in support of this proposition, three of which
merit discussion.
Cargill, Inc. v. Evanston Ins. Co. concerned a dispute some-
what similar to this one. 642 N.W.2d 80 (Minn. Ct. App. 2002).
A Georgia environmental regulator had sent a letter asking
Cargill to conduct a remedial investigation of contamination
at a site. Id. at 82–83. Cargill was insured for environmental
claims at the time it received the letter, but its insurer later
disclaimed responsibility, arguing that because the letter was
a mere request and the regulator had not taken further action
until after the end of the coverage period, no eligible claim
had been made against Cargill while it was insured. Id. at 83–
84. The Minnesota Court of Appeals disagreed, holding that
the regulator’s initial letter constituted a “claim” for purposes
of triggering insurance coverage even though “the syntax of
the communications did not take the form of demands.” Id. at
85–86. The court noted that Georgia law required the environ-
mental regulator to first act through “conference, conciliation,
and persuasion” before resorting to the issuance of formal or-
ders. To the court, it was clear that Cargill was not “free to
ignore” the letter, which was “undeniably a demand for ac-
tion” despite its superficially conciliatory tone. Id. at 85.

-- 10 of 30 --

No. 19-3129 11
Wisconsin Central also cites SCSC Corp. v. Allied Mut. Ins.
Co., in which the Minnesota Supreme Court held that a Re-
quest for Information letter from a Minnesota environmental
regulator was not just a mere “claim” but in fact a full-blown
“suit” despite the insurance company’s argument that the let-
ter did “not carry the threatening, coercive tone of a lawsuit.”
536 N.W.2d 305, 315 (Minn. 1995). The court approvingly
cited an Iowa case that defined a suit as an attempt to gain an
end by legal process and a Ninth Circuit case that called a PRP
letter from the EPA a suit because an “‘ordinary’ person
would perceive such a letter as notice of the effective com-
mencement of a ‘suit’ necessitating legal defense.” Id. (citing
A.Y. McDonald Indus. v. Insurance Co. of N. Am., 475 N.W.2d
607, 626–29 (Iowa 1991), and Aetna Casualty & Sur. Co., Inc. v.
Pintlar Corp., 948 F.2d 1507, 1516–17 (9th Cir. 1991)).
To these cases Wisconsin Central adds a similar ruling un-
der Texas law. In International Ins. Co. v. RSR Corp., the Fifth
Circuit held that a jury was justified in finding that a “claim”
arose under Texas law when the EPA placed a facility owned
by RSR on its National Priorities List, also known as the Su-
perfund list. 426 F.3d 281, 297 (5th Cir. 2005). The jury had
heard testimony to the effect that the EPA almost inevitably
initiates formal adversarial action against the owner of prop-
erties placed on the list. Id. at 298. The Fifth Circuit noted that
placement on the list has immediate negative consequences
for the owner of the listed property. Id. at 297. Those include
loss of business reputation and loss of property value. Id.
Delisting can only occur “where no further response is appro-
priate” and requires approval of the state where the property
is listed as well as a public notice and comment period. Id. at
297–98. The court also observed that the government had the

-- 11 of 30 --

12 No. 19-3129
right to hold RSR strictly liable for the environmental contam-
ination on the property it owned. Id. at 298.
In all these cases, a government regulator took some for-
mal action against the party or the property of the party
against whom a “claim” (or “suit”) was then deemed to have
been asserted.10 “Potentially Responsible Party” and “Request
for Information” letters bear deceptive names. Such commu-
nications are not friendly requests for materials, or mere no-
tices that a party might become liable in the future. Rather,
they are the formal mechanisms by which a party is brought
under the authority of the regulator. See Land O’Lakes v. Emp’rs
Mut. Liab. Ins. of Wis., 846 F. Supp. 2d 1007, 1020 (D. Minn.
2012) (observing that a PRP letter was not just a “polite invi-
tation … to engage in conversation”).11 In the cases Wisconsin
Central cites, most of the regulators’ actions—like the sending
of a Request for Information or a Potentially Responsible
Party letter—immediately levied costly legal obligations on
their recipients. They also imposed near certain risks of
10 And in International Ins. Co. v. RSR Corp., the Fifth Circuit considered
various definitions of “claim” but upheld a jury instruction with a broad
definition, in part because that case concerned an insurance policy that
Texas law required be construed in favor of the insured. 426 F.3d at 290 –
95, 298 (5th Cir. 2005).
11 For example, under Wisconsin law, once a PRP is determined to be a
responsible party, it acquires extensive obligations to investigate and to
contribute to the cleanup of the site. WIS . A DMIN . CODE NR §§ 716, 722
(detailing the obligations of responsible parties to investigate and remedi-
ate environmental contamination).
And in a case widely cited by state and federal courts, Johnson Controls,
Inc. v. Employers Ins. of Wausau, 264 Wis. 2d 60, 72, 665 N.W.2d 257, 264
(2003), a PRP letter from the EPA or equivalent state agency qualifies as a
“suit” for purposes of insurance contracts.

-- 12 of 30 --

No. 19-3129 13
further adversarial action on the parties. The Ninth Circuit’s
discussion of this point in Aetna (cited in the SCSC case) is
instructive:
The extent of CERCLA liability is far-reaching. … In
order to influence the nature and costs of the environ-
mental studies and cleanup measures, the PRP must
get involved from the outset. In many instances, it is
more prudent for the PRP to undertake the environ-
mental studies and cleanup measures itself than to
await the EPAʹs subsequent suit in a cost recovery ac-
tion. … [I]f a person who is liable for a release or threat
of release of a hazardous substance fails [to take reme-
dial action] … the EPA can choose to proceed with a
Superfund-financed cleanup, and then seek punitive
damages. Lack of cooperation may expose the insured,
and potentially its insurers, to much greater liability …
948 F.2d at 1517. As the cases above show, the same principle
applies to state environmental regulators. To Wisconsin Cen-
tral, these authorities demonstrate how the actions of the var-
ious players here constituted a “claim” within the claim
period.
Here, however, the facts show that the WDNR took no ac-
tion against the railroads during the claim period. The cases
above all turn on the official actions of environmental regula-
tors. But Wisconsin Central does not argue that the WDNR
asserted a claim against the railroads during the claim period.
It argues Northern States, a private company, asserted a
claim. Private parties are not government regulators. See
Zecco, Inc. v. Travelers, Inc., 938 F. Supp. 65, 68 (D. Mass. 1996)
(observing that “the distinction between a letter from the gov-
ernment and one from a private party is significant” when

-- 13 of 30 --

14 No. 19-3129
deciding whether a “suit” has been initiated for purposes of
insurance coverage). And no authority Wisconsin Central
cites recognizes a transitive property that converts Northern
States’s efforts—to convince the regulator to send a PRP letter
to the railroads and to persuade the railroads to voluntarily
join the cleanup effort—into the equivalent of a regulator ac-
tually sending a PRP letter or taking other official action that
would constitute a “claim.”
2.
In contrast to environmental regulators, who can speak
softly but carry a big stick, Northern States bellowed at the
top of its lungs. But its efforts to involve the railroads in the
environmental investigation failed—until the EPA became
interested in the Kreher Park site and decided to name the
railroads as PRPs. This occurred many years after the claim
period ended. Still, Wisconsin Central argues that the actions
of Northern States during the claim period constituted the as-
sertion of a “claim” against the railroads.
Beyond cases involving regulators, Wisconsin Central
cites Ritrama, Inc. v. HDI-Gerling Am. Ins. Co. for what it means
to assert a "claim.” 796 F.3d 962 (8th Cir. 2015). There, the
Eighth Circuit affirmed a district court’s holding that, under
Minnesota law, “an assertion by a third party that the insured
may be liable to it for damages within the risks covered by the
Policy” constitutes a “claim.” Id. at 967 (emphasis supplied).
The Eighth Circuit reached this conclusion, though, only by
interpreting the term “’assertion’ … to mean something more
than just a mere statement of facts already occurred but rather
an assertion of a right to relief, i.e., demand for relief.” Id. at
969. The appeals court cited case law which focused on this
“demand for relief” or “assertion of a right” requirement. Id.

-- 14 of 30 --

No. 19-3129 15
at 968–69. That court also noted that its interpretation was
consistent with the relevant dictionary definitions of
“claim”—“[t]he assertion of an existing right” and “[a] de-
mand for money, property, or a legal remedy to which one
asserts a right.” Id. at 967 (referencing Claim, BLACK ’ S LAW
D ICTIONARY). The Eighth Circuit was able to square this read-
ing with the record because the district court, in its summary
judgment order, had itself used “demand” to characterize the
actions that amounted to a “claim.” Id. at 969 n.6.
Northern States’s actions do not meet this definition of
“claim.” The problem is not that Northern States failed to
include in its communications a monetary amount or the
precise legal basis for its right to relief—Wisconsin Central
forcefully argues that those are not requirements for the
existence of a claim. Rather, Northern States did not assert
any right to relief, nor make any demands for relief, against
either railroad during the claim period. The only “assertions”
Northern States made were that the railroads were
responsible for pollution at Kreher Park and that the WDNR
might and should name them as PRPs. Northern States did
not make any demands either. If Northern States had sued,
threatened to sue, or demanded that the railroads join the
investigation because they owed Northern States a legal duty,
then a claim would have been asserted. Making comments to
the press, asking a party to voluntarily contribute,
unsuccessfully asking (even begging) a third party to assert a
claim, and meeting with parties to try to persuade them to
voluntarily join a remediation effort by convincing them that
a regulator will take formal action—all of these are distinct
from “asserting a claim.”

-- 15 of 30 --

16 No. 19-3129
Wisconsin Central characterizes Northern States’s actions
differently, as more than mere persuasion. Underlying North-
ern States’s requests, Wisconsin Central submits, was a right
to take legal action, which in turn would fit within the defini-
tion of either “assertion of a right” or “demand for relief,” and
therefore constitute a “claim.” So the parties debate whether
Northern States could have initiated legal action, even if it
wanted to.
Soo Line responds, agreeing with the district court, that
the law prevented Northern States from bringing a claim
against the railroads during the claim period. This is because
Wis. Stat. ch. 292, known as the Wisconsin spills law, does not
provide for a private right of action, Grube v. Daun, 210 Wis.
2d 682, 692, 563 N.W.2d 523, 527–28 (1997); PRPs were not al-
lowed to bring cost recovery actions under Section 107 of
CERCLA, Akzo Coatings, Inc. v. Aigner Corp., 30 F.3d 761, 764
(7th Cir. 1994); and parties who had not yet faced a federal
lawsuit or entered into a settlement could not bring contribu-
tion actions under Section 113 of CERCLA, as this court later
recognized in Bernstein v. Bankert, 733 F.3d 190, 201 (7th Cir.
2013).
But, as Wisconsin Central replies, CERCLA contribution
and cost recovery suits were hotly litigated areas, and the law
during the claim period remained in flux. Despite this court’s
1994 ruling in Azko, we later held that PRPs could bring cost
recovery actions under Section 107. Bernstein, 733 F.3d at 201
(2013). And this court’s holding in Bernstein as to Section 113
was based on a 2004 Supreme Court case that clarified the in-
terpretation of CERCLA. Id. A 1997 Northern District of Indi-
ana case, for example, had held the opposite: that a PRP could
bring a Section 113 action even before facing a federal lawsuit

-- 16 of 30 --

No. 19-3129 17
or entering into a settlement. Ninth Ave. Remedial Grp. v. Allis
Chalmers Corp., 974 F. Supp. 684, 691 (N.D. Ind. 1997). Soo Line
responds that despite incurring extensive investigation and
cleanup costs at the site, Northern States did not bring a con-
tribution action until many years later—after the EPA became
involved—suggesting it did not believe that it previously had
the authority to sue.
We conclude that Northern States might have had a viable
cause of action during the claim period against the railroads.
But the existence of an uninvoked right to sue does not decide
whether a “claim” was “asserted.” Even if it had a claim or
thought it had a claim, Northern States did not sue, did not
threaten to sue, and did not even allude to its right to sue ei-
ther railroad during the claim period. 12
12 Wisconsin Central, citing Nischke v. Farmers & Merchants Bank & Tr.,
also contends that Northern States could have brought a negligence suit
against the railroads, arguing that a plaintiff can recover in negligence for
remediation efforts that Wisconsin environmental law forced her to take.
187 Wis. 2d 96, 522 N.W.2d. 542 (Ct. App. 1994). But the discussion in
Nischke did not involve whether the plaintiff had the right to sue—that
was established by the damage to the plaintiff’s property. Because she had
a duty under Wisconsin environmental laws to take remedial measures,
the court made an exception to the general rule that damages are limited
to the lesser of the cost to repair or the decrease in the property’s value. Id.
at 118–120, 551–52. And Soo Line correctly notes that under Wisconsin
law, a plaintiff in a negligence suit cannot recover for damage to another’s
property. Wausau Tile, Inc. v. Cty. Concrete Corp., 226 Wis. 2d 235, 253, 593
N.W.2d 445, 454 (1999) (characterizing a claim for damages to third-
party’s property for which plaintiff was responsible for repairing as a
claim for economic loss not cognizable under negligence).
In the 2012 federal lawsuit against the railroads and the City of Ash-
land, Northern States included negligence counts against the railroads.

-- 17 of 30 --

18 No. 19-3129
In further support of its position, Wisconsin Central points
to communications between the railroads to show it acted as
if a claim had been asserted. But there are better explanations
for these communications than that a claim was made. First,
Northern States was doing its best to convince the WDNR to
assert a claim against the railroads and to persuade the rail-
roads that the WDNR would do just that. Potential targets of
a claim, like Wisconsin Central and Soo Line, would naturally
act to avoid and minimize liability. Second, if there was any
chance that Northern States’s actions might be construed as a
“claim,” Wisconsin Central needed to protect its future right
to indemnification by fulfilling its obligations under the
agreement to promptly notify Soo Line. 13 Third, especially as
the end of the claim period drew near, Wisconsin Central had
incentive to act as if a “claim” had been “asserted” so it could
benefit from indemnification by Soo Line, which, recall, bore
responsibility until the claim period expired. That prudence
dictated Wisconsin Central taking protective measures does
not mean that a “claim” was “asserted.”
To buttress this argument, Wisconsin Central draws our
attention to the meeting between the railroads’ attorneys
W.D. Wis. Case No. 12-cv-00602 D.E. 1, Supp. App’x 152–54. But all claims
against the railroads in that suit were dismissed upon their settlement
with the EPA. Inclusion of those causes of action in the complaint in the
2012 case does not prove that Northern States had a right to prevail on
them.
13 The Agreement requires timely notice for indemnification. Agreement
§ 18(b), Supp. App’x 21. A party looking to maintain the contract’s protec-
tion thus has every reason to notify so that if a claim is made and succeeds
there is no doubt that notification was made and indemnification not
waived.

-- 18 of 30 --

No. 19-3129 19
where both parties agreed to take a cooperative stance toward
Northern States and the WDNR but against affirmatively
seeking a PRP letter. Because the railroads jointly agreed not
to seek a PRP letter (which would have been the assertion of
a “claim”), Wisconsin Central argues it is unfair for Soo Line
to say it is entitled to indemnification because no claim was
timely asserted. Wisconsin Central’s attorney recounts in her
affidavit that “because [she] understood that both Parties
were operating under the belief that the allegations regarding
Kreher Park constituted a ‘claim’ for which [Wisconsin
Central] would be seeking indemnification from Soo Line …
[she] felt that any strategy regarding Kreher Park to protect
[Wisconsin Central’s] interests came with the concomitant
duty to protect Soo Line’s interests, too, as the future
indemnitor … .”14
But whether Wisconsin Central believed that Soo Line in-
tended to indemnify is not relevant, because under the Agree-
ment, neither party should have tried to incur liability for the
purpose of securing indemnification. Under Minnesota law,
every contract has an implied covenant of good faith and fair
dealing. In re Wren, 699 N.W.2d 758, 765 n.10 (Minn. 2005). For
Wisconsin Central to seek a PRP letter—that is, to seek to have
a claim asserted against it just to secure indemnification from
Soo Line—risks breaching that covenant. Likewise, it would
have been a breach of the covenant for Soo Line to try to delay
the issuance of such a letter until after the claim period just to
secure indemnification from Wisconsin Central. Neither
party alleges that anything like that happened here.
14 Supp. App’x 130.

-- 19 of 30 --

20 No. 19-3129
3.
One might think that Wisconsin Central is left paying for
these environmental clean-up costs at the Ashland site due to
an unfortunate technicality. But recall the purpose of the in-
demnification provision at issue here: to assure Wisconsin
Central’s lenders so that they would agree to finance the asset
purchase. The initial version of the contract had provided that
Wisconsin Central would immediately assume liability for all
environmental matters “relating to the ownership of the As-
sets or the operation of LST arising out of the acts of omissions of
parties other than Soo.” (emphasis supplied). After the execu-
tion of this initial version, Wisconsin Central’s lenders
threatened to withdraw their financing of the deal because
unexpected environmental claims might have prevented Wis-
consin Central from being able to repay the loans. To allow
the agreement to go forward, Wisconsin Central and Soo Line
renegotiated the terms of indemnification, replacing the fault-
based allocation of liability in the initial agreement with a
time-based allocation: for environmental claims asserted
within ten years of the Agreement, Soo Line would retain lia-
bility, but after that time period, Wisconsin Central would as-
sume all liability, even for environmental claims arising out
of Soo Line’s own fault.
This arrangement served its purpose. Had any environ-
mental claims been asserted during the ten-year claim period,
Soo Line’s duty to indemnify would have protected Wiscon-
sin Central’s lenders from having their interests subordinated
to the environmental claims. Wisconsin Central enjoyed the
benefit of its bargain—the financing of its purchase of Soo
Line’s assets and security from environmental claims for ten
years. But it came with a price—the assumption of liability for

-- 20 of 30 --

No. 19-3129 21
all further environmental claims relating to its purchase, even
those that are the fault of Soo Line and its predecessors. This
Kreher Park environmental contamination matter is such a
claim.
“Words and other conduct are interpreted in the light of
all the circumstances, and if the principal purpose of the par-
ties is ascertainable it is given great weight.” R ESTATEMENT
(SECOND) OF C ONTRACTS § 202(1) (1981). The district court’s
interpretation of the Agreement is in accord with the purpose
of the renegotiated indemnification clause.
* * *
For these reasons, we agree with the district court’s con-
clusion that no “claim” concerning the Kreher Park environ-
mental contamination site was asserted against the railroads
during the Agreement’s claim period. During that period,
Northern States neither threatened litigation nor invoked its
right to sue the railroads, and the WDNR did not take any
action that imposed any legal duties or impending legal peril
on either railroad. Under the Agreement, the responsibility to
defend and indemnify against the environmental claims thus
belonged to Wisconsin Central, not to Soo Line.
B.
Next we consider the question of allocation of damages.
Wisconsin Central argues that even if a “claim” was not “as-
serted” until after the claim period, it can be liable under the
indemnification clause for only a portion of the parties’ settle-
ment with the EPA and Northern States.
We again start with the text of the Agreement’s indemnifi-
cation clause. Its relevant portion states “[Wisconsin Central]
shall assume … liabilities and obligations of Soo [Line]: …

-- 21 of 30 --

22 No. 19-3129
[for] all claims for environmental matters relating to the own-
ership of the Assets or the operation of LST …”15
The Agreement defines “Assets” with a seven-page list
that includes, among other things, all interests in the physical
railroad lines, improvements to them, the land on which they
are located, and attached facilities; maintenance and commu-
nication equipment; parts inventory; trademarks; personnel
files, accounting records, customer and supplier lists, and
other business records; and rights related to the Assets under
other contracts. The Agreement defines “LST” as “the lines of
railroad described in Exhibit A,” which is a detailed descrip-
tion of the paths of the lines.
The “claim[s] for environmental matters” at issue here are
the EPA’s naming of the railroads as PRPs and Northern
States’s subsequent CERCLA contribution action against
them. In a letter to the railroads, the EPA identified two activ-
ities for which it had “credible evidence that the railroads con-
tributed to or affected contamination at the Site.” One of these
was the dredging of Chequamegon Bay near the commercial
dock around the year 1900, which the EPA says exacerbated
pollution by disturbing contaminants from sediments. The
other was the dumping of waste from railroad equipment.
Against an original site cost estimate of approximately $100
million, the EPA and Northern States demanded from the rail-
roads a “very fair” $12.9 million, close to the $10.5 million
figure eventually paid to settle their claims. Neither railroad
contests that the final settlement was motivated at least in part
by the allegations included in the EPA’s letter.
15 Agreement (as amended) § 4(a)(v)(3), Supp. App’x 34.

-- 22 of 30 --

No. 19-3129 23
Wisconsin Central argues that Soo Line cannot show that
these claims “relat[ed] to” the “ownership of the Assets” or
“the operation of LST.” For Wisconsin Central, the settlement
of the Superfund matters involved a wide range of activities,
only some of which concerned the assets or operations it ac-
quired. So Wisconsin Central contends that Soo Line has not
met its burden to show that the damages award reasonably
approximates its losses. As an example, the dredging of the
area around the commercial dock is cited as not properly
within the scope of the indemnification clause. Soo Line and
its predecessors built the commercial dock, operated it to fur-
ther their railroad business, and owned it until 1982 (when
Soo Line deeded it to a local college). Wisconsin Central
claims that it cannot be held responsible under the Agreement
for the dredging of the dock because it purchased neither the
dock nor its operations.
To be entitled to complete indemnification, Soo Line needs
to establish that the liability is for a “claim” related to either
(1) “the operation of LST”—i.e., the operation of those rail
lines that Wisconsin Central purchased, or (2) “the ownership
of the Assets” purchased by Wisconsin Central.
1.
Wisconsin Central contends that it cannot be liable for the
dredging under the first part—“operation of LST”—for two
reasons. First, interpreting “operation of LST” narrowly as the
operation of the rail lines themselves, Wisconsin Central
essentially argues that the dredging of the commercial dock
was not part of the operation of the physical rail lines it
purchased. To Wisconsin Central, the dock was a separate
operation altogether serving other tenants, including a coal
company and a paper company, and used mostly as a public

-- 23 of 30 --

24 No. 19-3129
dock after 1909. Second, Wisconsin Central interprets
“operation of LST” as limited to the “modern-day” rail line
operations that it acquired, not the historical operation of
those lines. Wisconsin Central contends it cannot be liable for
the dredging of the dock because that activity was not part of
the rail line’s “modern-day” operations.
The Agreement’s text does not support these interpreta-
tions. The Agreement refers to the “the operation of LST” in
the singular, not “operations,” plural. And the Agreement
does not state that the “operation of LST” extended only to
recent operations or those that continued to the time of the
sale. Like almost any business operation that continues for
over one century, the business of the railroad changed over
the years. As part of its purchase, Wisconsin Central agreed to
assume liability for “all” environmental claims arising out of
the operation of the rail lines it acquired. Without a time limit,
“all” extends to however long ago those liabilities arose and
regardless of what later became of the relevant aspect of those
operations. The only timeline in the clause is about when a
“claim” is “asserted,” not when the underlying basis for it oc-
curred. If the liability for a claim for an environmental matter
relates to the operation of LST and would have been Soo
Line’s, then it is covered by the provision and is now Wiscon-
sin Central’s.
Nor do we construe “relating to … the operation of LST”
as referring only to the physical operation of the rail lines
within the right-of-way. It is natural and consistent with the
Agreement’s commercial purpose for the scope of indemnifi-
cation to extend to liability for activities on land not pur-
chased by Wisconsin Central. Part of the operation of a rail
line is the construction and maintenance of the surrounding

-- 24 of 30 --

No. 19-3129 25
infrastructure that makes the rail line accessible and useful for
business purposes. Liabilities arising from such activity are li-
abilities of the railroad business, and when selling various as-
sets of that business, such liabilities need not follow the land
on which some wrongful action was taken but might instead
follow the assets most central to the business.
Applying this understanding, we conclude that the dredg-
ing of the commercial dock was part of the “operation of LST.”
The dock was built—and at the time of the relevant conduct,
owned—by the same company that owned and operated the
rail lines. The dock is extremely close geographically to the
rail lines. There was no conceivable purpose for the railroad
to have built this dock at this location except to allow cargo to
be transferred between railcars and ships. That is, the dock
was built to further the business of the railroad. Both parties
admit that the railroad serviced the commercial dock (in ad-
dition to other nearby businesses). As counsel for Wisconsin
Central admits, there were rails on the docks.16 From all of this
evidence, we conclude that the dredging of the dock at issue,
undertaken around 1900, was part of the operation of the rail
lines. That the railroad leased space on the dock to other busi-
nesses, and that the dock later came to be used primarily for
other purposes, do not preclude the dock from being part of
the business of the rail lines at the time of the dredging. Even
if the dredging was carried out in part for the benefit of other
tenants, it was still maintenance of a dock that was part of the
operation of the rail lines.
16 Oral Argument at approximately 4:40.

-- 25 of 30 --

26 No. 19-3129
2.
Even if Wisconsin Central is not liable under the “opera-
tion of LST” phrase, Soo Line argues the other railroad is
liable for the entire environmental claim under the second
part of the indemnification clause—“relating to the owner-
ship of the Assets.” Soo Line observes that Wisconsin Central
acquired all of Soo Line’s existing rail assets in the region, in-
cluding the right-of-way that passes through the Superfund
site. As an owner of that right-of-way, subject to limited de-
fenses, Wisconsin Central could be held strictly liable under
CERCLA for the cost of the entire environmental cleanup, un-
der joint and several liability. Soo Line therefore contends that
the claims were related to the right-of-way, an “Asset” that
Wisconsin Central acquired, so the entirety of Soo Line’s set-
tlement payment fits within the scope of that liability.
Soo Line’s argument strikes us as correct insofar as the
railroads incurred costs purely because of strict liability for
land ownership on the site. But the liability and related dam-
ages in the Superfund matters were not limited to ownership
of the land. Rather, the record shows that the settlement
amount here was based on the polluting activities allegedly
carried out by the railroads. As evidence of this we can look
to the EPA settlement letter,17 which describes those activities.
The EPA has the right to hold landowners on Superfund
sites strictly liable for the entire cost of a cleanup through joint
and several liability. But it often allows PRPs to settle with the
government for amounts far smaller than the total cost of the
environmental cleanup, and the allocation of liability can be
further refined through private contribution actions under
17 Supp. App’x 155–57.

-- 26 of 30 --

No. 19-3129 27
Section 113 of CERCLA. Both occurred as to this site. North-
ern States sued the railroads, Northern States Power Co. v. City
of Ashland, Wis., 131 F. Supp. 3d 802 (W.D. Wis. 2015), and
jointly with the EPA, entered into a settlement with them for
less than the full cleanup costs.
When allocating liability under such contribution claims,
courts consider equitable factors such as whether a party
caused the pollution. Valbruna Slater Steel Corp. v. Joslyn Mfg.
Co., 934 F.3d 553, 566 (7th Cir. 2019). But because fault is only
one factor, even after an allocation, parties can be left
financially responsible for more of the cleanup costs than they
would bear under a purely fault-based regime. E.g., id. at 567
(where liability for 25% of the costs of a cleanup was imposed
on a faultless landowner). For the indemnification clause here
to serve its purpose, it must extend to such liability. After all,
such liability “relate[s] to ownership of the Assets.” It was by
owning the “Assets” that the parties could become jointly and
severally liable for the Superfund site in the first place.
Therefore, if the railroads had not been accused of
contributing to the pollution but were instead held strictly
liable as landholders—other facts being the same—we would
still require Wisconsin Central to indemnify Soo Line under
the “ownership of the Assets” part of the indemnification
clause.
Yet even though the EPA may have had the right to hold
the railroads responsible for the entire cleanup cost just for
owning land in the Superfund site, the EPA instead secured a
settlement amount that was based on the alleged polluting

-- 27 of 30 --

28 No. 19-3129
activities of the railroads.18 Similarly, Northern States’s con-
tribution lawsuit against the railroads was based on the activ-
ities carried out by the railroads.19 The claims were thus re-
lated to the operation of the railroad line, more so than the
ownership of the Assets. So Soo Line’s argument—that Wis-
consin Central should bear the entire cost because CERCLA
allows for full joint and several liability for anyone holding
land in the Superfund site (but not subject to one of the nar-
row defenses)—does not persuade us.
For the indemnification clause to apply, the environmen-
tal claim must relate to the basis of the settlement for which
Soo Line seeks indemnification. Here, more than ownership
of the assets, that is the operation of the railroad business
identified by the EPA as contributing to the contamination on
the site.
3.
In a further attempt to bear a smaller allocation of dam-
ages, Wisconsin Central points out that Soo Line and its pre-
decessors used to have a much larger footprint in the Kreher
Park area. In 1877, Soo Line’s predecessors owned over 5 acres
of the future Superfund site. In 1908, they owned 4.87 acres.
Soo Line sold or deeded away much of this property in the
decades and years before the Agreement, and in the 1987
Agreement Wisconsin Central came to own only 2.29 acres.
Using their expert’s calculation that railroad holdings in the
Kreher Park area averaged 4.23 acres between 1874 through
2002, Wisconsin Central contends that the ratio of its acquired
18 Supp. App’x 155–57.
19 Supp. App’x 152–54.

-- 28 of 30 --

No. 19-3129 29
property to this average railroad holding should determine
the percentage of the EPA settlement that it is responsible for:
54.1%.
This contention is appealing but in the end unpersuasive.
Such a rough allocation might be appropriate when all parties
are held responsible based on strict liability for ownership of
contaminated land and where no better basis exists for assign-
ing liability. But here, liability was premised on the historical
actions of the parties and their predecessors, and the parties
memorialized the allocation of that liability between them in
a contract. All liability for these claims is related to the opera-
tion of LST, so under the Agreement, Wisconsin Central is
responsible for 100% of the environmental damages, plus in-
terest, attorneys’ fees, and costs.
We offer a final note as to the district court’s order resolv-
ing the allocation of damages.20 Both that court and this court
treat this later order as an addendum to the earlier grant of
summary judgment to Soo Line. 21 Although this later order
only briefly addressed the question of damages, to be fair, the
district court was not presented with some of the sophisti-
cated arguments we have received in this appeal. We have
reviewed de novo the record and the summary judgment mo-
tion practice in the district court. We can conclude that the
indemnification clause applies to the entire settlement be-
cause it was based on the operation of the railroad line. Soo
Line has thus met its burden to show that the damages award
reasonably approximates its losses. Jensen v. Duluth Area
YMCA, 688 N.W.2d 574, 579 (Minn. Ct. App. 2004)
20 Dist. Ct. D.E. 113.
21 Dist. Ct. D.E. 84.

-- 29 of 30 --

30 No. 19-3129
(“[D]amages need not be proved with certainty; it is legally
sufficient that a reasonable basis for approximating loss is
shown.”).
* * *
For these reasons, we agree with the district court’s hold-
ing that Wisconsin Central is responsible for the entirety of
the railroads’ settlement with the EPA. The indemnification
clause extends to “all claims for environmental matters relat-
ing to the ownership of the Assets and the operation of LST.”
The claims which the railroads settled with the EPA and
Northern States all arose out of the dumping of waste on the
right-of-way, or from the other activities of Soo Line’s prede-
cessors in support of the operation of the railroad. The claims
are thus related to either the ownership of the railway or the
operation of the rail lines and are therefore within the scope
of the Agreement’s indemnification clause.
III.
Both parties have offered considered and well-developed
arguments in support of their positions. Giving full effect to
the railroads’ Agreement, including the indemnification
clause, results in Wisconsin Central bearing these environ-
mental costs in their entirety. For the reasons relayed above,
we A FFIRM the district court’s grant of summary judgment to
Soo Line.

-- 30 of 30 --