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describing MODFLOW as a "widely-used, well-tested particle-tracking model[] that ha been subjected to peer review and [is] commonly accepted in the hydrogeologic community."
Summary of this case from Valencia v. Franklin County Water DistrictOpinion
Case No. 1:99-CV-384
December 6, 2001
For Plaintiff(s): Charles M. Denton/Eric C. Fleetham.
For Defendant(s): Robert J. Jonker/John V. Byl/Dean F. Pacific.
OPINION
The Court has before it Plaintiff's motion for reconsideration of the Court's October 2, 2001, Order denying Plaintiff's motion for partial summary judgment and granting in part Defendant's motion for summary judgment. In the Opinion issued in connection with the Order, the Court concluded that Plaintiff failed to produce sufficient evidence to support its claim for owner liability under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9601-9675, and Part 201 of Michigan's Natural Resources and Environmental Protection Act ("NREPA"), M.C.L. §§ 324. 20101-21113. The Court also refused to pierce the corporate veil in concluding that Plaintiff failed to produce sufficient evidence for derivative liability under CERCLA. The Court also granted summary judgment to Defendants on Plaintiff's claim under the federal Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. § 6901-6992.
In the instant motion, Plaintiff contends that it presented sufficient evidence to support owner liability in the form of employee testimony regarding the disposal of hazardous substances during the relevant time period. Plaintiff also argues for a broader standard for operator liability than the one articulated by the Court in its Opinion. In addition, Plaintiff contends that the Court should pierce the corporate veil because an injustice will result if Defendants are not held derivatively liable. As to the RCRA claim, Plaintiff points to injunctive relief sought under the Act and argues that it does not merely seek compensation for cleanup costs.
Standard
To prevail on a motion for reconsideration, the movant must "not only demonstrate a palpable defect by which the Court and the parties have been mislead, but [must] also show that a different disposition of the case must result from a correction thereof." W.D. Mich. LCivR 7.4(a). There is no provision in the Federal Rules of Civil Procedure that provides for a motion for reconsideration, and such a motion is to be evaluated as a motion for relief from judgment under Fed.R.Civ.P. 59(e).Huff v. Metro. Life Ins. Co., 675 F.2d 119, 122 (6th Cir. 1982). A motion for reconsideration may not be used to raise issues that could have been raised in the previous motion, see Kohl v. Murphy, 767 F. Supp. 895, 904 (N.D.Ill. 1991), or to introduce evidence which could have been proffered during the pendency of a summary judgment motion, see Thomas Indus., Inc. v. Wagner Spray Tech Corp., 619 F. Supp. 1280, 1284 (E.D.Wis. 1985); Indep. Petroleum Ass'n of Am. v. Babbitt, 178 F.R.D. 323, 327 (D.D.C. 1998). It is not an opportunity to reargue the case, but rather to point out manifest error of law or present newly discovered evidence. Sault Ste. Marie Tribe of Chippewa Indians v. Engler, 146 F.3d 367, 374 (6th Cir. 1998).
Discussion
Plaintiff raises four objections to the Court's ruling. They will be taken in turn.
I. Owner Liability
CERCLA establishes strict liability for owners of property where hazardous substances are dumped. Anspec Co. v. Johnson Controls, Inc., 788 F. Supp. 951, 956 (E.D.Mich. 1992) (citing CERCLA, 42 U.S.C. § 9607(a)(2)). Plaintiff asserts that Defendants are strictly liable under CERCLA as "owners" for any dumping that occurred between their purchase of the Site in October 1963 and the sale of the property to Aero I on October 16, 1968. It argues that, contrary to the Court's ruling, there is sufficient evidence regarding disposal of hazardous substances during this time.
A. Corke Affidavit
Plaintiff offers the affidavit of John Corke to "supplement" the statements he made in his deposition. This is precisely the kind of evidence in the Plaintiff's control that could have been proffered during the pendency of the summary judgment motion. See Emmons v. McLaughlin, 874 F.2d 351, 358 (6th Cir. 1989) (district court did not abuse its discretion in denying a Rule 59 motion when the moving party based its motion on evidence that it had in its control before the original entry of judgment). As such, it will not be considered by the Court.
B. Expert Report
In addition to employee testimony, Plaintiff offers the supplemental report of their expert, Dr. Michael Sklash, who concludes that "the new soil data indicate another potential source beneath the southern part of the 1967 addition." (Sklash Report, Pl.'s Br. Supp. Ex. F.) However, noting a "potential source" beneath the 1967 addition is not concrete evidence that waste disposal occurred during Defendants' ownership of the Site. Standing alone, it would not be enough to overturn the Court's decision. There must be some other evidence supporting the conclusion that disposal occurred before October 16, 1968.
C. Employee Deposition Testimony
Plaintiff reviews the testimony of four employees who worked at the Site prior to the sale of the property. Ken Wertz ("Wertz"), hired in October 1966, worked as a spring fabricator for two years before beginning work in the paint room sometime during 1968. (Wertz Dep. at 6-7, Pl.'s Br. Supp. Ex. E.) He stated that he took used paint filters to the Disposal Pit at least once a week. (Id. at 18-19.) Wertz remembered seeing paint cans and dirty cleaning rags in the pit as well. (Id. at 19.) He testified that he did not see 5-gallon cans or 55-gallon barrels in the pit. (Id.) Wertz stated that he did not take paint thinner to the pit, and he did not know of anybody else who did either. (Id. at 20.) According to Wertz, the paint room employees put the used paint thinner into a 55-gallon drum that was placed outside the paint room and hauled away by the company. (Id. at 17, 20.)
Bill Folk ("Folk"), hired in August 1962, worked with tool balancers. (Folk Dep. at 5.) He testified that the Disposal Pit was visible from the building. (Id. at 20.) Folk did not remember if waste was hauled away or the dump was used when the plant opened in 1965. (Id. at 19.) He stated that nothing other than cardboard boxes was in the pit and that he never saw drums being placed in the pit. (Id. at 20.) Folk did not have any personal knowledge about TCE or cleaning the degreaser. (Id. at 16.) Likewise, he did not work in the paint room and did not know what paint room workers did to clean equipment or dispose of dirty paint filters. (Id. at 17-18.)
Rick Shull ("Shull"), hired on October 9, 1968, worked in the paint room. (Shull Dep. at 6-7.) He testified that he took dirty paint filters, paint dust, and paint cans to "a big hole in the ground" at the Site every day. (Id. at 9-10, 18.) He also placed 5-gallon buckets of used paint thinner into the dump about once a week. (Id. at 28, 76.)
John Corke ("Corke"), hired in 1961, also testified that pails of used paint thinner and dirty paint filters were regularly placed into the Disposal Pit. (Corke Dep. at 7, 71-72.) Corke testified that painting did not immediately begin at the Site when the plant moved there in 1965 and that they farmed the work out "for a long period of time." (Id. at 73, 76.) At one point in his deposition, he stated that he could not remember any specific date as to when painting began at the Site. (Id. at 194-95.) He later stated that painting had begun at the Site by 1967. (Id. at 196.) As to Corke's knowledge of TCE disposal, Corke testified that he personally cleaned the degreaser. (Id. at 88-89.) He stated that they would fill a drum with the dirty material from the degreaser and put this into the Disposal Pit. (Id. at 92.) When asked whether he personally took the material to the dump, Corke replied, "I guess I probably would say I have done it. I can't put my finger on the exact times. . . ." (Id. at 92-93.) Later in his deposition, Corke testified that he never personally took TCE to the disposal area. (Id. at 150, 152.) He stated that he did not see somebody else do it either, but he assumed that the TCE was dumped into the pit because that was the only place to take it. (Id. at 152-54.)
Plaintiff, as the party opposing summary judgment, must demonstrate with "concrete evidence" that there is a genuine issue of material fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324-25, 106 S.Ct. 2548, 2553-54 (1986); see also Frank v. D'Ambrosi, 4 F.3d 1378, 1384 (6th Cir. 1993). The Court recognizes that the events took place decades ago and the memories of witnesses have faded. While there is ample evidence that hazardous waste disposal occurred at the Site, there is very little specific evidence as to when such disposal occurred. Wertz could not pinpoint when in 1968 he began to work in the paint room and dispose of paint wastes. Folk had no personal knowledge about the disposal of either TCE or paint wastes, and he only saw cardboard boxes in the Disposal Pit. Shull was hired and began to work just one week before the sale of the property. He remembered disposing of dirty paint filters every day and paint thinner about once every week, but he did not state that he disposed of any wastes during his first week of work. The only testimony in any of these depositions regarding the timing of the disposal is from Corke, who stated that he remembered the disposal area existing as long as they were in the facility at the Site. (Corke Dep. at 77-78.) In the context of a conversation on paint waste disposal, he stated, "it was a hole in the ground that we had up there . . . that's where we put everything, all of our trash. That's what we called the dump." (Id. at 78.) He also stated that taking TCE to the dump was "the process that took place from the beginning." (Id. at 115-16.) As to the TCE disposal, however, Corke admitted that he never personally disposed of the used TCE into the pit, he never personally saw anyone else place TCE into the pit, and no one told him that they had done so. (Id. at 154.)
Defendants assert that Corke does not have personal knowledge of the information and, thus, he is not competent to testify on this matter.See Fed.R.Evid. 602. Defendants argue that the Court cannot consider evidence on a summary judgment motion that would not be admissible at trial. See Fed.R.Civ.P. 56(e); U.S. Structures, Inc. v. J.P. Structures, Inc., 130 F.3d 1185, 1189 (6th Cir. 1997). The Court disagrees that Corke is not competent to testify and will consider his statements. Corke testified that he had personal knowledge of the procedures for cleaning the paint room and disposing of paint wastes into the Disposal Pit. (Corke Dep. 77-79.) He also personally cleaned the degreaser and knew about the disposal of TCE. (Id. at 92-93.) The fact that he never actually carried a drum of used TCE to the Pit or never went out and observed others disposing of wastes is not dispositive. His conclusion that TCE must have been brought to the pit was based on what he knew about the plant and its employees and the practices he observed. The inferences and opinions he expressed are rationally based on his perception, helpful to a determination of the issue, and not based on any scientific or technical knowledge. See Fed.R.Evid. 701. Corke's statements concerning TCE disposal are admissible and the Court will consider them.
Corke's statement that the Disposal Pit existed from the beginning of the operations at the Site and that the practice from the beginning was to dump wastes there is enough to demonstrate owner liability. Plaintiff presents very little evidence, and Corke's testimony is certainly subject to doubt and criticism because of his apparently contradictory statements, but these are not appropriate considerations for the Court at this stage of the proceedings. See Gribcheck v. Runyon, 245 F.3d 547, 551 (6th Cir. 2001) (stating that the district court is not to consider the credibility of witnesses when considering a motion for summary judgment). The Court finds that it erred in granting summary judgment to Defendants on the issue of owner liability and will grant Plaintiff's motion for reconsideration.
II. Operator Liability Standard
Plaintiff contends that the Court articulated too narrow a standard for operator liability under CERCLA in denying summary judgment to both parties on this claim. In its Opinion, the Court stated that under United States v. Bestfoods, 524 U.S. 51, 118 S.Ct. 1876 (1998), to be considered an "operator" under CERCLA, it is not enough for liability to attach that a corporate defendant actively participated in and exercised control over the general affairs of a subsidiary. Id. at 67-68, 118 S.Ct. at 1887. (10/2/01 Op. at 10-11.) If a corporate parent exercised control over the regulation of the facility itself it may be held directly liable in its own right as an operator. To be directly liable, a defendant must "manage, direct, or conduct operations specifically related to pollution, that is, operations having to do with the leakage or disposal of hazardous waste, or decisions about compliance with environmental regulations." Id. at 66-67, 118 S.Ct. 1887. The Sixth Circuit applied this standard to an individual shareholder in Carter-Jones Lumber Co. v. Dixie Distribution Co., 166 F.3d 840 (6th Cir. 1999), in holding that "an officer [must] be actively involved in the arrangements for disposal before individual liability may be imposed." Id. at 846-47.Carter-Jones was an "arranger" liability case to which the Sixth Circuit made Bestfoods, an "operator" liability case, applicable. Under the standard enunciated by the Sixth Circuit, the defendant could be liable if Ohio law permitted piercing the corporate veil or if he had "intimate participation" in the arrangement for disposal. Id. at 846. The district court's finding of facts regarding the defendant's activities satisfied the Bestfoods standard because the sole shareholder was actively involved in the arrangements for disposal. Id. at 846-47.
Plaintiff cites United States v. Meyer, 120 F. Supp.2d 635 (W.D.Mich. 1999), for the proposition that "where a party's operational decisions, in conjunction with surrounding circumstances, contribute to a release, operator liability may attach." Id. at 639 (citing Westfarm Assoc. v. Wash. Suburban Sanitary Comm'n, 66 F.3d 669, 680-81 (4th Cir. 1995)). Meyer, an officer and shareholder of a family-owned construction company, supervised the construction of sewer lines for an industrial park facility built by another of his companies. Hazardous waste from the sewer lines seeped into the ground and the United States brought suit under CERCLA. The court said that in order for Meyer to be held personally liable, the plaintiff, United States, would have to either pierce the corporate veil or show "that Meyer was personally involved or `intimate[ly] participat[ed]' in the operation of the sewer system."Id. at 640. "The latter inquiry must focus on Meyer's actual exercise of control over the operation of the sewer system, rather then his capacity to do so." Id. (citing Bestfoods). Based on Meyer's role as the party directing the construction, alteration and repair of these lines, the court found that Meyer was an operator. Id. at 640.
This Court has no particular problem with the standard stated in Meyer on page 639 insofar as it is clarified on page 640. When so clarified,Meyer is consistent with Bestfoods and Carter-Jones. In essence, demonstrating operational decisions plus surrounding circumstances might be sufficient, or insufficient, for operator liability depending upon the "surrounding circumstances." Establishing this phrase, taken out of context, as a stand-alone standard for the instant case, however, would be confusing to the jury and inconsistent with Bestfoods and Carter-Jones Lumber if the "surrounding circumstances" do not link the defendants as operators or arrangers for the disposal of waste. The Court in Bestfoods stated that in order to be held directly liable, an operator must "manage, direct, or conduct operations specifically related to pollution, that is, operations having to do with the leakage or disposal of hazardous waste, or decisions about compliance with environmental regulations." Id. at 66-67, 118 S.Ct. 1887 (emphasis added). In applying this standard to an individual shareholder arranger inCarter-Jones Lumber Co., the Sixth Circuit noted that besides piercing the corporate veil, the defendant was directly liable "in his own right due to his intimate participation in the arrangement for the disposal" and that the evidence satisfied "the Bestfoods requirement that an officer be actively involved in the arrangements for disposal before individual liability may be imposed." Carter-Jones Lumber Co., 166 F.3d at 846-47 (emphasis added). See also, Browning-Ferris Indus. of Ill., Inc. v. Ter Maat, 195 F.3d 953, 956 (7th Cir. 1999) (holding that a corporate officer could be liable as an "operator" if he did not merely direct general operations or even specific operations unrelated to pollution but also supervised or controlled operations related to hazardous waste disposal.).
The standard set out by the Court in its Opinion will continue to be the standard applied to operator liability.
III. Derivative Liability
Plaintiff argues that the Court erred in granting summary judgment to Defendants as to their derivative liability under CERCLA. The Court held that failure to follow corporate formalities, the only evidence submitted by Plaintiff on this point, is not sufficient to justify piercing the corporate veil. (10/2/01 Op. at 12-13.) Fraud, illegality, or injustice must also be shown. K Mart Corp. v. Knitjoy Mfg. Inc., 542 F. Supp. 1189, 1192 (E.D.Mich. 1982) (citing Solomon v. Western Hills Dev. Co., 110 Mich. App. 257, 263, 312 N.W.2d 428, 432 (1981)). Plaintiff claims that injustice will result if the corporate veil is not pierced because Defendants dumped hazardous waste on the Site, sold the property, and dissolved the corporation. Defendants have not been absolved of their potential liability to Plaintiff because the Court denied summary judgment to Defendants on the issue of operator liability and is granting reconsideration on the issue of owner liability. To permit piercing the corporate veil simply to hold individuals or owners liable for cleanup costs under some vague "injustice" standard is the same argument rejected in Bestfoods and Carter-Jones.
IV. RCRA Claim
The Court granted summary judgment to Defendants on Plaintiff's claim under the federal Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. § 6901-6992, because contribution for past and present cleanup costs is not recoverable under RCRA. Plaintiff notes that in its Amended Complaint, it seeks injunctive relief and the imposition of civil penalties under RCRA, not merely contribution. (Am. Compl. ¶ 81.)
Under § 6972(a)(1)(B) of RCRA, contribution claims are not available but the Court is empowered to issue injunctive relief. See Meghrig v. KFC Western, Inc., 516 U.S. 479, 484, 116 S.Ct. 1251, 1254 (1996). Under § 6972(a) and § 6928(g), the Court may impose civil penalties. Therefore, to the extent Plaintiff seeks contribution for cleanup costs incurred, the grant of summary judgment of its claim under RCRA was correct and the motion for reconsideration will be denied. Summary judgment on the claims for injunctive relief and civil penalties under RCRA will be reversed.
V. Application of the Aviall Services Case
In their Response in Opposition to Plaintiff's Request for Clarification of Hearing Order (docket no. 130), Defendants first drew the Court's attention to a recent Fifth Circuit case, Aviall Services, Inc. v. Cooper Industries, Inc., 263 F.3d 134 (5th Cir. 2001), which held, in a 2-1 decision, that a party may bring a § 113 contribution claim only if there is a prior or pending § 106 or § 107 action against it. In their Response Brief, Defendants again urge the Court to dismiss Plaintiff's contribution claim based on the Fifth Circuit's decision since Plaintiff undertook cleanup costs voluntarily and has never been subjected to a § 106 or § 107 action. The arguments for and against the Defendants' position are set forth inAviall and its dissent. This Court agrees with the dissent and the earlier district court decisions cited in Aviall at page 143.
Because the statutes are so similar, the analysis applies to both the federal CERCLA and the state NREPA contribution claims. See Kelley v. Tiscornia, 827 F. Supp. 1315, 1318 n. 1 (W.D.Mich. 1993).
The Court also notes that a petition for rehearing en banc is currently pending before the Fifth Circuit. See Marathon Oil Co. v. Texas City Terminal Ry., No. G-01-336, 2001 WL 1517800, at *2 (S.D.Tex. Nov. 19, 2001).
Therefore, since Aviall it is not binding on this Court, it is not necessary that Plaintiff be subject to a § 106 or § 107(a) claim before it may seek contribution under § 113(f).
Conclusion
The Court will grant Plaintiff's motion for reconsideration as to its claim for owner liability because it has presented enough evidence to the Court that disposal of hazardous wastes may have occurred at the site prior to October 16, 1968. The Court will also grant the motion as to Plaintiff's claim under RCRA to the extent it seeks injunctive relief and civil penalties and not contribution under the statute. Finally, the Court will deny Plaintiff's motion to reconsider the standard for operator liability and Plaintiff's claim for derivative liability.
An Order consistent with this Opinion will be entered.
ORDER
For the reasons stated in the Court's Opinion filed on this date,
IT IS HEREBY ORDERED that Plaintiff's Motion For Reconsideration (docket no. 132) is DENIED IN PART and GRANTED IN PART. The motion is denied for reconsideration of the claims for operator and derivative liability. The motion is granted as to claims for owner liability under CERCLA and NREPA, and injunctive relief and civil penalties under RCRA.