Berg v. Popham

• Decision Date: 24 June 2005
• Docket Number: No. 01-35807.,01-35807.
• Citation: 412 F.3d 1122
• Parties: David BERG; Marge Berg, Plaintiffs-Appellants, v. David POPHAM; Tsukiko Popham, Defendants, and Norge Corporation, and its successors in interest; Magic Chef Corporation; Maytag Corporation; ABC Inc.; ABC Co.; ABC Corp., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

412 F.3d 1122

David BERG; Marge Berg, Plaintiffs-Appellants, v. David POPHAM; Tsukiko Popham, Defendants, and Norge Corporation, and its successors in interest; Magic Chef Corporation; Maytag Corporation; ABC Inc.; ABC Co.; ABC Corp., Defendants-Appellees.

No. 01-35807.

United States Court of Appeals, Ninth Circuit.

Argued August 7, 2002.

Submission Withdrawn October 4, 2002.

Resubmitted June 16, 2005.

Filed June 24, 2005.

Michael W. Flanigan, Walther & Flanigan, Anchorage, AK, for the plaintiffs-appellants.

I. Franklin Hunsaker, Bullivant Houser Bailey, Portland, OR, Christopher W. Angius, Holland & Knight LLP, Portland, OR, for the defendants-appellees.

Appeal from the United States District Court for the District of Alaska; John W. Sedwick, District Judge, Presiding. D.C. No. CV-00-00151-JWS.

Before: B. FLETCHER, ARTHUR L. ALARCÓN, and GRABER, Circuit Judges.

ALARCÓN, Senior Circuit Judge:

This matter is before us to review the Alaska state law questions presented by the parties to this dispute.¹ This appeal presents a novel issue under Alaska law, i.e., is an entity subject to liability under Alaska Statute ("AS") § 46.03.822(a)(4) if it manufactured or sold a useful product that, when used as designed and installed by the manufacturer, releases hazardous substances.

The Maytag Corporation ("Maytag") moved to dismiss the second amended complaint filed by David and Marge Berg ("the Bergs") for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Relying solely on federal decisions interpreting the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601-9675, Maytag argued that it was not liable under CERCLA or its Alaska counterpart, AS § 46.03.822(a)(4). The district court dismissed the second amended complaint without citing any decision of the Alaska Supreme Court addressing the issue before this court.

The Alaska Supreme Court accepted our request for certification for its interpretation of Alaska law. In its response to our request, the Alaska Supreme Court held that a manufacturer of a useful product can be held liable under AS § 46.03.822(a)(4) if it was intended to direct a hazardous substance into a city sewer system. Berg v. Popham, 113 P.3d 604, 612 (Alaska, 2005); 113 P.3d 604. Accordingly, we vacate and remand that portion of the district court's judgment on the pleadings regarding Maytag's potential liability under AS § 46.03.822(a)(4).

I

The Bergs filed this action in the Superior Court for the State of Alaska alleging, inter alia, that Maytag was liable for contribution pursuant to CERCLA and AS § 46.03.822(a)(4) for a portion of the costs incurred in remediation resulting from the discovery of percholoroethylene ("PCE") emanating from sewer lines in the ground connected to the Bergs' dry-cleaning business.

Maytag removed the action to federal court, alleging federal question and diversity jurisdiction. Maytag moved to dismiss the Bergs' first amended complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure. The Bergs moved for leave to amend their complaint. The district court granted the Bergs leave to file a second amended complaint.

The Bergs alleged in their second amended complaint that they owned a dry-cleaning business in Anchorage, Alaska, from 1972 through 1978 and again from 1980 through 1983. The dry cleaning equipment was purchased from Norge Corporation ("Norge") before 1972. Maytag is Norge's successor in interest.² Norge recommended that the Bergs use PCE in the equipment as part of the dry-cleaning process. Norge designed the layout of the equipment and installed the dry-cleaning equipment and a water and PCE separator system that "facilitated spillage, leakage and direction of [PCE] into the city sewer system."

In 1991, highway construction workers for the State of Alaska discovered PCE in the soil near the Bergs' former dry-cleaning business. The State issued notices and filed liens on the Bergs' assets to create a pool of funds to be used in decontamination efforts.

Maytag moved to dismiss the Bergs' second amended complaint for failure to state a claim upon which relief can be granted. The district court granted Maytag's motion, in part, concluding that it could not be liable as an arranger or transporter under CERCLA or AS § 46.03.822(a)(4). Subsequently, the court granted Maytag's motion for judgment on the pleadings regarding the Bergs' remaining state-law claims pursuant to Rule 12(c) of the Federal Rules of Civil Procedure. The Bergs timely filed a notice of appeal from the district court's final judgment. This Court has jurisdiction over this appeal pursuant to 28 U.S.C. § 1291.

II

The Bergs do not appeal from the portion of the district court's judgment dismissing their CERCLA claim. They assert, however, that the district court erred in dismissing their claim for contribution against Maytag under AS § 46.03.822(a)(4) because "the plain language of the Alaska `arranger' language ... allows for the present suit, since Norge did by contract arrange for disposal of PCE through the piping system it installed at the Bergs' dry cleaning plant, by and through the Norge dry cleaning machines it installed plumbed to the sewers."

We review "de novo a district court's dismissal of a complaint: for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) ... and for judgment on the pleadings pursuant to Rule 12(c)." Arrington v. Wong, 237 F.3d 1066, 1069 (9th Cir.2001). "A complaint should not be dismissed unless it appears beyond doubt that the plaintiff can prove no set of facts in support of the claim that would entitle it to relief. All allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party." Daniel v. County of Santa Barbara, 288 F.3d 375, 380 (9th Cir.2002) (quotations and citation omitted).

AS § 46.03.822(a) imposes strict liability for damages and "the costs of response, containment, removal, or remedial action incurred" by the State of Alaska on persons responsible for "an unpermitted release of a hazardous substance." The statute also authorizes private parties to file an action to "seek contribution from any other person who is liable" under the statute. AS § 46.03.822(j). Persons subject to the statute's joint and several liability scheme include owners and operators of facilities "from which there is a release ... of a hazardous substance." AS § 46.03.822(a)(2). The Bergs, as former owners and operators of the dry-cleaning business, are subject to liability under this subsection and are entitled to bring an action for contribution against other responsible parties pursuant to AS § 46.03.822(j).

In addition to imposing liability on "owners" and "operators," AS § 46.03.822(a)(4) imposes liability on persons who "arranged" for the disposal of hazardous waste. "Arrangers" are defined as

any person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by the person, other than domestic sewage, or by any other party or entity, at any facility or vessel owned or operated by another party or entity and containing hazardous substances, from which there is a release, or a threatened release that causes the incurrence of response costs, of a hazardous substance[.]

§ 46.03.822(a)(4) (emphasis added).

CERCLA, by contrast, defines the liability of a person who arranges the release of a hazardous substance as

any person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by such person, by any other party or entity, at any facility or incineration vessel owned or operated by another party or entity and containing such hazardous substances[.]

42 U.S.C. § 9607(a)(3) (emphasis added). Unlike the Alaska statute, § 9607(a)(3) does not contain the disjunctive "or" before the words "by any other party or entity."

The Bergs alleged in their second amended complaint that Maytag installed defective dry-cleaning equipment at the Bergs' dry-cleaning business that included a "still system [that] when used as directed spilled [PCE] into the city sewer system[ ]" and a "water/[PCE] separator system that when used as directed, spilled [PCE] into the city sewer system." The Bergs argue that the district court erred in determining that these allegations were insufficient to state a claim for arranger liability under AS § 46.03.822(a)(4).

In construing CERCLA, we have recognized that "`[n]o court has imposed arranger liability on a party who never owned or possessed, and never had any authority to control or duty to dispose of, the hazardous materials at issue.'" United States v. Shell Oil Co., 294 F.3d 1045, 1058 (9th Cir.2002) (quoting United States v. Iron Mountain Mines, Inc., 881 F.Supp. 1432, 1451 (E.D.Cal.1995)). Maytag contends that it cannot be liable as an arranger because the Bergs have not alleged that it owned or possessed the hazardous substance that was released into the sewer system.

Because we found no controlling precedent in decisions of the Alaska Supreme Court interpreting the scope of the word "arranged" as used in AS § 46.03.822(a)(4), we certified the following two questions to the Alaska Supreme Court: (1) "Alaska Statute section 46.03.822(a)(4), in contrast to 42 U.S.C. § 9607(a)(3), contains the word `or' preceding the phrase `by any other party or entity.' In light of the inclusion of the word `or,' does section 46.03.822(a)(4) require that a person own, possess, have `authority to control,' or `have a duty to dispose of' the hazardous substance that is released, before that entity can be subject to arranger liability as is required under 42 U.S.C. § 9607(a)(3...