Berg v. Popham

• Decision Date: 20 May 2005
• Docket Number: No. S-10815.,S-10815.
• Citation: 113 P.3d 604
• Parties: David BERG and Marge Berg, Appellants, v. David and Tsukiko POPHAM, d/b/a Alladin Cleaners, and Norge Corporation, and its successors in interest Magic Chef Corporation, Maytag Corporation, ABC Inc., ABC Co., and ABC Corp., Appellees.
• Court: Alaska Supreme Court

113 P.3d 604

David BERG and Marge Berg, Appellants, v. David and Tsukiko POPHAM, d/b/a Alladin Cleaners, and Norge Corporation, and its successors in interest Magic Chef Corporation, Maytag Corporation, ABC Inc., ABC Co., and ABC Corp., Appellees.

No. S-10815.

Supreme Court of Alaska.

May 20, 2005.

Michael W. Flanigan, Walther & Flanigan, Anchorage, for Appellants.

Joseph R.D. Loescher, Hughes Thorsness Powell, Anchorage, and I. Franklin Hunsaker and Christopher Angius, Bullivant Houser Bailey, Portland, Oregon, for Appellees.

Before: BRYNER, Chief Justice, MATTHEWS, EASTAUGH, FABE, and CARPENETI, Justices.

OPINION

CARPENETI, Justice.

I. INTRODUCTION

The Ninth Circuit has certified the following two questions to this 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)?

2. If the answer to Question 1 is "no," may an entity be subject to arranger liability under Alaska Statute section 46.03.822(a)(4) if it manufactures, sells, and installs a useful product that, when used as designed, directs a hazardous substance into the city sewer system?¹

Because we find that AS 46.03.822(a)(4) was intended to be more inclusive than its federal counterpart, we hold that the answer to the first question is "no," and the answer to the second question is "yes."

II. FACTS AND PROCEEDINGS

David and Marge Berg owned and operated the "Boni-Park" laundry and dry cleaning business in Anchorage from 1972 until 1978. David and Tsukiko Popham purchased the business in 1978 and operated it until they resold the company to the Bergs in 1980. The Bergs owned and operated the business again until 1983, when they sold the business to the Jaeger family.

From the pleadings, it appears that Boni-Park was part of a franchise arrangement with the Norge Corporation, a manufacturer of dry cleaning equipment. According to the Bergs, a Norge dealer in Anchorage "designed the layout of the equipment and installed the equipment in accordance with Norge manuals and installation materials." The Bergs claim that Norge personnel visited Boni-Park "several times" to check whether "the facility was being run in accordance with Norge practices and procedures" and that these personnel assured them that "the Norge equipment, including the dry cleaning facilities, had been correctly installed and were being correctly operated."

The Norge dry cleaning equipment at Boni-Park used the hazardous substance Perchlorethylene (PCE or "Perc") as a cleaning solvent that was mixed with water during the dry cleaning process. A "water/Perc separator" was then used to recapture the PCE while the separated water was flushed through a drainage system into the local sewer lines. A vaporization process was also used periodically to cleanse any oil and dirt residue that had accumulated during recycling of the PCE. This vaporization process yielded a PCE-contaminated sludge, which was also flushed into the sewer lines. There is no allegation that the defendants provided PCE to Boni-Park, but only that they arranged for the disposal of waste byproducts generated by the dry cleaning process.

At some point, PCE escaped into the environment from Boni-Park's premises or from the sewer pipes leading from the property, perhaps through underground leaks. The Bergs assert that, throughout the time they owned and operated Boni-Park, they used and maintained the dry cleaning equipment exactly as specified by Norge, and that they "never spilled PCE." Because we do not address factual disputes in answering a certified question, we assume for the purposes of this decision that the Bergs are correct when they contend that the release of PCE could only have been "through the factory-designed, approved, and installed drain lines."

In 1987 or 1988 the State of Alaska discovered the presence of PCE in the soil near Boni-Park. The state notified the Bergs that they were "potentially responsible persons" (PRPs) under AS 46.03.822 ("section.822"), Alaska's version of the federal Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA").² Alaska Statute 46.03.822 makes the owners of a facility from which there is a release of a hazardous substance a class of PRPs, strictly liable to the state for the costs of cleanup and remediation.³ The Bergs were compelled to pay into a cleanup fund with other PRPs as part of the remediation effort for this site. The Bergs sued their insurer to obtain these funds. Section .822 also allows PRPs to obtain damages or contribution from other parties who contributed to the release of the hazardous substance.⁴ The Bergs' settlement with their insurer allowed the insurer to "seek contribution, indemnity, or similar relief from any responsible parties."

After allegedly incurring over $1 million in costs associated with the PCE cleanup, the Bergs sought contribution from the Maytag Corporation and Norge's other successors-in-interest (hereinafter referred to collectively as Maytag). They sued under a theory of so-called "arranger liability" under AS 46.03.822(a)(4) or U.S.C. § 9607(a)(3). Maytag removed the case to the federal district court, which granted in part Maytag's motion to dismiss because it held that arranger liability was inapplicable to Maytag under CERCLA or section .822.⁵ On appeal to the Ninth Circuit, the Bergs did not contest the dismissal of their CERCLA claim, but they argued that the district court erroneously interpreted section .822's arranger liability provision.⁶ The Ninth Circuit certified the two questions above to clarify Alaska law on this issue.⁷

III. STANDARD OF REVIEW

In deciding a question of law upon certification from another court under Appellate Rule 407(a), we must "stand in the shoes of the certifying court," yet exercise our independent judgment.⁸ A certified question necessarily involves determinative questions of Alaska law for which there is no controlling precedent.⁹ Therefore, we must select the rule of law that is most persuasive in light of precedent, reason, and policy.¹⁰

IV. DISCUSSION

A. The First Certified Question

The first certified question asks whether, considering the slight difference between the language of section .822 and CERCLA, a person or entity must own, possess, have "authority to control," or have a "duty to dispose of" a hazardous substance in order to be susceptible to "arranger liability" under AS 46.03.822(a)(4). The meaning of this provision is a question of first impression.

CERCLA imposes strict liability on:

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, and...¹¹ from which there is a release, or a threatened release which causes the incurrence of response costs, of a hazardous substance[.]¹²

By contrast, AS 46.03.822(a)(4) imposes strict liability on:

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[.]

(Emphasis added.)

Both parties acknowledge that CERCLA is the source of section .822's so-called "arranger liability" provision, but they differ on how closely section .822's meaning was meant to track that of CERCLA. While 42 U.S.C. § 9607(a)(3) and AS 46.03.822(a)(4) contain nearly identical wording, the Ninth Circuit has noted a small but potentially pivotal difference between the two provisions. Alaska's legislature added the word "or" to section .822 before "by any other party or entity."

The parties devoted much of their briefing to debating the significance of this difference. Maytag argues that the missing "or" in CERCLA is merely the result of sloppy drafting, and should be read into the provision by common sense. As the words of the two provisions are nearly identical, Maytag urges us to interpret subsection .822(a)(4) as imposing the same thing as subsection 9607(a)(3): strict liability for anyone who arranged for disposal or treatment of a hazardous substance that he owned or possessed. By arguing that the arranger liability provisions of CERCLA and section .822 are worded essentially identically, Maytag implies that federal CERCLA case law should be strong persuasive authority as to the interpretation of section .822's arranger liability. Maytag then points to federal cases that it believes would not support arranger liability here.

The Bergs argue that federal law is essentially different from state law because of their linguistic dissimilarities, and that Alaska's statute is broader than CERCLA, creating arranger liability for "any person who... arranged ... for ... treatment of hazardous substances, owned or possessed by the person ... or by any other party or entity. . . ." (Emphasis added.) The Bergs contend that federal cases are of little help in interpreting section .822.

While federal case law interpreting a federal statute does not control our decision in interpreting a state statute, the Alaska legislature intended that CERCLA be...