Cyprus Amax Minerals Co. v. TCI Pac. Commc'ns, LLC

• Citation: 28 F.4th 996
• Decision Date: 07 March 2022
• Docket Number: No. 21-5038,21-5038
• Parties: CYPRUS AMAX MINERALS COMPANY, Plaintiff - Appellee, v. TCI PACIFIC COMMUNICATIONS, LLC, previously named as TCI Pacific Communications, Inc., Defendant - Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

28 F.4th 996

CYPRUS AMAX MINERALS COMPANY, Plaintiff - Appellee,

v.TCI PACIFIC COMMUNICATIONS, LLC, previously named as TCI Pacific Communications, Inc., Defendant - Appellant.

No. 21-5038

United States Court of Appeals, Tenth Circuit.

FILED March 7, 2022

Paul D. Steinman, Cozen O'Connor, Pittsburgh, Pennsylvania, and Paula M. Jantzen, Ryan Whaley, Oklahoma City, Oklahoma (Mark D. Coldiron, Ryan Whaley, Oklahoma City, Oklahoma, with them on the briefs), argued for the Appellant.

John F. Stoviak, Saul Ewing Arnstein & Lehr LLP, Philadelphia, Pennsylvania (Michael F. Smith and Timothy J. Bomhoff, McAfee & Taft, P.C., Tulsa, Oklahoma; Cathleen M. Devlin and Patrick F. Nugent, Saul Ewing Arnstein & Lehr LLP, Philadelphia, Pennsylvania, with him on the brief), argued for the Appellee.

Before CARSON, BRISCOE, and ROSSMAN, Circuit Judges.

BRISCOE, Circuit Judge.

TCI Pacific Communications, LLC ("TCI") appeals the district court's judgment holding it liable to Cyprus Amax Minerals Co. ("Cyprus") for contribution under 42 U.S.C. §§ 9601(9)(B), 9607(a), and 9613(f) of the Comprehensive Environmental Response and Liability Act ("CERCLA"). The district court granted partial summary judgment to Cyprus and pierced the corporate veil to hold TCI's corporate predecessor, the New Jersey Zinc Company ("NJZ"), liable as the alter ego of the Tulsa Fuel & Manufacturing Co. ("TFMC"). The district court then interpreted CERCLA and held that TCI was liable as a former owner/operator of a CERCLA "facility." The district court had jurisdiction under 28 U.S.C. § 1331 and 42 U.S.C. § 9613(b). This court has jurisdiction under 28 U.S.C. § 1291, and we affirm.

This case involves CERCLA claims brought by Cyprus to determine whether TCI can be held liable for environmental cleanup costs relating to zinc smelting operations near Collinsville, Oklahoma. The Bartlesville Zinc Company, a former subsidiary of Cyprus's predecessor, operated the Bartlesville Zinc Smelter (the "BZ Smelter") from 1911 to 1918, near Collinsville, Oklahoma. TFMC owned and operated another zinc smelter (the "TFM Smelter") from 1911 to 1926. The smelters were located approximately one-quarter mile from each other, just south of Collinsville, Oklahoma. This case does not concern cleanup work at either smelter, but rather is an action by Cyprus seeking cost recovery and contribution for its remediation in the broader Collinsville area, within the Collinsville Soil Program ("CSP") Study Area (the geographic area designated in Figure 1, below). Cyprus seeks to hold TCI liable as a former owner or operator of the TFM Smelter whose waste came to be located throughout the CSP Study Area. The district court ruled for Cyprus, concluding that hazardous substances came to be located at both smelter sites and off-site within the CSP Study Area and that the entire area should be treated as a single facility for the purposes of Cyprus's CERCLA cost recovery and contribution claims.

Figure 1 shows the CSP Study Area and the location of the two smelters in relation to each other and to Collinsville, and Figure 2 shows a closer view of the two smelters, the BZ Smelter to the east and the TFM Smelter, nearly adjacent, to the west. See App. Vol. 56 at 3.

Figure 1

Figure 2

I

The parties do not dispute the general historical facts. In 1906, L.T. McRae, C.A.H. de Saulles, J.T. Price, A.D. Terrell, and G.C. Stebbins incorporated TFMC under the laws of Kansas. McRae and de Saulles were also affiliated with another company NJZ had acquired four years previously. At the time of its incorporation, TFMC had $50,000 in startup capital. It filed annual statements with the State of Kansas every year between its startup and dissolution. At least some of the annual statements were signed and notarized in New York, where NJZ had its corporate offices. TFMC also had a registered agent for service of process and litigated in its own name. The annual statements indicated that TFMC elected officers and had a Board of Directors, and that individuals affiliated with NJZ (but not NJZ itself) owned TFMC's stock. There is evidence of only one TFMC shareholder's meeting, in 1912. At that time, de Saulles was president of TFMC, owned 495 out of TFMC's 500 shares, and sold real property to the company for $1.00. Edgar Palmer replaced de Saulles as TFMC's president in 1912 and served as TFMC's president until its dissolution in 1926. Palmer owned the vast majority of TFMC's stock from at least 1912 to 1926. He was also president of NJZ. Until 1914, TFMC reported up to $586,226 in debt in its annual statements. From 1915 until dissolution, TFMC reported no debt. TFMC's annual statements indicated it made a profit each year of its existence, but its capital account remained at $50,000.

In a 1918 issue of Zinc magazine (an internal NJZ newsletter), NJZ's vice president J.E. Hayes discussed NJZ's structure in relation to its subsidiaries. Hayes stated that NJZ's subsidiaries were part of a bigger entity with a single management system, noting that it was necessary to form subsidiaries to operate in some states, but that "the parent company and its lines of organization and routines carry through all the subsidiaries." App. Vol. 17 at 97.

Also in 1918, NJZ made a "War Work" report to the Federal Trade Commission stating that "all material is charged at cost as it passes into the next department." Palmer, then president of both NJZ and TFMC, averred to the War Industries Board that "[a]s the owner of the stock of its subsidiary companies [NJZ] controls their operations, the purchase of all materials and the sale of all products," specifically identifying TFMC as a wholly owned subsidiary of NJZ. Id.

In 1921, NJZ filed an informal complaint with the Interstate Commerce Commission ("ICC") relating to freight charges. In 1922, TFMC filed a formal complaint with the ICC relating to the same dispute. A statute of limitations issue arose, which boiled down to whether NJZ, acting as the agent of TFMC, could file an informal complaint on TFMC's behalf. If the filing by NJZ could be considered as a filing by TFMC, the filing would be timely.

At a hearing before the ICC on May 9, 1923, NJZ put on evidence that it filed the informal complaint on TFMC's behalf and, more generally, that NJZ could act on behalf of its subsidiaries in any matter. C.H. George, General Traffic Manager of both NJZ and TFMC, testified by reading a prepared statement that the "entire capital stock [of TFMC] is owned by [NJZ]" and that NJZ owned the stock of all subsidiary companies. Id. at 95. George further testified that NJZ "possesses consequent to that absolute ownership, complete control of all the affairs of its subsidiaries ... and in fact and in actual practice does exercise complete control in the general conduct of its and their business, and it acts as agent for and in behalf of its subsidiaries." Id. George went further still, testifying that "lines of authority of [NJZ's] personnel extend to all companies, so that its executives and their staff function without regard to corporate lines of division." Id. NJZ claimed that its officers acted in the same positions for NJZ and its subsidiaries. NJZ introduced organizational charts showing that TFMC was a subset of NJZ's manufacturing department. It also introduced a written statement by George that he was authorized to act for TFMC both as general traffic manager of TFMC and "as general traffic manager of [NJZ] through the authority of the latter to act for the former." Id. at 96. In supplemental briefing, NJZ doubled down, arguing that it "owns all the capital stock of its subsidiary companies ... and, consequent to such absolute ownership, possesses complete control of all the affairs of its subsidiaries, and in fact and in actual practice does exercise such complete control in the general conduct of its and their business, and it acts as agent for and in behalf of its subsidiaries." Id.

The ICC apparently agreed with NJZ's representations, stating: "We are of opinion that the informal filing [by NJZ] was, in fact, on complainant's [TFMC's] behalf. The record shows that C.H. George, who signed the informal complaint, was also general traffic manager for complainant, with authority to bring complaints before us for and on behalf of complainant." Tulsa Fuel & Mfg. Co. v. Director General, As Agent, Atchison, Topeka & Santa Fe Ry. Co. , 98 I.C.C. 411, 413 (1925). The ICC concluded that TFMC was entitled to reparation in the amount of $2,234.97 plus interest.

In 1922, NJZ's president, vice president, general counsel, comptroller, treasurer, general sales manager of ore, and purchasing agent all held the same positions within TFMC. When TFMC was dissolved in 1926, its real property was sold to the Tulsa County Coal Company. NJZ (not individuals affiliated with NJZ) received a $500,000 liquidation dividend as a result of the sale.

TFMC operated the TFM Smelter. Both the TFM and BZ smelters generated many kinds of solid waste, such as broken and spent retorts and condensers, used refractory brick from furnace linings, and retort residue containing coked reducing coal. Residents of the area used byproduct from the TFM Smelter and the BZ Smelter for various residential and construction projects, a common practice at the time. By this means, smelter waste containing a mixture of metals, including zinc, cadmium, lead, arsenic, and sulfur made its way into the soil of the greater Collinsville area, and the waste from the two smelters is indistinguishable. In other words, hazardous material in any given part of the CSP Study Area could have come from either smelter.

In the early 1990s, the Oklahoma Department of Environmental Quality ("ODEQ") began investigating the BZ Smelter, eventually issuing a report noting the BZ Smelter's proximity to the TFM Smelter and that it was impossible to determine which smelter was responsible for any given contamination. After identifying Cyprus as a potentially responsible party, ODEQ and...