Emhart Indus. v. New Eng. Container Co.
| Decision Date | 27 October 2022 |
| Docket Number | C.A. 11-023 WES,C. A. 06-218 WES |
| Court | U.S. District Court — District of Rhode Island |
| Parties | EMHART INDUSTRIES, INC., Plaintiff and Counterclaim Defendant, v. NEW ENGLAND CONTAINER COMPANY, INC., et al., Defendants and Counterclaim Plaintiffs. EMHART INDUSTRIES, INC., Plaintiff and Counterclaim Defendant, v. UNITED STATES DEPARTMENT OF THE AIR FORCE, et al., Defendants, Counterclaim Plaintiffs, and Third-Party Plaintiffs, v. BLACK & DECKER, INC., et al., Third-Party Defendants. |
I. Introduction
Having trudged through several phases of litigation and been found liable for contamination at the Centredale Manor Restoration Project Superfund Site, Emhart now hopes to recover some response costs as contribution from those it argues are also responsible. To do so, it leans on Section 113 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”), see United States v. Atl. Rsch. Corp., 551 U.S. 128, 131, 139 (2007), under which Emhart must prove as follows: (1) the party falls within one of the four categories of covered persons; (2) there was a release or threatened release of a hazardous substance from a facility; (3) the release or threatened release caused the incurrence of response costs and (4) the response costs track the national contingency plan, Dedham Water Co. v. Cumberland Farms Dairy 889 F.2d 1146, 1150 (1st Cir. 1989) (citing 42 U.S.C. § 9607(a)).
Emhart's targets - the Third-Party Defendants and Cross Defendants[1]- resist this result, taking aim at Emhart's claim that they are covered persons. The Court allowed these Defendants to move early,[2] before the bulk of expert discovery, on the limited question[3] of whether there is a triable issue as to arranger liability. From this came thirteen Motions for Summary Judgment from fourteen Defendants, ECF Nos. 890, 893, 894, 896, 898, 900, 902, 904, 905, 908, 910, 912, 914. As stated in the Court's September 22, 2022, Text Order, the Court DENIES all, with two caveats: both Henkel Corporation and BASF Corporation (only as it relates to Paragon) may refile their Motions, ECF Nos. 905, 914, following expert discovery. The reasons for the Court's rulings follow. II. Analysis
These Defendants are tied to this saga because they sent used 55-gallon steel drums to New England Container Company (“NECC”) for drum reconditioning between about 1948 and 1972. Emhart Statement Additional Facts (“Emhart Stat.”) ¶¶ 134-135, ECF No. 944; Emhart Resp. Defs.' Common Facts ( ) ¶ 4-5, ECF No. 945. To attach liability, Emhart argues these customers were arrangers because they intended to dispose of residual hazardous substances at the Site. Because Emhart did not move for summary judgment, it need not prove Organic Dyestuffs Corporation, The Original Bradford Soap Works, Inc., Sequa Corporation, Teknor Apex Company, and Union Oil Company of California. They move together. See Defs.' Mot. Summ. J. 2 n.1, ECF No. 890. this now; instead, the familiar summary judgment standard applies, testing for triable issues and requiring the Court to draw all reasonable inferences in Emhart's favor. See Air-Con, Inc. v. Daikin Applied Latin Am., LLC, 21 F.4th 168, 175 (1st Cir. 2021).
These Motions concern whether Defendants were “arrangers,” meaning they “entered into [a sale] with the intention that at least a portion of the product be disposed of during the transfer process.” Burlington N. & Santa Fe Ry. Co. v. United States, 556 U.S. 599, 612 (2009). An arranger “arranges for disposal or treatment . . . of hazardous substances.” 42 U.S.C. § 9607(a)(3) (cleaned up). “Disposal” is “the discharge, deposit, injection, dumping, spilling, leaking, or placing of any solid waste or hazardous waste into or on any land or water so that such solid waste or hazardous waste or any constituent thereof may enter the environment or be emitted into the air or discharged into any waters, including ground waters.” Id. § 6903(3).
Burlington Northern is the seminal case on arranger liability. There, the Supreme Court confirmed that liability attaches where entities “enter into a transaction for the sole purpose of discarding a used and no longer useful hazardous substance” but does not attach “merely for selling a new and useful product if the purchaser of that product later, and unbeknownst to the seller, disposed of the product in a way that led to contamination.” 556 U.S. at 610.
The trickier cases are those landing along this spectrum of liability - these were the subject of Burlington Northern. “[C]ases in which the seller has some knowledge of the buyers' planned disposal or whose motives for the ‘sale' of a hazardous substance are less than clear” require a fact-intensive, case-specific analysis. Id.; see also Consolidation Coal Co. v. Ga. Power Co., 781 F.3d 129, 147 (4th Cir. 2015) () (internal quotation marks omitted).
In Burlington Northern, the Court held that Shell, which shipped pesticides and other chemicals before switching to bulk sales and requiring its purchasers to maintain bulk storage facilities, was not an arranger. 556 U.S. at 612. It reasoned that Shell did not “enter into the sale with the intention that at least a portion of the product be disposed of during the transfer process by one or more of the methods described in the statute.” Id. (cleaned up). Evidence supported that Shell was aware of “minor, accidental spills” but did not “intend such spills to occur.” Id. at 612-13 (cleaned up). And “[w]hile it is true that in some instances an entity's knowledge that its product will be leaked, spilled, dumped, or otherwise discarded may provide evidence of the entity's intent to dispose of its hazardous wastes, knowledge alone is insufficient to prove that an entity ‘planned for' the disposal, particularly when the disposal occurs as a peripheral result of the legitimate sale of an unused, useful product.” Id. at 612 (emphasis added). To be an arranger, Shell must have sold the chemicals “with the intention that at least a portion of the product be disposed of during the transfer process by one or more of the methods” defined as disposal.[4] Id. (emphasis added). Shell, however, “took numerous steps to encourage its distributors to reduce the likelihood of such spills.” Id. at 613. Thus, “Shell's mere knowledge that spills and leaks continued to occur” provided “insufficient grounds” for arranger liability to attach. Id. And so, the Court held that it did not.
In Burlington Northern's wake, courts have tried to gauge where offending parties land on the spectrum of liability. The analyses vary depending on the facts, but always focus on whether the offenders took intentional steps toward disposal.[5] See id. at 611. From those courts' analyses, we can glean the following:
First, a party may be liable as an arranger even absent an agreement expressly contracting for disposal if it understood disposal “would be the result of its actions and took the conscious and intentional step of leaving [the disposer] to dispose of the materials.” United States v. Gen. Elec. Co., 670 F.3d 377, 391 (1st Cir. 2012) (). Thus, Defendants' plaint that “Emhart has not produced a single contract or agreement for the disposal of hazardous substances at the Site” is not dispositive. Mem. L. Supp. Defs.' Mot. Summ. J. 9, ECF No. 890-1.
Second, actual (not constructive) intent is required, see Gen. Elec., 670 F.3d at 390, and courts rely on circumstantial evidence of the totality of the circumstances to find arranger liability when direct evidence is lacking, see, e.g., id. at 394 (); United States v. Cello-Foil Prods., Inc., 100 F.3d 1227, 1233 (6th Cir. 1996) (same); see also Niagara Mohawk Power Corp. v. Chevron U.S.A., Inc., 596 F.3d 112, 120 (2d Cir. 2010) (quoting Franklin Cnty. Convention Facilities Auth. v. Am. Premier Underwriters, Inc., 240 F.3d 534, 547 (6th Cir. 2001)) (“When determining CERCLA liability, there is nothing objectionable in basing findings solely on circumstantial evidence, especially where the passage of time has made direct evidence difficult or impossible to obtain.”) (internal quotation marks omitted). For this reason, Defendants' insinuation that circumstantial evidence is somehow second-class to direct evidence and cannot raise a triable issue is off the mark.
Third, control over the method of contamination is unnecessary. Distilled to its essence, arranger liability wants “to deter and, if necessary, to sanction parties seeking to evade liability by ‘contracting away' responsibility.” Gen. Elec., 670 F.3d at 382. This purpose would be defeated if Defendants' exposure ended once the drums left their control, as they suggest. See Cello-Foil, 100 F.3d at 1232 ().
Fourth - and most consequential to these Motions - disposal need not be the only purpose of the transaction; instead, it may be one among several. Emhart emphasizes that “[a]ll that is required for arranger liability to attach is that disposal be an intended purpose of a transaction; it need not be the sole or even primary purpose of the transaction.” Emhart's Opp'n Defs.' Mot. Summ. J (“Opp'n”) 9, ECF No. 943. Defendant...
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