Gopher Oil Co. v. Union Oil Co. of California

• Decision Date: 20 November 1990
• Docket Number: Civ. No. 4-88-16.
• Citation: 757 F. Supp. 988
• Parties: GOPHER OIL COMPANY, INC., a Minnesota corporation, Plaintiff, v. UNION OIL COMPANY OF CALIFORNIA, a California corporation, Defendant.
• Court: U.S. District Court — District of Minnesota

757 F. Supp. 988

GOPHER OIL COMPANY, INC., a Minnesota corporation, Plaintiff, v. UNION OIL COMPANY OF CALIFORNIA, a California corporation, Defendant.

Civ. No. 4-88-16.

United States District Court, D. Minnesota, Fourth Division.

October 12, 1990.

Judgment Vacated November 23, 1990.

Judgment Order November 20, 1990.

Lawrence C. Brown, Delmar R. Ehrich, Brian Boru O'Neill, Paul M. Vaaler, Faegre & Benson, Minneapolis, Minn., for plaintiff.

Joe A. Walters, Corey John Ayling, O'Connor & Hannan, Minneapolis, Minn., for defendant.

ORDER

Filed Oct. 12, 1990.

DOTY, District Judge.

This matter came on for trial before a jury on June 25, 1990, and was tried through July 11, 1990. At the conclusion of the trial the jury returned a Special Verdict which read:

We, the jury in the above entitled action, return the following answers to the questions of fact presented to us.

PART I—MISREPRESENTATION

1. Before plaintiff Gopher Oil purchased the site, did defendant Union Oil misrepresent material facts to Gopher Oil about the condition of the site?

Yes

If your answer to Question No. 1 is "Yes," answer Question No. 2. If your answer to Question No. 1 is "No," do not answer any of the remaining questions in part I; rather proceed directly to question No. 8.

2. Did plaintiff Gopher Oil know, or by the exercise of reasonable care should it have known, before January 11, 1982, that defendant Union Oil misrepresented facts about the condition of the site?

No

If your answer to Question No. 2 is "No," answer Question No. 3. If your answer to Question No. 2 is "Yes," do not answer any of the remaining questions in part I, rather, proceed directly to question No. 8.

3. When defendant Union Oil misrepresented facts to plaintiff Gopher Oil, did Union Oil know those facts were false or assert those facts without knowing whether they were true or false?

Yes

If your answer to Question No. 3 is "Yes," answer Question No. 4. If your answer to Question No. 3 is "No," do not answer any of the remaining questions in part I; rather, proceed directly to question No. 8.

4. Did plaintiff Gopher Oil rely on defendant Union Oil's misrepresentation about the condition of the site?

Yes

If your answer to Question No. 4 is "Yes," answer Question No. 5. If your answer to Question No. 4 is "No," do not answer any of the remaining questions in part I; rather, proceed directly to question No. 8.

5. Did defendant Union Oil make the misrepresentation about the condition of the site (1) with the intent to induce plaintiff Gopher Oil to act in reliance upon it, or (2) was plaintiff Gopher Oil justified in relying on defendant Union Oil's misrepresentation about the condition of the site? If you find either (1) or (2) is true, your answer to Question No. 5 is "Yes," if you find neither (1) nor (2) is true, your answer to Question No. 5 is "No."

Yes

If your answer to Question No. 5 is "Yes," answer Question No. 6. If your answer to Question No. 5 is "No," do not answer any of the remaining questions in part I; rather, proceed directly to question No. 8.

6. Did defendant Union Oil's misrepresentations about the condition of the site directly cause plaintiff Gopher Oil to suffer damages:

Yes

If your answer to Question No. 6 is "Yes," answer Question No. 7. If your answer to Question No. 6 is "No," do not answer any of the remaining questions in part I; rather, proceed directly to question No. 8.

7. What amount of money will fairly compensate plaintiff Gopher Oil for the damages it suffered as a direct result of defendant Union Oil's misrepresentation regarding the condition of the site?

$1,823,272.81

PART II—CLEAN-UP RESPONSIBILITY

8. As part of its purchase of the Thornton Avenue site in 1980, did Gopher Oil Company agree to assume the risk of environmental clean-up obligations and to hold W.H. Barber (Union Oil) Company harmless for the cost of any such clean-up?

No

Please answer Question No. 9.

9. Taking all of the responsibility for response costs to be incurred in the future to be 100%, what percentage of responsibility for those response costs do you attribute to:

                          0% Gopher Oil
                        100% Union Oil
                          0% Barber Oil
                        ____
                        100%
                

After the jury returned the verdict both parties submitted proposed Findings of Fact and Conclusions of Law and defendant submitted motions for summary judgment and a new trial.

I. CERCLA AND MERLA

A. FINDINGS OF FACT

For Gopher Oil's CERCLA and MERLA claims, the court makes the following findings of fact:

1. The Site

Gopher Oil Company, Inc. ("Gopher Oil") is the owner of a five acre site located at 825 Thornton Avenue Southeast, Minneapolis, Minnesota ("site"). The site is extensively contaminated with oil and industrial chemicals.

From the early 1900's to 1980, W.H. Barber Company ("W.H. Barber") and its predecessors owned and operated a bulk oil and chemical facility located at the site. It included a dock for loading and unloading tanker trucks and railroad tank cars carrying petroleum products, chiefly lubricants such as motor oils and hydraulic fluids, and industrial chemicals. It also had stationary "tank farms" located throughout the site for storage of those products. W.H. Barber blended oil and chemicals into finished products and repackaged them into small containers ranging from 55-gallon barrels to one-quart cans at the site. In 1955, Pure Oil Company acquired W.H. Barber which became a wholly-owned subsidiary of Pure Oil Company. In 1965, Pure Oil Company merged with the Union Oil Company of California ("Union Oil"). In connection with the merger, W.H. Barber became a wholly-owned subsidiary of Union Oil.

2. Union Oil's W.H. Barber Operation

Union Oil operated the W.H. Barber operation as part of its Eastern Marketing Region of the Union 76 Division. W.H. Barber was part of a larger department known as "Subsidiary Sales." This department comprised six organizations that operated in markets other than retail or commercial sales of Union 76 products. Union Oil management did not treat the W.H. Barber "subsidiary" any differently from the other organizations in the same department.

Union Oil management exercised control over W.H. Barber's operations. Union Oil retained title over products it sent to W.H. Barber. It required W.H. Barber to blend and package products to Union Oil specifications. Union Oil also controlled sales of W.H. Barber's finished products. At times, Union Oil ordered W.H. Barber to stop selling certain oil products so that those sales could be transferred to another Union Oil operation in St. Paul, Minnesota. Union Oil also unilaterally reassigned W.H. Barber personnel to the Union Oil operation in St. Paul.

Union Oil hired, fired and promoted W.H. Barber personnel, sometimes against the wishes of W.H. Barber management. Union Oil set pay grades and job classifications consistent with Union Oil policy. Personnel at the W.H. Barber facility were paid by Union Oil rather than W.H. Barber. Union Oil also approved employee terminations.

Union Oil required W.H. Barber to package Union 76 brand lubricants on a break-even cost basis. Union Oil paid W.H. Barber a packaging fee. Union Oil determined the fee by reference to per-unit costs plus freight charges for comparable packaging at Union Oil's Cincinnati, Ohio, packaging facility.

Union Oil monitored environmental safety and compliance at all Union Oil facilities, including W.H. Barber. No distinctions were made between W.H. Barber and other operations directly owned and operated by Union Oil. W.H. Barber was required to report any environmental concerns to Union Oil.

Union Oil also required W.H. Barber to report any potential environmental violations. This requirement covered spills and leaks of chemicals or oil at the facility.

Union Oil assisted W.H. Barber in complying with environmental regulations and standards. Union Oil prepared a Spill Prevention Countermeasures and Control Plan for the site as required under the Federal Clean Water Act. The Plan lists Union Oil, not W.H. Barber, as the owner of the site.

The general managers of W.H. Barber from 1965 to 1980, made no significant business decisions without approval from a Union Oil manager of subsidiary sales in Schaumberg, Illinois. Final decisions rested with a Union Oil sales manager in Schaumberg rather than the head of W.H. Barber's operations in Minneapolis. Former workers at the site considered themselves employees of Union Oil.

3. Union Oil's AMSCO Operation

The site included an operation of the American Mineral Spirits Company ("AMSCO"), which was a directly owned and operated division of Union Oil. AMSCO stored, blended and packaged industrial chemicals into 55-gallon drums and smaller containers. The AMSCO operation spanned the period from 1965 to 1980. Union Oil's AMSCO division maintained an office on the site as well as a sales manager, and sales marketing, accounting and operations personnel.

W.H. Barber and AMSCO shared the facilities at the site, although use of one facility for blending and repackaging industrial chemicals belonged almost exclusively to AMSCO. This facility was known as the "gas house." As a matter of operating convenience, employees who worked on AMSCO products in the "gas house" technically remained W.H. Barber employees but did only AMSCO work and were supervised by AMSCO managers. That arrangement was in place before and after the merger between Pure Oil Company and Union Oil in 1965.

Certain storage tanks at one of the facility's "tank farms" were also set aside for AMSCO chemical products. Significantly, AMSCO retained title to the products stored at the "chemical tank farm" set aside for AMSCO products. Union Oil also retained title to products sent to the W.H. Barber operation for processing.

AMSCO paid for its use of the facility through a packaging fee charged on its products. AMSCO also paid the employees it used, as well as a percentage of the facility overhead such as utilities, taxes...