KFC Western, Inc. v. Meghrig, 92-56597

• Decision Date: 01 March 1995
• Docket Number: No. 92-56597,92-56597
• Citation: 49 F.3d 518
• Parties: , 63 USLW 2553, 25 Envtl. L. Rep. 20,638 KFC WESTERN, INC., Plaintiff-Appellant, v. Alan MEGHRIG; Margaret Meghrig, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 518

49 F.3d 518

40 ERC 1161, 63 USLW 2553, 25 Envtl.

L. Rep. 20,638

KFC WESTERN, INC., Plaintiff-Appellant, v. Alan MEGHRIG; Margaret Meghrig, Defendants-Appellees.

No. 92-56597.

United States Court of Appeals,

Ninth Circuit.

Argued and Submitted April 5, 1994.

Decided March 1, 1995.

Daniel Romano, Santa Monica, CA, for plaintiff-appellant.

John P. Zaimes, McClintock, Weston, Benshoof, Rochefort, Rubalcava & MacCuish, Los Angeles, CA, for defendants-appellees.

Appeal from the United States District Court for the Central District of California. Harry L. Hupp, District Judge, Presiding

Opinion by Judge Harry PREGERSON; Dissent by Judge BRUNETTI.

Before: BROWNING, PREGERSON, and BRUNETTI, Circuit Judges.

PREGERSON, Circuit Judge:

KFC Western, Inc. ("KFC") appeals the district court's dismissal of its action under the Resource Conservation and Recovery Act ("RCRA") to recover environmental clean-up costs from the prior owners of contaminated property sold to KFC. The district court dismissed KFC's action under Federal Rule of Civil Procedure 12(b)(6) because it concluded that RCRA Sec. 7002, codified at 42 U.S.C. Sec. 6972(a)(1)(B), does not authorize private plaintiffs to collect a restitutionary remedy. We have jurisdiction under 28 U.S.C. Sec. 1291. We reverse and remand.

BACKGROUND

In September 1975, Alan and Margaret Meghrig (the "Meghrigs") sold real property to KFC, which continues to own and operate a Kentucky Fried Chicken franchise on the property. Unbeknown to KFC, underground soil at the property was contaminated with elevated levels of refined petroleum products (lead and benzene) at the time of the sale. The contamination allegedly resulted from the Meghrigs' negligence in operating a gasoline station on the property. The Meghrigs never informed KFC about the contamination.

In October 1988, in the course of improving the property, KFC discovered the contaminated soil. The City of Los Angeles Department of Building and Safety issued a corrective notice ordering KFC to stop all construction on the property pending analysis of the soil and clearance from the County of Los Angeles Department of Health Services (the "DHS"). Analysts confirmed the presence of elevated levels of refined petroleum in the soil. Although KFC neither caused the contamination nor owned the property when the contamination occurred, the DHS ordered KFC to clean up the property. KFC spent over $211,000.00 to assess and remove the contaminated soil for off-site disposal. KFC completed the clean-up in 1989 and, in June 1990, asked the Meghrigs to reimburse the costs. The Meghrigs refused.

On May 29, 1992, KFC filed a complaint in district court against the Meghrigs under RCRA Sec. 7002, codified at 42 U.S.C. Sec. 6972(a)(1)(B), for restitution of the expended clean-up costs. The Meghrigs filed a Federal Rule of Civil Procedure 12(b)(6) motion to dismiss the complaint, offering two reasons why KFC's action did not come within the RCRA citizen suit provision: (1) there was no "imminent and substantial endangerment" because KFC had completed the clean-up three years before filing, and (2) RCRA authorized suits for injunctive relief only, not for damages. The district court granted the Meghrigs' motion and granted KFC leave to amend its complaint.

KFC filed an amended complaint which alleged that the contaminated soil, at the time of clean-up, presented an "imminent and substantial endangerment" to public health and the environment by threatening surrounding groundwater and potentially risking the health of people expected to use the property and the KFC franchise. RCRA Sec. 7002, codified at U.S.C. Sec. 6972(a)(1)(B). Also, KFC stated that its damages claim was actually a claim for "equitable restitution." Upon the Meghrigs' renewed motion, the district court dismissed the amended complaint. In its dismissal order, the district

court stated that 42 U.S.C. Sec. 6972(a)(1)(B) authorizes only injunctive or other equitable relief and only in cases involving an existing, imminent danger to public health or the environment. KFC appeals.

ANALYSIS

We review de novo a dismissal for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Oscar v. University Students Co-op. Ass'n, 965 F.2d 783, 785 (9th Cir.) (en banc ), cert. denied, --- U.S. ----, ----, 113 S.Ct. 655, 656, 121 L.Ed.2d 581 (1992). In reviewing such a dismissal, our review is limited to the contents of the complaint, Buckey v. County of Los Angeles, 968 F.2d 791, 794 (9th Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 599, 121 L.Ed.2d 536 (1992), and we must take as true all allegations of material fact and construe them in the light most favorable to the plaintiff, Oscar, 965 F.2d at 785.

This appeal presents us with a question of first impression--whether the RCRA citizen suit provision authorizes a private plaintiff to collect restitution of clean-up costs. The RCRA citizen suit provision provides:

[A]ny person may commence a civil action on his own behalf ... against any person ... including any ... past or present owner or operator of a treatment, storage, or disposal facility, who has contributed or who is contributing to the past or present handling, storage, treatment, transportation, or disposal of any solid or hazardous waste which may present an imminent and substantial endangerment to health or the environment[.]

. . . . .

The district court shall have jurisdiction ... to restrain any person who has contributed or who is contributing to the past or present handling, storage, treatment, transportation, of disposal or any solid or hazardous waste referred to in [Sec. 6972(a)(1)(B) (the endangerment provision) ] [and] to order such person to take such other action as may be necessary, or both....

RCRA Sec. 7002, codified at 42 U.S.C.A. Sec. 6972(a)(1)(B) and Sec. 6972(a) (West 1984 & Supp.1993) (emphasis added).

The parties dispute initially whether, for purposes of Sec. 6972(a)(1)(B), "imminent and substantial endangerment" must exist at the time the plaintiff files a complaint or may exist at the time of clean-up. The Meghrigs urge us to adopt the district court's reasoning that Sec. 6972(a)(1)(B) authorizes citizen suits only if contamination poses an imminent and substantial endangerment at the time the plaintiff files the complaint. Because KFC completed the clean-up of the property three years before commencing this lawsuit, the Meghrigs argue that KFC has no remedy under RCRA. The result urged by the Meghrigs is supported by certain comments in the legislative history that explain the meaning of the term "imminence." "Imminence in this section applies to the nature of the threat.... The section, therefore, may be used for events which took place at some time in the past but which continue to present a threat to the public health or the environment." Staff of House Subcommittee on Oversight and Investigation, Committee on Interstate and Foreign Commerce, 96th Cong., 1st Sess., Hazardous Waste Disposal 32 (Comm. Print 96-IFC 31, 1979) ("Eckhardt Report") (emphasis added). See Dague v. City of Burlington, 935 F.2d 1343, 1356 (2d Cir.1991) (finding an "imminent hazard" requires proof that a risk of harm is present), rev'd in part on other grounds, --- U.S. ----, 112 S.Ct. 2638, 120 L.Ed.2d 449 (1992); United States v. Price, 688 F.2d 204, 214 (3d Cir.1982) (noting that imminent danger existed at the time of the district court's hearing). ¹ Nonetheless, we agree with KFC that RCRA authorizes citizen suits with respect to contamination that in the past posed imminent and substantial danger. We choose to follow the Eighth Circuit's interpretation of RCRA Sec. 7003, codified at 42 U.S.C. Sec. 6973, which authorizes suits by the Administrator of the Environmental Protection Agency ("EPA"), and which is worded virtually identically to Sec. 6972(a)(1)(B). ² The Eighth Circuit reads the imminent endangerment requirement as "limit[ing] the reach of RCRA to sites where the potential for harm is great" but not as limiting the time for filing an action. United States v. Aceto Agric. Chemicals Corp., 872 F.2d 1373, 1383 (8th Cir.1989).

In Aceto Agric. Chemicals Corp., the Eighth Circuit, when it reversed a Federal Rule of Civil Procedure 12(b)(6) dismissal order, addressed and rejected the same arguments that the Meghrigs make here. The defendants in the Eighth Circuit case argued that because the plaintiff (EPA) cleaned up the site before bringing suit, the required "imminent and substantial endangerment" did not exist. The court concluded that the language of RCRA "does not require the EPA to file and prosecute its RCRA action while the endangerment exists." Id. The court explained that RCRA's purpose "is to 'give broad authority to the courts to grant all relief necessary to ensure complete protection of the public health and the environment. The limitation urged by defendants would defeat this purpose,' " would be an "absurd and unnecessary" requirement. Id. (citations to quoted material omitted).

We also agree with KFC that RCRA authorizes a restitutionary remedy under these circumstances. KFC's action to collect restitution of clean-up costs falls within the statutory allowance for district court orders that defendants take "such other action as may be necessary...." 42 U.S.C. Sec. 6972(a) ("The district court shall have jurisdiction ... to restrain any person who has contributed or who is contributing to [an imminent and substantial endangerment], to order such person to take such other action as may be necessary, or both....") (Emphasis added). We reject the Meghrigs' contention that the statute entitles citizens to obtain only an injunction or other equitable relief that is not the equivalent of compensatory money damages.

Because Congress intended that citizen suits be governed by the same standards of liability as governmental actions, ³ and because it worded the provisions almost identically, we choose to...