New York v. Solvent Chemical Co., Inc.

• Decision Date: 22 July 2002
• Docket Number: No. 83-CV-1401C.,83-CV-1401C.
• Parties: The State of NEW YORK, Plaintiff, v. SOLVENT CHEMICAL COMPANY, INC., ICC Industries, Inc., Defendants.
• Court: U.S. District Court — Western District of New York

218 F.Supp.2d 319

The State of NEW YORK, Plaintiff, v. SOLVENT CHEMICAL COMPANY, INC., ICC Industries, Inc., Defendants.

No. 83-CV-1401C.

United States District Court, W.D. New York.

July 22, 2002.

COPYRIGHT MATERIAL OMITTED

Jaeckle, Fleischmann & Mugel, LLP, (Dennis P. Harkawik, and Brenda J. Joyce, of counsel), Buffalo, NY, for Solvent Chemical Company, Inc.

O'Brien & White, P.C., (Mark A. White, of counsel), Boston, MA, for Recochem and Joseph Kuchar.

INTRODUCTION

CURTIN, District Judge.

Presently before the court are six motions related to a third-party action brought pursuant to the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9601, et seq. Third-Party Plaintiff Solvent Chemical Company, Inc. ("Solvent") has moved for summary judgment seeking liability under CERCLA against third-party defendants Recochem, Inc., and Joseph Kuchar, individually (collectively "Recochem" or "defendants"). Item 996. Recochem and Kuchar, in turn, have filed a cross-motion for summary judgment against Solvent, Item 1013; a motion to strike the affidavit of Solvent's expert, Dr. E. Bruce Nauman, Item 1016; a motion to strike Dr. Nauman's Report and Testimony, Item 1017; a motion to strike the affidavit of Brenda Joyce, Esq., one of the attorneys for Solvent, Item 1019; and a motion for sanctions, Item 1022.

Oral argument on these motions took place on January 16, 2002. For the reasons that follow, Solvent's motion for summary judgment is denied; Recochem and Kuchar's cross-motion for summary judgment is denied; and Recochem and Kuchar's motions to strike (a) the affidavit of Dr. Nauman, (b) the Report and testimony of Dr. Nauman, and (c) the Joyce affidavit, are denied. In addition, defendants' motion for sanctions is denied.

BACKGROUND

In 1983, the State of New York (the "State") brought an action against, inter alia, Solvent pursuant to Section 107(a) of CERCLA, 42 U.S.C. § 9607(a), "seeking recovery of costs incurred and to be incurred, and other relief, in responding to the release or threatened release of hazardous substances at or in connection with the property located at and near 3163 Buffalo Avenue, Niagara Falls, New York...." Item 1000, Ex. 3, p. 2. In December 1996, the State issued a Record of Decision ("ROD") identifying a number of hazardous substances in the soil and ground water at the Buffalo Avenue site (the "site") and calling for specific remedial activities to be undertaken there. Item 1000, Ex. 1. Among the contaminants identified in the ROD were various dicholorobenzenes¹. Id., pp. 10-11. Several of the dicholorobenzenes are listed as hazardous substances pursuant to § 101(14) of CERCLA, 42 U.S.C. § 9601(14). Item 1000, Ex. 2.

In April 1997, Solvent and the State entered into a Consent Decree, in which Solvent agreed to implement the remedy set forth in the ROD. Item 1000, Ex. 3. The Consent Decree was approved by this court on October 8, 1997. Item 655. It reserved Solvent's right to seek contribution against other non-settling parties. Item 1000, Ex. 3, ¶ 47. It also provided that the remedial actions to be undertaken to clean up the site should be conducted in compliance with applicable provisions of CERCLA and the National Contingency Plan, 40 C.F.R. Part 300. Item 1000, ¶ 6.

Solvent then proceeded to file third-party actions seeking, inter alia, statutory contribution under CERCLA against other alleged owners, operators, transporters, and those who arranged for disposal at the site. It asserts that it has already incurred over $4.4 million in response costs at the site, and anticipates that it will incur over $20 million in total response costs. Id., ¶¶ 6, 7. At oral argument, Solvent's counsel stated that remediation of the site is complete, at a cost of $5.3 million dollars so far.

On April 3, 1998, in its Fifth-Amended Third-Party Complaint, Solvent impleaded Record Chemical² and Joseph Kuchar, as third-party defendants, seeking contribution from each of them under CERCLA for a share of the response costs Solvent has and will incur at the site. Item 1000, Ex. 4. The Complaint charged Recochem and Kuchar, and a number of other "Chlorinated Benzene Waste Generators" with selling/providing Chlorinated Benzene Waste materials to Solvent which could not be used unless they were further processed. Id., ¶¶ 142, 144. Solvent charged that by providing this material to Solvent, the Chlorinated Benzene Waste Generators "arranged for the disposal of and/or treatment of the ... Chlorinated Benzene Wastes and any hazardous substances contained therein." Id., ¶ 143. Further, Solvent claimed that if the generators had not provided these wastes to Solvent, "they would have had to otherwise treat or dispose of them." Id., ¶ 145. In their answer, Recochem and Kuchar raised as an affirmative defense that the sale of the chlorinated benzene material to Solvent constituted sale of a "valuable and useful produc[t]" rather than an "arrange[ment] for `disposal'" pursuant to CERCLA. Item 1000, Ex. 5, p. 19.

The cross-motions for summary judgment primarily concern whether the sales of chlorinated benzene material by Recochem to Solvent were arrangements for treatment or disposal under CERCLA — which would be an element of CERCLA liability — or sales of a useful product — which would obviate CERCLA liability.

FACTS

Many of the facts in this case are undisputed. However, the parties contest how those facts are characterized. Solvent relies on documentary evidence and testimony in support of its motion, while the Recochem defendants rely solely on deposition testimony and affidavits, without document backup. Counsel for Recochem states that the company "did not save documents from 25 years ago." Item 1068, p. 8.

From 1973 until 1977, Solvent operated a chemical manufacturing facility at the 3163 Buffalo Avenue site. Item 1000, Ex. 1, p. 1. Its "principal products of manufacture were various technical and refined grades of chlorinated benzenes and zinc chloride solution." Item 998, ¶ 9. In 1974, Solvent President Bertram White described Solvent's operations as

process[ing] impure Paradichlorobenzene and purify[ing] same by crystallization, then we proceed to solidify the end product and grind and screen same for shipment.

Our end product is equivalent to that of every basic manufacturer but we do not produce the raw material which originates from a reaction of Chlorine and Benzene and then a distillation procedure.

Item 1049, Ex. F. Solvent characterized its "niche" as "purchas[ing] off-specification or low-purity chlorinated benzene material from other manufacturers and distill[ing] or otherwise re-work[ing] this off-specification material to make it into one of the recognized saleable grades of chlorinated benzene." Item 998, ¶ 10; Muzyka Dep., Item 1000, Ex. 8, p. 28. Once Solvent processed the material, the residues and impurities removed during the reprocessing were disposed off-site. Id., pp. 39, 155, 185.

1. The Production Process

As explained by Solvent's expert, Dr. E. Bruce Nauman, chlorobenzenes "are formed by the reaction of chlorine with benzene." Item 997, ¶ 12. The transactions between Solvent and Recochem involved three isomeric forms of dichlorobenzenes: 1,2-dichlorobenzene ("ortho-dichlorobenzene"); 1,3-dichlorobenzene ("meta-dichlorobenzene"); and 1,4-dichlorobenzene ("para-dichlorobenzene"). Obtained during the benzene chlorination process, the three dichlorobenzenes have "different properties, markets and prices." Id., ¶ 13. In a typical benzene chlorination process, para-dichlorobenzenes ("para") would constitute approximately 40 percent of the mixed dichlorobenzenes produced, and ortho-dichlorobenzenes ("ortho") would constitute approximately 60 percent of the mixed dichlorobenzenes produced. Meta-dichlorobenzene ("meta") would constitute less than 1 percent of the mixed dichlorobenzenes produced. Id., ¶¶ 14-16. According to Dr. Nauman, para is the ingredient of mothballs and can be used as a chemical intermediate; ortho is used as a solvent, disinfectant, and chemical intermediate. Meta has "no significant markets and is not recovered as a purified material in a typical benzene chlorination process." Id., ¶ 16.

Utilizing a process flow diagram as well as the testimony of Recochem employees, Dr. Nauman described Recochem's production process as consisting of

a two-step process to treat a feed stream of mixed dichlorobenzenes. In the first step, para-dichlorobenzene was crystallized as relatively pure product. There was a liquid residue, commonly called `mother liquor' that results from the crystallization....

The second step ... was distillation of the mother liquor from the first step. The purpose of this distillation was not to separate the various dichlorobenzenes but instead was to remove tars and other high boiling impurities. The overhead product from the distillation column was nominally ortho-dichlorobenzene, but in fact contained whatever quantities of para- and meta-dichlorobenzene were in the mother liquor.

Item 997, ¶¶ 22, 23.³

Recochem "processed and sold chlorinated benzene products...." Item 1014, p. 4. Its major objective was to purify para, although it also "sold various grades of Orthodichlorobenzene" which varied from 50 percent to 80 percent pure. Carmichael Dep., Item 1000, Ex. 12, p. 21. Recochem's "normal target" of ortho purity was 70 percent, id., p. 82, although it had markets for lower percentage ortho products. According to Ralph Carmichael, Vice President of Recochem, "the majority of the sales [of ortho] would have been in a range of sixty (60) to probably seventy, seventy-five (70-75) [percent], that was what our unit was capable of producing on a regular basis." Id., pp. 22-23. He noted that "in the degreaser, carbon removal, solvent application, [certain companies] did not have any very strict specifications of Ortho quality, Ortho percentage. All they really wanted was a clean liquid product...