Trinity Indus., Inc. v. Greenlease Holding Co.
| Decision Date | 11 September 2018 |
| Docket Number | Nos. 16-1994,16-2244,s. 16-1994 |
| Citation | 903 F.3d 333 |
| Parties | TRINITY INDUSTRIES, INC.; Trinity Industries Railcar Corporation, Appellants in No. 16-2244 v. GREENLEASE HOLDING COMPANY; Ampco-Pittsburgh Corporation Greenlease Holding Company, Appellant in No. 16-1994 |
| Court | U.S. Court of Appeals — Third Circuit |
Steven F. Baicker-McKee [ARGUED], Mark K. Dausch, Marc J. Felezzola, Babst Calland, 603 Stanwix Street, Two Gateway Center, 6th Floor, Pittsburgh, PA 15222, Counsel for Greenlease Holding Co.
Frederick W. Addison, III, Nolan C. Knight [ARGUED], Munsch Hardt Kopf Harr & Dinan, 3800 Lincoln Plaza, 500 North Akard Street, Dallas, TX 75201, Counsel for Trinity Industries, Inc. and Trinity Industries Railcar Corp.
Paul D. Steinman [ARGUED], Jessica S. Thompson, Eckert Seamans Cherin & Mellott, 600 Grant Street, 44th Floor, Pittsburgh, PA 15219, Counsel Ampco-Pittsburgh Corp.
Before: CHAGARES, JORDAN, and HARDIMAN, Circuit Judges.
OPINION OF THE COURT
This is a dispute about the proper allocation of costs to remediate a contaminated manufacturing site in Greenville, Pennsylvania. From 1910 until 1986, Greenlease Holding Co. ("Greenlease"),1 a subsidiary of the Ampco-Pittsburgh Corporation ("Ampco"), owned the site and operated railcar manufacturing facilities there. Trinity Industries, Inc. and its wholly-owned subsidiary, Trinity Industries Railcar Co. (together referred to as "Trinity"), acquired the site from Greenlease in 1986 and continued to manufacture railcars there until 2000. An investigation by the Commonwealth of Pennsylvania into Trinity's waste disposal activities resulted in a criminal prosecution and eventual plea-bargained consent decree which required, in relevant part, that Trinity remediate the contaminated land. That effort cost Trinity nearly $9 million.
This appeal arises out of the District Court's determination that, under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq. , ("CERCLA"), and Pennsylvania's Hazardous Sites Cleanup Act, 35 Pa. Stat. § 6020.101 et seq ., ("HSCA"), Trinity is entitled to contribution from Greenlease for remediation costs. After eight years of litigation, and having sorted through a century of historical records, the District Court allocated 62% of the total cleanup costs to Greenlease and the remainder to Trinity. The parties filed cross-appeals challenging a number of the District Court's rulings, including its ultimate allocation of cleanup costs. For the reasons that follow, we will affirm the District Court's pre-trial rulings on dispositive motions; we will vacate its cost allocation determination; and we will remand for further proceedings consistent with this opinion.
The site in question, known by the parties as the "North Plant," is a tract of land that was used as a manufacturing site by a succession of companies. Greenlease and Trinity also, at different times, operated facilities on a nearby tract of land called the "South Plant," though that property does not figure prominently in this appeal. Over time, the footprint of the North Plant grew from eleven to thirty-four acres. That industrial development, as well as the many years of manufacturing activity that occurred there, resulted in multiple releases of hazardous materials —primarily lead—into the ground.
From at least 1898 until sometime before Greenlease's acquisition of the North Plant in 1910, Shelby Steel Tube Company owned and operated a steel tube factory on eleven acres of land that is now part of the North Plant. Over the course of its ownership, Shelby Steel deposited historic fill as it was constructing its manufacturing facilities. According to the District Court, "[h]istoric fill is ‘a soil mixed with various non-native materials, including construction demolition debris, concrete, asphalt, or it could be industrial materials such as slag or ash.’ " (App. at 186.) Unfortunately, historic fill often contains lead and other contaminants.
Greenlease began its manufacturing activities at the North Plant soon after acquiring the property. Between 1911 and 1922, it significantly expanded the North Plant to support its growing business of building and repairing railcars. During that expansion, Greenlease used historic fill in the foundations supporting the new structures and rail lines. Operations at the North Plant included two shops to paint the railcars, and Greenlease used a variety of toxic chemicals and lead paint during the painting process, without doing anything meaningful to collect or contain the runoff.
In 1983, Ampco acquired Greenlease,3 but their relationship predated that acquisition. They had had three overlapping board members since 1979 and continued to do so until 1986. Other than those three shared board members and one shared officer, no other persons were employees of both Ampco and Greenlease. Greenlease employees alone "were responsible for all day-to-day operations at the North Plant, including any waste disposal, waste handling,painting, abrasive blasting, welding, and fabrication operations." (App. at 81-82.) Those employees coordinated disposal with outside contractors and communicated with the Pennsylvania Department of Environmental Protection ("PADEP") on environmental matters. Indeed, Ampco "did not employ any engineers or persons with technical experience in manufacturing that could make decisions for [Greenlease] with respect to environmental compliance or waste management." (App. at 82.) Instead, "Ampco employed only a professional staff, such as accountants, actuaries, and lawyers[.]" (App. at 82.) Ampco did provide Greenlease with advice regarding the laws and regulations related to Greenlease's waste generation, and Ampco monitored that waste generation.
The cooperation between parent and subsidiary was complete enough that Greenlease adopted a resolution declaring that any action taken by Ampco that it "may think necessary and desirable to take on behalf of [Greenlease] shall be deemed to be the action of [Greenlease's Board]." (App. at 72 (citation omitted).) Ampco also asserted the right to approve Greenlease's expenditures that exceeded a certain amount, though Greenlease was solely responsible for placing and paying any purchase orders. In addition, Ampco provided certain services to Greenlease to minimize costs, including overseeing a single retirement plan and providing centralized financial planning and master insurance policies.
In 1986, Ampco authorized the Greenlease board of directors to sell the North Plant to Trinity. The Purchase and Sale Agreement between Trinity and Greenlease (the "Agreement") included a clause declaring that Greenlease "makes no representation or warranty regarding compliance with the Environmental Protection Act, any other environmental laws or regulations or any hazardous waste laws or regulations (collectively, ‘Environmental Laws’)." (App. at 199.) Mutual indemnification provisions specific to environmental liabilities provided, in pertinent part:
[Greenlease] agrees to indemnify and hold harmless [Trinity] against Damages arising out of or related to violations of Environmental Laws, which were caused by [Greenlease] or its predecessors in title to the assets at the [North Plant] on or prior to the date of Closing. [Trinity] agrees to indemnify and hold harmless [Greenlease] against Damages arising out of or related to violations of Environmental Laws, which are caused by [Trinity] or its successors in title to the assets at the [North Plant] after the date of the Closing. It is the intention of the parties that liability under this Section for any condition that is caused by the acts of [Greenlease] or its predecessors in title to the assets prior to the date of the Closing and by the acts of [Trinity] or its successors in title to the assets after the date of Closing shall be allocated between the parties in a just manner taking into account degree of fault, period of violation and other relevant factors.
(App. at 61 (some alterations in original).) Those indemnities were stated to be effective for only three years after the closing of the property sale. The Agreement further provided that Trinity "has not assumed, and expressly denies assumption hereby of, any other liability, obligation or commitment of [Greenlease] other than as set forth above or otherwise expressly set forth herein." (App. at 60-61 (alteration in original).) Finally, a "[n]on-waiver of [r]emedies" clause in the Agreement provided that "[t]he rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies which the parties hereto may otherwise have at law or in equity." (App. at 62.)
Following the 1986 sale of the North Plant to Trinity, Greenlease continued to exist only as a "shell holding company without any [employees,] business activities, for profit activities, or other commercial undertakings[.]" (App. at 89.) Its assets decreased at the end of each year following the sale of the North Plant, from about $51 million in 1987 to $658,594 in 1990. In the third and fourth years following the sale of the North Plant to Trinity, Greenlease issued dividends to Ampco, leaving Greenlease with only a $250,000 reserve for liabilities. At that time, Greenlease had no known liabilities beyond the reserve. The executive vice president and chief administrative officer for Ampco, who was also an officer and director of Greenlease, stated that it was common for dividends to be made from a subsidiary to Ampco after an indemnification period ended. An environmental reserve was placed on Greenlease's books when Trinity sued Greenlease and Ampco.4
After purchasing the North Plant, Trinity continued the manufacture of railcars there. In one of the paint shops, it...
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