United States v. Dico, Inc.

Decision Date05 September 2017
Docket Number4:10–cv–00503
Citation265 F.Supp.3d 902
Parties UNITED STATES of America, Plaintiff, v. DICO, INC. and Titan Tire Corporation, Defendants.
CourtU.S. District Court — Southern District of Iowa

Elizabeth L. Loeb, Eric C. Albert, Sara C. Colangelo, Steven D. Shermer, Zachary Nathaniel Moor, U.S. Department of Justice–Environment & Natural Resources Environmental Enforcement Section, Washington, DC, Robyn E. Hanson, United States Department of Justice, ENRD, Denver, CO, for Plaintiff.

Michael F. Iasparro, Hinshaw & Culbertson LLP, Rockford, IL, Sergio Enrique Acosta, Thomas D. Lupo, Joel David Bertocchi, Pro Hac Vice, Hinshaw & Culbertson LLP, Chicago, IL, Mark McCormick, Stephen H. Locher, Belin Mccormick, P.C., Des Moines, IA, Defendants.

ORDER ON BENCH TRIAL

ROBERT W. PRATT, Judge

The United States of America (the "Government") filed this action against Dico, Inc. ("Dico") and its corporate affiliate Titan Tire Corporation ("Titan Tire") (collectively "Defendants") under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C. § 9601 et seq. Clerk's No. 1. After awarding summary judgment to the Government as to each of its claims, the Court held a bench trial on civil penalties and punitive damages from December 2 through December 5, 2013.

On appeal, the United States Court of Appeals for the Eighth Circuit affirmed in part and reversed in part the prior rulings of this Court, remanding the case for a trial on the merits on certain issues with respect to which it concluded genuine disputes as to material facts precluded summary judgment. On remand, the Court held a bench trial on the merits as to those issues from April 3 through April 6, 2017. The parties submitted proposed findings of fact and conclusions of law on May 5, 2017. Clerk's Nos. 347, 348. The case is fully submitted.

I. PROCEDURAL HISTORY

This action concerns the sale of several buildings by Dico through Titan Tire to Southern Iowa Mechanical, L.L.C. ("SIM"). United States v. Dico, Inc. , 808 F.3d 342, 345 (8th Cir. 2015). In March 1994, years prior to this sale, the presence of hazardous polychlorinated biphenyls ("PCBs") was discovered in several buildings on property owned by Dico located in Des Moines, Iowa ("the Dico site"). Id. Relying on its authority to issue "such orders as may be necessary to protect public health and welfare and the environment" under 42 U.S.C. § 9606(a) of CERCLA, the Environmental Protection Agency ("EPA") initiated a removal action and issued a unilateral administrative order ("the 1994 Order") that required Dico to address the contamination by, among other things, repairing and encapsulating all the remaining insulation in the buildings to prevent the further release of PCBs into the environment. Dico , 808 F.3d at 345.

The 1994 Order imposed continuing obligations on Dico concerning the affected buildings. Id. at 352–53. In particular, paragraph 31 of the order required Dico to submit and implement an operation and maintenance plan addressing "the actions necessary to ensure the protectiveness and integrity of the removal action," including the maintenance of all interior surface sealing and the encapsulation of all building insulation, and to complete "appropriate reporting, including, at a minimum, submittal of a written report on an annual basis." Id. at 352. And paragraph 59 of the order required Dico to "immediately take all appropriate action" and "immediately notify" the EPA should any "change in site conditions" cause or threaten to cause the further release of hazardous substances. Id. at 353.

In 2007, Titan Tire entered into three transactions with SIM on behalf of Dico involving several buildings, each of which was subject to the 1994 Order with the exception of the northern end of a building known as the Production Building. Id. at 345–46. After purchasing the buildings, SIM dismantled them and disposed of the materials used to construct them other than the steel beams they contained, which were relocated to its property in Ottumwa, Iowa ("the SIM site"). Id. at 346.

In September 2007, the EPA learned that buildings subject to the 1994 Order had been dismantled and sold. Id. The EPA subsequently traced the steel beams to the SIM site and discovered PCBs in insulation still attached to the beams and in the surrounding soil. Id. Negotiations to reach an administrative settlement regarding the cleanup of the SIM site ensued but were ultimately unsuccessful, and the EPA initiated a removal action at the SIM site, issuing a new unilateral administrative order requiring Dico and Titan Tire to work with an environmental contractor to retrieve and dispose of insulation there ("the 2008 Order"). Ex. 80; see also Clerk's No. 128 at 12. As a result, more than four tons of insulation were removed from the SIM site, the testing of which revealed the presence of PCBs. Dico , 808 F.3d at 346.

In October 2010, the Government filed this suit against Dico and Titan Tire, alleging two distinct violations of CERCLA. Clerk's No. 1. First, the Government alleged Defendants violated 42 U.S.C. § 9607(a) by arranging for the disposal of a hazardous substance by means of the sales that led to the dismantling of buildings subject to the 1994 Order. Id. at 1–2, 8, 11–12. In relation to this "arranger liability" claim, the Government sought to recover all past and future response costs it incurred in connection with response actions pertaining to the SIM site pursuant to 42 U.S.C. § 9604. Id. at 11–12, 14. Next, the Government alleged Dico violated 42 U.S.C. § 9606(b)(1) by violating the terms and conditions of the 1994 Order. Id. at 9–10, 12–14. In relation to this allegation, the Government sought civil penalties and punitive damages pursuant 42 U.S.C. § 9607(c)(3) based on the costs it had incurred in responding to the release or threatened release of PCBs at the SIM site. Id. at 12–14.

In August 2012, the Court heard oral argument on motions filed by the Government seeking partial summary judgment with respect to Defendants' liability for arranging for the disposal of a hazardous substance, Dico's liability for civil penalties and punitive damages, and the recoverability of the Government's response costs related to the SIM site removal action. See Clerk's Nos. 79, 93, 97, 98. Following the hearing and extensive briefing by the parties, the Court entered two separate orders on the three pending motions. Clerk's Nos. 119, 128; see also Clerk's Nos. 61, 62, 63, 68, 69, 70, 74, 75, 78, 94, 95, 96, 122, 123, 124–1, 127.

First, on September 24, 2012, the Court granted partial summary judgment to the Government on its arranger liability claim, concluding Defendants had intentionally arranged for the disposal of PCBs by selling the PCB-contaminated buildings to SIM. Clerk's No. 119 at 14–40. Months later, on March 6, 2013, the Court granted partial summary judgment to the Government on the question of whether Dico had violated the 1994 Order, concluding Dico necessarily did so by arranging for the demolition of the buildings subject thereto and by failing to immediately notify the EPA of the resulting change in conditions at the Dico site. Clerk's No. 128 at 37, 39, 43. The Court further concluded Dico could be held liable for both civil penalties and punitive damages because it lacked sufficient cause to violate the order. Id. at 30–31, 40–42. Pursuant to its ruling on arranger liability, the Court ruled Defendants were liable for all response costs the Government had incurred or would incur resulting from the SIM site removal action. Id. at 43. But the Court concluded a bench trial was necessary to determine "the amount, if any, of civil penalties and/or punitive damages to be assessed" against Dico based on its violations of the 1994 Order. Id.

The Court held the bench trial on civil penalties and punitive damages on December 2 through December 5, 2013. Clerk's No. 198 at 2; see Clerk's Nos. 192, 193, 194. Following the trial, the Court issued an order directing the entry of a judgment holding Defendants jointly and severally liable for $1,477,787.73 in response costs already incurred and reported in connection with the SIM site on the arranger liability claim and holding Dico liable for $1,620,000.00 in civil penalties ($10,000 per day for each of the 162 days during which the disassembly of the buildings took place) and $1,477,787.73 in punitive damages (an amount equivalent to the total response costs the EPA had already incurred and reported in connection with the SIM site) based on its violations of the 1994 Order. Clerk's No. 198 at 14, 28–31. The Court further ordered the entry of a declaration stating Defendants would be liable for unreported and future response costs incurred in connection with the SIM site removal action and ordered the Government be allowed to recover its costs incurred in this action. Id. at 30–31.

On appeal, the Court of Appeals reversed and vacated the grant of summary judgment to the Government on the question of arranger liability and vacated this Court's order with respect to response costs "specifically associated with" its finding on that issue. Dico , 808 F.3d at 351. But the Court of Appeals affirmed the grant of summary judgment to the Government on the question of whether Dico had violated the 1994 Order, concluding Dico had necessarily violated paragraphs 31 and 59 of the order by permitting the disassembly of buildings subject thereto and by failing to notify the EPA of the resulting change in conditions at the Dico site. Id. at 352–54, 355. Notwithstanding that affirmance, though the Court of Appeals affirmed the associated award of civil penalties to the Government, it vacated the punitive damages awarded based on the response costs the Government had incurred in connection with the SIM site. Id. In reversing that award, the Court of Appeals emphasized that the conduct amounting to violations of the 1994 Order violations established at...

To continue reading

Request your trial
2 cases
  • U.S. v. Dico, Inc.
    • United States
    • U.S. Court of Appeals — Eighth Circuit
    • April 11, 2019
    ...v. Dico, Inc ., 808 F.3d 342, 354–355 (8th Cir. 2015).On remand, the district court conducted a bench trial. United States v. Dico, Inc. , 265 F.Supp.3d 902, 906 (S.D. Iowa 2017). It found that Dico and Titan arranged to dispose of a hazardous substance in violation of the CERCLA, and held ......
  • United States v. Dico, Inc., 17-3462
    • United States
    • U.S. Court of Appeals — Eighth Circuit
    • April 11, 2019
    ...Dico, Inc., 808 F.3d 342, 354-355 (8th Cir. 2015). On remand, the district court conducted a bench trial. United States v. Dico, Inc., 265 F. Supp. 3d 902, 906 (S.D. Iowa 2017). It found that Dico and Titan arranged to dispose of a hazardous substance in violation of the CERCLA, and held th......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT