United States v. Dico, Inc.
| Decision Date | 29 December 2016 |
| Docket Number | 4:10–cv–00503 |
| Parties | UNITED STATES of America, Plaintiff, v. DICO, INC. and Titan Tire Corporation, Defendants. |
| Court | U.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, Plaintiff.
Michael F. Iasparro, Hinshaw & Culbertson LLP, Rockford, IL, Sergio Enrique Acosta, Thomas D. Lupo, Joel David Bertocchi, Hinshaw & Culbertson LLP, Chicago, IL, Mark McCormick, Stephen H. Locher, Belin McCormick, P.C., Des Moines, IA, for Defendants.
Before the Court are two motions seeking partial summary judgment filed by Dico, Inc. ("Dico") and Titan Tire Corporation ("Titan Tire") (collectively "Defendants") on May 16, 2016. Clerk's Nos. 235, 236. The United States of America ("Plaintiff" or the "Government") responded to both motions on June 13, 2016. Clerk's Nos. 251, 252. Defendants replied on June 28, 2016. Clerk's Nos. 256–1, 256–2, 259. With leave of the Court, the Government filed a surreply addressing both motions. Clerk's No. 264.
Also before the Court is a motion to exclude certain issues from trial on remand filed by the Government on June 1, 2016. Clerk's Nos. 246, 246–1. Defendants responded on July 8, 2016. Clerk's No. 267. The Government replied on July 18, 2016. Clerk's No. 272.
The matters are fully submitted.
This case stems from the sale of several buildings by Dico, through its corporate affiliate Titan Tire, to Southern Iowa Mechanical ("SIM"). United States v. Dico, Inc. , 808 F.3d 342, 345 (8th Cir. 2015). In March 1994, many years prior to the sale in question, the Environmental Protection Agency ("EPA") discovered the presence of hazardous Polychlorinated Biphenyls (PCBs) in adhesive contained in the insulation of Buildings 2, 3, 4, and 5 as well as the Maintenance building on land owned by Dico 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), the EPA issued an administrative order ("the EPA Order") requiring Dico to remove some PCB contamination and encapsulate all the remaining insulation in the buildings to prevent the further release of PCBs into the environment. Dico , 808 F.3d at 345.
The EPA 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 an operation and maintenance plan addressing "the actions necessary to ensure the protectiveness and integrity of the removal action," including necessary maintenance of all interior surface sealing and insulation encapsulation on the buildings. Id. at 352. The same paragraph also required Dico to complete "appropriate reporting, including, at a minimum, submittal of a written report on an annual basis." Id. In addition to these maintenance and reporting requirements, the EPA Order required Dico to communicate with the EPA under specified circumstances. Id. at 353. Specifically, 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.
In 2007, Titan Tire entered into three transactions with SIM on behalf of Dico involving buildings that were subject to the EPA Order, including one transaction for the disassembly and removal of the Maintenance Building, one transaction for the purchase of the western portion of Building 3, and one transaction for the purchase of Buildings 4 and 5 and the northern portion of the Production Building. Id. at 345. After purchasing the buildings, each of which was subject to the EPA Order with the exception of the northern portion of the Production Building, SIM dismantled them and disposed of all the materials used to construct them other than the steel beams they contained, which SIM relocated to a storage site in Ottumwa, Iowa ("the SIM site"). Id. at 346.
In September 2007, the EPA observed that most of these buildings had been dismantled and learned of the sale for the first time. Id. The EPA subsequently traced the steel beams to the SIM site, where it discovered PCBs in insulation still attached to the beams and in soil in the area. Id. The EPA was able to determine that the beams came from buildings Dico had sold to SIM. Id. However, the EPA had no means of precisely tracing the origin of the PCBs discovered at the SIM site and could not confirm whether the beams came from the Dico buildings subject to the EPA Order. Id.1 Following unsuccessful negotiations to reach an administrative settlement with Defendants regarding the cleanup of the SIM site, the EPA issued a new order directing Dico to work with an environmental contractor to retrieve the insulation removed from the Dico buildings from the SIM site and dispose of it. See id. ; Clerk's No. 128 at 12; see also Clerk's No. 239–39. 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 under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C. § 9601 et seq. Clerk's No. 1. In the complaint, the Government alleged that Defendants violated 42 U.S.C. § 9607(a) by arranging for the disposal of a hazardous substance by entering into the transactions that resulted in the dismantling of buildings subject to the EPA Order. Id. at 1–2, 8, 11–12. In connection with 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. The Government also alleged that Dico violated 42 U.S.C. § 9606(b)(1) by violating the terms and conditions of the EPA Order governing the buildings subject thereto. Id. at 9–10, 12–14. In connection with the latter allegation, the Government made two distinct claims, including one seeking civil penalties and one seeking punitive damages based on the costs it incurred in responding to the release or threatened release of PCBs at the SIM site in reliance on 42 U.S.C. § 9607(c)(3). Id. at 12–14.
In August 2012, the Court heard oral argument on three pending motions for partial summary judgment filed by the Government, including a motion for partial summary judgment on arranger liability, a motion for partial summary judgment as to Dico's liability for civil penalties and punitive damages, and a motion for partial summary judgment on the recoverability of the Government's response costs related to the SIM site removal action. See Clerk's Nos. 79, 98; see also Clerk's Nos. 61, 62, 63, 68, 69, 70, 74, 75, 78. With the Court's permission, both parties submitted supplemental briefing on the motions following the hearing. See Clerk's Nos. 94, 95, 96, 122, 123, 125–1, 127; see also Clerk's Nos. 98, 126.
Thereafter, the Court entered two separate orders on the three pending motions for partial summary judgment. Clerk's Nos. 119, 128. On September 24, 2012, the Court granted partial summary judgment to the Government on the arranger liability claim, concluding Defendants intentionally arranged for the disposal of PCBs by selling the PCB-contaminated buildings to SIM. Clerk's No. 119 at 14–40. On March 6, 2013, the Court also granted partial summary judgment to the Government on the question of whether Dico violated the EPA Order. Clerk's No. 128 at 37, 39, 43. Specifically, the Court concluded that Dico violated paragraph 31 of the order by arranging for the demolition of the buildings subject thereto. Clerk's No. 128 at 37. The Court also concluded that Dico violated paragraph 59 of the order by failing to immediately notify the EPA of the resulting change in conditions at the Dico site because demolishing the regulated buildings necessarily resulted in the release of PCBs. Id. at 39. Because the Court determined that Dico lacked sufficient cause to violate the order, it concluded Dico may be liable for both civil penalties and punitive damages. Id. at 30–31, 40–42. In light of its prior ruling on arranger liability, the Court also ruled that Defendants were liable for all response costs the Government had incurred or would incur "as a result of 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." Id.
In December 2013, the Court held a bench trial on the appropriate civil penalties and punitive damages to be assessed against Dico based on its violation of the EPA Order. Clerk's No. 198 at 2; see Clerk's Nos. 192, 193, 194. On February 24, 2014, the Court issued an order on the bench trial directing the entry of judgment against Defendants jointly and severally for $1,477,787.73 in response costs already incurred and reported in connection with the SIM site on the arranger liability claim as well as the entry of judgment against Dico for $1,620,000.00 in civil penalties ($10,000.00 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 based on its violation of the EPA Order. Clerk's No. 198 at 14, 28–31. The latter award was equivalent to the total response costs the EPA had already incurred and reported in connection with the SIM site. Clerk's No. 198 at 30. In the same order, the Court held the Government was entitled to the entry of a declaratory judgment against Defendants "holding them liable for all response...
To continue reading
Request your trial