US v. Shaffer Equipment Co., Civ. A. No. 5:90-1195.

• Decision Date: 17 June 1992
• Docket Number: Civ. A. No. 5:90-1195.
• Court: U.S. District Court — Southern District of West Virginia
• Parties: UNITED STATES of America, Plaintiff, v. SHAFFER EQUIPMENT COMPANY, Anna Shaffer, Berwind Land Company, Berwind Corporation and Johns Hopkins University, Defendants.

796 F. Supp. 938

UNITED STATES of America, Plaintiff, v. SHAFFER EQUIPMENT COMPANY, Anna Shaffer, Berwind Land Company, Berwind Corporation and Johns Hopkins University, Defendants.

Civ. A. No. 5:90-1195.

United States District Court, S.D. West Virginia, at Beckley.

June 17, 1992.

Richard B. Stewart, Asst. Atty. Gen., Environment and Natural Resources Div., J. Jared Snyder, Atty., Environmental Enforcement Section, Environment & Natural Resources Div., U.S. Dept. of Justice, Washington, D.C., and Carol A. Casto, Asst. U.S. Atty., Charleston, W.Va., for plaintiff.

Johnnie E. Brown, Cynthia M. Salmons, McQueen Law Offices, L.C., and Anthony P. Tokarz, Bowles, Rice, McDavid, Graff & Love, Charleston, W.Va., for Shaffer Equipment Co., Inc. and Anna Shaffer.

John H. Tinney, Carl L. Fletcher, Jr., Spilman, Thomas, Battle & Klostermeyer, for Berwind Land Co. and Berwind Corp.

Robert A. Lockhart, and Robert G. McLusky, Jackson & Kelly, Charleston, W.Va., for Johns Hopkins University.

MEMORANDUM OPINION AND ORDER

HALLANAN, District Judge.

On April 28 and 29, 1992 came counsel for the parties for a hearing on several pending motions. After noting appearances, the Court granted Plaintiff's Motion to Strike the Jury Demand of Defendants Anna Shaffer and Shaffer Equipment Company, granted Plaintiff's Motion to Dismiss the Third Counterclaim of Defendants Anna Shaffer and Shaffer Equipment Company and denied Plaintiff's Emergency Motion to Exclude Testimony of Defendant's Expert at this hearing. The Court also received evidence concerning Defendants' Motions for Sanctions, Costs and Discipline of Counsel and Defendants' Joint Motion for Dismissal of Action for Bad Faith Misconduct of Counsel and took these motions under advisement.¹ Lastly, the Court heard oral argument on Defendants' Motion to Dismiss, or Alternatively Strike the Administrative Record and Grant De Novo Review. This motion was taken under advisement as well. Having carefully considered the papers, exhibits, declarations and affidavits presented as well as the testimony from the hearing, the Court is prepared to issue its rulings herein on Defendants' motions to (1) dismiss for bad faith misconduct, (2) for sanctions and costs and (3) to strike the administrative record and grant de novo review.

I. Background

In response to a complaint, an inspector for the West Virginia Department of Natural Resources ("DNR") obtained soil samples in September 1984 from property owned by Shaffer Equipment Company ("SEC") on which it operated a mining equipment supply and repair shop. Analysis of the soil samples showed contamination by polychlorinated biphenyls ("PCBs"). SEC conducted its operations on a 1.11 acre parcel in Minden, Fayette County, West Virginia ("parcel"). DNR sought the assistance of the United States Environmental Protection Agency ("EPA") in dealing with the contamination. Thereafter EPA mobilized its contractors and personnel in December 1984 to begin a cleanup of PCBs on and around the parcel. Upon fencing in and securing the parcel, EPA began to remove the contaminated soil. EPA segregated the PCB contaminated soil and transported the soil to a landfill in Emille, Alabama for disposal. EPA also transported PCB contaminated equipment from the parcel. The agency completed the removal of PCBs on December 20, 1987.

During the cleanup, EPA's On-Scene Coordinator Robert E. Caron supervised the implementation of a soil washing technology designed to decontaminate the soil. This soil washing technology, commonly known and referred to in these proceedings as the "solvent extraction method," was implemented on site and involved the use of methanol as a medium for extracting PCBs from contaminated soil. In theory, the solvent extraction method would alleviate the need to transport soil to a landfill for disposal. Caron arranged for O.H. Materials, Inc. to construct a full-scale treatment plant on the parcel to implement the solvent extraction method. The plant began operations in October 1985 but was immediately unsuccessful. On November 21, 1985, Caron ordered that the plant cease operations and that O.H. Materials, Inc. disassemble the plant and remove it from the parcel.

On December 19, 1990, the United States of America ("United States") commenced this action to recover its response costs incurred pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq ("CERCLA"). The United States, through EPA, spent in excess of $5 million to cleanup the parcel — $4.022 million for general cleanup and $1.235 million for its activity relating to implementing the solvent extraction method. The Defendants answered the complaint and asserted a host of counterclaims and cross-claims. The parties then engaged in discovery throughout the 1991 calendar year. On December 18, 1991, the Court entered a Time Frame Order requiring the parties to file their summary judgment motions, responses and replies during the period of January 17, 1992 to February 7, 1992. The December 18 Time Frame Order also scheduled this case for trial on March 24, 1992.

The parties timely filed their summary judgment motions. Then on January 31, 1992, Assistant United States Attorney Carol A. Casto filed a motion on behalf of the United States to stay this matter for a period of 60 days. The motion and accompanying letter bear the signature of AUSA Casto. The accompanying letter reads as follows:

Dear Judge Hallanan:

A serious problem has arisen with regard to the testimony of a material EPA witness in the above-referenced action. The United States Attorney's office has been advised that an investigation has been commenced by the appropriate governmental authorities. As a result of the pendency of those investigations and information provided to the United States by counsel for the defendants the United States is unable to proceed in good faith with the litigation of this action until further inquiry is made. We are, therefore, filing the attached Motion for a Stay of all proceedings in this action and respectfully request that the Court allow us a period of sixty days to evaluate this case in light of this information.

Very truly yours MICHAEL W. CAREY United States Attorney By: /s/ CAROL A. CASTO Assistant United States Attorney

(emphasis added).

By Order entered February 3, 1992, the Court directed the Defendants to respond to motion for stay on or before February 6, 1992. Upon receiving Defendants' responses, the Court on February 13, 1992 granted the motion to stay in part. The February 13 Order advised the parties that the case would be stayed for a period of 30 days instead of the 60 days requested, as the Court believed that "the United States is well equipped to conduct their investigation in a diligent manner." The same order also directed the United States to advise the Court in writing by March 13, 1992 — the end of the stay — as to whether it will continue to prosecute this case. Further, the February 13 Order vacated the Time Frame Order entered December 18, 1991 and continued the March 24, 1992 trial date. Meanwhile, in February the Defendants filed motions to dismiss or, in the alternative, strike the administrative record and grant de novo review. In addition, the Defendants except Johns Hopkins filed their motions for sanctions and costs on March 10 and 11, 1992.²

On March 13, 1992 — the final day of the stay — the United States advised the Court in its "Report of the Plaintiff United States of America" of its desire to continue litigating this matter. Five days later on March 18 the Defendants jointly filed their motion to dismiss for bad faith misconduct.³ Later on April 14, 1992, the Court convened a status conference with lead trial counsel pursuant to an Order entered on April 9, 1992.⁴ At the conclusion of the status conference, the Court granted the United States' motion for dismissal of Defendant Berwind Corporation as a defending party⁵ and advised lead trial counsel that the Court would convene an evidentiary hearing on the motions to dismiss for bad faith misconduct and for sanctions and costs. On April 16, 1992, the Court entered an Order scheduling the evidentiary hearing for April 28, 1992 and established pretrial deadlines and a trial date of June 30, 1992.

The evidentiary hearing lasted for two days. Aside from several rulings on other pending motions,⁶ the hearing largely consisted of direct and cross-examination of counsel in this matter. Finding the allegations and statements contained in the motions to be serious and grave, the Court believed and still believes that the credibility of counsel is at issue and that an evidentiary hearing was the proper means for the Court to ascertain the truth of what transpired in this litigation from September 1991 and January 1992. For these reasons, the Court overruled the objection and denied the request of the United States at the hearing to dispense with the presentation of evidence and have this Court rely on the voluminous record herein in making its rulings.⁷

Central to the motions to dismiss for bad faith misconduct, for sanctions and costs, and to strike the administrative record and grant de novo review is EPA On Scene Coordinator Robert E. Caron. Caron is the "material EPA witness" referred to in AUSA Casto's letter dated January 31, 1992 which accompanied the motion for stay. In general, the Defendants contend that Caron is a perjurer and complete fraud, that the administrative record compiled at his direction is inherently untrustworthy and that counsel for the United States concealed Caron's true colors from this Court and the defending parties while relying on his actions as On-Scene Coordinator in prosecuting this CERCLA cost recovery action. The United States acknowledges that Caron is less than credible, as will be shown below, but vigorously maintains that it was not aware of the Caron's misrepresentations until mid-January 1992 and...