JAMES P. O'HARA, United States Magistrate Judge.
This is an environmental cleanup case brought pursuant to the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq. ("RCRA") and under a variety of state law theories of recovery. Highly summarized, Clean Harbors, Inc. and Clean Harbors Coffeyville, LLC (collectively "Clean Harbors") are suing CBS Corporation for damages arising from environmental contamination at a waste-management facility in Coffeyville, Kansas. Clean Harbors currently owns the facility; CBS's predecessors in interest used to own the facility. The case is now before the undersigned U.S. Magistrate Judge, James P. O'Hara,
Victor DeJong was an employee of Westinghouse, a predecessor in interest to CBS, from 1966 to 1979 and from 1984 to 1988. He worked for Aptus (a subsidiary of Westinghouse, which owned the Coffeyville facility) from 1988 to 1992. DeJong signed an affidavit on December 7, 2011, shortly before Clean Harbors filed its response to CBS's motion for summary judgment. Clean Harbors relies on DeJong's affidavit to oppose summary judgment and to support its piercing-the-corporate-veil theory of recovery. Because Clean Harbors did not disclose DeJong as a witness before discovery closed, CBS seeks to strike the affidavit and Clean Harbors's reliance on it in response to CBS's motion for summary judgment.
Federal discovery rules require parties to, "without awaiting a discovery request, provide to the other parties ... the name... of each individual likely to have discoverable information — along with the subjects of that information — that the disclosing party may use to support its claims or defenses, unless the use would be solely for impeachment."
The "exclusion of evidence presented out of time is `automatic and mandatory' unless the violation was either justified or harmless."
First, the court finds Clean Harbors could have discovered DeJong's identity, and that he may have had relevant information, months before December 2011. Clean Harbors simply had to review the documents it disclosed to CBS or the documents CBS disclosed to it. On August 31, 2011, Clean Harbors disclosed a letter to DeJong from the U.S. Environmental Protection Agency ("EPA"), regarding Kansas waste removal codes and an "Emergency Contingency Plan" for the facility. The plan listed DeJong as vice president and general manager of the facility.
Second, although the pretrial order allowed the parties to take depositions after discovery closed, this exception applied to only two expert witnesses and unopposed discovery, "so long as it does not delay the briefing of or ruling on dispositive motions or other pretrial preparations."
Third, Clean Harbors's reliance on Taylor v. St. Louis Southwestern Railway Co.
Clean Harbors also argues it timely disclosed DeJong as a witness because final witness lists are not due until twenty-one days before trial, and trial has not yet been scheduled. As noted above, the pretrial order does not authorize any party to shirk the mandatory disclosure requirements in Fed.R.Civ.P. 26(a) or (e). Clean Harbors argues Fed.R.Civ.P. 26(e) does not apply here because CBS knew of DeJong as early as November 8, 2011, if not earlier, and the duty to supplement initial
Fourth, Clean Harbors contends that its untimely disclosure of DeJong will not harm CBS because the trial date has not yet been set and because Clean Harbors will agree to let CBS depose DeJong before trial. The court disagrees. Allowing this new evidence at the summary judgment stage will prejudice CBS. It had no notice of Clean Harbors relying on DeJong as a witness until after CBS filed its motion for summary judgment. CBS did not depose DeJong during discovery and did not explore the matters covered in DeJong's affidavit because Clean Harbors had not identified him as a witness. As in Sinks, allowing CBS the opportunity to cure this prejudice would require reopening discovery, re-briefing the pending summary judgment motion, and possibly scheduling trial to begin on a later date than it otherwise would have.
Clean Harbors has not shown that its failure to disclose DeJong as a witness was substantially justified or harmless. The court therefore strikes the DeJong affidavit.
CBS seeks to strike from Clean Harbors's response any reference to or reliance on Clean Harbors's piercing-the-corporate-veil theory because Clean Harbors did not properly preserve the theory in the pretrial order. The pretrial order (doc. 90) controls the course of the action unless modified by the court in accordance with D. Kan. Rule 16.2(c).
In exercising this discretion, the
In opposition to the motion to strike, Clean Harbors argues (1) it reasonably identified the theory in the pretrial order, (2) it didn't need to designate piercing the corporate veil as a separate and independent theory of liability, and (3) CBS has known piercing the corporate veil is an issue in the case.
First, Clean Harbors relies on seven passages in the pretrial order to show it reasonably identified the piercing-the-corporate-veil theory.
The pretrial order nowhere mentions Clean Harbors's piercing-the-corporate-veil theory; it only alleges CBS's liability for the acts of its predecessors in interest. Liability as a successor in interest, however, is different than liability imposed by piercing the corporate veil. And to the extent the pretrial order more generally states CBS is responsible for the actions of its subsidiaries, this also does not fairly encompass Clean Harbors's piercing-the-corporate-veil theory. Unlike successor or vicarious liability, imposing liability by piercing the corporate veil is based on an abuse of the corporate form that justifies disregarding the protections of the corporation when "allowing the legal fiction of a separate corporate structure would result in injustice."
The pretrial order is extremely detailed in setting forth the facts and legal theories upon which Clean Harbors relies — it spans
Second, Clean Harbors argues the pretrial order didn't have to specifically mention the piercing-the-corporate-veil theory because it is not a stand-alone claim for recovery, but is "embraced within and inherent in the legal and factual issues listed in the pretrial order."
Clean Harbors's piercing-the-corporate-veil theory, however, is different. Here, the pretrial order speaks primarily of CBS's liability for acts of its predecessors for whom CBS is liable, including Westinghouse, Aptus, and NEI. As already noted, liability for acts of predecessors in interest is fundamentally different than liability based on piercing the corporate veil. Moreover, to pierce the corporate veil Clean Harbors must show, based on a laundry list of factors, that the circumstances justify doing so.
Third, Clean Harbors argues CBS has known piercing the corporate veil is an issue in this case. But just because CBS has disputed its liability for the acts of Aptus, its subsidiary, does not mean that it knew Clean Harbors intended to rely on piercing the corporate veil to hold CBS liable. And the reference to "corporate structure" by Clean Harbors's Fed. R.Civ.P. 30(b)(6) witness or the reference to the relationship between CBS and Aptus by CBS's lawyer is insufficient to put CBS on notice of Clean Harbors's piercing-the-corporate-veil theory.
The pretrial order does not preserve Clean Harbors's piercing-the-corporate-veil theory. Clean Harbors has therefore waived it, and CBS's motion to strike is granted. Even if the pretrial order did preserve Clean Harbors's piercing-the-corporate-veil theory, it does not contain sufficient facts to support the theory. Moreover,
Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.
The moving party bears the initial burden of showing the absence of any genuine issue of material fact.
The court views the record in the light most favorable to the nonmoving party.
The subject property is a facility located in Coffeyville, Kansas. It sits on roughly 406 acres at the southern end of the Coffeyville Industrial Park. The facility is contaminated with various hazardous waste materials.
As of August 1, 1988, Aptus owned and operated the facility. It performed services related to the transportation, storage, laboratory analysis, and incineration of certain types of hazardous waste. National Electric, Inc. ("NEI") and Westinghouse Specialty Services, Inc., a wholly owned subsidiary of Westinghouse Electric Corporation (collectively "Westinghouse"), owned Aptus. In September 1988, Westinghouse bought NEI. In February 1991, Westinghouse Specialty Services merged with NEI. So from September 1988 through March 1995, Westinghouse owned NEI, which in turn owned Aptus, which owned and operated the facility.
On March 7, 1995, under a stock purchase agreement ("SPA"), Westinghouse sold NEI to Rollins Environmental Services. Shortly thereafter, Westinghouse merged with CBS. After a merger with Viacom and several name changes, the resulting entity took the name CBS. CBS is therefore Westinghouse's successor in interest.
In February 2002, Clean Harbors purchased the facility from Safety-Kleen — a successor in interest to Rollins — as part of the sale of certain assets during Safety-Kleen's bankruptcy proceedings.
As part of the bankruptcy proceedings, however, Safety-Kleen and Viacom (a predecessor in interest to CBS) stipulated to reject the SPA under 11 U.S.C. § 365. The bankruptcy court approved the stipulation. Clean Harbors subsequently moved to set aside the stipulation and to declare that Safety-Kleen's rejection of the SPA did not affect Clean Harbors's rights under the SPA as against CBS. The bankruptcy court denied the motion. Clean Harbors appealed the decision to the district court, which has not yet ruled.
The SPA governed Westinghouse's sale of NEI to Rollins. With respect to contamination at the facility, Article 12 of the SPA required Westinghouse to "perform such investigation, remediation or corrective action, in full compliance with the requirements of any Governmental Authority."
The parties dispute whether CBS and its predecessors in interest caused the contamination at the facility. CBS contends the facility was contaminated before its predecessors became involved. It argues
The facility is contaminated with the following hazardous substances and hazardous waste constituents:
The EPA has also directed Clean Harbors to investigate for 1, 4-Dioxane in the groundwater.
The parties dispute whether a pathway exists between harmful waste at the facility and potential receptors, and whether the harmful waste will reach any receptors at harmful levels. An Annual Remedy Effectiveness and Performance Monitoring Report for 2009 stated the effectiveness of the east wing of the funnel and gate system may be decreasing, and the plume of contamination may be flowing around the gate instead of filtering through it. The parties dispute whether the plume is actually circumventing the funnel and gate, and even if it is, whether the plume could endanger human health or the environment. If the plume is circumventing the funnel and gate system, it could create a new pathway of exposure to offsite landowners. Clean Harbors's neighbor, American Insulated Wire, has contacted Clean Harbors about groundwater contamination moving offsite from the facility.
In 2007 through 2010, onsite groundwater and soil data, and offsite groundwater data indicated hazardous contamination exceeded established cleanup levels. CBS disputes that the data indicates hazardous contamination above established cleanup levels at the points of compliance. To date, both onsite and offsite soil and groundwater levels have exceeded cleanup levels established by the EPA. Again, CBS disputes whether hazardous contamination exceeds established cleanup levels at the points of compliance. CBS's expert has testified he thinks cleanup at the facility will go on forever.
On August 30, 1988, the EPA issued a consent order to Aptus regarding the facility. It stated the presence of hazardous wastes at the facility or the release of hazardous wastes from the facility may present a substantial hazard to human health or the environment. The purpose of the order was to ascertain — through monitoring, testing, analysis, and reporting — the nature and extent of any hazard the facility may present to human health or the environment. The EPA subsequently issued a RCRA permit requiring corrective measures to remediate contamination at the facility. In 1998, SECOR International, Inc., prepared a risk analysis report for the EPA which found two completed pathways of exposure.
When Clean Harbors bought the facility in 2002, it knew the EPA had issued a RCRA permit regarding the facility, which required the permittee to take corrective measures. Clean Harbors also knew, however, that through various settlements, Westinghouse had received money in exchange for accepting responsibility for future cleanup.
The EPA evaluated the funnel and gate system based on four threshold criteria: (1) overall protection, (2) attainment of media cleanup standards, (3) controlling the sources of releases, and (4) compliance with waste management standards. It found that the corrective measure satisfied each of these criteria. It also proposed monitored natural attenuation for two plumes of contamination, established onsite and offsite cleanup levels for soil and groundwater contamination, required institutional controls and deed restrictions, and required monitoring to ensure the proposed remedies were working as expected.
In August 2005, the EPA selected the funnel and gate as the final corrective measure at the facility. The EPA found this remedy appropriate and protective of human health and the environment. At around the same time, the EPA modified Clean Harbors's RCRA permit. The modification described the selected remedy as including (1) a funnel and gate system, (2) groundwater treatment system, and (3) institutional controls. It stated these remedies will protect human health and the environment, control the sources of releases so as to reduce or eliminate to the maximum extent practicable further releases that might pose such a threat, and meet all applicable federal, state, and local laws and regulations. It also listed cleanup levels, described Clean Harbors's monitoring, reporting, remedy review, corrective measures completion report, and financial assurance obligations.
Clean Harbors later applied to renew its RCRA permit. On April 12, 2010, the EPA renewed the permit. It requires Clean Harbors to implement and maintain the corrective measures identified in the final corrective measures decision, and to monitor and report on the effectiveness and performance of the remedy. It also allows the EPA to select a new remedy if necessary, and to require Clean Harbors to undertake additional investigation to select a new remedy. If action is required to protect human health or the environment or to prevent or minimize the further spread of contamination while long-term remedies are pursued, the EPA may require Clean Harbors to implement interim measures.
The 2010 RCRA permit clarified the cleanup levels and required Clean Harbors to further investigate contamination in the soil and groundwater. The EPA specifically instructed Clean Harbors to investigate the apparent ineffectiveness of monitored natural attenuation, the groundwater contamination plume that appeared to have circumvented the funnel and gate system, and the possible presence of 1, 4-dioxane — a new contaminant of concern that had not been previously addressed.
In issuing the permit, the EPA stated the corrective measures for the facility were protective of human health and the environment. It required annual monitoring and reporting to determine whether these remedies effectively protect human health and the environment, and required Clean Harbors to give financial assurances for remediation in the event it becomes unable to perform its obligations. The parties dispute whether the permit changed Clean Harbors's corrective measures obligations. They also dispute the
Under the 2010 RCRA permit, Clean Harbors must notify the EPA within twenty-four hours if it becomes aware of any occurrence that may endanger human health or the environment. Clean Harbors has not provided any such notification. It contends, however, that since 1988 the EPA has been aware of the substantial hazard the soil and groundwater contaminants present. As the permit requires, Clean Harbors has provided annual reports to the EPA. Those reports indicate groundwater apparently flowing around the wall of the funnel and gate system, and that monitored natural attenuation appears not to be working as planned in 2005.
The permit requires Clean Harbors to take all reasonable steps to minimize releases to the environment and carry out such measures as are reasonable to prevent significant adverse impacts on human health or the environment. It also requires Clean Harbors to take interim measures to abate any imminent and substantial endangerment to human health or the environment. The parties dispute whether Clean Harbors has implemented any such measures and whether the EPA has directed Clean Harbors to take such measures. Clean Harbors asserts that it has complied, and intends to comply, with all relevant corrective measure provisions contained in the RCRA permit.
In its Annual Remedy Effectiveness and Performance Monitoring Reports for 2007 through 2010, Clean Harbors did not advise the EPA it believed the conditions at the facility presented an imminent and substantial endangerment to human health and the environment, and concluded that "[n]o recommendations are offered at the present time for maintenance, modification, or repair of the engineered remediation systems." Clean Harbors contends the EPA has known there is or may be an imminent and substantial hazard since 1988 when it issued the consent decree.
In September 2011, the EPA lowered the allowable toxicity level for TCE. The new toxicity level for that substance may result in more stringent cleanup levels that are more difficult to reach.
From September 1988 to March 1995, Westinghouse (CBS's predecessor in interest) owned NEI which in turn owned Aptus, which owned the facility. Operations at the facility included transformer cleaning and rehabbing. Westinghouse sought 100% control of Aptus to free Westinghouse Electric from the constraints imposed by the arrangement with NEI and to obtain full benefit of Aptus growth and profitability. Westinghouse sought to integrate Aptus into its portfolio of environmental services. In obtaining 100% control of Aptus, Westinghouse expected full participation in Aptus management, integration of Aptus into the overall Westinghouse strategy, and consolidation of the sales and operating profit to obtain the advantages of Aptus growth.
For example, Westinghouse employees took jobs at Aptus. Marv Kolesar, a Westinghouse Electric employee, became president of Aptus. Westinghouse's manager of permitting and compliance, traveled to Coffeyville to meet with city officials and employees and to "fly the Westinghouse flag." On at least one occasion, Westinghouse and Aptus shared in-house legal counsel, and Westinghouse attorneys negotiated settlements with the
Westinghouse Electric also performed audits of the facility to ensure it followed Westinghouse practices and procedures. Based on the audits, it would make operational changes — the facility would prepare a response to the audit indicating how it would correct the issues identified in the audit. Westinghouse would follow up with the facility until it completed all action items in the plan.
Westinghouse required Aptus to use waste disposal companies Westinghouse had preapproved. It required Aptus to submit all disposal contracts and scrap material arrangements for review and approval. Westinghouse also required Aptus to submit all applications for, or revisions of, permits. Before Aptus could use a subcontractor at the facility, it had to get preapproval from Westinghouse. Westinghouse employees also received, and sometimes commented on, work plans and monthly reports summarizing the facility's activity. Employees at the facility were subject to Westinghouse's limit-of-authority policy requiring Westinghouse approval for significant operational expenses.
While Westinghouse owned NEI, numerous spills occurred at the facility. The parties debate, however, whether the spills contributed to the contamination at issue in this case. In 1988, Aptus improperly disposed of an underground storage tank containing chlorinated solvents. Also during Westinghouse's ownership of NEI, the facility pumped contaminated groundwater out of a degreaser sump into a drainage ditch on the property. Because the containment systems at the facility were compromised while Aptus owned it, hazardous waste was released into the soil and groundwater at the incinerator and contributed to contamination at the facility.
With respect to remediation at the facility, on at least one occasion Westinghouse paid for remediation services, paid a fine, and entered into an agreement with an environmental remediation company to perform groundwater and soil remediation services at the facility. Even after selling NEI, Westinghouse investigated and remediated soil and groundwater contamination at the facility. It installed, owned, and operated an air stripping tower used as part of the pump-and-treat remediation system. After Safety-Kleen sold the facility to Clean Harbors in 2002, CBS/Viacom continued to work with the EPA to investigate and remediate soil and groundwater contamination at the facility. CBS continued remediation even after it received notice of the purported assignment of Article 12 rights to Clean Harbors. In January 2006, CBS sent a letter to Clean Harbors indicating it had completed its obligation to remediate soil and groundwater at the facility. Because of ongoing negotiations between the parties, in March 2006, CBS explicitly retracted the letter. CBS contends, however, that its retraction was conditioned on bankruptcy court approval of a stipulation between the parties, which never occurred. CBS has continued to pay utility costs for part of the remediation system since 2008.
In the early 1990s, Westinghouse, Aptus, and past owners of the facility sued each other for damages for groundwater contamination at the facility. In 1995, shortly before Westinghouse merged with CBS, it reached a settlement agreement whereby Westinghouse received $2.7 million in return
The certificates of insurance Clean Harbors submitted to the EPA and/or the Kansas Department of Health and Environment covering from September 6, 2006, to March 19, 2009, showed a financial assurance amount ranging between $2,338,907 and $2,471,548. Under RCRA, Clean Harbors must notify the EPA within 10 days if it becomes aware of information indicating that any financial assurance instrument provided under the permit is inadequate or no longer satisfies the requirements. Clean Harbors has not notified the EPA of an increase in the estimated cost of the remediation.
Clean Harbors's expert opines that future investigation, remediation, operation, maintenance, monitoring, and reporting requirements at the site will cost roughly $8.45 million. The parties dispute, however, whether the expert used proper methods to arrive at that amount.
CBS argues Clean Harbors's claims are prohibited by a "bar order" this court issued in previous litigation over environmental cleanup at the facility. The order states in part as follows:
CBS argues the term "any party" includes anyone and everyone who might bring a claim against the Settling Parties in the future. This seems an unreasonably strained and aggressive reading of the term "party." In context, the term "party" most naturally includes "Settling Parties" and "non-Settling Parties," but not anyone and everyone else. The main case on which CBS relies — Barton Solvents, Inc. v. Southwest Petro-Chem, Inc. — does not contradict this interpretation.
To prevail on its RCRA claim, Clean Harbors must show three things: (1) CBS was an owner or operator of a solid or hazardous waste treatment storage or disposal facility; (2) CBS contributed to the handling, storage, treatment, transportation, or disposal of a hazardous waste that contaminated the facility; and (3) the hazardous waste may present an imminent and substantial endangerment to health or the environment.
The first two essential elements of Clean Harbors's RCRA claim — whether CBS was an operator of the facility and whether CBS contributed to contamination at the facility — overlap. Both elements turn on CBS's involvement in the facility's operations.
The parties agree that the Supreme Court's decision in United States v. Bestfoods
The second element of Clean Harbors's RCRA claim — that CBS contributed to the handling, storage, treatment, transportation, or disposal of a hazardous waste that contaminated the facility — requires a similar factual showing.
CBS argues it is entitled to summary judgment because Clean Harbors has not shown that CBS caused the contamination in question. RCRA, however, is not so demanding. Rather, it contemplates operator liability if Clean Harbors merely can show CBS managed, directed, or conducted operations "having to do with the leakage or disposal of hazardous waste, or decisions about compliance with environmental regulations."
CBS more specifically argues (1) through (4) do not give rise to an inference it operated the facility. But it does not specifically address (5) through (10). Even if CBS is correct, and (1) through (4) do not permit an inference that CBS operated the facility, when viewed in the light most favorable to Clean Harbors, (5) through (10) do. Therefore, a genuine issue of material fact exists as to whether CBS operated the facility and contributed to the handling, storage, treatment, transportation, or disposal of a hazardous waste that contaminated the facility.
In Burlington Northern & Santa Fe Ry. Co. v. Grant, the Tenth Circuit explained what RCRA means by hazardous waste that "may present an imminent and substantial endangerment to health or the environment."
CBS argues it is entitled to summary judgment because (1) Clean Harbors's designated representative testified he was unaware of any RCRA triggers; (2) Clean Harbors has not disclosed any expert testimony regarding imminent and substantial
Some of the facts on which Clean Harbors relies date back to before any remedial measures were taken at the facility. Such facts are of little relevance in determining any imminent and substantial endangerment to health or the environment. But viewing the facts in the light most favorable to Clean Harbors, and drawing all reasonable inferences in its favor, a genuine issue of material fact exists as to whether the hazardous waste at the facility may present an imminent and substantial endangerment to health or the environment. Specifically, the parties genuinely dispute whether the contamination is circumventing the funnel and gate system and, if so, whether it may pose an imminent and substantial risk to human health and the environment.
CBS argues the injunctive relief RCRA provides is not available to Clean Harbors because the EPA has already implemented a comprehensive remedy for cleaning up the facility.
RCRA gives the court broad equitable power to "enforce" a "permit, standard, regulation, condition, requirement, prohibition, or order," to "restrain any person who has contributed or who is contributing to the past or present handling, storage, treatment, transportation, or disposal of any solid or hazardous waste," and to "order such person to take such other action as may be necessary."
Clean Harbors seeks an injunction requiring CBS to continue its investigation and complete remediation obligations at the facility.
Second, Clean Harbors argues the injunctive relief it seeks goes "beyond current activities as necessary to achieve the target cleanup levels" because the current corrective measures are not working.
Moreover, the RCRA permit that obligates Clean Harbors to clean up the facility is quite comprehensive. It requires Clean Harbors to implement the final corrective measures the EPA identified, any additional corrective measures the EPA may identify, any interim measures necessary to protect human health and the environment, and requires Clean Harbors to maintain financial assurances to ensure its cleanup obligations are met even if it becomes unable to pay for the remediation. Clean Harbors does not specify how the relief it seeks as against CBS would differ from or supplement Clean Harbors's own obligations under the RCRA permit. Nor does Clean Harbors explain, in light of the comprehensive nature of the permit, why an order requiring CBS to cleanup the facility is necessary to protect human health or the environment. Thus it appears any "additional obligations" would fall squarely within the scope of the EPA RCRA permit.
As in other purported RCRA cases, it seems this case is about the cost of cleaning up the facility, as opposed to preventing endangerment to human health or the environment.
Clean Harbors has seven remaining claims, all based on state law: declaratory judgment (count II),
In the usual case in which all federal-law claims are eliminated before trial, the balance of factors the court considers in determining whether to exercise jurisdiction — judicial economy, convenience, fairness, and comity — will point toward declining to exercise jurisdiction over the remaining state-law claims.
This federal court will not presume to dictate or control any state-court proceedings that may follow. But it should be noted that the parties already have conducted (and reportedly completed) very extensive discovery. The parties have agreed on a pretrial order and they have filed and fully briefed dispositive motions. These efforts need not be duplicated. Any follow-up state-court case therefore should be in a position to proceed to trial in the next few months.
In consideration of the foregoing, it is hereby ordered:
1. CBS's motion to strike rebuttal expert reports (
2. CBS's motion to strike (
3. CBS's motion for summary judgment (
4. Clean Harbors's motion for leave to respond to CBS's submission of supplemental authority (
5. CBS's motion for leave to file supplemental submissions (
6. This case is dismissed.
