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Browning-Ferris Indus. of Ill., Inc. v. Ter Maat

Citation: 29 ELR 20142
No. 92 C 20259, 13 F. Supp. 756/(N.D. Ill., 07/29/1998)

The court holds that a defendant-operator company and a defendant-transporter company are liable under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for costs incurred in cleaning up the MIG/De Wane Superfund site in Illinois, and orders them each to pay over $ 2 million in past response costs as well as a percentage of all interim remedial measure (IRM) costs and future response costs. Plaintiffs filed the contribution action against defendants after receiving two administrative orders on consent to cleanup the landfill from the U.S. Environmental Protection Agency and a state environmental agency. Plaintiffs leased and operated the site as a landfill from 1969 to 1975. The defendant companies leased and operated the landfill from 1975 until 1988.

The court first holds that the defendant-transporter company was a joint operator of the site and, as such, bears direct liability under CERCLA for the cleanup costs. The defendant-operator paid the defendant-transporter a management fee to reimburse the transporter, in part, for its performing certain administrative functions for the operator related to the site. Numerous outside parties that were involved with the site considered the defendant-transporter to be the operator, and some vendors sent correspondence and invoices to the defendant-transporter for services related to site operations. Additionally, an individual who served as an officer for both companies sent letters to state agencies pertaining to operation matters at the site that he signed as president of the defendant-transporter company. The court next holds that plaintiffs failed to attribute individual liability to the officer as an operator and failed to prove a basis to pierce the corporate veil as to either of the defendant companies. The particular structure and functions of the company alone do not justify attributing liability to the officer individually. In addition, there is no evidence of undercapitalization; stock was issued by both companies; corporate formalities were in fact observed; other officers and directors performed specific, identifiable functions for each company; corporate records were maintained for both companies; and there is no evidence that either company was a mere facade for the operation of the officer.

The court then holds that an affidavit of one of the plaintiff's employees is admissible as an admission by the plaintiff as circumstantial evidence of what type and volume of solvent waste was hauled by the employee. The court also holds that the plaintiff hauled solvent waste, including sludges and infilco waste, to the site during the period of 1973 to 1975. The court finds persuasive defendants' expert witness testimony that the plaintiff contributed approximately 3.4 million pounds of solvents to the site between 1973 and 1975, which represents 91 percent of the total solvent content at the site.

The court next holds that plaintiffs have sufficiently shown that their costs are necessary and consistent with the national contingency plan (NCP). The undisputed evidence shows that the response costs sought by plaintiffs were for actions taken pursuant to two administrative orders on consent. Plaintiffs are entitled to recover all oversight costs because allowing oversight costs to be recovered best serves the broad remedial purpose of CERCLA and promotes the effective cleanup of environmental hazards. Furthermore, plaintiffs are entitled to recover the full amount sought for potentially responsible party search costs and attorneys fees.

The court further holds that defendants and the owners of the site share the responsibility for the costs associated with the emergency removal and IRM activities. The court attributes zero percentage of the emergency removal and IRM costs to plaintiffs. There is no evidence to show that anything they did attributed to the need to take emergency removal and IRM action. However, defendants had an obligation under applicable regulations to properly close the site, and it is undeniable that they failed in this undertaking. There is no doubt that had the site been properly closed the need for emergency and interim actions would have been minimized. Furthermore, the law places the responsibility for closure on both the owners and defendants. Not only did the owners fail to take any action to close the site, they interfered with defendants proposal to do so by refusing to sign off on the closure plan. The court further holds that defendants are 85 percent responsible and the owners are 15 percent responsible. This division of responsibility is based on the fact that the operators were in the best position to effectuate a closure but refused to do so. The court also holds that defendants and the owners are responsible for future costs related to the IRMs based on these percentages. The court then holds that the defendant-operator company and the defendant-transporter company will not be considered a single party for purposes of allocating response costs. Any allocation of liability will take into consideration their dual role as operators of the site during their period of operation. The court next holds that the defendants can be declared liable for future response costs pursuant to CERCLA § 113(g)(2). The court also holds that plaintiffs are entitled to interest from the defendants on plaintiffs' costs related to the site.

The court then holds that solvents are, in part, causing some elements of the remedy. The court next holds that the site was not closed by defendants on June 30, 1988, or anytime thereafter. The court then holds that the total orphan share is 1.58 percent to be distributed on a pro rata basis to all parties, including defendants. The court next holds that the plaintiff that leased the landfill from 1971 to 1975 violated its landfill permit by failing to remove the waste that was deposited in a certain area prior to May 5, 1972. The court also holds that the defendant-officer's deposition testimony contains admissions by a party and is, therefore, admissible as substantive evidence. However, absent an opportunity for further explanation, such statements have little evidentiary weight. The court further holds that the settlement between the plaintiff that leased the landfill from 1971 to 1975 and insurance companies is inadmissible to show bias of plaintiffs' allocation expert and the owners' ability to pay. There is no showing that the settlement injected any bias into the allocation expert opinion that would not otherwise be there as a result of the allocation expert being a witness testifying on behalf of the plaintiff. The court then holds that plaintiffs are entitled to seek contribution for $ 8,036,608.87 before any settlement set-offs and allocation are applied or any prejudgment interest is assessed. The court next holds that the owners had no responsibility for leachate management at the site. Although the evidence implies that the owners had responsibility for leachate maintenance once the site was closed, any responsibility owed by the owners never came to fruition because the site was never closed.

Next, the court holds that it will allocate a 10 percent share of the present and future cleanup costs to the transporters, a 40 percent share of the present and future cleanup costs to the generator class, a 5 percent share of the present and future cleanup costs to the owners, and a 45 percent share of the present and future costs to the operators. In determining the percentage of liability among the operators, the court allocates 40 percent of the remaining 44.63 percent of overall costs to plaintiff-operators and 60 percent of the remaining 44.63 percent to defendant-operators. When the orphan shares are distributed, this equates to 18.21 percent of the overall costs to plaintiff-operators and 27.14 percent of the overall costs to defendant-operators. Roughly 83 percent of the total volume of waste in the landfill was placed there during the operation by defendant-operators, and approximately 17 percent went in under the plaintiff-operators era. Plaintiff-operators' most significant downfall was the placement of 3.4 million pounds of liquid and semi-liquid solvent waste at the site. Plaintiff-operators also failed to excavate waste from a certain area, which contributed to the to the overall contamination of the site. As for defendant-operators, their big downfall was the state in which they left the site on their abandonment in June 1988. Defendant-operators lack of cooperation and involvement in the cleanup also weigh heavily in favor of allocating them a greater share of costs.

In determining the percentage of liability among the transporters, the court allocates 60 percent of the 7.7 percent share to defendant-transporter and 40 percent to plaintiff-operators. The court bases this allocation on the volume attributable to each party as transporters, including not only the added volume of the solvent waste that plaintiff-transporters is liable for but also its toxicity. When the orphan shares are distributed, this equates to 4.7 percent of the overall costs to defendant-transporter and 4.21 percent of the overall costs to plaintiff-transporters. In sum, the court ordered that the defendant liable as an operator must pay $ 2,068,342.70 in past response costs, 42.50 percent of all IRM costs, and 13.57 percent of all other future site costs; the defendant liable as a transporter and a joint operator must pay $ 2,381,894.95 in past site costs, 42.50 percent of all IRM costs, and 18.31 percent of all other future site costs.

Counsel for Plaintiffs
Pierre C. Talbert
Katz, Randall & Weinberg
333 W. Wacker Dr., Ste. 1800, Chicago IL 60606
(312) 807-3800

Counsel for Defendants
Patrick Fanning
Knight, Hoppe, Fanning & Knight
2860 River Rd., Ste. 400, Des Plaines IL 60018
(847) 298-8000