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Prudential Ins. Co. of Am. v. U.S. Gypsum

Citation: 19 ELR 21220
No. Nos. 87-4227, -4238, 711 F. Supp. 1244/29 ERC 1424/(D.N.J., 03/28/1989)

The court rules that owners of commercial and residential structures do not have claims under § 107 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) against corporate entities that have designed, manufactured, or supplied asbestos-containing materials, and civil actions under the federal Racketeer Influenced and Corrupt Organizations Act (RICO) include claims against legitimate businesses for the purpose of remedying commercial fraud. After initially noting that CERCLA § 107 encompasses corporate entities within the term person and that asbestos is a hazardous substance under CERCLA § 102, the court holds that the sale of asbestos for use in building construction does not constitute disposal of a hazardous substance under CERCLA. The court holds, however, that merely characterizing the transaction as a sale is insufficient to avoid liability. Liability for damage under § 107 attaches only to parties who transact specifically to dispose of or treat a hazardous substance. Although asbestos is a dangerous product, and pieces of it may eventually flake off in conveyance, defendants demonstrated neither an affirmative act to get rid of nor an arrangement to dispose of a hazardous waste under CERCLA. Instead, defendants merely sold the asbestos as part of a complete, useful product. The court then grants plaintiffs leave to amend their complaint to allege a federal RICO claim. Civil actions under RICO are not limited to situations in which there is a tie to organized crime. Rather, RICO extends to remedying commercial fraud, particularly those instances that constitute a pattern of racketeering activity. The court holds that plaintiffs pleaded with sufficient particularity their allegation that the asbestos companies made fraudulent representations proscribed by RICO in advertisements, sales literature, and trade publications concerning the safety of asbestos-containing materials. Finally, the court holds that plaintiffs may amend their pleadings to assert alternative theories of liability, since inconsistency of simultaneously asserted claims is not a basis upon which to deny leave to amend a properly pleaded complaint.

Counsel for Plaintiffs
Edward A. Zunz Jr.
Riker, Danzig, Scherer, Hyland & Perretti
1 Speedwell Ave., Headquarters Plaza, Morristown NJ 07960
(201) 538-0800

Counsel for Defendants
Dell M. Damsgaard
Morgan, Lewis & Bockius
2000 One Logan Sq., Philadelphia PA 19103
(215) 963-5000

Thomas W. Polaski
O'Donnell, Kennedy, Vespole & Piechta
414 Eagle Rock Ave., West Orange NJ 07052
(201) 669-0100