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Ashland Oil, Inc. v. Miller Oil Purchasing Co.

Citation: 12 ELR 20845
No. No. 81-3246, 678 F.2d 1293/(5th Cir., 06/24/1982)

The Fifth Circuit rules that a hazardous waste disposal company and two sellers of crude oil are strictly liable for damages incurred by Ashland Oil, Inc. as a result of defendants' injection of a toxic industrial waste into Ashland's pipeline system. Defendant Rollins-Purle, Inc., who had agreed to dispose of the waste, dichlorobutadiene (BR50 and BR68), through incineration, instead sold it to defendant Young. Young then sold the waste as petroleum products to defendant Waco, Inc., who, in turn, sold the material to defendant Miller Oil Purchasing Co. Miller sold the waste as crude oil to the Ashland Oil Purchasing Co. and injected it into the Ashland pipeline system. The results were a fire and explosion at Ashland's refinery and contamination of two million barrels of oil. After resolving the choice of law issues posed by the litigation, the court rules that Rollins and Young are strictly liable since their disposal of the waste was an abnormally dangerous and ultrahazardous activity. In addition, Rollins is liable under the theory of intentional tort. The court also rules that Miller and Waco are strictly liable as sellers of a defective product since the industrial waste that they each sold as crude oil was unreasonably dangerous in the uses that both they, as sellers, and Ashland, as the ultimate consumer contemplated would be made of the material. However, Rollins is not strictly liable under products liability law since under Louisiana law it was neither a seller nor manufacturer of industrial wastes products. Turning to the defendants' warranty liability, the court holds that Miller is liable for breach of an express warranty of merchantability and implied warranties of merchantability and fitness for a particular purpose. Waco is liable for breach of an implied warranty of merchantability. The court also rules that (1) all four defendants' conduct constituted negligence, (2) Rollins' insurance policy excluded coverage for the damage incurred by Ashland, and (3) Ashland may recover punitive damages from Young, Waco, and Miller.

The full text of this opinion is available from ELR (34 pp. $4.75, ELR Order No. C-1283).

Counsel for Appellants
Harry S. H. Verlander Jr.
Faris, Ellis, Cutrone & Gilmore
1207 Whitney Bldg., New Orleans LA 70130
(504) 581-6373

Counsel for Appellee
Dermot S. McGlinchey
McGlinchey, Stafford & Mintz
P.O. Box 2000, 630 Camp St., New Orleans LA 70176
(504) 586-1200