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B.F. Goodrich v. Betkoski

ELR Citation: 27 ELR 20329
Nos. 95-6074 et al., 99 F.3d 505/(2d Cir., 11/01/1996) grant of summary judgment aff'd in part, rev'd in part, remanded

The court holds that a district court erred in granting summary judgment in favor of nearly 100 third-party defendants alleged to be potentially responsible parties (PRPs) in a contribution action brought by two coalitions of industrial-waste generators under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The coalitions had previously settled their liability for generating hazardous substances disposed of at the Beacon Heights and Laurel Park landfills with the United States, the state of Connecticut, and the landfills' owner and operator. The court first holds that the lower court dismissals that were predicated on the notion that a waste product is not covered by CERCLA unless specifically listed as a hazardous substance—even when its component parts are hazardous substances—misconstrued CERCLA and must be reversed. It makes no difference that the specific wastes disposed of by the third-party defendants were not themselves listed as hazardous substances, because as long as their component parts were listed as hazardous substances there may be CERCLA liability. The court next holds that when the district court required the coalitions to show an actual breakdown of products containing hazardous substances, and determined there was no liability if the hazardous substances would only be released by an intervening force, it acted in a manner contrary to precedent. Proof that a defendant's waste did not release listed hazardous substances is only relevant to the issue of apportionment of damages, not to the issue of liability. The district court also erred by granting summary judgment where the amounts of hazardous substances disposed of were "minuscule" or "nominal." The absence of threshold quantity requirements in CERCLA leads logically to the conclusion that the Act's hazardous substance definition includes even minimal amounts.

The court next holds that the district court erred to the extent it relied on U.S. Environmental Protection Agency (EPA) PRP designations in deciding whether to grant summary judgment. EPA's decision not to initiate its own enforcement action is irrelevant in determining whether a defendant might be liable under CERCLA. The court further holds that CERCLA's plain language and broad remedial purpose provide for successor liability under the Act. The court adopts the substantial continuity test as the appropriate legal test for successor liability under CERCLA and reverses those grants of summary judgment where the district court applied a different and more restrictive law of successor liability. The court next holds that only transporters who select disposal locations are liable under CERCLA; thus, the court agrees with the district court that unless the third-party defendant transporters selected the facility or disposal site, they cannot be found liable under the Act. The court, however, vacates the grants of summary judgment in favor of several transporters and remands for the district court to consider whether the transporters "actively participated" in choosing the disposal facility.

The court then holds that those summary judgment dismissals, made sua sponte without 10 days' notice, were error. In addition, the court finds no abuse of discretion in the district court discovery orders or its decision rejecting the coalitions' request for additional discovery. The court next holds that it was error for the district court to reject an expert's written testimony that the third-party defendants' wastes contained hazardous substances, particularly in the absence of any expert evidence to the contrary. The expert's affidavit raised genuine issue of material fact in the majority of cases, and therefore the grants of summary judgment in such cases were improper.

The court next holds that the district court improperly included as funds received by the U.S. government money that the Laurel Park owner and operator agreed to pay to the Laurel Park Coalition for the landfill's remediation. The district court should not have reduced the nonsettling defendants' liability to the government by the money paid to the coalition because the government had neither possession nor actual control over the money. Further, unreimbursed response costs still remain at both facilities; therefore, judgment on the pleadings was inappropriate. Based on the government's cost summaries, the government could prove facts entitling it to relief. The district court also erred by crediting to the state of Connecticut a portion of the owner-operator settlement that was paid to the Laurel Park Coalition.

[Related decisions in this litigation are published at 19 ELR 20357, 22 ELR 20683, 23 ELR 21080, and 24 ELR 20515, 21600. Briefs are digested at ELR BRIEFS & PLEADS. 66147, 66157, 66161, 66453, and 66461].

Counsel for Plaintiffs
Peter A. Appel
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Counsel for Defendants
John O'Leary
Pierce, Atwood, Scribner, Allen, Smith & Lancaster
One Monument Sq., Portland ME 04101
(207) 773-6411

Before Walker and McLaughlin, JJ.