16 ELR 20246 | Environmental Law Reporter | copyright © 1986 | All rights reserved

Standard Equipment, Inc. v. Boeing Co.

No. C84-1129M (W.D. Wash. February 5, 1985)

The court holds that assessment costs for hazardous waste site cleanup are not sufficient to ripen a claim for response costs under § 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The court first considers the merits of generator and transporter defendants' motions to dismiss plaintiff's Racketeer Influenced and Corrupt Organizations Act (RICO) actions. The court rules that although Boeing is not named as a defendant in plaintiff's RICO claims, it nevertheless has standing to move to dismiss those claims, since it is in the pool of defendants from which plaintiff seeks discovery. The court denies most of defendants' motions to dismiss, rejecting arguments that plaintiff failed to sufficiently plead its claims. The court then rules that plaintiff's CERCLA claim is not ripe. Plaintiff has incurred investigative costs only. Expenses for monitoring, assessment, and evaluation such as plaintiff has incurred are certainly costs of response that are ultimately recoverable, but assessment costs by themselves are not sufficient for a CERCLA cost-recovery action. Actual cleanup of a release must have begun. Finally, the court rules that plaintiff's use of fictitious defendants is proper. Plaintiff has specified the actions of the unnamed defendants and merely seeks to discover their names.

Counsel for Plaintiff
Steven W. Hale
Cable, Barrett, Langenbach & McInerney
1900 Fourth and Blanchard Bldg., 121 Fourth Ave., Seattle WA 98121
(206) 464-1900

Counsel for Defendants
Charles C. Gordon
Perkins Cole
One Bellevue Center, Suite 1800, 411 108th Ave. NE, Bellevue WA 98004
(206) 453-6980

[16 ELR 20246]

McGovern, J.:

Memorandum and Order Granting and Denying Defendant's Motion to Dismiss and Other Motions

THIS MATTER comes on for hearing before the undersigned Judge of the above-entitled court on the various motions of the parties. Defendant Boeing moves to dismiss the complaint and is joined by most of the thirty-one remaining named defendants. Four other defendants, Northwest Steel Rolling Mills, Sea-Land Freight Services, Inc., Pittsburgh and Midway Coal Mining Co. and Davis Walker Co. have also moved to dismiss providing the Court with separate memoranda and authority in support. These defendants' arguments largely mirror those of Boeing but will be discussed when relevant. Boeing also moves to dismiss the fictitious defendants and plaintiff moves to strike defendants' affidavits. Because all the arguments raised in support of the motion to dismiss the complaint as to the "generator and transporter" defendants, as defined below, apply equally to all those defendants, the Court shall treat an argument raised by one as applying to all. Therefore, when in this Order the words "defendant" or "Boeing" appear, it shall mean all generator and transporter defendants.

I. Facts

Plaintiff Standard Equipment, a neighbor of Western Processing in Kent, sues numerous named and unnamed defendants. Except for defendants Western Processing, and Garmt and Luurt Nieuwenhuis, the defendants are all "generators and transporters" of waste deposited at Western's site.

Plaintiff has been engaged in the construction, mining and development business for over fifty years. Plaintiff's basis allegation is that improperly stored hazardous waste from the Western Processing site has migrated through the soil and contaminated plaintiff's property. Plaintiff is now unable to refinance loans because of decreased property value and therefore is in danger of going out of business.

II. Plaintiff's Claims

Plaintiff alleges four federal causes of action and eleven pendent state claims. Three of the federal claims are pursuant to the civil remedy provisions of the Racketeer Influenced and Corrupt "Organizations Act (RICO), 18 U.S.C. §§ 1961-68 (1982). The final federal claim is pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. §§ 9601-57 (1982).

Plaintiff's RICO claims involve the "RICO defendants," Garmt and Luurt Nieuwenhuis, Liquid Waste Disposal Co., Jack Pinchev, Bayside Waste Hauling and Transfer, Inc., John Does IXXX, and "one or more of the Generator and Transporter Defendants," (Complaint, P61).

In summary, RICO provides that any person "injured in his business or property by reason of a violation of § 1962" may bring a civil suit in district court and recover treble damages. 18 U.S.C. § 1964(c) (1982). Section 1962 prohibits (1) a "person" (2) employed by or associated with an "enterprise" (3) which is engaged in or [16 ELR 20247] whose activities affect interstate commerce (4) from directly or indirectly engaging in a "pattern" (5) of "racketeering activity." 18 U.S.C. § 1962(c) (1982). Section 1961 defines a "pattern" as at least two enumerated criminal acts separated by 10 years of less. § 1961(5). "Racketeering activity" includes "any act which is indictable under . . . [18 U.S.C. § 1241, wire fraud; or § 1343, mail fraud]." § 1961(1)(B).

Plaintiff's first RICO claim alleges that all of the RICO defendants constitute an "enterprise" which engaged in a fraudulent scheme to dump rather than recycle waste at Western's site and to "cover up" their illegal activity. The RICO defendants had actual knowledge of Western's improper and illegal procedures or constructive knowledge based upon Western's deflated prices which could only be due to its failure to comply with costly regulations. Defendants either knew about ten identified false mail and wire communications or should have known that such communications would be made in furtherance of the deceptive scheme. Finally, plaintiff alleges that the mail and wire fraud violations constitute a "pattern of racketeering" in violation of 18 U.S.C. § 1962(c).

Plaintiff's second claim differs from its first in that it alleges the RICO "enterprise" consists of not all of the RICO defendants, but only defendants Western and Garmt and Luurt Nieuwenhuis. Plaintiff then alleges that the generator and transporter RICO defendants aided and abetted the "enterprise" of Western and the Nieuwenhuises, by sending Western waste, and thus enabling it to carry out its disposal business in an economical fashion. Plaintiff alleges that the aiding and abetting RICO defendants "knew" Western had defrauded various agencies and the public, rather than participated in the deceptive scheme, and that mail and wire fraud were reasonably foreseeable events in furtherance of the scheme to defraud.

Plaintiff's third RICO claim is for conspiracy between Western and other RICO defendants to violate 18 U.S.C. § 1962(c), in violation of § 1962(d).

Plaintiff's final federal claim is for recovery of necessary response costs expended in testing and analyzing soil and ground-water pollution on plaintiff's property. Plaintiff alleges that Western and the generator and transporter defendants are liable for these costs pursuant to § 107(a) of CERCLA, 42 U.S.C. § 9607(a) (1982).

III. Motion to Dismiss Complaint

Before reaching the substance of defendant's Motion to Dismiss, plaintiff contends that Boeing does not have standing to move to dismiss the RICO claims since it is not a named RICO defendant. As noted above, Boeing's only tie to the RICO claim is as a "generator and transporter" RICO defendant. Plaintiff contends that until it has conducted discovery and possesses sufficient facts to allege that Boeing was part of the deceptive scheme, Boeing may not move to dismiss the RICO claims.

This argument, however, is a none too clever attempt to put defendant at risk and at the same time take away its ability to defend. Boeing is in the pool of "generator and transporter" defendants from which plaintiff seeks discovery with the view toward specifically naming as a defendant. Plaintiff cannot have it both ways.

1. Insufficient Allegation Of Fraud

The predicate act upon which plaintiff bases its claim of racketeering activity is fraud. Fraud must be pleaded with particularity. Fed. R. Civ. P. 9(b). Although particularity is required, this does not mean that detailed evidentiary matters need be pleaded, only "the identification of the circumstances constituting fraud so that the defendant can prepare an adequate answer from the allegation." Walling v. Beverly Enterprises, 476 F.2d 393, 397 (9th Cir. 1973).

Defendant first contends "particularity" has not been met because, although plaintiff lists 10 separate communications sent by Western, other defendants are not informed of the contents of the letters or wires. The content of the communication and the fact misrepresented must be alleged in addition to time and place.

The nature of the communications, however, is the concealment of the illegal disposal of waste, as pleaded. This meets the minimal requirements of pleading the contents of the fraud which is difficult when all the information lies in defendant's hands. This complaint gives sufficient detail to allow defendant to answer.

Boeing next argues that plaintiff fails to allege the acts committed by defendants other than Western Processing. Each defendant is entitled to know what acts he is charged with committing. Since "RICO defendants"includes "one or more" of the generator and transporter defendants, no individual defendant knows if he is included in any of the three RICO claims, or what it is he is alleged to have done. Moreover, since plaintiff pleads principal and, aiding and abetting liability in the alternative, no defendant knows whether he is alleged to be principally or secondarily liable.

Plaintiff responds citing Lewis v. Berry, 101 F.R.D. 706 (W.D. Wash. 1984), where the court held that under Fed. R. Civ. P. 9(b), if one defendant knew or should have known of the misrepresentations of another defendant, fraud is stated with sufficient particularity. Id. at 709. Plaintiff has alleged that the RICO defendants knew or should have known of Western's misrepresentations and thereafter participated in the fraudulent scheme to deceive state and federal agencies.

Because plaintiff does not name each defendant, its RICO claims do take on the appearance of a fishing expedition. However, plaintiff should be granted some latitude since all of the relevant information is in the hands of defendant. Summary judgment remains available to defendant.

Regarding the third claim for RICO conspiracy, defendant contends plaintiff has only pleaded facts linking Western Processing and its operators to a conspiracy, and not other defendants. Therefore, plaintiff has not pleaded conspiracy with sufficient particularity. Defendants, however, are alleged to have supplied waste and either known or should have known that Western Processing was illegally disposing of that waste for their mutual benefit. These factual allegations of conspiracy are sufficient to allow defendants to formulate an answer.

Finally, defendant argues that plaintiff has not even met the less restrictive pleading requirements of Rule 8(a). If Rule 9(b) is satisfied, however, as it is, Rule 8(a) must also be satisfied. In any event, plaintiff has given a "short and plain statement" of its right to relief.

2. Failure to Allege Injury to "Business or Property by Reason of" a RICO Violation

Defendant contends that the "by reason of a violation of § 1962" language requires that the predicate acts of mail and wire fraud directly cause plaintiff's injury. Noting first that RICO was patterned after the Clayton Act, 15 U.S.C. § 12 et seq., defendant cites antitrust decisions which hold that the "by reason of" language in § 4 of the Clayton Act requires plaintiff's injury to be caused by the antitrust violation. Plaintiff, defendant contends, has failed to allege that the mail and wire fraud directly caused its injury.

The Seventh Circuit in Haroco, Inc. v. American Nat'l Bank & Trust Co. of Chicago, 747 F.2d 384 (7th Cir. 1984), however, rejected this argument. The Haroco court held that the "by reason of" language creates nothing more than a proximate cause requirement. The predicate criminal conduct "must directly or indirectly have injured the plaintiff's business or property." Id. at 398 (emphasis added). That is all the statutory language requires.

The Haroco Court persuasively argues that Congress, in drafting RICO, intentionally created a broad statute to deal with a deviously sophisticated problem; organized crime. "Congress deliberately cast the net of liability wide, being more concerned to avoid opening loopholes through which the minions of organized crime might crawl to freedom that to avoid making garden-variety frauds actionable in federal treble-damage proceedings — the price of eliminating all possible loopholes." Haroco, 747 F.2d at 390. Any complaints about the statute's all-inclusiveness should be directed to Congress rather than the courts.

A RICO plaintiff needs only to allege that it was proximately injured by the RICO enterprise's racketeering activity. Plaintiff here alleges property and business injury due to the RICO defendants' fraudulent scheme to wrongfully dispose of waste at the Western site. That is sufficient.

3. Failure to Allege a Racketeering Injury

Defendant contends that RICO requires a "racketeering injury," that is, an injury of the type the statute was designed to prevent. Again analogizing to the antitrust area, defendant notes that the "by reason of" language in the Clayton Act has been interpreted to require an injury the antitrust laws were designed to prevent. Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 488 (1977). To hold otherwise is to federalize state tort law for business [16 ELR 20248] fraud. Burns v. Ledbetter, 583 F. Supp. 1050, 1056 (S.D. Cal. 1984); Willamette Savings & Loan v. Blake & Neal Finance Co., 577 F. Supp. 1415, 1427-50 (D. Or. 1984).

It is nearly impossible, however, to define "racketeering injury." In Waste Recovery Corp. v. Mahler, 566 F. Supp. 1466 (S.D.N.Y. 1983), the Court went so far as to adopt Justice Stewart's pornography "test" of "I know it when I see it." Id. at 1468-69. Thus, in order to avoid the problem of defining a racketeering injury some courts have apparently abandoned the search for a coherent test.

Other courts have resurrected an often criticized "organized crime" link. E.g., Sedima S.P.R.L. v. Imrex Co., Inc., 741 F.2d 482 (2d Cir. 1984); Bankers Trust Co. v. Rhoades, 741 F.2d 511 (2d Cir. 1984). These courts require that plaintiff prove that his injury was caused by the activities of "mobsters' or "organized crime."

There are, however, several reasons why Congress made no express requirement of a link to "organized crime" in RICO even though the legislative history makes numerous such references. Organized crime, like "racketeering injury," is difficult to define. A constitutional vulnerability due to vagueness was possible. There were potential problems in creating restraints on first amendment rights to free association and the possibility of creating an unconstitutional status offense. There was also the problem of defeating the purpose of creating a broad and far reaching tool for the eradication of organized crime by requiring plaintiff to prove defendant was involved in "organized crime." It should also be noted that courts have never considered such a requirement for criminal cases. Criminal RICO has applied to many cases not involving "mobsters." There is no reason to distinguish between civil and criminal RICO here. Finally, Congress used broad strokes when it wrote RICO: it proscribed certain conduct by "any person." § 1962(c). Courts should not insert into a statute a requirement Congress left out.

The Second Circuit stands alone among the three circuits that have decided whether plaintiff must plead a "racketeering injury." Haroco, 747 F.2d 384 (7th Cir. 1984); Alexander Grant and Co. v. Tiffany Industries, 742 F.2d 408, 413 (8th Cir. 1984) (both expressly rejecting the Second Circuit's decision in Sedima). Moreover, one panel of the Second Circuit recently reached the opposite result of Sedima although was constrained to follow its precedent. Furman v. Cirrito, 741 F.2d 524, 533 (2d Cir. 1984). Plaintiff need not plead a "racketeering injury." All that is required, and plaintiff has met its burden here, is the pleading of an injury to "business or property," as is expressly stated in § 1964(c).

4. Failure to Allege Competitive Injury

Defendant notes several district court cases which have required plaintiff to show that it was injured competitively by defendants' racketeering activity. Congress was concerned with the infiltration of legitimate business by mobsters and the adverse affects such action has on competition. Defendant thus contends that because Standard is not a competitor of Western or the other defendants, the complaint must be dismissed.

This is the one area where the courts have reached some accord; this argument is regularly rejected. Bankers Trust Co. v. Rhoades, 741 F.2d 511, 516 n. 6 (2d Cir. 1984) ("We do not agree with the view that, because the structure of § 1964(c) was patterned after § 4 of the Clayton Act . . . [that] a civil RICO plaintiff is required to show a competitive injury"); Bunker Ramo Corp. v. United Business Forms, Inc., 713 F.2d 1272, 1288 (7th Cir. 1983) ("requiring competitive injury . . . [does] not agree with the plain language of the statute nor fulfill the purposes of RICO"); Bennett v. Berg, 685 F.2d 1053, 1059 (8th Cir. 1982) ("we conclude that an allegation of commercial or competitive injury is not required by the RICO Act"). The plain language of the statute requires an injury to "business or property." Section 164(c). Plaintiff has alleged such an injury here.

5. Failure to Allege Prior Criminal Conviction

Relying on its Second Circuit authority, defendant contends that a civil RICO plaintiff must plead the existence of criminal convictions, or at least indictments, on the underlying predicate crimes of mail and wire fraud. The Sedima court decided this after a lengthy analysis of the statutory laniguage and legislative intent. 741 F.2d at 498-504.

In summary, Sedima noted that § 1964(c) creates district court jurisdiction for a civil plaintiff who has been injured by reason of a violation of § 1962. Violation, the court concluded, means conviction.

A § 1962 violation, however, requires proof of "racketeering activity." Racketeering activity is defined by § 1961(a)(A)-(D) as any enumerated act "chargeable" under state law, "indicatable" under Federal law, or any enumerated "offense" under subsection (D) which is punishable under the laws of the United States. "Chargeable" and "indictable" clearly speak to something less than a conviction.

Sedima reasoned, however, that the use of "chargeable" and "indictable" may not have expressed Congress' desire "to give civil courts power to determine whether an act is 'indictable' in the absence of a properly returned indictment. . . ." 741 F.2d at 500. Courts do not traditionally determine whether someone is "indictable" or "chargeable." That is the job of the grand jury or prosecutor. To read § 1961(1) as not requiring convictions or at least indictments is to eliminate the protection from the government afforded an individual by the grand jury.

Sedima goes on to note the problem of multiple burdens of proof. If convictions are not required, the civil RICO jury would have to decide the element of "indictable" beyond a reasonable doubt while the remainder of the RICO elements would be by a preponderance of the evidence. This would create too much confusion.

Finally, the Sedima court noted that even champions of the liberal interpretation of civil RICO argue that the due process requirement that criminal statutes be narrowly construed does not apply to civil RICO. Civil RICO does not draw lines between what is criminal and what is innocent. 741 F.2d at 502 and n. 58. Due process is satisfied because the predicate crimes have already been narrowly construed. Sedima reasoned that this, therefore, requires prior convictions.

Whether prior convictions are necessary is a close question although at least two, and possibly three other circuits have disagreed with the Second Circuit. Bunker Ramo Corp. v. United States Business Forms, Inc., 713 F.2d 1272, 1287 (7th Cir. 1983); USACO Coal Co. v. Carbomin Energy, Inc., 689 F.2d 94, 95 and n. 1 (6th Cir. 1982); see Alcorn County v. U.S. Interstate Supplies, Inc., 731 F.2d 1160, 1168-69 (5th Cir. 1984) (implies that prior conviction is not necessary).

Examining the plain language, it is hard to escape the words "indictable" and "chargeable." These simply do not contemplate prior convictions. Moreover, "violation" and "offense" do not necessarily mean the same thing as conviction. One can violate a law, or commit an offense, and for any numer of reasons not be convicted. The plain language points toward no need for prior convictions.

In addition, placing with the court or petit jury the decision of whether defendant is "indictable" does not affront the grand jury system. Civil RICO is a civil case. Defendant's liberty is not at stake by reason of plaintiff's prosecution of his civil case. Proof that defendant is indictable does not mean defendant has been indicted; only the grand jury can do that. It simply means that plaintiff has met one of the elements set out by Congress for a civil RICO case.

Regarding the problem of multiple burdens of proof, it is not for the courts to second guess the wisdom of Congress. In any event, courts and juries already provide heightened standards of proof to specific issues of fraud, defamation, paternity and other types of civil actions. Sedima, 741 F.2d at 506 (Cardamore, J., dissenting). There is no reason to believe that a RICO jury could not do the same. Also, the "indictable" element would not likely require proof beyond a reasonable doubt. A grand jury returns an indictment based upon probable cause or a reasonable probability that the crime has been committed. That is probably all that would be necessary here.

Regarding the due process requirement that criminal statutes be narrowly construed, it again must be stated that this is a civil not a criminal case. Defendant's liberty is not in jeopardy because of a civil RICO jury's finding that he is "indictable" for mail fraud. Granted, RICO is designed to provide a private plaintiff a remedy for injury caused by another's "criminal" wrong. But that does not mean that criminal consequences flow from a civil RICO case. A civil defendant is simply not entitled to criminal due process protections.

Finally, requiring prior criminal convictions creates absurd [16 ELR 20249] results. Plaintiff's civil RICO remedy would be dependent upon whether a local prosecutor plea bargains defendant down to a lesser or different crime, grants immunity, or simply decides not to prosecute. In light of all of the above, prior criminal convictions are not required.

6. Failure to Properly Plead Aiding and Abetting

Plaintiff's second cause of action alleges that the RICO defendants aided and abetted the "enterprise" of Garmt and Luurt Nieuwenhuis and Western Processing. Citing Moss v. Morgan Stanley, Inc., 553 F. Supp. 1347, 1362 (S.D.N.Y.), aff'd, 719 F.2d 5 (2d Cir. 1983), cert. denied, 104 S. Ct. 1280 (1984), a case involving the predicate crime of securities fraud, defendant contends that plaintiff's failure to allege in its second cause that defendant aided and abetted the predicate crimes of mail and wire fraud requires dismissal of the second cause.

Plaintiff responds contending that allegations of mail fraud require a showing that defendant participated in the fraudulent scheme, and that the mails were used in furtherance of the scheme. United States v. Bohonus, 628 F.2d 1167, 1171 (9th Cir.), cert. denied, 447 U.S. 928 (1980). One can "cause" the mails to be used simply if it is reasonably foreseeable that it would be done in furtherance of the fraudulent scheme. United States v. McDonald, 576 F.2d 1350, 1360 (9th Cir. 1978). Plaintiff has alleged that the use of the mails was foreseeable.

Plaintiff's first cause is stated sufficiently because plaintiff specifically alleges that defendant "participated" in the fraudulent scheme. The second cause, however, is devoid of any allegation that defendant "participated" in any fraudulent scheme. Paragraph 74 merely alleges that defendants "acted with knowledge" of the fraudulent scheme. Even according to plaintiff's own authority, Bohonus, in order to be liable for the predicate acts of mail fraud, defendant must have been a participant in the fraudulent scheme.

Defendant's motion as to claim 2 is well taken. Plaintiff has failed to allege a necessary element; that defendant participated in the fraudulent scheme.

7. Failure to Properly Plead an "Enterprise"

Defendant Northwest Steel Rolling Mills, in a separate memorandum in support of its motion to dismiss, contends that plaintiff has failed to allege a distinction between the "person(s)" alleged to be engaged in racketeering activity and the "enterprise" through which the persons conducted their activity. Defendant contends that because all of the defendant "persons" are also alleged together to constitute the "enterprise," that plaintiff has failed to allege a proper RICO claim. In Rae v. Union Bank, 725 F.2d 478 (9th Cir. 1984), the Ninth Circuit held that there must be a separate identity between the RICO defendant and the enterprise noting that "if Union Bank is the enterprise then it cannot also be the RICO defendant." Id. at 481.

It is clear, however, that this identity rule only applies where a single defendant is also alleged to be an "enterprise." The rule prevents a single "person" who commits two predicate acts from also being charged under RICO. Here, the alleged enterprise is a group of RICO defendants "associated in fact" pursuant to 18 U.S.C. § 1961(4) (1982). That is all the statute requires and plaintiff has met its burden.


A private party may sue in federal court to recover "costs of response" to hazardous waste releases. CERCLA states that "notwithstanding any other provisions or rule of law . . . [generators, transporters and operators] shall be liable for all costs of removal . . . incurred by the United States Government [and] any other necessary costs of response incurred by any other persons consistent with the national contingency plan." 42 U.S.C. § 9607(a) (1982). Section 9601(25) defines "removal" as both the actual clean-up and acts taken to "monitor, assess and evaluate" a hazardous waste release.

Boeing raises several contentions in support of its motion to dismiss plaintiff's CERCLA claim. Defendant Sea-Land, in a separate memorandum, also raises a defense which is relevant to transporter defendants. Because plaintiff's claim, assuming that is valid, is not ripe, Boeing and Sea-Land's other substantive challenges will be held for another day.

1. Failure to Allege Actual Cleanup Costs

Boeing contends that plaintiff's CERCLA claim, even if valid, is not yet ripe because plaintiff has only incurred investigation costs and has not yet incurred any actual clean-up costs. Boeing contends that the plain meaning of the "costs of response incurred" requires plaintiff to have actually begun the clean-up of its property before it may sue in federal court for reimbursement. Defendant notes that the paramount Congressional policy behind CERCLA is to promote clean-up of the environment and not to create a cause of action for mere study.

Plaintiff responds contending that the definition of "response" includes "monitor, assess, and evaluate." Defendant does not dispute the fact that plaintiff has incurred expenses conducting numerous tests on its property regarding the extent of the waste migration. Plaintiff contends these "assessment" costs are "costs of response" and therefore trigger its CERCLA claim.

Plaintiff's expenses for assessment are indeed "costs of response" which are ultimately recoverable. The cases indicate, however, that assessment costs alone, even though recoverable, are not sufficient to trigger or ripen a CERCLA claim. Actual clean up must have begun in order to create a CERCLA claim.

In Bulk Distribution Centers, Inc. v. Monsanto Co., 21 ERC 1080 [15 ELR 20151] (S.D. Fla. 1984) the court specifically held that "the actual clean up of the release must have begun before a cost recovery action can be reviewed." Id. at 1093. The court reasoned that to rule otherwise would be tantamount to ruling on liability before the clean up began. This is in direct conflict with CERCLA's primary purpose; to clean up the release first and then determine liability. Id. it also seems apparent that a reviewing court would likely have insufficient information to form a reasoned ruling on liability since only the test costs, and not the actual cleanup expenditures, would have been accurately determined.

The Bulk Transportation court, citing CERCLA's primary purpose to clean up hazardous releases, held that that purpose is promoted by requiring plaintiff to incur clean up costs before its CERCLA claims ripen. The promise of a claim down the road provides an incentive for beginning the clean up. Congress enacted CERCLA to supervise and promote the clean up of hazardous releases, not just to study them.

Other recent cases have decided the same was as Bulk Transportation. Cadillac Fairview/California, Inc. v. Dow Chemical Co., 21 ERC 1584 [14 ELR 20716] (C.D. Cal. 1984); Wickland Oil Terminals v. ASARCO, Inc., 21 ERC 1640 [14 ELR 20494] (N.D. Cal. 1984); United States v. Price, 577 F. Supp. 1103 [13 ELR 20843] (D.N.J. 1983); State ex rel. Brown v. Georgeoff, 562 F. Supp. 1300 (N.D. Ohio 1983); Environmental Defense Fund v. Lamphier, 12 ELR 20843 (E.D. Va. 1982).

Plaintiff cites one case, New York v. General Electric Co., 592 F. Supp. 291 [14 ELR 20719] (N.D.N.Y. 1984) which holds the opposite of the above cases. That court noted that since assessment costs are defined as "response" costs, that mere testing triggers a CERCLA claim. New York v. G.E., however, is distinguishable in that it involved not a private action but a CERCLA claim brought by a state under different statutory provisions. The court expressly held that, in distinguishing Cadillac Fairview, a private action, state and federal cases involve "significantly different cost criteria." 592 F. Supp. at 298. In light of the policy considerations, and the greater weight of authority, plaintiff's CERCLA claim must be dismissed for failure to incur any actual clean up costs.

IV. Motion To Dismiss Fictitious Defendants

Boeing cites Sigurdson v. Del Guercio, 241 F.2d 480 (9th Cir. 1956) and Craig v. United States, 413 F.2d 854 (9th Cir. 1969), an admiralty case, in support of its motion to dismiss the fictitious defendants. These cases held that the use of fictitious defendants is disfavored and should not be allowed. Craig stated, with disapproval, that the only possible purpose in naming fictitious defendants is to allow plaintiff to add defendants' names after the statute of limitations has run.

More recently, however, the Ninth Circuit has held that while the use of John Does is not favored, "situations arise . . . where the identity of alleged defendants will not be known prior to the filing of a complaint. In such circumstances, the plaintiff should be given an opportunity through discovery to identify the unknown [16 ELR 20250] defendants." Gillespie v. Civiletti, 629 F.2d 637, 642 (9th Cir. 1980). Plaintiff here has specified the actions of the unnamed defendants and merely seeks to discover their names. This is a proper use of fictitious defendants.

V. Motion to Strike Affidavits

At the pretrial conference, this Court ordered discovery stayed pending the filing of motions to dismiss. It was understood that these motions would be based entirely upon legal arguments which defendants contended would obviate the need for discovery. It would be manifestly unfair at this time to consider these affidavits.

Plaintiff has had no opportunity to conduct discovery and respond to the assertions made in these affidavits. The last sentences of Rule 12(b) provide that when matters outside the pleadings are presented in a 12(b)(6) motion "the motion shall be treated as one for summary judgment . . . and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56." Plaintiff has had no such opportunity.

Moreover, much of what is contained in these affidavits, relating to defendants lack of participation in selecting the disposal site, is relevant only to Sea-Land's argument in support of its motion to dismiss the CERCLA claim. Since the CERCLA claim, even if valid, is not yet ripe, this argument and the affidavits should be saved for possible use at a later date.

Therefore, it is hereby ORDERED:

(1) Defendant's Motions to Dismiss Plaintiff's Complaint is GRANTED as to causes of action two and four; and DENIED as to the remaining causes;

(2) Defendant's Motion to Dismiss Fictitious Defendants is DENIED;

(3) Plaintiff's Motion to Strike Affidavits is GRANTED;

(4) the stay of discovery is hereby lifted;

(5) a Special Master shall be appointed for the purposes of overseeing and managing the discovery process and to hear and decide all motions related to discovery;

(6) the Special Master's compensation, which shall be fixed by subsequent court order, shall be borne equally by the parties;

(7) the parties shall attempt to agree upon an individual to serve as Special Master; and

(8) The Clerk of the Court shall direct uncertified copies of this Order to counsel of record.

16 ELR 20246 | Environmental Law Reporter | copyright © 1986 | All rights reserved