Missouri v. Bliss

No. 84-1447-C (4) (E.D. Mo. December 16, 1985)

The court rules that § 107 of the Comprehensive Environmental Response, Compensation, and Liability Act may be applied retroactively to acts committed prior to its enactment and that Missouri law extends long-arm jurisdiction to a foreign company that succeeded to the assets and liabilities of a Missouri corporation. The court rejects defendants' argument that plaintiff's failure to comply with CERCLA § 106 was fatal to the claim since plaintiff is suing under § 107. Addressing defendants' motions to dismiss for lack of personal jurisdiction, the court holds that it has jurisdiction over defendant Syntex (U.S.A.) by virtue of the state's long-arm statute since Syntex (U.S.A.) took over the assets and obligations of a former state corporation. The court further holds that it lacks jurisdiction over certain of the corporation's divisions, which did not have the requisite contacts with the state and maintained sufficient corporate separateness to insulate them from the court's jurisdiction over the parent company.

The court next holds that plaintiff may sue defendant company Syntex Agribusiness under the Missouri Hazardous Substances Act for cleanup costs incurred at a hazardous waste site. Plaintiff's pleadings alleged that defendant company had control over a hazardous substance at the time it was released from the site. Finally, the court holds that plaintiff stated a proper claim for response costs against defendant NEPACCO, a Delaware corporation, despite the company's 1973 forfeiture of its charter, since NEPACCO had never been dissolved.

Counsel for Plaintiff
John Ashcraft, Attorney General; David A. Taylor, Ass't Attorney General
Supreme Ct. Bldg., P.O. Box 899, Jefferson City MO 65102
(314) 751-3321

Counsel for Defendants
James C. Ochs
225 S. Meramec, Clayton MO 63105
(314) 725-9700

John J. Cole
Armstrong, Teasdale, Kramer & Vaughan
611 Olive St., Suite 1900, St. Louis MO 63101
(314) 621-5070

[16 ELR 20361]

Cahill, J.:

Memorandum and Order

This matter is before the Court on the following motions of the parties: Defendant Jerry Bliss' and Jerry Bliss, Inc.'s motions to dismiss; the Syntex defendants' separate motions to dismiss; John Lee's, Edwin Michael's, and Northeastern Pharmaceutical's (NEPACCO's) motion to dismiss plaintiff's first amended complaints, quash service of summons, and for summary judgment, and motion for leave to withdraw filed by counsel for the Bliss defendants.

This is a civil action for reimbursement of response costs brought under the Comprehensive Environmental Response Compensation and Liability Act of 1980 (CERCLA), 42 U.S.C. § 9601, et seq. Plaintiff, the State of Missouri, alleges it has incurred compensable response costs as a result of defendants' disposal of dioxin within the state of Missouri. Plaintiff seeks declaratory relief, equitable liens, and compensatory and punitive damages. Plaintiff also seeks relief under state nuisance law and Missouri's Hazardous Substances Act, MO. REV. STAT. §§ 260.500 through 260.550.

Jerry Bliss' and Jerry Bliss, Inc.'s Motions to Dismiss

As grounds in support of their respective motions to dismiss, the Bliss defendants contend, plaintiff fails to state a federal claim for reief or any other claim upon which relief can be granted. Specifically, defendants argue that nothing in the statute authorizes plaintiff to file suit to recover under the circumstances set forth in their pleadings. Defendants also argue that CERCLA is not to be applied retroactively, and that plaintiff cannot show compliance with 42 U.S.C. § 9606.

A Rule 12(b)(6) motion should not be granted unless it appears beyond doubt that plaintiff is not entitled to recover under any set of provable facts. The complaint is to be liberally construed, and the facts as alleged are taken as true. Furthermore, the Court is to give plaintiff the benefit of all favorable inferences that may reasonably be drawn in his favor. Stifel, Nicholas & Co., Inc. v. Dain, Kalmain & Quail, Inc., 578 F.2d 1256, 1260 (8th Cir. 1978).

"CERCLA was enacted by Congress to provide for liability, compensation, clean up, and emergency response to hazardous substances released into the environment." United States v. Reilly Tar & Chemical Corp., 546 F. Supp. 1100 [12 ELR 20954] (D. Minn. 1982). The facts as alleged in plaintiff's petition establish an imminent and substantial threat to health and environment. Further, plaintiff has pled those steps it took in response to this substantial threat and the response costs it has incurred to date. Under the requirement of the federal rules for notice pleading and in view of this Court's obligation to accept all factual allegations as true, plaintiff's complaint states a legally sufficient claim for relief under CERCLA.

Defendants' contention that plaintiff has failed to comply with 42 U.S.C. § 9606 is without merit. Sec. 9606, entitled "Abatement Actions," permits the Government to bring suit to obtain abatement action whenever the President determines there may be an imminent and substantial endangerment to the public health, welfare or environment because of an actual or threatened release of a hazardous substance. Plaintiff does not rely on § 9606 in bringing this action; consequently, whatever compliance requirements defendants are referring to are inapplicable here.

Next, defendants argue that the acts plaintiff claims they committed occurred seven to nine years ago, and because CERCLA is not retroactive, plaintiff's claims must be dismissed. Although there is a strong presumption against retroactive legislation, § 9607 of CERCLA has been found to be retroactive. See United States v. Northeastern Pharmaceutical and Chemical Co., 579 F. Supp. 823 [14 ELR 20212] (W.D. Mo. 1984); State of Missouri v. Independent Petrochemical Corp., No. 83-2670C(2) [15 ELR 20161] (E.D. Mo. 1984); State ex rel. Brown v. Georgeoff, 562 F. Supp. 1300, 1314 (N.D. Ohio 1983); United States v. Waste Industries, 556 F. Supp 1301 [13 ELR 20286] (E.D.N.C. 1982); United States v. Wade, 546 F. Supp. 785 [12 ELR 21051] (E.D. Pa. 1982). Thus, defendants' assertion opposing retroactive application of § 9607 is therefore overruled.

Syntex Defendants' Motions to Dismiss

Defendants Syntex Corporation, Syntex Laboratories, Inc., and Syntex (U.S.A.), Inc. move to dismiss plaintiff's first amended complaint pursuant to Rule 12(b)(2), Fed. R. Civ. P. Defendants contend they lack the requisite contacts with this forum and are not doing business in Missouri. Further, these Syntex defendants contend they own no property in the state. Syntex Agribusiness (Agribusiness) has also moved for dismissal of Count IV of plaintiff's complaint pursuant to Rule 55:27(a)(6), Mo. Rules of Civil Procedure. Agribusiness contends plaintiff has failed to assert a statutory cause of action under MO. REV. STAT. §§ 260.500-260.550 (Hazardous Substances Act), for plaintiff does not allege that Agribusiness was a "person" having control over a hazardous substance when a hazardous substance emergency occurs. The Court will address the motions of Syntex Corporation, Laboratories, Inc., and U.S.A., Inc. first, then proceed to the motion of Agribusiness.

Sec. 9607 of CERCLA does not authorize nationwide service [16 ELR 20362] of process. Rule 4(e), Fed. R. Civ. P., provides that in the absence of a statute authorizing nationwide service of process, a defendant may only be served under the circumstances and in the manner prescribed by a statute or rule of court of the state in which the district court sits. Consequently, in order for this Court to exercise personal jurisdiction over defendants, they must be subject to the jurisdiction of the Missouri state courts. A nonresident's amenability to service of process is controlled by the state's long-arm statute and the fourteenth amendment.

In passing on a motion to dismiss for lack of personal jurisdiction, the Court must engage in a two-step inquiry. First, whether or not the defendant is subject to jurisdiction by virtue of an applicable state statute, in this instance, Missouri's Long-Arm Statute, must be determined. Second, whether the exercise of jurisdiction violates the due process clause of the fourteenth amendment. Scullin Steel Co. v. National Railway Utilization Corp., 676 F.2d 309, 312 (8th Cir. 1982). In making these determinations, the Court must view the evidence in the light most favorable to the nonmoving party. See Mountaire Feeds, Inc. v. Agro Impex, S.A., 677 F.2d 651, 653 (8th Cir. 1982). Missouri's long-arm statute provides,

1. Any person or firm, whether or not a citizen or resident of this state, or any corporation, who in person or through an agent does any of the acts enumerated in this section, thereby submits such person, firm, or corporation, and, if an individual, his personal representative, to the jurisdiction of the courts of this state as to any cause of action arising from he doing of any of such acts:

(1) The transaction of any business within this state;

(2) The making of any business within this state;

(3) The commission of a tortious act within this state;

(4) The ownership, use, or possession of any real estate situated in this state;

(5) The contracting to insure any person, property or risk located within this state at the time of contracting;

MO. REV. STAT. § 506.500. Plaintiff contends all the Syntex divisions constitute "one entity" and that the acts of all Syntex entities are attributable to the others. Moreover, plaintiff alleges in its petition that Syntex Corporation has exercised such control and dominance over the activities of its wolly owned subsidiaries, Syntex U.S.A., Agribusiness, and Laboratories, Inc., that the Court should pierce the corporate veil between the parent corporation and its subsidiaries for purposes of assessing liability in this case.

Syntex Corporation (Corporation) is a foreign corporation organized under the laws of the Republic of Panama. Syntex (U.S.A.) is Corporation's American holding company. U.S.A. owns directly or indirectly all the stock of the various Syntex subsidiaries. In 1969, U.S.A. was called Syntex Laboratories (Old Labs). During a period of corporate reorganization, Old Labs entered into an agreement to purchase the assets of a Missouri corporation named Hoffman-Taff, Inc. Under this agreement, Old Labs received substantially all the assets of Hoffman-Taff. In addition, Old Labs agreed to be responsible for all contracts, obligations, and liabilities of Hoffman-Taff. Sometime after reorganization, Old Labs changed its name and became Syntex (U.S.A.). Chief Judge Nangle in United States of America v. Russell Martin Bliss, et al., No. 84-200C(1) (November 1, 1985), expressly found that Syntex U.S.A., Inc., was subject to the Court's jurisdiction as successor to Hoffman-Taff, Inc. The contacts of Syntex Corp. and Syntex Labs, Inc., were found insufficient for jurisdiction purposes. Moreover, it was found that the Syntex divisions maintained the requisite corporate separateness and, thus, were not "one entity" notwithstanding Corporation's sole ownership of the subsidiaries, its alteration of the corporate structure of Hoffman-Taff, its sharing of common officers and directors, and its manipulation of the cash flow of Syntex Agribusiness. The Court agrees with and adopts the rationale of U.S. v. Russell Martin Bliss, and concludes that Syntex (U.S.A.) is subject to this Court's jurisdiction under the long-arm statute as successor to Hoffman-Taff, Inc.

Syntex Agribusiness (Agribusiness) seeks the dismissal of Count IV of plaintiff's first amended complaint on the ground that plaintiff fails to assert a statutory cause of action under §§ 260.500-260.550, MO. REV. STAT. (Hazardous Substances Act). Specifically, Agribusiness argues plaintiff's failure to allege that Agribusiness is a "person having control over a hazardous substance when a hazardous substances emergency occurs," is fatal to its cause of action. In response, plaintiff agree it must allege that Agribusiness had control over a hazardous substance at the time a hazardous substance emergency occurs, and submits that it has pled sufficient facts to support that conclusion. The Court agrees, and defendant's motion to dismiss will therefore be denied.

A hazardous substance emergency is defined "as any release of hazardous substances in quantities equal to or in excess of those determined pursuant to §§ 101(14) or 102 or CERCLA. MO. REV. STAT. § 260.500(6). Release is defined "as any threatened or real emission, discharge, spillage, leakage, pumping, pouring, emptying, or dumping of a substance into or onto the land, air, or water. . . ." MO. REV. STAT. § 260.500(9). A person having control over a hazardous substance is any person producing, handling, storing, transporting, refining, or disposing of a hazardous substance when a hazardous substance emergency occurs, including bailees, carriers, or any other person in control of a hazardous substance when a hazardous substance emergency occurs whether they own the hazardous substance or are operating under a lease, contract, or other agreement with the legal owner thereof. Sec. 260.500(8).¹ Plaintiff, in its petition at P29, alleges that defendant became a joint venturer with certain other named defendants in the production of hexachlorophene, whose byproduct is dioxin. Further, plaintiff alleges that the dioxin waste was placed in a tank at Hoffman's (later a Syntex facility) plant in Verona, Missouri. In P31, plaintiff alleges that defendant and others arranged to have the waste removed from the tank with defendant Bliss who is alleged to have removed and disposed of the waste in a manner violative of both state and federal statutes. Construing plaintiff's allegations in a light most favorable to it and in conjunction with the applicable provisions of the Hazardous Substances Act, and Court concludes that Count IV and the above referenced paragraphs of plaintiff's complaint state a legally cognizable claim under the Act. Consequently, Agribusiness' motion to dismiss Count IV will be denied.

Northeastern Pharmaceutical's, Edwin Michaels', and John Lee's Motions to Dismiss

Northeastern Pharmaceutical and Chemical Company (NEPACCO) and its former president and vice-president, Edwin Michaels and John Lee, move this Court for an order dismissing plaintiff's claims against them. In support of their respective motions, defendants argue NEPACCO is not longer a suable entity because it forfeited its corporate charter to do business in Missouri on January 1, 1973. The capacity of a corporation to sue and be sued is determined by Fed. R. Civ. P. 17(b). Because NEPACCO was incorporated in Delaware, Delaware law governs the issue respecting NEPACCO's capacity to be sued. NEPACCO never undertook steps to voluntarily dissolve; its corporate charter was simply forfeited. A Delaware corporation which has forfeited its charter but has not dissolved is in a state of coma during which it is still subject to sut. See Ross v. Venezuelan American, 230 F. Supp. 701 (D. Del. 1964). The reasoning of Ross was adoted by Judge Filippine of this district in State of Missouri v. Independent Petrochemical Corp., et al., No. 83-2670C(2) (E.D. Mo. 1984), in law. This Court also adopts the rationale of Ross and holds that NEPACCO is presently subject to suit.

The Bliss Attorneys' Motion to Withdraw

Counsel for the Bliss defendants have requested leave to withdraw in this matter. It is the policy of this Court to deny motions to withdraw until such time as replacement counsel have been retained. Counsel do not indicate that new attorneys have been retained in this matter. Consequently, the Court will deny counsel's request without prejudice and grant them leave to request permission to withdraw anew upon the entry of replacement counsel. If the Bliss defendants do not secure replacement counsel by January 10, 1985, the Court ORDERS defendants' counsel to notify defendants in writing of a hearing now set for January 24, 1986, at 11:30 a.m., at which time defendants may show cause why their counsel should not be permitted to withdraw. Accordingly,

[16 ELR 20363]

IT IS HEREBY ORDERED that Jerry Bliss' and Jerry Bliss, Inc.'s motions to dismiss are DENIED;

IT IS FURTHER ORDERED that the motions of Syntex Corporation and Syntex Laboratories, Inc., to dismiss for lack of personal jurisdiction are GRANTED;

IT IS FURTHER ORDERED that the motions of Syntex (U.S.A.), Inc., and Syntex Agribusiness to dismiss are DENIED;

IT IS FURTHER ORDERED that the motions of John Lee, Edwin Michaels, and NEPACCO to dismiss, quash service of summons, and for summary judgment are DENIED;

IT IS FURTHER ORDERED that Bliss counsel's motion to withdraw is DENIED WITHOUT PREJUDICE.

1. To the extent defendant is arguing that it must exercise control over the hazardous substance at the site where the clean up costs are incurred, this section should dispel such a notion, as it presupposes that more than one person can have control over a hazardous substance at different times and places and be subject to liability if a hazardous substance emergency occurs.