Missouri v. Syntex (U.S.A.), Inc.

No. 85-2856 C (6) (E.D. Mo. March 20, 1987)

The court makes various procedural rulings in an action by the state of Missouri seeking recovery of response costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and the common law of public nuisance for the improper disposal of hazardous wastes in Times Beach. The court holds that the generator defendant, which forfeited its corporate charter in 1976, has the capacity to be sued under the law of its parent state, Delaware, and that the service made upon it was proper. The court also holds that it has personal jurisdiction over the generator and the transporters since their conduct brings them within the reach of Missouri's long-arm statute. The court rules that the statute of limitations did not begin to run at the time of the alleged disposal of dioxin in Times Beach, but that it is triggered anew by each release of dioxin into the environment. The court rules that the definition of "person" in CERCLA § 107(a)(3) includes corporate officers and employees and holds that plaintiff has stated a claim against the generator defendant's president and vicepresident. The court holds that CERCLA applies retroactively and that the burden of proof of showing that response costs are inconsistent with the National Contingency Plan is on defendants.

Turning to the state law claim, the court holds that under Missouri law, plaintiff is not required to own the land on which a public nuisance is alleged to have occurred. The court also holds that it is appropriate for it to exercise pendent jurisdiction over the state's nuisance claim in the interests of judicial economy. Finally, the court holds that the United States is not an indispensible party to this action.

[Related opinions are published at 15 ELR 20161; 16 ELR 20352, 20361, 20368; and 17 ELR 20241, 20958.]

Counsel for Plaintiff
David A. Taylor, Ass't Attorney General
P.O. Box 899, Jefferson City MO 65102
(314) 751-8806

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

[17 ELR 21014]

Gunn, J.:

Memorandum

This case is before the Court on the motions of defendants Northeastern Pharmaceutical & Chemical Company, Inc. (NEPACCO), Edwin Michaels and John W. Lee to dismiss the State of Missouri's claim against them and the motion of defendant Syntex Agribusiness (U.S.A.), Inc.'s motion to join the United States as a party in this action.

This litigation arises from the clean up efforts by the United States and the State of Missouri in response to disposal of hazardous waste in Missouri. The instant action by the State of Missouri seeks recovery of response costs under § 107(a) of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9607(a) (CERCLA) and under the common law of public nuisance.

From April 1970 to January 1972 defendant NEPACCO manufactured the disinfectant hexachlorophene at its plant in Verona, Missouri. The manufacturing process produced various hazardous and toxic byproducts, including 2, 4, 5-trichlorophenol (TCP), 2, 3, 7, 8-tetrachlorodibenzo-p-dioxin (TCDD or dioxin) and toluene. The waste byproducts were pumped into a holding tank periodically emptied by waste haulers. The State of Missouri alleges that during 1971 NEPACCO arranged, through Michaels and Lee, for defendant Independent Petrochemical Corporation (IPC) to have or arrange to have the waste removed from the tank. IPC in turn contracted with Russell Martin Bliss to remove the dioxin-contaminated waste from the tank. Defendant Bliss allegedly stored some of the waste in tanks owned by him in the St. Louis area; some of the waste was allegedly disposed of in Times Beach in St. Louis County, where Bliss allegedly used it to oil roads.

NEPACCO was incorporated in 1966 under the laws of Delaware and maintained its principal office in Stamford, Connecticut. Michaels formed NEPACCO, was a major shareholder and served as its president. Lee, also a major shareholder, served as NEPACCO's vice-president and as supervisor of the Verona plant. In 1976 NEPACCO forfeited its corporate charter by failing to maintain a registered agent for service of process; however, NEPACCO did not file a certificate of voluntary dissolution with the Delaware secretary of state. In 1974 its corporate assets were liquidated and the proceeds used to pay corporate debts before distribution to shareholders.¹

Defendants NEPACCO, Michaels and Lee have filed separate motions to dismiss. NEPACCO asserts that it does not have the capacity to be sued and that plaintiff cannot effect service upon it because it has forfeited its corporate charter. NEPACCO, Michaels and Lee all challenge the personal jurisdiction of this Court on the ground that none of them has engaged in business in Missouri in the last fourteen years. Defendants further argue for dismissal on the grounds that the complaint fails to state a cause of action, that the statute of limitations bars the action, that the complaint violates due process and that the complaint improperly invokes the pendent jurisdiction of the Court. Michaels and Lee assert that CERCLA does not provide for a finding of individual liability against them.

Defendants raised many of these arguments without success in litigation before the United States District Court for the Western District of Missouri in 1984. Appeal of the ruling of the Honorable Russell G. Clark is now complete, see United States v. Northeastern Pharmaceutical & Chemical Co., 810 F.2d 726 [17 ELR 20603] (8th Cir. 1986), and the opinion of the Eighth Circuit has preclusive effect on the issues raised before this Court.

The Eighth Circuit affirmed the holding of the district court that NEPACCO had the capacity to be sued under Delaware law. 810 F.2d at 746, citing Ross v. Venezuelan-American Independent Oil Producers Ass'n, 230 F. Supp. 701 (D. Del. 1964); Wax v. Riverview Cemetery Co., 41 Del. (2 Terry) 424, 24 A.2d 431 (Super. Ct. 1942). This Court further holds that the service made on the secretary of state of Delaware in accordance with Title 8, Del. Code § 321(b) is effective against NEPACCO. See Ross, 230 F. Supp. at 702. NEPACCO's motion to dismiss for insufficiency of service is accordingly denied.

Defendants' motions to dismiss for lack of personal jurisdiction are without merit. Plaintiff's complaint alleges conduct by these defendants in Missouri that brings them within the reach of the Missouri long-arm statute.² Defendants' contacts with this forum were purposeful, such that they "should reasonably anticipate being haled into court [here]." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). See also United States v. Bliss, 108 F.R.D. 127 [16 ELR 20368] (E.D. Mo. 1985); State of Missouri v. Independent Petrochemical Corp., 610 F. Supp. 4 [15 ELR 20161] (E.D. Mo. 1985).

Defendants' argument that this action is barred by the statute of limitations also fails. Plaintiff alleges on-going contamination of the environment attributable to the disposal of hazardous waste in Times Beach. The statute of limitations, therefore, did not commence running in 1971, but rather is triggered anew by each release of dioxin into the environment. Holding defendants to the defense of this suit at this time and in this forum does not therefore offend traditional notions of due process.

The Eighth Circuit held in NEPACCO that the definition of "person" in § 107(a)(3) of CERCLA "includes both individuals and corporations and does not exclude corporate officers or employees. See CERCLA § 101(21), 42 U.S.C. § 9601(21)." 810 F.2d at 743 (additional citations omitted). Plaintiff's complaint therefore states a claim against Michaels and Lee under CERCLA. Under Missouri law as well a corporate officer or director of a corporation may be liable for a tort when he either participated in the tortious act or authorized, directed or acquiesced in it when he knew, or by exercise of reasonable care should have known of it and should have objected or taken steps to prevent it. Osterberger v. Hites Construction Co., 599 S.W.2d 221, 229 (Mo. App. 1980).

The Eighth Circuit has held that CERCLA has retroactive application, NEPACCO, 810 F.2d at 741. The burden of proof in showing that response costs are inconsistent with the National Contingency Plan falls on defendants. Id. at 747.

Defendants move to dismiss the public nuisance claim under Missouri law on the ground that plaintiff the state of Missouri does not allege ownership on the land the nuisance is alleged to affect. Ownership of the land by a government plaintiff in a public nuisance action is required neither by statute nor by case law. See §§ 260.375(29) and 260.480.6, RSMo (Supp. 1987); County of Shannon v. Mertzlufft, 630 S.W.2d 238, 239 (Mo. App. 1982).

Finally, this Court holds that its exercise of pendent jurisdiction over plaintiff's claim under state law will not lead to confusion, but will rather promote the interests of judicial efficiency and economy by permitting resolution in the course of a single litigation of all claims arising out of a common nucleus of facts.

This Court denies the motion of defendant Syntex to join the United States for the reasons set forth by the Honorable Edward L. Filippine in his order of October 17, 1986. See State of Missouri v. Independent Petrochemical Corp., Order Denying Motion to Join United States, No. 83-2670C(2), slip op. [17 ELR 20241] (E.D. Mo. Oct. 17, 1986).

[17 ELR 21015]

Order

Pursuant to the memorandum filed herein on this date,

IT IS HEREBY ORDERED that the motions of defendants Northeastern Pharmaceutical & Chemical Co., Inc., Edwin Michaels and John W. Lee to dismiss plaintiff's complaint against them be and they are denied.

IT IS FURTHER ORDERED that the motion of defendant Syntex Agribusiness, Inc. to join the United States of America as a party be and it is denied.

1. This statement of facts is taken largely from United States v. Northeastern Pharmaceutical & Chemical Co., et al., 810 F.2d 726 (8th Cir. 1986), which in turn relied heavily on the lower-court opinion reported at 579 F. Supp. 823 (W.D. Mo. 1984).

2. 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 the doing of any of such acts:

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

(2) The making of any contract 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;

(6) Engaging in an act of sexual intercourse within this state with the mother of a child on or near the probable period of conception of that child.

* * *

3. Only causes of action arising from acts enumerated in this section may be asserted against a defendant in an action in which jurisdiction over him is based upon this section.

§ 506.500, RSMo (Supp. 1987). Plaintiff alleges conduct by defendants that would fall within subparagraphs (1), (2), (3) and (4).