United States v. Production Plated Plastics, Inc.

No. K87-138 CA (W.D. Mich. January 28, 1991)

The court holds that defendants found liable in a Resource Conservation and Recovery Act (RCRA) enforcement action may not sue an alleged owner/operator for contribution for remedial expenses. The court rules that RCRA does not provide for a right of contribution among joint tortfeasors. RCRA § 7002(a)(1)(B) does not expressly create a right of contribution and nothing in the Act implies a right of contribution. This result is supported by the fact that RCRA § 7002 does not provide a private right of action for damage. The court also holds that defendants may not bring an action under RCRA's citizen suit provision against the alleged owner/operator because the state has commenced and is diligently prosecuting an action under RCRA § 7002(a)(1)(B).

Counsel are listed at 21 ELR 21214.

[21 ELR 21220]

Gibson, J.:

Opinion

Plaintiffs United States of America, Frank J. Kelley, Attorney General for the State of Michigan, the Michigan Natural Resources Commission, and Gordon E. Guyer, Director of the Michigan Department of Natural Resources (collectively the "government"), filed the present action for permanent injunctive relief and imposition of civil penalties against defendants Production Plated Plastics, Inc. ("PPP"), Michigan City Plastics, Inc. ("MCP"), Michael J. Ladney, Jr., and Marguerite Ladney, pursuant to Sections 3008(a)and (g) of the Resource Conservation and Recovery Act of 1976 ("RCRA" or the "Act"), 42 U.S.C. §§ 6928(a) and (g), and Section 48 of the Michigan Hazardous Waste Management Act ("HWMA"), M.C.L.A. § 299.548.

On May 14, 1990, this Court determined that defendants Michael J. Ladney Jr. and PPP operated a hazardous waste facility and stored hazardous waste at their Richland, Michigan facility (the "Richland facility") in violation of RCRA and HWMA. Specifically, Michael Ladney and PPP violated Sections 3005(a) and (e) of RCRA, 42 U.S.C. § 6925(a) and (e), and the RCRA regulations, 40 C.F.R. Part 265, by discharging hazardous waste into unlined surface impoundments and by operating waste piles without an RCRA permit or RCRA interim status. They also failed to submit required closure and postclosure plans and commence and complete closure of the Richland facility within the time periods required by RCRA Section 3005(e) and 40 C.F.R. §§ 265.112 and 265.118. These RCRA violations in turn amounted to violations of Sections 6 and 22 of HWMA; M.C.L.A. §§ 299.506 and 299.522, for the continued operation of an unlicensed hazardous waste storage and disposal facility.¹

Trial on the appropriate remedy to be assessed against Michael Ladney, PPP, and MCP is scheduled to begin on February 4, 1991. In a flurry of pre-trial activity beginning in late December, the Court granted in part and denied in part the goverrnment's motion for summary judgment as to appropriate injunctive relief and granted third-party defendant Amerace Corporation's motion to sever the action against it. The Court also granted Marguerite Ladney and the State of Michigan's motion to dismiss the complaint against Marguerite Ladney pursuant to a stipulated settlement reached between the two parties. Now pending before the Court is defendants PPP and Michael J. Ladney Jr.'s ("movants") motion for leave to file a third-party complaint or third-party crossclaim against Marguerite Ladney pursuant to Federal Rules of Civil Procedure 13(g), 14(a), or 15. For the reasons stated below, the motion is denied.

Marguerite Ladney was not originally a party to this lawsuit. In the fall of 1989, plaintiff State of Michigan and defendants PPP, MCP, and Michael J. Ladney Jr. made a motion for leave to add Marguerite Ladney as a party defendant in the action. The motion was granted and she was added as a defendant by the State of Michigan in an amended complaint filed in October 16, 1989. Since then Michigan and Marguerite Ladney have reached a settlement which requires Marguerite Ladney to pay $ 60,000 to the state in exchange for the state dropping its claim against her.

Over the objection of Michael J. Ladney Jr., the Court granted Michigan and Marguerite Ladney's motion to dismiss the complaint against her. United States et al. v. Production Plated Plastics et. al., No. K87-138 CA [21 ELR 21214](W.D. Mich. Jan. 24, 1991) (Order granting motion to dismiss.)

In their proposed complaint, movants present the same theory of recovery which Michigan chose to dismiss in favor of the $ 60,000 settlement. Specifically, movants contend that Marguerite Ladney blocked the sale of all of the assets of North American Products ("NAP"), a Canadian corporation. The NAP sale was to be made in conjunction with a larger sale of assets of the Detroit Plastics Molding group of companies (the "DPM group"). The DPM group includes PPP, MCP, NAP, and various other companies founded by Michael Ladney. According to movants, the sale of the DPM group assets was designed to raise sufficient cash for movants to meet their responsibility to close the Richland facility and comply with the financial responsibility and postclosure care requirements of RCRA. However, when Marguerite Ladney voted against selling her shares of NAP, the entire deal fell through. Movants assert that Marguerite Ladney's decision was a "corporate decision" made by an "owner/operator" which caused a continuation of the Richland facility's RCRA violations and for which Marguerite Ladney is liable under the Act.²

Movants aver that they are entitled to contribution from Marguerite Ladney pursuant to Title 42 United States Code Section 6972(a)(1)(B)³ for "remediation expenses, including experts' attorneys' fees, incurred because of alleged continued RCRA violations and resulting exposure to liability, fines and penalties." Proposed Complaint at 8-9. They also request that the Court enter a declaratory judgment finding Marguerite Ladney jointly liable under RCRA as an "owner or operator" of the Richland facility.

II.

Although leave to amend a pleading pursuant to Federal Rule of Civil Procedure 15 should be freely granted, if the proposed amended pleading will result in undue prejudice to another party or cannot withstand a motion to dismiss under Rule 12(b)(6); leave to file is properly denied. United States v. Wood, 877 F.2d 453, 456 (6th Cir. 1989); Roth Steel Products v. Sharon Steel Corp., 705 F.2d 134, 155 (6th Cir. 1983).

Rule 12(b)(6) tests whether a claim has been adequately stated in the complaint. The Court's inquiry at this point, before the reception of any evidence by affidavit or admission, is merely whether the challenged pleading sets forth allegations sufficient to make out the elements of a right to relief. In making this determination,the allegations in the pleading are taken at "face value", California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 515 (1972), and should be construed favorably to the pleader. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). "[W]ell pleaded facts are taken as true, and the complaint is construed liberally in favor of the party opposing the motion." Davis H. Elliot Co. v. Caribbean Utilities Co., 513 F.2d 1176, 1182 (6th Cir. 1975). All reasonable inferences which might be drawn from the pleading must be indulged. Fitzke v. Shappell, 468 F.2d 1072, 1076 n.6 (6th Cir. 1972). The court must deny the motion to dismiss unless it can be established beyond a doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Windsor v. The Tennessean, 719 F.2d 155, 158 (6th Cir. 1983), cert. denied, 469 U.S. 826, 105 S. Ct. 105, 83 L. Ed. 2d 50 (1984); Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 101-02, 2 L. Ed. 2d 80 (1957).

[21 ELR 21221]

III.

In Northwest Airlines, Inc. v. Transport Workers Union of America, 451 U.S. 77, 90 (1980), the Supreme Court determined that a right of contribution under federal legislation may arise in either of two ways. First, it may be created by statute, either expressly or by clear implication. Second, it may be part of the federal common law which has arisen through the exercise of judicial power to fashion appropriate remedies for unlawful conduct. See also Texas Industries, Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 638 (1980). Where a federal statute does not explicitly create a right to contribution, such a right may be implied only if Congress intended that a defendant have a right to contribution. Moreover, "when Congress has enacted a comprehensive legislative scheme including an integrated system of procedures for enforcement . . . [t]he judiciary may not . . . fashion new remedies that might upset carefully considered legislative programs." Northwest Airlines, 451 U.S. at 97. See also Texas Industries, 451 U.S. at 640-46.

[1] RCRA Section 7002(a)(1)(B) does not expressly create a right of contribution among joint violators.⁴ Similarly there is nothing in the Act which implies a right of contribution. After reviewing the statute, its remedial goals, and its place in the overall statutory scheme of federal environmental legislation, the Court is satisfied that Congressional intent was clearly not to allow a right of contribution. The remedial scope of RCRA is so broad-ranging that it would do violence to a clear reading of the statute to find an implied remedy where none has been expressly conferred.⁵

In addition, it has been determined that RCRA Section 7002 does not provide a private right of action for damages. Walls v. Waste Resource Corporation, 761 F.2d 311, 316 [15 ELR 20438] (6th Cir. 1985). See also Middlesex City Sewerage Authority v. National Sea Clammers, 453 U.S. 1, 18 [11 ELR 20684] (1981) (Private remedies in addition to those expressly provided should not be implied). This result lends support to a finding of no right for contribution. If movants cannot recover damages under RCRA, they are not entitled to an apportionment of damages in a contribution action. Accordingly the complaint fails to state a claim for contribution against Marguerite Ladney, and to the extent it requests contribution, the motion for leave to file the complaint is denied.

Movants' complaint also requests a declaratory judgment finding that Marguerite Ladney is jointly liable as an "owner or operator" under RCRA. The jurisdictional basis for this claim is alleged to be the same as for the contribution claim, i.e., the citizen's suit provision of Section 7002(a)(1)(B). However, a citizen's may not be brought under RCRA if the state "has commenced and is diligently prosecuting an action under subsection (a)(1)(B) of this section." 42 U.S.C. § 6972(b)(2)(C). In the present case, the State of Michigan has commenced and is diligently prosecuting an action under Section 7002(a)(1)(B) against Michael Ladney, PPP, and MCP. Thus, movants are precluded from bringing an action for declaratory relief against Marguerite Ladney and their motion for leave to file a complaint must be denied.⁶

IV.

For the reasons stated above, defendants PPP and Michael J. Ladney Jr.'s motion for leave to file a cross-complaint or third-party complaint against Marguerite Ladney is denied.

ORDER

In accordance with the Opinion dated January 24, 1991, IT IS HEREBY ORDERED that defendants Production Plated Plastics and Michael J. Ladney, Jr.'s motion for leave to file a third-party complaint or third-party crossclaim against Marguerite K. Ladney (Pleading No. 170) is DENIED.

IT IS SO ORDERED.

1. Although the May 14, 1990, opinion does not discuss MCP's liability, the Court is informed that MCP will stipulate to its liability.

2. In finding non-corporate owners or operators personally liable under RCRA, the court's focus is normally on their involvement in the day-to-day operations and corporate decision making that led to the violations. For instance, Michael Ladney was held liable under RCRA because he was "personally involved or directly responsible for acts in violation of RCRA and HWMA." United States et al. v. Production Plated Plastics et al, slip op. at 13[21 ELR 20035](W.D. Mich. May 14, 1990). In a motion for summary judgment she filed before the action against her was dismissed, Marguerite Ladney presented strong evidence that she had no direct ownership interest in PPP and that she had no corporate decision making authority whatsoever. Without giving an opinion as to the final merits of the claims against Marguerite Ladney, it appears that her decision not to sell her shares of NAP was a personal business decision, not a "corporate" decision affecting PPP's continuing RCRA violation.

3. Movants consistently cite 42 U.S.C. § 6972(1)(B) as the section of RCRA pursuant to which they are entitled to contribution. The Court notes that there is no such section under Title 42 of the United States Code. The Court presumes that movants are referring to 42 U.S.C. § 6972(a)(1)(B).

4. The full text of the section allows any person to commence a civil action on his own behalf:

(B) against any person, including the United States and any other governmental instrumentality or agency, to the extent permitted by the eleventh amendment to the Constitution, and including any past or present generator, past or present transporter, or past or present owner or operator of a treatment, storage, or disposal facility, who has contributed or who has contributing to the past or present handling, storage, treatment, transportation, or disposal of any solid or hazardous waste which may present an imminent and substantial endangerment to health or the environment.

42 U.S.C. § 6972(a)(1)(B).

5. Compare the language of RCRA Section 7002 with Section 7002 with Section 113 of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") which states, inter alia, at subsection (f)(1):

Any person may seek contribution from any other person who is liable or potentially liable under section 9607(a) of this title, during or following any civil action under section 9606 of this title or under section 9607(a) of this title.

42 U.S.C. § 9613(f)(1). Given the comprehensive nature of federal environmental legislation, the fact that similar language is not found in the relevant RCRA Sections establishes that no right of contribution is embodied in RCRA. The contribution remedy is designed specifically for actions brought under CERCLA.

6. The Court recognizes that this is a unique situation. The defendants are attempting to sue another potentially liable party after the government has commenced an action against them. Section 7002(b) (2)(C) may not have anticipated such a situation. Ordinarily, when faced with a similar dilemma, the defendants would implead the potentially liable party pursuant to Federal Rule of Civil Procedure 14(a). However, movants are precluded from impleading Marguerite Ladney because she was dismissed with prejudice from the original action pursuant to the stipulated settlement reached with the State of Michigan. The Court has already determined that the settlement is fair and reasonable. Moreover, if movants are liable they will ultimately share in the $ 60,000 settlement. Because the state cannot recover twice for the same injury, movants' liability to the state, if any, will be reduced by $ 60,000.