California Department of Toxic Substances Control et al v. Jim Dobbas, Inc. et al

Filing 286

MEMORANDUM AND ORDER signed by Senior Judge William B. Shubb on 731/2023 ORDERING that DTSC's 279 Motion to Dismiss and Motion to Strike are GRANTED IN PART. Intervenors' counterclaims are DISMISSED. Intervenor's seventh affirmativ e defense for contributory and comparative negligence is hereby STRICKEN. DTSC's Motion to Strike Intervenors' jury demand is DENIED. Intervenors have twenty days from the date of this Order is signed to file amended counterclaims, if they can do so consistent with this Order. (Mena-Sanchez, L)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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CALIFORNIA DEPARTMENT OF TOXIC
SUBSTANCES CONTROL, et al.,

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No. 2:14-cv-00595 WBS EFB

Plaintiffs,
MEMORANDUM AND ORDER RE:
MOTION TO DISMISS
COUNTERCLAIMS AND MOTION TO
STRIKE

v.
JIM DOBBAS, INC., a California
corporation, et al.,
Defendants.

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Plaintiffs Department of Toxic Substances Control and

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the Toxic Substances Control Account (collectively “DTSC”) seek

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recovery of costs and declaratory relief under the Comprehensive

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Environmental Response, Compensation, and Liability Act

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(“CERCLA”), 42 U.S.C. § 9601 et seq., in connection with the

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cleanup of a wood preserving operation in Elmira, California.

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(First Am. Compl. (“FAC”) ¶ 19 (Docket No. 77).)

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Century Indemnity Company, The Continental Insurance Company,

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Allianz Underwriters Insurance, Chicago Insurance Company, and
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Intervenors

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Fireman’s Fund Insurance Company (collectively, “Intervenors”),

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acting behalf of their insured, C&A Products, LLC (“C&A”),1 have

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filed an answer in intervention and counterclaims against DTSC.

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(Docket No. 271.)

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for cost recovery under CERCLA § 107, 42 U.S.C. § 9607;

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contribution under CERCLA § 113(f); declaratory relief under

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CERLCA § 113(g), 42 U.S.C. § 9613(g); and contribution and

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indemnity under the California Hazardous Substance Account Act

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(“HSAA”), California Health and Safety Code § 25300, et seq.

Specifically, Intervenors filed counterclaims

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(Docket No. 271.)

Intervenors also included certain affirmative

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defenses within their answer and have requested a jury trial.

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DTSC has moved to dismiss the counterclaims, strike

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Intervenors’ affirmative defense for contributory and comparative

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negligence, and strike the jury demand.

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court held a hearing on the motion on July 24, 2023.

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I.

(Docket No. 279.)

The

Motion to Dismiss Counterclaims

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When considering a motion to dismiss a counterclaim

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under Federal Rule of Civil Procedure 12(b)(6), the court uses an

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identical standard as that for dismissal of a claim.

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AirWair Int’l Ltd. v. Schultz, 84 F. Supp. 3d 943, 949 (N.D. Cal.

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2015).

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true and draw all reasonable inferences in favor of the claimant.

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See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on

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other grounds by Davis v. Scherer, 468 U.S. 183 (1984); Cruz v.

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Beto, 405 U.S. 319, 322 (1972).

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a claimant must plead “only enough facts to state a claim to

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See, e.g.,

The court must accept the allegations in the claim as

To survive a motion to dismiss,

C&A Products is the successor to Wickes Corporation,
one of the former owners and operators of the site.
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relief that is plausible on its face.”

Bell Atl. Corp. v.

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Twombly, 550 U.S. 544, 570 (2007).

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however, “asks for more than a sheer possibility that a defendant

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has acted unlawfully,” and where a counterclaim pleads facts that

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are “merely consistent with a defendant’s liability,” it “stops

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short of the line between possibility and plausibility.”

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Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550

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U.S. at 557).

This “plausibility standard,”

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The Intervenors’ first and second counterclaims seek

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cost recovery and contribution from DTSC pursuant to CERCLA §§

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107 and 113.

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must allege that DTSC was (1) “the owner and operator of a vessel

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or a facility,” (2) a “person who at the time of disposal of any

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hazardous substance owned or operated any facility at which such

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hazardous substances were disposed of,” (3) a “person who . . .

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arranged for disposal or treatment . . . of hazardous

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substances,” or (4) a “person who accepts or accepted any

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hazardous substances for transport . . . .”

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The Intervenors assert their counterclaims on the theory that

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DTSC mismanaged cleanup efforts at the remediation site and is

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liable as an “operator” under § 9607(a)(2). (Intervenors

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Countercls. ¶¶ 7-34.)

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In order to assert such claims, the Intervenors

42 U.S.C. § 9607(a).

This court previously addressed similar counterclaims

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brought by defendant Jim Dobbas, Inc. (“Dobbas”) in deciding a

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similar motion to dismiss brought by DTSC.

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12.)

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considered an operator under CERCLA, there was some dispute among

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courts about the level of control necessary to support operator

(Docket No. 43 at 5-

The court noted that while a government entity may be

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liability.

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“actual control standard,” requiring affirmative acts from a

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purported operator to support liability, with other courts

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applying a broader “authority to control” standard.

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43 at 6-7 (citations omitted).)

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Specifically, some courts have applied a narrower

(Docket No.

This court recognized that cases from the Ninth and

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Fourth Circuits had applied the narrower actual control

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definition, requiring that the entity “play an active role in

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running the facility, typically involving hands-on, day-to-day

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participation in the facility’s management.”

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Unified Sch. Dist. v. Dorothy B. Godwin Cal. Living Tr., 32 F.3d

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1364, 1367 (9th Cir. 1994); see also United States v. Dart

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Indus., Inc., 847 F.2d 144, 146 (4th Cir. 1988).

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further noted that several courts had dismissed claims against

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state agencies where there were no allegations that the state

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agency had any involvement with the facility other than remedial

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cleanup efforts.

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F.2d at 146 (requiring “hands on” activities that contributed to

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the release of hazardous waste); Stilloe v. Almy Bros., 782 F.

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Supp. 731, 735-36 (N.D.N.Y. 1992); United States v. W. Processing

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Co., 761 F. Supp. 725, 730-31 (W.D. Wash. 1991).)

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See Long Beach

The court

(Docket No. 43 at 7 (citing Dart Indus., 847

However, this court also noted that those cases pre-

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dated the Supreme Court’s decision in United States v. Bestfoods,

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524 U.S. 51, 66 (1998), and held they were not persuasive.

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court explained that “Bestfoods does not require an operator to

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play an active role.

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direct, or conduct . . . operations having to do with the leakage

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or disposal of hazardous waste, or decisions about compliance

The

It requires only that an entity ‘manage,

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with environmental regulations.’”

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Bestfoods, 524 U.S. at 66-67).)

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(Docket 43 at 9 (quoting

The court also noted, among things, (1) agreements

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between DTSC or its predecessor agency and C&A or its

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predecessor, which set forth the agencies’ approval of remedial

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action at the Elmira site and which were attached to Dobbas’

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counterclaims; and (2) the allegations of the complaint that DTSC

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performed “response actions” at the facility, including “efforts

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to repair and restart the groundwater extraction and treatment

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system, completion of a remedial investigation for site soils,

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preparation of the Removal Action Workplan, implementation of the

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Removal Action Workplan in October and November 2011, groundwater

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monitoring, and other tasks.”

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Compl. ¶¶ 21-29; Exs. A & B (Docket No. 1).)2

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court determined that the pleadings sufficiently pled DTSC’s

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liability as an operator under CERCLA, and the court denied

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DTSC’s motion to dismiss Dobbas’ counterclaims for cost recovery

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and contribution.

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(Docket No. 43 at 8-9 (citing
Ultimately, the

(Docket No. 43 at 9-10.)

Here, Intervenors’ allegations regarding operator

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liability are similar to those asserted by Dobbas.

Nevertheless,

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notwithstanding the court’s prior ruling, DTSC argues that

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Intervenors have not sufficiently alleged its liability as an

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DTSC filed an amended complaint in December 2014, after
the court issued its order regarding Dobbas’ counterclaims.
(Docket No. 77.) DTSC amended the complaint to add C&A Products
as a defendant after investigation revealed that C&A might have
insurance coverage which could be a source of funds to reimburse
DTSC’s response costs. (Docket No. 68-1 at 3.) The amended
complaint’s allegations regarding DTSC’s response actions are
identical, and the amended complaint also attaches the same
documents as the original complaint, in addition to others.
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operator.

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recent decision in United States v. Sterling Centrecorp Inc., 977

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F.3d 750 (9th Cir. 2020), decided after this court’s order ruling

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on plaintiff’s motion to dismiss Dobbas’s counterclaims, now

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requires allegations that a party play an active role to held

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liable as an operator, and there are no such allegations here.

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Specifically, DTSC argues that the Ninth Circuit’s

In Sterling, the Ninth Circuit examined whether the

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United States could be held liable as an operator because of its

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issuance of an order during World War II shutting down gold

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mines, including the mine at issue in the case.

The panel

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explained that Bestfoods “clarifies that actual participation in

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decisions related to pollution is necessary for a finding of

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operator liability,” and noted that it had previously stated in

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Long Beach, 32 F.3d at 1367, that “[t]o be an operator of a

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hazardous waste facility, a party must do more than stand by and

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fail to prevent the contamination.

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in running the facility, typically involving hands-on, day-to-day

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participation in the facility’s management.”

It must play an active role

977 F.3d at 758.

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The panel continued, explaining that “[t]he Bestfoods

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standard confirms that operator status has a nexus requirement.

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That is, it requires that an operator’s relationship to the

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facility at issue must, at least in part, focus on ‘operations

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specifically related to pollution.’”

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U.S. at 66).

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requires something more than general control over an industry or

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facility.

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control over the facility’s polluting activities.”

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Id. (quoting Bestfoods, 524

The panel reiterated that “operator liability

It requires some level of direction, management, or
Id.

In light of the additional guidance provided by the
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Ninth Circuit in Sterling, the court determines that Intervenors

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have not sufficiently alleged that DTSC was an operator under

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CERCLA.

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whether the Ninth Circuit’s narrower definition of an operator in

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Long Beach applied after the Supreme Court’s decision in Best

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Foods, the Ninth Circuit has once again after Best Foods noted in

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Sterling that a party “must play an active role in running the

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facility, typically involving hands-on, day-to-day participation

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in the facility’s management.”

While this court previously expressed doubt about

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Here, Intervenors’ allegations repeat the First Amended

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Complaint’s allegations regarding DTSC’s response actions and add

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additional allegations that “DTSC actively operated the

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groundwater extraction and treatment system despite its 2001

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report stating the ‘ground water pump and treat system would

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likely be unsuccessful in meeting the remedial action

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objections’” and “[a] Site inspection in 2010 also revealed there

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were ‘numerous cracks in the asphalt cap’ that DTSC contracted to

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maintain in 2007.”

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However, a vague allegation that DTSC “actively operated” a

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groundwater system and DTSC’s alleged knowledge of its

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contractor’s failure to maintain a remedial structure on the site

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do not sufficiently allege that DTSC’s involvement with the site

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rose to the level of active control with hands-on, day-to-day

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participation in managing the Elvira site.

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court will dismiss the first and second counterclaims based on

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the failure to properly allege DTSC was an operator under CERCLA.

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(Counterclaims at 16 (citations omitted).)

Accordingly, the

Further, even assuming that DTSC’s management of the
site rose to the level that it could be considered an operator,
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there is no plausible allegation that DTSC operated the Elvira

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site when any hazardous materials were “disposed”, as defined by

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CERCLA.

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liability of “any person who at the time of disposal of any

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hazardous substance owned or operated any facility at which such

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hazardous substances were disposed of,” (emphasis added).

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explained by the Ninth Circuit in Carson Harbor Village, Ltd. v.

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Unocal Corp., 270 F.3d 863, 874-87 (9th Circ. 2001), the gradual

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passive migration of contamination through soil during a former

As stated above, Section 107(a)(2) provides for

As

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owner’s ownership of a property was not a “disposal” under

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CERCLA.

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-- that DTSC has not properly managed existing contamination as

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it passively migrates through the soil, due to inadequate

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remedial measures.

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allegation that DTSC’s actions “contributed to or caused the

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leakage or disposal of hazardous waste,” (Countercls. ¶ 14),

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there is no allegation how anything DTSC did could be considered

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disposal under CERCLA § 107.

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to sufficiently allege disposal of hazardous materials during

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DTSC’s alleged operation of the site is a second and independent

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ground for dismissal of the first and second counterclaims.

Yet that appears to be the Intervenors’ allegation here

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While Intervenors assert the conclusory

Accordingly, Intervenors’ failure

Because Intervenors have not properly alleged DTSC’s

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liability as an operator or disposal under § 107 and § 113, the

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court will dismiss their counterclaims for cost recovery and

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contribution.

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counterclaim for declaratory relief and the counterclaim under

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the HSAA.

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Cal. 2014) (claim for declaratory relief under § 113(g)(2) is

Further, the court will also dismiss the § 113(g)

See Coppola v. Smith, 19 F. Supp. 3d 960, 977 (E.D.

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dependent on a valid § 107 claim); Adobe Lumber, Inc. v. Hellman,

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658 F. Supp. 2d 1188, 1192-93 (E.D. Cal. 2009). (California’s

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HSAA provides for civil actions for indemnity and contribution

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and expressly incorporates CERCLA’s liability standards and

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defenses).

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II. Motion to Strike Affirmative Defense

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Federal Rule of Civil Procedure 12(f) authorizes the

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court to “strike from a pleading an insufficient defense or any

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redundant, immaterial, impertinent, or scandalous matter.” Fed.

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R. Civ. P. 12(f).

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strike is to avoid the expenditure of time and money that must

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arise from litigating spurious issues by dispensing with those

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issues prior to trial.”

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F.2d 880, 885 (9th Cir. 1983).

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“[T]he function of a [Rule] 12(f) motion to

Sidney-Vinstein v. A.H. Robins Co., 697

DTSC moves to strike Intervenors’ seventh affirmative

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defense for contributory and comparative negligence, which reads

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in part:

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Any and all injury or damage was caused, in whole or
in part, by Plaintiffs’ own negligence, carelessness,
lack of due care and fault, or by the negligence,
carelessness, lack of due care and fault of
Plaintiffs’ predecessors in interest, their agents,
employees or tenants and/or third parties, excluding
Collins & Aikman.
(Docket No. 271 at 12.)
This court previously addressed similar affirmative

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defenses asserted by defendant Dobbas.

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that CERCLA § 107(b) provides an exclusive list of defenses

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available in cost recovery actions under CERCLA.

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at 18-19 (citing, inter alia, Cal. ex rel. Cal. Dep’t of Toxic

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Substances Control v. Neville Chem. Co., 358 F.3d 661, 672 (9th
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The court first noted

(Docket No. 43

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Cir. 2004);3 Levin Metals Corp. v. Parr-Richmond Terminal Co.,

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799 F.2d 1312, 1317 (9th Cir. 1986)).)

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that while DTSC also asserted a claim for civil penalties under

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the HSAA, that statute “expressly incorporates CERCLA’s liability

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standards and defenses,” and thus Dobbas could not assert

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defenses to the HSAA that it could not assert under § 107(a) of

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CERCLA.

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Lumber, Inc. v. Hellman, 658 F. Supp. 2d 1188, 1192 (E.D. Cal.

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2009); Coppola v. Smith, 935 F. Supp. 2d 993, 1011 (E.D. Cal.

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The court further noted

(Docket No. 43 at 19-20 (citing, inter alia, Adobe

2013).)

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This court then looked to Dobbas’s affirmative defenses

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that DTSC’s claims were barred or should be reduced because

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DTSC’s own actions caused or aggravated the release of hazardous

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substances.

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The court struck those defenses, explaining:

[C]ourts have consistently “rejected negligence on the
part of the government as a defense to liability in
CERCLA actions.” Cal. Dep’t of Toxic Substances
Control v. Alco Pac., Inc., 217 F. Supp. 2d 1028, 1037
(striking contributory fault defense and citing
cases); see also United States v. Shell Oil Co., Civ.
No. 91-589, 1992 WL 144296, at *9 (C.D. Cal. Aug. 9,
1992) (“[C]omparative fault and contributory
negligence are not defenses to CERCLA actions.”
(citations omitted)). Section 9607(b) requires a
defendant to prove that damages were “solely caused”
by a third party, 42 U.S.C. § 9607(b), preventing
Dobbas from asserting these kinds of comparative
As explained by this court previously, the Neville
court held that this exclusive list of defenses did not apply to
suits for contribution under § 113(f) of CERCLA, but DTSC has not
asserted a CERCLA claim for contribution in this case – it only
asserts CERCLA claims for cost recovery and declaratory relief,
in additional to the HSAA claim, which is not asserted against
C&A Products. (Docket No. 43 at 19 (citing Neville, 358 F.3d at
672).) Further, “because declaratory relief claims are
derivative of cost recovery,” see Neville, 358 F.3d at 672, §
107(b)’s limitation on defenses applies to DTSC’s claim for
declaratory relief as well. (Docket No. 43 at 19).
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negligence defenses.”
(Docket No. 43 at 23.)

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Intervenors provide no authority calling into question
this prior determination, but rather argue for a different
interpretation of the authorities relied on the court.

sees no reason to depart from its prior determination regarding
the availability of comparative fault or contributory negligence
affirmative defenses.

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Because negligence by the government is

not a defense to CERCLA, and correspondingly not a defense under
the HSAA, the court will strike Intervenors’ seventh affirmative
defense.4
III. Motion to Strike Jury Demand

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The court

The Seventh Amendment entitles a party to a jury trial
in all “[s]uits at common law” in which the amount in controversy
exceeds twenty dollars, U.S. Const. amend. VII, but does not
require a jury trial for claims that are exclusively equitable in
nature, see Tull v. United States, 481 U.S. 412, 417-18 (1987).
DTSC requests to strike Intervenors’ demand for a jury trial,
arguing that its claims are exclusively equitable in nature.

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The court previously denied DTSC’s similar motion to

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At oral argument, intervenors stated that their main
reason for opposing the motion to strike their contributory and
comparative negligence affirmative defense was their desire to
fully assert their theory that C&A was not the cause of the
contamination at the Elvira site. However, as the court noted in
its 2014 decision, CERCLA does not bar defenses related to
whether a defendant’s conduct was the proximate cause of any
release of hazardous substances. (Docket No. 43 at 20-21
(citations omitted).) Moreover, DTSC has not moved to strike
Intervenors’ other affirmative defenses, most of which pertain to
causation.
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strike the jury trial demand asserted by defendant Jim Dobbas,

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Inc.

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was substantial authority that CERCLA cost recovery actions

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provided restitution and were thus equitable in nature because

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they seek to restore parties who incur cleanup costs to the

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position they previously occupied.

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have held that there is no right to a jury trial in CERCLA cost

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recovery actions.

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Toxic Substances Control v. Alco Pac., Inc., 217 F. Supp. 2d

(Docket No. 43 at 12-14.)

The court explained that there

Accordingly, these courts

(Docket No. 43 at 13 (citing Cal. Dep’t of

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1028, 1046 (C.D. Cal. 2002) (collecting cases); Wehner v. Syntex

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Corp., 682 F. Supp. 39, 40 (N.D. Cal. 1987)).)

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However, the court noted that those authorities were

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called into question by the Supreme Court’s statement in Great–

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West Life & Annuity Insurance Co. v. Knudson, 534 U.S. 204

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(2002), in which it cautioned that “not all relief falling under

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the rubric of restitution is equity.”

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Second Circuit has held that “in light of [Great–West], it is by

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no means clear that the restitution provided by § 9607(a) is

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equitable, rather than legal, in nature.”5

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Testing, Inc. v. Town of Babylon, 584 F.3d 436, 452 (2d Cir.

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2009).

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Id. at 212.

Moreover, the

AMW Materials

Given this uncertainty and the need to err on the side

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of preserving the right to a jury, see Granite Rock Co. v.

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International Brotherhood of Teamsters, 649 F.3d 1067, 1069 (9th

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This court also noted the split among courts whether
there was a right to a jury trial for § 9613(f) contribution
claims. (Docket No. 43 at 13-14 (citing Hatco Corp. v. W.R.
Grace & Co. Conn., 59 F.3d 400, 412 n.9 (3d Cir. 1995)(collecting
cases).)
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Cir. 2011), the undersigned determined that disposing of Dobbas’

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jury demand as to the CERCLA claims was inappropriate on a motion

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to strike.

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demand as to DTSC’ claim under the HSAA because the civil

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penalties authorized under the HSAA are essentially legal in

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nature, as they go beyond restitution.

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(citations omitted).)

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The court also denied the motion to strike the jury

(Docket No. 43 at 14-15

DTSC argues that Intervenors’ jury demand should be
stricken given the authorities finding that cost recovery actions

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are in fact equitable in nature.

DTSC also seeks to distinguish

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this court’s prior denial of the motion to strike Dobbas’ jury

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demand by noting that while it asserted an HSAA claims against

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Dobbas, it has not asserted a claim under the HSAA against C&A

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Products.

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claim separately from the CERCLA cost recovery and declaratory

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relief claims when discussing whether Dobbas was entitled to a

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jury.

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and ANW Materials Testing alone was sufficient to warrant denial

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of the motion to strike the jury demand.

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provided no authorities decided after Great-West and ANW

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Materials Testing establishing that CERCLA cost recovery actions

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are strictly equitable in nature.

However, the court’s 2014 order addressed DTSC’s HSAA

In the court’s view, the uncertainty raised by Great-West

Moreover, DTSC has

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Here, Intervenors are defending the same CERCLA claims

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for cost recovery asserted by DTSC against Dobbas, and they also

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assert a counterclaim for cost recovery similar to Dobbas’.

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light of the continued uncertainty as to whether CERCLA cost

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recovery actions are equitable in nature, the court will deny

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DTSC’s motion to strike Intervenors’ jury demand.
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In

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IT IS THEREFORE ORDERED that DTSC’s motion to dismiss

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and motion to strike (Docket No. 279) are GRANTED IN PART.

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Intervenors’ counterclaims are DISMISSED.

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affirmative defense for contributory and comparative negligence

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is hereby STRICKEN.

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demand is DENIED.

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Intervenor’s seventh

DTSC’s motion to strike Intervenors’ jury

Intervenors have twenty days from the date of this

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Order is signed to file amended counterclaims, if they can do so

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consistent with this Order.

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Dated:

July 31, 2023

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