Dune Energy, Inc. v. Chevron U.S.A. Inc.
ORDER granting in part and denying in part 7 Motion to Dismiss. Plaintiff SHALL AMEND its Complaint within fifteen (15) days of this Order. Signed by Judge Jay C. Zainey. (jrc)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
DUNE ENERGY, INC.
CHEVRON U.S.A., INC.
SECTION: "A" (5)
ORDER AND REASONS
Before the Court is a Motion to Dismiss for Failure to State
a Claim upon which Relief May be Granted (Rec. Doc. 7) filed by
Defendant Chevron U.S.A., Inc. Plaintiff Dune Energy, Inc. opposes
The motion, set for submission on June 3, 2015, is
before the Court on the briefs without oral argument.1
Plaintiff Dune Energy, Inc. filed its Complaint on February
This matter arises out of alleged environmental concerns
and costs related to a compressor station in the Garden Island Bay
Field in or adjacent to navigable waters in Plaquemines Parish.
Plaintiff alleges that it is the current operator of the field in
which the compressor station sits.2
It claims that Defendant, as
a "successor by merger with Texaco," formerly operated the field
and station prior to abandoning the station.
The Court declines the request for oral argument as it finds it
would be unnecessary to decide the issues before it.
Plaintiff also alleges that it "has not operated the
[c]ompressor [s]tation" as of the time of filing.
maintained ownership of the station even after concluding its
production activities in the field.
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. §
It alleges that the station was in a
state of disrepair, that materials were degrading and becoming
friable, and that Defendant did nothing to remedy or prevent the
actual or potential releases of asbestos. Allegedly, the situation
only worsened upon Defendant's abandonment of the station and
resulted in actual or potential releases to the surrounding air and
Plaintiff states that the Louisiana Department of Natural
Resources has ordered it to present a remediation plan for any past
or ongoing releases and to act to prevent any future releases, and
that it has incurred costs in implementing these orders.
Plaintiff brings the current action for cost recovery or
contribution from Defendant in an "equitable portion" under federal
law via 42 U.S.C. § 9607, or, in the alternative, § 9613, as well
as under state law via the Louisiana Environmental Quality Act
("LEQA"), La. R.S. § 30:2271, et seq.
Via the instant motion, Defendant seeks to dismiss all claims
of Plaintiff for failure to state a claim.3
Defendant argues that
Plaintiff has not properly pleaded factual allegations to support
the necessary elements under any of the stated claims.
STANDARD OF REVIEW
In the context of a motion to dismiss the Court must accept
all factual allegations in the complaint as true and draw all
reasonable inferences in the plaintiff’s favor.
Lormand v. US
Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009) (citing Tellabs,
Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (2007); Scheuer
v. Rhodes, 416 U.S. 232, 236 (1974); Lovick v. Ritemoney, Ltd., 378
F.3d 433, 437 (5th Cir. 2004)).
However, the foregoing tenet is
inapplicable to legal conclusions.
Ashcroft v. Iqbal, 129 S. Ct.
1937, 1949 (2009). Thread-bare recitals of the elements of a cause
of action, supported by mere conclusory statements, do not suffice.
Id. (citing Bell Atlantic Corp. v. Twombly, 550, U.S. 544, 555
The central issue in a Rule 12(b)(6) motion to dismiss is
The Court notes Defendant's argument that Plaintiff did not
correctly clarify that it was pleading its federal actions in the
alternative as the claims are mutually inconsistent. The Court, while
appreciating Defendant's technical notation, will construe the
pleading as having stated them in the alternative to the extent
necessary, rather than having Plaintiff amend its Complaint to so
clarify. Further, the Court notes that this point is not as clear a
matter of general black-letter law as Defendant might represent. The
Supreme Court noted in United States v. Atlantic Research that in
certain grey areas it is an open question as to whether incurred costs
might be "recoverable under § 113(f), § 107(a), or both.". 551 U.S.
128, 139 n.6 (2007).
complaint states a valid claim for relief. Gentilello v. Rege, 627
F.3d 540, 544 (5th Cir. 2010) (quoting Doe v. MySpace, Inc., 528
F.3d 413, 418 (5th Cir. 2008)).
To avoid dismissal, a plaintiff
must plead sufficient facts to “state a claim for relief that is
plausible on its face.”
Id. (quoting Iqbal, 129 S. Ct. at 1949).
“A claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Court does not accept as true “conclusory allegations, unwarranted
factual inferences, or legal conclusions.” Id. (quoting Plotkin v.
IP Axess, Inc., 407 F.3d 690, 696 (5th Cir. 2005)).
conclusions must be supported by factual allegations. Id. (quoting
Iqbal, 129 S. Ct. at 1950).
Each action asserted by Plaintiff, and Defendant's arguments
as to why each should be dismissed, will be discussed separately
a. 42 U.S.C. § 9607
Under this statute, a private party has the "right to bring a
associated with responding to an environmental threat."
Uniroyal Chem. Co., Inc. v. Deltech Corp., 160 F.3d 238, 242 (5th
Cir. 1998). A plaintiff must establish the following four elements
to state a prima facie case: 1.) the site is a "facility"; 2.) that
the defendant is a "responsible person"; 3.) that a release or
threatened release of a hazardous substance has occurred; and 4.)
that the release or threatened release has caused the plaintiff to
incur response costs.
Vine Street, LLC v. Borg Warner, Corp., 776
F.3d 312, 315 (5th Cir. 2015).
The parties do not dispute that the
station is a facility within the meaning of 42 U.S.C. § 9601(9).
Defendant argues that based on Plaintiff's allegations, it
cannot be considered a "responsible person" under 42 U.S.C. §
9607(a) as a matter of law. § 9607(a) provides, in pertinent part,
that a covered party or potentially responsible party includes "any
person who at the time of disposal of any hazardous substance owned
or operated any facility at which such hazardous substances were
Defendant argues that it is not such
In a footnote in its memorandum, Defendant further argues that
asbestos-containing materials are not included within the definition
of "disposal," as the statute defines that term by reference to the
Solid Waste Disposal Act, 42 U.S.C. 6901, et seq. § 9601(29)("The
terms 'disposal', 'hazardous waste', and 'treatment' shall have the
meaning provided in section 1004 of the Solid Waste Disposal Act.").
The definition of disposal within that statutory scheme is "the
discharge, deposit, injection, dumping, spilling, leaking, or placing
of any solid waste or hazardous waste into or on any land or water so
that such . . . waste . . . may enter the environment or be emitted
into the air or discharged into any waters . . . ." § 6903(3).
Defendant contends that as asbestos is not considered in that scheme's
definitions as "solid waste" or "hazardous waste," it cannot be the
subject of a disposal action. This argument is not without support.
See 3550 Stevens Creek Assoc. v. Barclays Bank, 915 F.2d 1355, 1361
(9th Cir. 1990)(noting that, "[o]n its face 'disposal' pertains to
'solid waste or hazardous waste,' not to building materials which are
neither."). This Court, however, does not accept the strained reading
suggested by Defendant. Congress chose to write § 9607 as applying in
the context "of disposal of any hazardous substance." §
9607(a)(2)(emphasis added). There is no question that asbestos is
considered a hazardous substance within the meaning of the statute.
See Dayton Indep. Sch. Dist. v. U.S. Mineral Prods. Co., 906 F.2d
a party as Plaintiff has alleged only that Defendant "abandoned"
and subsequently sold the station, and neither abandonment nor sale
constitutes a disposal.
In support of this argument, Defendant
cites to cases which it argues stand for the proposition that a
mere sale of a property cannot constitute disposal and that some
affirmative act was required.
Sycamore Indus. Park Assoc. v.
Ericsson, Inc., 546 F.3d 847 (7th Cir. 2008); G.J. Leasing Co.,
Inc. v. Union Elec. Co., 54 F.3d 379 (7th Cir. 1995)(Posner, C.J.);
3550 Stevens Creek Assoc. v. Barclays Bank, 915 F.2d 1355 (9th Cir.
"disposal" do not give the cases the nuanced reading that their
Plaintiff contends that the cases do not bar
a finding of disposal where a prior owner and operator abandoned
the use of a structure and allowed it to fall into a state of
disrepair, and took no steps to prevent the asbestos within from
1059, 1064 (5th Cir. 1990); § 9602; 29 C.F.R. § 302.4. To give this
the reading suggested by Defendant would be to substitute the explicit
Congressionally-chosen verbiage with a meaning gathered by cherrypicking part of a referenced definition in a separate statutory
scheme. See CP Holdings, Inc. v. Goldberg-Zoino & Assoc., Inc., 769
F. Supp. 432, 437 (D. N.H. 1991)(observing that, under such a reading,
"[s]ections of the CERCLA statute regarding the disposal of hazardous
substances . . . would have to be either ignored or read to mean only
the disposal of hazardous wastes"). Regardless of what the courts or
counsel might say about the drafting of CERCLA, it is not the proper
province of the courts to edit or replace its terms of art as they see
fit. See, e.g., United States v. W.R. Grace & Co., 429 F.3d 1224,
1238 (9th Cir. 2005)("It has become de rigeur to criticize CERCLA as a
hastily passed statute that is far from a paragon of legislative
clarity."). While appreciating the thorough research by counsel, the
Court disregards any argument made on this basis.
becoming friable and releasing into the surrounding environment.
Defendant also argues that Plaintiff has not properly pleaded
that there has been a release or a threatened release. It contends
that any allegations as to releases to the outside environment are
too vague and speculative, and that a release confined to the
interior of a building is not a release within the meaning of the
Plaintiff responds that its allegations include the charge
that asbestos was escaping and leaking into the outside environment
as a result of the degradation allowed by Defendant.
further argues that Defendant is applying an improper standard to
Plaintiff's burden at this point in the proceedings.
pleading as to any costs incurred, stating that they are also too
Defendant also argues that Plaintiff has not pleaded that
any costs were incurred "voluntarily," and thus the claim must be
dismissed as a matter of law.
Plaintiff responds that it has no duty to itemize specific
costs at this point.
Further, Plaintiff argues that Defendant
misreads the Supreme Court's statements that costs must be incurred
"voluntarily" for a § 107 action.
It states that this was merely
meant to draw a distinction between an action arising from a legal
judgment or settlement agreement, and does not preclude a claim
resulting from a government oversight body's order.
attorney's fees is excluded under § 9607 as a matter of law.
Plaintiff does not respond to this argument.
While recognizing the underlying strengths of many of its
arguments, and not discounting the difficult road that Plaintiff
has ahead of it in proving up its case, the Court will not make the
fine legal distinctions Defendant wishes it to draw when so few
facts are known at this point.
The disposal question is the most complex of the arguments
presented pertaining to § 9607.
Plaintiff seeks to push the
frontier of CERCLA's definition of disposal. C.f G.J. Leasing Co.,
Inc., 54 F.3d at 384 (describing a case in which a court held that
CERCLA imposed liability on the vendor of drained batteries where
the vendor knew that the vendee dumped hazardous substances after
obtaining the batteries as being "at the very frontier of the
Defendant is correct, as Plaintiff concedes, that several
cases stand for the proposition that sale of a property containing
hazardous substances does not constitute CERCLA disposal. However,
that holding provides limited assistance in the current case.
Those cases premised their findings on certain assumptions or
conclusions that are challenged in the allegations before this
For example, the Seventh Circuit addressed the appeal of a
case in which the plaintiff brought CERCLA claims under § 9607
decommissioned power plant.
G.J. Leasing Co., Inc., 54 F.3d at
381. The power plant incorporated asbestos into both its structure
Id. at 382.
As part of its purchase of the
property, the plaintiff arranged for a third-party salvor to strip
what it could from the site, including the power plant.
383. After the salvor "went through the power plant like a tornado
and left the building a shambles," the plaintiff found loose and
deteriorating asbestos in the air and in the facility.
plaintiff then removed some of the asbestos and sought to recover
its expenditures from the defendant.
Id. at 383-84.
Circuit, while reserving judgment on a case in which "the primary
purpose and likely effect" of a sale would be the removal of
asbestos in circumstances likely resulting in the release of
asbestos fibers into the surrounding environment, found that the
sale of a building cannot be considered a "disposal" under CERCLA
simply because the building contains asbestos fibers exposed to the
environment as a result of the unforeseeable negligence of a
"preposterous results" of adopting such an expansive ruling where
Id. at 384.
That ruling came with caveats critical to the case before this
In what are representative premises for the cases cited by
First, as the Fifth Circuit has also noted, if the
release of asbestos happens only within the building, CERCLA does
not govern the case.
Id. at 385; Dayton, 906 F.2d at 1066
(favorably citing cases which have come to this conclusion).
Second, the Seventh Circuit stated "[w]e are assuming that there
'disposal' of a hazardous substance." Id.; Stevens Creek, 915 F.2d
at 1361 (making a similar observation); Sycamore, 546 F.3d at 851
The court stated that this was a factual question and
that the district court had not been clearly erroneous in its
finding that no leak had occurred.
First, it would provide a clear limiting principle to the
policy concern referenced above.
Second, even more importantly,
such an occurrence (leaking at the time of sale) arguably brings
the event into the definitions of disposal and release under
A further brief exploration of the courts' struggle to
define the parameters of "disposal" helps to clarify the logic in
keeping this avenue open for CERCLA liability.
Early after its enactment, the courts, including the Ninth
Circuit, tended towards a definition of "disposal" that would limit
CERCLA's grasp to affirmative acts.
See, e.g., Stevens Creek, 915
F.2d at 1362 (collecting cases). Due in part though to the tension
that this created in the statute's reference to terms such as
"spilling" and "leaking," the courts began to back off of such a
bright-line distinction and instead focused more on the nature of
the event that occurred. See, e.g., Carson Harbor Village, Ltd. v.
Unocal Corp., 270 F.3d 863, 875-881 (9th Cir. 2001)("We therefore
reject the absolute binary 'active/passive' distinction used by
Indeed, the substantial overlap in terms used to
define 'disposal' and 'release' and the presence of both 'active'
and 'passive' terms in both definitions suggests something other
than an active/passive distinction governs the terms."). The Fifth
Circuit has indicated its agreement with this analysis.
Uniroyal Chem. Co., Inc. v. Deltech Corp., 160 F.3d 238, 252 (5th
Cir. 1998)(noting, in an arranger-liability case, that "it is
original)(citing Dayton, 906 F.2d at 1064-66)).5
The paradigmatic example is the abandonment of barrels leaking
a hazardous substance.6 A close summary of Plaintiff's allegations
presents a situation in which an owner or operator abandoned a
building with full knowledge that it was degrading, that in doing
so it was releasing hazardous substances, and that such substances
The Fifth Circuit in Uniroyal examined the "consumer product in
consumer use" exception applicable to the definition of the term
"facility" – an issue not disputed by Defendant in the present case.
The CERCLA definition of "release" explicitly includes this
example. § 9601(22). The consideration of such an example also
caused the Ninth Circuit to move away from its previous active /
passive bright line definition of disposal. See Carson Harbor
Village, Ltd., 270 F.3d at 879.
were being released not only within the building but also into the
Despite this, the owner or operator in
this example still chose to take no action to remedy the issue.
is an open question as to whether CERCLA liability might apply
assuming fulfillment of the other necessary elements.
The Court at this point does not definitively decide this
question, including what, if any, scienter might or could be
applicable (given the nature of a CERCLA action).
There are too
many factual issues that are unknown at this point – not as a
matter of legally deficient pleadings, but as a matter of the
gradual unfolding of the litigation process.
Plaintiff has alleged that the degradation of the asbestos "began
"degradation of [it] has, on information and belief, resulted in
releases . . . into the environment, including discharges to air
Defendant, noting the overlap in analysis between
disposal and release, cites to many of the same cases saying that
there is no release where such release is confined to a building.
See, e.g., Sycamore, 546 F.3d at 853.
Based on the allegations
just recited, and for the reasons stated previously, the Court will
not dismiss the Complaint on this basis at this time.
As to the costs incurred, Defendant's argument that Plaintiff
has not pleaded that the costs were incurred voluntarily is a
misconstrual of the use of that term in United States v. Atlantic
Research, 551 U.S. 128, 139 n.6 (2007).
That case employed the
term merely to describe a scenario in which one incurs costs other
than by a legal judgment or settlement.
is inapplicable here.
Thus, that argument
Further, the Court finds that Defendant has
sufficiently pleaded that it incurred costs and does not need to
specifically itemize its costs.
Discovery in this case will
further illuminate on just what basis the costs were incurred.
As a final note, the Court will grant the motion as to the
requests for attorney's fees arising out of the present litigation.
Plaintiff does not respond to this part of Defendant's motion.
Key Tronic Corp. v. United States, 511 U.S. 809, 819 (1994), the
Supreme Court held that "CERCLA § 107 does not provide for the
bringing a cost recovery action."
b. 42 U.S.C. § 9613
§ 9613 provides for a right of 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
Plaintiff has admitted that it is not the subject of
Plaintiff states that instead it has been "directed by
the Louisiana Department of Natural Resources ("LDNR") as a member
of the Joint Command of state and federal resource agencies with
jurisdiction over the field" to take evaluative and remedial
While the Supreme Court has held open the question of
whether an administrative order or other "compelled costs of
response" might constitute a "civil action" for purposes of this
statute, it has definitively held that there is no claim available
under § 9613(f) in a case with very similar facts as those alleged
See Atlantic Research, 551 U.S. at 139 n.6 (2007); Cooper
Indus., Inc. v. Aviall Srvcs., Inc., 543 U.S. 157, 168 n.5 (2004).
In Cooper Indus., Inc. v. Aviall Srvcs., Inc., the plaintiff
sought contribution via § 9613 from a previous owner and operator
of a site where the Texas Natural Resource Conservation Commission
environmental laws, directed [the plaintiff] to clean up the site,
and threatened to pursue an enforcement action if [the plaintiff]
failed to undertake remediation." Cooper Indus., Inc., 543 U.S. at
The Court went on to note, "Neither the Commission nor the
EPA, however, took judicial or administrative measures to compel
The Supreme Court reversed and remanded the case,
holding that the plaintiff could not seek contribution via § 9613
on this basis.
Id. at 165-68.
Plaintiff's current allegations
mirror the facts in Cooper Indus., Inc.
Out of an abundance of
caution, the Court will allow Plaintiff to amend its Complaint to
clarify whether any administrative order has issued to govern its
Otherwise, this claim must be dismissed.
La. R.S. § 30:2271, et seq.
The Louisiana Liability for Hazardous Substance Remedial
Environmental Quality Act, provides, in pertinent part, as follows:
G. (1) In furtherance of the purpose of R.S.
30:2275, those participating parties who,
after an initial demand is made by the
secretary under R.S. 30:2275, agree to clean
up the pollution source or facility may,
without the institution of a suit by the
secretary under R.S. 30:2275, sue and recover
from any other nonparticipating party who
shall be liable . . . .
(3) In furtherance of the purpose of this
Chapter, a person who has incurred remedial
costs in responding to a discharge or disposal
of a substance covered by this Chapter,
without the need for an initial demand by the
secretary, may sue and recover such remedial
costs as defined in R.S. 30:2272(9) from any
person found by a court to have performed any
of the activities listed in Subsection A if
the plan for remedial action was approved by
the secretary in advance or, if an emergency,
unreasonable delay and the secretary accepts
the plan thereafter. An action by a person
other than the secretary shall not be barred
by the failure of the secretary to demand
participation in the remediation.
R.S. § 2276(G)(1,3).7
Defendant's arguments as to disposal, discharge, and costs
under § 30:2276 mirror the CERCLA arguments discussed above.
"Secretary" refers to Secretary of the Louisiana Department of
(Rec. Doc. 7-1, at 20-21; Def.'s Memorandum in Support) (noting
that these definitions parallel the meaning of disposal and release
under CERCLA); at 22 (arguing the costs are not pleaded with proper
The Court will not repeat its analysis as to these
Defendant also argues that Plaintiff has not alleged that it
incurred any costs either voluntarily or before receiving an
"initial demand by the secretary," and, thus its claims fail as a
matter of law.
Plaintiff responds that neither the statutory
constitutes a demand by the secretary, and that its allegations are
sufficient to show a demand at this point.
To support its position, Defendant cites to Margone, L.L.C. v.
This case provides little support at this point
in the proceedings.
In Margone, the plaintiff was organized by
several lessees of the site in question as a response to the
instructions of the Louisiana Department of Natural Resources to
clean up the site.
Margone, 896 So.2d at 116.
partially cleaned the site.
The plaintiff then
Subsequently, the Louisiana
Department of Natural Resources as the lead clean-up agency.
Shortly thereafter the Department of Natural Resources issued an
order demanding that the plaintiff complete the clean-up.
The Louisiana Third Circuit affirmed a denial of an exception
of no cause of action.
While it did not define or focus on the
"voluntarily completed a partial remediation."
Id. at 117-18.
also noted that the Department of Natural Resources had been
designated as the lead clean-up agency.
Id. at 118 n.13.
the fact that the Department of Natural Resources had already
directed it to clean the site, and that the only allegation
concerning "approval" was the designation of a lead agency, that
court found that a claim had been sufficiently stated under §
30:2276(G)(3) to survive the dismissal stage of the litigation.
Id. at 118.
Additionally, the exact interactions between the Department of
Natural Resources and the Department of Environmental quality, the
nature of the directions given by the Department of Natural
Resources, and the timing and extent of Plaintiff's response will
be essential factors in determining the applicability of the
statute to the present action. Those factors are not known at this
point in the proceedings but will undoubtedly become apparent
through further discovery.
IT IS ORDERED that the Motion to Dismiss for Failure to State
a Claim upon which Relief May be Granted (Rec. Doc. 7) filed by
Defendant Chevron U.S.A., Inc. is GRANTED IN PART and DENIED IN
It is GRANTED as to the claim for attorney's fees under 42
U.S.C. § 9607.
It is DENIED as to all other claims under 42 U.S.C.
§ 9607 and La. R.S. § 30:2267.
It is DENIED WITHOUT PREJUDICE as
to the claims under 42 U.S.C. § 9613.
Plaintiff SHALL AMEND its
Complaint within fifteen (15) days of the issuance of this Order
with respect to this claim.
August 21, 2015
JAY C. ZAINEY
UNITED STATES DISTRICT JUDGE
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?