City of Las Cruces et al v. United States of America et al
Filing
475
MEMORANDUM OPINION AND ORDER by District Judge Judith C. Herrera denying 317 Defendant American Linen Supply of New Mexico, Inc.'s Motion to Dismiss Plaintiffs' Second Amended Complaint.. (baw)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
CITY OF LAS CRUCES AND DONA ANA
COUNTY,
Plaintiff,
vs.
CV No. 17 -0809 JCH
THE LOFTS AT ALAMEDA, LLC;
AMERICAN LINEN SUPPLY OF NEW
MEXICO, INC.; RAWSON LEASING
LIMITED LIABILITY CO.; and
CHISHOLM’S-VILLAGE PLAZA L.L.C.,
Defendants.
MEMORANDUM OPINION AND ORDER
This case is before the Court on Defendant American Linen Supply of New Mexico, Inc.’s
Motion to Dismiss Plaintiffs’ Second Amended Complaint [Doc. 317]. The issue is whether
Plaintiffs have failed to state a claim under Rule 12(b)(6) against Defendant American Linen
Supply of New Mexico, Inc. (“American Linen”). Plaintiffs have filed a response [Doc. 323] and
American Linen has submitted a reply brief. [Doc. 331]. After considering the arguments of
counsel and the law, the Court concludes that the motion to dismiss should be denied.
FACTUAL ALLEGATIONS
In their Second Amended Complaint [Doc. 306] (“the complaint”), Plaintiffs—both local
government entities—allege that all the Defendants, including American Linen, have released
hazardous substances into the soil and groundwater in or near Las Cruces, New Mexico, and that
the release of these substances has contributed to a plume of contaminated groundwater
approximately 1.8 miles long and .5 miles wide known as the Griggs & Walnut Ground Water
Plume (“the Site”). Plaintiffs, who have spent millions of dollars investigating and remediating
the pollution, and who will continue to incur costs into the future for the installation and
maintenance of an appropriate water treatment system, seek both a declaratory judgment against
and a money judgment from the Defendants, including American Linen, for their past, present,
and future costs in responding to the hazards at the Site.
Plaintiffs allege that starting in approximately 1938, dry cleaning operators under various
names owned and operated dry cleaning facilities on both N. Main St. and N. Church St. in Las
Cruces (“the facilities”), with American Linen owning and/or operating the facilities since 1949.
Plaintiffs allege that according to records of the City of Las Cruces, American Linen possessed
dry cleaning equipment in the 1970s that used a hazardous substance known as perchloroethylene,
also known as “perc,” or “PCE.” According to the Second Amended Complaint, “[f]or up to 80
years of dry-cleaning operations at these Facilities, hazardous substances, including PCE, were
used and released to the soil and groundwater at and to the Site.” Doc. 306 at ¶ 23. The Plaintiffs
further allege:
[D]uring at least the 1970s and 1980s, and potentially for many years before,
American Linen instructed its employees to dispose of PCE-laden dry cleaning
waste, including sludge, filter material, and still bottoms1, into a dumpster outside
the Facilities as part of its waste-handling operations. This PCE waste disposal
resulted in PCE migrating into groundwater and contributed to the contamination
of the Site.
1
Unsure of the meaning of the phrase “still bottoms,” the Court found the following generic
definition online. During the solvent recovery process, solvents are separated from contaminants
using distillation. Still bottoms are the residual waste material from the solvent recovery processes
and are usually collected in 55-gallon drums. See https://www.cleanplanetchemical.com/is-yoursolvent-waste-wasting-your-money/
2
Doc. 306 at ¶ 25. Plaintiffs allege that PCE has been detected in the soil at American Linen’s
facilities. Id. at ¶¶ 33, 36.
In their complaint, Plaintiffs also allege that American Linen was responsible for the
dumping of hazardous PCE at a second location, the Las Cruces Flood Control Dam (“the Dam”),
located about 3.2 miles east of the facilities:
[D]uring the 1970s and 1980s, American Linen arranged for a local pumper truck
hauler, Jesus Villanueva, to remove PCE dry cleaning waste from its Facilities.
American Linen’s PCE waste was dumped and released to bare soil near the Las
Cruces Flood Control Dam (“Dam”), located approximately 3.2 miles east of the
American Linen Facilities, where it migrated to groundwater and contributed to
contamination of the Site.
Id. at ¶ 24. Plaintiffs further assert:
On January 22, 2010, [the New Mexico Environment Department
(“NMED”)] received a citizen’s complaint from a former employee, Victor Jasso2,
reporting that large amounts of PCE dry cleaning waste from American Linen’s
Facilities had been dumped near the Dam.
Mr. Jasso further alleged that American Linen arranged for a local septage
hauler to remove PCE dry cleaning waste spilled at its Facilities. He stated that this
PCE waste was then dumped from the open truck to bare soil near the Dam.
NMED investigated Mr. Jasso’s complaint and found PCE in soil vapor at
the indicated areas near the Dam.
The PCE that was dumped near the Dam migrated to groundwater….
2
As a general rule, when a party presents matters outside of the pleadings for consideration, the
court must either exclude that evidence or convert the motion to one for summary judgment.
Alexander v. Oklahoma, 382 F.3d 1206, 1214 (10th Cir. 2004). However, American Linen
argues that because Plaintiffs referenced Mr. Jasso’s deposition testimony in their Second
Amended Complaint, the Court can and should consider other testimony from his deposition
without converting their motion to dismiss to a motion for summary judgment. See Doc. 317 at
8. Plaintiffs do not object to this procedure, and in fact both parties have attached portions of Mr.
Jasso’s deposition testimony to their respective briefs. Doc. 317-1 and Doc. 323-1. The Tenth
Circuit has held that a district court may consider documents attached to or referenced in the
complaint if they “are central to the plaintiff's claim and the parties do not dispute the
documents’ authenticity.” Jacobsen v. Deseret Book Co., 287 F.3d 936, 941 (10th Cir. 2002).
Here, because both parties have invited the Court to consider Mr. Jasso’s deposition testimony in
ruling on the Rule 12(b)(6) motion, the Court will do so without converting it to one for
summary judgment.
3
Modeling conducted in July 2020 shows that American Linen’s disposal of
PCE at the Dam is a major cause of future response costs at the Site.
Id. at ¶ 41-45.
In his deposition, Mr. Jasso testified that the perc used by American Linen had an
“obnoxious smell,” and that being around it made you “high all the time, kind of be, you know, in
another world.” Doc. 323-1 at depo. pp. 25, 37. He testified that when you touched the perc, it
dried your skin and turned it white. Id. at depo. p. 36. In addition, Jasso stated that when they
cleaned the dry-cleaning equipment coils, they were left with sludge that he knew contained perc
based on both the smell and the way it affected his skin when he touched it. Id.
Finally, Plaintiffs allege that “American Linen, by its own action, contract, agreement, or
otherwise, arranged for the disposal of hazardous substances, including PCE, at and near its
Facilities and at other locations, such as at and near the Dam, within the meaning of 42 U.S.C. §
9607(a)(3).” Id. at ¶ 60. Plaintiffs allege that NMED investigated Mr. Jasso’s complaint and found
PCE in soil vapor at the area near the Dam described by Jasso. Id. at ¶ 43. According to the
complaint, the PCE from American Linen’s facilities that was dumped near the Dam not only
migrated to groundwater and has contributed, and is still contributing, to the contamination at the
Site, but also is a major cause of future response costs. Id. at ¶ 44-45.
Plaintiffs assert three causes of action against American Linen: cost recovery under the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”),
42 U.S.C. §§ 9601 et seq., contribution under CERCLA, and a request for declaratory judgment
holding American Linen liable “for past and future costs necessary to respond to and abate the
release or threated release of hazardous substances at or from the Site.”
4
LEGAL STANDARD
When the Court reviews a Rule 12(b)(6) motion to dismiss for failure to state a claim, “all
well-pleaded factual allegations in the complaint are accepted as true and viewed in the light most
favorable to the nonmoving party.” Moore v. Guthrie, 438 F.3d 1036, 1039 (10th Cir. 2006)
(quotation marks omitted). A complaint must contain “enough facts to state a claim to relief that
is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “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.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009). “[A] well-pleaded complaint may proceed even if it strikes a savvy judge that actual
proof of those facts is improbable, and ‘that a recovery is very remote and unlikely.’ ” Twombly,
550 U.S. at 556 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).
DISCUSSION
I.
Overview of CERCLA
In 1980, Congress enacted CERCLA in response to “the serious environmental and health
risks posed by industrial pollution.” United States v. Bestfoods, 524 U.S. 51, 55 (1998). CERCLA
states that “any person may commence a civil action on his own behalf ... 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) who is alleged to be in violation of any
[applicable] standard, regulation, condition, requirement, or order....” 42 U.S.C. § 9659(a)(1).
CERCLA provides a private right of action under two specific provisions, Section 107 and Section
113. Section 113(f)(1) & (2) provides private litigants the right to seek contribution, and Section
107(a) allows them to seek cost recovery. Id.; 42 U.S.C. §§ 9607(a), 9613(f)(1) & (2). These
5
provisions complement each other and offer distinct rights “to persons in different procedural
circumstances.” Consol. Edison Co. of N.Y. v. UGI Utils., Inc., 423 F.3d 90, 99 (2d Cir. 2005).
Under CERCLA, there are four potentially responsible parties that may be held liable under
Sections 107 and 113. Two of these include the owner and operator of a facility, or any person
who at the time of disposal of any hazardous substance owned or operated any facility at which
such hazardous substances were disposed of. 42 U.S.C. § 9607(a) and (b). With respect to
Plaintiff’s owner/operator claim, American Linen argues that Plaintiffs have failed to adequately
allege a plausible theory of migration of PCE from its Facility to the Site. American Linen also
argues that Plaintiffs have failed to state a claim against it under the third category of liability
reserved for “arrangers.” An arranger is a person or entity who by contract or agreement “arranged
for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of
hazardous substances owned or possessed by such person, by any other party or entity, at any
facility or incineration vessel owned or operated by another party or entity and containing such
hazardous substances.” 42 U.S.C. § 9607(a)(3). Arranger liability ensures that owners of hazardous
substances may not free themselves from liability by selling or otherwise transferring a hazardous
substance to another party for the purpose of disposal. See Burlington Northern and Santa Fe Ry.
Co. v. Unites States, 556 U.S. 599, 609-10 (2009). Plaintiffs’ arranger claim relates to their
allegations that American Linen had an agreement with Jesus Villanueva to remove dry-cleaning
waste containing PCE from its facility and then dispose of it, which he did by dumping it at the
Dam.
6
II.
American Linen’s Arguments for Dismissal
A.
Failure to Plead Required Knowledge As an Arranger
1.
Knowledge that PCE Was Hazardous
Arranger liability ensures that owners of hazardous substances cannot escape liability by
transferring a hazardous substance to another party for the purpose of disposal. See Burlington N.,
556 U.S. at 609-10. American Linen argues that the Court should dismiss claims brought against
it as an arranger “because Plaintiffs cannot prove that American Linen knew or understood
wastewater that might contain PCE to be a hazardous substance at the time of the alleged
arrangement.” [Doc. 317 at 3]. To begin with, it is not Plaintiffs’ burden to prove anything at this
stage of the proceedings; rather, a Rule 12(b)(6) motion merely tests the sufficiency of the
allegations in the complaint. Therefore, the question before the Court is whether the allegations of
the Second Amended Complaint are sufficient to assert an arranger claim under CERCLA.
As described above, Plaintiffs allege that starting around 1938 American Linen released
dry-cleaning waste containing PCE to the soil and groundwater at and to the Site. Doc. 306 at ¶
23. Plaintiffs further allege that in the 1970s and 1980s, American Linen arranged for a pumper
truck hauler to remove PCE waste from its facilities, and that the waste was released to bare soil
near the Las Cruces Flood Control Dam, where it then migrated to groundwater. Id. at ¶ 24. Finally,
they allege that “during at least the 1970s and 1980s, and potentially for many years before,”
American Linen had instructed its employees to dispose of PCE dry-cleaning waste in a dumpster
outside its facilities, causing PCE migration into groundwater and contributing to contamination
of the Site. Id. at ¶ 25. Plaintiffs allege that in 2010, NMED received a citizen’s complaint from a
former employee of American Linen reporting that large amounts of PCE from American Linen’s
facilities had been dumped near the Dam, including some transported by a local septage hauler.
7
Doc. 306 at ¶¶ 41-42. The Second Amended Complaint does not allege a time frame during which
the dumping occurred, nor does it contain express allegations that American Linen had actual
knowledge that its dry-cleaning waste contained a hazardous substance at the time it released the
waste or arranged for someone to take it away. American Linen argues that the arranger claim
should be dismissed because Plaintiffs have failed to allege such knowledge. The Plaintiffs argue
that allegations of intent are unnecessary because CERCLA is a strict liability statute.
Few courts have addressed the issue presented by the allegations in this case: whether an
arranger defendant must know that the material it disposed of is hazardous. Understanding arranger
liability under CERCLA begins with Burlington Northern and Santa Fe Ry. Co. v. United States,
556 U.S. 599 (2009). The Supreme Court did not reach the question presented here, but it did
highlight the importance of the intent of an arranger. In that case the arranger defendant, Shell Oil
Company, sold useful products containing hazardous substances to a distributor, which then
allowed the chemicals to seep into the soil. Id. at 602-04. After the distributor went out of business,
the plaintiffs sued Shell Oil for arranger liability under CERCLA, asserting that Shell was liable
because it knew that minor, accidental spills of a hazardous chemical occurred during its transfer
from the common carrier to the distributor’s storage tanks after the product had come under the
distributor’s stewardship. The Burlington Northern Court disagreed, concluding that Shell was not
liable as an arranger because it did not intend that “at least a portion of the product be disposed of
during the transfer process,” but rather intended to sell this distributor “an unused, useful product.”
Id. at 612. It held that Shell’s “mere knowledge that spills and leaks continued to occur [was]
insufficient grounds for concluding that Shell ‘arranged for’ the disposal of [the products] within
the meaning of § 9607(a)(3).” Id. at 613.
8
The Burlington Northern court reasoned that because CERCLA does not specifically
define what it means to “arrang[e] for” disposal of a hazardous substance, the phrase should be
given its ordinary meaning. Id. at 610-11. The Supreme Court stated that arranger liability
undoubtedly attaches under § 9607(a)(3) when an entity “enter[s] into a transaction for the sole
purpose of discarding a used and no longer useful hazardous substance.” Burlington Northern, 556
U.S. at 610. On the other end of the spectrum, “an entity [can] not be held liable as an arranger
merely for selling a new and useful product3 if the purchaser of that product later, and unbeknownst
to the seller, disposed of the product in a way that led to contamination.” Id. However, the Court
noted that things become murky when the arrangements “fall between these two extremes,” such
as when “the seller has some knowledge of the buyers’ planned disposal,” or the seller’s “motives
for the ‘sale’ of a hazardous substance are less than clear.” Id. In these circumstances, “the
determination whether an entity is an arranger requires a fact-intensive inquiry that looks beyond
the parties’ characterization of the transaction as a ‘disposal’ or a ‘sale’ and seeks to discern
whether the arrangement was one Congress intended to fall within the scope of CERCLA’s strictliability provisions.” Id. In deciding what types of arrangements fall into this category, the
Supreme Court concluded that arranger liability under CERCLA implicitly creates an exception
to the statute’s strict liability provisions. See id. at 611. Specifically, the Court held that “the word
‘arrange’ [in the statute] implies action directed to a specific purpose,” and, consequently, “an
entity may qualify as an arranger under § 9607(a)(3) when it takes intentional steps to dispose of
a hazardous substance.” Id. The question of whether an arranger must know that the substance in
question is hazardous was not before the Court, and therefore the Court did not address it.
3
Neither party is arguing that American Linen sold its dry-cleaning waste as a new or useful
product. See Doc. 317 at 10. Thus, this appears to be purely a disposal case.
9
Lower courts have struggled to apply Burlington Northern in a variety of contexts. In
Appleton Papers, Inc. v. George A. Whiting Paper Co., 2012 WL 2704920 (E.D. Wis. July 3, 2012)
(unpublished), the Court was presented with an arranger claim against a paper company involved
in recycling “broke,” the trim, cuttings, and other waste created during the process of making and
coating paper. The “broke” turned out to contain hazardous polychlorinated biphenyls (“PCBs”),
but at the time, PCBs were not recognized as posing an environmental hazard. The paper company
sold the broke to a recycling mill whose conversion of the broke discharged PCBs into a river,
which resulted in extensive environmental contamination. After a bench trial, the court concluded
that the company that discarded the broke was not liable as an arranger in part because “it lacked
knowledge that broke, a byproduct of its manufacturing process, could be hazardous.” Id. at *12.
The Appleton Papers court also cited “the underlying purpose of arranger liability under
CERCLA,” which it defined as “to deter and, if necessary, to sanction parties seeking to evade
liability by ‘contracting away’ responsibility.” Id. at 11 (quoting United States v. Gen. Elec. Co.,
670 F.3d 377, 382 (1st Cir. 2012)). It noted that “it is difficult to find that the disposer was trying
to evade liability where “the dangerousness of the product is unknown to the would-be arranger.”
Id. Imposing liability on those with no knowledge, the Appleton Papers court reasoned, would not
result in deterrence because “people who do not even suspect that their product is harmful are not
in a position to be deterred.” Id. The court reasoned that it is “doubtful that a defendant can ever
be found to be an arranger if he did not know the substance in question is hazardous.” Id. at 11
(emphasis in original). Because the arranger in Appleton Papers was disposing of paper scraps that
it did not know and would not suspect to be hazardous, the court concluded it was not liable as an
arranger.
10
Importantly, the Appleton Papers court noted that factual context is key. For example, an
arranger cannot turn a blind eye to the disposal of substances that it should know are hazardous.
“Clearly liability may attach if the arranger did not know about the specifics of the hazard in
question (e.g., that PCBs are harmful) if, for example, the product is obviously or inherently
dangerous, such as large drums of oil or other chemicals.” Id. (emphasis in original). In Appleton
Papers, the arranger was ridding itself of “seemingly harmless bales of paper scraps,” id., that
“few people would suspect . . . could be a hazardous substance.” Id. at 10. The court suggested
that the outcome would have been different if the arranger should have known the substance was
hazard just by its very nature—i.e., drums of chemicals. As the Appleton Papers court stated:
[W]hen the Burlington Northern court notes that “if an entity were to enter into a
transaction for the sole purpose of discarding a used and no longer useful hazardous
substance,” it is implicit or assumed in such a statement that the entity knew or at
least suspected that the substance was harmful.
Id. at 11 (quoting Burlington Northern, 556 U.S. at 610) (emphasis in original). Under Appleton
Papers, implicit knowledge based on the nature of the substance is enough to support arranger
liability.
Five years later in Town of Islip v. Datre, 245 F. Supp. 3d 397 (E.D.N.Y. 2017), the court
looked at both Appleton Papers and Burlington Northern, among other decisions, in assessing
whether to dismiss claims against an alleged arranger when the complaint alleged no facts to
support an inference that the arranger knew the substance in question was hazardous. In Islip,
thousands of tons of construction and demolition debris, contaminated fill materials, brick, metal,
and other debris were dumped in a public park. Id. at 405-06. The complaint alleged that the
arranger defendants “had knowledge of the disposal of the materials they arranged to transport,”
but it did not allege that they knew the material contained hazardous substances. Id. at 424-25.
11
Further, the complaint lacked allegations that would “give rise to an inference that they knew, or
should have known, of the material’s hazardous nature.” Id. at 425 (emphasis added). The Islip
court concluded that in the absence of facts supporting at least the inference of knowledge, the
claims for arranger liability should be dismissed. Id. at 425.
In reaching that conclusion, the court relied on three things. First, it pointed out that in
Burlington Northern, the Court stated that liability attaches when an arranger takes “intentional
steps to dispose of a hazardous substance.” Id. at 423 (quoting Burlington Northern, 556 U.S. at
611). The Islip court argued that the Supreme Court could have omitted the term “hazardous” from
its holding if it believed that knowledge of the hazardous nature of the substance were irrelevant.
Id. It then pointed to cases that have relied on Burlington Northern to describe the requisite intent.
Id. (citing, inter alia, United States v. Gen. Elec. Co., 670 F.3d 377, 383 (1st Cir. 2012)
(“[F]ollowing Burlington Northern, a discernible element of intent to dispose of a hazardous
substance is necessary for an entity to be sanctioned pursuant to § 9607(a)(3).”) and Team Enters.
v. W. Inv. Real Estate Trust, 647 F.3d 901, 908 (9th Cir. 2011) (“[A]ctions taken with the intent to
dispose of a hazardous substance are sufficient for arranger liability.”)). Second, the Islip court
reasoned that “requiring knowledge of the substance’s hazardous nature comports with CERCLA’s
purpose of preventing responsible parties from ‘contracting away’ their liability and deterring them
from attempting to do so.” Id. Finally, the Islip court concluded that the knowledge requirement is
consistent with the language of CERCLA, which explicitly attaches arranger liability to a person
who arranges for disposal of hazardous substances. Id. at 424. The court agreed with Burlington
Northern that the word “arrange” implies an action directed to a specific purpose—in this case,
disposal of not just any substance, but of a hazardous substance. Id. Thus, the Islip court held that
“for arranger liability to apply, a plaintiff must establish that the defendant who arranged for the
12
disposal of material knew, or should have known, that the material contained hazardous
substances.” Id. (emphasis added).4
This Court concurs with Appleton Papers and Town of Islip—both cases upon which
American Linen relies—that one cannot be liable an arranger unless one knew or should have
known that the material for which they arranged disposal contained a hazardous substance. This
standard acknowledges the need for the requisite state of mind as explained above, yet does not
allow for polluters to avoid liability by simply claiming ignorance. If the polluter should have
known that the materials contained a hazardous substance, it can still be held liable. In this case,
the arranger claim focuses on the assertion that American Linen arranged for others to move dry
cleaning waste from its facility to the Dam. Plaintiffs’ Second Amended Complaint contains no
allegations from which one could reasonably infer that American Linen had actual knowledge that
the dry-cleaning waste contained a hazardous substance. That is not the end of the discussion,
however, because the question remains as to whether one could infer from the allegations that
American Linen should have known that the dry-cleaning waste it hired Jesus Villanueva to move
from its facilities and dump at the Dam over a period of two decades contained a hazardous
substance.
The Court concludes that based on the allegations of the Second Amended Complaint
(including the Jasso deposition to which it refers), one can reasonably infer that American Linen
should have known that its dry-cleaning waste contained a hazardous substance. Plaintiffs allege
that during the 1970s and 1980s, American Linen disposed of dry-cleaning waste—including
4
Some district courts have adopted this standard for arranger liability. See, e.g., Borough of
Edgewater v. Waterside Construction, LLC, 2021 WL 2680148 at *8 (D.N.J. Jun. 30, 2021)
(unpublished).
13
sludge, filter material, and still bottoms (described at footnote 1, infra)—not only at its own
facility, but also arranged for Jesus Villanueva to dispose of dry-cleaning waste at the Dam using
a pumper truck. Thus, Plaintiffs allege that American Linen was arranging for disposal of large
amounts of liquid chemicals. Furthermore, these chemicals had an “obnoxious odor” that not only
made American Linen employees feel “high” but also dried out their skin and turned it white when
they touched it. These are not characteristics of a harmless substance. As noted in Appleton Papers,
items “such as large drums of oil or other chemicals,” are “obviously or inherently dangerous” and
those who arrange for their disposal cannot claim lack of knowledge. Appleton Papers, 2012 WL
2704920 at *11 (E.D. Wis. July 3, 2012) (unpublished). In other words, the dry-cleaning waste in
this case is not like the seemingly harmless paper scraps in Appleton Papers because Plaintiffs
have adequately alleged that American Linen should have known that the still bottoms, sludge and
filter material containing “perc” or PCE were hazardous in nature.
American Linen attempts to argue that its dry-cleaning waste was more akin to the
construction site waste in Town of Islip. That construction waste was purportedly dumped to aid
in grading and sodding a soccer field, but upon closer inspection, those constructions materials
were found to contain asbestos, pesticides, and heavy metals. However, there were no allegations
in Town of Islip to support the inference that the defendant should have known that the construction
debris contained any hazardous substances. That is not the case here, where the complaint alleges
the dumping of apparently strong liquid chemicals.
Thus, Plaintiffs have adequately pled facts from which one can reasonably infer the intent
necessary for an arranger claim.
2.
Knowledge During the Relevant Time Frame
14
Next, American Linen argues that it cannot be held liable as an arranger until at least April
4, 1985, because that was the date PCE was designated as a hazardous substance under CERCLA.
According to American Linen, it could not have known of the hazard posed by PCE until this
official designation was made. American Linen cites no authority that supports the argument that
an arranger cannot be held liable for disposal of a hazardous substance until after it has been
officially designated as such.
On the other hand, the overwhelming weight of authority holds that as a broadly remedial
statute, CERCLA should apply retroactively. Many federal courts have reasoned that Congress
clearly indicated its intent that the Act be applied retroactively and that the Act permissibly
allocates the burdens of environmental remediation to the parties who created the need for it. See,
e.g., O’Neil v. Picillo, 883 F.2d 176, 183 n. 12 (1st Cir. 1989) (approving retroactive liability under
CERCLA over due process challenge); United States v. Northeastern Pharm. & Chem. Co., 810
F.2d 726, 732-34 (8th Cir. 1986) (affirming district court’s conclusion that retroactive application
of CERCLA to acts of disposal made before CERCLA’s effective date does not violate due process
or give rise to a taking of property); O'Neil v. Picillo, 682 F. Supp. 706, 729 (D.R.I. 1988), aff'd,
883 F.2d 176 (1st Cir. 1989) (holding, without discussion, “that liability for response costs under
CERCLA for releases which occurred prior to [December 10,] 1980 [(CERCLA's effective date)]
does not offend due process”); United States v. Shell Oil Co., 605 F. Supp. 1064, 1072 (D. Colo.
1985) (“[CERCLA] is by its very nature backward looking. Many of the human acts that have
caused the pollution already had taken place before its enactment; physical and chemical processes
are at their pernicious work, carrying destructive forces into the future.”). This suggests that to be
held liable under CERCLA, an arranger need not have actual notice that a substance has officially
been designated as hazardous, but only that it knew or should have known that it was hazardous.
15
If it were otherwise, no arranger could ever be held liable for contamination that occurred prior to
such designation, and there is no authority to suggest that Congress desired that result. As
discussed herein, there are adequate allegations to support the inference that American Linen
should have known that its dry-cleaning waste contained a hazardous substance.
3.
Futility of Amendment
American Linen argues that due to Plaintiffs’ reliance on the testimony of Victor Jasso, it
would be futile to amend their complaint to say that American Linen arranged for disposal of PCE
after it was designated as a hazardous substance in April of 1985. However, this argument is moot,
as the Court has already concluded that Plaintiffs’ current allegations support the inference that
American Linen should have known about the hazardous nature of the dry-cleaning waste even
before that date.
4.
Public Policy Considerations
American Linen contends that dismissal of the arranger claim against it would comport
with the purpose of arranger liability. Relying again on Appleton Papers, American Linen argues
that the purpose of arranger liability is to “deter and, if necessary, to sanction parties seeking to
evade liability by ‘contracting away’ responsibility.” Doc 317 at 9 (quoting Appleton Papers, 2012
WL 2704920 at *11 (quoting United States v. Gen. Elec. Co., 670 F.3d 377, 382 (1st Cir. 2012))).
“People who do not even suspect that their product is harmful are not in a position to be deterred,”
argues American Linen. Doc. 317 at 9 (quoting Appleton Papers, 2012 WL 2704920 at *11).
However, based on Plaintiffs’ allegations, American Linen certainly should have suspected that
it’s PCE-laden dry-cleaning waste was harmful. As explained above, the courts in both Appleton
Papers and Town of Islip acknowledged that liability will attach not only if the arranger actually
knew of the hazardous nature of the substance, but also if the arranger should have had that
16
knowledge. Logic suggests that the statute was designed to deter parties from “contracting away”
responsibility in that situation as well. Given the allegations surrounding the nature of the drycleaning waste for which American Linen arranged disposal, it is hard to argue that it should not
have known of its hazardous nature. Therefore, the Court concludes denial of American Linen’s
motion to dismiss is consistent with the policy and purpose of CERCLA.
B.
Failure to Plead Intent
American Linen argues that Plaintiffs have failed to adequately plead that as an arranger it
had the intent to dispose of a hazardous substance.
American Linen’s first argument hails back to the discussion above—that Plaintiffs cannot
plead that it had intent to dispose of a hazardous substance because American Linen did not know,
and could not have known, that PCE was a hazardous substance within the meaning of CERCLA
during the relevant time period. To be sure, the Supreme Court has held that “To qualify as an
arranger, a party must have entered into an arrangement with the intention that at least a portion of
the product be disposed of during the transfer process by one or more of the methods described in
§ 6903(3).” Chevron Mining Inc. v. United States, 863 F.3d 1261, 1280 (10th Cir. 2017) (quoting
Burlington Northern, 556 U.S. at 612). However, as discussed above, Plaintiffs have adequately
pled facts to support the inference that American Linen should have known that PCE was a
hazardous substance, and that is enough under Burlington Northern and its progeny—particularly
those cases cited by American Linen, such as Appleton Papers and Town of Islip.
Second, American Linen argues that Plaintiffs’ allegations regarding its “arrangement” are
conclusory. American Linen contends that Plaintiffs’ allegation that it “arranged for a local pumper
truck hauler, Jesus Villanueva, to remove PCE dry cleaning wastes from its Facilities” is
inadequate because it alleges no facts regarding the nature of the arrangement. See Doc. 317 at 14.
17
Again, this argument fails. The Tenth Circuit has stated that for arranger liability to attach, the
arranger must arrange for the transport or disposal of the hazardous substances “by contract,
agreement or otherwise.” Raytheon Constructors, Inc. v. Asarco Inc., 368 F.3d 1214, 1219 (10th
Cir. 2003). The Jasso deposition contains allegations that an American Linen supervisor, Manuel
Medina, had an understanding with a local pumper truck driver, Jesus Villanueva, to pump the
used PCE from American Linen’s facility into his tanker truck and haul it away. Doc. 323-1 at
depo. p. 50. It was Mr. Medina’s practice to inform Mr. Villanueva when his services would be
needed and at what time he should arrive at the American Linen facility to remove the used perc.
Id. at 54-55, 63, 135. Finally, Jasso testified that he witnessed Mr. Villanueva dumping the used
PCE, sludge, and water used to rinse out stills near the Dam. Id. at 56-58. Further, American Linen
concedes that its dirty PCE was not a useful product with the potential to be sold or used for another
purpose. Taken together, these allegations are sufficient to support a reasonable inference that
American Linen had an agreement with Jesus Villanueva to take used PCE from its facility and
dispose of it elsewhere.
C.
Failure to Plead a Plausible Theory of Migration
American Linen’s final argument relates to Plaintiffs’ claims against it not as an arranger,
but as the owner/operator of the Facilities where it allegedly disposed of hazardous dry-cleaning
waste on the premises. American Linen contends that Plaintiffs failed to allege sufficient facts to
demonstrate that any PCE released at its facilities caused contamination or increased response
costs at the Site approximately one mile away.
1.
Timeliness
Plaintiffs’ first response is that American Linen’s Rule 12(b)(6) motion to dismiss the
owner/operator claim is untimely. As the rule directs, any motion asserting a 12(b) defense must
18
be made before filing an answer. Fed. R. Civ. P. 12(b). In this instance, the owner/operator claims
against American Linen were present in the previous version of Plaintiffs’ complaint [Doc. 79],
which they amended only to add the arranger claim. American Linen answered that prior amended
complaint, but it did not move to dismiss the owner/operator claims. Thus, Plaintiffs assert that
American Linen has lost the right to do so now. American Linen declined to discuss this argument
in its reply brief.
This argument presents an interesting procedural question—whether an amended
complaint revives a defendant’s opportunity to file a motion to dismiss a claim that it has
previously answered. The Court can find no Tenth Circuit authority on this issue. However, it
appears that many courts have held that once a claim has been pled, the defendant must assert his
12(b)(6) motion; the right to file a motion to dismiss for failure to state a claim is not revived when
the claim is pled again in an amended complaint. See, e.g., Rowley v. McMillan, 502 F.2d 1326,
1333 (4th Cir. 1974) (“An unasserted defense available at the time of response to an initial pleading
may not be asserted when the initial pleading is amended.”); Sears Petroleum & Transport Corp.
v. Ice Ban America, Inc., 217 F.R.D. 305, 307 (N.D.N.Y. 2003) (“While it is true that an amended
complaint ordinarily supersedes a prior complaint, and renders it of no legal effect[,][i]t is also true
that if the amended complaint also contains new matter, the defendant may bring a second motion
under Rule 12 to object to the new allegations only.” (citations omitted)); Wafra Leasing Corp.
1999-A-1 v. Prime Capital Corp., 247 F. Supp. 2d 987, 999 (N.D. Ill.2002); Fed. Agr. Mortg.
Corp. v. It’s A Jungle Out There, Inc., 2005 WL 3325051, at *5 (N.D. Calif. Dec. 7, 2005)
(unpublished). Brooks v. Caswell, 2016 WL 866303 at *2-3 (D. Ore. Mar. 2, 2016) (unpublished).
See also Wright & Miller, FEDERAL PRACTICE & PROCEDURE, § 1388 (3d ed. 2004) (“The filing
of an amended complaint will not revive the right to present by motion defenses that were available
19
but were not asserted in timely fashion prior to the amendment of the pleading; conversely, a Rule
12 defense that becomes available because of new matter in the amended complaint may be
asserted by motion.”).
In light of the foregoing, the Court agrees that a motion to dismiss the owner/operator
claims is untimely. Plaintiffs pled those claims in the First Amended Complaint, and in response
American Linen failed to raise its Rule 12(b)(6) defense. Unfortunately for American Linen, the
filing of the Second Amended Complaint does not give it a second bite at the apple.
IT IS THEREFORE ORDERED that Defendant American Linen Supply of New Mexico,
Inc.’s Motion to Dismiss Plaintiffs’ Second Amended Complaint [Doc. 317] is DENIED.
_______________________________________
SENIOR UNITED STATES DISTRICT JUDGE
20
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?