Briggs et al v. Freeport-McMoRan Copper & Gold Inc et al

Filing 94

ORDER denying 66 Defendants' Motion to Dismiss Portions of Plaintiffs' First Amended Complaint Pursuant to Federal Rule of Civil Procedure 12(b)(6) (as more fully set out). Signed by Honorable Vicki Miles-LaGrange on 3/30/2015. (ks)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
HELEN BRIGGS, et al.,
Plaintiffs,
v.
FREEPORT-MCMORAN COPPER
& GOLD, INC., et al.,
Defendants.

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Case No. CIV-13-1157-M

ORDER
Before the Court is Defendants’ Motion to Dismiss Portions of Plaintiffs’ First Amended
Complaint (“Fir. Am. Compl.”) Pursuant to Federal Rule of Civil Procedure 12(b)(6) and Brief
in Support, filed July 7, 2014. On August 18, 2014, plaintiffs responded, and on August 25,
2014, defendants replied. Based on the parties’ submissions, the Court makes its determination.
I.

Introduction1
This action stems from plaintiffs’ allegations of continuous and ongoing pollution and

contamination in and around the City of Blackwell, Kay County, Oklahoma.2 Plaintiffs allege the
pollution emanates from the Blackwell Zinc Smelter (“Blackwell Smelter”), which plaintiffs
allege defendants own.3 The Blackwell Smelter began operations in 1916, and ceased operations
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All factual allegations set forth are taken from plaintiffs’ Fir. Am. Compl. [docket no.

65].
2

Plaintiffs consist of over 100 residents who are landowners in and around Blackwell,
Oklahoma.
3

During the operational period of the Blackwell Smelter, the Smelter was owned and
operated by defendant Blackwell Zinc Company, Inc. (“BZC”). Plaintiffs allege:
116. [BZC]. . . is a wholly owned subsidiary of Defendant
Cyprus Amax [Minerals Company], which is a wholly
owned subsidiary of Defendant [Freeport-McMoran
Corporation] (formerly Phelps Dodge Corporation), which
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on May 17, 1972. Plaintiffs allege that the Blackwell Smelter has continued to spread pollution
throughout Blackwell from the beginning of its operations until today. Plaintiffs further allege
that smelters, like the Blackwell Smelter, can cause air-polluting emissions and that defendants
operated the Blackwell Smelter with no emission controls. In their First Amended Complaint,
plaintiffs allege:
Some of Defendants’ pollution was placed directly on the
Plaintiffs’ properties. In other cases, the blowing of the wind picks
up Defendants’ pollution and distributes it on Plaintiffs’ properties.
. [sic] These pollutants contained considerable amounts of arsenic,
lead, cadmium, zinc and other heavy metals. Defendants’ holding
areas and slag ponds were unlined and, as a result, heavy metals,
such as zinc, lead, arsenic, and cadmium, contaminated the soils
and leached into the groundwater.
Fir. Am. Compl. ¶ 122. Plaintiffs further allege:
117.

Defendants as landowners of land that is continuing to
cause a trespass and nuisance to the Plaintiffs [sic] lands
are jointly and severally, as agents for one another, and/or
as alter egos of one another, and as corporate successors of
one another, and responsible for the pollution, obligations,
cleanup, and liabilities resulting from the continuing
pollution of the Plaintiffs [sic] properties in and around
Blackwell, Oklahoma.

Fir. Am. Compl ¶ 117.
As a result of defendants’ alleged actions, plaintiffs now seek actual and punitive
damages for (1) trespass; (2) private nuisance; (3) public nuisance; (4) negligence; (5) negligence
per se; and (6) unjust enrichment. Defendants, pursuant to Federal Rule of Civil Procedure
12(b)(6), move this Court to dismiss plaintiffs’ claims for trespass, private nuisance, public
nuisance, negligence, and negligence per se against defendants Freeport McMoRan Copper &
Gold (“FCX”), Freeport Minerals Corporation (f/k/a Freeport-McMoRan Corporation, f/k/a
is a wholly owned subsidiary of Defendant FreeportMcMoRan [Copper & Gold Inc.].
Fir. Am. Compl. ¶116.
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Phelps Dodge Corporation) (“FMC”), and Cyprus Amax Minerals Company (“Cyprus Amax”)
(collectively known as the “Non-BZC Defendants”) and dismiss plaintiffs’ claim for unjust
enrichment against all defendants, including BZC.
II.

Standard of Dismissal
Regarding the standard for determining whether to dismiss a claim pursuant to Federal

Rule of Civil Procedure 12(b)(6), the United States Supreme Court has held:
To survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief that is
plausible on its face. 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. The plausibility standard is not akin to a “probability
requirement,” but it asks for more than a sheer possibility that a
defendant has acted unlawfully. Where a complaint pleads facts
that are merely consistent with a defendant’s liability, it stops short
of the line between possibility and plausibility of entitlement to
relief.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotations and citations omitted). Further,
“where the well-pleaded facts do not permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged – but it has not shown – that the pleader is entitled to
relief.” Id. at 679 (internal quotations and citations omitted). Additionally, “[a] pleading that
offers labels and conclusions or a formulaic recitation of the elements of a cause of action will
not do. Nor does a complaint suffice if it tenders naked assertion[s] devoid of further factual
enhancement.” Id. at 678 (internal quotations and citations omitted). “While the 12(b)(6)
standard does not require that Plaintiff establish a prima facie case in her complaint, the elements
of each alleged cause of action help to determine whether Plaintiff has set forth a plausible
claim.” Khalik v. United Air Lines, 671 F.3d 1188, 1192 (10th Cir. 2012). Finally, “[a] court
reviewing the sufficiency of a complaint presumes all of plaintiff’s factual allegations are true
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and construes them in the light most favorable to the plaintiff.” Hall v. Bellmon, 935 F.2d 1106,
1109 (10th Cir. 1991).
III.

Discussion
Defendants assert that plaintiffs have failed to plead sufficient allegations to state a

plausible claim that: (1) the Non-BZC Defendants are directly liable to plaintiffs; (2) the NonBZC Defendants are agents of BZC; and (3) the Non-BZC Defendants are the alter egos of BZC.
Further, defendants assert that plaintiffs’ unjust enrichment claims against all defendants should
be dismissed since plaintiffs have an adequate remedy at law.
A.

Direct Liability

Defendants assert that plaintiffs’ claims of trespass, private nuisance, public nuisance,
negligence, and negligence per se are not plausible against the Non-BZC Defendants because
these claims stem from the operation of the Blackwell Smelter and the Non-BZC Defendants had
no interest in the Blackwell Smelter when it was in operation. Plaintiffs contend that “[t]his suit
arises from the ongoing pollution and contamination of Plaintiffs’ properties from the Blackwell
Zinc Smelter.” Plfs.’ Resp. at 6.
Trespass involves an actual physical invasion of the real estate of another without the
permission of the person lawfully entitled to possession. Williamson v. Fowler Toyota, Inc., 956
P.2d 858, 862 (Okla. 1998). In their First Amended Complaint, plaintiffs allege:
155.

Defendants intentionally and continuously or intermittently
caused a trespass to Plaintiffs’ properties by releasing and
dispersing toxic and harmful substances throughout
Blackwell and have caused and will continue to cause an
actual, physical, invasion of and interference with
Plaintiffs’ property interest. Defendants’ release of toxic
harmful substances is a direct and proximate cause of
Plaintiffs’ injuries and damages.

Fir. Am. Compl. ¶ 155. Plaintiffs further allege a private nuisance as follows:
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Every successive owner of property who neglects to abate a
continuing nuisance upon, or in the use of such property, created
by a former owner, is liable therefor in the same manner as the one
who first created it. 50 Okla. Stat. § 5. Defendants are currently
owners and operators of property in the Blackwell area that is
causing a nuisance to the Plaintiffs. For instance, the smelter site,
part of which is titled in the name of Cyprus Amex, continues to
emit pollutants into the Plaintiffs’ groundwater. . . .
Fir. Am. Compl. ¶ 163 (internal quotations omitted). In addition, plaintiffs allege that
“[d]efendants’ unlawful conduct in connection with the wide-spread dispersion of pollution in
Blackwell, including the pollution of the Plaintiffs’ properties in excess of that allowed by law
constitutes a public nuisance in violation of 50 Okla. Stat. § 2”4. Id. ¶ 166. Lastly, plaintiffs’
negligence and negligence per se claims allege:
171.

Plaintiffs have been injured as a direct result of
Defendants’ unlawful dispersion of toxic and harmful
pollutants.

172.

Defendants owe Plaintiffs a duty to not allow pollutants,
such as zinc, arsenic, cadmium, and lead, to be released
onto Plaintiffs’ homes, land and properties.

178.

As a direct result of Defendants [sic] actions throughout
Blackwell, air pollutants were released in violation of
Oklahoma Law, and Plaintiffs were and continue to be
forced to breathe, touch, ingest and be covered in pollution
caused by Defendants.

and

Id. ¶¶ 171, 172, and 178.

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Okla. Stat. tit. 50, § 2 provides:
A public nuisance is one which affects at the same time an entire
community or neighborhood, or any considerable number of
persons, although the extent of the annoyance or damage inflicted
upon the individuals may be unequal.
Okla. Stat. tit. 50, § 2.
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Having carefully reviewed Plaintiffs’ First Amended Complaint, and presuming all of
plaintiffs’ factual allegations are true and construing them in the light most favorable to
plaintiffs, the Court finds that plaintiffs have pled sufficient facts to state a plausible claim
against the Non-BZC Defendants for direct liability with respect to plaintiffs’ claims of trespass,
private nuisance, public nuisance, negligence, and negligence per se. The Non-BZC Defendants
adamantly contend that the material released from the Blackwell Smelter and damage to
plaintiffs’ properties occurred prior to the Non-BZC Defendants having any interest in the
Blackwell Smelter and, therefore, the Non-BZC Defendants are not directly liable for the alleged
tortious conduct to plaintiffs’ properties. However, plaintiffs contend that the pollution is
continuous and ongoing and that defendants, including the Non-BZC Defendants, as the current
landowners are directly liable for the pollution that continues to occur from the Blackwell
Smelter. The Court finds that plaintiffs’ specific allegations that “[d]efendants admit the soil
and/or shallow groundwater in certain areas of the City of Blackwell contains elevated levels of
zinc, arsenic, lead, and/or cadmium caused by Defendants past and continuing release,
distribution and re-distribution of pollutants” and that “[c]hildren in Blackwell continue to have
elevated blood lead levels as a result of the widespread dispersion of pollutants from Defendants’
Smelter” are particularly important and plausible. Fir. Am. Compl. ¶ 122 and ¶ 137. Therefore,
plaintiffs’ claims of trespass, private nuisance, public nuisance, negligence, and negligence per
se, at this stage of the litigation, should not be dismissed.
B.

Agency

“An agency relationship generally exists if two parties agree one is to act for the other.”
McGee v. Alexander, 37 P.3d 800, 807 (Okla. 2001) (internal citation omitted). “An essential
element of an agency relationship is that the principal has some degree of control over the

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conduct and activities of the agent.” Id. Further, “[i]t is not necessary that the parties intend to
create the legal relationship or to subject themselves to the liabilities which the law imposes
upon them as a result of it.” Farmers Nat’l. Grain Corp. v. Young, 102 P.2d 180, 185 (Okla.
1940). Defendants assert that plaintiffs have not sufficiently pled an agency theory of liability.
Specifically, defendants contend that plaintiffs have failed to show how the Non-BZC
Defendants exercised control over BZC, or how BZC exercised any control over the Non-BZC
Defendants.
Having carefully reviewed Plaintiffs’ First Amended Complaint, and presuming all of
plaintiffs’ factual allegations are true and construing them in the light most favorable to
plaintiffs, the Court finds that plaintiffs have pled sufficient facts to support their claim that the
defendants are agents of each other. Plaintiffs specifically allege that the Non-BZC Defendants:
[A]ctively performs, directs to be performed, or causes to be
performed,
individually
and
through
its
corporate
affiliates/subsidiaries, all obligations of Defendant Blackwell Zinc
Company, Inc. related to the Smelter and, through its actions,
accepts responsibility for all cleanup, remediation, and liabilities
associated with the historic operation of the Smelter.
Fir. Am. Compl. ¶¶ 113 – 115. Defendants contend that plaintiffs have failed to allege sufficient
facts to show that either BZC agreed to act for the Non-BZC Defendants or that the Non-BZC
defendants have exercised any degree of control over the relevant conduct and activities of BZC.
However, “[t]he existence of an actual agency relationship is not a prerequisite to establishing
[an] apparent [agency] [relationship].” Thorton v. Ford Motor Co., 297 P.3d 413, 420 (Okla. Civ.
App. 2012).
Apparent [agency] results from a manifestation by the principal to
a third person that another is his agent. The principal’s
manifestation may be made directly to a third person or to the
community by signs or by advertising.

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Id. at 41. In addition to the factual allegations cited previously in this Order, plaintiffs also allege
that some of the Non-BZC defendants on behalf of BZC have made statements about the
Blackwell Smelter closing (see Fir. Am. Compl. ¶ 124), paid debts of defendants to plaintiffs in
other litigation surrounding the Blackwell Smelter (see Fir. Am. Compl. ¶ 126), and “accepted
responsibility for the pollution in Blackwell, including the pollution on the Plaintiffs’
properties.” Fir. Am. Compl. ¶ 142. These factual allegations create the appearance that the
element of control is present between the Non-BZC Defendants and BZC, thus establishing, if
not an actual agency relationship, an apparent agency relationship between the defendants.
Therefore, plaintiffs’ claim of an agency relationship between the defendants should not be
dismissed.
C.

Alter Ego Theory

Defendants assert that plaintiffs have failed to plead a sufficient alter ego theory of
recovery against the Non-BZC Defendants. Defendants assert that since BZC is a New York
Corporation, New York alter ego law applies.5 “[P]iercing the corporate veil requires a showing
that: (1) the owners exercised complete domination of the corporation in respect to the
transaction attacked; and (2) that such domination was used to commit a fraud or wrong against
the plaintiff which resulted in plaintiff’s injury.” Morris v. N.Y. State Dep’t. of Taxation and
Fin,. 82 N.Y. 2d 135, 141 (N.Y. 1993). Domination is determined by:

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Defendants call the Court’s attention to Bd. of Cnty. Comm’rs of the Cnty. of Kay, Okla.
v. Freeport-McMoRun Cooper & Gold, Inc., No. CIV-12-601-C , at 6 (W.D. Okla. Sept. 5, 2013)
in which the court determined that since BZC was incorporated in New York, New York alter
ego theory applies in determining if BZC’s corporate veil should be pierced. Plaintiffs contend
that the court’s decision in Kay County was discretionary and that this Court should apply
Oklahoma law to determine if BZC’s corporate veil should be pierced. For purposes of this
instant Order, and for reasons set forth in Kay County, this Court will apply New York alter ego
law to determine if BZC’s corporate veil should be pierced.
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(1) the absence of the formalities and paraphernalia that are part
and parcel of the corporate existence, i.e., issuance of stock,
election of directors, keeping of corporate records and the like, (2)
inadequate capitalization, (3) whether funds are put in and taken
out of the corporation for personal rather than corporate purposes,
(4) overlap in ownership, officers, directors, and personnel, (5)
common office space, address and telephone numbers of corporate
entities, (6) the amount of business discretion displayed by the
allegedly dominated corporation, (7) whether the related
corporations deal with the dominated corporation at arms length,
(8) whether the corporations are treated as independent profit
centers, (9) the payment or guarantee of debts of the dominated
corporation by other corporations in the group, and (10) whether
the corporation in question had property that was used by other of
the corporations as if it were its own.
Peery v. United Capital Corp., 84 A.D.3d 1201, 1202 (N.Y. App. Div. 2011) (internal quotations
and citations omitted). Defendants assert that plaintiffs have failed to allege the factors necessary
to show that the Non-BZC Defendants dominated BZC and, therefore, were BZC’s alter egos.
Defendants further contend that plaintiffs have also failed to allege a fraud or wrong committed
by the Non-BZC Defendants since the Non-BZC Defendants did not become a part of the same
corporate family until years after the Blackwell Smelter operations had ceased.
Having carefully reviewed Plaintiffs’ First Amended Complaint, and presuming all of
plaintiffs’ factual allegations are true and construing them in the light most favorable to
plaintiffs, the Court finds that, all be it barely, plaintiffs have sufficiently pled an alter ego theory
claim against defendants. As the Court cited previously in this Order, plaintiffs allege:
116.

[BZC]. . . is a wholly owned subsidiary of Defendant
Cyprus Amax [Minerals Company], which is a wholly
owned subsidiary of Defendant [Freeport-McMoran
Corporation] (formerly Phelps Dodge Corporation), which
is a wholly owned subsidiary of Defendant FreeportMcMoRan [Copper & Gold Inc.].

Fir. Am. Compl. ¶116. Further, plaintiffs specifically allege:
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Upon information and belief, all the Defendants are dominated by
Freeport-McMoRan. Upon information and belief, there is not
adequate capitalization of the defendants to pay a judgment in this
case; indeed none of the other Defendants operate independently.
All operations in Blackwell are controlled by a hand full of
Freeport-McMoRan employees. Upon information and belief,
Freeport McMoRan has accepted responsibility for the pollution in
Blackwell. That pollution is causing injury to the Plaintiffs and
their properties. Upon information and belief, Freeport-McMoRan
has paid the debts of the other Defendants, including, for instance
the debts of the other Defendants relating to the Coffey litigation
and debts relating to continued cleanup liabilities in the Blackwell
area. Upon information and belief, Cyprus Amex’ [sic] purchase
and control of property in the area where the smelter was located
was directed and controlled by Freeport-McMoRan.
Fir. Am. Compl. ¶ 126. Defendants contend that plaintiffs have alleged domination in a
conclusory fashion; however, the Court finds that plaintiffs have alleged facts specific enough, at
this stage in the litigation, to allow the Court to draw the reasonable inference that the Non-BZC
Defendants exerted dominance over BZC. Further, the Court has already found that plaintiffs’
claims for direct liability against the Non-BZC Defendants should not be dismissed; so,
therefore, plaintiffs have sufficiently alleged a wrong committed by the Non-BZC Defendants.
Accordingly, for the reasons stated above, plaintiffs’ alter ego claims should not be dismissed.
D.

Unjust Enrichment

The long-standing rule in Oklahoma is that a plaintiff may not pursue an equitable
remedy when the plaintiff has an adequate remedy at law. Krug v. Helmerich & Payne, Inc., 320
P.3d 1012, 1022, (Okla. 2013) (citing Harvell v. Goodyear Tire and Rubber Co., 164 P.3d 1028,
1035 (Okla. 2006)). Further, “[w]here a party has an adequate remedy at law for breach of
contract or negligence, regardless of whether the party actually recovers thereon, the party may
not pursue a claim for unjust enrichment.” Naylor Farms, Inc. v. Anadarko OGC Co., No. CIV-

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08-668-R, 2011 WL 7267851, at *1 (W.D. Okla. June 15, 2011). See also Hydro Turf, Inc. v.
Int’l. Fid. Ins. Co., 91 P.3d 667, 673 (Okla. Civ. App. 2004).
Defendants contend that plaintiffs’ unjust enrichment claim should be dismissed because
plaintiffs have an adequate remedy at law since plaintiffs have asserted a negligence claim
against BZC. Plaintiffs contend that “while the Defendants’ [sic] may at some point in the
litigation be correct that Plaintiffs should elect between their equitable remedies and their legal
ones, the time for that election has not yet arrived.” Plfs.’ Resp. at 9. Having carefully reviewed
Plaintiffs’ First Amended Complaint, and presuming all of plaintiffs’ factual allegations are true
and construing them in the light most favorable to plaintiffs, the Court finds that, at this stage of
the litigation, plaintiffs have the right to plead alternative theories of recovery and, therefore,
plaintiffs’ unjust enrichment claim should not be dismissed.
IV.

Conclusion
Accordingly, for the reasons set forth above, the Court DENIES Defendants’ Motion to

Dismiss Portions of Plaintiffs’ First Amended Complaint Pursuant to Federal Rule of Civil
Procedure 12(b)(6) and Brief in Support [docket no. 66].
IT IS SO ORDERED this 30th day of March, 2015.

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