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U.S. v. HOOKER CHEMICALS & PLASTICS

October 2, 1990

UNITED STATES OF AMERICA, THE STATE OF NEW YORK, AND UDC-LOVE CANAL, INC., PLAINTIFFS,
v.
HOOKER CHEMICALS & PLASTICS CORPORATION, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Curtin, District Judge.

BACKGROUND

Among the forms of relief it requests in its amended complaint, plaintiff State of New York ("State") seeks $250 million in punitive damages on its common-law public-nuisance claims. The State contends that such an award is warranted in light of what it describes as the role of defendant Occidental Chemical Corporation ("OCC") in the creation of "the public health and environmental disaster at Love Canal." Item 142 at ¶ 1. OCC has moved under Rules 12(b)(6) and 56 of the Federal Rules of Civil Procedure to dismiss the State's punitive-damages claim for failure to state a claim upon which relief may be granted, or, in the alternative, for partial summary judgment denying the punitive-damages claim. OCC argues that the State's claim for punitive damages is not cognizable under New York law, and that, in any event, the claim violates both the United States Constitution and the New York State Constitution. For purposes of its motion, OCC concedes the truth of the facts alleged by the State in its amended complaint. See Item 867 at 2.

DISCUSSION

I. New York Statutory and Common Law

a) New York Penal Law § 240.45(1)

Beginning with the premise that "punitive damages are punishment" and that "New York law does not permit the State to inflict punishment for a public nuisance offense outside of the criminal context," Item 867 at 4, OCC argues that § 240.45 of the New York Penal Law supplies the only "punishment" authorized for a "public-nuisance offense" of the type alleged here. See Item 867 at 4-12, 17-18. That statute provides in relevant part that a person is guilty of criminal nuisance in the second degree when "[b]y conduct either unlawful in itself or unreasonable under all the circumstances, he knowingly or recklessly creates or maintains a condition which endangers the safety or health of a considerable number of persons." N YPENAL LAW § 240.45(1) (McKinney 1989). Criminal nuisance in the second degree is classified under New York law as a class "B" misdemeanor, the maximum punishment for which a corporation can be fined up to two thousand dollars. See N.Y.PENAL LAW §§ 60.25, 80.10(1)(c) (McKinney 1987); People v. L.A. Witherill, Inc., 29 N.Y.2d 446, 328 N.Y.S.2d 668, 671, 278 N.E.2d 905, (1972).*fn1

In arguing that such a fine is the maximum punishment to which it can be exposed, OCC points to portions of the legislative history of the 1881 predecessor statute of § 240.45(1), as well as to related sections of the 1881 Penal Code, indicating that the original criminal-nuisance statute*fn2 was part of a comprehensive criminal code intended to supplant and to replace "all pre-existing authority, including common law authority, for criminal prosecution," as well as to bar "any other form of non-statutory punishment by the State." Item 867 at 5-6.

Specifically, OCC cites the report drafted by the commissioners of the 1881 Code, which provided that one of the objects of the proposed code was "[t]o bring within the compass of a single volume the whole body of the law of crimes and punishments in force within this state." The Penal Code of the State of New York, Report of the Commissioners of the Code at iii (1865). OCC also notes that the code, which provided that "[n]o act or omission begun after the . . . day on which this Code takes effect . . . shall be deemed criminal or punishable, except as prescribed or authorized by this Code, or by some statute of this state not repealed by it," N.Y.PENAL CODE § 2 (Banks & Bros. 1881), was intended to abolish all common-law offenses. See The Penal Code of the State of New York, Report of the Commissioners of the Code, Comments to Draft Penal Code § 2 (1865). In addition, the code provided that "[a]n offense specified in this Code, committed after the . . . day when this Code takes effect, must be punished according to the provisions of this Code, and not otherwise." N YPENAL CODE § 719 (Banks & Bros. 1881). According to OCC, the "exclusivity" of this statutory scheme continues in the revised Penal Law, § 5.05 of which provides in relevant part:

    1. The provisions of this chapter shall govern
  the construction of and punishment for any
  offense defined in this chapter and committed
  after the effective date hereof . . . .
    2. Unless otherwise expressly provided, or
  unless the context otherwise requires, the
  provisions of this chapter shall govern the
  construction of and punishment for any offense
  defined outside of this chapter and committed
  after the effective date thereof. . . .

N Y PENAL LAW § 5.05(1), (2) (McKinney 1987). See Item 867 at 7.

OCC maintains that "[a]lthough sought in the context of a civil action, the punitive damages claimed by the State are, in substance, criminal fines," id. at 8, and that State-sought punitive damages "constitute punishment and are to be treated like criminal sanctions." Item 896 at 2. OCC thus contends, in essence, that the State's claim for punitive damages is tantamount to a criminal prosecution*fn3 and, consequently, cannot be pursued in a civil proceeding.

OCC does not claim that § 240.45(1) precludes a private party from seeking punitive damages in a public-nuisance action, or the State from seeking compensatory damages in a public-nuisance action. Nor does OCC claim, other than a brief and vague suggestion otherwise, see Item 896 at 3 n. 2, that the statute prevents the State from seeking punitive damages in a civil cause of action other than one sounding in public nuisance. Rather, OCC only contends that the criminal-nuisance statute forbids the State from recovering punitive damages in a public-nuisance action. For its part, the State does not contest that the Penal Law is the exclusive criminal remedy for public nuisance, or that there no longer are any common-law crimes that can be prosecuted. Rather, the State argues that, since punitive damages are not a criminal sanction, the Penal Law does not bar their recovery by the State.

The court finds OCC's arguments unpersuasive. Contrary to OCC's claim, the court would not have to construe "expansively" the State's authority to "impose punishment" in order to allow the State to proceed to trial with its punitive-damages claim. See Item 867 at 12. The common-law civil action of public nuisance has coexisted with the crime of public nuisance since the sixteenth century, see RESTATEMENT (SECOND) OF TORTS § 821B comment a (1977), and OCC has cited no authority establishing that the State could not recover punitive damages in a public-nuisance action prior to the passage of the 1881 Penal Code. Moreover, the 1881 Code provided:

    The provisions of this Code are not to be
  deemed to affect any civil rights or remedies
  existing at the time when this Code takes effect,
  by virtue of the common law or of any provision
  of statute.

N Y PENAL CODE § 720 (Banks & Bros. 1881). The code further provided:

    The omission to specify or affirm in this Code
  any liability to any damages, penalty, forfeiture
  or other remedy, imposed by law, and allowed to be
  recovered or enforced in any civil action or
  proceeding, for any act or omission declared
  punishable herein, does not affect any right to
  recover or enforce the same.

Id. at § 722 (emphasis added). These two sections were recodified in 1909 as §§ 23 and 24 of the Penal Law, and incorporated into the present Penal Law at § 5.10(3). The present statute declares that:

  [t]his chapter does not bar, suspend, or
  otherwise affect any right or liability to damages,
  penalty, forfeiture or other remedy authorized by
  law to be recovered or enforced in a civil action,
  regardless of whether the conduct involved in such
  civil action constitutes an offense defined in this
  chapter.

N Y PENAL LAW § 5.10(3) (McKinney 1987) (emphasis added).*fn4 OCC has not convinced the court that the New York legislature has ever regarded the recovery of punitive damages by the State in a public-nuisance action as a common-law criminal punishment that was intended to be abolished with the codification of New York's criminal law in 1881 or with any statutory revision thereafter. Rather, it appears to the court that the more logical reading of the statutory scheme, as reflected in §§ 720 and 722 of 1881 Code and in their successor statute, Penal Law § 5.10(3), is that it was intended to preserve the State's right to bring civil actions, including those sounding in public nuisance, seeking whatever remedies would be available to a private litigant. Indeed, assuming arguendo the truth of the State's allegations concerning OCC's conduct at Love Canal, the court suspects that OCC's assertion that it can be punished by no more than a misdemeanor conviction and a two-thousand-dollar fine would be greeted by New York's legislature and courts with a fair amount of incredulity.

Although OCC complains that the State's punitive-damages claim raises the specter of "unconstrained official coercion and government oppression," Item 867 at 12, it never explains how a $250 million punitive-damages claim brought by the State in a civil cause of action other than public nuisance, or, for that matter, a $250 million punitive-damages claim brought by a private party, would be any less coercive or oppressive. Furthermore, OCC ignores at least three crucial distinctions between a criminal prosecution and a civil lawsuit seeking punitive damages: first, the former punishes primarily through the deprivation of life and liberty, while the latter always punishes through monetary assessments; second, a criminal conviction, even for a corporation, can bring significant collateral consequences that do not accompany liability for punitive damages; and third, "a civil verdict ...


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