moved that we dismiss the claims against them pursuant to F.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. Westchester and O & R Utilities joined in the motion to dismiss claiming that the same arguments apply to them with equal force.
On April 13, 1993, the EPA issued an Administrative Order for Remedial Design and Remedial Action naming moving defendants International Paper, Nepera and Revere as well as International Business Machines and plaintiff Reichhold as respondents. The order found the respondents liable parties under § 107(a) of CERCLA, 42 U.S.C. § 9607(a), and ordered them to implement the selected remedy. In spite of the order, International Paper, Nepera and Revere still assert that plaintiffs' claims against them should be dismissed.
Plaintiffs and defendants dispute the standard to be applied by a district court upon a rule 12(b)(6) motion to dismiss a CERCLA claim. Generally, F.R.Civ.P. 8(a) requires that the complaint set forth "a short and plain statement of the claim." "All factual allegations in the complaint must be taken as true" and a complaint should not be dismissed unless it is beyond a doubt that plaintiff cannot prove a set of facts which would entitle him or her to relief. LaBounty v. Adler, 933 F.2d 121, 123 (2d Cir. 1991); Conley v. Gibson, 355 U.S. 41, 45-6, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957).
However, moving defendants contend that CERCLA litigation requires a higher level of specificity in pleadings. Defendants cite a Sixth Circuit case and four district court cases in support of this proposition.
The Supreme Court considered the propriety of a heightened pleading standard developed through case law in a recent case, Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit, 122 L. Ed. 2d 517, 113 S. Ct. 1160 (1993). In Leatherman, the Supreme Court considered the Fifth Circuit's heightened pleading standard in civil rights actions alleging municipal liability pursuant to 42 U.S.C. § 1983.
The Court held that a heightened pleading standard is "impossible to square" with "the liberal system of 'notice pleading' set up by the Federal Rules." Id. 61 U.S.L.W. at 4206. The Court noted that under Conley all that is required is a "short plain statement of the claim that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Leatherman, 61 U.S.L.W. at 4206, quoting Conley, 355 U.S. at 47. Noting that Federal Rule 9(b) specifically provided two exceptions to notice pleading for averments of fraud or mistake, the Court held that such express exceptions are the only exceptions to the general rule. Any other exception "must be obtained by the process of amending the Federal Rules, and not by judicial interpretation." Leatherman, 61 U.S.L.W. at 4207.
While there appears to be some case law support for requiring a heightened pleading standard, we find that the Leatherman reason applies with equal force here. Further, a closer examination the cases cited by moving defendants reveals that they are not incompatible with a notice pleading standard or are fatally inconsistent with Leatherman.
In McGregor v. Industrial Excess Landfill, Inc., 856 F.2d 39 (6th Cir. 1988), the Sixth Circuit specifically quotes Conley to establish the proper pleading standard, but then goes on to state, "[implicit in Conley] is the notion that the rules do contemplate a statement of circumstances, occurrences, and events in support of the claim being presented." McGregor, 856 F.2d at 42, quoting 5 C. Wright & A. Miller, Federal Practice and Procedure § 1215 (1969). In McGregor, the plaintiffs alleged that the United States, the State of Ohio and plaintiffs "have incurred and will continue to incur costs in connection with activities under CERCLA, including clean up, removal and remedial action." While plaintiffs listed expenditures by the state and federal government, they failed to list any costs they had personally incurred. Id. at 42, 43. Thus, the Sixth Circuit's focus appears not to have been on the fact that plaintiffs failed to plead with specificity all the response costs it paid, but the fact that plaintiff only listed government expenditures which suggested that they had not personally borne any of the response costs, a necessary element for a claim under § 107.
The propriety of response costs has proved a thorny issue for federal courts. Extensive litigation has occurred to determine whether specific costs are recoverable under § 107(a). Ascon Properties v. Mobil Oil Co., 866 F.2d 1149, 1154 (9th Cir. 1989). In order to deal with this difficulty, several courts have required that plaintiff allege at least one type of response cost cognizable under CERCLA. See Ascon, 866 F.2d at 1154; Cook v. Rockwell Internat'l Corp., 755 F. Supp. 1468 (D.Colo. 1991); Bradley Indust. Park v. Xerox Corp., 1991 U.S. Dist. LEXIS 1492, No. 88-7574(CSH)(S.D.N.Y. Feb. 4, 1991), 1991 U.S. Dist. LEXIS 1492.
Further, even though the Ascon court required that plaintiff allege a cognizable response cost, it found allegations that plaintiff had "been forced to incur response costs and in fact spent substantial amounts toward the clean-up, removal and remedial action" sufficient. Ascon, 866 F.2d at 1154.
The two other cases cited by defendants are Barnes Landfill, Inc. v. Town of Highland, 802 F. Supp. 1087 (S.D.N.Y. 1992) and Cash Energy, Inc. v. Weiner, 768 F. Supp. 892, 900 (D. Mass. 1991). In Cash Energy, a Massachusetts district court wrote, "it is a reasonable prediction that higher courts . . . will extend specificity pleading requirements to CERCLA cases, with appropriate subsidiary conditions. . . . Unless and until guidance to the contrary appears in legislation or precedent, I will so rule." Id. at 900. The court based its prediction on what it deemed to be a trend towards particularity in pleadings in certain types of cases. Id. at 899-900. However, Leatherman, specifically prohibits this type of judicial creation of heightened pleading requirements. Further, it expressly overturned the line of civil rights cases requiring heightened specificity which the Cash Energy relied upon as its principal example of "the trend toward specificity."
Therefore, in light of the Leatherman decision, we hold that a heightened pleading standard does not apply to CERCLA cases.
I. Count One: CERCLA Liability
In order to establish a private cost recovery action under CERCLA, plaintiffs must prove 1) that a defendant falls under one of the four categories of covered persons, 2) that the site is a "facility" as defined by CERCLA, 3) that there has been a release or threat of release of a hazardous substance at the facility, 4) that the release or threat of release caused the plaintiff to incur response costs, and 5) that plaintiff's costs were "necessary costs of response . . . consistent with the National Contingency Plan." 42 U.S.C. § 9607(a); B.F. Goodrich Co. v. Murtha, 958 F.2d 1192, 1198 (2d Cir. 1992).
Covered persons under CERCLA's liability provisions include:
any person who by contract, agreement, or otherwise 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 owned or operated by another party or entity and containing such hazardous substances.
42 U.S.C. § 9607 (a)(3). The complaint alleges that each of the moving defendants, Inco, International Paper, Jones, Lightron, Nepera, NYUMC, Revere, O & R Utilities and Westchester "arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of solid waste [which it owned or possessed] by another party or entity at the Site," and that studies performed by the EPA and others have shown that such waste contained hazardous substances making each of those defendants liable, pursuant to § 107(a)(3) of CERCLA, 42 U.S.C. § 9607(a)(3), for all response costs.
Plaintiffs claim that their complaint sufficiently alleges that the moving defendants arranged for the disposal or treatment of hazardous substances at the Site. We disagree. Plaintiffs state that they "clearly allege that each of the moving defendants sent solid waste containing hazardous substances." Had plaintiffs so stated, their argument opposing defendants' motion would be must stronger.
However, no such language is used in the complaint.
Reading the complaint literally, plaintiffs have alleged no more than the fact that moving defendants arranged for the treatment or disposal of solid waste and that studies have shown that solid waste contains hazardous substances. Plaintiffs do not state to which studies they refer to, nor do they state the source from which the solid waste studied came. Absent some allegation that the defendants's specific solid waste contained hazardous substances, plaintiffs have failed to allege that the defendants are liable parties under § 107(a)(3). Without a substantial tie between the studies and the solid waste generated by the individual defendants which would make plaintiff's allegation that defendants arranged for the transport or disposal of solid waste in essence an allegation that hazardous substances were transported or deposited, we cannot say that plaintiffs have stated a claim upon which relief can be granted.
Plaintiffs state that the Payne affidavit submitted in opposition to defendants' motion to dismiss makes it clear that waste associated with defendants contained hazardous substances. However, on a motion to dismiss pursuant to rule 12(b)(6), we cannot look outside the pleadings. LaBounty, 933 F.2d at 123.
Moving defendants argue that the amended complaint was drafted to allow plaintiffs to back away from the original complaint's straight-forward allegation that moving defendants arranged for the transport or disposal of hazardous substances. Ironically, at oral argument, plaintiffs' attorney stated that the amended complaint was not an attempt to soften allegations against defendants. Rather, he claimed it was intended to provide more specificity to the complaint by replacing a conclusory statement such as that each defendant "arranged for the disposal or treatment, or arranged with a transporter for transport or disposal or treatment, of Hazardous Substances owned or possessed by such defendant." In light of plaintiffs' contentions that their amended complaint was meant to allege that hazardous waste was contained in defendants' solid waste, we give plaintiffs twenty days to amend their § 107 claim.
II. Count Two: CERCLA Contribution
Section 113(f)(1) of CERCLA, 42 U.S.C. § 9613(f)(1) creates a private right of action by which "any person may seek contribution from any other person who is liable or potentially liable under section [107, 42 U.S.C. § ] 9607." The contribution provision codifies the federal common law principle that contribution can only be obtained from parties liable under governing law. Kelley v. Arco Indust. Corp., 739 F. Supp. 354, 356-57 (W.D. Mich. 1990). Thus, a party cannot be liable for contribution unless it is a responsible party as defined by § 107. Id. at 357.
Because, as previously discussed, plaintiffs have failed to state that defendants are liable parties under § 107, plaintiffs have also failed to state a claim for contribution under § 113. However, in light of the considerations discussed above, plaintiffs are also given twenty days to amend their § 113 claim.
III. Count Three: State Negligence Claim
The amended complaint alleges "that the defendants are liable for negligence in tort to plaintiffs for injuries suffered or to be suffered by plaintiffs as a direct and proximate result thereof." Defendants claim that plaintiffs' negligence claims should be dismissed because 1) under New York law a defendant has no duty to a plaintiff for a dangerous condition on property unless the defendant has an "occupancy, ownership, control, or special use of such premises" Balsam v. Delma Engineering Corp., 139 A.D.2d 292, 532 N.Y.S.2d 105 (1st Dep't 1988), appeal dismissed in part denied in part 73 N.Y.2d 783 (1988), 2) New York law does not allow a negligence action based solely on economic loss, County of Suffolk v. Long Island Lighting Co., 728 F.2d 52, 62 (1984) and 3) the three year statute of limitations for negligence actions have run for plaintiffs Ford, Reichhold and Union Carbide's claims. N.Y. C.P.L.R. § 214-c(2).
At oral argument, plaintiffs' attorney stated that plaintiffs were no longer alleging a negligence claim and were pressing a contribution claim in its stead. Plaintiffs' opposition papers reflect this position and state that they meant to allege that defendants negligently disposed of hazardous substances at the Site, and because they have been held responsible for the Site clean up, they have a claim for contribution.
Since plaintiffs appear to have dropped their negligence claim, we assume that it will be so reflected in their amended complaint and therefore do not reach defendants' motion to dismiss the negligence cause of action. Because the contribution claim was not pled in plaintiffs' complaint, we assume that they seek leave to amend their complaint to allege such a claim.
In order to determine whether plaintiffs should be allowed to add a state law contribution claim, we analyze whether or not such a claim is available. New York's contribution statute states:
two or more persons who are subject to liability for damages for the same personal injury, injury to property or wrongful death, may claim contribution among them whether or not an action has been brought or a judgment has been rendered against the person from whom contribution is sought.