from about 1980 to about 1984, Frontenac conducted various operations involving hazardous wastes at 3163 Buffalo Avenue, Niagara Falls, (2) during the course of those operations, Frontenac released hazardous wastes at the site, (3) during the time Frontenac owned and operated the site, hazardous wastes were released from and migrated off the site, (4) Frontenac failed to prevent the migration of the wastes from the site, and (5) during all or part of the time that Frontenac operated at and occupied the site, it was owned, operated, dominated, and controlled by Laidlaw. Item 179, PP 40-44; Item 181, 58-69; Item 183, PP 39-43.
Laidlaw does not argue that the allegations concerning Frontenac's operation of the site are insufficient to support a claim for contribution under CERCLA. Neither does it contend that Laidlaw was not the corporate parent of Frontenac during the period in question. Rather, it maintains that the allegation that Frontenac was owned, operated, dominated, and controlled by Laidlaw is simply "conclusory," and unsupported by facts sufficient to sustain a claim of parental liability under CERCLA, either under an ownership theory based on "piercing the corporate veil," or under a theory of operator liability. See Item 241, pp. 3-14.
Under CERCLA § 107(a), "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" may be held liable for response costs under the Act. 42 U.S.C. § 9607(a). It is generally agreed that "owner" liability and "operator" liability are two distinct concepts. See, e.g., Long Beach Unified School District v. Dorothy B. Godwin California Living Trust, 32 F.3d 1364, 1367 (9th Cir. 1994); Sidney S. Arst Co. v. Pipefitters Welfare Educ. Fund, 25 F.3d at 420-21; Lansford-Coaldale Joint Water Authority v. Tonolli Corp., 4 F.3d 1209, 1220 (3d Cir. 1993); John S. Boyd Co., Inc. v. Boston Gas Co., 992 F.2d 401, 408 (1st Cir. 1993). A corporation may be held liable as the owner of another corporation under circumstances warranting "piercing the corporate veil." Lansford-Coaldale Joint Water Authority v. Tonolli Corp., 4 F.3d at 1224-25; John S. Boyd Co., Inc. v. Boston Gas Co., 992 F.2d at 408. In addition, an affiliated corporation may be held liable as an operator when it is "deemed . . . to have had substantial control over the facility in question." Lansford-Coaldale Joint Water Authority v. Tonolli Corp., 4 F.3d at 1220. Some courts have held that operator liability may attach only when there is evidence of the actual exercise of control. Lansford-Coaldale Joint Water Authority v. Tonolli Corp., 4 F.3d at 1220-21; United States v. Kayser-Roth Corp. Inc., 910 F.2d 24, 27 (1st Cir. 1990), cert. denied, 498 U.S. 1084 (1991). Others have held that the authority to control is, by itself, sufficient. Nurad, Inc. v. William E. Hooper & Sons Co., 966 F.2d 837, 842 (4th Cir), cert. denied, U.S. , 113 S. Ct. 377, 121 L. Ed. 2d 288 (1992); Idaho v. Bunker Hill Co., 635 F. Supp. 665, 671-72 (D.Idaho 1986). See also, FMC Corp. v. Aero Industries, Inc., 998 F.2d 842, 846 (10th Cir. 1993); United States v. Carolina Transformer Co., 978 F.2d 832, 836-37 (4th Cir. 1992). The Second Circuit has not yet ruled on this issue.
I find that the third-party plaintiffs' allegations that Frontenac was owned, operated, dominated, and controlled by Laidlaw at the time Frontenac conducted its hazardous waste operations at 3163 Buffalo Avenue are sufficient under the liberal pleading standards of Fed. R. Civ. P. 8(a) to give fair notice to Laidlaw of their claims of corporate parent operator liability under CERCLA, under either an "actual exercise of control" or an "authority to control" theory. The general nature of the claims is clear enough. Discovery should enable the third-party plaintiffs to define them more precisely. As the third-party plaintiffs argue, the specific information needed for establishing the extent of Laidlaw's control of Frontenac and its activities may be currently in the exclusive possession of Laidlaw. Item 273, p. 9; Item 283, pp. 5,7. They cannot be expected to plead, at this time, facts sufficient to delineate the extent to which Laidlaw controlled Frontenac.
Since the amended third-party complaints sufficiently allege CERCLA operator liability claims, they cannot be dismissed under Fed. R. Civ. P. 12(b)(6). There is therefore no need to decide at this time whether or not they sufficiently allege claims under an ownership liability theory based on "piercing the corporate veil," or whether, as Laidlaw maintains, such claims must be stated with the particularity required by Fed. R. Civ. P. 9(b).
2. Good Faith Basis for the Claims -- Fed. R. Civ. P. 11
Laidlaw maintains that the third-party plaintiffs have failed to demonstrate, in their amended third-party complaints and their papers responding to Laidlaw's motion to dismiss, any good faith factual basis for their claims. Item 241, p. 16; Item 308, pp. 2-5. See also, Item 316. Consequently, it contends, the third-party plaintiffs have failed to comply with Fed. R. Civ. P. 11, their amended third-party complaints should be dismissed (Item 308, p. 5), and there is no basis for allowing them to replead or to proceed to discovery (Item 241, p. 16). It has not, however, made a direct challenge to the third-party plaintiffs' submissions by moving for sanctions under Fed. R. Civ. P. 11(c).
Fed. R. Civ. P. 11(b) states:
By presenting to the court (whether by signing, filing, submitting, or later advocating) a pleading, written motion, or other paper, an attorney . . . is certifying that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances,--
. . . .