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Sahu v. Union Carbide Corp.

November 20, 2006

JANKI BAI SAHU, ET AL., PLAINTIFF,
v.
UNION CARBIDE CORP. AND WARREN ANDERSON, DEFENDANTS.



The opinion of the court was delivered by: John F. Keenan, United States District Judge

OPINION & ORDER

The defendants' motion for summary judgment dismissing plaintiffs' remaining cause of action*fn1 for corporate veil piercing is granted.

I. Factual Background

Plaintiffs seek to pierce the corporate veil of defendant Union Carbide Corporation's ("UCC") former subsidiary Union Carbide India Limited ("UCIL"), to hold UCC liable for injuries allegedly caused by pollution from UCIL's pesticide formulation plant in Bhopal, India.

The UCIL plant began its operations in the mid-1960s, on land leased from the Indian state of Madhya Pradesh. (Compl. ¶ 70.) UCIL was incorporated under Indian law in 1934. 50.9% of UCIL's stock was owned by its parent corporation UCC. (Compl. ¶¶ 62, 63.)

The UCIL plant was back-integrated in 1979-1980 to manufacture pesticides. (Compl. ¶ 70.) During the manufacture of pesticides, hazardous wastes were generated and dumped within the plant's premises. After a gas leak in 1984, the plant was closed by the Indian government and never resumed normal operations. (Compl. 94.) Thereafter, all activity at the plant site was monitored closely by the Indian Central Bureau of Investigation, the Indian courts, and the Madhya Pradesh Pollution Control Board.

In 1994, Union Carbide sold all of its remaining UCIL shares (Compl. ¶ 117), and built a hospital in Bhopal with proceeds from the sale, Bano v. Union Carbide Corp., No 99 Civ. 11329, 2003 WL 1344884 (S.D.N.Y. Mar. 18, 2003). UCIL has since changed its name to Eveready Industries India Limited ("EIIL"). (Compl. ¶ 117.) In 1998, EIIL terminated its lease of the Bhopal plant site upon consent from the state government of Madhya Pradesh. (Compl. ¶ 124.)

II. Procedural History

A. Litigation for Pollution Arising out of the Gas Leak

The procedural history of this case stretches back over twenty years to a set of related cases filed in the wake of the 1984 gas leak at the UCIL plant in Bhopal. The cases sought recovery for injuries sustained as a result of pollution stemming directly from the gas leak. The Multi-District Litigation Panel consolidated the actions before this Court.

The consolidated action was dismissed on June 10, 1986 based on forum non conveniens. See In re Union Carbide Corp.Gas Plant Disaster at Bhopal, India in December, 1984, 634 F. Supp. 842 (S.D.N.Y. 1986), aff'd as modified, 809 F.2d 195 (2d Cir. 1987), cert. denied, 484 U.S. 871 (1987). The Court held, relying on the United States Supreme Court's decisions in Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 67 S.Ct. 839, 91 L.Ed. 1055 (1947) and Piper Aircraft Co. v. Reyno, 454 U.S. 235, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981), that the Indian legal system would be better able to mete out justice and fix liability for the tragic event based on: the presence of claimants, evidence, and witnesses in India; the Indian government's interest in the outcome of the litigation; and the administrative burden such litigation would tax on an American tribunal. Id.

The case proceeded in the Indian judicial system and was settled in 1989. Under the settlement order, UCC agreed to pay $470 million to a compensation fund. Bano v. Union Carbide Corp., No. 99 Civ. 11329, 2000 WL 1225789, at *2 (S.D.N.Y. Aug. 28, 2000) (summarizing the settlement terms).

B. Litigation for Pollution Arising out of Normal Plant Operations

1. The Bano Action

After settlement of the action for injuries arising specifically out of the gas disaster, residents of Bhopal and several organizations representing the residents of Bhopal filed a class action complaint before this Court asserting claims for personal injury and property damage caused by pollution from the normal operations of the UCIL plant, as distinct from pollution caused by the 1984 gas leak. This Court dismissed the Bano plaintiffs' personal injury claims as untimely because they were discovered more than three years before the action was commenced. Bano v. Union Carbide Corp., No 99 Civ. 11329, 2003 WL 1344884 (S.D.N.Y. Mar. 18, 2003). The entire case was eventually dismissed on summary judgment. Bano v. Union Carbide Corp., No. 99 Civ. 11329, 2005 WL 2464589 (S.D.N.Y. Oct. 05, 2005), aff'd, 2006 WL 2336428 (2d Cir. Aug. 8, 2006).

2. The Instant Action

Plaintiffs were originally members of a putative class in the Bano action. The present class action suit, filed on November 8, 2004, is comprised of plaintiffs whose personal injury claims are not time-barred as they were discovered within the three-year statute of limitations period. (Compl. ¶¶ 4-47.)

As in Bano, pollution arising out of the normal operations of the UCIL plant is the subject of the litigation. The plaintiffs claim that contamination of the soil and drinking water supply of sixteen communities in the vicinity of the former UCIL plant caused injuries to the communities' residents. (Compl. ¶ 1.) The plaintiffs assert three theories of liability against UCC: (1) that UCC "was a direct participant and joint tortfeasor in the activities that resulted in the environmental pollution"; (2) that UCC "worked in concert with UCIL to cause, exacerbate and/or conceal the pollution problem in Bhopal"; and (3) that UCIL acted as UCC's alter ego, justifying the piercing of UCIL's corporate veil.*fn2 (Compl. ¶ 60.) Based on these theories, plaintiffs seek relief for negligence, public nuisance, private nuisance, strict liability, medical monitoring, battery, and injunctive relief.

On August 5, 2005, defendants moved for summary judgment, pursuant to Federal Rule of Civil Procedure ("FRCP") 56 and/or dismissal pursuant to FRCP 12(b)(6), arguing that all three of plaintiffs' theories fail as a matter of law. Plaintiffs objected and applied for a stay on the veil piercing issue in order to conduct additional discovery pursuant to FRCP 56(f).

On December 1, 2005, the Court dismissed, as a matter of law, all of plaintiffs' claims with regard to the first and second theories of liability; the direct participant and concerted action theories, respectively. Sahu v. Union Carbide Corp., 418 F. Supp.2d 407 (S.D.N.Y. 2005). The Court granted a stay allowing plaintiffs to conduct sixty days of additional discovery related exclusively to veil piercing, the third and remaining theory of liability.*fn3 After the Court granted two additional extensions, discovery concluded on April 30, 2006. With the benefit of this additional discovery, plaintiffs filed renewed objections to defendants' motion for summary judgment on the veil piercing issue.

The Court now considers whether summary judgment for the defendants dismissing plaintiffs' remaining theory of liability is appropriate.

III. Discussion

A. Summary Judgment ...


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