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Town of New Windsor v. Avery Dennison Corporation

March 1, 2012


The opinion of the court was delivered by: Seibel, J.


Before the Court is Defendants' Motion to Dismiss Plaintiff's Amended Complaint. (Doc. 22.) For the reasons stated below, Defendants' Motion is GRANTED IN PART and DENIED IN PART.


I assume the facts, although not the conclusions, in the Amended Complaint ("Am. Compl."), (Doc. 18), to be true for purposes of Defendants' Motion. For reasons I will discuss later, I also consider various documents attached to the parties' submissions. Where a fact is not from the Amended Complaint, I will so indicate.

Plaintiff, the Town of New Windsor (the "Town"), is a municipal corporation organized under the laws of the State of New York. (Am. Compl. ¶ 6.) Defendant Dennison Monarch Systems, Inc. ("Dennison Monarch") was a corporation organized under the laws of the State of Delaware, authorized to do business in New York since 1981. (Id. ¶ 7; Rea Decl. Ex. A.)*fn1

Dennison Monarch filed a Certificate of Dissolution with Delaware on March 15, 2001, (Moench Decl. Ex. D),*fn2 and notified the state of New Jersey of its dissolution on August 15, 2001, (Rea Decl. Ex. C), but apparently never notified the state of New York, because as of March 2, 2011, it was listed as an active corporation in the New York State Department of State's ("NYSDOS") Division of Corporations' online Business Entity Database ("NY Database"), (id. Ex. A). Dennison Monarch is a wholly owned subsidiary of Defendant Dennison Manufacturing Co. ("Dennison Manufacturing"), a corporation organized under the laws of the State of Nevada, authorized to do business in the State of New York since 1962. (Am. Compl. ¶ 7.) Dennison Manufacturing is a wholly owned subsidiary of Defendant Avery Dennison Corporation ("Avery Dennison"), a corporation organized under the laws of the State of Delaware, authorized to do business in New York since 1977. (Id.)

A.Defendants' Plant

From 1956 to 1994, Defendants operated a manufacturing facility (the "Plant") located at 15-21 Ruscitti Road, also known as MacArthur Avenue, in the Town. (Id. ¶¶ 2, 9.) The Plant manufactured metal office furniture, accessories, office equipment, and computer equipment. (Id. ¶¶ 2, 13.) Avery Dennison owns the Plant property, which consists of 5.8 acres. (Id. ¶¶ 10--11.) The former physical Plant building, which Avery Dennison demolished in 2009, occupied 2.2 acres in the northwestern portion of the property. (Id. ¶ 11.)

Plant operations included cutting, shaping, welding, deburring, degreasing, coating, and painting metal components. (Id. ¶ 13.) Part of the Plant's operations utilized chlorinated solvents in two large degreasing pits located in the central portion of the Plant. (Id.) For years, massive amounts of solvent and process wastes were discharged from these pits and from other sources at the Plant into the soils, groundwater, and bedrock underlying the Plant property. (Id.)

In 1983, inspectors from the United States Environmental Protection Agency ("EPA") issued the Defendants a Notice of Violation after finding that the Plant's coating operation, which included the use of hundreds of tons of solvents, was producing emissions of volatile organic compounds that violated its Clean Air Act permit limits, and otherwise failed to comply with state and federal law. (Id. ¶ 14.) In 1984, the EPA also classified the Plant as a Significant Industrial User, due to the high volume of industrial process liquids generated by the Plant. (Id.) In 1985, because Defendants continued Plant operations despite the 1983 Notice of Violation, the United States Department of Justice filed an enforcement action seeking injunctive relief and $25,000 in civil penalties against the Plant. (Id.)*fn3 Defendants stopped manufacturing operations in approximately 1994. (Id. ¶ 15.)

B.The Town Water Supply

The Town owns property immediately adjacent to the eastern boundary of the Plant property, including wetlands, two Little Falls Ponds (the "Ponds") and the Little Falls Ponds Wellfield (the "Wellfield"). (Id. ¶¶ 3, 12.) Three wells (the "Wells") located in the Wellfield have supplied part of Plaintiff's drinking water since the late 1960s. (Id. ¶¶ 3, 12.) In 1971 and 1974, the Plaintiff commissioned the repair of Well equipment, significantly increasing the daily yield of the Wells. (Id. ¶ 16.) After a period of time, Plaintiff purchased Catskill Aqueduct water from New York City at very favorable rates, so that water became a major source of the Town's supply. (Id. ¶ 17.) As a result, the Wells were decommissioned, but remained an emergency backup water source for Plaintiff. (Id.)

During the 1990s, Avery Dennison and Dennison Manufacturing conducted several environmental investigations of the Plant. (Id. ¶ 22.) Early investigations revealed massive amounts of solvent contamination in the soils, groundwater, and bedrock under the former Plant site. (Id. ¶ 27.) The New York State Department of Environmental Conservation ("NYSDEC"), attributes the source of contamination to the decades of use of the two large degreasing pits at the Plant. (Id.) Some of the contaminants discovered in environmental samples from the Plant include 1,1,1-trichloroethane, trichloroethene, perchloroethene, 1,2-dichloroethane, 1,1,-dichloroethene, and 1,2-dichloroethene. (Id.) Plaintiff alleges that these chemicals are "hazardous substances," as that term is defined in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C. §§ 9601--9675.*fn4 According to the EPA, exposure above Maximum Contaminant Levels to 1,1,1-trichloroethane could cause liver, nervous system, or circulatory problems, and similar exposure to 1,2-dichloroethene could cause increased risk of cancer. (Rea Decl. Ex. L, at 2--3.) Due to the flow of groundwater from the Plant toward Plaintiff's property, the edge of the plume consisting of these solvents is now contaminating the Wells. (Am. Compl. ¶ 3.)

C.The Voluntary Cleanup Agreement

In 1999, after years of negotiations with NYSDEC, Dennison Monarch signed Voluntary Cleanup Agreement #V00135-3 ("VCA"), (Moench Decl. Ex. I), under NYSDEC's then-existing Voluntary Cleanup Program. (Id. ¶ 22.) Under the VCA, Dennison Monarch agreed to (1) investigate the extent of contamination on the Plant property and adjacent properties, and (2) clean up contamination on Plant property. (Id. ¶ 23.) The VCA does not require Defendants to remediate Plaintiff's property or any other off-site contaminated properties. (Id. ¶ 24.) Although Dennison Monarch Systems signed the VCA, Avery Dennison and Dennison Manufacturing have always conducted the investigations, dealt with the NYSDEC, and planned and conducted the fieldwork required under the VCA. (Id. ¶ 25.)

During the first decade of investigations after signing the VCA, Defendants' remediation consultants proposed to NYSDEC that leaving the solvents in the ground and groundwater was the right remedy, insisting that the solvent plume would clean itself up. (Id. ¶ 29.) NYSDEC rejected this approach. (Id.) Defendants' next proposal to NYSDEC involved "in situ" remediation. (Id.) Rather than remove the solvent-contaminated soil, thus eliminating the source of the plume, Defendants proposed injecting chemicals into the soil to treat the solvent contamination. (Id.) Defendants would treat only Plant property, and this method would not remediate the solvents present in the soil of Plaintiff's property. (Id.) Defendants' remediation consultant is now preparing a design work plan for the in situ method. (Id.) Avery Dennison has refused to remediate the Town property. (Id. ¶ 26.) In 2005, NYSDEC instructed Defendants to prepare a remedial contingency plan should the Town begin to draw from the Wells again, but Defendants refused to do so. (Id. ¶ 30.)

D.The Town's Current Water Supply

Defendants have always insisted that the Wells are not contaminated with solvents from the Plant. (Id. ¶ 30.) Defendants have taken soil samples, groundwater monitor well samples, and surface water samples from the Ponds. (Id.) Defendants, however, have never sampled the Wells' drinking water despite several requests from the Town to do so. (Id.) Defendants have maintained that the solvent contamination was so minor in the groundwater monitoring wells in the wetlands adjoining the Wellfield that the solvent plume could not possibly extend into the Wells themselves. (Id.)

Eventually, the Town hired its own geological consultant, Conrad Geoscience Corporation ("Conrad"), to analyze Defendants' data and assist in negotiations between the Town and Defendants. (Id. ¶ 31.) Defendants continued to insist that there was no evidence that the Wells' drinking water was contaminated. (Id.) In response, Conrad sampled the Wells' drinking water in May 2008 and found that the plume had migrated into the Wells. Conrad immediately provided this data to Defendants. (Id.) Notwithstanding this data, Defendants refused to remediate the solvent plume in the wetlands and the Wellfield and have not taken any samples of the Wells' drinking water. (Id. ¶ 32.)

In the past few years, Plaintiff has experienced persistent water shortages that have worsened every year, and it needs to reactivate the Wells. (Id. ¶ 18.) The Town engineer, however, has cautioned against using the Wells because of the solvent contamination. (Id.) Specifically, according to the engineer, pumping the wells would alter the flow of groundwater and create a cone of depression that could draw in chlorinated solvents, increasing the already- existing solvent contamination in the Wells. (Id.) And because the Plant property remains heavily contaminated today, solvents will continue to flow into the soil of Plaintiff's property, further contaminating the drinking water supply. (Id. ¶ 33.)

Without water from the Wells, and because of recent sharp increases in the price of New York City water, which now costs Plaintiff $30,000 per month in excess charges alone, Plaintiff has been forced to drill more than twelve exploratory wells in various locations in search of additional supply. (Id. ¶ 19--20.) The Town has obtained approval from the Department of Health for the only successful exploratory wellfield to date, but that supply is not enough. (Id. ¶ 19.) Even if enough new wells are found to satisfy Plaintiff's need, the Town will incur costs for the design, development, and construction of treatment and delivery systems. (Id.) To date, Plaintiff has spent more than $250,000 in exploring for new groundwater supplies. (Id.) On February 27, 2011, New York City officials unexpectedly shut down the Catskill Aqueduct Tap that provides most of Plaintiff's water because of problems related to upstream turbidity. (Id. ¶ 21.) Plaintiff is in a water emergency and must be able to reactivate the Wells. (Id.) The Town engineer estimates that Plaintiff will spend $30 million over the next twenty years to compensate for the contaminated Wells. (Id. ¶ 36.)

E.Procedural Posture

On October 7, 2010, Plaintiff brought this lawsuit against Defendants in New York state court, alleging negligence, strict liability for ultrahazardous activities, trespass, private nuisance, and public nuisance. (Doc. 1 Ex. D.) On November 15, 2010, Defendants removed the case to this Court. (Doc. 1.) On February 3, 2011, the New Windsor Town Board ("Board") "ratified and approved" this lawsuit. (Rea Decl. Ex. N.) On February 17, 2011, I granted Plaintiff leave to amend the Complaint. (Feb. 17, 2011 Minute Entry.) On March 3, 2011, Plaintiff filed the Amended Complaint, alleging the same five causes of action as in the original Complaint. Plaintiff seeks $30 million in "compensatory, consequential, and special damages," punitive damages, and injunctive relief requiring Defendants to remediate solvent contamination on Plaintiff's property. (Am. Compl. 20.) Defendants, in their Motion to Dismiss, argue that (1) Defendant Dennison Monarch lacks capacity to be sued, (2) NYSDEC has primary jurisdiction over Plaintiff's claims, (3) Plaintiff lacks capacity to bring this suit, and (4) Plaintiff's strict liability, trespass, and private nuisance claims fail as a matter of law. (See Ds' Mem.)*fn5

II.Applicable Legal Standards

A.Motions to Dismiss Standard ...

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