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United States v. Dico, Inc.

United States Court of Appeals, Eighth Circuit

April 11, 2019

United States of America Plaintiff-Appellee
v.
Dico, Inc.; Titan Tire Corporation Defendants-Appellants

          Submitted: January 15, 2019

          Appeal from United States District Court for the Southern District of Iowa - Des Moines

          Before BENTON, MELLOY, and KELLY, Circuit Judges.

          BENTON, CIRCUIT JUDGE.

         Dico and Titan appeal the district court's[1] finding that they violated the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), that they are jointly and severally liable for response costs, and that Dico is liable for punitive damages. Having jurisdiction under 28 U.S.C. § 1291, this court affirms.

         I.

         Dico, Inc. owned several buildings in Des Moines contaminated with Polychlorinated Biphenyls (PCBs) in the insulation. In 1994, the Environmental Protection Agency issued an administrative order that Dico remove some of the PCB contamination, encapsulate the remaining insulation, and submit a long-term maintenance plan for EPA approval. See 42 U.S.C. § 9606(a) (authorizing the EPA to issue "such orders as may be necessary to protect public health and welfare and the environment"). The order also required ongoing testing, annual reports to the EPA, and immediate notification if changes in site conditions threatened further release of PCBs. Without informing the EPA, Dico-through its corporate affiliate Titan Tire Corporation-sold the buildings to Southern Iowa Mechanical (SIM) in 2007. Titan did not tell SIM that the buildings were contaminated with PCBs and subject to an EPA order. SIM tore down the buildings and stored them in an open field, where the EPA later found PCBs.

         The EPA sued Dico to recover damages for its cleanup costs. It alleged Dico violated the CERCLA by arranging to dispose of a hazardous substance. See 42 U.S.C. § 9607(a)(3) (establishing liability for those who "arrange[] for disposal . . . of hazardous substances"). The EPA also alleged Dico violated the 1994 order by circumventing the long-term maintenance plan, failing to prevent the additional release of PCBs, and failing to notify the EPA of changed site conditions. See 42 U.S.C. § 9606(b)(1) (establishing liability for those who violate the terms and conditions of an EPA order). The district court granted summary judgment, finding CERCLA arranger liability and a violation of the 1994 order. United States v. Dico, Inc., 892 F.Supp.2d 1138, 1163 (S.D. Iowa 2012). After a bench trial, it imposed civil penalties and punitive damages. United States v. Dico, Inc., 4 F.Supp.3d 1047, 1068 (S.D. Iowa 2014). This court affirmed summary judgment on Dico's violation of the 1994 order and civil penalties, but held that questions of fact precluded summary judgment on arranger liability and punitive damages. United States v. Dico, Inc., 808 F.3d 342, 354-355 (8th Cir. 2015).

         On remand, the district court conducted a bench trial. United States v. Dico, Inc., 265 F.Supp.3d 902, 906 (S.D. Iowa 2017). It found that Dico and Titan arranged to dispose of a hazardous substance in violation of the CERCLA, and held them jointly and severally liable for $5, 454, 370 in response costs. Id. at 967, 970. It held Dico liable for the same amount in punitive damages, an amount equal to the costs incurred from Dico's violation of the 1994 order. Id. at 970-71. It also found Dico and Titan jointly and severally liable for all costs not yet reported, all future costs, all enforcement costs, and attorney's fees. Id. at 970. Dico and Titan appeal.

         II.

         The CERCLA imposes strict liability for environmental contamination upon an entity that "arrange[s] for disposal . . . of hazardous substances." 42 U.S.C. § 9607(a)(3). "[U]nder the plain language of the statute, an entity may qualify as an arranger under § 9607(a)(3) when it takes intentional steps to dispose of a hazardous substance." Burlington N. & Santa Fe Ry. Co. v. United States, 556 U.S. 599, 611 (2009). Dico and Titan qualify as arrangers if they "entered into the sale . . . with the intention that at least a portion of the product be disposed of" as a result of the transfer. Id. at 612.

         "[T]he determination whether an entity is an arranger requires a fact-intensive inquiry." Id. at 610. "After a bench trial, this court reviews the district court's findings of fact for clear error." Schaub v. VonWald, 638 F.3d 905, 915 (8th Cir. 2011). This court will affirm "the district court's account of the evidence" if it is "plausible in light of the record viewed in its entirety." Id., citing Anderson v. City of Bessemer City, 470 U.S. 564, 573-74 (1985).

         Dico and Titan argue that the district court gave insufficient weight to evidence that the transaction was legitimate. For example, the terms of the 2007 sale mirror the terms of Dico and Titan's 2004 sale of a Weld Shop to SIM. Dico and Titan argue that because the 2004 sale was legitimate, the 2007 was legitimate too. The district court properly found that similarities in the transactions are "by no means conclusive evidence that [Dico and Titan's] intent regarding the former was the same as their intent regarding the latter." Dico, 265 F.Supp.3d at 966.

         Next, Dico and Titan argue the usefulness of part of the buildings is evidence of a legitimate transaction. The district court found that the contaminated buildings' structural-steel beams were reusable if sampled and decontaminated. Dico, 265 F.Supp.3d at 957. An entity that "enter[s] into a transaction for the sole purpose of discarding a used and no longer useful hazardous substance" is liable under the CERCLA. Burlington N., 556 U.S. at 610. But, "an entity could not be held liable as an arranger merely for selling a new and useful product ...


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