The manufacturer of PCE dry cleaning machine filtering system is not a CERCLA arranger

Since 1980, Team Enterprises, LLC leased space in a shopping center in Modesto, California, where it operated a dry cleaning store.  From 1980 to 2004, Team used PCE in its dry cleaning equipment, and the machines generated wastewater containing PCE.  Team used Puritan Rescue 800 filter-and-still combination equipment ("Rescue 800"), designed and manufactured by R.R. Street & Co., Inc. ("Street") to filter and to recycle the PCE-laden wastewater for reuse.  The Rescue 800 returned distilled PCE to Team's dry cleaning machines and deposited the resulting wastewater into an open bucket.  Once in the bucket, some of the remaining PCE would separate from the water, allowing Team to recapture "pure" (or visible amounts of) PCE for reuse.  The remaining wastewater contained dissolved (and thus invisible) PCE.

Team disposed of this wastewater by pouring it down the sewer drain.  It comes as no surprise, given that sewer lines are designed to leak, that some of the PCE then leaked into the soil.  The California Regional Water Quality Control Board ("RWQCB") deemed the affected property in need of remediation, which Team performed at its own expense.

Team sued Street and several other defendants in District Court for contribution under CERCLA.  Team also alleged various state-law causes of action, including claims for trespass and nuisance.  The District Court granted summary judgment to Street on all claims, and Team appealed.  In Team Enterprises, LLC v. Western Inv. Real Estate Trust et al, 2011 U.S. App. LEXIS 15383 (9th Cir.: 7/26/11), the 9th Cir. reviewed the case.

The Court found arranger liability under Section 9607(a)(3) applied only if the material was "waste" rather than a useful product; the Court concluded that, at most, the equipment's design indicated that the manufacturer was indifferent to the possibility that residual solvent would be poured down the drain.  This was not sufficient to show arranger liability.  No evidence indicated the equipment was designed to be a waste disposal machine.  The equipment's self-evident purpose was to recover and to recycle usable solvent that would otherwise be discarded.  Allowing intent to be inferred from a mere failure to warn would expand the scope of arranger liability.  The manufacturer had no legal authority to direct the cleaner's conduct, and the cleaner failed to establish that the manufacturer exercised any actual control over the dry cleaner's disposal of the residual solvent.  As such, there was no arranger liability.

As to the state law claim for nuisance, the Court held that a defendant may be liable for assisting in the creation of a nuisance if he either (1) affirmatively instructs the polluting entity to dispose of hazardous substances in an improper or unlawful manner, or (2) manufactures or installs the disposal system.  Mere but-for causation, on the other hand, does not give rise to nuisance liability. 

As to the state law claim for trespass, the Court held that a trespass is an invasion of the interest in the exclusive possession of land.  The essence of the cause of action for trespass is an unauthorized entry onto the land of another.  In California, it is established that trespass may include invasion by pollutants.  Even though the action causing the entry of pollutants does not have to be intentional, the entry must be "unauthorized" to support a cause of action for trespass.  One cannot commit an actionable interference with one's own possessory right for purposes of a trespass claim. 

In reviewing the case, one is left with the conclusion that the failure of Team was one of proof and perhaps cause of action.  A RCRA environmental endangerment claim might have been more effective; Team would not be out of pocket money.  However, given the RWQCB order, Team may not have been able to hold off doing a lot of site characterization and some remediation during the pendency of the litigation, but it might have put off spending inordinate sums.

Also, it is most unfortunate, but the history of PCE dry cleaning is one of everyone ignoring the implications of their activities and failure of equipment design.  Sewers are designed to be porous, and some litigation has pursued cities for being involved in the creation of contaminant plumes.  Early dry cleaning machine designs, the failure to provide hoses that could stand up to the assault of PCE and thus regularly failed, yielding major spills, instruction manuals that recommended cement lined culverts to catch PCE spills (when PCE goes through cement), are just some of the many failures of the entire industry to address key problems with the chemical and the technology.  [Unfortunately, some of the "green" alternatives, while more environmentally friendly, still hold the potential for harm to the workers in the industry.]

Although it is beyond the scope of this blog because it really would require the scope of a law review article, the 9th Cir.'s interpretation of California state law may be open to debate on some key points.  To say that the case law in California is replete with cases whose statement of the law contradict one another is to state the obvious.  For practitioners in California such a fractured state of the law on such key torts as nuisance makes for "exciting" litigation.

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