ELR Citation: ELR 20061
No(s). 93-50064/LAC (N.D. Fla. Jul 19, 1994)

The court holds that nonsettling parties that sold spent lead acid batteries to a battery recycling business are liable as arrangers under §107(a)(3) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for response costs the settling parties incurred in cleaning up lead and acid contamination at the site. The court first holds that two former owners of the site are liable as owners and operators under §107(a)(2). Turning to the battery sellers' defenses, the court next holds that §107(a)(3) does not require proof of intent for arranger liability. The provision does not, on its face, refer to a party's intent and the phrase "arranged for" does not imply that a party must prove intent to dispose or treat in order to prevail on a §107(a)(3) claim. Thus, the court holds that lack of knowledge or intent should not serve as a defense to CERCLA liability. The court next holds that defendants were not dealing in a "useful product" instead of disposing of a waste product; because once the batteries no longer functioned as batteries, they became a waste product and their residual value depended on the lead they contained. The court holds that the recycler's process of breaking open the batteries, recovering the lead groups, washing the lead, and disposing of the acid and battery casings amounted to "treatment" of a hazardous substance within the meaning of CERCLA, and that the recycler's handling of the acid and burial of the battery casings constituted a "disposal" of a hazardous substance within the meaning of the Act. The court next holds that certain defendants that claim they had no knowledge as to where or how the recycler was treating the batteries they sold to it are still liable as arrangers. Because CERCLA is a strict liability statute, knowledge cannot be an element of a §107(a)(3) claim. Moreover, reading a knowledge requirement into §107(a)(3) would encourage generators to escape liability by remaining ignorant about how their hazardous wastes are disposed. The court also holds that defendants who sold batteries directly to the recycler—a company in the business of breaking batteries—are as arrangers because these defendants made the "crucial decision" as to how, when, and by whom the hazardous substances would be treated and disposed.

Turning to various individual defendants' defenses to liability, the court next holds that there is a genuine issue of material fact regarding whether one defendant who sold batteries to a broker that then sold them to the recycler, may be held liable even though it is an "indirect seller." The court holds that if the defendant sold batteries to the broker with actual or constructive knowledge that the recycler would be the ultimate recipient of the batteries, then the defendant can be found liable under §107(a)(3). Defendant indirect sellers cannot avoid liability merely because it was the broker who decided to sell the batteries to the recycler. The court next holds that it has personal jurisdiction over a nonresident defendant in the action. The court holds that defendant committed a tortious act in Florida, thereby triggering jurisdiction under Florida's long-arm statute. By selling batteries to the recycler, defendant helped create a serious environmental hazard at the site. The exercise of jurisdiction does not violate defendant's due process rights, because he had sufficient, although somewhat attenuated, minimum contacts with Florida. And exercising personal jurisdiction over him in this matter comports with "traditional notions of fair play and substantial justice."

The court next holds CERCLA preempts South Carolina's statute of repose, which requires claims to be filed against a dissolved corporation within five years of its formal dissolution. Applying federal common law, the court holds that dissolved corporations that have not distributed their assets are subject to suit under CERCLA, but that dissolved corporations that have distributed their assets—"dead and buried" corporations—are not amenable to suit under the Act. The court holds that there is a genuine issue of material fact as to whether the dissolved corporate defendant has distributed its assets, and orders this defendant to produce documents plaintiffs had requested during discovery on this issue. The court then holds that another defendant that sold batteries to the recycler is not entitled, as a matter of law, to assert §107(a)(3)'s "third party" defense to arranger liability. A contractual relationship existed between this defendant and the recycler as seller and buyer, and the release of hazardous substances at the site was "in connection with" this relationship. Moreover, by not inquiring into or observing the recycler's disposal practices, the defendant did not take the necessary precautions under §107(a)(3)((b)).

Finally, the court holds that plaintiffs are entitled to a declaratory judgment under §113(g)(2) that defendants are liable for all future response costs, but reserves ruling on the amount and allocation of damages until a later date.

Counsel for Plaintiffs
Phillip A. Bates
Clark, Partington, Hart, Larry, Bond, Stackhouse & Stone
One Pensacola Plaza
125 W. Romana St., Ste. 800, Pensacola FL 32591
(904) 434-9200

Counsel for Defendants
Michael W. Kehoe
Fuller, Johnson & Farrell
Southeast Bank Bldg.
316 S. Baylen St., Ste. 560, Pensacola FL 32581
(904) 434-8845