ELR Citation: ELR 20030
No(s). 94-5681 (3d Cir. Oct 23, 1995)

The court affirms a district court judgment that a waste hauling company is liable for response costs under §107(a)(4) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for transporting hazardous waste to a site in Tabernacle, New Jersey, but holds that genuine issues of material fact preclude summary judgment regarding the liability of the company's principal shareholders and a real estate partnership alleged to be a joint venturer with the company in connection with the transportation of hazardous waste to the site. The court first rejects defendants' contention that by failing to participate in the final pretrial conference and the trial itself, the United States effectively abandoned its claim for a declaration as to future response costs, thus warranting dismissal of the government's action against defendants under Fed. R. Civ. P. 41(b) for failure to prosecute. The court holds that the district court properly considered the relevant factors in denying defendants' motion to dismiss. As the district court observed, there was no history of dilatoriness on the government's part, nor was there any evidence that the government acted in bad faith. The court holds that there was no need for the government to attend the pretrial conference or trial merely to preserve a claim for declaratory relief based solely on the district court's summary judgment liability rulings. Moreover, in light of these rulings, the government's claim for a declaratory judgment as to liability for future response costs was clearly meritorious. Also, the prejudice claimed by defendants flows from the effect of the declaratory judgment to which the government is entitled, and is not attributable to any dilatory conduct on the government's part. The court holds that the government's absence from the pretrial conference did not impair defendants' ability to defend against the claim for declaratory relief. Thus, the district court did not abuse its discretion in declining to dismiss the government's claim.

Next, the court affirms the district court judgment that the company is liable as a transporter. The evidence established that during the pertinent time, the company accepted for disposal drummed liquid waste generated by another defendant, and it is undisputed that the waste contained hazardous substances. The court then holds that liability may not be imposed on an officer or shareholder under §107(a)(4) solely on the basis of an officer's or shareholder's active involvement in the corporation's day-to-day affairs. Instead, there must be a showing that the person sought to be held liable actually participated in the liability creating conduct. It is not necessary that the officer personally accept waste for transport, nor that the officer participate in the selection of the disposal facility. Liability may be imposed where the officer is aware of the acceptance of materials for transport and of the company's substantial participation in the selection of the disposal facility. Applying these principles, the court holds that the United States was not entitled to summary judgment against the company's principal shareholders on the issue of liability. Although there is substantial evidence that these individuals were actively involved in the day-to-day affairs of the company at the time of the disposal, there is countervailing evidence that the individuals were not "hands on" managers during the relevant time period. Moreover, one shareholder submitted an affidavit disavowing knowledge of disposal of drums at the site.

The court next holds that there is a genuine issue of material fact as to whether there was an agreement between a real estate partnership and the company to form a joint venture, thus precluding summary judgment on the partnership's transporter liability. In an affidavit, one partner disclaims any intention to form a joint venture, undisputed facts tend to corroborate this disclaimer, and a jury could rationally conclude that the disclaimer is credible. The issues must be submitted to the fact finder, because the facts permit competing inferences concerning the existence of an agreement to form a joint venture. The court rejects the government's assertion that the evidence it has proffered is so overwhelming that a fact finder would necessarily have to infer the existence of the requisite agreement.

Counsel for Plaintiff
Albert M. Ferlo Jr.
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Counsel for Defendant
Joseph H. Kenney
Kenney & Kearney
220 Lake Dr. E., Cherry Hill NJ 08034
(609) 779-7000

Before Becker, Alito, and Vanaskie^*, JJ.