Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

United States v. Saporito

February 9, 2010

UNITED STATES OF AMERICA, PLAINTIFF,
v.
JAMES Y. SAPORITO AND PAUL CARR, DEFENDANTS.



The opinion of the court was delivered by: Judge Rebecca R. Pallmeyer

MEMORANDUM OPINION AND ORDER

Beginning in December 2003, the United States spent $1.5 million to clean up hazardous substances at a site on the northwest side of Chicago where the Crescent Plating Works once operated. In this lawsuit under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), the government seeks to recover these funds from Defendants James Saporito and Paul Carr. According to the government, Saporito ran the operation from 1997 to 1999 and again from 2001 to 2003 when he was also an owner, and Carr was responsible for the day-to-day operations from 2000 to 2003. The government has reached a settlement agreement with Carr. Saporito, the only remaining defendant, has filed six counterclaims, and both sides have moved for summary judgment. For the reasons explained here, the court grants the government's motion to dismiss Saporito's counterclaims and enters summary judgment in favor of the government.

FACTUAL BACKGROUND

Preliminary Matters

The court has had no small amount of difficulty determining what facts are truly in dispute due to the 236 pages worth of filings-not counting exhibits-the parties have submitted on the matter. Defendant's Reply to Plaintiff's 56.1(b)(3) Response to Defendant's 56.1(a)(3) Statement, Dkt. 123, is by itself 110 pages long. Many of those pages, as well as the 50 pages of Defendant's 56.1(b)(3) Response to Plaintiff's 56.1(a)(3) Statement, Dkt. 111, are taken up with repeating a handful of objections, which, for the reasons explained here, must be overruled.

First, Defendant argues that the government may not rely on EPA Pollution Reports and EPA Action Memorandum because they are inadmissible hearsay. (Def's Response to Pl's 56.1(b)(3), Dkt. 111, ¶¶ 3-4, 14, 51, 64-70; Def's Reply to Pl's 56.1(b)(3) Response to Def's 56.1(a)(3), Dkt. 123, ¶ 28.) Under Federal Rule of Evidence 803(8), however, public records and reports are not excluded by the hearsay rule. That exception applies to the reports in question, e.g., O'Dell v. Hercules, Inc., 904 F.2d 1194, 1206 (8th Cir. 1990), and Defendant does not attempt to argue otherwise.

Defendant also seeks to exclude the EPA documents and a declaration by an EPA employee on the grounds that those documents contain opinion testimony that was not disclosed in accordance with the scheduling order. (Def's Memo in Opposition, Dkt. 110, at 1 n.1, 6; Def's 56.1(b)(3) Response to Pl's 56.1(a)(3), Dkt. 111, ¶¶ 38, 39; Def's Reply to Pl's 56.1(b)(3) Response to Def's 56.1(a)(3), Dkt. 123, ¶¶ 24, 28, 37, 42, Supp ¶¶ 42, 44, 45.) The authors of the declaration and the EPA documents were on hand for the EPA's cleanup of Crescent Plating, so their recounting of the evidence is based on first-hand observations. Thus, the evidence is admissible under Federal Rule of Evidence 701 and the government was not required to make disclosures pursuant to Federal Rule of Civil Procedure 26(a)(2).

When he is not arguing that evidence based on personal knowledge is inadmissible expert testimony, Defendant argues the reverse: that statements by Frank Altmayer, an expert for the government, are not admissible because Altmayer has not been shown to have personal knowledge of the subject of that testimony. (Def's Response to Pl's 56.1(b)(3), Dkt. 111, ¶¶ 4-5, 7-8, 14-15, 17, 19-20, 38-39; Def's Reply to Pl's 56.1(b)(3) Response to Def's 56.1(a)(3), Dkt. 123, Supp. ¶¶ 14-16, 20, 22-23, 53.) This objection, too, is overruled; as an expert witness, Altmayer need not have personal knowledge of the subject about which he testifies. FED. R. EVID. 703.

Finally, Defendant argues repeatedly that certain statements by Altmayer cannot be relied on because they were not timely disclosed in his expert report. (Def's Response to Pl's 56.1(b)(3), Dkt. 111, ¶¶ 5-8, 14-15, 17, 19-20, 26, 38-39, 55; Def's Reply to Pl's 56.1(b)(3) Response to Def's 56.1(a)(3), Dkt. 123, Supp. ¶¶ 14-16, 20, 22-23.) As the court understands this argument, it is no more than a technical complaint: the government's 56.1(a)(3) statement cites to a declaration submitted by Altmayer in support of the government's motion for summary judgment rather than to Altmayer's expert report. That report was timely disclosed. Defendant complains that the exact phrases used in the 56.1(a)(3) statement and Altmayer's declaration are not found in Altmayer's expert report, but he never argues that one of those phrases is not supported by the report. It may have been preferable for the government's statement to cite to the report or for Altmayer's declaration itself to cite to the report, but Defendant has not pointed to anything in the statement or declaration that is either contradicted by or not supported by the report.

1. Undisputed Facts

a. Crescent Plating's Operation

Beginning in the 1970s, Crescent Plating operated a facility on the northwest side of Chicago that plated steel and brass objects with various metals such as zinc, chromium, and copper. (Pl's 56.1(b)(3), Dkt. 87, ¶¶ 3-4.) In addition to those metals, the plating process also used, among other potentially hazardous chemical, sodium cyanide, hexavalent chromium, and trichloroethene. (Id. ¶¶ 5, 7.) Very simply explained, the electroplating process involves dipping the item to be plated into a series of chemical baths through which electrical current is run. (Id. ¶¶ 6, 8.) Crescent Plating had at least two different plating lines each made up of a series of baths. (Id. ¶¶ 9-10.) When items are moved from one bath to another, some dripping of the plating solution onto the floor is inevitable. (Id. ¶¶ 16-17.) The floor at Crescent Plating was bare concrete; although waste from spills was routed through trenches to a pit lined with polypropylene to be cleaned up, those trenches were also bare concrete. (Id. ¶¶ 12, 19.) Highly acidic plating chemicals can corrode concrete. (Id. ¶ 20.)

The electrical current needed for the plating process comes from a device called a rectifier that converts alternating current to direct current. (Pl's 56.1(b)(3), Dkt. 87, ¶ 6.) Altmayer, the government's expert witness, describes the rectifier as a necessary part of the process, (id.), but Defendant claims that his expert witness, Gerald Albert Krulik, disputes that description of a rectifier. (Def's 56.1(b)(3) Response to Pl's 56.1(a)(3), Dkt. 111, ¶ 6.) In fact, Krulik nowhere states that electroplating can be performed without a rectifier; he adds only that a rectifier has many uses aside from electroplating-every laptop needs one, for example, in order to charge its battery-and that the rectifier is not capable of producing hazardous waste on its own. (Id.) The government does not dispute these facts. (Pl's Reply to Def's 56.1(b)(3) Response to Pl's 56.1(a)(3), Dkt. 121, at 5-6.)

To dispose of plating solutions, Crescent Plating pumped the waste through pipes to the facility's wastewater treatment area. (Pl's 56.1(b)(3), Dkt. 87, ¶¶ 12-13.) The waste was then treated with various chemicals before being poured into a 60,000 gallon clarifier, a large tank that relies on gravity to separate water from precipitated metals as the waste settles. (Id. ¶ 14.) The clarifier produced some waste that, under the Clean Water Act and local regulations, was permissibly disposed of into the sewer, but the clarifier also produced sludge that was routed to a 2,025-gallon tank. (Id. ¶ 15.) Water was removed from the sludge in a filter press and the remaining "cakes" of dewatered sludge were placed in a bin located outside the building for proper disposal offsite. (Id.)

b. Defendant's Involvement with Crescent Plating

From as early as 1974, Crescent Plating was owned and run by Donald Saporito, Defendant's cousin. (Def's 56.1(a)(3), Dkt. 93, ¶ 5.) Paul Carr began working there in 1979 and worked his way up to plant manager in 1997, vice president in 1999, and president in 2000. (Pl's 56.1(a)(3), Dkt. 87, ¶ 22-27.) Defendant testified that he became involved in Crescent Plating in 1997 when he loaned $100,000 to his cousin. (Def's 56.1(a)(3), Dkt. 93, ¶ 9.) Although Defendant describes the transaction as a loan, the government has submitted a signed Bill of Sale reflecting that the transaction was a purchase. (Pl's 56.1(b)(3) Response to Def's 56.1(a)(3), Dkt. 108, ¶ 9, Ex. 3.) In addition, a Crescent Plating employee stated that Defendant told her he had bought the operation.*fn1 (Id. ¶ 9.) Notwithstanding whether the deal involved a purchase or a loan, Defendant does not dispute that he held the title of Vice President at Crescent Plating between 1997 and 1999 and had some responsibilities at the company during that time period. (Pl's 56.1(a)(3), Dkt. 87, ¶ 28, 30.) Although documents show that Defendant had signatory authority for Crescent Plating's operations, that he was responsible for plant maintenance, and that he had responsibility for environmental regulatory paperwork, Defendant has disputed that evidence, questioning the authenticity of his signature on documents where it appears. (Pl's 56.1(b)(3) Response to Def's 56.1(a)(3), Dkt. 108, ¶ 10; Def's Reply to Pl's 56.1(b)(3) Response to Def's 56.1(a)(3), Dkt. 123, ¶ 10.) In 1999, Donald Saporito terminated Defendant from Crescent Plating's employ. (Def's 56.1(a)(3), Dkt. 93, ¶ 10.)

Some time after his termination-the exact date is not in the record-Defendant sued Crescent Plating and Donald Saporito in state court. The third amended complaint in that litigation, a copy of which is in the record, alleges that Defendant purchased Crescent Plating and does not refer to a loan. (Pl's 56.1(b)(3) Response to Def's 56.1(a)(3), Dkt. 108, ¶ 9, Ex. 8.) The complaint also asserts that Defendant "at all times relevant possessed complete control over the operation and management" of Crescent Plating. (Id., Ex. 8 ¶ 19.) Presumably, "all times relevant" refers to the time between the 1997 loan/sale and Defendant's 1999 termination.

Donald Saporito died before the case could be resolved and before the purported loan could be repaid, but Defendant reached a settlement agreement with Carr, Crescent Plating, and Donald Saporito's estate in 2002. (Def's 56.1(a)(3), Dkt. 93, ¶ 10.) That agreement, a copy of which is in the record, seems to reflect yet another possibility for Defendant's role at Crescent Plating between 1997 and 1999. (Pl's 56.1(b)(3) Response to Def's 56.1(a)(3), Dkt. 108, ¶ 7, Ex. 2.) In the agreement, the parties stated that Donald Saporito was "the owner of all of the issued shares of stock of Crescent," and that Defendant had alleged that he had an agreement with Donald Saporito to purchase the stock on or after Saporito's death for a "sum certain previously paid." (Id., Ex. 2.) To settle their dispute, the parties agreed that the estate would transfer its interest in the Crescent Plating property to Defendant and Carr, jointly, in exchange for $35,000, of which $10,000 had already been paid. (Id.) Defendant and Carr never made the $25,000 payment, though, because the property was seized for failure to pay property taxes. (Pl's 56.1(b)(3) Response to Def's 56.1(a)(3), Dkt. 108, ¶ 10.) It was sold in a tax sale in December 2003. (Id. ¶ 7.) To settle any potential claim of ownership that Defendant or Carr might assert, the buyer in the tax sale paid Defendant about $70,000. (Id. ¶ 7, Ex. 1, Saporito Dep., at 225.) Defendant testified that he shared some of that payment with Carr, but did not say how much. (Id., Ex. 1, Saporito Dep., at 225.)

In 2001, while Defendant's case against his cousin's estate was ongoing, Defendant made an agreement with Carr, who was acting on behalf of Crescent Plating. In the agreement, Defendant acquired various pieces of equipment used by Crescent Plating, which he then leased back to the company. (Pl's 56.1(a)(3), Dkt. 87, ¶¶ 31, 35-36.) The equipment included 14 rectifiers, a 2-ton filter press, boilers, computers, and a semi-truck and trailer. (Id. ¶ 35.) The bill of sale, a copy of which is in the record, is signed by Paul Carr, who is identified as President of Crescent Plating and "seller," and by Defendant, who is identified as "buyer." (Id., Ex. 25.) Although the bill of sale records a payment of $10,000, Defendant testified that he paid an additional $30,000 to $40,000 for the equipment over time. (Id., Ex. 25, Ex. 2, Saporito Dep., at 233-34.) Defendant described that additional amount as payment for the equipment but also as payments to cover Crescent Plating's bills to keep the company running. (Id.) Defendant testified that the equipment he owned was the "heartbeat" of Crescent Plating's business. (Id., Ex. 22, Saporito Dep., at 435.) In a document filed several months after the deposition, Defendant explained that he had not intended to offer an opinion on the importance of his equipment to the plating operation, but only on the equipment's importance to him through its earning power. (Def's Memo in Opposition, Dkt. 110, Ex. 1 ¶ 13.)

c. Release of Waste

Since at least 1997, Crescent Plating has had to deal with several complaints about releases of hazardous waste. (Pl's 56.1(a)(3), Dkt. 87, ¶¶ 40-47.) In 1997, occupants of a neighboring building complained about a black liquid with a chemical smell seeping through their basement wall. (Id. ¶¶ 40, 51.) After the complaint, an investigator for the Chicago Department of Environment ("DOE") observed spillage and leakage on one of Crescent Plating's lines. (Id. ¶ 40) He also observed that the building's concrete floor was so badly cracked that the soil below it was visible. (Id.) His observations about the floor are disputed: Carr testified that the floor was not cracked because any cracks were promptly repaired. (Def's 56.1(b)(3) Response to Pl's 56.1(a)(3), Dkt. 111, ¶ 40; Pl's 56.1(a)(3), Dkt. 87, Ex. 5, Carr Dep., at 138-39.) In March 2001, an inspector from the Metropolitan Water Reclamation District of Greater Chicago ("MWRD") observed that, due to a broken pipe, a six-inch deep pool of wastewater had formed on the floor. (Pl's 56.1(a)(3), Dkt. 87, ¶41.) In April 2002, the same inspector found another broken pipe from which liquid from the plating lines was running onto the floor. (Id. ¶ 43.) In 2002, the new owners of the neighboring building complained about seepage, which a DOE investigator noted appeared identical in color to chromic acid on the floor of the Crescent Plating facility. (Id. ¶ 52.) The government's expert concluded that hazardous substances detected in soil samples below that building likely migrated from Crescent Plating. (Id. ¶ 60.) Defendant attempts to dispute the expert's conclusion by relying on statements made by his own expert that some of the chemicals found in the soil may have come from other sources. (Def's 56.1(b)(3) Response to Pl's 56.1(a)(3), Dkt. 111, ¶¶ 55, 60.)

On at least three occasions in 2003, inspectors from the Chicago DOE and the MWRD visited the Crescent Plating site and met with Defendant regarding conditions at the site. (Pl's 56.1(b)(3) Response to Def's 56.1(a)(3), Dkt. 108, Supp. ¶¶ 8-9.) In July 2003, the Illinois Environmental Protection Agency served Crescent Plating with a Notice of Intent to Pursue Legal Action, alleging violations of the Illinois Environmental Protection Act. (Id., Ex. 42, at 10594-95.) At the request of the Chicago DOE, the EPA assessed the site in October 2003. (Pl's 56.1(a)(3), Dkt. 87, ¶61.) EPA discovered large amounts of plating waste that were not being stored properly, and Chicago DOE ordered Crescent Plating to stop operations. (Id. ¶¶ 61-62.) Defendant was present at the facility the day it was shut down, and he signed the consent form giving EPA access. (Pl's 56.1(b)(3) Response to Def's 56.1(a)(3), Dkt. 108, Supp. ¶ 13, Ex. 44.) In a declaration attached to his memorandum in opposition to Plaintiff's motion for summary judgment, Defendant states that he did not read the one-page document before signing it because he did not believe he had that option. (Def's Memo in Opposition, Dkt. 110, Ex. 1 ¶ 18.) What led him to believe that government officials intended to foreclose the option of reading the document is unexplained.

In December 2003, EPA began its own removal activities at the site and in February 2004, the EPA authorized funding for the removal action based on its determination that the conditions at Crescent Plating presented "an imminent and substantial endangerment to the public health, welfare, and the environment." (Pl's 56.1(a)(3), Dkt. 87, ¶¶ 65, 68.) The first EPA site assessment found 58 vats and tanks and 464 containers holding various liquids and sludges as well as a 20-cubic-yard box filled with plating sludge. (Id. ¶ 65.) Some containers had deteriorated and spilled, the building and equipment were coated with plating sludge, and the building had no heat or electricity. (Id. ¶¶ 64-67.) During the cleanup, the government found two large areas of concrete floor that ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.