United States District Court, S.D. Illinois
BLUE TEE CORP. and GOLD FIELDS MINING, INC., Plaintiffs,
XTRA INTERMODEL, INC., X-L-CO, INC., XTRA COMPANIES INC., XTRA CORPORATION and XTRA LLC. Defendants.
MEMORANDUM and ORDER
DAVID R. HERNDON, District Judge.
I. Introduction and Background
Pending before the Court is defendants' XTRA Corporation, XTRA Companies, Inc., and XTRA LLC's combined motion to dismiss plaintiffs' second amended complaint and memorandum in support thereof (Doc. 48). Defendants argue plaintiffs' allegations that XTRA Corp. and/or XTRA LLC are liable merely because their subsidiaries owned and operated the Site and their conclusory assertions of vicarious liability for XTRA Corp.'s subsidiaries' alleged actions are insufficient to state a claim for which relief can be granted as a matter of law. Plaintiffs oppose the motion (Doc. 62). Defendants filed a reply brief (Doc. 66). Based on the applicable law and the following, the Court denies the motion.
On August 13, 2013, plaintiffs, Blue Tee Corp. ("Blue Tee") filed a five count complaint against XTRA Intermodal, Inc. ("XTRA Intermodal"), X-L-CO., Inc. ("X-L"), XTRA Corporation ("XTRA Corp."), and XTRA LLC, pursuant to Sections 107 and 113 of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), as amended (Doc. 2). The complaint seeks recovery costs and contribution costs incurred or to be incurred by Blue Tee in performing response, investigation and remedial activities at the Old American Zinc Plant site ("Site") in Fairmont City, Illinois (Doc. 2). Plaintiff alleges that remediation of the Site has cost it more than $4 million and future costs are anticipated to exceed $11 million. Blue Tee sued what it believes to be "shell" corporations bearing some form of the "XTRA" name in addition to XTRA Corp. which it asserts is a wholly owned subsidiary of Berkshire Hathaway, Inc.
On November 14, 2013, Blue Tee filed an amended complaint adding two parties, plaintiff Gold Fields Mining, LLC, and defendant XTRA Companies, Inc. ("XTRA Companies") (Doc. 39). In response, defendants filed the pending motion to dismiss (Doc. 48). Subsequently, on February 12, 2014, Magistrate Judge Donald G. Wilkerson granted plaintiffs leave to file a second amended complaint (Doc. 67). In that Order, Magistrate Judge Wilkerson noted that the filing of the second amended complaint would not render moot the pending motion to dismiss.
On February 13, 2014, plaintiffs filed their second amended complaint (Doc. 69). Count I is against XTRA Intermodal and X-L for cost recovery pursuant to § 107(a) - response costs incurred; Count II is against XTRA Intermodal and X-L for contribution; Count III is against XTRA Intermodal and X-L for declaratory judgment; Count IV is against XTRA Intermodal and X-L for statutory and equitable subrogation; Count V is against XTRA Corp. and XTRA LLC for cost recovery, contribution and declaratory judgment - response costs incurred and Count VI is against XTRA Corp. and XTRA Companies to pierce the corporate veil.
The following allegations are taken from the second amended complaint. Blue Tee is the successor in interest to American Zinc Company of Illinois ("American Zinc"). American Zinc owned the Site from 1916 to 1979. American Zinc operated the Site as a zinc smelter from 1916 to 1953. American Zinc consolidated the slag or "clinker" in piles on the Site.
In 1976, defendant X-L executed a lease with American Zinc for use of the property as a truck terminal. In 1979, X-L purchased the property. Following the purchase of the property, defendant XTRA Intermodal expanded its operations and X-L transferred its ownership of the property to XTRA Intermodal in 1995. Thereafter, XTRA Intermodal ground up the stockpiled slag and clinker and distributed it throughout the Site. XTRA Intermodal's grinding and spreading of slag throughout the Site resulted in blowing dust, created a nuisance, contaminated neighboring properties and aggravated the contamination of the Site.
In 1994 and 1995, the United States Environmental Protection Agency ("EPA") and the Illinois Environmental Protection Agency ("IEPA") began to investigate the Site. The EPA determined that XTRA Intermodal had exacerbated conditions at the Site and issued a Unilateral Administrative Order ("UAO") to XTRA Intermodal directing it to participate and cooperate in the Remedial Investigation and Feasibility Study ("RI/FS"). XTRA Intermodal violated the UAO by failing to participate and cooperate in the RI/FS process or by failing to make a good faith offer to contribute to the costs of the RI/FS. Most of the material to be consolidated on Site for the final remedy consists of about 893, 000 cubic yards of ground slag, which resulted from XTRA Intermodal's actions. Blue Tee has made repeated demands upon XTRA Intermodal to participate in or contribute to the costs of remediation but XTRA Intermodal has failed and refused to contribute.
Plaintiff Gold Fields paid the costs incurred by Blue Tee for remediation at the Site and seeks recovery pursuant to its subrogation rights under CERCLA, Illinois law, and contract law as it may sue in Blue Tee's name pursuant to their agreement.
As the motion to dismiss is ripe, the Court turns to address the merits of the motion.
II. Motion to Dismiss Standard
A Rule 12(b)(6) motion tests the sufficiency of the complaint to state a claim upon which relief can be granted. Hallinan v. Fraternal Order of Police Chicago Lodge 7, 570 F.3d 811, 820 (7th Cir. 2009); Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir.1990). In reviewing a motion to dismiss, the Court takes as true all factual allegations in plaintiffs' complaint and draws all reasonable inferences in their favor. See Rujawitz v. Martin, 561 F.3d 685, 688 (7th Cir. 2009); Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 618 (7th Cir. 2007). The Supreme Court explained in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007), that Rule 12(b)(6) dismissal is warranted if the complaint fails to set forth "enough facts to state a claim to relief that is plausible on its face."
To survive a Rule 12(b)(6) motion to dismiss, the claim first must comply with Rule 8(a) by providing "a short and plain statement of the claim showing that the pleader is entitled to relief" (Fed.R.Civ.P. 8(a)(2)), such that the defendant is given "fair notice of what the * * * claim is and the grounds upon which it rests." Twombly, 550 U.S. at 555 (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). Second, the factual allegations in the claim must be sufficient to raise the possibility of relief above the "speculative level, " assuming that all of the allegations in the complaint are true. E.E.O. C. v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly, 550 U.S. at 555). "Detailed factual allegations" are not required, but the plaintiff must allege facts that, when "accepted as true, * * * state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 555). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. "[O]nce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint." ...