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Village of Rockton v. Sonoco Products Co.

United States District Court, N.D. Illinois

September 23, 2015

Village of Rockton, Illinois, Plaintiff,
v.
Sonoco Products Company, Defendant

          For Village of Rockton, Illinois, a Municipal Corporation, Plaintiff: Benjamin B Gould, Daniel P. Mensher, LEAD ATTORNEYS, PRO HAC VICE, Keller Rohrback L.l.p., Seattle, WA; Lynn Lincoln Sarko, LEAD ATTORNEY, Gretchen Freeman Cappio, Keller Rohrback L.L.P., Seattle, WA; Adam S Long, Barrick, Switzer, Long, Balsley & Van Evera, Rockford, IL; Dominick L Lanzito, Peterson Johnson & Murray - Chicago LLC, Chicago, IL; Jody L. Booher, Barrick Switzer Long Balsley & Van Evera, LLP, Rockford, IL; Melissa Kaye Sims, Sims Law Office, Princeton, IL.

         For Sonoco Products Company, Defendant, Counter Claimant: Scott Collins Sullivan, LEAD ATTORNEY, WilliamsMcCarthy LLP, Rockford, IL; Russell D Anderson, Williams & McCarthy, Rockford, IL; S. Ross Shealy, Haynsworth Sinkler Boyd, P.a., Columbia, SC.

         For Village of Rockton, Illinois, a Municipal Corporation, Counter Defendant: Daniel P. Mensher, Lynn Lincoln Sarko, LEAD ATTORNEYS, Gretchen Freeman Cappio, Keller Rohrback L.L.P., Seattle, WA; Adam S Long, Barrick, Switzer, Long, Balsley & Van Evera, Rockford, IL; Jody L. Booher, Barrick Switzer Long Balsley & Van Evera, LLP, Rockford, IL; Melissa Kaye Sims, Sims Law Office, Princeton, IL.

Page 701

         ORDER

         FREDERICK J. KAPALA, District Judge.

         Defendant's motion for judgment on the pleadings [34] is granted in part and denied

Page 702

in part. Counts 2-8, 13-16, 19-27, 34-53, 56-57, 59-75, and 80-82 of the consolidated amended complaint are dismissed, and Rockton's claim for attorneys fees and costs is stricken. All other claims remaining pending, and the parties should contact the Magistrate Judge for all further pretrial proceedings.

         STATEMENT

         Plaintiff, Village of Rockton, Illinois (" Rockton" ), initiated this litigation against defendant, Sonoco Products Company (" Sonoco" ), by filing 81 separate complaints in state court alleging violations of the Rockton Municipal Code based on purported environmental contamination and other hazardous conditions on Sonoco's property located within the village. The state-court complaints alleged that the various ordinance violations began on or about December 2, 2007, and continued " every day thereafter through the present date and beyond," and Rockton sought penalties of up to $750 per day per violation. Thereafter, Sonoco removed each of the complaints to federal court pursuant to this court's diversity jurisdiction and consolidated all of the actions into this single case. Rockton subsequently filed a consolidated amended complaint re-alleging the 81 ordinance violations as Counts 1 through 81 and also raising a claim of unjust enrichment in Count 82. The amended complaint seeks damages in excess of $155,000,000 as of the time of filing with potential damages continuing to accrue at a rate of up to $60,750 per day. Currently before the court is Sonoco's motion for judgment on the pleadings seeking to dismiss several of Rockton's claims pursuant to Federal Rule of Civil Procedure 12(c). For the reasons stated below, the motion is granted in part and denied in part.

         I. BACKGROUND

         According to the pleadings, Sonoco has owned and operated a paper mill facility located at 200 Hawick Street in Rockton (the " Site" ), which is situated on the north bank of the Rock River, since it purchased the Site in 1963. Prior to Sonoco's purchase, several other entities also ran a paper mill at the Site since 1851. During its tenure, Sonoco manufactured paperboard at the Site until it closed the facility in late 2008 due to economic conditions. Despite efforts by Rockton to acquire the property from Sonoco since it ceased operations, Sonoco is still the owner of record for the Site.

         Sonoco first became aware of potential environmental concerns at the Site in March 2006 when a contractor installing a new water line encountered petroleum-contaminated soil. The release of the fuel oil into the soil was attributed to leaking underground pipes from an aboveground storage tank. Sonoco reported the leak to the Illinois Emergency Management Agency and subsequently hired contractors who excavated a total of 422 tons of petroleum-impacted soil for off-site disposal. Following additional investigation, Sonoco also began removing contaminated groundwater from the Site and enrolled the Site in the Illinois Environmental Protection Agency's (" IEPA" ) Site Remediation Program (" SRP" ).[1] At that

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time, Sonoco submitted only a Focused Site Investigation Report regarding the contaminated soil and a Remedial Action Plan that called for the installation of a groundwater pump and treat system, both of which were approved by the IEPA. Although Sonoco later discontinued contact with the IEPA, the groundwater remediation system was installed and operated intermittently between April and August 2007. However, the pump and treat system was discontinued after technical difficulties were encountered because of fluctuating groundwater elevation and contamination was identified in an up-gradient well. After that, contaminated water was manually removed from the wells on a regular basis.

         In late 2009, after it had closed its facility and ceased operations at the Site, Sonoco hired Environmental Resources Management (" ERM" ) to conduct a Phase I and Phase II investigation of the facility. Although these investigations were conducted without IEPA oversight,[2] it appears that ERM conducted at least two rounds of sampling and analysis of soil and groundwater conditions at the Site between 2009 and 2010. Based on its investigation, ERM identified several Recognized Environmental Conditions that could adversely impact the environment and also determined that there were several areas that may require remediation based on samples which contained contamination by various compounds at concentration levels greater than the amounts listed in the IEPA's Tiered Approach to Corrective Action Objectives (" TACO" ) regulations.

         In 2011, the mayor and other representatives of Rockton traveled to Sonoco's corporate headquarters to discuss the possibility of purchasing the Site. At or around that same time, Sonoco provided Rockton with at least a summary of the ERM Phase II investigation report. Ultimately, it appears that the parties were unable to come to an agreement on an acceptable sales price for the property. In fact, it seems that the closest the parties ever came to reaching a deal was in June 2013 when Sonoco received an option agreement executed by Rockton to purchase the Site at fair market value in an " as is" condition.

         In the meantime, on January 22, 2013, the Rockton Board of Trustees (" the Board" ) passed Resolution 2013-101, which requested the IEPA's assistance in conducting an environmental investigation of the Site. The IEPA obliged and initiated work on a Brownfield Redevelopment Assessment for the Site on February 26, 2013. Thereafter, it appears that Sonoco had several discussions with the IEPA regarding the additional testing that was requested by Rockton, and by August 2013 Sonoco had determined that it was in its best interest to " investigate pursuing a brownfields-type arrangement under the Illinois Site Remediation Program or TACO." Sonoco communicated this intention to Rockton in a letter addressed to the mayor and declined to give Rockton an option to purchase the Site " until the brownsfield [sic] process is underway, if not completed." In October 2013, the IEPA continued its assessment and conducted fieldwork at the Site, which included

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the collection of numerous soil and groundwater samples.

         On March 27, 2014, Sonoco provided the IEPA with an update on the progress at the Site as well as specific comments in response to a prior inquiry from the IEPA. In the letter, Sonoco indicates that, " [b]ased on all of the new information compiled from the various sources, Sonoco believes that there is enough data to now fully characterize the entire site, instead of just the specific area of the remediated oil leak." Sonoco requested that it " be allowed to work in conjunction with [IEPA] to develop a revised Site Investigation Report, Remediation Objectives Report, and Remedial Action Plan for the site," and that " [t]he goal would be to obtain a no further remediation letter from [IEPA] for the site."

         On May 16, 2014, the IEPA reported the results of its Brownfield Redevelopment Assessment. Several of the samples collected from the Site were found to contain either organic or inorganic compounds at concentration levels greater than the corresponding Corrective Action Objectives. As a result, the IEPA concluded that there were " several areas on the property that should be addressed further in accordance with the TACO regulations" and " recommended that site officials re-establish a close working relationship with Illinois EPA through the Voluntary Site Remediation Program to proceed with future investigation, remediation, and redevelopment." Shortly thereafter, on May 28, 2014, the IEPA indicated that Sonoco's responses from the March 27 update letter were acceptable, and that it anticipated Sonoco would " submit a revised Site Investigation Report, Remedial Objectives Report, and Remedial Action Plan utilizing current data and evaluating all exposure pathways for industrial/commercial land use." The next day, on May 29, 2014, Sonoco submitted its Comprehensive Site Investigation Report and Remediation Objectives Report to the IEPA,[3] which was subsequently approved on August 25, 2014. As a result, it is undisputed that the entire Site is now enrolled in the SRP,[4] and Sonoco is currently working with the IEPA to obtain a No Further Remediation letter.

         Rockton took a more aggressive and punitive approach in response to the IEPA's Brownfield Redevelopment Assessment. At a meeting on July 22, 2014, the Board passed Ordinance 2014-21 " amending Village code regarding violation remedies." This ordinance caused the following language to be added to sections 92.023 and 92.024 of the Rockton Municipal Code:

Any person, persons, firm, company, corporation or association or their representatives violating any provision of this chapter, upon conviction or a finding of liability, the village may seek an order: requiring the violator to remediate such violation at the violator's sole costs and

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expense; authorizing the village to remediate the violation with the village being reimbursed by the violator for any and all costs, incurred by the village for such remediation; and/or the imposition of fines of up to $750 per day for each and every violation with each day a violation exists constituting a separate offense. In addition to any other relief available to the village, the village may apply to a court of competent jurisdiction for any injunction to prohibit the continuation of any violation of this chapter, including, but not limited to, seeking a temporary restraining order, temporary injunction and/or permanent ...

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