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Cyprus Amax Minerals Company v. TCI Pacific Communications, Inc.

United States District Court, N.D. Oklahoma

June 20, 2017




         Now before the Court are Plaintiff Cyprus Amax Minerals Company's Motion for Partial Summary Judgment as to Defendant TCI Pacific Communications, Inc.'s CERCLA Liability and Integrated Brief in Support (Dkt. # 213) and Defendant's Motion for Summary Judgment and Integrated Memorandum in Support (Dkt. # 216).[1] Plaintiff Cyprus Amax Minerals Company (Cyprus) has filed a motion for partial summary judgment as to TCI Pacific Communications, Inc.'s (TCI) liability under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq. (CERCLA). TCI argues that Cyprus cannot establish that TCI is liable under CERCLA and that it is entitled to summary judgment on Cyprus' contribution claims. Dkt. # 216.

         I. Procedural History

         Cyprus alleges that it is the successor of a company that operated a zinc smelting facility near Collinsville, Oklahoma, and Cyprus was cooperating with state and federal authorities to clean up environmental contamination caused by the smelting activities. Dkt. # 2, at 1-2. The original complaint named TCI, Viacom, Inc. (Viacom), CBS Corporation, and CBS Operations, Inc. as defendants. Cyprus alleges that the Bartlesville Zinc Company operated the Bartlesville Zinc Smelter (BZ Smelter), which was located approximately one mile from Collinsville, and Cyprus claims that there was another zinc smelting facility known as the Tulsa Fuel and Manufacturing Zinc Smelter (TFM Smelter) also located about one mile from Collinsville. Id. at 5. The two smelting facilities were located approximately one-quarter of a mile apart. Id. The TFM Smelter was nominally owned by the Tulsa Fuel and Manufacturing Company (TFMC) between 1911 and 1925, but Cyprus alleges that TFMC was the alter ego of the New Jersey Zinc Company (NJZ). Id. As of February 2009, Cyprus was conducting a remedial action at the BZ Smelter site pursuant to a consent decree, and the United States Environmental Protection Agency (EPA) was taking remedial action at the TFM Smelter site. Dkt. # 213-8, at 32. This case does not concern the cleanup work at the BZ or TFM Smelter sites, and Cyprus is not seeking to recover contribution for any response costs incurred at the BZ Smelter site.

         In 2009, Cyprus entered into a consent decree with the Oklahoma Department of Environmental Quality (ODEQ) to perform soil sampling and remediation in Collinsville. Id. at 1-36. An action memorandum dated February 20, 2009 describing the purpose and scope of the Collinsville Soil Program (CSP) was attached to the consent decree, and the work that Cyprus agreed to perform in the consent decree was undertaken as part of the CSP. Dkt. # 213-8, at 30-36. ODEQ had determined that investigation and remediation of soil in Collinsville was necessary, because “[h]istoric smelter emissions and transport of smelter material off-site have potentially impacted soil” within Collinsville. Id. at 32. The action memorandum clearly refers to both the TFM and BZ Smelters as sources of smelter emissions and smelter waste transported offsite. Id. at 31-32. Cyprus admitted for the purpose of the consent decree that it was liable under CERCLA and Oklahoma law. Dkt. # 227-8, at 2-36. On April 26, 2011, Cyprus filed this case seeking cost recovery and contribution under CERCLA under theories that defendants were former owners or operators of the TFM Smelter and that defendants arranged for the disposal or treatment of hazardous substances. Cyprus also alleged a claim of unjust enrichment under state law. The defendants were not the original owners of the TFM Smelter or the parent companies of TFMC, but Cyprus argued that the defendants were the successors and/or indemnitors of NJZ. Id. at 12-14.

         The parties requested to initially proceed with discovery and motion practice on the issue of defendants' status as corporate successors of TFMC. Dkt. # 44. The case was assigned to the Honorable Gregory K. Frizzell, and he referred the parties to a magistrate judge for a scheduling conference. Dkt. # 48. The magistrate judge entered a scheduling order on the “corporate issues” phase of discovery. Dkt. # 49. Defendants filed a motion (Dkt. # 53) seeking a determination as to whether federal common law or Kansas law applied to the issue of piercing the corporate veil, and Cyprus responded that Oklahoma law applied to this issue. Judge Frizzell ruled that Kansas law applied to the determination of whether the corporate veil of TFMC could be pierced. Dkt. # 89. The case was reassigned to the Honorable John E. Dowdell. Dkt. # 105. Cyprus filed an amended complaint (Dkt. # 106) naming only TCI and CBS Operations, Inc. as defendants, and the defendants filed a motion to dismiss (Dkt. # 114) many of the claims alleged in the amended complaint. Judge Dowdell entered an opinion and order (Dkt. # 142) dismissing CBS Operations, Inc. as a defendant, and the only claims remaining after this ruling were Court III through VII of the amended complaint as to TCI. Count III and V seek to hold TCI liable for contribution under a theory that TCI was a former owner or operator of a facility where a hazardous substance was released, and Cyprus alleges in Counts IV and VI that TCI is liable for contribution as an arranger for the disposal or treatment of a hazardous substance. Count VII of the amended complaint seeks a declaratory judgment that TCI is liable to Cyprus for response costs and damages associated with the remediation of contamination in Collinsville.

         The case was transferred to the undersigned. The parties filed motions to exclude expert testimony concerning the corporate separateness of TFMC and NJZ, and the Court set a briefing deadline for motions for summary judgment after ruling on the Daubert[2] motions. The parties filed motions for summary judgment concerning the status of TFMC as the alter ego of NJZ. The Court considered the relevant factors under Kansas law for piercing the corporate veil and found that TFMC was operated as the alter ego of NJZ. Dkt. # 183. The Court entered an amended scheduling order (Dkt. # 196) setting the case for a non-jury trial on November 9, 2016. TCI and Cyprus filed motions for summary judgment as to TCI's liability for contribution under CERCLA. The Court struck all remaining deadlines in the scheduling order, including the non-jury trial, pending a ruling on the pending motions for summary judgment.

         Factual Background

         The TFM Smelter was owned by TFMC and it operated from 1911 to 1926, and the TFM Smelter was located about one mile south of Collinsville. Dkt. # 213-2, at 4. In 1992, the Oklahoma State Department of Health (OSDH) conducted a preliminary assessment of the TFM Smelter site for the purpose of determining whether the site posed a risk to public health, and the OSDH collected information to assist the EPA and ODEQ to determine if further action under CERCLA was warranted. Dkt. # 217-2, at 37. ODEQ later conducted a focused Site Inspection to collect additional information to consider whether the site should be added to the National Priorities List (NPL) or if no further remedial action was necessary. Id. The EPA recommended that the TFM Smelter site be added to the NPL and a search was undertaken to identify potentially responsible parties (PRPs). Id. The EPA has declared that the TFM Smelter site is a CERCLA facility and has placed the site on the NPL. Dkt. # 213-6, at 29, 42-83. From 2005 to 2006, ODEQ conducted a Remedial Investigation/Feasibility Study (RI/FS) and performed sampling of “on-site surface and subsurface soils and waste, off-site surface soils, surface water, sediment, groundwater, vegetation, and air.” Dkt. # 217-2, at 6. The sampling identified elevated levels of arsenic, cadmium, and lead in the “on-site surface and subsurface soils, off-site surface soils, surface water, sediment, groundwater, and vegetation . . . .” Id. The EPA conducted a supplemental RI/FS between November 2007 and March 2008, and the objectives of the supplemental RI/FS were to obtain additional data about potential off-site contamination caused by smelter waste and to evaluate the possibility of contamination caused by airborne particulates. Dkt. # 220-2, at 11. The EPA concluded that “few offsite residential properties potentially have been impacted by site contamination and that no undisturbed air dispersion locations appears [sic] to be impacted by the release and dispersion of airborne particulates from the operating smelter . . . .” Id. at 13. However, a small number of offsite residential properties were “potentially impacted by the use of waste mass fill material” from the TFM Smelter site and the cause of contamination at other residential sites could not be definitively determined. Id.

         In 1995, ODEQ contacted counsel for Viacom, Inc.[3] to discuss the cleanup of the TFM Smelter site. Dkt. # 213-10, at 2-3. ODEQ believed that Viacom, Inc. was the successor-in-interest to NJZ, and ODEQ cited historical evidence linking TFM and NJZ. Id.. Viacom denied that NJZ exercised control over TFM and, even if such a showing were made, it further denied that it would be liable for any activities that occurred before 1926. Id. at 18-19. In 2000, the EPA invited Viacom, Inc. to enter negotiations for the cleanup of the TFM Smelter site, and the EPA sent a special notice to Viacom, Inc. that triggered a duty for Viacom, Inc. to make a good-faith response within 60 days of receipt of the EPA's letter. Dkt. # 213-6, at 30. Viacom, Inc. again denied that TFM was controlled by NJZ, and Viacom, Inc. declined to take part in any cleanup efforts at the TFM Smelter site. Dkt. # 213-10, at 21-22. ODEQ notified Viacom, Inc. in 2009 that it had determined that waste from the TFM Smelter site had traveled off-site and that Viacom, Inc. was liable for offsite impacts. Dkt. # 213-2, at 220. In response, CBS Corporation denied that it was liable under CERCLA on the ground that TFMC was not the alter ego of NJZ. Dkt. # 213-10, at 26.

         In addition to contacting PRPs for the liabilities of the TFM Smelter, ODEQ was also seeking to identify and obtain funds and assistance from the PRPs for the BZ Smelter. The BZ Smelter operated from 1911 to 1918, and it was owned and operated by the Bartlesville Zinc Company. Dkt. # 106, at 5. The BZ Smelter is located approximately one-quarter of a mile from the TFM Smelter, and the BZ Smelter is also approximately one mile from Collinsville. Id. There is no dispute that Cyprus is the successor-in-interest to the Bartlesville Zinc Company, and Cyprus does not dispute that waste from the BZ Smelter was used for projects in Collinsville. After the BZ Smelter was shut down, the Atcheson Topeka & Santa Fe Railroad installed a steam shovel at the site, and the steam shovel was used to load cinders for use as railroad ballast. Dkt. # 217-1, at 1. In May 1919, a local newspaper ran an advertisement stating that “[b]uildings of all descriptions, firewood, timber, and all kinds of materials along this line, gravel, stones for fixing roads, [and] lots of electrical wire” were for sale at the site of the former BZ Smelter. Id. at 2. However, Cyprus has produced historical evidence suggesting that smelter waste from both smelters was transported off-site and used as construction material in Collinsville. In 1912 and 1913, local newspapers reported that cinders from the “smelters” were used as railroad ballast. Dkt. # 213-2, at 44; Dkt. # 213-4, at 17. The Collinsville News reported in 1913 through 1915 that broken retorts and cinders from the smelters were used to build a road in Collinsville. Dkt. # 213-4, at 36, 39, 42, 49.

         Pursuant to a consent decree between Cyprus and ODEQ, “all residential properties, commercial properties, houses of worship, childcare facilities, alleys, vacant fields, parks and schools located within the corporate limits of the City of Collinsville” or any location within one mile of this site has been declared a CERCLA facility. Dkt. # 213-8, at 7. In addition, any place where waste material from the Bartlesville Zinc Company Smelter Site can now be found is also part of the Collinsville CERCLA site. Id. The consent decree fully resolved Cyprus' liability to ODEQ for response costs for the cleanup of hazardous substances in Collinsville, and the consent decree states that the parties negotiated in good faith and the settlement was “fair, reasonable, and in the public interest.” Id. at 4, 8. By entering a consent decree with ODEQ, Cyprus may not be sued for contribution for matters within the scope of the consent decress, and this includes contribution claims under state and federal law. Id. at 18-19.

         Smelter operations generated many kinds of solid waste, such as broken and spent retorts and condensers, used refractory brick from furnace linings, and retort residue containing coked reducing coal. Dkt. # 213-2, at 32. The blended and oxidized ore typically found in smelter waste contained a mixture of metals, including zinc, cadmium, lead, arsenic, and sulfur. Id. Smelter waste was used to build bridge supports, roads, and a reservoir at the TFM Smelter facility. Id. at 246, 250, 257. The final remedial investigation report prepared by ODEQ for the TFM Smelter site noted that “[p]revious studies have indicated that approximately seven (7) acres of the site are covered with approximately 30, 000 cubic yards of waste consisting of broken retorts and condensers, slag, building debris, ash, bricks, ” and other smelter waste. Dkt. # 213-4, at 4. In addition, ODEQ actually observed waste materials on the surface at the TFM Smelter site across approximately 25 acres. Id. Historical evidence shows that waste from smelter facilities was used for road construction and repair, and smelter cylinders were used in railroad repair. Dkt. # 213-2, at 44; Dkt. # 213-4, at 17; id. at 49. Newspaper articles refer to using cinders and retorts from “smelters, ” and this could imply that the cinder and retorts were from the BZ and TFM Smelters. Id. at 26, 36, 39, 42, 45. There is evidence that Tulsa County road crews used black smelter waste from the TFM Smelter “sometime in the 1960s.” Dkt. # 213-3, at 239. In other words, there is solid smelter waste on site at the TFM Smelter and there is evidence that some of this waste was moved into Collinsville.

         Air emissions were another form of waste that was generated by a zinc smelter. The parties do not dispute that the TFM Smelter generated air emissions and that the air emissions contained hazardous substances such as lead, cadmium, and arsenic. Cyprus's expert, A.J. Gravel, opines that zinc smelters produced two types of air emissions that would have carried hazardous substances away from the smelting facility. The primary source of air emissions came from furnaces used in the smelting process, and neither the BZ Smelter nor the TFM Smelter had any type of system to control air emissions from furnaces. Dkt. # 213-2, at 36-38. There were also fugitive air emissions from waste piles left at smelter sites, and this occurred when wind carried particles from smelter waste deposited on the ground. Id. at 39. The parties dispute whether the air emissions could have reached Collinsville. Gravel opines that both air emissions from furnaces and fugitive air emissions are a possible pathway for the distribution of hazardous substances from the TFM Smelter to Collinsville. Id. In 2007, ODEQ issued its final remedial investigation report for the TFM Superfund Site, and ODEQ found that the data did not “suggest an aerial dispersion plume from the TFM [Smelter] that resulted in widespread contamination.” Dkt. # 229-4, at 9. ODEQ noted that the lowest concentration of metals in the soil was more than one mile from the TFM Smelter, and concentrations were typically higher in the areas near the TFM Smelter. Id. TCI's expert, Jay Vandeven, testified in his deposition that air emissions from the TFM Smelter would have followed the prevailing winds and that the aerial emissions would have traveled off-site. Dkt. # 213-2, at 205. However, Vandeven is not an expert on air modeling and he does not intend to offer an opinion as to whether air emissions from the TFM Smelter could have reached Collinsville. Dkt. # 230-2, at 15-16.

         Pursuant to its consent decree with ODEQ, Cyprus has undertaken remedial work in Collinsville. The consent decree required Cyprus to implement the CSP, and sampling and remediation began in May 2009 and continued to October 2013. Dkt. # 213-2, at 91. The EPA and ODEQ had entered a memorandum of agreement (MOA) authorizing ODEQ to oversee and direct certain remedial actions pursuant to a Voluntary Cleanup Program (VCP). Dkt. # 213-8, at 87-98. Amy Brittain was the supervisor of the CSP, and she testified that the CSP was part of the VCP. Id. at 45, 47-48. ODEQ stated that the purpose of the CSP was to “sample and test soils found on residential, commercial, and public properties in or near Collinsville that have potentially been affected by the historic zinc smelters, and to remove and replace with clean material those soils that exceed standards established by the [ODEQ].” Dkt. # 213-2, at 232. Cyprus was required to develop a Remedial Action Work Plan, subject to approval by ODEQ, and ODEQ also retained the right to reject a supervising contractor. Dkt. # 213-8, at 8. The action memorandum issued by ODEQ identified both the BZ and TFM Smelters as potential sources of hazardous substances found in Collinsville. Dkt. # 213-2, at 232-33. Cyprus coordinated with ODEQ to determine the size of the site to be tested, and the size of the site was relatively large due to the possible placement of smelter materials at a significant distance from the BZ and TFM Smelters. Dkt. # 213-8, at 85. Before the consent decree had been entered, ODEQ had identified 10 properties with elevated levels of lead, cadmium, and arsenic, and Cyprus was ordered to expedite soil remediation at these properties. Dkt. # 213-6, at 109. Cyprus performed the required soil remediation on an expeditited basis following an Interim Remedial Work Action Plan approved by ODEQ. Dkt. # 213-2, at 92.

         The consent decree required that all work performed by Cyprus be consistent with the National Oil and Hazardous Substances Pollution Contingency Plan (NCP), and the soil remediation activities were to be conducted pursuant to an action work plan developed by ODEQ. Dkt. # 213-2, at 235; Dkt. # 213-8, at 8. The soil remediation standards in the CSP were originally developed jointly by ODEQ and the EPA for the remediation of the TFM Smelter site. Dkt. # 213-10, at 44. The EPA coordinated with ODEQ concerning the preparation of the consent decree and ODEQ stayed in contact with the EPA regarding the TFM Smelter site, but ODEQ maintained oversight and control over the CSP. Dkt. # 229-8, at 8. ODEQ has determined that all of the work performed to date has been consistent with the remedial action work plan and all of the work was necessary to protect human health and the environment. Dkt. # 213-8, at 75.

         The parties' experts dispute whether the remedial work undertaken by Cyprus pursuant to the consent decree was necessary and if the work was performed in compliance with the NCP. Vandeven opines that the “majority of the costs claimed by [Cyprus] were not ‘necessary costs of response' under the NCP, were not incurred ‘consistent' with applicable provisions of the NCP, and have not led to a CERCLA-quality cleanup.” Dkt. # 230-2, at 5. Vandeven claims that ODEQ and Cyprus failed to take existing data into account when formulating the CSP, and failed to take into account “sources, migration pathways, and risks associated with the site prior to initiating the CSP, ” resulting in a remediation program with a “wildly excessive scope and unnecessary costs.” Id. at 8. Gravel states that the CSP was performed in substantial compliance with the NCP, and his opinions are based on ODEQ's analysis of Cyprus' work and his own independent analysis. Dkt. # 213-2, at 48-65. Gravel opines that Cyprus has incurred over $30 million in recoverable response costs as of January 14, 2016, and these costs primarily include expenses incurred for investigation, sampling, and soil remediation. Id. at 67.


         Summary judgment pursuant to Fed.R.Civ.P. 56 is appropriate where there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986); Kendall v. Watkins, 998 F.2d 848, 850 (10th Cir. 1993). The plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. Celotex, 477 U.S. at 317. “Summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed ‘to secure the just, speedy and inexpensive determination of every action.'” Id. at 327.

         “When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. . . . Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine issue for trial.'” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (citations omitted). “The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the [trier of fact] could reasonably find for the plaintiff.” Anderson, 477 U.S. at 252. In essence, the inquiry for the Court is “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Id. at 250. In its review, the Court construes the record in the light most favorable to the party opposing summary judgment. Garratt v. Walker, 164 F.3d 1249, 1251 (10th Cir. 1998).


         Cyprus seeks to hold TCI liable for contribution under CERCLA, because it claims that it has incurred response costs pursuant to a consent decree with ODEQ and some of the costs can be attributed to the disposal and release of hazardous substances at the TFM Smelter site. Cyprus argues that TCI can be considered a “covered person” under CERCLA due to its status as a former owner or operator of a facility or as an arranger for the disposal of a hazardous substance. TCI argues that it cannot be held liable under CERCLA, because ...

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