Yankee Gas Services Co. v. UGI Utilities, Inc. , 428 F. App'x 18 ( 2011 )

10-1570-cv
Yankee Gas Servs. Co. v. UGI Utils., Inc.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN
CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE
EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
“SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY
PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New
York, on the 13th day of April, two thousand eleven.
PRESENT: GUIDO CALABRESI,
REENA RAGGI,
Circuit Judges,
JOHN GLEESON,
District Judge.*
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YANKEE GAS SERVICES COMPANY,
CONNECTICUT LIGHT & POWER COMPANY,
Plaintiffs-Appellants,
v. No. 10-1570-cv
UGI UTILITIES, INC.,
Defendant-Appellee.
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APPEARING FOR APPELLANTS: BRUCE W. FELMLY (Barry Needleman,
Cathryn R. Vaughn, on the brief), McLane, Graf,
Raulerson & Middleton Professional Association,
*
District Judge John Gleeson of the United States District Court for the Eastern
District of New York, sitting by designation.
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Manchester, New Hampshire.
APPEARING FOR APPELLEE: JAY N. VARON (Paul Bargren, Michael J.
Harwin, Jennifer M. Keas, on the brief), Foley &
Lardner LLP, Washington, D.C.
Appeal from the United States District Court for the District of Connecticut (Mark R.
Kravitz, Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that the judgment of the district court entered on March 31, 2010, is AFFIRMED.
Plaintiffs Yankee Gas Services Company and The Connecticut Light and Power
Company (“CL&P”), current owners of the sites of thirteen former manufactured gas plant
facilities (“MGPs”) in Connecticut, sued defendant UGI Utilities, Inc. (“UGI”), the alleged
past operator of the MGPs, pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act (“CERCLA”), 42 U.S.C. § 9607(a), to recover plaintiffs’
costs in responding to MGP pollution from the period 1884 to 1941. Plaintiffs now appeal
from a judgment in favor of defendant entered after a bench trial at which the district court
determined that UGI was not an operator of nine of the MGPs under the standard set forth
in United States v. Bestfoods, 524 U.S. 51 (1998),1 and that the statute of limitations had run
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The bench trial covered plaintiffs’ claims concerning nine MGPs: the Bristol,
Meriden Cooper Street, Middletown, Norwalk, Putnam, Rockville, Waterbury South,
Winsted Gay Street, and Willimantic facilities. Before trial, plaintiffs voluntarily withdrew
their claims relating to three MGPs, the Meriden South Colony Street, Waterbury Benedict
Street, and Winsted Prospect Street facilities. Plaintiffs’ claims concerning the final MGP,
the Waterbury North facility, were severed from the main action and are to be tried
separately.
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with respect to two of those nine MGPs, the Norwalk and Willimantic facilities. See Yankee
Gas Servs. Co. v. UGI Utils., Inc., 616 F. Supp. 2d 228 (D. Conn. 2009). Because we
identify no error of law or fact in the district court’s operator determination, we affirm the
judgment on that basis and need not address its limitations conclusion.
“We review the district court’s findings of fact after a bench trial for clear error and
its conclusions of law de novo.” Arch Ins. Co. v. Precision Stone, Inc., 584 F.3d 33, 38-39
(2d Cir. 2009) (internal quotation marks omitted). In reviewing for clear error, we will not
second-guess either the trial court’s credibility assessments or its choice among permissible
competing inferences. See Amalfitano v. Rosenberg, 533 F.3d 117, 123 (2d Cir. 2008)
(internal quotation marks omitted). We review de novo mixed questions of law and fact and
the district court’s use of facts “to draw conclusions of law, including a finding of liability.”
Travellers Int’l, A.G. v. Trans World Airlines, Inc., 41 F.3d 1570, 1575 (2d Cir. 1994). In
applying these principles, we assume the parties’ familiarity with the facts and the record of
prior proceedings, which we reference only as necessary to explain our decision to affirm.
CERCLA states that any person or corporation that “owned or operated any facility”
from which hazardous materials were released is liable for costs incurred by any other person
or corporation to clean up the contamination pursuant to a government-approved plan. 42
U.S.C. § 9607(a)(2), (a)(4)(B); see also id. § 9601(21). While the statute defines the phrase
“owner or operator” “only by tautology . . . as ‘any person owning or operating’ a facility,”
United States v. Bestfoods, 524 U.S. at 56 (quoting 42 U.S.C. § 9601(20)(A)(ii)), the
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Supreme Court in Bestfoods construed the term to reference “someone who directs the
workings of, manages, or conducts the affairs of a facility,” id. at 66. The Bestfoods Court
proceeded “[t]o sharpen the definition for purposes of CERCLA’s concern with
environmental contamination,” by explaining that “an operator must manage, direct, or
conduct operations specifically related to pollution, that is, operations having to do with the
leakage or disposal of hazardous waste, or decisions about compliance with environmental
regulations.” Id. at 66-67 (emphasis added). As we have observed, this “‘sharpen[ed]’
construction, while sufficiently broad to extend beyond titular owners and day-to-day
operators, nevertheless implies a level of control over the hazardous substances at issue.”
AMW Materials Testing, Inc. v. Town of Babylon, 584 F.3d 436, 444 (2d Cir. 2009)
(emphasis and alteration in original).
With respect to corporate ownership of a polluting facility, Bestfoods signaled that
the parent or subsidiary status of a corporation is essentially irrelevant to “operator” analysis:
Under the plain language of the statute, any person who operates
a polluting facility is directly liable for the costs of cleaning up
the pollution. See 42 U.S.C. § 9607(a)(2). This is so regardless
of whether that person is the facility’s owner, the owner’s parent
corporation or business partner, or even a saboteur who sneaks
into the facility at night to discharge its poisons out of malice.
If any such act of operating a corporate subsidiary’s facility is
done on behalf of a parent corporation, the existence of the
parent-subsidiary relationship under state corporate law is
simply irrelevant to the issue of direct liability.
Id. at 65; see also id. at 68 (“The question is not whether the parent operates the subsidiary,
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but rather whether it operates the facility, and that operation is evidenced by participation in
the activities of the facility, not the subsidiary.” (internal quotation marks omitted)). The
Court emphasized, however, that “[i]t is a general principle of corporate law deeply ingrained
in our economic and legal systems that a parent corporation . . . is not liable for the acts of
its subsidiaries,” and that “nothing in CERCLA purports to reject this bedrock principle.”
Id. at 61-62 (internal quotation marks omitted). Bestfoods further described the proper
application of CERCLA’s concept of an “operator” in the corporate parent-subsidiary
context:
[A] parent can be held directly liable when the parent operates
the facility in the stead of its subsidiary or alongside the
subsidiary in some sort of a joint venture. . . . [N]orms of
corporate behavior (undisturbed by any CERCLA provision) are
crucial reference points. . . . [W]e may refer to them in
distinguishing a parental officer’s oversight of a subsidiary from
such an officer’s control over the operation of the subsidiary’s
facility. Activities that involve the facility but which are
consistent with the parent’s investor status, such as monitoring
of the subsidiary’s performance, supervision of the subsidiary’s
finance and capital budget decisions, and articulation of general
policies and procedures, should not give rise to direct liability.
The critical question is whether, in degree and detail, actions
directed to the facility by an agent of the parent alone are
eccentric under accepted norms of parental oversight of a
subsidiary’s facility.
Id. at 71-72 (citations, alteration, and internal quotation marks omitted).
With these controlling principles in mind, we have reviewed the trial record, the
district court’s meticulous and well-reasoned opinion, and the parties’ arguments on appeal,
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and we identify no legal error or clear factual error in the determination that UGI was not an
operator of the subject MGPs during the period in question. Plaintiffs have marshaled an
impressive volume of contemporaneous corporate records – including board and committee
meeting minutes, correspondence, and internal reports – illustrating the extent of UGI’s
involvement in the business of its Connecticut subsidiaries. As the district court reasonably
found, this evidence shows that UGI “was a vigilant parent that conducted detailed – yet not
eccentric – oversight of the operations of its subsidiaries in Connecticut”; “provided
assistance to CL&P from time to time when CL&P requested it”; and “carefully oversaw the
operations of CL&P, consistent with UGI’s status as a corporate parent.” Yankee Gas Servs.
Co. v. UGI Utils., Inc., 616 F. Supp. 2d at 233. Such assistance did not, as a matter of law,
equate to managing, directing, or operating the facilities in the stead of CL&P or in some sort
of joint venture with it. See id. Accordingly, we identify no error of law or fact in the
district court’s finding
that Plaintiffs have failed to prove by a preponderance of the
evidence that UGI and CL&P conducted operations at the MGPs
in some sort of joint venture or joint undertaking, and that UGI’s
involvement with the individual MGPs was consistent with its
role as an investor and shareholder of, and consultant to, CL&P.
Id. at 257; see also id. at 245 (“The Court concludes, and finds as a fact, that there was
nothing eccentric, or contrary to ordinary corporate norms as recognized in Bestfoods, in the
relationship between UGI, the parent, and its subsidiary CL&P, or the subsidiaries that
owned the Norwalk MGP before CL&P.”); id. at 247 (“[T]he Court finds as a fact that UGI
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did not operate the Norwalk facility between 1900 and 1906, either in the stead of its
subsidiaries or in some sort of a joint venture alongside its subsidiaries.”); id. at 247-48 (“The
Court finds as a fact that there was nothing eccentric or abnormal about UGI’s interaction
or involvement with CL&P, or the MGPs owned by CL&P, from 1917 to 1941.”); id. at 256
(“[T]he Court finds as a fact that it was CL&P (and CL&P alone) that had responsibility for
creating and implementing those budgets [i.e., budgets approved by UGI] and managing and
directing operations of its facilities, including the MGPs.”).
We have considered plaintiffs’ remaining arguments on appeal and conclude that they
are without merit. For the foregoing reasons, the March 31, 2010 judgment of the district
court is AFFIRMED.
FOR THE COURT:
CATHERINE O’HAGAN WOLFE, Clerk of Court
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