United States District Court, W.D. Pennsylvania
TRINITY INDUSTRIES, INC., TRINITY INDUSTRIES RAILCAR CORPORATION, Plaintiffs,
GREENLEASE HOLDING COMPANY, AMPCO-PITTSBURGH CORPORATION, Defendants.
JOY FLOWERS CONTI, Chief District Judge.
The issues before the court in this opinion are whether defendant Ampco-Pittsburgh Corporation ("Ampco") can be held directly liable for its actions or derivatively liable for the actions of its subsidiary, defendant Greenlease Holding Company ("Greenlease") with respect to enumerated claims raised in connection with a manufacturing plant, located at 60 Union Street, Greenville, Mercer County, Pennsylvania (the "North Plant"), which previously was owned by Greenlease and currently is owned by plaintiffs Trinity Industries, Inc. ("Trinity Industries") and Trinity Industries Railcar Corporation ("Trinity Railcar") (together, "Trinity" or "plaintiffs"). These issues were raised in cross-motions for summary judgment filed by Trinity (ECF No. 151), and Ampco (ECF No. 147).
II. Procedural History
On October 24, 2008, Trinity filed a complaint against Greenlease and Ampco setting forth the following claims:
count I seeking cost recovery under § 107 under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et seq.;
count II seeking contribution under §§ 113(f)(1) and 113(f)(3)(B) of the CERCLA;
count III seeking recovery under § 7002(a)(1)(B) of the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. § 6901 et seq.;
count IV seeking recovery under section 1101 of the Pennsylvania Hazardous Sites Cleanup Act ("HSCA"), 35 PA. CONS. STAT. § 6020.101 et seq.;
count V seeking recovery under sections 701 and 702 of the HSCA;
count VI seeking contribution under section 705(c)(2) of the HSCA;
count VII seeking contribution under Pennsylvania state law; and
count VIII setting forth a state law claim for negligence per se.
(ECF No. 1.)
On October 30, 2013, Ampco filed a motion for summary judgment seeking a judgment in its favor with respect to all counts of the complaint arguing that as a matter of law, it is not directly liable under any claim or derivatively liable for the alleged acts of Greenlease with respect to North Plant. (ECF No. 143.) On the same day, Trinity filed a partial motion for summary judgment arguing, among other things, that it is entitled to summary judgment on its claims against Ampco because Ampco operated the North Plant and piercing of the corporate veil is warranted under the applicable statutes and case law. (ECF No. 151.) On November 4, 2013, Ampco filed a response in opposition to Trinity's partial motion for summary judgment, (ECF No. 209), and Trinity filed a response in opposition to Ampco's motion for summary judgment, (ECF No. 212). On November 7, 2013, Trinity filed a reply brief to Ampco's brief in opposition to its partial motion for summary judgment, (ECF No. 219), and Ampco filed a reply brief to Trinity's brief in opposition to its motion for summary judgment, (ECF No. 221). On November 12, 2013, Ampco filed a combined concise statement of facts with respect to its motion for summary judgment, (ECF No. 223), and Trinity filed a combined concise statement of fact with respect to plaintiffs' motion for summary judgment, (ECF No. 224).
On December 19, 2013, the court held a hearing with respect to the Ampco's and Trinity's motions for summary judgment limited to the issue whether Ampco may be held liable to Trinity as a matter of law. The court-based upon its review of the submissions of Ampco and Trinity and the arguments presented at the hearing-determined Ampco's motion for summary judgment should be granted and Trinity's motion for summary judgment should be denied. This opinion sets forth the reasoning for the court's decision.
A. Greenville and Ampco
In or about 1910, Greenville Steel Car Company ("Greenville") began operating a railcar manufacturing facility at the North Plant. (Ampco's Combined Statement of Fact ("ACSOF") ¶ 1.) Greenville was originally organized as the Greenville Metal Products Company. (Id. ¶ 2.) In 1914, the company adopted the name Greenville Steel Car Company. (Id.) In 1924, Greenville Steel Car Company was formally chartered in the Commonwealth of Pennsylvania. (Id.) In August 1937, Pittsburgh Forging Company ("PFC") purchased all Greenville's stock. (Id. ¶ 3.)
In or about October 1979, Ampco acquired all PFC's stock through a wholly-owned acquisition subsidiary, Ampco-Pittsburgh Securities I Corporation. (ACSOF ¶ 4.) On December 29, 1983, Greenville declared a dividend to PFC of the stock of Greenville's then subsidiary, Greenville Leasing Company, which was an entity that leased railcars. (Id. ¶ 6.) On that same day, PFC declared a dividend to Ampco-Pittsburgh Securities I Corporation of the stock of PFC's then subsidiary, Greenville, making Ampco-Pittsburgh Securities I Corporation the sole shareholder of Greenville. (Id. ¶ 5.) In January 1984, PFC changed its name to GLC Holding Company. (Id. ¶ 7.) On December 21, 1984, the stock of GLC Holding Company was purchased by GATLX Leasing Corporation. (Id. ¶ 8.) In 1985, Ampco-Pittsburgh Securities I Corporation was merged into Ampco, making Ampco the sole shareholder of Greenville. (ACSOF ¶ 10.)
B. Greenville's Operation of the North Plant
Greenville's employees were responsible for all day-to-day operations at the North Plant, including any waste disposal, waste handling, painting, abrasive blasting, welding, and fabrication operations. (ACSOF ¶ 20.) For example, Greenville's management met with paint manufacturers to discuss what changes needed to be made to the paint that Greenville used in order to ensure the paint would meet new standards and regulations coming into effect. (Id. ¶ 21.) William C. Bubeck ("Bubeck"), director of safety and security for Greenville, communicated with the Pennsylvania Department of Environmental Protection (the "DEP"), formerly known as the Pennsylvania Department of Environmental Resources, with respect to environmental matters including air toxics emissions, PCB transformers, hazardous waste inspections, and alleged violations of the solid waste management act. (Id. ¶ 22.) George Fisher ("Fisher"), plant maintenance engineer for Greenville, communicated with the DEP with respect to environmental matters, including air emissions calculations from the paint booths and hazardous waste notification forms. (Id. ¶ 23.) Fisher was responsible for obtaining information about the DEP's volatile organic compound ("VOC") regulations and disseminating it to the plant. (Id.)
Albert Beers ("Beers") was a Greenville employee from 1965 until 1986. (ACSOF ¶ 24.) While a plant engineer for Greenville, Beers communicated with the DEP with respect to environmental matters, including hazardous waste generator inspections and a permit to construct and use an on-site solid waste incinerator. (Id. ¶ 25.) Beers communicated with outside contractors with respect to off-site disposal of used paint mixtures. (Id. ¶ 26.) After the North Plant was sold in 1986, Gottschall provided documentation to the Environmental Protection Agency with respect to waste Greenville may have sent to an offsite landfill known as the River Road Landfill. (Id. ¶ 33.)
C. Ampco's Parent-Subsidiary Relationship with Greenville
At all relevant times, Ampco held an ownership interest in various entities, including companies engaged in manufacturing diversified engineered products or industrial equipment, employed only a professional staff, e.g., accountants, actuaries, and lawyers, and did not employ any engineers or persons with technical experience in manufacturing. (ACSOF ¶ 34.)
Between 1979 and 1986, Ampco and Greenville had overlapping board members, but did not share formal corporate office space. (ACSOF ¶¶ 36, 38.) Gottschall, Ed Moores, and John R. Young were overlapping board members from 1979 to 1986, and Ernest Siddons was an overlapping officer from 1984 to 1986. (Id. ¶ 38.) No employees, other than officers and directors, were employees both of Greenville and Ampco. (Id. ¶ 37.) Greenville adopted a resolution that said "any action which the [Ampco] Board, or its Executive Committee, may think necessary and desirable to take on behalf of [Greenville] shall be deemed to be the action of [Greenville's Board]." (Id. ¶ 39.)
Ampco retained the right to approve Greenville's expenditures that exceeded a certain threshold. (ACSOF ¶ 42.) Ampco provided certain high level services to its subsidiaries in the areas of insurance, legal, banking, and accounting. (Id. ¶ 43.) In 1985, Greenville's pension plan for salaried employees was merged into Ampco's retirement plan. (Id. ¶ 44.) Ampco's retirement plan covered all its subsidiaries for purposes of administration. (Id.) Each subsidiary maintained its separate identity and separate individual plans. (Id.) Ampco used a centralized banking system for all its subsidiaries in order to maximize the amount on which it could obtain interest and either maximize or minimize borrowing amounts. (Id. ¶ 45.) Greenville had its own banking account, account number, and all checks were signed and approved by officers of Greenville. (Id.) Ampco had master insurance policies in order to obtain lower costs and better coverage, in which all subsidiaries, including Greenville, were named insureds. (Id. ¶ 46.) The individual subsidiaries were charged for their pro rata portion of the premium payment. (Id.)
Ampco had bulk services agreements on behalf of its subsidiaries in order to obtain lower prices due to the bulk purchasing capability of the group. (ACSOF ¶ 47.) The actual order placement and payment for such orders would be made in the normal course by the subsidiary, such as Greenville. (Id.) Ampco had a revolving credit agreement with several banks to benefit the entire organization as a whole and on occasion, used the value of its investment in Greenville to guaranty these lines of credit. (Id. ¶ 48.)
D. The Sale of the North Plant from Greenville to Trinity
As of December 1986, Greenville was solvent. (ACSOF ¶ 52.) On December 9, 1986, Trinity purchased the North Plant from Greenville, pursuant to a Purchase and Sale Agreement, for an $8, 000, 000 cash payment and in consideration of Trinity's execution of a promissory note in the face amount of $6, 075, 120 for the benefit of Greenville. (Id. ¶¶ 11, 49.) Ampco, as the sole shareholder of Greenville, authorized the Greenville board of directors to proceed with negotiations and sell the North Plant on terms deemed by Greenville's board to be in the best interest of Greenville and Ampco. (Id. ¶ 51.) From 1986 until 2000, Trinity operated a railcar manufacturing business at the North Plant as its Greenville Steel Car Division. (Id. ¶ 50.)
E. Greenville After the Sale of the North Plant to Trinity
In February 1987, following the sale of the North Plant to Trinity, Greenville maintained a reserve for liabilities in the amount of $250, 000 and amended its articles of incorporation to change its name to Greenlease Holding Company. (ACSOF ¶¶ 13, 54; ECF No. 150-1 at 22-23; ECF No. 150-40 at 2.) In or about May 1987, Ampco authorized Greenlease to sell the promissory note directly to Principal Mutual Life Insurance. (ACSOF ¶ 56.) On August 1, 1989, and October 15, 1990, respectively three and four years after Trinity purchased the North Plant from Greenlease, Greenlease issued dividends to Ampco. (Id. ¶ 57.)
F. The Criminal Complaint against Trinity with respect to the North Plant
The Commonwealth of Pennsylvania and the DEP, began an investigation at the North Plant based upon allegations that Trinity illegally dumped and disposed of hazardous waste on the site. (ACSOF ¶ 16.) In April 2006-twenty years after Trinity purchased the North Plant from Greenlease-the Commonwealth of Pennsylvania filed a criminal complaint against Trinity asserting three felony counts related to the illegal management of hazardous waste and eight misdemeanor counts related to the illegal dumping and disposal of solid hazardous waste. (Id. ¶ 17.) On October 31, 2006, Trinity entered into a plea agreement with the Pennsylvania Office of Attorney General. (ECF No. 150-19 at 2.) Pursuant to the plea agreement, Trinity was to: (i) plead nolo contendere to five counts of the criminal information filed at CP-43-1655-2006; (ii) reimburse the DEP in the amount of $54, 502.55 for investigative costs; (iii) pay a $200, 000 fine to Pennsylvania's Solid Waste Abatement Fund; (iv) make a $50, 000 contribution to a nonprofit organization; and (v) remediate all environmental contamination at the North Plant as set forth in the consent order and agreement attached to the plea agreement. (Id.) Trinity was sentenced on December 21, 2006, in the Court of Common Pleas of Mercer County, pursuant to the consent order and agreement ("Consent Order") entered into by DEP and Trinity on the same day. (ECF No. 150-19 at 5.)
The Consent Order, in pertinent part, provided:
6. a. The North Plant and South Plant. Trinity shall obtain prior approval from [the DEP] and conduct the Response Actions in accordance with [the DEP]-approved schedule to fully investigate and respond to the release of hazardous substances at the North Plant and South Plant to attain one or a combination of the Background, Statewide Health, or Site Specific cleanup standards selected by Trinity and approved by [the DEP] pursuant to Chapter 3 of the Land Recycling Act, 35 P.S. §§6026.302-6026.303, for non-residential use.
b. Contamination migrating from the North Plant or South Plant. For any release of hazardous substances in groundwater or soil that is migrating from the North Plant and/or South Plant, Trinity shall attain one or a combination of the Background or Statewide Health cleanup standards selected by Trinity, and approved by [the DEP] pursuant to ...