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Written by Justin Gifford, General Counsel for PolicyFind

In Hinds Investments, L.P. v Team Enterprises, Inc., et al (2011 WL 3268027 (C.A.9 (Cal.))) (“Hinds I”), and Hinds Investments L.P. v Team Enterprises Inc. (2011 WL 3250461 C.A.9 (Cal.))) (Hinds II)Hinds Investments, L.P., a property owner pursued R.R. Street and Co. and others (“Street,” the manufacturer of a PCE filters & distillation units) in an attempt to prosecute a RCRA citizen suit for contributor liability and to attach CERCLA arranger liability for cleanup costs as an arranger/disposer of hazardous waste (used PCE). The original actions were brought in the eastern district of California where the District Court Judge granted Team’s motion for dismissal for the plaintiff’s failure to state a claim upon which relief could be granted.  District Judge O’Neill found that the various defendants’ manufacture and sale of the useful dry-cleaning equipment did not rise to the level of arranging for the disposal of the hazardous waste.  In both decisions, the Circuit Court’s decision was largely based upon the lack of an active role by the defendants in the disposal of the hazardous waste.

Hinds appealed under both the federal CERCLA and RCRA statutes as well as state claims for nuisance and trespass, asserting that the defendants sold the dry cleaning equipment “for the purpose of disposing of perchloroethylene or that defendants exercised control over the disposal process.” As in Team Enterprises, LLC v. Western Investment Real Estate Trust, et al (2011 WL 3075759 (C.A.9 (Cal.))), the court referenced the useful product doctrine, stating in Hinds I: “[d]esigning machinery that has a purpose helpful to society, like the dry cleaning of clothes, even when that machinery may produce waste as a byproduct, does not render the manufacturer a contributor to waste disposal,” inand by extension is not the same as selling or arranging the transfer of hazardous waste, which no longer has a useful purpose and is likely done to avoid liability for disposing of hazardous waste. In Hinds II, the court was less elaborate, but found that “[w]aste disposal recommendations fall short of the kinds of affirmative acts…” needed to attach arranger liability.

The court noted in Hinds II that its conclusions regarding the level of purposeful interaction and active control required to render a manufacturer a contributor are consistent with those reached by other courts considering the scope of RCRA contributor liability.  The Ninth Circuit’s opinion went on to note that, while other courts have not explicitly held that RCRA requires defendants to be actively involved, they have suggested that some sort of affirmative action controlling the disposal of waste is required.

The court’s final line in Hinds II is definitive: “Mere design of equipment that generated waste, which was then improperly discarded by others, is not sufficient.” In short, the defendants did not direct the improper disposal of hazardous waste solely by manufacturing useful equipment or authoring instruction manuals detailing their use.

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