On May 21, 2007, the U.S. Supreme Court, in Bell Atlantic Corporation v. Twombly, 127 S.Ct. 1955; 167 L.Ed. 2d 929, announced a new standard for testing the sufficiency of pleadings in the face of a motion to dismiss. The Court set aside the rule in Conley v. Gibson, 355 US 41; 78 S.Ct. 99; 2 L.Ed. 80 (1957), which held that a complaint should not be dismissed unless it could be shown that it was not possible, pursuant to the pleadings, to demonstrate any set of facts which would support recovery; instead, the Court said that the appropriate test was whether the allegations of the complaint, if taken as true, would support the conclusion that recovery was “plausible.” In overruling Conley, the Court said, of the “possible” standard, “*** after puzzling the profession for 50 years, this famous observation has earned its retirement. The phrase is best forgotten as an incomplete, negative gloss on an accepted pleading standard ****.”
Bell Atlantic was an anti-trust case based on the Sherman Anti-Trust Act. Many commentators suggested that the Bell Atlantic standard would only apply to matters (such as anti-trust) where the requirements of a statute dictated specific pleading requirements, that the Court had not intended to completely change the standards for testing the sufficiency of complaints.
Shortly after the Bell Atlantic decision, the U.S. District Court for the Northern District of Alabama was faced with the question in Evans v. Walter Industries, case no. 1:05-CV-01017-KOB. The Alabama court held the “plausible” standard applicable to a putative class action toxic tort case and it dismissed the case, with prejudice, against one of the Defendants.
As noted below, this decision could have significant implications in other Superfund cases if the federal courts, generally, reach the same conclusion.
II BACKGROUND FACTS
This case arises from the extensive environmental concerns in Anniston, Alabama, a city of approximately 27,000 in northeastern Alabama. Anniston was the site where PCBs were first produced in 1927, and continued to be manufactured until 1972. In addition, in the first half of the 20th century the city was home to numerous iron pipe foundries; indeed, it was once known as the “sewer pipe capitol” of the world. The foundries produced thousands of tons, per day, of waste foundry sand allegedly contaminated with lead and a variety of other heavy metals, solvents, and PCBs.
Much of Anniston is low lying and swampy, traversed by numerous creeks and open drains, many of which have become contaminated with PCBs. Foundry sand has been extensively used as fill material and top soil in residential yards throughout the city and adjoining communities. This has all led to Anniston becoming the location of two Superfund sites, one for remediation of PCBs and the other a removal action to clean lead from residential yards, extensive contribution actions, and a series of class actions by local residents who claim a variety of injuries as a result of local contamination.
The concern of the local residents has been exacerbated by the fact that Anniston is immediately adjacent to Fort McClellan, an Army post which was for many decades the headquarters of the Army’s Chemical, Biological, and Radiological Warfare Corps and the Army is now in the process of destroying various toxins stored at the post which have become unstable with the passage of time.
III. PROCEDURAL HISTORY
Plaintiffs, reportedly representing a plaintiff class of 12,000 to 14,000 people, filed a complaint in state court in 2005 asserting very broad, vague claims of personal injury, trespass, nuisance, and diminution of property value against foundry operators and a number of other, non-foundry companies. The case was removed to federal court pursuant to the Class Action Fairness Act and remains there.
Considerable skirmishing, involving Defendants’ motions attacking what were styled as “shotgun” allegations, and subsequent dismissals without prejudice eventually resulted in the filing of a second amended revised complaint in 2007. Defendants again attacked the complaint as the type of “shotgun” pleading which had attracted much negative comment by the Eleventh Circuit. A few days before argument on those motions, the Supreme Court released the Bell Atlantic decision. Defendants cited that decision as supplemental authority, arguing that the Court now had authority to dismiss the “shotgun” pleading with prejudice.
The Plaintiffs had alleged, and argued, that the foundries had produced thousands of tons of contaminated sand which ended up in Plaintiffs’ yards; further, that all of the Defendants may have released sand, PCBs, and other contaminants in sand that was used to clean up spills, stormwater, and air emissions. The Court was critical of these allegations because they did not specify what each Defendant had allegedly done, but, rather, seemed to treat all releases as a group action. The Plaintiffs argued that they could not be required to specify what each Defendant had done until they were permitted to pursue discovery. They argued that the Conley standard should apply and that their allegations should be found to be sufficient because it was “possible” that, in discovery, they could find specific facts to support their allegations. The Plaintiffs also argued that Bell Atlantic did not apply because the allegations were not made pursuant to a statute which required the averment of specific facts.
The Court rejected the Plaintiffs’ arguments and applied the Bell Atlantic standards. Its decision was based on three considerations. First, it noted that Conley was not an anti-trust case; therefore, even though the Supreme Court struck down the Conley test in an anti-trust case, its ruling was not limited to specific statutory actions.
Next, the Court held that adequate pleadings were necessary to advise not only the Defendants, but also the courts, of the allegations of the case so that discovery could be administered and could proceed in an appropriate manner. The Court styled this as a requirement to advise Defendants and the court of “*** who, what, when, where ***” the actions resulting in the damage complained of occurred.
Next, the Court focused on the Supreme Court’s discussion, in Bell Atlantic, of the high cost of discovery and the increasing practice of plaintiffs in putative class actions to file suit with vague allegations and then use the high cost of discovery to pressure defendants into settling.
Based on all these considerations, the Court dismissed the complaints as to all parties, but agreed to give Plaintiffs “one last chance” to file an adequate complaint against the foundry defendants. With respect to the non-foundry defendants, the Court observed that the allegations that there “may” have been discharges of contaminants in sand used to clean up spills and in stormwater and air emissions were entirely too vague and that, if the Plaintiffs could not produce much more specific allegations, those claims would be dismissed with prejudice.
Subsequently, Huron Valley Steel Corporation, a Defendant which is a recycler of non-ferrous scrap metals, moved for dismissal with prejudice and for entry of an immediate final judgment. The Court agreed that, from the face of the complaint, it appeared that this was a foundry sand case, that Huron Valley Steel Corporation had never produced or disposed of foundry sand, and that there were no other allegations against it that were not impermissibly vague. Therefore, the court dismissed the matter with prejudice as to Huron Valley Steel Corporation and entered final judgment for that Defendant.
The court has yet to rule on the motions to dismiss of the remaining Defendants.
IV. POTENTIAL IMPLICATIONS OF THIS DECISION
If other federal courts follow the line of reasoning of the Alabama court it could remove a number of complications in the future in Superfund matters. Most important, it may do away with, or at least significantly reduce, the practice of filing vague, broadly worded complaints against PRPs by groups of residents who live in the vicinity of Superfund sites, then seeking to pressure defendants to quickly settle. It could also simplify the task of planning and sequencing remediation activities and documenting Administrative Records to protect against such lawsuits. This could provide an important cost saving for PRPs in many cases.
For further information, contact Jack D. Shumate at firstname.lastname@example.org or (248) 258-1405.
Jack Shumate is Senior Environmental Counsel in the law firm Butzel Long, Professional Corporation. Mr. Shumate holds a BS degree in Chemical Engineering from Rose-Hulman Institute of Technology and received his JD from the Salmon P. Chase College of Law of Northern Kentucky University in 1962. He is listed in the Best Lawyers in America and is a Founding Regent and Charter Fellow of the American College of Environmental Lawyers.
Butzel Long is a full-service law firm headquartered in Detroit, Michigan with offices throughout Michigan and in Florida, New York City, and Washington DC and alliance offices in China and Mexico.