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NEW JERSEY DEPT. OF ENVTL. PROTECTION v. GLOUCESTE

August 17, 1989

STATE OF NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff,
v.
GLOUCESTER ENVIRONMENTAL MANAGEMENT SERVICES, INC., et al., Defendants, and GLOUCESTER ENVIRONMENTAL MANAGEMENT SERVICES, INC., et al., Third-party Plaintiffs, v. TOWNSHIP OF GLOUCESTER, et al., Third-party Defendants, and TOWNSHIP OF GLOUCESTER, Fourth-party Plaintiff, v. CITY AND COUNTY OF PHILADELPHIA, et al., Fourth-party Defendants. AMADEI SAND & GRAVEL, INC., et al., Plaintiffs, v. STATE OF NEW JERSEY, et al., Defendants. ICI AMERICAS, INC., et al., Plaintiffs, v. STATE OF NEW JERSEY, et al., Defendants



The opinion of the court was delivered by: BROTMAN

 Presently before the court is the motion of defendants Ford New Holland, Inc., and Sperry Corporation ("the New Holland defendants") to dismiss plaintiff New Jersey Department of Environmental Protection's ("DEP") claims against them for lack of subject matter jurisdiction. DEP alleges that those defendants generated toxic waste dumped at a Gloucester Township, New Jersey, landfill. Although the thrust of the New Holland defendants' argument is that DEP cannot bring its state law claims against them in federal court, their motion requires the court to examine whether it has subject matter jurisdiction over the entire case. DEP initially brought this action in state court, and a defendant impleaded the United States Environmental Protection Agency ("EPA"), which removed the action to this court. After dismissing EPA from the case, the court chose to maintain jurisdiction over DEP's ancillary state law claims. The New Holland defendants claim that DEP asserted state law claims against it at a time when all of DEP's claims against all defendants were purely state law claims and that there can be no pendent party jurisdiction in such a situation. For the reasons set forth below, the court finds that it does have jurisdiction over this action and that the exceptional circumstances of this case allow for pendent party jurisdiction over the New Holland defendants. The court will therefore deny their motion to dismiss.

 I. FACTS AND PROCEDURAL BACKGROUND

 A. The Landfill and the State Court Litigation

 This lawsuit involves the sixty-acre Gloucester Environmental Management Services, Inc. ("GEMS") landfill owned by the Township of Gloucester and operated by Amadei Sand & Gravel, Inc., and GEMS, and others between the late 1950s and 1980 when the state of New Jersey ordered its closure. While in operation the landfill received municipal and industrial liquid and solid waste from hundreds of sources, and that waste included dangerous amounts of toxic materials.

 In 1980 DEP filed this lawsuit in the Superior Court of New Jersey, Chancery Division, Camden County, seeking proper closure of the landfill, recovery of response costs, and penalties. As DEP learned the extent of contamination in the landfill, it amended its complaint to join additional parties it believed were responsible for dumping hazardous wastes at the site and to add additional legal grounds for relief. By the end of 1982, DEP had filed three amended complaints in Superior Court asserting several causes of action against the owners and operators of the landfill under the New Jersey Spill Compensation and Control Act ("the Spill Act"), N.J. Stat. Ann. §§ 58:10-23.11 to -23.33 (West 1982); the Solid Waste Management Act, id. §§ 13:1E-1 to -48 (West 1979); the Sanitary Landfill Facility Closure and Contingency Fund Act id. §§ 13:1E-100 to - 198 (West Supp. 1989); the Water Pollution Control Act, id. §§ 58:10A-1 to -20; Id. § 23:5-28 (West 1940 & Supp. 1989); as well as claims based on common law nuisance, negligence, and strict liability. By early 1984, the parties to the state court suit by direct and third-party claims included the owners and operators of the landfill, several parties that allegedly generated the toxic materials dumped at the site, and several parties that allegedly transported those materials to the site.

 Early in 1983 EPA became involved in the effort to remedy the landfill. In that year EPA listed the GEMS landfill on its national priority list of hazardous waste sites needing remediation. It now ranks twelfth on that list. EPA joined forces with DEP pursuant to section 104 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C. §§ 9601-9657 (1982), and hired a firm to conduct a feasibility study at the site. In 1985, after a public comment period, EPA issued a Record of Decision selecting a remedy for the landfill. The remedy to be performed included installation of a cap on top of the landfill and a clay and soil cover on its sides; construction of an active gas collection and treatment system; construction of a groundwater pumping and treatment system; connection of certain homes to the public water supply system; relocation of Holly Run; and remediation of Holly Run and Briar Lake. EPA and DEP later divided the remedy into two phases: Phase one included capping the landfill and building a gas collection and treatment system, and phase two included building a groundwater pumping and treatment system and decontaminating Holly Run and Briar Lake.

 B. Impleader, Removal and Early Proceedings in This Court

 In late 1983 the Township of Gloucester filed an amended third-party complaint in Superior Court naming EPA as a third-party defendant. That pleading amended the Township's third-party complaint to state:

 
27(a). The E.P.A., [sic] is an agency of the United States authorized under Federal Statutes to perform remedial measures at duly designated waste disposal sites;
 
. . . .
 
152. The E.P.A. has an interest in this matter, which would necessarily be affected by resolution of this case in that it seeks the same or similar relief as does plaintiff, D.E.P.
 
153. The E.P.A.'s refusal to join in this action as a plaintiff exposes the Township of Gloucester to the possibility of inconsistent or multiple obligations by reasons of E.P.A.'s claimed interest.

 In January 1984 EPA filed a verified petition for removal in this court. That petition stated, "This action is a Civil action commenced in a state Court over which the United States District Court has original jurisdiction, and therefore may be removed to this court pursuant to 28 U.S.C. § 1441(a) et seq."

 Following removal to this court, EPA moved for dismissal on the ground that the complaint failed to state a claim upon which relief could be granted. The court granted the motion and dismissed the agency from the case because it found that sovereign immunity barred the lawsuit. New Jersey Dep't of Envtl. Protection v. Gloucester Envtl. Management Servs., Inc., Civil Action No. 84-152, slip op. (D.N.J. Aug. 1, 1984). The court then raised on its own motion the question of whether it could maintain subject matter jurisdiction over the case without EPA as a party. After requesting further briefing and after carefully considering the issue, the court determined that it could and should retain jurisdiction over the case in its entirety. New Jersey Dep't of Envtl. Protection v. Gloucester Envtl. Management Servs., Inc., Civil Action No. 84-152, letter op. (D.N.J. June 5, 1985).

 In finding continued federal jurisdiction, this court first held that EPA properly removed the action to federal court. Although EPA's removal petition cited the entire removal chapter, the court focused its attention on a single provision permitting removal of any action against

 
Any officer of the United States or any agency thereof or person acting under him, for any act under color of such office or on account of any such right, title, or authority claimed under any act of Congress for the apprehension or punishment of criminals or the collection of revenue.

 28 U.S.C. § 1442(a)(1); see letter op. at 5-6. The court further held that section 1442(a)(1) authorizes removal of an entire case even though the agency seeking removal was involved in only one discrete part of the case. Letter op. at 6 (citing IMFC Professional Servs. v. Latin Am. Home Health, Inc., 676 F.2d 152, 158-59 (5th Cir. 1982)). The court went on to find that it had the power to maintain jurisdiction over the case after it dismissed EPA. Id. at 7. Finally, the court found that it should exercise its discretion to retain jurisdiction over the case:

 
This case involves, inter alia, a determination of responsibility for and cleanup of toxic wastes, a pressing national issue which is most acute in New Jersey. It is vital that these actions proceed expeditiously in order to protect the public welfare and to preserve the public trust and confidence. By retaining jurisdiction now, the court hopes to avoid creating a litigation "merry-go-round" of waste and delay when, on remand, federal claims are asserted and/or federal parties joined, leading once again to removal to this court.

 Id. at 7-8.

 In the same opinion in which the court announced that it would maintain jurisdiction over this case, it granted the Township of Gloucester's motion to file an amended counterclaim, crossclaim, and third-party complaint to state several federal causes of action. Id. at 8-9. Those causes of action arise under section 107 of CERCLA, 42 U.S.C. § 9607, section 505(a) of the Clean Water Act, 33 U.S.C. § 1365(a), and section 7002 of the Resource Conservation and Recovery Act, 42 U.S.C. § 6972. Letter op. at 9. The court further noted that its jurisdiction under CERCLA is exclusive and found that "nothing in the record suggests that the court lacks pendent jurisdiction over the state law claims asserted herein." Id. (citing United Mine Workers v. Gibbs, 383 U.S. 715, 16 L. Ed. 2d 218, 86 S. Ct. 1130 (1966)).

 C. Managing the Litigation

 DEP's third amended complaint filed in Superior Court, which was the pleading in effect when EPA removed the case to this court, named only the landfill owners and operators as defendants. Although this group of actual defendants numbered only six, these defendants named numerous alleged generators and transporters of the toxic wastes dumped at the GEMS site as third-party defendants. Consequently, the task of managing the litigation was quite difficult from the start. Hon. Jerome B. Simandle, U.S. Magistrate, took responsibility for holding a series of case management conferences to ease the transaction costs and burdens of involvement in a case with so many parties and to attempt to negotiate a settlement. The result of Judge Simandle's efforts was a series of case management orders ultimately structuring the defendants into six distinct groups and altering the usual rules of service and joinder. In addition, Judge Simandle's orders have limited and organized discovery and motion practice.

 Case Management Order No. 1 created a defendants' committee, granted DEP leave to file an amended complaint naming additional parties, ordered that upon filing of a third-party complaint by one defendant it shall be deemed filed by all defendants against the named third-party defendant, and ordered that all cross-claims and counterclaims by new third-party defendants shall be deemed to have been made, filed, served, and denied without the necessity of formal pleading. Case Management Order No. 2 divided the defendants' committee into five groups: DEP, the owners, the alleged operators, the alleged generators, and the alleged transporters. The order named liaison counsel for each group and defined the duties for such counsel. The order also altered the usual rules for motion practice by extending the time in which responsive pleadings must be served. Judge Simandle subsequently issued a third and a fourth management order, and in March 1988 issued Case Management Order No. 5, which consolidated the provisions of the previous orders.

 Case Management Order No. 5 created a new group of defendants, the municipalities, whom the generator defendants would shortly join in this action as third-party defendants charged with dumping toxic waste at the GEMS site. At the time of this order, the direct and indirect defendants in the case numbered more than three hundred. The order repeated the provisions already in place about automatic joinder of third-party complaints and automatic assertions and denials of cross-claims. In addition, this order provided that all answers filed in this action, both before and after the date of the order, will be deemed to include cross-claims for indemnity and contribution made by the answering party against all other direct or indirect defendants (except to the extent that an indemnity or contribution claim arises out of facts specific to a particular party). Subsequent to issuing Case Management Order No. 5, Judge Simandle has held further case management conferences and has issued four further case management orders.

 Judge Simandle's contribution to managing this lawsuit has been nothing less than phenomenal. He has spent hundreds of hours working with liaison counsel and many of the hundreds of parties those counsel represent in an attempt to render order on this lawsuit and to reach a settlement agreement. The inch-thick stack of case management orders represents only a small portion of the work he and others have put into this litigation. The docket provides some indication of the effort that has gone into this case. Today it contains thirty-six pages of entries, and those entries number more than 800. Managing this case has been no easy task, and only through patience, diligence, and skill of those involved -- including court personnel, the several liaison counsel, and other counsel -- has the management effort thus far been a success.

 D. Administrative Developments, Constitutional Challenges, and Amended Pleadings

 DEP sought to force potentially responsible parties to clean up the landfill both through this lawsuit and through a series of administrative directives issued pursuant to the Spill Act. These directives ordered potentially responsible parties to complete specified cleanup work. The recipients of the first two Spill Act directives raised constitutional challenges to them, but the court never had an opportunity to address those challenges. The challenges became moot because some of the potentially responsible parties satisfied the directives and because DEP agreed to file an amended complaint joining in this litigation all recipients of the Spill Act directives. In October 1986 DEP filed its fourth amended complaint, which named as defendants more than fifty additional alleged generators and transporters of the hazardous wastes dumped at the GEMS site.

 In May 1987 DEP issued a third Spill Act directive naming more than ninety allegedly responsible parties and ordering them to pay close to $ 1.6 million for the design of the remedy DEP and EPA selected for the landfill. That directive named parties not included in the previous directives or in DEP's fourth amended complaint. The New Holland defendants were among the potentially responsible parties named in this new directive. Many of the parties named in the new directive challenged that administrative order on the ground that it violated their federal constitutional rights to due process and equal protection. The generator defendants raised these challenges as part of this lawsuit, and they sought a temporary restraining order. In addition, the operators and another group each filed new lawsuits raising similar constitutional challenges, Amadei Sand & Gravel, Inc. v. New Jersey Dep't of Envtl. Protection, Civil Action No. 87-3086, and ICI Americas Inc. v. New Jersey Dep't of Envtl. Protection, Civil Action No. 87-3110. The court also received a letter from the Ford New Holland defendants stating that, although they were not then defendants in this lawsuit, they would like any relief granted to the defendant generators also to be granted to parties like themselves who were named as respondents to the third Spill Act directive but who were not named as defendants in this case. The court adjourned without date the parties' applications for a temporary restraining order. The court consolidated the new filings with this action and set a briefing schedule for the parties' challenges. The court heard oral argument in December 1987. However, for several reasons, including progress of settlement talks and the pendency of the instant motion, the court has yet to rule on these applications.

 In August 1988 DEP issued its fourth Spill Act directive ordering the respondents to begin to perform the first phase of remedial action at the GEMS landfill site in the immediate future. At the same time, serious settlement negotiations were ongoing before Judge Simandle in an attempt to raise the funds necessary for the defendants to hire a private contractor to complete the selected remedy. Such a contractor agreed to undertake phase one of the remedy (essentially involving capping the landfill and building a gas collection system) for $ 32.5 million plus cost overruns. Under the terms of the fourth directive and the Spill Act, if the parties failed to meet that directive's deadline for beginning work DEP could engage its own contractor through public bidding and seek treble costs from the respondents. In cooperation with the defendants, DEP postponed the compliance deadline month after month until it announced that November 30, 1988, was the final deadline.


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