Tuesday, October 21, 2008

Sycamore Industrial Park v. Ericsson, Inc.

Oct 20: In the U.S. Court of Appeals, Seventh Circuit, Case No. 08-1118. The Appeals Court explains that in 1985, plaintiff Sycamore Industrial Park Associates bought an industrial property with fixtures, including a boiler-based steam heating system, from defendant Ericsson, Inc. Before it sold the property, Ericsson installed a new natural gas heating system, but it left the old heating system in place. Several years after purchasing the property, Sycamore discovered that the boilers, pipes, and various pipe joints that make up the old system were insulated with asbestos-containing material.

Sycamore sued to force Ericsson to remove and dispose of the abandoned asbestos insulation and reimburse Sycamore for alleged "response costs it has incurred or will incur in removing the asbestos insulation." The suit was brought under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and the Resource Conservation and Recovery Act (RCRA). The district court granted Ericsson’s motion for summary judgment, and Sycamore appealed. The Appeals Court affirmed the district court’s grant of summary judgment.

In its ruling, the district court found that the defendant abandoned the asbestos insulation in place at the property prior to sale. Yet it held as a matter of law that the abandonment did not constitute “disposal” of a solid or hazardous waste into or on any land or water so that such solid waste or hazardous waste might enter the environment, as CERCLA requires. In addition, the district court held as a matter of law that the abandonment of the boiler-based heating system and the subsequent sale of the Sycamore property was not “handling, storage, treatment, transportation or disposal of any solid or hazardous waste,” as required by RCRA.

In its review the appeals Court notes that the Ninth Circuit reached the same conclusion in Stevens Creek, 915 F.2d 1355. The Seventh Circuit said, "Our sister Circuit determined there was no private cause of action under CERCLA for the sale of a building containing materials with asbestos because the defendant never 'disposed' of a hazardous substance." The Seventh Circuit ruled further, "Here, there is no evidence that Ericsson transferred the Sycamore property with the intent to dispose of a hazardous substance. It incidentally left the old heating equipment in place when it sold otherwise useful realty. It simply does not make sense to hold that Ericsson is a responsible party just because Sycamore decided to remove asbestos in place decades after it purchased valuable real estate in a legitimate transaction."

On the RCRA claim, the Appeals Court said, ". . .as a matter of law, by leaving equipment that is insulated by asbestos in place and then selling the Sycamore property, Ericsson did not handle, store, treat, transport, or dispose of the asbestos as required for RCRA liability.

Access the complete opinion (click here).