Appendix — Vista Paint Corp. v. United States
Supreme Court brief1998
Ask Donna
What actually matters in this document.
Text
APPENDIX
TABLE OF CONTENTS
Page
Order of the Court of Appeals,
a aceg og ge au EE TO ie ET la
Order of the Court of Appeals Denying
Petition for Rehearing, January 23,1998 .......... 3a
Opinion of the District Court, April 16, 1996........... 4a
Opinion of the Court of Appeals, September 24,
De aia haha bb as eae oe ue 34a
Declaration of Eddie R. Fischer. April 28,
oie RE OCIS OT ae ead TE ae a 46a
Amended Pretrial Conference Order.
I PP te rr cee te hy 64a
Opinion of the District Court, February 11,
cist ee PERE Ce OEE 6 1 roe a ae a 69a
Complaint, December 3, 1990 ..................... 73a
Supplemental Scheduling Order,
I aig oa a ey 80a
Transcript of District Court Proceedings,
vis, scale cosi Neha ORE Ee Oe RD ak AT 82a
Transcript of District Court Proceedings,
sce ihe oa BE OE Te ORES TEE cal 85a
Order Dismissing Defendant’s Counterclaim.
Dismissing Defendant’s Third Party
Complaint, and Striking Certain Affirmative
RN UN Ee SOE ee ee 89a
APPENDIX A
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA.
Plaintiff-counter-defendant-Appellee
VISTA PAINT CORPORATION.
Defendant-counter-claimant-Appellant.
No. 96-55670.
D.C. No. CV-94-00127-RT
ORDER’
Appeal from the United States District Court
for the Central District of California
Robert J. Timlin, District Judge, Presiding
Submitted Oct. 6, 1997°°
Pasadena, California
Decided Nov. 4, 1997.
Before PREGERSON, D.W. NELSON, and HAWKINS.
~
> .
" This disposition is not appropriate for publication and may not be cited to
or by the courts of this circuit except as provided by Ninth Circuit Rule 36-
™ The panel unanimously finds this case suitable for decision without oral
argument. Fed. R. App. P. 34(a) and Ninth Circuit Rule 34-4.
Circuit Judges
We affirm for the reasons stated in the district court’s
Findings of Fact and Conclusions of Law entered April 16,
1996
All motions pending before this Court are denied as moot.
3a
APPENDIX B
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-counter-defendant-Appellee,
VISTA PAINT CORPORATION,
Defendant-counter-claimant-Appellant.
No. 96-55670
D.C. NO. CV-94-00127-RT
Filed January 23, 1998
ORDER
BEFORE: PREGERSON, D.W. NELSON, and HAWKINS.
Circuit Judges.
lhe panel as constituted above has voted to deny the petition
for rehearing and to reject the suggestion for rehearing en banc.
The full court has been advised of the suggestion for
rehearing en banc and no judge of the court has called for a
vote to rehear this matter en banc. Fed. R. App. P. 35.
The petition for rehearing is denied and the suggestion for
rehearing en banc is rejected.
4a
APPENDIX C
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
UNITED STATES OF AMERICA,
Plaintiff,
ws
VISTA PAINT CORPORATION,
Defendant.
CASE NO. EDCV 94-0127 RT.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
United States District Court, C.D. California.
Filed April 16, 1996.
The matter came on regularly for trial, United States District
Judge Robert J. Timlin presiding. After having heard the
arguments of counsel and examined the evidence presented, the
Court makes the following findings of fact and conclusions of
law:
I.
FINDINGS OF FACT
A. Amended Findings of Uncontroverted Facts and
Conclusions of Law.
|
Sa
The following Findings of Fact are conclusively established
by the Amended Findings of Uncontroverted Facts and
Conclusions of Law, filed February 11, 1992 (“Amended
Findings”), and the Amended Pretrial Order, filed January 3,
1993 (“1/3/94 Court Order’’):
1. In 1984, as part of the State Implementation Plan
(“SIP”) for California to limit the VOC content of paint, the
South Coast Air Quality Management District (“SCAQMD”)
and the San Diego County Air Pollution Control District
(“SDCAPCD”) adopted SIP Rules 113["] and 67.0. These rules
regulate non-flat architectural coatings, otherwise known as
gloss or semi-gloss paints, which are commonly used to paint
structures, mobile homes or pavement. In order to control air
pollution from the manufacture and application of these
coatings, the rules limit their VOC content to no more than 250
grams of VOC per liter of coating (“250 g/1 VOC”), and forbid
the sale, offer for sale, or application of any such paint
exceeding these VOC limitations (“non-compliant coatings”).
2. As background, local and regional government
authorities under California law have primary responsibility for
control of air pollution. Cal. Health & Safety Code § 40000 et
seq. Two of these local authorities are the SCAQMD, which
includes Los Angeles and Orange Counties, and the
SDCAPCD, which includes San Diego County. These districts
are empowered to adopt rules governing air pollution and to
independently enforce them as state law. Id. at § 40001. As for
the federal government, the Clean Air Act (“CAA”) provides
the EPA with independent authority to enforce federally
approved air pollution control laws. Section 110 of the Act, 42
U.S.C. § 7410 (Section 7410), requires among other things that
each state submit rules for emission limitations to be
" [So in original and throughout remainder of opinion. The actual number
of the rule is 1113.]
6a
incorporated into the SIP, and enforced as federal law by the
EPA. See 42 U.S.C. § 7413.
3. In 1985, the U.S. Environmental Protection Agency
(“EPA”), pursuant to the CAA, approved SCAQMD Rule 113
and SDCAPCD Rule 67.0 as part of the SIP for California, to
be enforced as federal law. 50 Fed. Reg. 3338 (January 24,
1985).
4. Vista’s president was aware of these rules and their
purpose in the time period between 1985 to 1987, to control
VOC emissions. Vista was both a long-time manufacturer and
seller of non-compliant coatings, having produced its “Trim-
Kote” and “Proformer” brands with VOC’s in excess of 250 g/1
for over ten years. Vista offered these non-compliant coatings
for sale for the five-year period preceding February 1987.
5. EPA met with industry trade associations in 1987,
including the National Paint & Coatings Association and the
Southern California Paint & Coatings Association, regarding its
strategy for taking enforcement action against companies
violating the 1985 VOC limitations set by law. EPA informed
the industry that it would, as a matter of enforcement
discretion, prioritize enforcement against those companies that
did not cease the manufacture of non-compliant coatings by
July 1, 1987, and who did not cease their sale of non- compliant
coatings by September 1, 1987. Thus, while EPA retained the
discretion to prosecute any company that violated the VOC
limitation after January 24, 1985, EPA announced that those
companies that persisted longest in their continuing violations
of the Clean Air Act would be the first to be prosecuted.
6. On March 19, 1987, in order to determine the
compliance status of the paint industry with the VOC
limitations of federal law, EPA issued a request for information
to a number of paint manufacturers, including Vista, pursuant
to Section 114 of the CAA, 42 U.S.C. § 7414 (“Section 114
7a
Request”). EPA required that each company report the volume
of each non-architectural coating that it manufactured from
February to May 1987, and the VOC content of each coating.
Each company was given until April 7, 1987, to submit their
first reports, and warned that non-compliance would subject
them to civil penalties.
7. Vista did not respond to EPA’s March 19, 1987 request.
Vista’s president cannot recall why Vista did not respond.
Faced with Vista’s recalcitrance, EPA subsequently issued an
Administrative Order against Vista pursuant to Section
113(a)(3) of the CAA, finding that Vista had violated Section
114 of the CAA in failing to provide the requested information
to EPA. 42 U.S.C. §§ 7413(A)(3)[], 7414. Per its Order, EPA
directed Vista to disclose by no later than April 16, 1987, the
VOC content of the architectural coatings that it manufactured
or distributed from February through May 1987.
8. Vista only partially complied with EPA’s
Administrative Order, responding in a letter postmarked April
20, 1987, by disclosing the VOC content of the architectural
coatings it manufactured in February and March 1987 only.
Vista’s letter disclosed that its monthly paint production was
approximately 25,000 gallons of coatings, with 55 percent by
volume of the identified coatings exceeding the 250 g/l VOC
limitation of federal law. Vista did not respond to EPA’s Order
regarding its coatings manufactured in April and May 1987,
and did not provide the requested information.
9. EPA subsequently sought more specific information
from the paint manufacturers regarding the trade name, volume
and VOC content of each non-compliant coating sold in each
California air quality district in March, April and May 1987.
On May 15, 1987, EPA sent Vista a modified request for more
* [So in original.]
8a
specific information to supplant its initial request for
information. Alternatively, EPA specified that the paint
manufacturer could stipulate that it sold and/or offered for sale
coatings in violation of the 250 g/l VOC limitation, and the
month and location where the non-compliant paint was sold.
Vista was advised that a failure to provide the requested
information would subject Vista to an enforcement action for
civil penalties of $25,000 per day of violation.
10. Vista responded by a letter dated June 12, 1987.
Without disclosing the months in which it sold non-compliant
coatings, Vista admitted to selling non-compliant coatings in
the SCAQMD and the SDCAPCD. Vista’s president also
confirmed Vista’s prior admissions in his sworn deposition
testimony. Yet the information regarding the volume of each
such non-compliant Vista coating sold and the location of their
sale was available to Vista in March, April and May of 1987.
11. Based upon Vista’s admission, EPA issued a Notice of
Violation to Vista on June 19, 1987, pursuant to Section
113(a)(1) of the CAA.
12. EPA, in its continuing effort to compel Vista to comply
with the law, sent Vista a second Section 114 request on June
19, 1987, requesting documentation of any quantities of Vista
non-compliant coatings manufactured and sold in the
subsequent July-October 1987 period. This request required
Vista to (1) establish and maintain records regarding their non-
compliant coatings; (2) report the volume of non-compliant
coatings sold in August through October 1987 and their
location of sale; (3) report the name and VOC content of the
coatings sold; and (4) report the identity of coatings
manufactured by Vista from July through October 1987.
13. The information requested by EPA’s June 19, 1987,
Section 114 request was available to Vista at the time of EPA’s
:.
oe
4
3
9a
request. EPA again warned Vista at that time of the $25,000
per day penalty if the requested information was not received.
14. In an effort to further accommodate the paint industry
and Vista, EPA by its letter dated July 22, 1987, modified its
second Section 114 request with a strictly tailored condition.
In this letter, EPA stipulated that if Vista would commit to (1)
the cessation of the manufacture of non-compliant coatings by
July 1, 1987, (2) the cessation of all sales of non-compliant
coatings by September 1, 1987 (a condition never fulfilled by
Vista, see below), and (3) disclose the time and location of
sales of non-compliant paint in August 1987 (another condition
never fulfilled by Vista), that Vista would be relieved of its
obligation to provide the other information requested by EPA
in its prior June 1987 letter. Vista was still required to
maintain all relevant records of its manufacture and sale of non-
compliant coatings. EPA was explicit, however, that all
conditions must be strictly complied with if Vista was to be
relieved of any of its reporting obligations.
15. Vista continued to manufacture, sell and offer for sale
its non-compliant coatings throughout April to October 1987,
but did not provide any reports to EPA. Vista continued to
manufacture non-compliant coatings in April, May and June of
1987, and continued to sell and offer for sale its non-compliant
coatings in the Los Angeles and San Diego areas throughout
June, July, August and September 1987. Although Vista
continued to sell non-compliant coatings, Vista submitted no
report of its August sales as requested in EPA’s July 22, 1987,
letter and no report as required by EPA’s June 19, 1987, letter.
EPA, per the CAA Section 113, 42 U.S.C. § 7413, gave notice
to the appropriate state air pollution control agency of this
enforcement action.
16. On August 19, 1987, Vista’s president, Eddie R.
Fischer, telephoned William Wruble of EPA Region IX to ask
for more time to sell his non-compliant coatings. After
10a
discussing Vista’s situation, Mr. Fischer stated that “he had no
choice but to sell the [non-compliant] paint past September 1,
and was planning to do so.” Mr. Fischer then stated that “he
would (could) litigate if he had to, since the option was to go
out of business.”
17. Mr. Wruble denied Vista’s request for additional time
to sell its non-compliant coatings, and explained that Vista’s
failure to take EPA’s enforcement authority seriously was not
a reason to grant it additional time to sell non-compliant
coatings. Mr. Fischer then said that he “didn’t think it was our
[EPA’s] intention to put him in jail, although he’d be willing to
pay a ‘reasonable’ fine to be able to continue to sell his
violating coatings.”
18. Vista was also warned by the local SDCAPCD to cease
its sale of non-compliant coatings by September 1, 1987, a
warning Vista received at least by July 28, 1987. Vista,
however, continued to sell non-compliant coatings throughout
September 1987. Vista admits that such non-compliant
coatings remained offered for sale throughout Vista’s San
Diego stores in September 1987. Vista also continued its
refusal to respond to EPA’s request for information.
19. Further evidence that Vista sold non-compliant coatings
after September 1, 1987, is provided where inspectors from the
SDCAPCD purchased the Vista-brand “Trim-Kote” coating, a
non-compliant coating, from Vista’s retail outlet on Kearney
Villa Road in San Diego, California, on September 2, 1987.
The SDCAPCD’s laboratory analysis revealed that the
purchased paint had a VOC concentration of 387 g/l, well
above the permissible 250 g/l permitted by SDCAPCD Rule
67.
20. The SDCAPCD inspectors purchased a second gallon
of non-compliant coating, a Vista paint under the brand name
“Proformer,” from the same Vista San Diego store on
lla
September 22, 1987. The SDCAPCD laboratory analysis
revealed that the purchased paint had a VOC concentration of
381 g/l, well above the permissible 250 g/l permitted by
SDCAPCD Rule 67.
21. Both Vista’s records and its president corroborate these
violations. Vista’s April 16, 1987, report to EPA identifies that
its “Trim-Kote” and “Proformer” paints as non-compliant
coatings, have a VOC concentration of 340 and 380 g/l,
respectively. Vista’s president confirmed that Vista’s “Trim-
Kote” and “Proformer” paints purchased by the SDCAPCD
inspectors would be expected to have VOC concentrations in
excess of 250 g/l. Mr. Fischer further admits that non-
compliant coatings were sold in San Diego on September 2,
1987. Based upon these illegal sales, the SDCAPCD cited
Vista with two misdemeanor Notices of Violation for its
violations of SDCAPCD Rule 67. Cal. Health & Safety Code
§ 42400.
22. Faced in September 1987 with enforcement action from
the SDCAPCD (EPA had not yet taken its enforcement action
against Vista), Vista sought a variance from the SDCAPCD
Hearing Board.
23. As background, the variance procedure is a creation of
the California Health & Safety Code §§ 42350 et seq., and
provides the applicant with a procedure to obtain relief from a
local rule (not a federal rule) under certain strictly limited
conditions. Cal. Health & Safety Code § 42350. In part, an
applicant cannot obtain a variance unless the applicant attests
that it “is, or will be, in violation of Section 41701 or of any
rule, regulation, or order of the district.” Cal. Health & Safety
Code § 42352(a). Thus, by applying for a variance, Vista
further admitted that it was in violation of SDCAPCD Rule 67
and/or its intent to violate that rule for the express purpose of
selling the remainder of Vista’s non-compliant paints within
the next 90 days.
12a
24. Vista was subsequently unable to persuade a majority
of the SDCAPCD Hearing Board at its September 24, 1987,
hearing that a variance was warranted, and Vista obtained no
variance relief at any time from the SDCAPCD. Vista applied
to the SDCAPCD Hearing Board for reconsideration, then
dropped its request. Vista represented instead that it had
removed its non-compliant paint from its San Diego stores as
of October 12, 1987, but after the September 24, 1987, variance
hearing. Vista’s president explains that he removed the non-
compliant coating from his San Diego stores because those
coatings were not selling well. Vista subsequently paid a fine
to the SDCAPCD for its violations of their local rules.
25. The VOC’s emitted by Vista’s paint are a primary
precursor of ozone, or smog, which the EPA has designated as
a major air pollutant. 42 U.S.C. §§ 7408, 7450, 7451; 40
C.F.R. F9{"] 50.1, 50.9. The 13,000 gallons of coating offered
for sale in September 1987 in San Diego by Vista would release
approximately eight tons of VOC hydrocarbons.
26. Ozone pollution causes serious adverse health effects,
including coughing, reduced lung capacity, respiratory infection
and possible permanent lung damage. There is also evidence
that the young, the elderly, and those persons with respiratory
ailments (such as asthmatics) are among those who are
particularly susceptible to the adverse effects of ozone. At
certain concentration levels, ozone irritates the respiratory
system and causes coughing, wheezing, chest tightness and
headaches. Due to its irritation nature, ozone can aggravate
asthma, bronchitis and emphysema. Some studies indicate that
chronic exposure to fairly low levels of ozone may reduce
resistance to infection and alter blood chemistry or
chromosome structure. At higher concentrations [of ozone],
hospitalization becomes a possibility.
" [So in original.]
13a
27. Ozone also causes significant damage to the
environment, where ozone can destroy vegetation, reduce crop
yield, and damage exposed materials by causing cracking,
fading and weathering. Moreover, clear evidence shows that
ozone damages economically, ecologically and aesthetically
important plants. When exposed to ozone, major annual crops
produce reduced yields. Some tree species suffer injury to
needles or leaves, lowered productivity and, in severe cases.
individual trees can die.
28. EPA has through the federal Clean Air Act attempted to
control and regulate VOC emissions from a variety of sources,
including paint manufacturers. In 1987, EPA found that 40
paint companies, including Vista, were in violation of the
federal CAA’s limitation on VOC concentrations in their
coatings. All 40 paint companies received a Notice of
Violation, and 38 announced their intent to cease non-
compliant paint sales. Only one company announced its intent
to continue to violate the VOC restrictions, to intentionally
violate the law despite repeated warnings from the regulatory
agencies, and to disregard the effects of its violations on human
health and the environment: that company was Vista.
29. After EPA referred this matter to the U.S. Justice
Department for enforcement action, Vista for the first time
produced a letter it purportedly prepared on or about August 4,
1987, and sent to EPA, that represented that Vista had ceased
its manufacture of non-compliant coatings on June 30, 1987,
and “will not offer for sale any non-compliant coatings after
September 1, 1987.”
30. This representation has in fact proven to be false.
Vista’s president admits that sales of such coatings continued
well after September 1, 1987. In addition, there is no copy of
the letter in EPA’s files or any other indication that it was
received by EPA prior to the date it was produced to the U.S.
Department of Justice in 1989. Vista’s president testified that
l4a
he cannot recall ever seeing the purported Vista August 4,
1987, letter before 1989, when it was first produced to the U.S.
Department of Justice.
31. Vista appears to have had no intention of ceasing its
sale of non-compliant coatings in August 1987, where Vista’s
president announced to EPA at precisely the same time that
Vista would continue its sales of non-compliant paint after
September 1, 1987, and Vista in fact did so. Vista’s president
said that Vista would go bankrupt if it could not sell its non-
compliant paint, a statement that again cannot be reconciled
with Vista’s purported August 1987 letter.
32. The United States propounded interrogatories and
requests for production of documents on May 1, 1991, seeking
this identical information requested by EPA in 1987. Vista
responded with groundless objections with no legal basis, and
flatly refused to provide the information or produce the relevant
documents. The United States then brought a motion to compel
Vista to comply with its discovery requests. As a result, this
Court ordered that Vista (1) specifically identify by September
27, 1991, the quantity of its non-compliant coatings
manufactured and sold in 1987, and (2) produce the requested
documents at the U.S. Attorney’s Office by no later than
October 25, 1991, again mirroring the information requested by
EPA in 1987.
33. Vista did not identify its non-compliant coatings with
a verified response per this Court’s Order, and as required by
Section 114 of the CAA, but instead directed the United States
to look through unidentified documents at its warehouse.
Moreover, Vista has refused to make those documents available
for inspection until October 25, 1991.
34. Vista has already provided its sworn response stating
unequivocally that no documents exist regarding its sale or
offer for sale of non-compliant coatings prior to August 30,
lSa
1987. See Vista’s “Supplemental” Responses No. 2 and 3.
This unexplained disappearance of Vista’s documents is
directly contrary to EPA’s Section 114 requirement that Vista
retain those documents.
35. Vista’s sworn responses to the United States’ Requests
for Admission (“RFA”) cannot be reconciled with the
deposition testimony of Vista’s president, where he admits
precisely the same facts that Vista denies in its RFA responses.
For example, Vista’s president admits that he knew that Vista
was selling non-compliant coatings in September 1987.
Fischer Depo. p. 188. But see Vista RFA No. 27. There are
numerous other examples. See Vista RFA Nos. 1, 2, 3, 5, 6 and
7. See especially Vista’s evasive response to RFA No. 13 and
14.
B. Memorandum of the Ninth Circuit Court of Appeals
(Court of Appeals).
The following Findings of Fact are conclusively established
by the Memorandum in United States v. Vista Paint Corp., No.
92-55160 (9th Cir., Sept. 24, 1992) (“Memorandum”), and the
“1/3/94 Court Order.”
1. Vista had ample opportunity to submit comments on the
inclusion of the local rules in the California State
Implementation Plan (“SIP”) pursuant to Section 307(d) of the
CAA, and to challenge EPA’s approval of the inclusion of
those rules in the SIP pursuant to Section 307(b)(1) of the
CAA.
2. Vista admits that it did not halt the sale of non-
complying paint by September 1, 1987.
3. Vista was manufacturing, selling and offering for sale
non-complying coatings in 1985, when the volatile organic
compounds (“VOC”) limit became effective.
l6a
4. In June 1987, Vista told EPA that it was selling non-
complying paint in the SCAQMD and the SDCAPCD.
5. Vista’s president, Eddie Fischer, admitted that Vista had
been violating the rules since 1985 and was doing so before and
after September 1, 1987.
6. Vista also admitted that these violations in the
SDCAPCD continued until October 12, 1987.
7. Fischer expressly testified in his deposition that non-
complying paint was offered for sale after September 1, 1987,
in San Diego.
8. EPA’s second information request required Vista to
establish and maintain certain records and to submit certain
reports. Vista’s president admitted that the kind of information
EPA sought was available when EPA requested it.
9. If Vista had stopped offering for sale and selling non-
complying paint by September 1, 1987, it would have been
relieved of some of the requirements in this request. However,
Vista continued to sell such paint after September 1, 1987.
Vista’s president understood that the requirements of the
second request were waived only if Vista stopped selling non-
complying paint by September 1, 1987. Although Vista
admittedly continued to sell non-complying paint after
September 1, 1987, it never provided the information requested
by EPA.
10. Vista [has a] history of full compliance.
11. The duration of violation [is settled].
12. SDCAPCD previously assessed a $500 penalty.
17a
13. The $500 Vista paid to the SDCAPCD [was] on a fine
originally set at $2,000.
14. Vista obtained a “significant economic benefit” that
supported a “substantial penalty.”
15. Vista has improperly failed to disclose information
which it has or had in its exclusive possession to assess the
precise economic benefit to it due to its illegal offer for sale and
sale of non-compliant coatings.
16. Vista failed to submit admissible evidence to controvert
the U.S.A.’s showing of Vista’s significant economic benefit.
17. EPA’s ability to gather information on potential
violations is vital to enforcement of the CAA. It is irrelevant
that no ozone was formed from Vista’s failure to supply the
information.
18. Vista’s president was told by EPA and the San Diego
District that, if it did not stop selling non-complying paint by
September 1, 1987, enforcement would follow. There was
nothing unusual or perplexing in these instructions to Vista.
C. Findings of Fact After Trial.
The following Findings of Fact are established by the
evidence at the trial on certain remanded civil penalty issues.
1. Vista isa company whose primary operation consists of
manufacturing and selling at retail paint and paint products. It
is the largest manufacturer, distributor and retail seller of paint
in Orange County, California. Vista manufactures
approximately 25,000 gallons of paint each month for sale at its
stores in California. It has 28 retail locations in Southern
California, including San Diego County. Its total sales in 1990,
1991 and 1992 exceeded $44,000,000 in each year, and its total
18a
sales in 1993 approximated $47,000,000. Its general office and
sole paint manufacturing plant are located in Fullerton,
California. It has 400 employees.
2. In 1994, Vista’s net worth was approximately
$12,000,000 and its net current assets were approximately
$8,553,000.
3. Eddie Fischer is the sole owner and president of Vista.
Mr. Fischer has ultimate control of all operational, financial
and managerial decisions of Vista. Vista is a Subchapter S
corporation for federal tax purposes, which causes all taxable
income of Vista to be allocated to Mr. Fischer and is taxed at
the appropriate individual tax rates.
4. For the years following the filing of this lawsuit for
which Vista has filed income tax returns, Vista’s gross profits
have remained relatively steady: $20,063,000 for 1990;
$19,543,000 for 1991; and $19,596,000 for 1992. Because of
certain transactions between Vista and Mr. Eddie Fischer, its
sole equity owner, Vista’s reportable net income since this
lawsuit was filed has been drastically reduced: $2,241,000 in
1990; $582,000 in 1991; and a net loss of $464,000 in 1992.
5. By reason of certain transactions between Vista and Mr.
Eddie Fischer, the total shareholder equity in Vista is $2.9
million.
6. However, Vista’s purported financial condition of only
$2.9 million in stockholder equity has not precluded Vista’s
ability to obtain a $3 million dollar letter of credit from Bank
of America posted with the District Court. See Vista’s motion
for release of Rule 62(d) security, filed on March 2, 1993. In
its financial analysis of Vista, exhibit 107, Bank of America
partly concludes at page 2 that Vista lowered its retained equity
because of the instant action:
19a
“In June 1991, Mr. Fischer was advised that it would be
advantageous for him to withdraw $7,950M in retained
earnings from Vista. This represented the Sub chapter S
earnings upon which he has paid income taxes, since
Vista became a Sub S corp. in 1986. This amount was
lent to the company and subordinated to the Bank. This
accounting action was also taken to lower the retained
earnings because of the EPA suit.” (Emphasis added).
7. On March 10, 1992, Vista posted with this Court a
Standby Letter of Credit from Bank of America in the amount
of $3,176,723 to secure the summary judgment in the amount
of $3,020,000 entered against Vista by Judge Real.
8. Bank of America concluded that Vista is easily capable
of financing a $3.02 million dollar judgment against it:
“Judge Manuel Real of the US District Court imposed a
$3MM fine . . . even if the total fine would be levied Vista
Paint could put together the financing to repay the fine
over a relatively short period of time.”
9. The Court of Appeals on page 10 of its Memorandum
discussed the seriousness of the violation factor as one of the
seven criteria provided in 42 U.S.C. 7413(e) for consideration
by the Court in determining the amount of penalty to be
assessed. It stated that as to the application of that factor to the
Section 110 violation (selling or offering for sale in violation
of SIP) there was a triable issue of material fact regarding how
many gallons of non-compliant coatings Vista was offering for
sale during September 1987 in San Diego County. The Court
finds that Vista offered for sale at least 13,000 gallons of non-
compliant coatings in San Diego in September 1987. It also
finds that Vista sold at least 70 gallons of non-compliant
coatings in San Diego during the period September 1, 1987 to
October 12, 1987.
20a
10. In August 1985, SCAQMD amended Rule 1113 to
extend to 1989 California paint companies’ ability to sell non-
compliant paint up to 380 g/1 VOC. SCAQMD’s decision was
known to Vista.
11. In January 1986, SDCAPCD amended its Rule 67.0 to
extend to September 1, 1986, California paint companies’
ability to sell non-compliant paint up to 380 g/l VOC in San
Diego. SDCAPCD’s decision was known to Vista.
12. Both districts subsequently submitted their new time
extension revisions to EPA as revisions to the federal SIP.
These proposed revisions to extend the time for compliance
with their local rules which imposed a 250 g/l VOC deadline
under state law, did not constitute federal law.
13. The SDCAPCD revision proposed to extend the
deadline for compliance with the 250 g/l VOC limitation to
September 1, 1986. The revision was submitted to the
California Air Resources Board (“CARB”), then to EPA on
August 12, 1986, with less than one month remaining before
September 1, 1986, when the proposed local rule extension
would expire by its own terms. Because of the short time
remaining before it became a moot proposal, EPA did not act
on SDCAPCD’s proposed extension of the federal SIP as to
non-compliant coatings. At all times, the federal SIP remained
in effect and required compliance with the 250 g/l VOC
limitation by all members of the coatings industry, including
Vista.
14. The SCAQMD proposed revision to Rule 1113 was
submitted to EPA and formally disapproved by EPA in 1989.
See 54 Fed. Reg. 5236 (February 2, 1989).
15. Vista’s violations continued in both the SCAQMD and
the SDCAPCD (in violation of the SDCAPCD rule) throughout
1986 and a portion of 1987, in violation of the federal SIP.
eee
2la
16. The Court finds that the August 4, 1987, letter by Vista,
addressed to EPA (Exhibit 13) as a response to EPA’s
information request of July 22, 1987 (Exhibit 12), was not sent
or delivered to EPA.
To the extent that any of the foregoing Findings of Fact are
deemed to be Conclusions of Law, they are incorporated into
the following Conclusions of Law stated in II.B below.
IT.
CONCLUSIONS OF LAW
A. The following Conclusions of Law are the law of the case
by reason of the Conclusions of Law made in the Amended
Findings and the 1/3/94 Court Order.
1. Vista illegally offered for sale and sold non-compliant
coatings with a VOC content in excess of 250 g/l during the
time period between and including December 3, 1985, through
October 12, 1987, in violation of the SIP rules identified as
SCAQMD Rule 1113 and SDCAPCD Rule 67, and continued
to violate those rules more than 30 days after having received
a Notice of Violation from EPA on June 24. 1987.
2. Vista has, therefore, violated Section 110 and 113 of the
Clean Air Act, 42 U.S.C. §§ 7410, 7414, from December 3,
1985, to October 12, 1987, a total of 578 (sic) days of
violations and there being no genuine issue of material fact
remaining, the United States is entitled to summary judgment
thereon.
3. Vista illegally and unreasonably failed to respond to
EPA’s June 19, 1987, request for relevant information in
violation of Sections 113 and 114 of the CAA, 42 U.S.C. §§
7413, 7414, by its failure to (a) establish and maintain records
regarding their non-compliant coatings, (b) report the volume
22a
of non-compliant coatings sold in August through October
1987 and their location of sale; (c) report the name and VOC
content of the coatings sold; and (d) report the identity of
coatings manufactured by Vista from July through October
1987.
4. Vista has, therefore, violated Sections 113 and 114 of
the Clean Air Act from August 26, 1987, to November 18,
1991, a total of 1177 (sic) days of violations and, there being no
genuine issue of material fact remaining, the United States is
entitled to summary judgment thereon.
5. Section 113 of the CAA, 42 U.S.C. § 7413(b), provides
for imposition of a civil penalty against Vista of not more than
$25,000 per day of violation for (1) the sale or offer for sale of
non-compliant VOC paint in violation of CAA Section 110,
and (2) for the failure to respond to EPA’s request for
information in violation of CAA Section 114. 42 U.S.C. §
7413(b)(2), (4). For purposes of computing the appropriate civil
penalty, the penalty period begins when the source first
commits the violation and not later when the NOV is issued.
This Court will first determine the maximum penalty allowable
and then consider any mitigating circumstances.
6. Vista’s failure to respond to EPA’s request for
information is equally serious. More than four years after the
information was requested by EPA, then by the USS.
Department of Justice in this lawsuit, Vista has not yet
responded to EPA’s request that Vista specify the quantity of
non-compliant paint manufactured and sold in the summer of
1987.
7. There is injury to the public when responsible parties
such as Vista do not respond to official inquiries pertaining to
its Clean Air Act compliance and liability. EPA must expend
a significant portion of its limited monies to prosecute these
actions, and the violator escapes effective regulation of its
L
23a
pollution by hiding its violation and challenging EPA to find
the information on its own, if it can. Where the regulatory
program is designed to protect public health, as with the Clean
Air Act, it is even more important to deter violators.
B. The Conclusions of Law stated in IIA above, and are
applicable to all of the foregoing F indings of Facts.
1. Jurisdiction and Venue.
a. This Court has subject matter jurisdiction over
this action pursuant to Section 1 13(b) of the CAA, 42 U.S.C.
§ 7413(b) and 28 U.S.C. §§ 1331, 1345 and 1355, and personal
jurisdiction over the parties.
b. Venue in this district is proper pursuant 42
U.S.C. 7413 and 28 U.S.C. § 1391(c).
c. Vista is a corporation covered by the CAA, 42
U.S.C. § 7602(e).
d. EPA satisfied the requirement that notice of this
action be given to the proper state air pollution control agency
pursuant to the CAA, 42 U.S.C. 5.7413(b).["]
2. Generally Applicable Law Regarding Issues Remanded
For Trial.
a. The penalty criteria are set forth in CAA Section
113(e)(1), 42 U.S.C. § 7413(e)(1) (Section 7413(e)(1). In
assessing civil penalties, CAA Section 1 13(e)(1) provides that
the Court shall consider the following factors: (1) the size of
the business and the economic impact of the penalty on the
business; (2) the seriousness of the violation; (3) the violator’s
" [So in original.]
——
24a
full compliance history; (4) good faith efforts to comply; (5)
the duration of the violation as established by any credible
evidence; (6) payment by the violator of penalties previously
assessed for the same violation; (7) the economic benefit of
noncompliance, and such other factors as justice may require.
b. Neither statutory nor case law (which the Court
could find) dictates that the Court in weighing such factors
must give more weight to any one factor than to any of the
other factors.
C. Under Section 7413(e), civil penalties are
awardable for violations of Sections 7410 and 7414 on days
which precede the date a Notice of Violation is served by EPA
on the violator. U.S. v. SCM Corp., 667 Fed. Supp. 1110,
1122-1123 (D. Md.1987).
d. The general purposes of a civil penalty are three
fold: (1) retribution, (2) deterrence, and (3) restitution. Tull v.
US., 481 U.S. 412, 422 (1987).
e. In determining the civil penalty, the Court
“should give effect to the major purpose of a civil penalty:
deterrence.” United States v. T & S Brass and Bronze Works
Inc., 681 F. Supp. 314, 322 (D.S.C. 1988), affd. in relevant
part, 865 F.2d 1261 (4th Cir.1988), 28 ERC, 19 Envtl. L. Rep.
20, 857.
f. The Court of Appeals in its Memorandum
remanded this action for trial only as to the application of
certain Section 7413(e)(1) factors and then for a determination
of the civil penalty under Section 7413(b).
3. Penalty Factors Remanded For Trial.
The following three statutory penalty factors were remanded
for trial: (1) economic impact/size of business; (2) good-faith
25a
efforts to comply; and (3) seriousness of violation. In addition,
the interest of justice non-statutory factor of government delay
remained as an unresolved issue of fact.
a. Size Of Business/Economic Impact.
Regarding the Court’s consideration of the first two criteria
of Section 7413(e)(1): size of the business and the economic
impact of civil penalties on Vista’s business (sometimes
characterized collectively as the “ability to pay’’), the Court,
based on the facts and applicable law, considers them
inextricably interrelated in their application to Vista.
Vista is an expanding business with increasing annual gross
sales revenues in the range of 45 to 47 million dollars annually.
It has a healthy financial structure with considerable assets and
net worth, annual net income (see Findings of Fact I C 1 and 2
above). Its earning capacity and borrowing capacity are such
that the total civil penalties the Court adjudicates against it in
this case will not undermine its financial structure and place it
in jeopardy of “going out-of-business.” Vista is capable of
paying the penalties which will be ordered by the Court. The
Court concludes that those two factors do not support a non
substantial civil penalty.'
b. Vista’s Good Faith Efforts To Comply.
(i) Section 7410 Violations.
Although Vista had received on June 24, 1987, a Notice of
Violation from EPA regarding sales of non-compliant coatings
in violation of the architectural coatings rules contained in the
California federally approved State Implementation Plan
' This conclusion is made notwithstanding certain financial transactions
since 1990 between Vista and Mr. Eddie Fischer which cause Vista to
appear on financial statements to be less financially stable than it is.
26a
(“SIP”) (Exhibit 10), it proceeded to sell such non-compliant
coatings into November 1987. Vista’s president admitted that
in September 1987, it offered for sale in San Diego County
13,000 gallons of such coatings and sold 35 to 70 gallons of
those coatings in that county.
Vista knowingly and intentionally violated federal law from
at least December 3, 1985, to October 12, 1987, ignoring
during that period repeated warnings by EPA and the June 1987
Notice of Violation. Vista made a considered decision to offer
to sell and sell non-compliant coatings in violation of Section
7310 and risk penalties rather than obey the law.
During this time period, Vista knew of the federal law
regulating the VOC content of its coatings and prohibiting its
offering for sale and selling non-compliant coatings.
(ii) Section 7414 Violations.
Vista made no real good faith effort to comply with Section
7414 and respond to EPA’s information requests. It did not
respond to the March 19, 1987, request. Vista submitted
incomplete responses to EPA’s April 20, 1987, administrative
order and transmitted inadequate responses to EPA’s
information requests of June 19, 1987, and July 22, 1987, in
part by not providing the required reports. Vista never
responded to those portions of the information requests asking
for specific quantities of non-compliant paint manufactured and
sold in the summer of 1987.
Vista advised the EPA that it would litigate if it had to and
would continue to sell its non-compliant coatings regardless of
the law, even if it had to pay a “reasonable” fine for doing so.
The Court of Appeals at page 7 of its Memorandum pointed
to Mr. Fischer’s statement that Vista’s employees spent three
days attempting to compile the information sought by EPA’s
|
27a
Section 114 information request and this is evidence of good
faith. In fact, the documents which Vista’s employees
purportedly used to compile the information sought by EPA are
Vista’s sales receipts and such were inspected by the United
States. But, these receipts were not responsive to the
information requested.
Vista’s corporate state of mind was to engage in a pattern of
continued non-cooperation with Vista’s enforcement efforts by
withholding the documentation of its violations or by providing
incomplete information regarding such while it continued to
sell and offer to sell non-compliant coatings after the Notice of
Violation. The Court concludes that such non good faith
conduct supports a substantial penalty.
c. Seriousness of Vista’s Violations.
(i) Section 7410 Violations.
The unlawful emissions of VOC’s into the atmosphere of the
SCAQMD and SDCAPCD from the application of non-
compliant coatings sold by Vista between 1985 and 1987,
estimated to be 13 tons per month, exacerbated the ozone
problem in both districts. This calculation is based on an
estimate of Vista’s sale of 11,300 gallons of such coatings each
month. The government was not able to ascertain the actual
amount because Vista failed to comply with EPA’s information
requests for the actual volumes of such coatings sold or offered
for sale during that period.
Findings of Facts I A 25 through 27 above describe the
effects of ozone on human health and the environment. Vista’s
non-compliant coatings as sold and applied by its customers,
contributed appreciably to the ozone content in the two
districts. If Vista had complied with Section 7410, there would
have been a major reduction in atmospheric pollutants in
SCAQMD and SDCAPCD.
28a
Based on the uncontradicted testimony of doctors C. Shepard
Burton, Ph.d.["], and Jack D. Hackney, M.D., the VOC
emissions from the application of Vista’s non-compliant
coatings, however, would have no measurable negative impact
on human health and the environment of the SCAQMD and
SDCAPCD. Therefore, the seriousness of Vista’s 7410
violations support a moderate penalty.
(ii) Section 7414 Violations.
Based on Conclusion of Law II A 7 above, and CAA’s
statutory scheme which makes its effectiveness depend in large
part on the members of the regulated industries maintaining and
keeping required records of their operations and then
submitting complete, accurate and timely reports regarding
such to EPA when requested, the seriousness of the 7314
violations supports a moderate to substantial penalty.
d. Government Delay As An Interest of Justice
Mitigating Factor.
(i) | EPA Delays In Reviewing Proposed SIP
The period of time consumed by EPA in reviewing and
making its decision on the proposed revisions by SCAQMD
and SDCAPCD to extend the time to comply with SIP as to
manufacturing, offering to sell and selling non-compliant
coatings was not unreasonable. See General Motors Corp. v.
US., 496 U.S. 530, 541 n. 4, 110 L. Ed.2d 480, 110 S. Ct. 2528
(1990).
As to the proposed revision to Rule 113, SCAQMD
submitted it to EPA on November 12, 1985, and it was
" [So in original.]
29a
disapproved on February 2, 1989. In the period 1985 through
1989, EPA’s delay in processing and acting on proposed
revisions to SIP by local districts was attributable to statutory
ambiguities, policy issues not resolved on a national basis,
adverse court decisions affecting EPA’s ability to process
certain types of revisions and lack of resources. (See deposition
testimony of Mr. Howekamp).
Another important factor was whether the proposed revision
was controversial. The proposed revision to Rule 113 was very
controversial because it provided for a four year relaxation
period before it became effective. Many issues regarding this
proposed revision were being discussed in the coatings industry
and in the governmental agencies having regulatory authority
over pollutants emitted into the atmosphere. Further, the
SCAQMD had not provided enough information to support its
request. Consequently, EPA had to do its own investigative
work to clarify some of these issues. This slowed down the
review process. (See deposition testimony of Mr. John
Ungvarsky.) Additionally, as required by law, EPA submitted
the proposed Rule 113 revision and its recommended
disapproval to the Office of Management and Budget (“OMB”)
on December 12, 1986, and OMB did not report its concurrence
until May 14, 1988.
Regarding SDCAPCD’s proposed revision to Rule 67.0.
there was no unreasonable delay by EPA in reviewing it. The
revision was submitted to EPA on August 12, 1986. Because
the revision became moot less than one month after it was
submitted to EPA, EPA did not act on it.
In any event, even if there were unreasonable delays in
acting on the proposed rule revisions, Vista was not prejudiced
by them because Vista violated federal law before and after the
rule revisions were submitted to EPA. Vista’s violations
continued in both the SCAQMD and the SDCAPCD (in
violation of the SDCAPCD rule) throughout 1986 and 1987.
30a
The effect of the local rule relaxation in the SCAQMD had no
effect on Vista’s violations of federal law in the SCAQMD by
virtue of 42 U.S.C. § 7416, and no effect on Vista’s violations
of both federal and local law in the SDCAPCD.
Further, Vista was aware as early as 1985 that EPA was not
inclined to allow the extensions as proposed by the districts.
Therefore, having concluded that the delays by EPA in
reviewing the proposed SIP revisions were reasonable, such
delays do not mitigate the amount of the civil penalties to be
imposed.
(ii) EPA/Department of Justice (DOS") Delay In Initiating
EPA’s delay in taking enforcement action against Vista for
its Sections 7410 violations during the period 1985 to October
12, 1987, was reasonable because during that period EPA was
collecting and evaluating a great amount of information,
including input from the coatings industry, and was engaged in
lengthy discussions with the local districts regarding
enforcement policy. Only in the Fall of 1987, did EPA refer the
matter to the Department of Justice for prosecutorial
consideration. Such delay caused no prejudice to Vista. See
Conclusions in II 3 d(i) above.
As to the Section 7414 violations, the prosecutorial delay
was unreasonable from June 21, 1989 through January 18,
1991. On June 21, 1989, the EPA and DOJ announced in a
press release that on that date the DOJ was going to file a civil
penalty enforcement action against Vista in U.S. District Court
(Exhibit 638). But, DOJ did not do so until December 5, 1990.
Vista was prejudiced by such delay because from June 21,
1989 to January 18, 1991, DOJ knew that Vista was
maintaining the legal position that it had complied with Section
7314 by timely and complete responses to EPA’s information
3la
requests. See the letter from Joseph J. Armao, Vista’s attorney,
to Gerald F. George, attorney, Enforcement Section.
Department of Justice. Such delay supports a moderate
reduction in the penalty for the period June 21. 1989 to January
18, 1991.
4. Penalty Factors Not Remanded F or Trial.
a. Vista’s Full Compliance History.
Although Vista had no history of non-compliance with the
CAA before its violations of Sections 7410 and 7414, the
extent and degree of such knowing and intentional violations
demonstrate a history of non-full compliance. The application
of this factor supports a substantial penalty.
b. Duration of Vista’s Violations.
Vista’s violations of Sections 7410 and/or 7414 spanned a
period of almost six years. Such duration of violations supports
a substantial penalty.
c. Vista's Payment of Penalties Previously y Assessed For
Vista was assessed by SDCAPCD $2.000.00 in penalties for
two separate sales of non-compliant paints in that district after
September 1, 1987, in violation of its Rule 67.0. Vista paid
only $500.00 towards the fine.
The fact that Vista paid $500.00 as a penalty to
SACAPCD[}] in regards to two sales. which this Court has
found also constitute violations by Vista of Section 7410, is
considered by this Court as a slightly mitigating factor
" [So in original.}
32a
respecting the penalty to be assessed against Vista for violation
of Section 7410.
d. Economic Benefit To Vista From Non-Compliance.
Vista received significant economic benefit from its
violations of Section 7410 by avoiding the cost of eliminating
the sale of non-compliant coatings, including nonsalability of
any inventory of non-compliant paint in stock. It also avoided
the manufacturing and marketing costs of switching certain of
its brands-to a compliant coating status. Although many of
Vista’s competitors also were selling non-compliant coatings
in the SCAQMD and SDCAPCD during the period December
3, 1985 to September 1, 1987, in violation of Section 7410 and,
therefore, Vista had no competitive advantage over them, other
coatings manufacturers and retailers were in compliance. As to
the latter group, Vista derived an economic benefit from its
non-compliance with Section 7410.
Further, Vista’s failure to comply with Section 7414 and
provide the information and records sought by EPA’s
information requests preclude the Court from determining the
actual economic benefit to it from violating Section 74109. The
Court infers from such non-disclosure that the records, which
were in the exclusive possession of Vista, would confirm this
Court’s conclusion that Vista obtained significant economic
benefit from its offering to sell and selling non-compliant
paints during December 3, 1985 to October 12, 1987, in
violation of Section 7410.
The application of this factor supports a substantial penalty.
5. Civil Penalty.
The Court has weighed all those factors in Section
7413(e)(1), as applied to the facts determined after trial and to
a ail
33a
the facts previously adjudicated by Judge Real’s summary
judgment and affirmed by the Court of Appeals. It concludes:
a. Regarding Vista’s Section 7410 violations, the
Court assesses a civil penalty of $500.00 per day for each of
Vista’s 568 days of violations from December 3, 1985, to June
24, 1987 (the date Vista received its Notice of Violation from
EPA),’ and $2500.00 per day for each of Vista’s 110 days of
violation from June 24, 1987, to October 12, 1987. a total of
678 days. The total Section 7410 civil penalty is $559,000.00.
b. Regarding Vista’s Section 7414 violations, the
Court assesses a civil penalty of $500.00 for each of Vista’s
665 days of violations from August 26, 1987, through June 21,
1989 (the date of the EPA/DOJ’s press release), and $250.00
per day for each of Vista’s 879 days of violation from June 21.
1989, through November 18, 1991, a total of 1544 days.’ The
total Section 7414 civil penalty is $552,250.00.
To the extent that any of the foregoing Conclusions of Law
are deemed to be Findings of Fact. they are incorporated into
the Findings of Fact, as stated in I. C above.
DATED: April 16, 1996
/s/ Robert J. Timlin
ROBERT J. TIMLIN
United States District Judge
* Judge Real’s Amended Findings calculated the days covered by such
period to be 468 days.
’ Judge Real’s Amended Findings calculated the total days to be 1177 days.
34a
APPENDIX D
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff,
v.
VISTA PAINT CORPORATION,
Defendant.
VISTA PAINT CORPORATION, Counterclaimant-Appellant,
v.
UNITED STATES OF AMERICA,
Counterdefendant-Appellee.
VISTA PAINT CORPORATION,
Third-Party Plaintiff-Appellant,
V.
ENVIRONMENTAL PROTECTION AGENCY; SOUTH
COAST AIR QUALITY MANAGEMENT DISTRICT; SAN
DIEGO AIR POLLUTION CONTROL DISTRICT; AIR
RESOURCES BOARD; TECHNICAL REVIEW GROUP;
Third-Party Defendants-Appellees.
ieperereeeereeeeeneersenenesesiaineeeetaiiiiaiaiaiiaaal
35a
No. 92-55160.
D.C. No. CV-90-6449-R
MEMORANDUM’
Appeal from the United States District Court for the Central
District of California, No. CV-90-6449-R; Manuel L. Real.
Chief District Judge, Presiding.
Argued and Submitted August 19, 1992
Pasadena, California
Filed September 24, 1992
Before: TANG and HALL, Circuit Judges, and WALKER.”
District Judge.
Vista Paint Corporation (“Vista”) appeals from the district
court’s summary judgment in favor of the government finding
Vista liable for violations of the Clean Air Act (“CAA”) and
awarding the United States (“USA”) civil penalties and
attorneys fees. Vista also appeals the dismissal of its
counterclaims and third-party complaint against the
Environmental Protection Agency (“EPA”), California Air
Resources Board (“ARB”), South Coast Air Quality
Management District (SCAQMD”), and San Diego Air
Pollution Control District (“SDAPCD”).
The district court had jurisdiction over the enforcement
action pursuant to 42 U.S.C. § 7413(b) and 28 U.S.C. §§ 1331,
1345, and 1355. Jurisdiction over the third-party complaint and
counterclaim was disputed. We have jurisdiction over this
' This disposition is not appropriate for publication and may not be cited
to or by the courts of this circuit except as provided by 9th Cir. R. 36-3.
™ The Honorable Vaughn R. Walker, United States District Court Judge for
the Northern District of California. sitting by designation.
}
j
36a
timely appeal pursuant to 28 U.S.C. § 1291. We affirm in part,
reverse in part, and remand this action to the district court.
I,
Vista contends that the district court erred in granting
motions striking certain of Vista’s affirmative defenses and
dismissing Vista’s counterclaims and third-party claims for
want of subject matter jurisdiction and for failure to state a
claim.
A. Invalidity claims and defenses.
As Vista had ample opportunity to submit comments on the
inclusion of the local rules in the California state
implementation plan (“SIP’’) pursuant to section 307(d) of the
CAA, and to challenge EPA’s approval of the inclusion of
those rules in the SIP pursuant to section 307(b)(1) of the CAA,
the district court lacked subject matter jurisdiction over the
third-party complaint, the counterclaim, and the affirmative
defenses dealing with invalidity.
B. Estoppel claims and defenses.
Assuming that there was jurisdiction over the estoppel
claims and defenses, the district court correctly dismissed these
claims and defenses for failure to state a claim. Even if the
EPA had promised not to exercise its enforcement discretion
against those paint manufacturers who ceased sales of non-
complying paint by September 1, 1987, and that promise was
sufficient to estop EPA, Vista admits that it did not halt the sale
of non-complying paint by that date. Accordingly, any
“promise” would be inapplicable to Vista and it could not
37a
prevail on its estoppel theory as a matter of law. Accordingly,
the district court properly dismissed the claims and defenses
based on estoppel for failure to state a claim.
II.
Vista also contends that the district court erred in finding
that Vista violated the CAA by selling or offering for sale non-
complying paint, and by refusing to comply with EPA’s
information request.
A. Paint sale liability.
There was no genuine factual dispute precluding summary
judgment as to Vista’s liability for selling or offering for sale
non-complying paint. Vista was manufacturing, selling and
offering for sale non-complying coatings in 1985 when the
volatile organic compounds (“VOC”) limits became effective.
In June 1987, Vista told EPA that it was selling non-complying
paint in the SCAQMD and the SDAPCD. In his deposition,
Vista’s President, Eddie F ischer, admitted that Vista had been
violating the rules since 1985 and was doing so before and after
September 1, 1987. Vista also admitted that these violations in
the SDAPCD continued until October 12, 1987.
Vista did not raise the issue that the dates of the sales were
not proved for Sundays and holidays until after summary
judgment had been entered. In his declaration in Opposition to
summary judgment, Fischer denied that Vista offered for sale
thousands of gallons of non-complying paint. However.
Fischer expressly testified in his deposition that non-complying
paint was offered for sale after September 1, 1987, in San
Diego. A party may not recant sworn testimony in order to
]
Vista also argues that USA is estopped due to “EPA’s variance
representations.” However, Vista did not raise this argument until its post-
judgment motion. See infra Section IV.
a
38a
defeat a summary judgment motion. Juardo v. Eleven-Fifty
Corp., 813 F.2d 1406, 1410 (9th Cir.1987). Accordingly, as no
issue of fact or law remained, summary judgment as to liability
for non-complying paint sales was proper.
B. Compliance with information request.
There was no genuine factual dispute precluding summary
judgment as to Vista’s liability for refusing to comply with
EPA’s information request. EPA’s second information request
required Vista to establish and maintain certain records and to
submit certain reports. Vista’s President admitted that the kind
of information EPA sought was available when EPA requested
it. If Vista had stopped offering for sale and selling non-
complying paint by September 1, 1987, it would have been
relieved of some of the requirements in this request. However,
Vista continued to sell such paint after September 1, 1987.
Vista’s President understood that the requirements of the
second request were waived only if Vista stopped selling non-
complying paint by September 1, 1987. Although Vista
admittedly continued to sell non-complying paint after
September 1, 1987, it never provided the information requested
by EPA. Accordingly, the court did not err in granting
summary judgment as to liability for Vista’s refusal to comply
with EPA’s information request because no issue of fact or law
remained.”
Ill.
Vista also contends that the district court erred in summarily
awarding civil penalties. Due to the factual nature of many of
the factors the district court was required to consider in
* Vista’s argument that the EPA had no authority to require the sales data
and that it had sufficient cause to act as it did were only raised in its post-
judgment motion. See Section IV.
39a
determining the civil penalty, summary judgment was
improper.
Section 113(e)(1) of the Clean Air Act requires that:
In determining the amount of any penalty to be assessed
under this section . . . the Administrator or the court, as
appropriate, shall take into consideration (in addition to such
other factors as justice may require) the size of the business,
the economic impact of the penalty on the business, the
violator’s full compliance history and good faith efforts to
comply, the duration of the violation as established by any
credible evidence (including evidence other than the
applicable test method), payment by the violator of penalties
previously assessed for the same violation, the economic
benefit of noncompliance, and the seriousness of the
violation.
42 U.S.C. § 7413(e)(1) (1992 Supp).’
A. Section 113(e)(1) factors.
1. economic impact/size of business
In opposition to summary judgment, Vista asserted that there
was a genuine factual dispute as to the economic impact of the
penalty on Vista’s business. The court below specifically noted
in its findings:
Vista is a major manufacturer, distributor and retail seller of
paint with its total sales last year exceeding 50 million
dollars .... Imposition of the penalty assessed below would
’ The 1990 Amendments became effective on November 15, 1990. USA
filed its complaint on December 3. 1990. Accordingly, the Amendments
apply to this case.
40a
amount to approximately six percent of Vista’s sales in a
single year of operation.
In his declaration, Fischer stated that Vista’s overall sales for
fiscal 1991 were about “$45 million and profits were
approximately two million dollars. Since then, sales have been
flat but profits have declined.” In addition, Fischer declared
that “[i]mposition of the fine sought by the government in this
case, would result in the destruction of my business and the loss
of 400 number of jobs [sic] in the Southern California area.”
USA contends that Fischer’s statements did not give the court
any financial information to help the court make its
determination. While Vista presented no business records, tax
returns, affidavits of accountants to controvert the USA claim
that the imposition of the full amount of the penalty would
amount to less than eleven percent of Vista’s sales in one year,
Fischer’s declarations raise a genuine issue of material fact.
Accordingly, the court erred in granting summary judgment as
to this penalty factor.
2. full compliance history
The district court held that despite Vista’s history of full
compliance, a substantial penalty was warranted. As there was
no factual dispute, summary judgment as to this factor was
proper.
3. good faith efforts to comply
In opposition to summary judgment, Vista asserted that there
was a genuine factual dispute as to its state of mind. A court
should be wary of granting summary judgment when good faith
is in question. See White v. Roper, 901 F.2d 1501, 1503-06
(9th Cir.1990); H t l ion Vv.
Rollison, 615 F.2d 788, 793 (9th Cir. 1980). In his declaration,
Fischer stated that Vista made every attempt to cooperate with
the EPA. USA contends that there are no material facts in
4la
dispute regarding good faith. However, the mere fact that Vista
offered for sale and sold non-complying paint after September
1, 1987, does not establish that Vista acted in bad faith. As
there was a genuine issue of material fact. summary judgment
was improper as to this factor.
In addition, the court erred in summarily finding that Vista
acted in bad faith in failing to respond to the information
request. In his declaration, Fischer stated that Vista attempted
at all times to cooperate with the government’s request.
Fischer also stated that three Vista employees spent three days
trying to compile the requested data. There were contested
issues of material fact.’ Vista’s good faith was a question of
fact that should not have been decided on summary judgment.
4. duration of violation
The district court correctly ruled that the duration of
violation supported a substantial penalty. Vista’s argument that
any violation occurred only on the day of the deadline. but did
not continue thereafter, is meritless. The CAA explicitly
provides for penalties for each day that Vista fails to respond to
an information request. 42 U.S.C. § 7413(b) (1992 Supp).
* At summary judgment, Vista argued that the issue of state of mind was
“relevant to the seriousness of any violation.” As good faith is irrelevant as
to the seriousness of the violations, the court correctly refused to consider
good faith under that factor. Vista did not argue that its state of mind was
relevant to its good faith efforts to comply. This error is likely due to the
failure of USA to bring its complaint under the 1990 CAA Amendments.
As good faith is a factor that the district court was required to consider,
summary judgment as to this issue was not proper.
> Vista’s contention that EPA’s “promise” that any deficiencies in Vista’s
responses would excite “immediate” action, and its settlement letter that
told Vista that EPA had “enough information to make a settlement offer,”
led Vista to believe that it had satisfied the information request, was not
raised until the post-judgment motion.
42a
5. payment of penalties previously assessed
SDAPCD previously assessed a $500 penalty. Vista argues
that the court “appears to have given no weight to SDAPCD’s
evaluation of the proper penalty.” This argument is meritless.
The district court was not obligated to accept $500 as the
proper penalty. The district court considered the $500 Vista
paid to the SDAPCD on a fine originally set at $2,000.
6. economic benefit of noncompliance
The district court found that Vista obtained a “significant
economic benefit” that supported a “substantial penalty.”
While there may have been a factual dispute as to this issue, the
district court recognized that “Vista has improperly failed to
disclose information which it has or had in its exclusive
possession to assess the precise economic benefit to it due to its
illegal offer for sale and sale of non-compliant coatings.” The
court also found that Vista failed to submit admissible evidence
to controvert USA’s showing of Vista’s significant economic
benefit. Therefore, summary judgment was proper as to this
penalty factor.
7. seriousness of the violation
The court found that the seriousness of the violation
supported a substantial penalty. In opposition to summary
judgment, Vista asserted that there was a genuine factual
dispute as to the effects of its emissions on human health. The
only document filed by Vista in opposition to summary
judgment was a declaration by Fischer. Vista offered no
documentary evidence related to the quantity of paint offered
for sale to controvert the government’s claims as to the
potential health effects of the 13,000 gallons of paint it alleged
Vista had offered for sale in San Diego in September 1987.
USA contends that its claim was based on Fischer’s sworn
testimony before the San Diego Hearing Board that he had
“13,000 gallons of paint in the San Diego district.”
In its opposition, Vista represented that it had only sold 34
gallons of paint in September 1987 in the SDAPCD. But, in
his supporting declaration, Fischer estimates that Vista sold at
least 70 gallons. Fischer’s declaration raises a genuine factual
dispute as to the number of gallons offered for sale. Therefore.
this element of the seriousness factor was not properly disposed
of on summary judgment.
Vista also argues that any delay or lack of completeness in
providing the 1987 sales data had no adverse impact on the
public. This argument is meritless. EPA’s ability to gather
information on potential violations is vital to enforcement of
the CAA. It is irrelevant that no ozone was formed from
Vista’s failure to supply the information. See United States v.
Z ‘ , 823 F.2d 685, 689 (Ist Cir.
1987) (importance of compliance with information requests).
B. Non-statutory factors.
1. governmental delay
In opposition to summary judgment, Vista asserted that there
was a genuine factual dispute as to the effect of EPA’s inaction
on the district’s proposed SIP revisions. Ip General Motors
Corp. v. United States, 496 U.S. 530, 541 n. 4 (1990), the
Supreme Court found that “the Statutory remedies for EPA
inaction include .. . a request pursuant to § 113(b). . . for
reduction or elimination of penalties during any period in
which unreasonable agency delay results in prejudice.” See
also Uni tes v. S .» 667 F. Supp. 1110, 1128 (D.
Md 1987) (government delay should neither mitigate against
imposition of a substantial penalty nor act to enhance the
penalty amount). Vista made such a request at summary
judgment.
44a
Vista argues that EPA delayed from 1985 to 1987 in
notifying the industry that it would attempt to enforce the
federally approved, but locally superseded, rules. Vista also
argues that the district court failed to properly consider EPA’s
delay in acting on the proposed SIP revisions and in bringing
this action. Vista contends that had the EPA rejected the
revisions earlier, it would have made none of the paint sales.
The “mere failure by governmental agencies to prosecute . . .
does not allow a court to reduce a penalty.” Public Interest
New v. Pow
Terminals Inc., 913 F.2d 64, 81 Gel Cir. 1990). EPA is only
required to act on revisions of SIPs within a reasonable time,
not necessarily within four months. General Motors Corp., 496
U.S. at 536-42. USA contends that the EPA’s inaction on the
San Diego proposed revision was reasonable as it was
submitted less than a month before September 1, 1986.
Whether this and the other delays were reasonable was a
question of fact that precluded summary judgment as to this
factor.
2. unusual and perplexing nature of regulation
Vista did not bring up this argument until its post-judgment
motion. Vista cites only United States v. Louisiana-Pacific
Corp., 682 F. SUPP. 1122 (D. Colo. 1987), to support its
argument that its penalty should have been reduced because of
the “unusual and perplexing” nature of the regulatory scheme.
Whatever the complexity of the underlying legal basis for
EPA’s actions, Vista’s President was told by EPA and the San
Diego District that, if it did not stop selling non-complying
paint by September 1, enforcement would follow. There was
nothing unusual or perplexing in these instructions to Vista.
3. reliance
This argument was brought forth in Vista’s post-judgment
motion. The district court was not bound by Louisiana-Pacific
45a
to consider “justifiable and detrimental reliance.” Accordingly,
the court did not abuse its discretion in denying the post-
judgment motion as to this issue.
IV.
Unfortunately, Vista intertwined the distinct issues addressed
on summary judgment with those addressed Only in its post-
judgment motion.’ Vista never expressly argued in its opening
brief that the district court erred in denying its post-judgment
motion. Even in its reply brief, Vista’s arguments were, at best.
unclear. Vista did not even touch on any of these arguments in
its Opening brief. Accordingly, we refuse to consider these
arguments.
V.
We affirm the district court’s decision to grant motions
striking certain of Vista’s affirmative defenses and dismissing
Vista’s counterclaims and third-party claims for want of subject
matter jurisdiction and for failure to state a claim. We also
affirm the district court’s summary judgment as to liability, and
its denial of Vista’s post-judgment motion. However. we
reverse the district court’s summary judgment as to the civil
penalty, and remand to the district court for trial on the penalty
issues.
AFFIRMED IN PART, REVERSED IN PART, AND
REMANDED.
* After thorough review of the district court record, we conclude that the
following issues were raised for the first time in Vista’s post-judgment
motion: Vista's liability for pre-notice of violation sales, the burden of
proof regarding the dates of any sales, abuse of prosecutorial discretion.
USA’s failure to follow EPA’s penalty policy, constitutional excessiveness,
EPA’s authority to require the sales data, and Vista’s sufficient cause to act.
46a
APPENDIX E
D I . E
I, EDDIE R. FISCHER, hereby declare as follows:
1. 1 am the President and the sole shareholder of Vista
Paint Corporation (“Vista’’).
2. Vista began as a company in approximately 1957.
However, the original name of Vista was Paint & Masonry
Supply. It consisted of a small paint store located in Garden
Grove, California. I originally had a partner whose name was
Walt Jacobson. In about 1958, my partner and I began to
manufacture paint. Our first line of paint products was called
Kolor-Kote and was designed to be applied on concrete. Our
original manufacturing plant was in a small garage also located
in Garden Grove.
3. In approximately 1959, we moved our company to a
new location in Stanton, California. This new facility was
approximately 2,000 square feet in size. One half of it was
devoted to a store which sold paint products and related
materials. The rest of our facility was devoted to the
manufacture and production of paint products. At our new
location, in addition to manufacturing and selling Kolor-Kote,
we developed a new line of paint called Acri-Bond. This new
product line was designed for all purposes, including interior
and exterior, as well as dry wall, masonry and concrete. At
about that same time, we changed the name of the company to
Grove Paints.
4. In approximately 1965, we relocated to a new 7,00-
square foot facility also in Stanton, California. The new facility
was both a manufacturing plaint, as well as a retail store outlet.
During this time period, we continued to develop and
47a
manufacture new water-base paint products, such as Dura-Glide.
5. Approximately one year later, we opened a new factory
facility behind our retail store outlet in Stanton in order to
develop and manufacture future product lines.
6. In or about 1969, we opened our first satellite retail
outlet in Costa Mesa, California.
7. Throughout the 1970s, Vista enjoyed a moderate growth
pattern and continued to open up new retail locations in Orange
County.
8. In or about 1970, we changed the name of the company
to Vista Paint Corporation. Vista Paint Corporation was a “C”
corporation. The shareholders of the company were myself and
Walt Jacobson.
9. In approximately 1975, Walt Jacobson sold his interest
in Vista to me and I became the sole shareholder of Vista.
10. In the late 1970s, we began to make plans to open a new
factory, warehouse, general offices, as well asa retail store
outlet in Fullerton, California. This project took several years
to develop. In or about 1981, we opened our new facility in
Fullerton.
11. Our current operations are housed in a building of
approximately 134,000 square feet in size. Vista’s operations
initially took up approximately 80,000 square feet of that space
and currently we occupy approximately 110,00 square feet of
this building.
12. Approximately 12,000 square feet of our facility is now
devoted to our retail store. This store sells the Vista line of
architectural coatings and related products. In addition, we sell
Spray equipment and related components. Also. we sel] wall
48a
coverings, mini blinds, and related items from our retail
location. :
13. The balance of our facility is devoted to our general
offices, manufacturing and warehouse facilities. We take
special pride in the nature of our equipment, quality control and
environmental awareness at Vista. For example, when we first
moved into our new location in 1981, we put into place state-
of-the-art equipment for manufacturing and recycling. This
technology includes dust-recycling and water-recycling
systems. As far as I know, Vista was the first California paint
corporation to be involved in 100% recycling of waste products
which are generated during the manufacturing process.
14. Throughout the 1980s, Vista manufactured both water-
base and oil-base paints. Approximately 80% of our
production was in the water-base paint area. I believe that
Vista enjoyed technological superiority over its competitors in
the manufacturing of water-base paints based upon Vista’s
historical focus on this technology. In fact, our new plant in
Fullerton was almost exclusively designed for the research,
development, and manufacture of water-base architectural
coatings lines. In addition, solvent-based architectural coatings
are more difficult to deal with because solvent is flammable
and additional safety and environmental steps need to be taken
in the manufacturing process of solvent-base paints. As a
result, water-base paints tend to be slightly more profitable for
Vista to manufacture.
15. Asaconsequence, Vista had no particular incentive to
emphasize its manufacturing of solvent-base architectural
coatings during the 1980s. Indeed, the only reason for carrying
those product lines was because the market, especially paint
contractors, continued to demand solvent-based architectural
coatings for a variety of applications. I believe, and I think
painting contractors in Southern California concur, that there
si eeerceeeeeem imac iaiiiaiiiliaaiiaiaiiaaaiain
49a
are particular applications which can only be met by the use of
properly manufactured solvent-based coatings.
16. I have a vague memory that in or about the late 1970s,
the South Coast Air Quality management District
(“SCAQMD”) began to become involved in attempts to limit
the volatile organic compounds (“VOCs”) in architectural
coatings. However, Vista’s compliance with these rules and
regulations was handled by Jerome Fischer, or Vice President
of Operations, as well as by Joe Ramirez who was our
Technical Director.
17. During the 1980s, Vista continued to expand into other
Southern California counties, including San Diego County,
Riverside County, San Bernardino, and Los Angeles County.
By 1987, Vista had approximately 14 retail outlets in these
various counties and $24 million in gross sales.
18. Until the early part of 1987, it was my clear
understanding that Vista was required to comply with
environmental guidelines which were imposed either by
SCAQMD or the San Diego Air Pollution Control District
(SDAPCD”). We rarely, if ever, heard anything about
requirements from the Environmental Protection Agency
(“EPA”) or the California Air Resources Board (“CARB”).
19. In or about March 1987, I remember that I learned from
either Jerome Fischer and/or Joe Ramirez that, for the first
time, the EPA was demanding some manufacturing or sales
information from Vista. We were quite concerned at Vista
because we had historically never been required to answer to
EPA in terms of providing information or adjusting our product
lines to meet those requirements.
20. In addition, during the same time period, I had
occasional conversations with other executives of different
California paint companies, and they too expressed to me
50a
concern and confusion about these new demands from the EPA
for voluminous data from their companies as well.
21. Irelied on Jerome Fischer and Joe Ramirez to gather the
necessary data to comply with these EPA demands. It has
always been the policy of Vista to fully and immediately
comply with any information demand from any governmental
agency which has jurisdiction over our company.
22. Accordingly, | was quite concerned to receive Exhibit
504 on or about April 13, 1987. This document, addressed to
my attention, stated that somehow Vista was in violation for
failing to comply with an information request from the EPA.
| spoke with Jerome Fischer and Joe Ramirez to inquire about
the status of the EPA’s request. They told me that they were
doing their best to pull together the voluminous materials
demanded by the EPA and had hoped to receive an extension
of time within which to comply. Jerome Fischer further
advised me that he had attempted to reach Mr. Wruble at the
EPA for such an extension and Mr. Wruble had not returned his
telephone calls. I urged Jerome Fisher and Joe Ramirez to
immediately comply with EPA’s request. I was advised that
they did so on or about April 16, 1987. Joe Ramirez and
Jerome Fischer assured me that Vista would diligently comply
with all requests from EPA.
23. On or about May 15, 1987, I received another
information request from the EPA. This is Exhibit 507. I was
very bewildered and confused by this second information
request by EPA. First, the information request “withdrew” the
March 19 information request we had been working hard to
respond to and which, in my view, we had finally responded to
completely. Second, this information request made no mention
of the so-called “violation” which had been assessed against
Vista for failing to comply with the March 19, 1987, request.
Third, we were unclear about power and jurisdiction of the
EPA in this area. We had always looked to SCAQMD and, to
Sla
a lesser extent, SDAPCD, for guidance in complying with
environmental regulations. It was unclear to us, both at Vista
and in my conversations with other paint company executives.
what EPA was attempting to do in this area. Nevertheless, |
forwarded this second information request to Jerome Fischer
and Joe Ramirez and told them promptly to respond to the
EPA’s demands. 2
sales
24. On or about May 29, 1987. | drafted and mailed to the
EPA a letter which is Exhibit 508. The purpose of this letter
was to seek the assistance from the EPA which they had offered
to provide in their May 15, 1987, letter. I had been trying for
some time to contact Mr. William Wruble of the EPA who was
listed as the point of contact at that organization. However,
Mr. Wruble never returned my telephone calls. I had hoped to
receive from Mr. Wruble clarification of the second and highly
confusing information request from the EPA. Accordingly, my
May 29, 1987, letter was an attempt to receive a return
telephone call and/or assistance from the EPA. However, |
never received a telephone call or return letter from Mr.
Howekamp. Nor did I receive any follow-up communication
from Mr. Wruble, despite my request.
25. Ihave reviewed Exhibit 541, the Minutes of the June 8.
1987, Architectural Coatings Task Force meeting. This
refreshes my memory that in or about June 1987, we at Vista
became aware from various industry sources that we could no
longer manufacture non-flat, non-specialty architectural
coatings with a VOC level in excess of 250 g/l. We further
learned that we could no longer sell such coatings after
September 1, 1987. Accordingly, we made a corporate
decision at vista to discontinue those lines of non-flat, non-
* [So in original. }
52a
specialty architectural coatings which had 380 g/l VOC as of
July 1, 1987.
26. In or about June 1987, we made a corporate decision to
respond to the May 15, 1987, information request by stipulating
as we believed we were permitted to do. I have reviewed
Exhibit 509 which is a letter from Philip S. Patterson, Vista’s
Chief Financial Office in June 1987. This document further
refreshes my memory that we determined to cease the
manufacture and sale of 380 g/l non-flat, non-specialty
architectural coatings as the EPA demanded we do.
27. I was very concerned and confused when, on or about
June 19, 1987, I received a second notice of violation from the
EPA, Exhibit 511. We were quite surprised to learn that, by
stipulating to the EPA May 15, 1987, information request, we
would then be found to be in violation of EPA regulations.
28. We were even more confused when we received Exhibit
512, a June 19, 1987, third information request from EPA.
This third request demanded information about the manufacture
and sale of our paint products for the months of August,
September and October 1987. In addition, the third
information request demanded manufacturing information for
380 g/l VOC coatings for the months of July though October
1987. This did not seem to pertain to Vista because we had
already determined to cease the manufacture of those coatings
as of July 1, 1987.
29. The third information request from EPA was modified
by the EPA’s fourth information request, dated July 22, 1987,
Exhibit 513. This was also the first official written order from
EPA to cease manufacture of 380 g/L VOC coatings by July 1,
1987, an and to cease sales of such coatings by September 1,
1987. At Vista, we decided that the stipulation proposed in this
fourth information request was appropriate and we determined
that, rather than complying with the confusing and conflicting
53a
demands for information in the June and July information
requests, we would stipulate as provided for on page two of
Exhibit 513.
30. Accordingly, Jerome Fischer, on or about August 4,
1987, mailed to the EPA our stipulation in response to the J uly
22, 1987, EPA letter. We believed at the time that this
stipulation answered all of EPA’s concerns. We heard nothing
further from EPA about the June 19 and July 22, 1987,
information requests from EPA in 1987, throughout 1988 and
until May 1989.
31. In or about July or August 1987, I became aware that
there was a possibility that Vista could continue to sell it 380
g/l VOC coatings in San Diego County even after September 1,
1987. This was important to Vista because it has retail outlets
only in SCAQMD and SDAPCD which were the only Districts
of California which were prohibiting 380 g/L VOC coatings.
Therefore, absent a variance, Vista would be unable to sell its
inventory of 380 g/L coatings. This information came to me
though conversations in the industry and perhaps through
advisories which we occasionally obtained from SDAPCD. As
President of Vista, I was very concerned about our excess
inventory of 380 VOC paint. I was concerned for two reasons.
First, the disposal of several thousand gallons of 380 VOC
paint would be a waste disposal problem that we would have to
deal with at Vista. Secondly, Vista had approximately $60,000
of raw materials coast invested in this 380 g/L VOC paint. |
estimate that our total inventory at Vista of the 380 VOC paint
was approximately 13,000 gallons at this time. Importantly,
these 13,000 gallons consisted of slow-moving inventory which
Vista was unlikely to sell for many months, if not longer.
32. I have reviewed Exhibit 15. This was a letter that |
authored and Vista sent to its customers to described our
changes in our product line in order to comply with the new
EPA directives.
54a
33. I have reviewed Exhibit 193. These are notes from a
meeting conducted on August 19, 1987, and attended by
Jerome Fischer, Joe Ramirez, and myself. The purpose of this
meeting was to make a management decision on which of our
product lines had to be pulled from the he Vista inventory by
the September 1, 1987, deadline. In addition, the meting was
in order to discuss new labels for our products, as well as other
information to be put on the he paint containers so that our
customers cold also comply with the new EPA regulations.
Finally, we were reviewing certain of our product lines to
determine whether we would continue to manufacture them at
the lower VOC limits mandated by EPA, or whether we would
discontinue those lines entirely. Ultimately, as to Vista’s slow-
moving product lines, a corporate decision was made to not
reformulate them, but rather to discontinue the product line
entirely.
34. In or about August 1987, after many additional
attempts, I was finally able to talk to William Wruble of the
EPA by telephone. My primary reason for attempting to
contact Mr. Wruble was to try to obtain from EPA permission
or a variance to sell our inventory of approximately 13,000
gallons of 380 g/L VOC paint. | was particularly concerned
because the EPA had given Vista and the other paint companies
only two months to dispose of substantial excess inventory. |
emphasized to Mr. Wruble that we did take EPA’s deadline
seriously and that we had in fact ceased manufacturing of 380
VOC paint by July 1. However, a deadline of September 1,
1987, was simply too short a time period for a small paint
company like Vista to be able to properly dispose of its excess
inventory without suffering severe economic consequences.
During the conversation, Mr. Wruble mentioned that the
SDAPCD separately enforced its regulation, and that I might
wish to try to obtain a variance from SDAPCD. However, he
held out little hope that I would be able to obtain such a
variance. I emphasized to Mr. Wruble that it was important
that Vista obtain some sort of variance so that we could sell our
ee ee ee |
5Sa
excess inventory of 380 g/L VOC coatings. Based upon some
prior information I had received from EPA and other
environmental agencies, | was aware that the EPA and other
regulatory agencies would on occasion allow companies and/or
industry to pay a disposal fee or other compensation for the
privilege of selling out-of-date products and/or Causing other
emissions of pollution. I discussed this with Mr. Wruble and
inquired about the possibility of Vista paying a fee or some
dollar amount to dispose of our products. Mr. Wruble said that
he would check with his staff and EPA attorneys, but he did not
hold out much hope that such a fee or penalty could be paid.
Mr. Wruble never called me back to determine what he had
learned from his conversations with staff and/or EPA lawyers
about this issue.
35. I have examined Exhibit 16. This is an August 24.
1987, memorandum from myself and Mr. Jerome Fischer to al]
Vista Personnel. These were our instructions to our personnel
to advise them of our compliance with the new EPA
restrictions. The memorandum was designed t prevent the sale
of 380 g/L VOC coatings after September 1. 1987, and further
to advise our personnel as to which coatings could continue to
be sold after that date.
36. In order to attempt to obtain a variance to sell our
remaining inventory in San Diego County, I contacted
SDAPCD sometime in August 1987. Eventually, I believe |
talked to Mr. George Seidel. Mr. Seidel advised me that we did
not have to remove our “nonconforming paint” from our
inventory and that, while we were applying for a variance.
SDAPCD would not “shop our stores.” In other words, they
would just disregard that we had that paint there. Mr. Seidel.
or someone else from SDAPCD. provided us with a form with
which to apply for a variance to sell our 380 G/L VOC paints
in SDAPCD. Exhibit 20 is a copy of that form which was
filled out in our offices in Fullerton and signed by me on
August 31, 1987. I believe the documents was also filed on
ee ee
56a
August 31, 1987, in San Diego. Exhibit A to the variance
application is a listing of the four Vista retail paint stores in San
Diego County. Exhibit A to the variance application is a listing
of the four Vista retail paint stores in San Diego County.
Exhibit B once again shows our certification that we had ceased
the manufacture of 380 g/L VOC paint by July 1, 1987.
37. I have examined Exhibit 764 which is a copy of the
notice I received from the County of San Diego scheduling
Vista’s variance petition hearing for September 24, 1987.
38. I have reviewed Exhibit 19, which is a September 2,
1987, receipt from Vista’s San Diego retail store. It appears to
reflect the purchase of a one-gallon can of Trim-Kote
mahogany paint. Our Trim-Kote mahogany for sale in our San
Diego outlets during that time was 380 G/L VOC. However,
I had understood from George Seidel that while our variance
application was pending, we would not be found to be in
violation of SDAPCD Rule 67. Exhibit 19 also has a
handwritten note purportedly dated 9/18/87 and signed by
George Seidel which claims to reflect a conversation between
myself and Mr. Seidel. I do not recall this telephone
conversation. Nor do I recall specifying the number of gallons
or so-called non-complaint paint as 5,200 in San Diego County
after September 1987. However, this seems to be a good
approximation of the number of gallons of 380 G/L VOC paint
which were on our shelves in our four San Diego stores in
September 1987.
39. I have examined Exhibit 191 which purports to show
that Vista sold a gallon of “Proformer” paint which had in
excess of 250 g/L VOCs in the Los Angeles area in September
1987. However, the Proformer quick-dry enamel which was
purchased and tested was a “quick-dry enamel” which the EPA
allowed to have up to 400 g/l VOC. Therefore, Vista was not
in violation of Rule 1113 by the sale of this gallon of Proformer
paint.
57a
40. On September 24, 1987, I attended a hearing by the
SDAPCD to consider Vista’s application for a variance to sell
its remaining inventory in San Diego County. The Board
deadlocked one vote to one vote and no decision was taken on
my application. Therefore, we made a corporate decision not
to further proceed with the variance application and instead
immediately to remove the remainder of our 380 g/L VOC
paints from our store shelves in our four retail locations in San
Diego County. That inventory was then returned to our
warehouse in Fullerton, California.
41. I have examined Exhibit 42, a September 29, 1987,
violation from SDAPCD. I do not recall having received this
violation on or about the date it bears. I am very certain that |
did not receive this notice of violation by October 12, 1987,
when I sent to Mr. Edward Slater at SDAPCD Exhibit 24
certifying that Vista had removed all of the 380 g/l non-
conforming VOC paint from our four San Diego stores.
42. On or about October 14, 1987, I received a notice of
violation from SDAPCD. This was a result of one of our stores
being shopped and one gallon of 380 g/L VOC enamel being
purchased from that store. I have examined Exhibit 21, and I
recall receiving only the first page of this Exhibit. I did not
receive the narrative statement which comprises the last page
of this exhibit.
43. I have examined Exhibit 44 which is a copy of an
October 19, 1987, letter from myself to Mr. Edward Slater at
the SDAPCD. This letter was sent to Mr. Slater because I had
just received the October 14, 1987, notice of violation which
reflected that one of our San Diego stores had been shipped in
September 1987. I was concerned because it had been my
understanding, as reflected in the October 19, 1987, letter, that
while our variance application was pending in San Diego we
would not be held to be in violation of SDAPCD Rule 67. I
58a
heard nothing further from Mr. Slater following my
correspondence of October 19, 1987.
44. The reason we did not remove our 380 g/L VOC paints
from our store shelves in San Diego immediately following the
SDAPCD hearing on September 24, 1987, is because that
Board did not reach a decision on my variance application. |
felt, therefore, that the application was still pending. In fact, a
further hearing on my application was scheduled for November
5, 1987. However, on October 30, 1987, after all of the 380
g/L VOC coatings had been taken from the store shelves in San
Diego, I sent a letter to Mr. F.A.M. Buck advising him that
Vista did not wish to pursue the variance application further.
This is Exhibit 97.
45. I have examined Exhibits 25, 773, 27 and 28. These
documents reflect correspondence between myself and
SDAPCD. Ultimately, my dispute with SDAPCD for having
sold two gallons of 380 g/L VOC paint was resolved by Vista
paying $500 in full settlement for the violation. Following my
letter to SDAPCD on February 4, 1988 (Ex. 28), I heard
nothing further from SDAPCD.
46. On May 11, 1989, I was very surprised to receive
Exhibit 562. This letter advised me for the first time in almost
two years that the EPA was concerned about our efforts to
comply with its series of confusing information requests in
1987. I was advised to contact Department of Justice attorney
Gerald George to give him Vista’s explanation. Immediately
upon my receipt of that letter, | telephoned Mr. George to
discuss the matter. I wanted to know what it would take to
resolve this dispute. Mr. George insisted that I “give him a
number” to resolve the case. I believed I offered $500 to settle
the case. Mr. George did not accept the offer, but demanded
further information from Vista.
oo) a
59a
47. At about that same time, I hired the San Francisco law
firm of Heller, Erhman, White & McAuliffe to assist me in this
matter. My then-attorney, Joseph Armao, was able to obtain
from EPA attorney Gerald George a demand of $30,000 to
resolve the case. Both Mr. Armao and | felt that this amount
was far too much and we countered with an offer of $5,000. |
had emphasized to Mr. George that I believed my dispute with
the environmental agencies had been resolved with the payment
of my $500 fine to SDAPCD in early 1988.
48. In response to Mr. George’s further demand for
information from Vista, I sent him a letter dated June 19, 1989
(Ex. 29). In addition, I provided him with a copy of the August
4, 1987, letter which we had sent previously to EPA (Ex. 13).
49. In addition, my attorney Mr. Armao provided Exhibit
783, a June 21, 1989, letter to Gerald George with a further
response to questions Mr. George had about the substance of
Vista’s compliance with the 1987 information request. This
letter further reflects the legal advice I was being given by Mr.
Armao at this time that Vista had in fact fully complied with
the EPA information requests dated in March, May, June and
July 1987.
See eer
50. On or about June 23, 1989, in a further attempt to
provide EPA with all of the information it was apparently
seeking, Mr. Armao at my direction sent a letter, Exhibit 784,
to Mr. George. This letter also included a listing of our sales
from Vista store No. 9 (our largest San Diego Vista retail store)
and the number of gallons and a listing of the 380 g/L VOC
paint which was sold during the month of September 1987.
These figures had been compiled by Vista personnel over a
* [So in original. ]
60a
several day period by reviewing thousands of sales invoices and
receipts. In sum, the document established that no more than
35 gallons of so-called non-compliant paint was sold by this
one store during that time. By extrapolation, I estimated that
Vista sold no more than 70 gallons of non-compliant paints in
its four San Diego retail stores.
51. On or about June 23, 1987, I was advised by my
attorney Joseph Armao that he had received a letter from
Gerald George, Exhibit 522. I understood then that this letter
finally showed that the EPA was satisfied with the information
that they had been purportedly seeking since June 1987.
However, I was very surprised to learn that the EPA’s $30,000
demand had risen substantially to a new demand of $192,000.
I was very confused about the alleged “economic benefit” that
Vista had supposedly enjoyed from the sale of 70 gallons of so-
called non-complying paint. I was further confused about
EPA’s application of various other penalty factors which had
not been previously made known to me.
sialiadindind
+ oo OF
52. I had further discussions with Mr. Armao and he
advised me that this settlement demand was exorbitant and
should not be paid.
53. I did not formally reject the demand of Mr. George. |
did not hear anything further from the EPA or the Department
of Justice until December 1990 when Vista was served with the
instant lawsuit. I was stunned to find that the EPA continued
to allege that they had not received the information they had
* [So in original.]
* [So in original.]
ooo
6la
represented in June 1989 that the EPA had received all the
information it had been demanding.
54. In or about January 1991, Vista retained the law firm of
Donnelly, Clark, Chase & Smiland in order to represent Vista
in its litigation with the EPA and the Department of Justice.
During the course of the litigation over the next |] months, |
course of the litigation in 1991, I learned from Messrs.
Smiland and/or Newell of the Donnelly, Clark firm that the
had been seeking in its June 1987 information request, Mr.
Newell and/or Mr. Smiland advised me that, in their view, the
to respond to the June 1987 information request. However,
based upon the advice of Our attorneys, Vista made a decision
to give government attorneys and their staff full access to all of
the business records of Vista.
specified particular records that they wanted copied and we
made copies for them. | assigned a Vista employee to assist
AUSAs Hsiao and Park in whatever way he could for a full
day.
56. During the visit to our facility by AUSAs Hsiao and
Park, I had several conversations with AUSA Hsiao. During
those conversation, AUSA Hsiao said that in his view the case
62a
was worth $100,000 and he urged me to pay that amount to
resolve the dispute. I replied that the case was not worth
$100,000, but that $40,000 was a figure that Vista might be
willing to pay. AUSA Hsiao said that he felt that might be an
appropriate figure, but that other government officials would
not accept less than $100,000.
57. During his visit to the Fullerton facility in October
1987, Mr. Hsiao and/or Mr. Park never advised me that there
were missing documents. Never did they advise me that there
were “missing” sales receipts. Indeed, none of the gentlemen
representing the government who were at our facility that day
ever indicated that there were any documents which they were
seeking which were not made available to them. To this day,
I do not believe that there are any incomplete or missing
documents.
58. In or about October 1991, I traveled to San Francisco to
meet with EPA attorney Letitia Moore. I believe one other
individual was also present at that meeting, although I do not
remember that person’s name. Once again, I offered to settle
this matter for $40,000, but Ms. Moore demanded a “six
figure” settlement.
59. On or about October 25, 1991, I was advised by my
attorneys that the government had filed a motion for summary
judgment against Vista. At some point, I was advised that one
of the bases for the summary judgment motion was that Vista
was supposedly continuing to withhold information from the
government. This was especially surprising to me because we
had just provided AUSAs Hsiao and Park with full access to all
Vista documents.
60. Between October 25, 1991, and November 18, 1991, I
was out of the Los Angeles area for a good part of that time.
However, my attorneys assured me that there were so many
63a
substantial and triable issues of fact that it was highly unlikely
that a summary judgment would be entered against Vista.
61. I was advised by telephone on or about November 18,
1991, that a $3.1 million summary judgment had been entered
against Vista. I was completely stunned by that result. Asa
result of that judgment and the publicity which followed,
morale at Vista dropped tremendously. Employees were
concerned that Vista might be driven out of business and that
they would lose their jobs. Customers also contacted me and
other Vista employees and suggested that they could no longer
do business with us because of the adverse publicity. In fact,
our business was very slow in November and December 199]
and this slow period continued into the early parts of 1992.
Fullerton.
62. Atall times, it was Vista’s policy to fully, completely
and promptly reply to any and all government demands for
information, whether from environmental agencies or from the
Department of Justice.
I declare under penalty of perjury under the laws of the
United States of America that the foregoing is true and correct.
Executed this 28 day of April 1994 at Los Angeles,
California.
/
Eddie R. Fischer
64a
APPENDIX F
LOIS J. SCHIFFER
Acting Assistant Attorney General
GERALD F. GEORGE
KENNETH RIEMER
Environmental Enforcement Section
Environment and Natural Resources Division
United States Department of Justice
P.O. Box 7611, Ben Franklin Station
Washington, D.C. 20044
Telephone: (202) 514-4080
TERREE A. BOWERS
United States Attorney
LEON W. WEIDMAN
Assistant United States Attorney
Chief, Civil Division
PETER HSIAO
Assistant United States Attorney
Room 7516 Federal Building
300 North Los Angeles Street
Los Angeles, California 90012
Telephone: (213) 894-6117
LETITIA D. MOORE
U.S. Environmental Protection Agency
75 Hawthorne Street
San Francisco, CA 94105
(415) 744-1358
Attorneys for Plaintiff
UNITED STATES OF AMERICA
UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA
Sa
UNITED STATES OF AMERICA,
Plaintiff,
V.
VISTA PAINT CORPORATION,
Detendant.
No. CV 90-6449-A WT(GHKx)
{PROPOSED AMENDED]
PRE-TRIAL CONFERENCE ORDER
Pre-Trial Conference
Date: December 20, 1993
Time: 10:00 a.m.
Pursuant to Rule 16 of the Federal Rules of Civil Procedure
and Local Rule 9 of the Central District of California,
'T IS ORDERED:
1. The parties are plaintiff United States of America
(“United States”) and defendant Vista Paint Corporation
(“Vista”). Vista has been served and has appeared by filing its
ariswer in this case. The pleadings and court orders which raise
the issues are:
(1) the Complaint for Injunctive Relief and Civil
Penalties, filed December 3, 1990:
(2) the Answer to Complaint for Injunctive Relief
and Civil Penalties and Counterclaim for Declaratory and
Injunctive Relief, filed March 28, 1991;
2
|
66a
(3) Amended Findings of Uncontroverted Facts and
Conclusions of Law in Support of United States Motion for
Summary Judgment, filed February 11, 1992; and
(4) the Ninth Circuit Memorandum Opinion, filed
September 24, 1992.
The United States contends that the District Court’s Order
Dismissing Defendant’s Counterclaim, Dismissing Defendant’s
Third Party Complaint, and Striking Certain Affirmative
Defenses, filed July 23, 1991, also applies here.
2. Federal jurisdiction and venue are invoked upon the
grounds: |
(1) — This Court has subject matter jurisdictions over
this action pursuant to Section 113(b) of the federal Clean
Air Act (“CAA”), 42 U.S.C. § 7413(b), and 28 U.S.C.
§§ 1331, 1345 and 1355, and personal jurisdiction over the
parties herein. Vista does not contest this Court’s subject
matter jurisdiction.
(2) Venue in this district is proper pursuant to 42
U.S.C. § 7413 and 28 U.S.C. § 1391(c) in that Vista’s
principal place of business is in this district.
3. The United States estimates that the trial will require
three days or less, with the use of narrative statements for direct
testimony with the declarant made available for cross
examination. Vista estimates that the trial will take
approximately six court days.
4. The trial is to be a non-jury trial. At least one (1) week
prior to the trial date, each counsel shall submit to the court and
opposing counsel the findings of fact and conclusions of law
which the party expects the Court to make upon proof at the
time of trial as required by Local Rule 13.5.
67a
* * *
DATED: JAN 03 1994, 1993["]
/s/ A. Wallace Tashima
A. WALLACE TASHIMA
UNITED STATES DISTRICT
JUDGE
APPROVED AS TO FORM AND CONTENT:
DATED: 12/13/93
LOIS J. SCHIFFER
Acting Assistant Attorney General
GERALD F. GEORGE
KENNETH RIEMER
TERREE A. BOWERS
United States Attorney
LEON W. WEIDMAN
Assistant United States Attorney
Chief, Civil Division
/s/ Peter Hsiao
PETER HSIAO
Assistant United States Attorney
LETITIA D. MOORE
U.S. Environmental Protection Agency
Attorneys for Plaintiff
UNITED STATES OF AMERICA
* [Original includes erroneous reference to 1993.]
68a
DATED: 12/10/93
DONALD C. SMALTZ
WILLIAM F. FAHEY
LELAND A. WAHL
~' ANDREW M. ROSENFELD
SMALTZ & ANDERSON
A Professional Law Corporation
and
WILLIAM M. SMILAND
ROBERT M. NEWELL, JR.
DONNELLY, CLARK, CHASE & SMILAND
By /s/ William F. Fahey
William F. Fahey,
Attorneys for Defendant
VISTA PAINT CORPORATION
69a
APPENDIX G
BARRY M. HARTMAN
Acting Assistant Attorney General
GERALD F. GEORGE
Trial Attorney
Environmental Enforcement Section
Environment and Natural Resources Division
United States Department of Justice
301 Howard Street, Suite 870
San Francisco, CA 94105
Telephone: (415) 744-6484
LOURDES G. BAIRD
United States Attorney
LEON W. WEIDMAN
Assistant United States Attorney
Chief, Civil Division
PETER HSIAO
Assistant United States Attorney
SCOTT H. PARK
Assistant United States Attorney
Room 7516 Federal Building
300 North Los Angeles Street
Los Angeles, California 90012
Telephone: (213) 894-2285
Attorneys for Plaintiff
UNITED STATES OF AMERICA
UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA
UNITED STATES OF AMERICA,
70a
Plaintiff,
v.
VISTA PAINT CORPORATION,
Defendant.
NO. CV 90-6449-R
Date: February 3, 1991
Time: 10:00 a.m.
[PROPOSED] __ AMENDED __ FINDINGS __OF
UNCONTROVERTED FACTS AND CONCLUSIONS OF
LAW IN SUPPORT OF UNITED STATES’ MOTION
FOR SUMMARY JUDGMENT
Plaintiff United States of America’s motion for summary
judgment came on regularly for hearing on November 18, 1991,
Chief United States District Court Judge Manuel L. Real
presiding. Subsequently, defendant’s Motion for Findings Of
Fact and For Relief From And Amendment Of The Judgment
came on regularly for hearing on February 3, 1992. After
having heard the arguments of counsel and examined the
pleadings, memorandum and exhibits presented by the plaintiff
and defendants, the Court makes the following amended
findings of fact and conclusions of law:
STATEMENT OF UNCONTROVERTED FACTS
1. Vista is a major manufacturer, distributor and retail
seller of paint. It manufactures approximately 25,000 gallons
of paint each month for sale at its stores in California, and its
total sales last year exceeded 50 million dollars. Vista’s
general office and its sole paint manufacturing plant are located
in Fullerton, California. Vista sells its paint at its own stores in
|
7la
Stanton, Costa Mesa, La Habra, Orange, Mission Viejo,
Ontario, Riverside, E] Cajon, Chula Vista, Huntington Beach,
and San Diego, California.
2. In 1984, as part of the State Implementation Plan
(“SIP”) for California to limit the VOC content of paint, the
South Coast Air Quality Management District (“SCAQMD”)
and the San Diego County Air Pollution Control District
_ SDCAPCD”) adopted SIP Rules 1113 and 67.0. These rules
regulate non-flat architectural coatings, otherwise known as
gloss or semi-gloss paints, which are commonly used to paint
structures, mobile home or pavement. In order to control air
pollution from the manufacture and application of these
coatings, the rules limit their VOC content to no more than 250
grams of VOC per liter of coating (“250 g/l VOC”), and forbid
the sale, offer for sale, or application of any such paint
exceeding these VOC limitations (“non-compliant coatings”).
**k*
IT IS SO ORDERED
Dated: 2-11-92
[
HON. MANUEL L. REAL
CHIEF UNITED STATES
DISTRICT JUDGE
Presented by:
LOURDES G. BAIRD
United States Attorney
LEON W. WEIDMAN
Assistant United States Attorney
Chief, Civil Division
SCOTT PARK
72a
Assistant United States Attorney
/e/ P “ter Hsiao
PETER HSIAO
Assistant United States Attorney
Attorneys for Plaintiff
UNITED STATES OF AMERICA
73a
APPENDIX H
RICHARD B. STEWART
Assistant Attorney General
GERALD F. GEORGE
Senior Counsel
Environmental Enforcement Section
Environment and Natural Resources division
United States Department of Justice
301 Howard Street, Suite 870
San Francisco, CA 94105
Telephone: (415) 744-649]
LOURDES G. BAIRD
United States Attorney
LEON W. WEIDMAN
Assistant United States Attorney
Chief, Civil Division
IAN FAN
Assistant United States Attorney
1100 U.S. Courthouse
312 North Spring Street
Los Angeles, CA 90012
Telephone: (213) 894-2445
Attorneys for Plaintiff United States of America
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
UNITED STATES OF AMERIC A,
Plaintiff,
74a
VISTA PAINT CORPORATION,
Defendant.
NO. CV 90 6449 R
COMPLAINT FOR INJUNCTIVE RELIEF AND CIVIL
PENALTIES
(CLEAN AIR ACT, 42 U.S.C. §§ 7401, et seq.)
Filed December 3, 1990 -
COMPLAINT
The United States of America (“Plaintiff”), by and through
its undersigned attorneys, by the authority of the Attorney
General of the United States, and at the request of the
Administrator of the United States Environmental Protection
Agency (“EPA”), alleges that:
INTRODUCTION
1. This is a civil action for injunctive relief and for civil
penalties for violations by Vista Paint Corporation (“Vista”), of
the Clean Air Act, 42 U.S.C. § 7401 et seg. (“the Act”), EPA
regulations promulgated under the Act, and applicable portions
of the federally approved California State Implementation Plan
(“SIP”) regulating emissions of volatile organic compounds
(“VOCs”).
2. Plaintiff seeks to enjoin Vista from violating the SIP at
its California facilities which are located in the South Coast Air
Quality Management District (““SCAQMD”) and the San Diego-
Air Pollution Control district (“SDAPCD”).
75a
JURISDICTION AND PARTIES
3. This court has jurisdiction over this action pursuant to
Section 113(b) of the Act, 42 U.S.C. § 7413(b), and pursuant
to 28 U.S.C. §§ 1331, 1345 and 1355.
4. Venue properly lies in this District pursuant to Section
113(b) of the Act, 42 U.S.C. 7413(b), and 28 U.S.C. § 1391(c).
5. Pursuant to Section 113(b) of the Act, 42 U.S.C.
7413(b), notice of the commencement of this action has been
given to the State of California through the California Air
Resources Board.
6. Vista is a corporation organized under the laws of the
State of California, with its headquarters located in F ullerton,
California. Vista owns and operates an architectural coatings
manufacturing facility in Fullerton, California, and numerous
retail sales facilities throughout the SDAPCD and SCAQMD.
7. Atall times relevant hereto, Vista has sold and offered
for sale within the SCAQMD and SDAPCD architectural
coatings which contain volatile organic compounds (“VOCs”).
_ VOCs are precursors to ozone, an air pollutant.
8. Vista is a “person” within the meaning of Section
302(e) of the Act, 42 U.S.C. § 7602(e).
STATE IMPLEMENTATION PLAN
9. Section 109 of the Act, 42 U.S.C. § 7409, requires the
EPA Administrator (“Administrator”) to promulgate primary
and secondary ambient air quality standards for air pollutants,
including ozone. On February 8, 1979, primary and secondary
National Air Quality Standards (“NAAQS”) for ozone were
promulgated and published at 40 C.F.R. § 50.9.
76a
10. Vista’s manufacturing facility and its sales facilities for -
architectural coatings are located in areas in which the primary
NAAQS for ozone has not been attained. 40 C.F.R. § 81.305.
11. Section 110 of the Act, 42 U.S.C. § 7410, requires the
Administrator to approve any SIP for the implementation,
maintenance and enforcement of such ambient air quality
standards within specified time limits. Upon approval, the SIP
can be enforced by the federal government under Section
113(b) of the Act, 42 U.S.C. § 7413(b).
12. On January 24, 1985, the Administrator approved
SDAPCD Rule 67.0 and SCAQMD Rule 1113 as part of the
SIP submitted by the State of California. 50 Fed. Reg. 3338
(January 24, 1985).
13. SDAPCD Rule 67.0 and SCAQMD Rule 1113 set
limits on the VOC content of architectural coatings
manufactured after September 2, 1985 that are sold and offered
for sale within those districts.
FIRST CLAIM FOR RELIEF
14. Paragraphs 1-13 of this Complaint are incorporated
herein by reference as if fully alleged below.
15. On or about June 19, 1987, and pursuant to Section
113(b) of the Act, 42 U.S.C. § 7413(a)(1), EPA issued to Vista
a Notice of Violation (“NOV”) informing Vista that it was in
violation of SDAPCD Rule 67.0 and SCAQMD Rule 1113. A
true and correct copy of that NOV is attached hereto as Exhibit
A and incorporated herein.
77a
16. Vista has continued to violated[*] SDAPCD Rules 67.0
and SCAQMD Rule 1113 more than thirty (30) days after
issuance and receipt of the NOV.
17. Under Section | 13(b) of the Act, 42 U.S.C. § 7413(b),
Vista is liable for civil penalties of up to $25,000 for each day
of violation of either SDAPCD Rule 67.00 or SCAQMD Rule
1113.
SECOND CLAIM FOR RELIEF
18. The allegations of Paragraphs 1-13 of this Complaint
are incorporated by reference herein as if fully alleged below.
19. On or about June 19, 1987, the Administrator sent a
demand for information to Vista, pursuant to Section 114 of the
Act, 42 U.S.C. § 7414. On or about June 24, 1987, Vista
received this information demand from the Administrator.
20. Vista has failed to supply the information specified by
the Administrator in EPA’s June 19, 1987 information demand
to Vista.
21. Under Section | 13(b) of the Act, 42 U.S.C. § 7413(b),
Vista is liable for civil penalties of up to $25,000 for each day
of failure to comply with the Administrator’s information
demand.
RELIEF REQUESTED
Wherefore, Plaintiff United States of America respectfully
prays this Court to grant the following relief:
" [So in original.]
78a
A. Imposition of civil penalties of $25,000 per violation for
each day Vista has violated the Clean Air Act, SDAPCD Rule
67.0 and SCAQMD Rule 1113;
B. Entry of a permanent injunction against Vista requiring
it to cease violating the Clean Air Act and regulations
promulgated thereunder, including SCAQMD Rule 1113 and
SDAPCD Rule 67.0;
C. Award of the costs of this action against defendant and
in favor of the United States of America; and
D. Such further relief as this Court may deem just and
proper.
Respectfully submitted,
/s/ [illegible] for
RICHARD B. STEWART
Assistant Attorney General
Environment and Natural Resources
Division
U.S. Department of Justice
Washington, D.C. 20530
/s/ Gerald F. George
GERALD F. GEORGE
Senior Counsel
Environmental Enforcement Section
Environment and Natural Resources
mn Division
U.S. Department of Justice
301 Howard Street, Suite 870
San Francisco, California 94105
79a
LOURDES G. BAIRD
United States Attorney
FREDERICK M. BROSIO, JR.
Assistant United States Attorney
Chief, Civil Division
/s/ lan Fan
IAN FAN
Assistant United States Attorney
1100 U.S. Courthouse
312 North Spring Street
Los Angeles, CA 90012
OF COUNSEL:
ALLAN ZABEL
Office of Regional Counsel
U.S. Environmental Protection Agency, Region 9
1235 Mission Street
San Francisco, CA 94103
RACHEL HOPP
Office of Enforcement
U.S. Environmental Protection Agency
401 M Street, S.W.
Washington, D.C. 20460
80a
APPENDIX I
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
UNITED STATES OF AMERICA,
Plaintiff,
v.
VISTA PAINT CORPORATION,
Defendant.
NO. CV 90-6449 AWT
SUPPLEMENTAL SCHEDULING ORDER
This order supplements the pretrial conference order
and the order re further pretrial conference, both filed January
3, 1996.
IT IS ORDERED:
1. All in limine motions shall be filed and served by
March 25, and shall be noticed for hearing on April 18, 1994,
at 10:00 a.m.
2. A status conference to discuss readiness for trial shall
also be held on said date and time.
3. Trial is set to commence on May 23, 1994, at 1:30 p.m.
4. The direct testimony of all non-adverse witnesses shall
be presented by declaration or deposition extract. The
8la
testimony of adverse witnesses may be presented by deposition
(or the witnesses called in person). All such direct testimony
declarations and deposition transcript excerpts shall be filed
and served not later than May 2. This requirement does not
apply to rebuttal witnesses.
5. Any party desiring to cross-examine any witness whose
direct testimony has been presented by declaration shall, not
later than May 16, file and serve a Notice of Request To Cross-
Examine Witness(es), listing the witnesses the party desires to
cross-examine. All witnesses so designated in a timely Notice
of Request to Cross-Examine shall be made available at trial
for cross-examination. If not so made available, the direct
testimony of such witness shall be stricken. Witnesses not so
designated need not be produced at trial.
The designation of witnesses for cross-examination shall be
made in good faith. Any designation not made in good faith or
which is found to be frivolous may subject designating counsel
to sanctions. E.g., 28 U.S.C. § 1927.
Dated: February 28, 1994
/
A. WALLACE TASHIMA
United States District Judge
82a
APPENDIX J
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
HONORABLE ROBERT J. TIMLIN,
DISTRICT JUDGE PRESIDING
UNITED STATES OF AMERICA,
PLAINTIFF,
VS.
VISTA PAINT CORPORATION,
DEFENDANT.
CASE NO. ED CV 94-127-RT
VOLUME IV
COURT TRIAL
REPORTER'S TRANSCRIPT OF PROCEEDINGS
LOS ANGELES, CALIFORNIA
FRIDAY, APRIL 28, 1995
DOROTHY BABYKIN
PRO TEM COURT REPORTER
419J - U.S. DISTRICT COURTHOUSE
312 NORTH SPRING STREET
LOS ANGELES, CALIFORNIA 90012
83a
MR. WAHL: IT SEEMS FUNDAMENTALLY
UNFAIR. THEY’VE HAD A CHANCE TO REVIEW OUR
DECLARATIONS AND PRESENT A WITNESS ON THE
POINT, BUT WE CAN’T DO THAT.
I MEAN, I GUESS WHAT’S SUGGESTED HERE BY
ANALOGY IS THAT WE CAN’T USE MR. MAHAN FOR
THE VERY REASON THAT HE WAS ONE OF OUR
WITNESSES FOR OUR CASE IN CHIEF. BUT IF WE HAD
CALLED ANOTHER ECONOMIST, AS THEY HAVE
CALLED THEIR DR. MC KEE, THE SCIENTIST, THAT
THAT ECONOMIST COULD HAVE BEEN A REBUTTAL
WITNESS.
SO SOMEHOW WE’VE USED MR. MAHAN IN
OUR CASE IN CHIEF, BUT NOW HE’S PRECLUDED
FROM BEING THE SO-CALLED REBUTTAL WITNESS.
THAT DOESN’T RING FAIR, YOUR HONOR.
THE COURT: ALLICAN SAY IS THE WAY THIS
PROCESS HAS UNRAVELED IN THIS CASE, THIS IS MY
FIRST EXPERIENCE WITH EVIDENCE ON
DECLARATIONS SIMULTANEOUSLY FILED. THIS ISA
CLASSIC PILOT PROGRAM FOR RECONSIDERATION
OF ALLOWING TESTIMONY BY DECLARATIONS. BUT
THAT’S THE WAY IT IS.
IT WASN’T WRITTED. HIS RULING WASN’T
TAKEN UP TO THE NINTH CIRCUIT FOR REVIEW AS
TO WHETHER IT WAS APPROPRIATE. BUT MAYBE
YOU'LL HAVE AN OPPORTUNITY -- WHOEVER WANTS
TO APPEAL WHATEVER THE RESULTS ARE BY THIS
ee
84a
COURT, YOU CAN RAISE THAT ON APPEAL. IT’S A
CONSTITUTIONAL PROBLEM.
** *
85a :
APPENDIX K
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
HONORABLE ROBERT J. TIMLIN,
DISTRICT JUDGE PRESIDING
UNITED STATES OF AMERICA,
PLAINTIFF,
VS.
VISTA PAINT CORPORATION,
DEFENDANT.
CASE NO. ED CV 94-127-RT
VOLUME VII
COURT TRIAL
REPORTER’S TRANSCRIPT OF PROCEEDINGS
LOS ANGELES, CALIFORNIA
THURSDAY, MAY 4, 1995
DOROTHY BABYKIN
PRO TEM COURT REPORTER
429) - U. S. DISTRICT COURTHOUSE
312 NORTH SPRING STREET
LOS ANGELES, CALIFORNIA 90012
LOS ANGELES, CALIFORNIA
86a
THURSDAY, MAY 4, 1995; 8:40 A.M.
**
THE COURT: CALL THE CASE OF THE UNITED
STATES OF AMERICA VERSUS VISTA PAINT
CORPORATION. THE PARTIES -- ALL COUNSEL ARE
PRESENT AS WELL AS MR. EDDIE FISCHER.
BEFORE WE RETURN TO RULING ON
OBJECTIONS TO THE REMAINING EXHIBITS, TO
WHICH OBJECTIONS ARE STILL PENDING, THE
COURT'S GOING TO NOW STATE ITS RULING ON THE
ISSUE WHICH WAS BRIEF BY THE PARTIES
REGARDING THE QUESTION OF WHETHER THERE’S A
BURDEN OF PROOF AT THE TRIAL OF PENALTIES --
PENALTY.
MS. BREMER: YOUR HONOR, IF I MAY.
THE COURT: YES.
MS. BREMER: I THINK THE QUESTION --
CERTAINLY TO THE EXTENT THAT WE UNDERSTOOD
AND BRIEFED IT -- WAS THE QUESTION OF
STANDARD OF PROOF.
THE COURT: THAT’S CORRECT. AND
READING THE CASES, ?'VE CONCLUDED THAT IF
THERE IS NO BURDEN OF PROOF, THERE’S NO
STANDARD.
(LAUGHTER.)
THE COURT: I’M BROADENING THE ISSUE TO
GIVE YOU A BROADER RULING.
87a
THE COURT CONCLUDES THAT THE PENALTIES
PROVIDED IN THE CLEAN AIR ACT FOR VIOLATIONS
OF THE CLEAN AIR ACT ARE CIVIL IN NATURE. THEY
ARE NOT CRIMINAL OR QUASI CRIMINAL.
THE COURT FURTHER CONCLUDES THAT
UNDER THE CLEAN AIR ACT, THERE IS NO BURDEN
OF PROOF ON EITHER PARTY IN A TRIAL, WHICH IS
SOLELY ON THE ISSUE OF THE AMOUNT OF CIVIL
PENALTIES, IF ANY, WHICH THE COURT WILL ORDER
THE DEFENDANT TO PAY.
BASED ON THE CONCLUSION THAT THERE’S
NO BURDEN OF PROOF IN THIS PARTICULAR TRIAL.
THE COURT DEEMS THE ISSUE OF THE STANDARD OF
THE BURDEN OF PROOF TO BE MOOT.
ONCE THE LIABILITY FOR PAYMENT OF THE
PENALTY IS DETERMINED BY THE COURT, AND THE
COURT AT A LATER TRIAL ON THE PENALTY ISSUE
RECEIVES ADMISSIBLE EVIDENCE FROM BOTH SIDES,
AND THEN EXERCISES ITS DISCRETION IN
DETERMINING THE AMOUNT, IF ANY, OF THE
PENALTY AFTER WEIGHING AND BALANCING THE
PROPER STATUTORY AND COMMON LAW FACTORS
AGAINST THE FACTS WHICH IT FINDS FROM ALL THE
EVIDENCE ADMITTED AT TRIAL, IS THE GOVERNING
PRINCIPLE AS TO HOW THE COURT CONSIDERS THE
DECISION-MAKING PROCESS AND ALSO HAS GUIDED
THE COURT IN ARRIVING AT ITS CONCLUSION THAT
THERE’S NO BURDEN OF PROOF IN THIS PARTICULAR
TRIAL.
NOW, THAT WILL IMPACT THE ORDER OF
ARGUMENT. THERE WILL BE CLOSING ARGUMENT.
BUT THERE WILL BE ONLY TWO CLOSING
ARGUMENTS. AND IT’S MY UNDERSTANDING THAT
88a
THE ARRANGEMENT’S ARE THAT THE GOVERNMENT
WILL MAKE THE FIRST CLOSING ARGUMENT.
* * *
89a
APPENDIX L
RICHARD B. STEWART
Assistant Attorney General
STEPHEN JOHNSON
Trial Attorney
Environmental Defense Section
Environment and Natural Resources Division
United States Department of Justice
P.O. Box 23986
Washington, D.C. 20026-3986
Telephone: (202) 514-0375
LOURDES G. BAIRD
United States Attorney
PETER HSIAO
Assistant United States Attorney
SCOTT H. PARK
Assistant United States Attorney
Room 7516, Federal Building
300 North Los Angeles Street
Los Angeles, California 90012
Telephone: (213) 894-2285
Attorneys for Third Party Defendant
Environmental Protection Agency and
Plaintiff United States of America
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
UNITED STATES OF AMERICA,
Plaintiff,
V.
90a
VISTA PAINT CORPORATION,
Defendant.
VISTA PAINT CORPORATION,
Counterclaimant,
v.
UNITED STATES OF AMERICA,
Counterdefendant.
VISTA PAINT CORPORATION,
Third Party Plaintiff,
V.
ENVIRONMENTAL PROTECTION AGENCY;
CALIFORNIA AIR RESOURCES BOARD;
TECHNICAL REVIEW GROUP; SOUTH
COAST AIR QUALITY MANAGEMENT
DISTRICT; SAN DIEGO AIR POLLUTION
CONTROL DISTRICT,
Third Party Defendants.
No. CV 90-6449 (R)
PROPOSED ORDER DISMISSING DEFENDANT’S
COUNTERCLAIM, DISMISSING DEFENDANT’S
THIRD PARTY COMPLAINT, AND STRIKING
CERTAIN AFFIRMATIVE DEFENSES
9la
The motion of plaintiff United States of America to dismiss
defendant Vista Paint Corporation’s counterclaim and to strike
certain affirmative defenses in this action, and the motions of
the third party defendants, Environmental Protection Agency,
California Air Resources Board, Technical Review Group,
South Coast Air Quality Management District and San Diego
Air Pollution Control District, to dismiss defendant’s third
party complaint in this action, came on regularly for hearing
before this Court on June 17, 1991. Appearing on behalf of
plaintiff United States of America and third party defendant
Environmental Protection Agency were Stephen M. Johnson
and Peter Hsiao. Appearing on behalf of the third party
defendant South Coast Air Quality Management District was
Barbara Baird. Appearing on behalf of the third party
defendant San Diego Air Pollution Control District was Miriam
Milich. Appearing on behalf of the third party defendants
Technical Review Group and California Air Resources Board
was Norman N. Flette. Appearing on behalf of the defendant
and third party plaintiff was William H. Smiland. After
considering the moving and opposition papers, the arguments
of counsel and all other matters presented to the Court:
IT IS HEREBY ORDERED that:
1. The motions of the third party defendants
Environmental Protection Agency, South Coast Air Quality
Management District, San Diego Air Pollution Control District,
California Air Resources Board and Technical Review Group
to dismiss defendant Vista Pain["] Corporation’s third party
complaint are granted in their entirety and the third party
complaint is dismissed with prejudice with respect to all third
party defendants based upon the following grounds:
* [So in original. ]
92a
a. The Court lacks subject matter jurisdiction to review
the claims raised in the third party complaint;
b. The claims asserted by the defendant in the third party
complaint fail to state a claim upon which relief can be
granted.
2. Plaintiff United States of America’s motion to dismiss
defendant’s counterclaim is granted in its entirety and ihe
counterclaim is dismissed with prejudice based upon the
following grounds:
a. The Court lacks subject matter jurisdiction to review
the claims raised in the counterclaim;
b. The claims asserted by the defendant in the
counterclaim fail to state a claim upon which relief can be
granted;
3. Defendant’s First through Sixth, Eighth, Twelfth,
Thirteenth, and Fifteenth through Eighteenth purported
affirmative defense, inclusive, are stricken in their entirety.
DATED: This 23rd day of une, 1991
July
/stamp/ MANUEL L. REAL ____
MANUEL L. REAL
Chief United States District Judge
Submitted by:
LOURDES G. BAIRD
United States Attorney
SCOTT H. PARK
Assistant United States Attorney
93a
/s/ Peter Hsiao Date 6-21-91
Assistant United States Attorney
Attorneys for Plaintiff United States of America and
Third Party Defendant Environmental Protection Agency
PETER M. GREENWALD
District Counsel
/s/ Peter Hsiao for Barbara Baird
les dati lstonal
BARBARA BAIRD
Principal Deputy District Counsel
Attorneys for Third Party Defendant South Coast Air
Quality Management District
Date 6-21-91
LLOYD M. HARMON, JR.
County Counsel
by telephone authorization Date 6-21-91]
MIRIAM MILICH, Deputy
Attorneys for Third Party Defendant San Diego Air Pollution
Control District
DANIEL F. LUNGREN
Attorney General
R. H. CONNETT
Assistant Attorney General
by telephone authorization Date 6-21-91
NORMAN N. FLETTE
Deputy Attorney General
Attorneys for Third Party Defendants Technical Review Group
California Air Resources Board
* * *
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.