Reply Brief — Production Plated Plastics, Inc. v. United States

No. 91-1869 1 omar oF i.

In The

Supreme Court of the United States

October Term, 1992

-

PRODUCTION PLATED PLASTICS, INC.,

MICHIGAN CITY PLASTICS CO., INC.,

AND MICHAEL J. LADNEY,

Petitioners,

UNITED STATES OF AMERICA; Frank J.

Kelley, Attorney General for the

STATE OF MICHIGAN, ex rel; Michigan

Department of Natural Resources

Commission; Gordon E. Guyer,

Director of the Michigan Department

of Natural Resources,

Respondents.

«

Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Sixth Circuit

¢

REPLY BRIEF OF PETITIONER MICHAEL LADNEY

¢

Douc.as W. VAN Essen (P33169)

Attorney for Petitioners

Business Address & Telephone:

Suite 500, 200 Ottawa Ave., NW

Grand Rapids, MI 49503

(616) 459-1171

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 742-2831

[O [jp

== Soe

ce i oc

TABLE OF CONTENTS

Page

py oR ge ig 6s). eee eer rere re ii

REPLY TO RESPONDENTS’ STATEMENTS OF THE

ef TCR TET TTT OTT EL CRT eC CET TLE TEE Te 1

PTE, 655 56k Nc wince hs ovnceddcqbaenuweb ans 3

I. THE PERSONAL LIABILITY OF THE PETI-

TIONER MICHAEL LADNEY IS RIPE FOR

PONE KRSNA CKEM KDR KEAWOERE OR SUA SRSA Wn EA OOS 3

II. THE RESPONDENTS’ ARGUMENT IN FAVOR

OF PERSONAL LIABILITY IN A CORPORATE

SETTING IS FATALLY FLAWED BECAUSE IT

CANNOT DISTINGUISH BETWEEN CORPO-

RATE AND INDIVIDUAL ACTS............. 4

ee 8 PST ee Teer ETT T Te Terr Terre 7

TABLE OF AUTHORITIES

Page

CASES:

Delloiti vu. Baird, 428 US. 152 (SFG) ys ons isc ciewsces 3

Storer Communications, Inc. v. National Association

of Broadcast Employees, 854 F.2d 144, 146 (6th Cir

| nn rt mys SA Ne aN 3

STATUTES:

33 UGC & IDGRIENG) 66 occa Sanctus eee 7

G2 UR & GOD E, 6 5 occ cnn cndes cewenkse cee 1

G2 US © FETS) on cs vd eines haeees eee 7

Court RULEs:

W.D. Michigan Local Rule ZAC). «6. sssecissuenvsarss 3

REPLY TO RESPONDENTS’

STATEMENT OF THE CASE

Both Respondent State of Michigan (State Br. at 7)

and Respondent United States of America (U.S. Br. at 4)

flatly accuse Production Plated Plastics (“PPP”) of operat-

ing a hazardous waste facility in violation of the Resource

Conservation and Recovery Act, 42 USC § 6901, et seq. for

two years after PPP lost “interim status” in November of

1985 until December of 1987.

While this accusation is technically accurate it fails to

offer the Court the whole story. Both Respondents con-

spicuously fail to note that each acquiesced to PPP’s use

of its surface impoundments (RCRA facilities) during this

two year -period despite the facial violation of RCRA.

Why would the Environmental Protection Agency

(“USEPA”) and Michigan Department of Natural

Resources (“MDNR”) acquiesce to a technical RCRA vio-

lation? The answer is simple and compelling. The well-

being of the environment and the community necessi-

tated such acquiescence.

During this two year period a sewer construction

project was underway, with sewer hook-up achieved in

December of 1987. PPP’s only options during this period

were to use the impoundments or to close, which would

have meant the loss of 400 manufacturing jobs and the

demise of Richland, Michigan’s largest taxpayer and

employer. Furthermore, the closing of the plant would

have eliminated the financial underpinnings of the sewer

extension project and, therefore, would have destroyed

the groundwater remediation system at the plant, a sys-

tem that had to be shut down during this time pending

the extension of the sewer line.

In fact, it is undisputed that in 1986, in the middle of

this two year period, Governor James Blanchard of the

State of Michigan paid a special visit to the plant to

commend PPP for its commitment to the environment

and to maintaining Michigan manufacturing jobs. More-

over, it is undisputed that the United States Environmen-

tal Protection Agency in its October 17, 1985 letter

rejecting the Company’s Part B RCRA Application

blessed the continued temporary use of the PPP surface

impoundments until sewer hook-up could be achieved:

“As you know, we [USEPA] recommend that

you close the waste pile and surface impound-

ments in lieu of pursuing a permit. We are aware

that the feasibility of such closure depends upon your

ability to obtain an NPDES discharge permit or a

local sewer system connection for the plating system

waste water... ”

(Emphasis Added).

While these facts may be incidental to the issue of

personal liability, Petitioner Michael Ladney believes that

it is important for this Court to understand that he is not

a callous RCRA violator but instead is a responsible

industrialist concerned about preserving jobs and clean-

ing up the environment, exactly the type of individual

who is critical to our economic revival and environmental

regeneration.

ARGUMENT

I

THE PERSONAL LIABILITY OF THE PETITIONER

MICHAEL LADNEY IS RIPE FOR REVIEW

Respondent United States argues that the personal

liability of Petitioner Michael Ladney is not ripe for

review because it was not challenged in the district court

and because the Sixth Circuit refused to entertain the

issue. The Respondent is wrong in fact and law.

Petitioner Ladney denied that he was personally lia-

ble as a RCRA owner or operator in his Answer to the

Complaint (J.A. p. 120, 19), as well as in his Responses to

the Respondents’ Motion for summary disposition on

liability (See R73, R79).

It is true that the Petitioner’s arguments on his lack

of RCRA liability were not fully developed in the twenty-

eight days in which he had to respond to the summary

disposition motion under W.D. Michigan Local Rule

29(c). However, the fact that full argument on an issue

may not have been made in district court does not bar

Supreme Court consideration of that issue. Delloiti v.

Baird, 428 U.S. 132 (1976). Accordingly, whether Mr.

Ladney is personally liable under RCRA is an issue ade-

quately raised and litigated in the district court.

In any event, the Sixth Circuit Court of Appeals

reviews the issuance of summary judgment, as was

involved herein, on a de novo basis. Storer Communications,

Inc. v National Association of Broadcast Employees, 854 F. 2d

144, 146 (6th Cir 1988). This rule makes sense given the

truncated time (28 days) in which a party opposing sum-

mary judgment must present countervailing facts and

argument. Thus, even if one considers the issue of

whether Mr. Ladney was personally liable under RCRA

to be an issue first raised before the Sixth Circuit, which it

clearly was not, the Sixth Circuit properly considered the

issue despite erroneously deciding the question.! Under

any view, Petitioner’s liability is ripe for review by this

Court.

II

THE RESPONDENTS’ ARGUMENT IN FAVOR OF

PERSONAL LIABILITY IN A CORPORATE SETTING

IS FATALLY FLAWED BECAUSE IT CANNOT DISTIN-

GUISH BETWEEN CORPORATE AND INDIVIDUAL

ACTS

There is no better justification for a granting of the

Petition in the present case than the muddled logic con-

tained in the USEPA’s Brief in Opposition. On page 7 of

its brief, the USEPA argues that the district court’s find-

ing that Mr. Ladney was a statutory “operator” of the

PPP plant is consistent with common law because of the

“universal rule that an officer of a corporation who takes

1 The USEPA’s suggestion that the Sixth Circuit refused to

consider the issue is simply false. Discussion at oral argument

was almost entirely focused on this issue and the Sixth Circuit

expressly affirmed the liability finding against Mr. Ladney. The

USEPA merely seeks to take advantage of the fact that the Sixth

Circuit Court's affirmation in its per curiam decision contained

no analysis. Mr. Ladney has become painfully aware that an

absence of analysis is not tantamount or equivalent to the

absence of a substantive decision.

part in the commission of a tort by the corporation is

personally liable therefor” and because “no common law

principles are offended when, as here, an individual cor-

porate officer is held responsible for his own conduct.”

The Respondent cites no support for its adventurous

conclusion that the violation of a no fault regulatory

statute like RCRA is a tort. Overlooking for the moment

this glaring deficiency, a compelling question neverthe-

less emerges: What tortious acts did Mr. Ladney commit?

The USEPA attempts to answer this question on page

13 of its brief with the following four undisputed facts:

(1) Mr. Ladney was the president of PPP (as

well as 10 other manufacturing companies).

(2) He was the person listed on the facility’s

1980 Part A RCRA Application as “owner

and operator” although this status was cor-

rected before any RCRA violations

occurred.

(3) He attested in an affidavit to knowledge

about environmental compliance in a state

case that the Respondents maintain is irrel-

evant to this RCRA case.

(4) He was a hands-on corporate president

who kept in close contact with PPP’s opera-

tions by regular telephone contact with the

plant manager.

For the United States government to suggest that

being president of a corporation, signing federal forms,

having some knowledge of a related clean-up matter and

telephoning the plant manager to discuss general busi-

ness subjects is tortious behavior would be humorous if

its implications on our system of commerce and capital

investment were not so potentially deleterious.

The unvarnished reality is that the district court

found Mr. Ladney liable merely because of his status as

the president of a corporation that violated RCRA, rather

than because of any individual acts which he committed.

See portion of district court opinion on page A-14 of

Petitioners Brief. The USEPA knows it cannot defend the

district court’s operative holding in this case because it is

unprecedented under common law, unparalleled in any

other statutory context and because it is wholly unprin-

cipled.

Perhaps the best way to expose the unprincipled

nature of the governments’ reasoning would be to ask the

USEPA or State of Michigan which corporate officials or

employees would not be liable as RCRA “tortfeasors” in

the present case. Are PPP’s corporate directors, vice-

presidents, in-house legal counsel, plant manager, envi-

ronmental specialist, and waste water treatment workers

also liable as “operators” under RCRA?? The only answer

that USEPA or the MDNR can give this Court if presented

with this question on certiorari, is that any or all of such

personnel would have been liable if they had chosen to

sue them. For the reasons more thoroughly detailed in the

Petition for Writ of Certiorari, the governments’ alarm-

ing, unprincipled interpretation of congressional intent in

RCRA must be rejected, since Congress clearly knows

how to qualify the terms “person” or “operator” when it

2 Many of these corporate actors were far more active in the

decisions leading to the RCRA violations that Mr. Ladney, who

was president of eleven (11) manufacturing companies.

intends personal employee liability in a corporate/envi-

ronmental context.?

The simple truth in this case is that no act of Mr.

Ladney was tortious, and no straining of the facts can

remotely justify a conclusion that Mr. Ladney was acting

in a personal, rather than corporate capacity. The

USEPA’s suggestion that Michael Ladney is liable because

he acted individually not corporately lacks any pedagogy

because it blurs all distinctions between individual and

corporate acts. The USEPA’s position also essentially begs

the question of whether Congress intended corporate

actors to be individually and personally liable for the

Company’s no-fault RCRA violations.

¢

CONCLUSION

The personal liability in this case of an officer for

corporate RCRA violations is ripe and compelling for

review. A Writ of Certiorari should be issued.

Respectfully submitted,

Douctas W. VAN EssEN

Law, WEATHERS & RICHARDSON, P.C.

Business Address & Telephone:

200 Ottawa Avenue, N.W.

Suite 500

Grand Rapids, MI 49503

(616) 459-1171

3 See the Clean Water Act, 33 USC § 1348(4)(B) and the

Clean Air Act, 42 USC § 7413(h) which qualify these terms and

provide standards for personal liability in a corporate setting

but only under limited circumstances.