Type: Law Bulletins
Date: 01/20/2012

Employer Not Liable Under CERCLA For Employee's Actions

On November 9, 2011, the United States District Court for the District of Minnesota (No. 0:11-cv-00619-DWF-FLN), ruled that Northern States Power Company, through its wholly owned subsidiary Xcel Energy, (“Xcel”) was not liable for the unauthorized actions of its former employee that resulted in environmental contamination. 

Without the Xcel’s knowledge, one of its long-time employees took a number of electrical capacitors containing Polychlorinated Biphenyls (“PCBs”) and stored the capacitors on his property. The employee subsequently died and his property passed to his wife. Sometime later, the wife asked Xcel to remove the capacitors from the property. In doing so, Xcel discovered that the capacitors had leaked PCBs onto the property. 

After discovering the PCB contamination, the wife contracted to sell the property to Plaintiffs. However, she did not disclose the previous presence of the capacitors on the property. Consequently, Plaintiffs sued Xcel, alleging that the PCB-containing capacitors caused the property to lose virtually all of its value and caused Plaintiffs to suffer substantial and varying forms of harm. Plaintiffs sought to recover their alleged damages under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (“CERCLA”), and other Minnesota state environmental laws. 

Xcel moved to dismiss Plaintiffs’ CERCLA claim arguing that Plaintiffs failed to allege facts sufficient to establish Xcel was a “responsible party” or that the employee’s actions were within the scope of his employment.  In granting Xcel’s motion, the district court noted that all of Plaintiffs’ claims were based on the assumption that Xcel was responsible for the capacitors that the employee transported to his property.  However, Plaintiffs’ complaint did not allege any facts demonstrating how the employee acquired the capacitors. Nor did the complaint offer any facts to buttress Plainitffs’ assertion that Xcel somehow knew of or facilitated the employee’s transportation or storage of the capacitors to the property. 

The statutory prerequisites to properly assert and maintain a CERCLA claim are well-established.  However, the court noted that Plaintiffs’ complaint failed to make even a prima facie showing of these elements.  For example, Plaintiffs did not allege that Xcel was a “covered person,” that Xcel owned or operated the “facility” where the PCBs were released, that Xcel “arranged for disposal” of the PCBs, or that Xcel accepted the PCBs for transport and disposal. Consequently, the court dismissed Plaintiffs’ claim and ruled in favor of Xcel. 

It will be interesting to see if Plaintiff's appeal the Court's ruling or seek to amend their complaint to include the proper CERCLA allegations. This ruling indicates that CERCLA’s broad net of liability does not always ensnare all those who have come in contact with a hazardous substance that is later released.  Before filing a CERCLA claim, a CERCLA plaintiff should ensure that it can satisfy all of the well-established prerequisites of its CERCLA claim.

For more information regarding CERCLA or state environmental law claims, contact Frank Deveau or any member of Taft’s Environmental Practice Group. 

*Significant contributions were made to this article by Julian Harrell.

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