The Eighth Circuit for the U.S. Court of Appeals has upheld an $11 million judgment entered against two subsidiaries of Titan International (collectively “Titan”) by a lower court which ruled Titan had improperly sold contaminated buildings to avoid cleanup.  United States v. Dico, Inc., No. 17-3462 (8th Circuit 2019).  The Court’s holding affirms the lower court’s judgment that Titan violated the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA).

In 2010, the U.S. Department of Justice filed suit on behalf of the EPA alleging Titan failed to clean up polychlorinated biphenyls, or PCBs, and other contaminates before selling the land to another company. In 2017, Titan was ordered to pay $5.45 million in costs the U.S. Government incurred for disposing of hazardous substances related to the site, and another $5.45 million in punitive damages.

On appeal, Titan argued the court misapplied the law regarding arranger liability and held it to a more stringent standard than has been applied in other cases.  Titan claimed it did not intend to arrange for the disposal of hazardous substances when it engaged in arms-length transactions with a third-party.

The Eighth Circuit rejected this argument and upheld the lower court’s determination that Titan intended to arrange for the disposal of the PCB-laden material by seizing the opportunity to offload the contaminated buildings and intentionally chose to disregard the risks to human health and the environment that dismantling the contaminated buildings without proper precautions entailed. In doing so, the Eighth Circuit affirmed the lower court’s finding that this type of arrangement was “precisely” the kind of behavior that CERCLA was meant to discourage.