United States v. Gurley ( 2004 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206 2 United States v. Gurley No. 03-5132
ELECTRONIC CITATION: 2004 FED App. 0320P (6th Cir.)
File Name: 04a0320p.06 Gladstein, UNITED STATES DEPARTMENT OF JUSTICE,
Washington, D.C., for Appellee. ON BRIEF: Kent J.
Rubens, RIEVES, RUBENS & MAYTON, West Memphis,
UNITED STATES COURT OF APPEALS Arizona, James W. Gentry, Jr., SPEARS, MOORE,
REBMAN & WILLIAMS, Chattanooga, Tennessee, for
FOR THE SIXTH CIRCUIT Appellant. Richard Gladstein, UNITED STATES
_________________ DEPARTMENT OF JUSTICE, Washington, D.C., for
Appellee.
UNITED STATES OF AMERICA , X
Plaintiff-Appellee, - _________________
-
- No. 03-5132 OPINION
v. - _________________
>
, RONALD LEE GILMAN, Circuit Judge. The
WILLIAM M. GURLEY, -
Defendant-Appellant. - Environmental Protection Agency (EPA) issued an
information request to William M. Gurley on February 6,
N 1992 pursuant to § 104(e) of the Comprehensive
Appeal from the United States District Court Environmental Response, Compensation, and Liability Act
for the Western District of Tennessee at Memphis. (CERCLA), codified at 42 U.S.C. §§ 9604(e) and 9613(b).
No. 93-02755—Bernice B. Donald, District Judge. Gurley was directed to respond to the request within 15 days.
He was warned that the failure to do so could result in an
Argued: August 4, 2004 enforcement action by the EPA and civil penalties of up to
$25,000 per day of noncompliance.
Decided and Filed: September 21, 2004
The EPA filed a complaint on August 8, 1993, alleging that
Before: CLAY and GILMAN, Circuit Judges; MATIA, Gurley had failed to adequately respond to the agency’s
Chief District Judge.* request. Gurley answered that he had previously disclosed
the requested information on January 4, 1989 in a deposition
_________________ taken by the EPA in a companion case. See United States v.
Gurley Refining Co., 788 F. Supp. 1473 (E.D. Ark. 1992),
COUNSEL aff’d in part and rev’d in part, 43 F.3d 1188 (8th Cir. 1994).
Summary judgment was granted in favor of the United States
ARGUED: Kent J. Rubens, RIEVES, RUBENS & on December 30, 1998, and its petition for the imposition of
MAYTON, West Memphis, Arizona, for Appellant. Richard civil penalties was granted on November 26, 2002.
Gurley appeals both the grant of summary judgment and
*
the consequent imposition of approximately $1.9 million in
The Honorable Paul R. Matia, Chief United States District Judge for civil penalties. He argues that (1) the information request was
the Northern District of Ohio, sitting by designation.
1
No. 03-5132 United States v. Gurley 3 4 United States v. Gurley No. 03-5132
invalid, (2) he is exempt from compliance with the agency’s disposed of this waste by dumping it at, among other
request, (3) the EPA’s action is barred by the doctrine of res locations, the South Eighth Street landfill.
judicata, and (4) the agency’s motivation remains a disputed
issue of material fact. Gurley also challenges the imposition On February 6, 1992, the EPA, pursuant to its authority
of the penalty against him on the grounds that (1) a portion of under 42 U.S.C. § 9604(e)(2), issued a general notice
the fine was based upon a nonexistent cause of action, (2) the letter and information request to the defendant. After
fine levied was in violation of the Excessive Fines and Due several unsuccessful attempts to deliver that request, the
Process Clauses of the United States Constitution, and (3) the United States Marshals Service served it on the
district court abused its discretion by imposing the penalty. defendant’s wife. The information request sought
Finally, Gurley argues that the statutory scheme that provides Gurley’s individual knowledge of, among other things,
for the issuance of information requests violates the Due Gurley’s assets, generators of material that [was]
Process Clause of the Fifth Amendment to the United States disposed of at the site, site operations, and the structure
Constitution. For the reasons set forth below, we AFFIRM of GRC.
the judgment of the district court.
On September 15, 1992, the defendant sent a letter to the
I. BACKGROUND EPA stating his position that GRC was the entity that the
EPA should contact for information related to the site.
The relevant facts are set forth in the district court’s two The EPA responded on January 7, 1993, by indicating
opinions, the first of which granted the EPA’s motion for that the February 6, 1992 information request was
summary judgment and the second of which granted the addressed to the defendant individually and must be
agency’s petition to impose a civil penalty. In its summary answered in that capacity. The EPA also posed six
judgment order, the court summarized the factual background additional questions to Gurley. On January 18, 1993, the
as follows: defendant again sent a letter refusing to respond
individually and suggesting that any information requests
This case arises from EPA investigative actions be directed to GRC.
surrounding a former landfill near South Eighth Street in
West Memphis, Arkansas. As early as 1982, the EPA The United States then filed [its] action. Gurley
detected various hazardous chemicals at the site. Later subsequently provided the EPA with an individual
investigations led the EPA on October 14, 1992, to place response; however, he refused to answer the questions
the site on the CERCLA National Priorities list. The regarding his financial condition and he ignored the six
United States is presently engaged in several cases additional questions added to the EPA’s original request
surrounding the attempt to clean up that site. for information. The United States also believes that
Gurley’s responses to the other questions were
From 1962 until the present, the plaintiff was the incomplete.
president and majority stockholder in Gurley Refining
Company (“GRC”). GRC bought used oil and treated it, A significant delay in the proceedings was caused by
thereby allowing it to resell that oil. The refining process Gurley’s filing for personal bankruptcy in July of 1995. His
created a by-product residue of oily waste. GRC bankruptcy petition was finally dismissed in August of 1997,
allowing the district court to move forward on the EPA’s
No. 03-5132 United States v. Gurley 5 6 United States v. Gurley No. 03-5132
motion for summary judgment. The motion was granted on district court must construe the evidence and draw all
December 30, 1998, with the order providing that “the USA reasonable inferences in favor of the nonmoving party.
remains free to petition the court for the imposition of a civil Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
penalty under 42 U.S.C. [§] 9604(e)(5)(B).” Such a petition 574, 587 (1986). The central issue is “whether the evidence
was filed by the EPA in June of 1999. The petition was presents a sufficient disagreement to require submission to a
granted in November of 2002, with penalties imposed in the jury or whether it is so one-sided that one party must prevail
amount of $1,908,000 based upon the following calculation: as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 251-52 (1986). In the present case, the parties had
First, the Court fines Gurley $402,000 for the period agreed in their joint pretrial order that no issues of material
from February 28, 1992 until September 15, 1992, the fact remained.
date Gurley finally responded ($2,000/day x 201 days =
$402,000). Second, the Court fines Gurley $682,000 for 2. Statutory framework
the period from September 16, 1992, until July 29, 1994,
the date Gurley provided deposition testimony regarding The EPA is authorized to issue information requests
other PRPs [Potentially Responsible Parties] and Site pursuant to § 104(e) of CERCLA, a provision that is codified
operations ($1,000/day x 682 days = $682,000). Finally, at 42 U.S.C. § 9604(e)(2) and reads as follows:
the Court fines Gurley $824,000 for the period from July
30, 1994, until February 2, 1999, when Gurley answered Access to information
the Section 104(e) request under Court order ($500/day
x 1,648 days = $824,000). The Court bases this three- Any officer, employee, or representative described in
tiered penalty structure on the varying levels of paragraph (1) may require any person who has or may
egregiousness Gurley demonstrated in failing to comply have information relevant to any of the following to
fully with the EPA’s information requests. furnish, upon reasonable notice, information or
documents relating to such matter:
This timely appeal followed.
(A) The identification, nature, and quantity of
II. ANALYSIS materials which have been or are generated, treated,
stored, or disposed of at a vessel or facility or transported
A. Whether Gurley is liable for failing to respond to the to a vessel or facility.
EPA’s information request
(B) The nature or extent of a release or threatened
1. Standard of review release of a hazardous substance or pollutant or
contaminant at or from a vessel or facility.
The district court’s grant of summary judgment is reviewed
de novo. Therma-Scan, Inc. v. Thermoscan, Inc., 295 F.3d (C) Information relating to the ability of a person to
623, 629 (6th Cir. 2002). Summary judgment is proper where pay for or to perform a cleanup.
there exists no genuine issue of material fact and the moving
party is entitled to judgment as a matter of law. Fed. R. Civ. In addition, upon reasonable notice, such person either (i)
P. 56(c). In considering a motion for summary judgment, the shall grant any such officer, employee, or representative
access at all reasonable times to any vessel, facility,
No. 03-5132 United States v. Gurley 7 8 United States v. Gurley No. 03-5132
establishment, place, property, or location to inspect and is not too indefinite; and (3) the information requested is
copy all documents or records relating to such matters or relevant to legislative purposes.” United States v. Pretty
(ii) shall copy and furnish to the officer, employee, or Products, Inc., 780 F.Supp 1488, 1506 (S.D. Ohio 1991).
representative all such documents or records, at the
option and expense of such person. The district court below observed that the three elements
from Pretty Products were satisfied in this case because:
Liability for unreasonably failing to satisfy a properly (1) “The EPA was authorized by Congress, pursuant to
issued request for information is set forth in 42 U.S.C. 42 U.S.C. § 9604(e)(2), to require any person with
§ 9604(e)(5)(B), which reads in pertinent part as follows: information relevant to the EPA’s environmental
investigation to furnish requested information or documents
In the case of information or document requests or upon reasonable notice”; (2) “the scope of the request . . . was
orders, the court shall enjoin interference with such narrowly tailored to conform to the specific areas of inquiry
information or document requests or orders or direct within § 9604(e)(2)”; and (3) “the requests were consonant
compliance with the requests or orders to provide such with the legislative purpose of CERCLA because the answers
information or documents unless under the circumstances provided to the requests would facilitate the EPA’s
of the case the demand for information or documents is investigation and subsequent cleanup of the Site.”
arbitrary and capricious, an abuse of discretion, or
otherwise not in accordance with law. Gurley does not appear to dispute the first two elements.
He argues, however, that because he gave his deposition
The court may assess a civil penalty not to exceed testimony to the EPA on January 4, 1989, in which he
$25,000 for each day of noncompliance against any allegedly provided all of the relevant information, the
person who unreasonably fails to comply with th[is] subsequent information request must not have been “truly for
provision[.] the purpose of determining a need for response or choosing a
response action at the Site.” Gurley thus contends that “the
3. Whether the EPA’s information request was valid EPA sought information . . . (which it had already received
from him) without having a statutorily justifiable purpose for
The validity of an administrative request for information making the information request.”
generally turns on the reasonableness of the request. See
United States v. Morton Salt Co., 338 U.S. 632, 652-53 But the government points out in its brief that “the 1989
(1950) (quotation marks omitted) (“The gist of the protection deposition concerned the Gurley Pit, not the South 8th Street,
is . . . that the disclosure sought shall not be unreasonable.”). litigation. At the deposition, counsel for Gurley objected to
Although “a governmental investigation . . . may be of such any questions specifically related to the South 8th Street
a sweeping nature and so unrelated to the matter properly Site.” The government cites the following example from the
under inquiry as to exceed the investigatory power,” id. at deposition as illustrative of this point:
652, “it is sufficient if the inquiry is within the authority of
the agency, the demand is not too indefinite and the Q. [Counsel for the EPA] Why did you stop placing
information sought is reasonably relevant.” Id. An EPA waste in the City of West Memphis dump in the 1960s?
information request, therefore, “will be enforced where:
(1) the investigation is within EPA’s authority; (2) the request
No. 03-5132 United States v. Gurley 9 10 United States v. Gurley No. 03-5132
Mr. Rieves [counsel for Gurley]: I would object to that station dealer for any response costs or damages resulting
question, Craig. I don’t see what relevance the City of from a release or threatened release of recycled oil, or use the
West Memphis dump has to this lawsuit with regard to authority of section 9606 of this title against a service station
Gurley Pit at a separate location. dealer . . . .”). Gurley cites no authority for the proposition
that, despite its limited scope, § 9614(c) also operates to
In addition, Gurley refused at his deposition to disclose exempt service station dealers from compliance with
personal financial data or to provide information about other information requests. Nor does Gurley’s argument find
PRPs. support in the text of § 9604(e)(2), which states that the EPA
may issue an information request to “any person who has or
Gurley also argues that even if the information request was may have information . . . .” (emphasis added).
valid at the time it was issued, he was no longer obligated to
respond because the purposes that his disclosures would have The government’s alternative contention is that Gurley is
served “had, for all intents and purposes, been accomplished not a service station dealer as defined in § 9601(37)(A)(ii)
prior to the time [when he] was required . . . to respond to the because, among other reasons, he allegedly did not comply
information request.” But Gurley fails to cite any authority with the Solid Waste Disposal Act. Because the obligation to
for the proposition that a party may escape liability for failure respond to an EPA information request is not affected by
to respond to an information request by delaying until a one’s status as service station dealer, however, the question of
response is no longer of use to the agency. Furthermore, the whether Gurley would so qualify under § 9601(37)(A)(ii) is
need for a response and the usefulness of the information, irrelevant and therefore need not be decided.
which was requested on February 6, 1992, continued until at
least November of 1998, a time before which the cleanup at 5. Whether the district court erred in upholding the
the site in question had not yet begun. The information EPA’s request for information
sought by the EPA in the request was also relevant to the
agency’s ability to recover its incurred response costs, a valid Gurley contends that the EPA abused its discretion and
purpose that would continue even after the completion of acted in an arbitrary and capricious manner by requesting
cleanup. information from Gurley that he had already provided in his
1989 deposition. Because the 1989 deposition testimony
4. Whether Gurley was exempt from compliance concerned only the Gurley Pit, however, it did not exhaust
inquiry relevant to the cleanup and cost recovery relating to
Gurley argues that he is simply a service station dealer the South Eighth Street Site. The EPA’s subsequent issuance
under 42 U.S.C. § 9601(37)(A)(ii) (defining a “service station of an information request relating to the latter site was
dealer”) and, as such, is exempt from compliance with the therefore not “a burdensome repetition” as Gurley protests.
information request by virtue of 42 U.S.C. § 9614(c)
(exempting service station dealers from certain abatement 6. Whether the EPA issued its information request with
actions brought under 42 U.S.C. §§ 9606 and 9607). But the an improper motive or intent
service-station-dealer exception pertains to liability only
under §§ 9606 and 9607. See 42 U.S.C. § 9614(c) (“No Gurley alleges that the district court failed to comprehend
person . . . may recover, under the authority of subsection that it was “granting a summary judgment on a matter that
(a)(3) or (a)(4) of section 9607 of this title, from a service relied upon, among other matters, motivation and intent.”
No. 03-5132 United States v. Gurley 11 12 United States v. Gurley No. 03-5132
The government responds by pointing out that Gurley raises Gurley alleges that the district court committed reversible
this argument for the first time on appeal. Indeed, the parties error when it “improperly assumed that the Eighth Circuit
had previously agreed in their joint pretrial order that no decision was law of the case as to Gurley and he could not
issues of material fact remain. We will hold Gurley to his rely upon the doctrine of res judicata.” We find no suggestion
pretrial stipulation. See United States v. Ninety-Three (93) in the district court’s order, however, that it rejected the res
Firearms, 330 F.3d 414, 424 (6th Cir. 2003) (“This court has judicata argument on the ground that the Eighth Circuit’s
repeatedly held that it will not consider arguments raised for decision precluded the court below from considering the
the first time on appeal unless our failure to consider the issue argument. Rather, the district court rejected the argument
will result in a plain miscarriage of justice.”) (quotation marks based upon the same reasoning as the Eighth Circuit had
omitted). We perceive no such miscarriage of justice to exist articulated. The district court further concluded that the res
with regard to the EPA’s information request. judicata argument had been abandoned by Gurley in his
supplemental response to the motion for summary judgment.
7. Whether the doctrine of res judicata bars the EPA’s We find no error in the district court’s analysis of this issue.
claim
B. Whether the district court erred by imposing civil
Gurley argues that a criminal action brought under the 1970 penalties on Gurley
Rivers and Harbors Act against GRC for allegedly dumping
waste in the Mississippi River bars the EPA from bringing the 1. Standard of review
current CERCLA § 104(e) action against him. The district
court concluded that Gurley’s res judicata argument was We will uphold the district court’s imposition of a civil
without merit, reasoning as following: penalty unless it has abused its discretion. See Bartling v.
Fruehauf Corp., 29 F.3d 1062, 1068 (6th Cir. 1994)
Gurley’s original response to summary judgment also (“Because the statute [ERISA] expressly grants a district
argued that the United States’ CERCLA claim was court discretion in imposing penalties for an employer’s
barred by res judicata. . . . An almost identical failure to disclose, we review only for abuse of discretion.”);
contention was subsequently rejected by the Eighth see also Tull v. United States, 481 U.S. 412, 425 (1987)
Circuit in United States v. Gurley, 43 F.3d 1188 (8th Cir. (referring to the district court’s imposition of civil penalties
1994). That case involved a separate CERCLA for violation of the Clean Water Act as “highly
superfund site, but as in this case, GRC had been discretionary”).
previously prosecuted under the Clean Water Act. The
Eighth Circuit held that because Gurley had not been a An abuse of discretion will be found where the reviewing
named party in the previous suit, he could be sued in his court is “firmly convinced that a mistake has been made.”
individual capacity in a subsequent action. This court Adcock-Ladd v. Sec’y of Treasury, 227 F.3d 343, 349 (6th
adopts the Eighth Circuit’s reasoning. Regardless of this Cir. 2000) (quotation marks omitted) (defining the term
finding, it appears from his supplemental response to “abuse of discretion” to mean that “the lower court relie[d] on
summary judgment that Gurley has abandoned his res clearly erroneous findings of fact, . . . improperly applie[d]
judicata argument. the law[,] or use[d] an erroneous legal standard.” Id.
(quotation marks omitted). Legal conclusions regarding the
violation of constitutional rights are reviewed de novo. See
No. 03-5132 United States v. Gurley 13 14 United States v. Gurley No. 03-5132
United States v. Bajakajian, 524 U.S. 321, 337 n.10 (1998) defendant was shown. Id. at 371-72. In addition, although
(“[T]he question whether a fine is constitutionally excessive the government’s complaint originally sought penalties only
calls for the application of a constitutional standard to the for the period of time after September 11, 1992, its June 15,
facts of a particular case, and in this context de novo review 1999 petition for civil penalties discusses Gurley’s avoidance
of that question is appropriate.”). scheme as beginning in February of 1992. In light of the
government’s petition that put Gurley on notice that it was
2. Statutory framework going to present evidence of his avoidance that began in
February of 1992, and Gurley’s failure to object to the
“The court may assess a civil penalty not to exceed $25,000 admission of such evidence, we conclude that the district
for each day of noncompliance against any person who court properly exercised its discretion by fining Gurley for his
unreasonably fails to comply with th[is] provision[.]” noncompliance during this earlier period of time.
42 U.S.C. § 9604(e)(5)(B); see also United States v.
Ponderosa Fibres of America, Inc., 178 F. Supp. 2d 157, 161 4. Whether the district court’s imposition of civil
(N.D.N.Y. 2001) (“[W]hether the assessment of civil penalties violated the Excessive Fines and Due
penalties for non-compliance is appropriate turns on the Process Clauses of the United States Constitution
question of the reasonableness of the failure to comply with
an Information Request.”). With a statutory maximum of $25,000 per day in potential
civil penalties, an imposition of tens of millions of dollars
3. Whether the district court imposed a fine based upon could have been assessed in this case, but only a fraction of
a nonexistent cause of action that amount was ultimately levied: $1,908,000. Gurley
nevertheless argues that the penalty imposed on him is
Gurley contends that because the complaint sought unconstitutionally excessive, citing United States v.
penalties only for the period of time from September 11, 1992 Bajakajian, 524 U.S. 321, 334 (1998) (“[A] punitive
forward, the district court erred by imposing a fine in the forfeiture violates the Excessive Fines Clause if it is grossly
amount of $402,000 for the period of time from February 28, disproportional to the gravity of a defendant’s offense.”). In
1992 through September 15, 1992. The government responds light of Gurley’s wilful noncompliance for a period of seven
that Gurley consented to the consideration of these dates by years, however, we are not persuaded that the fine is “grossly
failing to object at trial to the introduction of evidence disproportional to the gravity of [the] defendant’s offense.”
regarding his bad faith avoidance of the EPA’s letters during Id. at 334.
the time in question. (The history of the EPA’s repeated
attempts to get Gurley to acknowledge receipt of the Gurley’s assertion of a due process violation is likewise
information request is detailed in the district court’s opinion.) without merit because a rational basis exists for penalizing
those who, like Gurley, purposefully ignore the EPA’s
In support of its “implied consent” theory, the government information requests over long periods of time. Penalties
cites Craft v. United States, 233 F.3d 358, 371-73 (6th Cir. such as those imposed here will encourage other PRPs to
2000), rev’d on other grounds by 535 U.S. 274 (2002). The share information that might be helpful in the cleanup of
Craft decision held, among other things, that the IRS could Superfund sites.
pursue a theory that it had not pled because the issue was tried
with the implied consent of the parties and no prejudice to the
No. 03-5132 United States v. Gurley 15 16 United States v. Gurley No. 03-5132
5. Whether the district court abused its discretion by C. Whether CERCLA § 104(e) violates the Due Process
ordering Gurley to pay a $1,908,000 civil penalty Clause of the Fifth Amendment to the United States
Constitution
Gurley acknowledges that the “trial judge’s analysis of the
factors to be considered in assessing the civil penalty was Gurley “invite[s] this Court to visit the question of whether
correct.” He nevertheless argues that the district court abused the applicable portion of 104(e) (information requests),
its discretion by imposing the penalty. We disagree. The particularly as it was interpreted and enforced by the district
district court properly addressed each of the factors that court, violates the Due Process Clause of the Fifth
district courts routinely consider before arriving at its penalty. Amendment” in light of the Eleventh Circuit’s decision in
See United States v. Taylor, 8 F.3d 1074, 1078 (6th Cir. 1993) Tennessee Valley Authority v. Whitman, 336 F.3d 1236 (11th
(“[C]ourts have identified the following factors, among Cir. 2003) (holding that the penalty provisions of the Clean
others, as bearing on the amount of a penalty: (1) the good or Air Act are unconstitutional because they can be assessed as
bad faith of the defendant, (2) the injury to the public, (3) the part of an administrative compliance order). That decision,
defendant’s ability to pay, (4) the desire to eliminate the however, is easily distinguishable. The Tennessee Valley
benefits derived by a violation, and (5) the necessity of Authority case concerned the issuance of an administrative
vindicating the authority of the enforcing party.”) (quotation compliance order imposing a penalty based upon the agency’s
marks omitted); United States v. Barkman, 784 F. Supp. own determination that the Clean Air Act had been violated.
1181, 1189 (E.D. Pa. 1992) (holding that the same five factors Id. at 1258. In the present case, by contrast, Gurley was
should be considered in assessing civil penalties against an afforded all of the process that he was due because a judicial
operator of a landfill for failure to comply with information determination that CERCLA had been violated followed a full
requests issued to him pursuant to CERCLA). Most of the and fair hearing before a federal judge. Id. (“Before the
factors’ application to Gurley are self-evident. As for Government can impose severe civil and criminal penalties,
Gurley’s ability to pay the civil penalty, the district court the defendant is entitled to a full and fair hearing before an
found as follows: impartial tribunal at a meaningful time and in a meaningful
manner.”) (quotation marks omitted).
The assessment of Gurley’s ability to pay a civil penalty
has been complicated by Gurley’s bankruptcy III. CONCLUSION
proceedings over the past few years. Nevertheless, as of
November 9, 2001, the record clearly indicates that For all of the reasons set forth above, we AFFIRM the
Gurley’s estate has nearly $23,000,000 available for judgment of the district court.
distribution. . . . After subtracting $16,500,000 for the
United States’ response costs and $2,300,000 for the
counsel for the bankruptcy trustee, $4,200,000 remain
available to pay the bankruptcy trustee and any civil
penalty against Gurley. . . . Gurley has the ability to pay
the substantial penalty levied[.]
In sum, we find no abuse of discretion in the district court’s
analysis and therefore uphold the civil penalty as imposed.