Albany Bank & Trust v. Exxon Mobil Corp ( 2002 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 01-4211
ALBANY BANK & TRUST COMPANY,
not individually, but solely as Trustee
under Trust No. 11-4067,
Plaintiff-Appellant,
v.
EXXON MOBIL CORPORATION, et al.,
Defendants-Appellees.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 01 C 6353—George W. Lindberg, Judge.
____________
ARGUED JUNE 5, 2002—DECIDED NOVEMBER 8, 2002
____________
Before FLAUM, Chief Judge, and DIANE P. WOOD and
WILLIAMS, Circuit Judges.
DIANE P. WOOD, Circuit Judge. Defendant Exxon Mobil
Corporation (Exxon) owns a gas station in Calumet City,
Illinois, that released petroleum from an underground
storage tank. Exxon reported the spill to plaintiff Albany
Bank & Trust Company (Albany), owner of an adjacent
property, and requested access to Albany’s property for
the purpose of investigating whether petroleum had
seeped onto that land as well. Albany refused. Instead, it
sued Exxon and its board of directors alleging various
2 No. 01-4211
violations of state and federal law. The district court
dismissed the complaint on the ground that Exxon had
no duty under federal law to remediate pollution on Al-
bany’s property prior to investigation and that Exxon was
prevented from investigating by Albany itself. We reverse
and remand for further proceedings.1
I
There is little more to the facts than what we have
already stated. On July 8, 1999, Exxon reported a petro-
leum release at its Calumet City facility to the Illinois
Environmental Protection Agency (IEPA). In December
2000, Exxon’s agent, Handex Environmental (Handex),
requested access to investigate petroleum releases that
might have migrated onto Albany’s property. Albany,
through its attorney, responded with a request that Exxon
enter into an access agreement under which it would
make a commitment to remove any contamination dis-
covered on the property as a result of the release and to
reimburse all of Albany’s expenses in obtaining remedi-
ation, including attorneys’ fees. Exxon was willing to
agree to warrant its investigative work, but it refused
to sign the broad agreement Albany had demanded. The
parties negotiated for several months, but they never
reached agreement on access for Exxon or Handex.
Albany instead conducted its own investigation, discov-
ering high levels of MTBE and benzene in the property’s
soil and groundwater. Believing the contamination mi-
grated from the gas station, it initiated this action under
the citizen suit provision of the Resource Conservation
1
We are not sure why the members of the board of directors
were also named, but this question can await further develop-
ment on remand.
No. 01-4211 3
and Recovery Act (RCRA), 42 U.S.C. § 6972, and added
claims under Illinois statutory and common law. On the
RCRA claim, Albany sought both an injunction compel-
ling Exxon to undertake immediate remediation of all con-
tamination on the property and payment of all attorneys’
fees and costs Albany had incurred in the investigation.
The district court dismissed the complaint.
II
A
We review a decision granting a motion to dismiss for
failure to state a claim de novo, accepting all well-pleaded
factual allegations as true and drawing all reasonable
inferences in favor of the plaintiff. Vorhees v. Naper Aero
Club, Inc., 272 F.3d 398, 401 (7th Cir. 2001). Generally,
matters outside the pleadings may not be considered on
such a motion. See FED. R. CIV. P. 12(b). However, this court
has permitted district courts to examine “[d]ocuments
that a defendant attaches to a motion to dismiss . . . if
they are referred to in the plaintiff’s complaint and are
central to her claim.” Venture Assocs. Corp. v. Zenith Data
Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993); see also
Tierney v. Vahle, 304 F.3d 734, 738 (7th Cir. 2002). Relying
on this authority, Exxon claims that we should consider
the proposed access agreements and other correspondence
it exchanged with Albany in reviewing the district court’s
ruling.
We reject Exxon’s argument. In the first place, although
cases like Tierney make it clear that documents attached
to a complaint are part of it for all purposes, and suggest
further that concededly authentic documents referred to
in a complaint that are central to a claim may also be
consulted on a motion under Rule 12(b)(6), the converse
is also true: documents that are neither included in the
plaintiff’s complaint nor central to the claim should not
4 No. 01-4211
be considered on a motion to dismiss. Berthold Types Ltd.
v. Adobe Sys. Inc., 242 F.3d 772, 775 (7th Cir. 2001). In
any event, the district court did not rely in its ruling on
any of the extra materials to which Exxon now points, and
so it would be inappropriate for us to take them into
account for the first time on appeal. In fact, even if one
were to take a more liberal approach to materials outside
the complaint than the one taken in Berthold Types, these
documents could still not be considered, because they
were neither attached to a pleading nor even to Exxon’s
motion to dismiss. Instead, Exxon introduced them in con-
nection with a related motion to disqualify Albany’s coun-
sel. For these reasons, we will consider only the complaint
in resolving this dispute.
B
Both Albany and Exxon contend that this is a simple
case, albeit for entirely different reasons. Albany rests on
the fact that its complaint alleges every element of a
prima facie RCRA case, which means, in its opinion, that
it was error to dismiss it as a matter of pleading. RCRA
is a comprehensive statute governing the treatment, stor-
age and disposal of hazardous waste. City of Chicago v.
Environmental Defense Fund, 511 U.S. 328, 331 (1994).
Its primary purpose is to limit the harmful effects of haz-
ardous waste “to minimize the present and future threat
to human health and the environment.” 42 U.S.C. § 6902(b).
A citizen is empowered under RCRA to bring suit “against
any person, including . . . any past or present generator . . .
who has contributed or who is contributing to the past
or present handling . . . of any solid or hazardous waste
which may present an imminent and substantial endan-
germent to health or the environment.” Id. § 6972(a)(1)(B).
To make out a prima facie claim under RCRA, a plaintiff
must allege (1) that the defendant has generated solid
No. 01-4211 5
or hazardous waste, (2) that the defendant is contributing
to or has contributed to the handling of this waste, and
(3) that this waste may present an imminent and sub-
stantial danger to health or the environment. Cox v. City
of Dallas, 256 F.3d 281, 292 (5th Cir. 2001). Imminence
does not require an existing harm, only an ongoing threat
of future harm. Id. at 299. Albany’s complaint makes
each of these allegations. Its property is contaminated with
petroleum waste at levels that substantially endanger
public health, and it has alleged that Exxon generated
and handled that waste. Therefore, Albany argues, the mo-
tion to dismiss should have been denied.
While Exxon admits that Albany has pleaded each of
these elements, it contends that the complaint contains
additional allegations defeating the RCRA claim, and thus
that Albany has effectively pleaded itself out of court.
Albany admitted that Exxon requested access to its prop-
erty to investigate possible petroleum migration. Albany
also conceded that it refused such access unless Exxon
agreed to remove any contamination discovered on its
property as a result of Exxon’s spill and to reimburse
Albany’s expenses and attorneys’ fees. Exxon claims that
Albany’s actions impeded investigation of potential con-
tamination, and that Albany has thereby forfeited its
right to have a federal court now order an investigation
pursuant to RCRA.
Exxon relies on a single district court case as author-
ity for this proposition. See Aurora Nat’l Bank v. Tri Star
Mktg., Inc., 990 F. Supp. 1020 (N.D. Ill. 1998). There the
plaintiff owned property which it rented to Tri Star, a gas
station operator. At the end of its lease, Tri Star removed
its underground storage tanks, detected waste on the
property, and offered to investigate and remediate. The
plaintiff evicted Tri Star and refused to grant access
for further investigation pending additional rental pay-
ments. Id. at 1025-26. The court in passing noted that “if
6 No. 01-4211
plaintiffs here have impeded the enforcement of environ-
mental laws for their own financial advantage, they have
not acted consistent with the purpose of the statute and
a finding of liability would not be warranted.” Id. at 1026.
In the end, however, the court issued no definitive ruling
on the matter, because there were factual disputes re-
garding whether the plaintiff had wrongfully evicted Tri
Star and thereby impeded cleanup efforts or if Tri Star
had instead dragged its feet on cleaning up the site. Id.
at 1027.
Exxon contends that this case is like Aurora without
the factual disputes. It has tried to investigate its spill
in full compliance with the environmental laws but Albany
has “impeded” its efforts. Exxon filed a report detailing
the contamination on its own property with the IEPA
and would have continued to comply with all necessary
laws if only it could have accessed and investigated the
property.
Despite Exxon’s claims, we are not persuaded that any
of the reasoning in Aurora is helpful for this case. (The
decision is obviously not controlling on this court, as it
comes from a district court. But we are happy to consult
it for whatever analytical assistance it may offer.) In
Aurora, the court was presented with at least the allega-
tion that the plaintiff was seeking additional private
payments unrelated to environmental law. Here, by con-
trast, Albany has requested (according to its complaint)
only the removal of all contamination on its property
resulting from the underground tank spill and the reim-
bursement of its expenses. RCRA itself permits both
recovery of litigation costs and attorneys’ fees, 42 U.S.C.
§ 6972(e), and injunctions ordering cleanup of waste “which
may present an imminent and substantial endanger-
ment to health or the environment.” Id. § 6972(a)(1)(B).
Exxon seems to believe that these statutory provisions
contradict the requirements Albany sought to impose in
No. 01-4211 7
its proposed agreement because Albany asked Exxon to
remediate any contamination caused by its leak, even if
the endangerment threat was not “imminent and sub-
stantial.” Even if this is so, we cannot construe the agree-
ment as an attempt by Albany to impede enforcement of
the environmental laws for its own financial advantage.
Simply because under some factual circumstances RCRA
might not require the complete elimination of Exxon’s
pollution from Albany’s property does not preclude the
possibility that Illinois law might impose exactly this type
of duty. RCRA specifically preserves state law remedies
to fill gaps that may be left by its scheme. Id. § 6972(f).
(In fact, if a dispute later arose about the adequacy of
Exxon’s remediation efforts, there would be time enough
then to litigate the question whether it had to do any more,
or if it had satisfied all federal and state law obligations.)
Far from an attempt to impede law enforcement, Albany’s
actions here seem little more than a garden variety at-
tempt to settle a dispute short of litigation. Failed set-
tlement efforts normally do not prevent plaintiffs from
later taking a case to court, and Exxon offers no justifica-
tion for treating RCRA differently.
Indeed, though we need not reach the question, it is
not at all clear that Aurora itself was rightly decided.
RCRA is quite comprehensive. After granting courts the
authority to order violators to take any action necessary
to attain compliance, the statute details specific prerequi-
sites to bringing a claim. A citizen must provide 90 days’
notice to the defendant and various government officials
of her intent to file suit. Id. § 6972(b)(2)(A). She may
not proceed if either the Environmental Protection Agency
(EPA) or a state agency is prosecuting an action against
the defendant. Id. § 6972(b)(2) (B)-(C). The provision also
may not be used to prevent operation of a waste disposal
facility. Id. § 6972(b)(2)(D). The statute itself places no
further restrictions on a citizen’s ability to sue. It is uncon-
8 No. 01-4211
tested that Albany met those requirements: it gave notice
of its intent to sue, no government agency is enforcing an
action against Exxon, and this case does not pertain to
a waste disposal site. PMC, Inc. v. Sherwin-Williams Co.,
151 F.3d 610, 618-19 (7th Cir. 1998). When Congress has
explicitly enumerated the preconditions to a given entitle-
ment (here the right to sue), a court should not infer
additional ones without evidence of contrary legislative
intent. Andrus v. Glover Constr. Co., 446 U.S. 608, 616-17
(1980). Though federal courts do place some penalties on
obstinate plaintiffs who unjustifiably refuse to settle their
disputes out of court, such as the cost-shifting provisions
after an offer of judgment, see FED. R. CIV. P. 68, dismissal
of a suit entirely seems to us a harsh penalty unlikely to
have been intended by Congress. Albany has not declared
that it will never allow Exxon on its property. Now that
the litigation is underway, assuming Exxon still wishes to
inspect the land for contamination, Albany will have to
permit entry during discovery under FED. R. CIV. P. 34(a)(2).
Under these circumstances, we find dismissal improper.
The district court also premised its decision on EPA
regulations that require corrective action for the release
of petroleum from underground storage tanks. 40 C.F.R.
§§ 280.60-.67. These provisions require that releases first
be investigated and that responsible parties next submit
corrective action plans. Only then is cleanup required. Id.
§ 280.66. Exxon argues that since it has been given no
opportunity to investigate or to submit a corrective ac-
tion plan, it would be premature for a court to order it
to begin cleanup or other remedial activities.
This too misses the point. EPA’s regulations do not
prohibit citizen suits to clean up petroleum contamina-
tion from leaking tanks. Waldschmidt v. Amoco Oil Co., 924
F. Supp. 88, 92 (C.D. Ill. 1996). If the EPA or the IEPA
wishes to bring a formal action to resolve responsibility
for cleaning up the waste on Albany’s property, this suit
No. 01-4211 9
would have to be dismissed. But assuming that an inves-
tigation, whether undertaken by the EPA, Exxon, or Al-
bany, has yielded evidence of imminent and substantial
contamination, the plain language of RCRA makes a
remedy available to Albany. Furthermore, the conceded
occurrence of the spill means that its claim for injunctive
relief is not premature. Cf. Avondale Fed. Sav. Bank v.
Amoco Oil Co., 170 F.3d 692, 695 (7th Cir. 1999) (denying
injunction where contamination was not currently an
imminent and substantial danger).
C
The district court also dismissed with prejudice any
claims Albany was making under RCRA for reimbursement
of the preliminary investigation expenses it has already
incurred, relying on both our precedent and authority
from the Supreme Court. In Meghrig v. KFC Western,
Inc., 516 U.S. 479, 488 (1996), the Supreme Court held
that “a private party cannot recover the cost of a past
cleanup effort under RCRA” whether the remedy is sought
as “damages” or “equitable restitution.” This court has
understood Meghrig also to bar a plaintiff from recover-
ing cleanup costs incurred after filing suit but prior to
the entry of final judgment. Avondale, 170 F.3d at 694.
Albany argues that its claim for reimbursement of
expenses it has already incurred may be pursued in spite
of this daunting precedent. It claims to be seeking “inves-
tigation” costs rather than “cleanup” costs, and it alleges
that Meghrig and Avondale bar only the latter. We cannot
accept this proposition. The plain language of 42 U.S.C.
§ 6972(a) bars damages and “deliberately limit[s] RCRA’s
remedies to injunctive relief.” Avondale, 170 F.3d at 694;
see also Nashua Corp. v. Norton Co., 116 F. Supp. 2d 330,
357-58 (N.D.N.Y. 2000); Walls v. Waste Resource Corp., 761
F.2d 311, 315 (6th Cir. 1985). Since the Meghrig Court
10 No. 01-4211
refused to characterize cleanup costs as equitable resti-
tution that could plausibly mesh with RCRA’s injunctive
remedies, and investigation costs are a mere subset of
cleanup costs, it seems clear to us that “investigation” costs
are no more recoverable than “cleanup” costs would be.
(Indeed, if only one could be recouped, the equities might
favor cleanup costs.) We declined to read additional reme-
dies into RCRA in Avondale and again reject the invita-
tion here.
Albany also contends that Rule 11 somehow requires
that its investigation costs be reimbursed, but we fail to
see the logic in this. True, parties must sometimes under-
take costly investigations of facts in order to state com-
plaints or defenses that will not be dismissed as frivolous,
but there is certainly no general cost-shifting rule that
requires the other side to reimburse those kinds of ex-
penses. Cf. 28 U.S.C. § 1920 (detailing costs that may be
taxed). While litigation costs and attorneys’ fees may be
awarded under 42 U.S.C. § 6972(e), nothing in this pro-
vision mandates recovery of the pre-litigation costs of
determining whether a plaintiff should bring a suit in the
first place.
Indeed, denying Albany damages for its own investiga-
tion efforts while still permitting it to go forward with its
claim for injunctive relief seems to us the most equitably
balanced reading of the statute. Nothing in the statute
indicates that Albany’s initial refusal to let Exxon on its
property to investigate contamination, even if obstruc-
tionist or wrongheaded, should bar it from suing entirely.
On the other hand, it does mean that Albany must bear
the costs of whatever preligitation investigation proves
to be necessary prior to filing a good-faith complaint
against Exxon. Were the rule otherwise, there would be
a serious moral hazard problem: someone in Albany’s posi-
tion could undertake a “Cadillac” investigation, confident
that it could shift its inflated costs to the other party. At
No. 01-4211 11
this stage of the game, as in other RCRA cases, past
cleanup costs must be borne by the plaintiff, but the
court may issue an injunction ordering future remedia-
tion to occur at the expense of the defendant, Exxon, if
Exxon proves to be the one responsible for the environ-
mental harm. Avondale, 170 F.3d at 694-95.
III
After dismissing Albany’s federal claim, the district
court declined to exercise supplemental jurisdiction over
the remaining state law claims. Because we are revers-
ing on the RCRA count, the state law claims brought
under both the Illinois Environmental Protection Act
and common law must be reinstated as well, as they are
related to the same set of operative facts. See Armstrong
v. Squadrito, 152 F.3d 564, 582 (7th Cir. 1998). The judg-
ment of the district court is REVERSED and the case is
REMANDED for further proceedings.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—11-8-02