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Schmucker v. Johnson Controls

United States District Court, N.D. Indiana, South Bend Division

March 2, 2015

RONALD and SONYA SCHMUCKER, et al., Plaintiffs,
JOHNSON CONTROLS, INC., et al., Defendants

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For Ronald Schmucker, Sonya Schmucker, Stephen Vandiepenbos, Lori Vandiepenbos, Richard L Stewart, Plaintiffs: John D Ulmer, LEAD ATTORNEY, Yoder Ainlay Ulmer & Buckingham LLP, Goshen, IN; Melissa A Gardner, Rodney L Michael, Jr, Thomas A Barnard, LEAD ATTORNEYS, Taft Stettinius & Hollister LLP - Ind/IN, Indianapolis, IN.

For Johnson Controls Inc, Defendant: Ed V Walsh PHV, III, James A Rolfes PHV, LEAD ATTORNEYS, PRO HAC VICES, Reed Smith LLP - Chi/IL, Chicago, IL; Kelly J Hartzler, LEAD ATTORNEY, Barnes & Thornburg LLP - SB/IN, South Bend, IN.

Tocon Holdings LLC, Defendant, Pro se, Georgetown, IN.

For Johnson Controls Inc, Cross Defendant: Ed V Walsh PHV, III, James A Rolfes PHV, LEAD ATTORNEYS, PRO HAC VICE, Reed Smith LLP - Chi/IL, Chicago, IL; Kelly J Hartzler, LEAD ATTORNEY, Barnes & Thornburg LLP - SB/IN, South Bend, IN.

For Johnson Controls Inc, Cross Defendant, Counter Claimant: Ed V Walsh PHV, III, LEAD ATTORNEY, PRO HAC VICE, Reed Smith LLP - Chi/IL, Chicago, IL; James A Rolfes PHV, LEAD ATTORNEY, Reed Smith LLP - Chi/IL, Chicago, IL; Kelly J Hartzler, LEAD ATTORNEY, Barnes & Thornburg LLP - SB/IN, South Bend, IN.

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JON E. DEGUILIO, United States District Judge.

This is a citizen suit under the Resource Conservation and Recovery Act relative to a former manufacturing facility in Goshen, Indiana, that the Plaintiffs allege contaminated the ground with hazardous wastes and caused dangerous levels of Trichloroethylene to be present in their neighborhood. The Plaintiffs, five individuals who own or reside in homes near the site, sued Johnson Controls, Inc., which owned and operated the facility from 1937 through 2007, and Tocon Holdings, LLC, which currently owns the property. They asserted claims against both defendants under each applicable citizen-suit prong of RCRA, alleging that the defendants are in violation of various RCRA requirements (Count I) and that they have caused or contributed to an imminent and substantial endangerment to health or the environment (Count II).

Tocon Holdings answered the complaint, but Johnson Controls has moved to dismiss both counts. Johnson Controls argues as to Count I that the complaint fails to state a claim, and argues as to both counts that the Plaintiffs failed to provide notice far enough in advance of filing suit, which is a statutory prerequisite to certain claims. The motion has been exhaustively briefed. For the reasons that follow, the Court grants the motion to dismiss as to Count I and denies it as to Count II, and grants Plaintiffs leave to amend.


Johnson Controls began operating a manufacturing facility in Goshen, Indiana in 1937, manufacturing parts for thermostats and building control systems. The facility's operations involved the use of Trichloroethene (TCE) and other hazardous chemicals. From 1937 through 1965, Johnson Controls discharged the waste products of these chemicals into an adjacent creek at a rate it estimated at 6 million gallons per year. The State of Indiana then ordered Johnson Controls to cease this dumping, at which point Johnson Controls began storing the wastes on-site in drums and other containers, pending off-site disposal. However, during the course of its operations, Johnson Controls also occasionally spilled or dumped this waste onto the ground.

When the regulations under the Resource Conservation and Recovery Act took effect in 1980, Johnson Controls qualified as a facility for the treatment, storage, or disposal of hazardous waste. It thus filed its " Part A" application on October 29, 1980, and on June 14, 1982, the Environmental Protection Agency notified

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Johnson Controls that it had been granted " interim status," the first step towards receiving a permit to store hazardous waste. At that point, Johnson Controls was required to either submit its " Part B" application to receive a formal permit, or to submit a closure plan. Johnson Controls opted to take the latter path, and beginning in 1989, it filed a series of closure plans for its four on-site hazardous waste management units. The Indiana Department of Environmental Management finally approved the closure plan on March 20, 1991. Johnson Controls then conducted soil sampling as recommended by IDEM, which detected contamination in the soil under the facility as high as 260,000 parts per billion (ppb). To determine the extent of the contamination, the facility commissioned a study that found a plume of contamination consisting primarily of TCE that extended 5,400 feet offsite to the west, 800 feet wide, and 170 feet below grade. The report stated that " it is believed that the plume is an accumulation of releases which occurred over a 55-year period of facility operations." [DE 4 ¶ 68].

Much of the plume was below a residential area, and it included two private drinking water wells. The tap water in the homes using those wells contained TCE in concentrations of 12,200 and 1,300 ppb. By comparison, the maximum contaminant level for TCE established by the EPA was 5 ppb. According to Plaintiffs, though, Johnson Controls acted slowly to contain or remediate this contamination. Not until 1997 did it submit a remediation plan to IDEM and install extraction wells in an attempt to remediate the TCE contamination to acceptable levels. Plaintiffs further allege that Johnson Controls' remediation efforts since then have been minimal and ineffectual, allowing dangerous levels of TCE to persist in their neighborhood through to the present. As of January 2013, groundwater underlying Goshen High School, which sits at the far end of the contamination plume, contained TCE contamination of 192 ppb. Another groundwater monitoring well in the heart of the neighborhood recorded even greater TCE contamination of 1,150 ppb, and other monitoring wells in the area likewise show substantial TCE contamination.

In addition, in 2011, Johnson Controls began investigating vapor intrusion, through which vapors from the TCE in the ground rise through the soil and contaminate the air inside surface structures. A July 12, 2012 report on vapor intrusion in the neighborhood inside the plume stated that " TCE was detected at concentrations exceeding the Residential Screening Level in 36 of the 39 sub-slab vapor samples collected from residential properties." [DE 4 ¶ 106]. The vapor levels at a number of these homes exceeded the recommended levels by several hundred times. In addition, the report revealed that 15 of the 20 residential homes tested had unacceptable levels of TCE vapors within their indoor air. Johnson Controls had vapor mitigation systems installed in those homes, but two of the homes had unacceptable levels of vapor intrusion even after installation of those systems, and Plaintiffs allege that Johnson Controls has not been properly monitoring or maintaining the systems. Plaintiffs further allege that many of the homes within the plume have not been tested at all, even though they are likely contaminated.

Dissatisfied with the pace and extent of Johnson Controls' remediation efforts, Plaintiffs served notice of their intent to sue on May 28, 2014, and then commenced this action on May 30, 2014, asserting two causes of action under RCRA. Johnson Controls has now moved to dismiss both counts.

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A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to state a claim upon which relief may be granted. When considering a Rule 12(b)(6) motion to dismiss, the Court must decide whether the complaint satisfies the " notice-pleading" standard. Indep. Trust Corp. v. Stewart Info. Servs. Corp., 665 F.3d 930, 934 (7th Cir. 2012). The notice-pleading standard requires that a complaint provide a " short and plain statement of the claim showing that the pleader is entitled to relief," sufficient to provide " fair notice" of the claim and its basis. Id. (citing Fed.R.Civ.P. 8(a)(2)); Maddox v. Love, 655 F.3d 709, 718 (7th Cir. 2011) (internal citations omitted); see also Bell A. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). In determining the sufficiency of a claim, the Court construes the complaint in the light most favorable to the nonmoving party, accepts all well-pleaded facts as true, and draws all inferences in the nonmoving party's favor. Reynolds v. CB Sports Bar, Inc., 623 F.3d 1143, 1146 (7th Cir. 2010) (internal citations omitted).

The Supreme Court has adopted a two-pronged approach when considering a Rule 12(b)(6) motion to dismiss. See Ashcroft v. Iqbal, 556 U.S. 662, 678-79, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). First, pleadings consisting of no more than mere conclusions are not entitled to the assumption of truth. Id. This includes legal conclusions couched as factual allegations, as well as " [t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements." Id. at 678 (citing Twombly, 550 U.S. at 555). Second, if well-pleaded factual allegations are present in the complaint, courts should " assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. at 679.

" A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. The complaint " must actually suggest that the plaintiff has a right to relief, by providing allegations that raise a right to relief above the speculative level." Maddox, 655 F.3d at 718 (internal citations omitted). A plaintiff's claim, however, need only be plausible, not probable. Indep. Trust Corp., 665 F.3d at 934 (quoting Twombly, 550 U.S. at 556). Determining whether a complaint states a plausible claim for relief is " a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679 (internal citations omitted). Factual allegations, however, " that are merely consistent with a defendant's liability . . . stop[] short of the line between possibility and plausibility of entitlement to relief." Id. at 678.

Finally, because a motion to dismiss tests the legal adequacy of a complaint, not its factual support, a court is limited in the materials it can rely on in resolving such a motion. " A motion under Rule 12(b)(6) can be based only on the complaint itself, documents attached to the complaint, documents that are critical to the complaint and referred to in it, and information that is subject to proper judicial notice." Geinosky v. City of Chi., 675 F.3d 743, 745 n.1 (7th Cir. 2012); see Fed.R.Civ.P. 12(d). The Seventh Circuit has also recognized a narrow exception to that rule for materials submitted by the non-movant, but only for the limited purpose of illustrating that the allegations in the complaint are plausible. Geinosky, 675 F.3d at 745 n.1. Here, both parties have submitted materials outside of

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the pleadings, but they both argue that the materials are public records subject to judicial notice such that the Court can consider them without converting the motion to a motion for summary judgment. The Court agrees, and also notes that none of those materials are essential to the resolution of this motion, so it does not need to convert the motion to one for summary judgment.


The Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., " enacted a broad range of policies and procedures to control disposal of solid and hazardous waste in the United States to protect public health and the environment." Adkins v. VIM Recycling, Inc., 644 F.3d 483, 486 (7th Cir. 2011). Subchapter III of RCRA, which pertains specifically to hazardous wastes, " empowers [the Environmental Protection Agency] to regulate hazardous wastes from cradle to grave . . . ." City of Chicago v. Envtl. Def. Fund, 511 U.S. 328, 331-32, 114 S.Ct. 1588, 128 L.Ed.2d 302 (1994). RCRA is implemented through a complex regulatory scheme that includes roles for the federal government, for state governments, and for citizens acting as " private attorneys general." Adkins, 644 F.3d at 486; AM Int'l, Inc. v. Datacard Corp., DBS, 106 F.3d 1342, 1349 (7th Cir. 1997). The EPA has the default responsibility for implementing and enforcing RCRA, but it may also authorize states to assume those roles. 42 U.S.C. § 6926(b). In that event, so far as is relevant here, the state regulations operate in lieu of the federal regulations, and the two governments share enforcement authority. Id.

In addition, RCRA contains two causes of action through which private individuals can assume enforcement roles. First, subsection (a)(1)(A) of § 6972 permits an individual to sue " any person . . . who is alleged to be in violation of any permit, standard, regulation, condition, requirement, prohibition, or order which has become effective pursuant to [RCRA.]" 42 U.S.C. § 6972(a)(1)(A). Second, subsection (a)(1)(B) permits an individual to sue " any person . . . who has contributed or who is contributing to the past or present handling, storage, treatment, transportation, or disposal of any solid or hazardous waste which may present an imminent and substantial endangerment to health or the environment." 42 U.S.C. § 6972(a)(1)(B). While an (a)(1)(A) claim requires a violation of some obligation under RCRA, without regard to its effects or severity, an (a)(1)(B) claim requires the presence of an imminent and substantial endangerment to health or the environment, but need not be predicated on any violation. In order to bring either of these claims, an individual must first provide notice to the defendant and to the state and federal agencies, and must then wait 60 or 90 days before filing suit. 42 U.S.C. § 6972(b). A plaintiff need not delay after providing notice, however, " in the case of an action under this section respecting a violation of subchapter III of this chapter." Id.

Plaintiffs press both claims here. Count II, which is based on the alleged presence of dangerous levels of TCE contamination in Plaintiffs' neighborhood, fits comfortably within the framework of an (a)(1)(B) claim for an imminent and substantial endangerment to health or the environment, and Johnson Controls does not challenge its sufficiency. Count I is more problematic, however, as Plaintiffs base this claim primarily on the presence of that same contamination, but struggle to identify any " permit, standard, regulation, condition, requirement, prohibition, or order" that Johnson Controls is " in violation of," as is required for an (a)(1)(A) claim. Johnson Controls thus moves to dismiss Count

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I for failure to state a claim. In addition, because Plaintiffs filed this suit only two days after serving notice of the claims, Johnson Controls also argues that both counts should be dismissed for ...

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