November 12, 2014

New York Law Journal / Written by: Harvey M. Stone, Peter R. Schlam

In the U.S. District Court for the Eastern District of New York, Judge Arthur D. Spatt dealt with a variety of issues under the Comprehensive Environmental Release, Compensation and Liability Act (CERCLA). Judge Raymond J. Dearie found no liability on the part of an out-of-possession owner with respect to an accident inside an apartment building. Judge Charles P. Sifton held that plaintiff's discharge from Father Flanagan's Boys' Home was not discriminatory. And Judge Spatt awarded benefits to plaintiff in light of her successful claims of retaliation and hostile work environment.


In AMW Materials Testing, Inc. v. Town of Babylon, 01 CV 4245 (EDNY, Dec. 20, 2004), Judge Spatt, deciding an issue of first impression, held that the Town of Babylon and codefendant North Amityville Fire Co. (NAFC), by extinguishing a fire at a facility that stored hazardous substances, had no liability as "operators" of the facility under the CERCLA, 42 USC § 9607 (2004). Plaintiffs–the land owner and AMW, the business whose use of a highly flammable solvent caused the fire–sought contribution, indemnification and damages. Rejecting an array of plaintiffs' arguments under CERCLA and other laws, the court granted summary judgment to defendants.

AMW ran an industrial plant within the town and the NAFC fire protection district. On the afternoon of Oct. 9, 2000, AMW employees were cleaning a long tube with a hazardous substance in a room constructed to protect against fires, when a flame appeared on the floor. Company personnel failed in their efforts to put out the fire. As the flames spread to the ventilation system, AMW's president (the plaintiff land owner) ordered the employees to leave the building.

The response of AMW's automatic fire alarm company led to NAFC's arrival. Fire and heavy smoke were coming out of the entire building. NAFC's chief assumed control and declined AMW's offer to help. Four other fire departments appeared at the scene. Because of the intensity of the fire and the imminent signs of collapse, the chief ordered the firefighters to spray heavy streams of water from a safe distance.

The fire continued to burn, causing explosions and extensive damage. At the chief's request, the town provided both a pay loader to take down remaining walls and a sand truck to contain the runoff of toxic water. NAFC remained at the facility until 1:00 a.m.

After the fire, AMW purportedly spent over $1 million to remove and contain hazardous materials and has not resumed its business.

CERCLA regulates the use of hazardous substances and the clean-up of sites. The act permits private parties to seek "contribution" or "indemnification" from potentially responsible parties for expenses incurred in responding to environmental dangers. An "innocent party" may seek indemnification for full recovery. A party that is itself liable may seek "contribution.'

As Judge Spatt observed, plaintiffs' claims for contribution fail because they voluntarily initiated clean-up of the site and, thus, do not meet CERCLA's requirements of a preexisting civil action (such as a suit by the government for abatement).

Nor were plaintiffs entitled to indemnification as an innocent party. Plaintiffs' main defense was that, within the meaning of the CERCLA provisions, defendants, and not AMW, actually "operated" the facility because it exercised authority over the property during the fire.

But defendants could not be considered operators of the facility merely by responding to and extinguishing a fire at the site. Slip op. 19. Among other things, plaintiffs started the fire, which threatened the environment, and took steps to put it out. AMW was operating the facility immediately before and during the release of hazardous substances. After the fire, AMW paid for the disposal of toxic wastes and sought recovery of costs and lost profits.

As Judge Spatt also noted, defendants had no "special relationship" with AMW and, in any event, could not be found negligent "for failure to exercise perfect judgment in discharging the governmental function of fighting fires." Slip op. 22.

Judge Spatt also rejected plaintiffs' argument that defendants engaged in ultrahazardous activity by applying high pressure water to the fire and exacerbating the damage. Of the six factors relating to whether an activity is ultrahazardous, the court found the sixth factor, the value to the community, "particularly instructive." Here, "[i]f the fire department had not extinguished the fire, the risk of it spreading would have put the entire community in great danger." Slip op. 24.

Finally, defendants were not liable under the New York Navigation Law for knowingly releasing kerosene, a petroleum product. Volunteer fire companies, the court noted, are exempt from the strict liability provisions of that statute. N.Y. Nav. Law § 181(a) (McKinney 2004). The same exemption covered the town, which was acting at the direction of the fire company and its chief.

Out-of-Possession Owner

In Williams v. Matrix Financial Services Corp., 03 CV 2592 (EDNY, Nov. 18, 2004), Judge Dearie held that under New York law the owner of a small apartment building was not in "possession" or "control" of the property when an accident occurred in a common interior stairway and, therefore, could not be liable.

Plaintiff lived on the third floor of a building with three apartments. Each apartment had a separate locked entrance, and each tenant had a key to the front door of the building.

Defendant acquired title to the building at a foreclosure sale in August 2001, but did not receive keys to the building at that time. A company retained by defendant to inspect the property tried seven times to enter the building during a six-month period, but was denied access. A process server hired by defendant had similar difficulties in gaining entry.

Defendant started holdover proceedings and served notices to quit on all tenants in February 2002. On April 19, 2002, plaintiff agreed to leave the building.

Four days earlier, plaintiff had allegedly injured herself when she fell on a common stairway between the first and second floors. Plaintiff testified that the stairway had been in disrepair for six months before the accident. She acknowledged, however, that she had never reported this problem to defendant.

Granting summary judgment in defendant's favor, Judge Dearie noted that mere ownership was not enough to create liability here. Defendant did not take possession of, or exercise control over, the building before the accident. Defendant had been denied access to the building and did not enter contractual relationships with the holdover tenants or collect rent from them. See Richardson v. Yasuda Bank and Trust Co., 772 NYS2d 595 (App. Div. 2004), appeal denied, 2004 N.Y. LEXIS 2212 (Ct. App. Sept. 7, 2004).

In short, there was nothing in the record to suggest that defendant had assumed an obligation to maintain the common areas inside the building. Nor was defendant on "constructive notice" of conditions in the building.

Title VII Claims

In Hansberry v. Father Flanagan's Boys' Home, 03 CV 3006 (EDNY, Nov. 24, 2004), Judge Sifton granted defendant's motion for summary judgment, dismissing plaintiff's claim under Title VII for wrongful discharge and finding the discharge was based on a legitimate reason.

Plaintiff worked for Father Flanagan's Boys' Home (Father Flanagan) in New York City from February 1998 until he was dismissed on Aug. 16, 2002, first as a youth care worker and then as a shift supervisor. Plaintiff was African-American and his immediate supervisor–Anthony DiLauro–was Caucasian. In response to a report that a youth in a home had engaged in sexual activity while shelter workers were sleeping on the job, Father Flanagan's management in Nebraska conducted an audit of overnight shift operations and staff at its shelters throughout the country.

On Aug. 7, 2002, Mr. DiLauro made a surprise inspection of the Brooklyn shelter where plaintiff was the shift supervisor. Other program directors inspected other Brooklyn shelters. Mr. DiLauro testified that he looked through an open window as he approached plaintiff's shelter and observed a figure slumped over in a chair with a blanket over his head in a room with the lights off. After entering the building, Mr. DiLauro encountered plaintiff in the hallway and, when he asked why he was in a room with the lights off, plaintiff looked embarrassed. Plaintiff, telling different versions, said that he covered himself with a blanket after observing an intruder at the window and that he was just sitting with the lights out. It was plaintiff's duty as supervisor to ensure that logs were filled out during his shift. Further inspection revealed that one log was accurately completed and another was not.

Following reports on the investigation and meetings, Father Flanagan's management, consisting of both African-American and non-African-American persons, decided to terminate plaintiff, and he was terminated on Aug. 16, 2002. Prior to his termination, plaintiff had never complained of race discrimination.

Judge Sifton determined that plaintiff provided insufficient evidence to draw an inference of discriminatory intent. Plaintiff presented no evidence concerning the identity or race of the person hired to take his position. While plaintiff alleged that Mr. DiLauro had made a series of disconnected discriminatory comments, plaintiff failed to submit additional evidence of discrimination or demonstrate a nexus between the comments and the adverse employment action. As Judge Sifton noted, "isolated and disconnected derogatory remarks by a decision maker are by themselves insufficient to raise an inference of discrimination." Slip op. 13.

Additionally, Judge Sifton found defendant's stated reason for terminating plaintiff legitimate and nondiscriminatory. Father Flanagan's policies and procedures list sleeping on the job as a ground for immediate termination. In the court's view, plaintiff's effort to show that defendant's ground for terminating him was a pretext and was instead motivated by racial animus was extremely weak. All plaintiff could point to were the disconnected and isolated remarks by Mr. DiLauro with no additional evidence that non-African-American employees received different treatment.

Judge Sifton also dismissed plaintiff's state law breach of contract claim, concluding that plaintiff was an at-will employee who could be freely terminated.

Retaliation Penalties

In a post-trial decision in Collins v. The Suffolk County Police Department, 01 CV 4194 (EDNY, Dec. 20, 2004), Judge Spatt:

  1. ordered defendants' files purged of negative information about plaintiff;
  2. enjoined defendants from future acts of retaliation against plaintiff;
  3. ordered that plaintiff be retroactively promoted to detective;
  4. awarded plaintiff prejudgment interest; and
  5. ordered entry of judgment in plaintiff's favor for compensatory and punitive damages as awarded by a jury.

A jury found in defendants' favor on plaintiff's racial and gender discrimination claims, but returned a verdict in favor of plaintiff, a black Suffolk County policy officer, on federal and state retaliation claims and found that plaintiff had been subjected to a hostile work environment. The jury awarded plaintiff compensatory damages in the amount of $79,500 and punitive damages in the amount of $150,000 against individual defendants who were supervisors of the Suffolk County Police Department.

Given the jury's conclusion that the police department's filing of a disciplinary charge against her was motivated by a retaliatory intent, the court ordered defendants to purge all documents related to that charge from their personnel files. Next, while anticipating that defendants would follow the law and not engage in further discriminatory conduct, Judge Spatt enjoined the defendants from engaging in future acts of retaliation against plaintiff.

Judge Spatt also granted plaintiff's request that she be retroactively designated a detective with the salary and benefits that accompany that position, even though plaintiff had suffered a "line of duty" motor vehicle accident injury after the denial of her promotion and was receiving full salary while out of work from that injury. Although defendants argued that the promotion should be denied because plaintiff was not presently "up to the task," the court pointed out that the promotion would have occurred before the accident, and with the promotion she would now be receiving the higher salary.

Peter R. Schlam and Harvey M. Stone are partners at Schlam Stone & Dolan.

[This article is reprinted with permission from the January 14, 2005, issue of the New York Law Journal. Copyright © 2007 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.]