Am. Premier Underwriters v. GE
14f4th560
6th Cir.2021Background
- GE designed and manufactured self-propelled electric railcars and liquid-cooled transformers filled with Pyranol (a PCB-containing coolant). Transformers included pressure‑relief valves that sometimes "burped" Pyranol; leaks and burps contaminated four Penn Central railyards.
- GE knew by the 1970s PCBs posed environmental risks, advised purchasers to exercise care, and made design changes intended to reduce Pyranol loss (including thermal sensors, cooling, and a listed shroud).
- GE sold Silverliner IV and Arrow II cars under five‑year warranties; GE placed onsite technicians in trailers to train and advise railroad personnel but (per union rules and practice) did not perform routine repairs, discipline railroad staff, or control yard operations.
- Penn Central’s 1976 Bill of Sale to Conrail transferred rights "used or useful in the provision of rail services" but expressly reserved pre‑conveyance liabilities.
- SEPTA, Conrail, and Amtrak assigned Paoli-related claims to APU in 2004. APU sued GE in 2005 for CERCLA cleanup costs and contractual indemnity; the district court granted judgment for GE on arranger and operator liability and on assignment and statute‑of‑limitations grounds; the Sixth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether GE is an "arranger" under CERCLA §9607(a)(3) | GE designed transformers with release valves, anticipated frequent spills, directed spill routing (shrouds), and adopted a fail‑and‑fix policy—showing intentional steps to dispose PCBs | GE sold a useful, necessary product (filled transformers); valves and other measures were to prevent explosions and to minimize loss, not to dispose of PCBs; foreseeability alone is insufficient | GE is not an arranger; Burlington N. controls: intentional disposal (state of mind) required and is absent here |
| Whether GE is an "operator" under CERCLA §9607(a)(2) | GE exercised post‑sale control: onsite technicians, directed repairs, decided timing of repairs, repaired offsite, and its fail‑and‑fix policy shows control | GE’s onsite role was limited to warranty administration, training, and advice; Penn Central controlled day‑to‑day operations and repairs; GE lacked actual control over pollution/waste decisions | GE is not an operator; it did not manage, direct, or conduct pollution‑related operations or exercise the requisite actual control |
| Whether Penn Central retained or assigned contractual indemnity rights in the 1976 Bill of Sale | APU: "used or useful" language + reservation of pre‑conveyance liabilities means Penn Central retained pre‑1976 indemnity rights | GE: Bill of Sale conveyed contract rights "used or useful" (including indemnity); reservation clauses preserved liabilities, not parts of rights | Bill of Sale conveyed the broad indemnity right to Conrail; Penn Central did not retain part of the indemnity right |
| Whether APU’s claims based on indemnity rights reassigned to it in 2004 are time‑barred under Pennsylvania law | APU: later settlement/assignment and continuing litigation tolled or deferred accrual so its 2005 suit is timely | GE: the indemnity is against liability so accrual occurs when indemnitee’s liability became fixed; SEPTA/Conrail liability was fixed by the 1999 consent decree, so 2005 suit is after the 4‑year limitations period | Claims based on rights reassigned in 2004 are time‑barred; accrual occurred when liability was fixed (1999), and Pennsylvania's four‑year statute ran before APU sued |
Key Cases Cited
- Burlington N. & Santa Fe Ry. Co. v. United States, 556 U.S. 599 (2009) (arranger liability requires intent to dispose; foreseeability alone insufficient)
- United States v. Bestfoods, 524 U.S. 51 (1998) (operator = one who manages/directs facility operations related to pollution)
- Cello‑Foil Prod., Inc. v. United States, 100 F.3d 1227 (6th Cir. 1996) (state of mind is critical in arranger analysis; mixed‑motive fact issues may preclude summary judgment)
- AM Int’l, Inc. v. Int’l Forging Equip. Corp., 982 F.2d 989 (6th Cir. 1993) (conveyance of a useful but dangerous product does not constitute arrangement for disposal)
- GenCorp, Inc. v. Olin Corp., 390 F.3d 433 (6th Cir. 2004) (collaboration in design/operation may support operator finding where parties jointly direct operations)
- Edward Hines Lumber Co. v. Vulcan Materials Co., 861 F.2d 155 (7th Cir. 1988) (designer/trainer of plant not an operator where day‑to‑day control remained with owner)
- United States v. Twp. of Brighton, 153 F.3d 307 (6th Cir. 1998) (adopts an actual‑control test and emphasizes fact‑intensive operator inquiry)
- Vine St. LLC v. Borg‑Warner Corp., 776 F.3d 312 (5th Cir. 2015) (focus transaction around useful product operation, not disposal, negates arranger liability)