New York v. Solvent Chemical Co.

166 F.R.D. 284, 42 ERC (BNA) 2041, 1996 U.S. Dist. LEXIS 5505, 1996 WL 204253
CourtDistrict Court, W.D. New York
DecidedApril 2, 1996
DocketNo. 83-CV-1401C
StatusPublished
Cited by16 cases

This text of 166 F.R.D. 284 (New York v. Solvent Chemical Co.) is published on Counsel Stack Legal Research, covering District Court, W.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
New York v. Solvent Chemical Co., 166 F.R.D. 284, 42 ERC (BNA) 2041, 1996 U.S. Dist. LEXIS 5505, 1996 WL 204253 (W.D.N.Y. 1996).

Opinion

DECISION AND ORDER

CURTIN, District Judge.

Before the court are (1) a joint motion by defendants Solvent Chemical Company (“Solvent”) and ICC Industries (“ICC”) for a protective order (Item 387), and (2) a joint cross-motion by the plaintiff State of New York (“the State”) and defendants Occidental Chemical Corp. (“OCC”), Mader Capital, Inc. (“Mader”) and the City of Niagara Falls (“the City”) to compel the production of certain documents, and for other related relief (Item 393). Oral argument was held on February 22,1996.

BACKGROUND

This is a complex environmental lawsuit under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C. § 9601 et seq., and related state law. The State filed suit on December 9, 1983, against Solvent, ICC, Mader, and three other defendants, for the costs of investigation and clean-up of a site located at 3163 Buffalo Avenue, Niagara Falls, New York. The complaint alleges, inter alia, that Solvent operated an industrial chemical facility at the site from 1972 to 1979; that Solvent sold the site to Transit Holding Corporation (“Transit”) in August 1978, but continued to operate there until January 1979; that Mader is a successor in interest to Transit; that ICC is the corporate parent and successor in interest to Solvent; and that in operating the site, Solvent released and disposed of large amounts of hazardous chemicals and chemical wastes onto the land and into the ground water.

In June 1986, Solvent, ICC, and Mader filed third-party complaints asserting CERCLA contribution and related claims against various third-party defendants, including [286]*286OCC and the City. Items 42-44. Thereafter, for several years, litigation proceeded only slowly. However, since the beginning of 1994, as investigation of the site has progressed and completion of a remedial action plan has drawn near, much has occurred. Additional parties have been brought in,1 and the pace of discovery has increased.

Recently, discovery has been focused on the question of whether ICC may be held liable under CERCLA, either as an operator of the site or as the corporate parent of Solvent. The current dispute centers on ICC’s retention of Eric Beu, a former employee of ICC and an important fact witness on these issues, as a litigation consultant.

In the mid to late 1970s, Mr. Beu was a vice-president of both ICC and Dover Chemical Corporation (“Dover”), a wholly owned subsidiary of ICC. He left ICC and Dover in 1979. A dispute developed over the circumstances of his departure. He brought an arbitration proceeding against ICC, and lost. Since that time, he has not worked in the chemical industry. In 1993, Dover filed a CERCLA action in the United States District Court, Northern District of Ohio, against several defendants, including Mr. Beu as a former owner (minority shareholder) and/or operator of Dover’s facility in Dover, Ohio (Dover Chemical Corp. v. Cohen, Case No. 5:93-CV-1304 (N.D.Ohio) (“the Dover litigation”)).

In early July 1995, OCC served a deposition subpoena on Mr. Beu. Upon learning that the subpoena had been served, ICC recognized that Mr. Beu possessed important information relating to Solvent’s operations at the Buffalo Avenue site and to the nature of ICC’s relationships with Solvent. The company’s review of internal documents relevant to Solvent’s operations revealed numerous memoranda written by or directed to Mr. Beu. Many of those documents contained handwritten notes made by Mr. Beu, which were indecipherable to ICC. Accordingly, ICC, Solvent, and Dover approached Mr. Beu, through his counsel in the Dover litigation, and entered into various agreements with him. First, Dover settled its claims against him in the Dover litigation. Under the terms of the settlement, Mr. Beu agreed to pay Dover the sum of $4,000.00, and Dover agreed to indemnify Mr. Beu with respect to any claims made against him by other parties in that case. Second, ICC and Solvent made covenants not to sue Mr. Beu in the present action. And third, ICC and Mr. Beu entered into a written consulting agreement pursuant to which Mr. Beu was made part of ICC’s trial team in this litigation. According to ICC and Solvent, under the terms of the consulting agreement Mr. Beu is required to assist ICC in reviewing and discussing with ICC and ICC’s counsel the documentation relevant to the subject matter of the litigation. He receives payment of $100.00 per hour worked, plus out-of-pocket expenses. See Items 387-89.

Mr. Beu was deposed from November 7 to November 9, 1995, by counsel representing the State (Robert Heman), OCC (Anthony Young), Mader (Peter Ruppar), the City (Richard Stanton), and the United States (Alan Birnbaum). Before the deposition, none of those parties were aware of the existence of the consulting agreement between ICC and Mr. Beu, or of the conditions under which Mr. Beu had agreed to cooperate with ICC. However, they had been informed that Mr. Beu was being represented by the law firm of Damon and Morey, counsel to Solvent in this action. At the deposition, Mr. Beu was represented by Paul Samson and Mark Keaton of Damon and Morey, and by Irwin Roth, counsel to both ICC and Solvent in this suit.

On the first day of deposition, OCC’s counsel, Anthony Young, asked Mr. Beu whether, after late 1979, he had had any further business relationships with ICC, Dover, or Solvent. He replied that he had not.2 None of [287]*287the attorneys representing Mr. Beu, ICC, and/or Solvent made any attempt to intercede. On the third day of deposition, the City’s counsel, Richard Stanton, asked Mr. Beu whether he had made any consulting arrangements with anyone in this litigation. He replied that he had, with ICC. Item 393, Young Declaration, ¶ 13 and Ex. J at 451.' Mr. Stanton, Mr. Young, and Peter Ruppar, Mader’s counsel, asked follow-up questions, and Mr. Beu testified that, under his agreement with ICC, he had spent one three-day and one three-to-four day session working at ICC’s offices in New York City, for a total of between 20 and 50 hours; that at those sessions, he had worked with Irwin Roth, counsel to both ICC and Solvent in this litigation, Paul Falick, ICC’s general counsel, and Paul Samson, then Solvent’s counsel; that all had been carried out after he had received his deposition subpoena; that under the agreement, ICC had agreed not to sue him in this litigation, and had undertaken to pay him at the rate of $100.00 per hour for his time; and that he was not being compensated for the time spent giving deposition testimony. However, he was instructed by his counsel, Mark Keaton, not to answer questions concerning various aspects of his work under the agreement:

(1) the nature of the consulting services he had provided;
(2) whether he had looked at or been shown any documents relating to the Solvent facility;
(3) what work he had performed for ICC subsequent to the New York City meetings; and
(4) whether any time spent working for ICC subsequent to the New York City meetings was spent reviewing documents.
See Item 393, Young Declaration, ¶ 17 and Ex. J at 495-99.

The deposition subpoena served upon Mr.

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166 F.R.D. 284, 42 ERC (BNA) 2041, 1996 U.S. Dist. LEXIS 5505, 1996 WL 204253, Counsel Stack Legal Research, https://law.counselstack.com/opinion/new-york-v-solvent-chemical-co-nywd-1996.