Trinity Industries Inc v. Greenlease Holding Co

Citation: 903 F.3d 333Docket: 16-1994

Court: Court of Appeals for the Third Circuit; September 11, 2018; Federal Appellate Court

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The case involves a dispute over the allocation of remediation costs for a contaminated manufacturing site in Greenville, Pennsylvania. Greenlease Holding Company, a subsidiary of Ampco-Pittsburgh Corporation, owned the site and operated railcar manufacturing from 1910 to 1986. In 1986, Trinity Industries, Inc. and its subsidiary acquired the property and continued operations until 2000. Following an investigation by Pennsylvania authorities into Trinity's waste disposal, a plea-bargained consent decree mandated Trinity to remediate the site, costing nearly $9 million.

The appeal arises from the District Court's ruling that, under CERCLA and Pennsylvania's HSCA, Trinity is entitled to seek contribution from Greenlease for these costs. After extensive litigation, the District Court determined that 62% of the cleanup costs should be allocated to Greenlease. Both parties appealed various rulings, including the cost allocation. The Circuit Court affirmed the District Court's pre-trial decisions but vacated its allocation of costs, remanding for further proceedings.

The North Plant, where the contamination occurred, expanded from eleven to thirty-four acres over time due to industrial development, which led to hazardous material releases, primarily lead. The historical background includes previous ownership by Shelby Steel Tube Company, which operated a steel tube factory and contributed to the site’s contamination.

Historic fill at the North Plant consists of soil mixed with non-native materials such as construction debris and industrial waste, often containing lead and other contaminants. Greenlease began operations shortly after acquiring the property, significantly expanding the facility between 1911 and 1922, during which it used historic fill for foundations and rail lines. The plant’s operations involved painting railcars with toxic chemicals and lead paint, with inadequate runoff management. 

In 1983, Ampco acquired Greenlease, having shared board members since 1979. However, Greenlease maintained independent day-to-day operations, including waste disposal and environmental communications, without direct technical oversight from Ampco. Ampco's involvement was limited to providing legal and regulatory advice regarding waste management, with Greenlease adopting a resolution allowing Ampco’s decisions to be treated as actions of Greenlease’s board. Ampco also controlled certain financial decisions and provided centralized services to Greenlease.

In 1986, Ampco authorized the sale of the North Plant to Trinity, with the Purchase and Sale Agreement stipulating that Greenlease made no warranties regarding compliance with environmental laws. The agreement included mutual indemnification clauses, where Greenlease agreed to indemnify Trinity for any environmental violations prior to the sale, and Trinity agreed to indemnify Greenlease for violations occurring after the sale.

Liability under the specified Section will be apportioned between Greenlease and Trinity based on fault, duration of violation, and other pertinent factors, specifically for conditions arising from Greenlease's actions before the Closing and Trinity's actions afterward. Indemnities are limited to three years post-Closing. Trinity has not assumed any other liabilities of Greenlease beyond those explicitly mentioned. A non-waiver clause indicates that the rights and remedies are cumulative and not exclusive. Following the sale of the North Plant to Trinity in 1986, Greenlease became a dormant holding company with declining assets, ultimately issuing dividends to Ampco and leaving a minimal reserve for liabilities. An environmental reserve was established when Trinity sued Greenlease and Ampco. Trinity continued to operate the North Plant until 2000, implementing measures to prevent contamination but later excavated and disposed of soil improperly. In 2004, Trinity sold the property to a Buyer without conducting an environmental assessment, restricting the Buyer from testing for contamination. The Buyer later exacerbated environmental issues by dumping hazardous waste. Subsequently, the Commonwealth of Pennsylvania initiated an investigation into Trinity's waste disposal practices, leading to felony and misdemeanor charges against Trinity in 2006.

Trinity entered a plea agreement with the Commonwealth that mandated the repayment of investigative costs, payment of a fine, and contributions to a nonprofit organization, along with environmental remediation as outlined in a consent decree approved by the Pennsylvania Department of Environmental Protection (PADEP). The decree required further investigation of the North Plant to ascertain the extent of hazardous substance releases and necessary remediation actions, governed by Pennsylvania’s Act 2. Trinity was required to obtain PADEP approval for significant actions related to the property and to submit multiple detailed reports and plans regarding the investigation and remediation efforts.

Due to the high-profile nature of the North Plant, bordered by residential areas, the remediation faced increased scrutiny and complexity. PADEP approved Trinity’s remedial investigation work plan in 2007, after which Trinity notified Greenlease of the contamination and its claim of Greenlease's contribution to the pollution. To facilitate the cleanup, Trinity repurchased the North Plant and selected Golder Associates, Inc. for the remediation, bypassing a competitive bidding process due to prior positive experiences and the urgency imposed by consent decree deadlines. The contract with Golder was based on a cost-plus-10% billing arrangement.

Golder identified twenty impact areas at the North Plant, with thirteen primarily contaminated by lead and others by various hazardous substances. Major remediation activities included soil excavation and treatment, landfill disposal, and the installation of asphalt caps over certain areas. The total cost for these efforts was approximately $9 million, resulting in parts of the property becoming suitable for parking, industrial, or commercial use. Ongoing maintenance involves ensuring the effectiveness of the remediation measures, such as monitoring groundwater and maintaining asphalt caps.

In 2008, Trinity initiated legal action against Greenlease and Ampco to recover remediation costs for the North Plant, citing federal and state laws, including CERCLA and RCRA. The complaint included claims for cost recovery and contribution under these statutes, as well as under the HSCA and state common law for contribution and negligence per se. During pre-trial motions, the District Court determined that Ampco bore no direct or derivative liability for the pollution at the North Plant. Greenlease's argument that Trinity’s claims were precluded by indemnification provisions in their Agreement was rejected; the court ruled that these provisions did not bar Trinity from pursuing other legal remedies. Cross motions for summary judgment resulted in the court recognizing Greenlease as a potentially responsible party under CERCLA and the HSCA, while granting Greenlease summary judgment on most of Trinity's claims, except for specific contribution claims. A bench trial was scheduled to resolve the equitable allocation of cleanup costs. Prior to trial, Trinity's attempts to recover costs related to the South Plant were denied, as Greenlease had no ownership or operational connection to that property. 

Both parties presented cost allocation proposals to the court. Trinity's expert identified three contamination sources at the North Plant and calculated that 99% of the cleanup costs should be assigned to Greenlease, based on historical data and responsibility percentages. In contrast, Greenlease's expert argued that historic fill was primarily responsible for the lead contamination, suggesting a different allocation.

Greenlease was found responsible for depositing fill on only 2.8 acres of the thirty-four-acre North Plant, with the remainder of the fill predating its ownership. Gerristen asserted that much of Golder’s cleanup work was unnecessary, suggesting that Trinity incurred excess costs, ultimately concluding that Greenlease should bear only 12-13% of the cleanup expenses. The District Court, in a detailed opinion, examined the extensive evidence and expert opinions, ruling that Greenlease was not liable for contamination linked to Shelby Steel or other non-parties due to Trinity's failure to establish their insolvency or immunity. However, the court rejected Greenlease's claim regarding Golder's costs being unreasonable.

Using historic maps, the court allocated responsibility for contamination among the parties. It agreed with Greenlease that certain lead contamination was solely due to Shelby Steel, absolving Greenlease of liability for those areas. In other areas, Greenlease was found responsible for historic fill deposits or the use of volatile chemicals, leading to full responsibility for those contaminations. For remaining areas, responsibility was divided based on property ownership duration and chemical usage considerations.

The court’s cost allocation method diverged from Gormley’s by not accounting for differing remediation costs. Instead, it calculated Greenlease’s responsibility by multiplying its assigned percentage by the square footage or cubic yardage of each remediation activity, resulting in a determination that Greenlease was liable for 83% of total costs, while Trinity was responsible for 17%. The court then applied equitable factors to adjust Greenlease's responsibility: it reduced Greenlease’s liability by 6% due to costs linked to a third-party Buyer’s actions, by 5% due to indemnification provisions indicating a liability shift, and recognized that remediation had increased the property’s value, making it suitable for commercial or industrial use.

An additional 10% reduction in Greenlease's responsibility was deemed appropriate by the Court to reflect the increased market value benefiting Trinity. Consequently, the District Court concluded that Greenlease was liable for 62% of the response costs incurred by Trinity for the North Plant cleanup. The legal context is grounded in the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), enacted in 1980, which allows parties who have paid for environmental remediation to pursue cost recovery or contribution from other potentially responsible parties (PRPs). Specifically, under CERCLA, §107(a) allows for complete cost recovery, while §113(f) enables contribution claims after certain conditions are met. Pennsylvania's Hazardous Sites Cleanup Act (HSCA) complements CERCLA, providing additional mechanisms for hazardous waste disposal issues.

Trinity's remaining claims on appeal are for contribution under CERCLA §113(f)(3)(B) and the corresponding HSCA section. Greenlease raises three main issues in its appeal: 

1. The indemnification provisions of the Agreement with Trinity do not prevent Trinity from seeking contribution, a conclusion that the Court affirms based on the Agreement's language.
  
2. The costs incurred by Trinity and Golder for the North Plant cleanup were found to be necessary and reasonable, with the Court affirming this ruling due to the established connection to environmental remediation and the absence of evidence supporting Greenlease's claims of excessive costs.

3. Greenlease contests the District Court's overall cost allocation. The Court agrees with Greenlease that this analysis was flawed, leading to a vacating of the judgment and a remand for further proceedings. 

Greenlease contends that its Agreement with Trinity released both parties from statutory or common law responsibilities after a three-year indemnification period, arguing that the denial of its motion for judgment on the pleadings was erroneous. The Court applies plenary review for such motions, which require a demonstration of no material factual disputes and entitlement to judgment as a matter of law, and similarly exercises plenary review over contract interpretation issues.

CERCLA permits indemnification agreements that allow parties to transfer financial responsibility for environmental cleanup costs. The statute explicitly states that it does not prohibit agreements for insurance, indemnification, or holding harmless for liabilities under this section. Whether the expiration of indemnification provisions shifted all financial responsibility for cleanup costs to Trinity depends on the interpretation of the Agreement, which is governed by Pennsylvania state law. Under Pennsylvania law, clear and unambiguous contracts bind the parties to the intent expressed within the document, and the entire instrument must be considered in determining that intent. Courts should not interpret one contract provision in a way that negates another and must give precedence to specific provisions when they conflict with broader terms.

In this case, the Agreement reserved Trinity's right to seek contribution from Greenlease for cleanup costs, despite the expiration of the mutual indemnification provisions after three years. The Agreement did not indicate an intent for Trinity to assume all of Greenlease's liabilities post-expiration; instead, it included explicit clauses stating non-assumption of liabilities and non-waiver of remedies. The non-assumption clause clarified that Trinity did not assume any liabilities of Greenlease beyond what's specified, and the non-waiver clause confirmed that rights and remedies provided were cumulative and not exclusive. Thus, while the right to indemnification ended after three years, Trinity retained its rights to seek contribution under CERCLA and the HSCA. Greenlease's arguments asserting that the indemnification provision should dominate the Agreement's interpretation were insufficient, as they overvalued specificity at the expense of the Agreement's overall context.

The contractual indemnity is explicitly defined, but the provisions regarding the non-assumption of liabilities and non-waiver of remedies clearly indicate the parties' intent to maintain non-contractual rights. These provisions are not time-limited and specifically address liabilities beyond the initial three-year indemnification period, which the indemnification clause does not cover. Indemnity agreements should be narrowly interpreted due to their nature of shifting legal obligations. Greenlease's argument that allowing Trinity to seek contribution under the non-waiver clause negates the environmental indemnity is flawed, as the parties established distinct contractual rights separate from statutory rights. The non-waiver clause confirms that both parties retain all legal and equitable rights. The District Court noted that the remedies from the indemnification provision are cumulative and do not exclude other legal remedies. Greenlease could have negotiated for Trinity to assume all liabilities post-indemnification but chose not to. Additionally, Greenlease's reliance on Keywell Corporation v. Weinstein is misplaced due to significant differences in the agreements involved; in Keywell, the indemnification terms and parties differ from those in the current agreement, especially regarding the duration and applicability of indemnification to individuals versus corporate entities.

The Second Circuit ruled that the plaintiff could not recover CERCLA cleanup costs from individual defendants due to clear contractual intent to limit liability after a two-year indemnification period. In contrast, the Agreement between Trinity and Greenlease does not show a similar intent to absolve Greenlease from liability after a three-year indemnification period; it explicitly states that Trinity did not assume Greenlease's liabilities unless stated otherwise. Greenlease's reliance on the Keywell case was deemed misplaced, leading to the affirmation of the denial of its motion for judgment on the pleadings.

Regarding the costs incurred by Trinity, Greenlease contended that the District Court wrongly allocated unnecessary costs due to Trinity's lack of cost controls during remediation at the North Plant. The court's factual findings are reviewed for clear error, while legal interpretations of CERCLA are reviewed de novo. To obtain contribution under CERCLA § 113(f)(3)(B), Trinity must establish that the North Plant is a facility, that Greenlease is a potentially responsible party (PRP), that a hazardous substance was released, and that Trinity incurred necessary response costs in accordance with the National Contingency Plan. Greenlease did not dispute the first three elements but argued against the District Court's conclusion that Trinity's response costs were necessary simply because they complied with a Consent Decree. The court found that the record demonstrated Trinity’s costs were indeed necessary under CERCLA, rendering the debate about the necessity of costs under a consent decree irrelevant. The term "necessary" in CERCLA is defined broadly, requiring only a connection between costs and cleanup efforts, rather than the costs being indispensable for the cleanup.

The term "necessary cost" in the context of CERCLA is defined as a cost that has a direct connection to environmental cleanup efforts. Black's Law Dictionary describes "necessary" as something essential for a specific purpose. The analysis of costs in this case references CERCLA precedent, including rulings that require response costs to be directly related to remedial actions at the relevant site. CERCLA broadly defines "response" to include various investigative, removal, and remedial actions. The District Court found a clear connection between the costs incurred by Trinity and its efforts to investigate and remediate contamination at the North Plant, which were guided by a Consent Decree and Pennsylvania's Act 2 requirements. This statute stipulates that remediation must meet one of three standards: a background standard, a uniform statewide health standard, or a site-specific standard based on risk assessment for future use.

Trinity applied the statewide health standard to identify areas needing response action and utilized a site-specific standard for the actual soil cleanup, bypassing the background standard. During the investigation, Trinity's consultant, Golder, used soil sampling to establish a "standard action level" for contamination, initially setting it at 1000 milligrams of lead per kilogram of soil to ensure thorough remediation while being cost-effective. This standard was chosen based on observed outcomes at higher thresholds. When it became evident that much of the soil exceeded this level but could remain due to planned capping, Golder conducted a site characterization study and ultimately adopted a 2500 parts per million standard approved by the Pennsylvania Department of Environmental Protection (PADEP). The site-specific standard also mandated community engagement and public comment regarding cleanup efforts.

The record indicates a clear connection between Golder’s investigative and remediation efforts and the objective of addressing environmental harms. Golder employed three main response actions: consolidating contaminated soil with an asphalt cap, excavating and chemically treating soil to make it nonhazardous before capping, and transporting hazardous soil to a landfill. The excavation allowed the use of simpler asphalt caps, as opposed to more complex Subtitle C caps governed by RCRA, which are more costly and challenging to install and maintain. The District Court noted that a Subtitle C cap would have made the site resemble a landfill, conflicting with the residential nature of the surrounding area and limiting the site's usability.

Trinity's response costs were deemed necessary under CERCLA, despite Greenlease's assertion that the cleanup was unnecessarily complex and costly due to oversight by PADEP and compliance with the Consent Decree. The requirement for PADEP approval at each cleanup stage was directly linked to meeting state environmental standards, thus classifying these costs as necessary for addressing hazardous releases. Greenlease's arguments primarily challenge the reasonableness of costs rather than their necessity, failing to provide specific examples of unnecessary expenditures. The District Court's factual findings support the conclusion that Trinity’s spending was appropriate and justified under the circumstances.

Trinity and Golder collaborated to manage costs effectively while working with the Pennsylvania Department of Environmental Protection (PADEP) to minimize the work required for compliance with a Consent Decree. The District Court recognized expert testimony confirming that Trinity's billing methods enhanced cost efficiency and inhibited Golder from overcharging Trinity. Greenlease did not provide sufficient grounds to challenge this assessment, and even if there were merit to Greenlease's arguments, the costs incurred by Trinity in complying with the Consent Decree could be deemed reasonable. While it remains undecided whether costs incurred by private parties under state consent decrees are presumed reasonable under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), it is established that similar costs for government parties are presumed reasonable if consistent with the National Contingency Plan.

However, the District Court erred in its cost allocation between Trinity and Greenlease, as it relied on a speculative methodology that diverged from Trinity's expert witness Gormley's proposed method. Greenlease criticized the Court's use of volumetric data as an arbitrary proxy for actual costs, arguing that it overlooked the differences in remediation costs associated with various activities. Greenlease contended that the District Court's methodology was flawed because it lacked actual cost evidence for the remediation efforts. The Court's departure from Gormley's methodology resulted in an unreliable cost allocation that requires correction. Under CERCLA, potentially responsible parties (PRPs) have a right to seek contribution for remediation costs, and a district court is permitted to allocate these costs using equitable factors, without requiring exact mathematical precision.

Sufficient factual evidence must be presented for a court to make informed decisions without resorting to speculation, as established in Scully v. US WATS, Inc. The allocation of CERCLA damages is reviewed for abuse of discretion, which occurs when a court's decision is based on erroneous factual findings, incorrect legal conclusions, or improper legal applications. In this case, both parties presented extreme positions regarding cost allocation for cleanup, with Trinity’s expert, Gormley, asserting that Greenlease should bear 99% of the costs, while Greenlease’s expert claimed Trinity should be responsible for nearly 90%, despite Greenlease’s long history of activity at the site. The complexity of the situation was compounded by Gormley’s unclear testimony, which deviated from his expert report's methodology.

Gormley's proposed six-step methodology for cost allocation involved: (1) assigning responsibility percentages for contamination in various areas based on historical data; (2) calculating the quantity of material needing remediation; (3) multiplying the quantity by each party's responsibility percentage; (4) summing results to establish responsibility percentages for major remediation activities; (5) multiplying these percentages by the costs of each activity; and (6) totaling costs to determine each party's overall responsibility. Although Gormley’s report presented a coherent methodology, his trial testimony transformed it into a confusing "three-stage process," which included allocations specific to areas of concern, impact areas, and major remediation activities. This lack of clarity posed challenges for the District Court in navigating the evidence presented by the parties.

Gormley sought clarification on whether each "stage" in his methodology for allocating costs was distinct or part of a single process. His testimony indicated that while the stages were not mutually exclusive, the first stage could stand alone, and the subsequent stages built upon it. However, he later agreed that each stage could independently contribute to developing a cost allocation logic for contamination at the North Plant. This contradicted his expert report, which emphasized that the stages were interconnected and not independent methods for cost allocation. 

The District Court misinterpreted Gormley’s unclear testimony, concluding that each stage could function independently for cost allocation. This led the court to base its cost allocation analysis solely on Gormley’s third stage while ignoring the foundational steps that supported it. The court’s approach was evident in its overall allocation analysis, which focused on major remediation activities without differentiating between them or considering costs, despite Gormley’s assertion that costs were a central aspect of his analysis. The court's methodology involved determining the responsibility percentage for each party, totaling the quantity of material used in remediation, and failing to differentiate among the various remediation activities involved at the North Plant.

No error was found in the Court's factual findings regarding contamination in specific areas. The Court's cost allocation analysis was critiqued for treating two different remediation activities as equivalent despite significant cost differences. It calculated the percentage of responsibility for contamination by multiplying each party's responsibility by the total amount of material used or remediated, resulting in Greenlease being assigned 83% and Trinity 17% of the contamination responsibility for the North Plant. However, this methodology was deemed speculative due to two main flaws: it did not differentiate between varied remediation costs and incorrectly treated square footage and cubic yard data as equivalent. Although a volumetric-centered approach can be reasonable under certain circumstances, it is inappropriate when multiple impact areas and remediation activities with differing costs are involved. The Court's approach led to an inequitable allocation, akin to comparing dissimilar units of measurement. Consequently, the judgment regarding cost allocation between Greenlease and Trinity was vacated due to this abuse of discretion.

If the District Court accepts Gormley’s analytical approach, it must follow the cost allocation methodology outlined in his expert report, which both parties utilized for their cost estimates. This methodology necessitates a distinct cost allocation analysis for each major remediation activity, drawing on readily available information in the record, though some additional fact-finding may be required. The Court must differentiate between major remediation activities and account for their varying costs, allowing for reasonable estimates rather than exact figures. Using volumetric and cost data specific to each activity, the Court should determine each party's responsibility for costs associated with those activities and calculate overall cost allocations for Greenlease and Trinity. The District Court has the discretion to adjust these percentages and may reopen the record if necessary for further analysis.

Trinity’s cross-appeal raises three main issues: first, it contests the District Court’s factual finding regarding responsibility for lead contamination at the North Plant, which the court upheld as not an abuse of discretion; second, it challenges the Court’s application of equitable deductions related to indemnification provisions and the North Plant's increased value post-cleanup, with the Court's prior application deemed erroneous but allowing for correction on remand; and third, Trinity appeals the determination that Ampco is not liable for Greenlease’s actions, which the Court affirms due to lack of evidence for direct or derivative liability.

The District Court's allocation of responsibility for lead contamination was upheld as not being an abuse of discretion. Trinity contested the Court's finding that Greenlease's painting operations did not contribute to the lead contamination that necessitated remediation. Trinity argued that evidence showed lead runoff from Greenlease's operations at the North Plant contaminated the ground. However, the review determined that the District Court's conclusions were supported by evidence and expert testimony. The Court identified historic fill, used by various parties over time, as the primary source of lead contamination, indicating that lead paint alone was insufficient to cause the required remediation. Greenlease's expert, Gerritsen, provided credible analysis through soil samples, demonstrating lead levels exceeding PADEP standards were linked to historic fill rather than painting operations. Although Trinity's expert offered a conflicting opinion without soil sample analysis, the Court was entitled to favor the more supported expert opinion.

Conversely, the District Court was found to have abused its discretion in granting equitable deductions based on indemnification provisions and the alleged increased value of the North Plant. While CERCLA allows trial courts significant discretion in allocating response costs, the Court’s deductions—5% for indemnification and 10% for increased value—were deemed arbitrary and speculative. Both Trinity and Greenlease criticized the deductions, with Greenlease acknowledging the lack of a basis for the figures in the record. The Court's application of the 5% deduction was based on a misinterpretation of precedent, and the 10% deduction lacked an explanation or foundation, leading to the conclusion that these deductions were improperly applied.

The District Court's decision to apply a 5% deduction to Greenlease's responsibility was based on the indemnification provisions of the Agreement, drawing on the precedent set in Beazer East, Inc. v. Mead Corporation. The court found that failing to consider the parties' intent, specifically the three-year limit on indemnification, would constitute an error. In Beazer, it was determined that a district court erred by not adequately incorporating the mutual intent of the parties regarding liability allocation in a contract, despite the lack of clear intent to transfer all liabilities as per state law requirements. 

In contrast, the District Court in the current case found no mutual intent to shift CERCLA liability from the sale of the North Plant, noting that only Greenlease's subjective intent to avoid liability existed. The court emphasized that such subjective intent should not heavily influence equitable allocations if it contradicts the written agreement. The District Court's reliance on Greenlease's subjective intent for the 5% deduction was deemed an abuse of discretion and a misapplication of Beazer. The court must clarify why, as a matter of equity, such a deduction is appropriate when the intent is not mutual and contradicts the contract. Consequently, the matter is remanded for reevaluation of the equitable deduction based on the indemnification provisions.

A 10% equitable deduction for Greenlease was deemed appropriate by the District Court due to the North Plant’s increased value post-remediation, which shifted the site from unproductive to suitable for commercial use. However, the appellate court disagreed with this application, noting the absence of evidence regarding the North Plant's fair market value before and after remediation. It emphasized that landowners seeking contribution for cleanup costs should share benefits from any resultant increase in property value, a principle supported by case law. The appellate court highlighted the need for concrete evidence of value changes to justify any deductions related to increased market value. It criticized the District Court for applying a value-based deduction without such evidence and allowed for the possibility of reopening the record to include this evidence. Additionally, the court found no error in the District Court’s ruling that Ampco was not liable for Greenlease's share of cleanup costs, as Trinity's evidence did not sufficiently demonstrate genuine material issues regarding Ampco’s liability.

Trinity argues that Ampco is directly liable under CERCLA as an “operator” of the North Plant and, alternatively, derivatively liable through a veil-piercing theory due to Greenlease’s operations. Direct and derivative liabilities are distinct grounds for assigning responsibility for environmental cleanup costs. The review of the District Court's summary judgment is conducted de novo, affirming that summary judgment is proper when no genuine material dispute exists.

The court concludes that Ampco is not directly liable for Greenlease’s contamination at the North Plant. Direct liability under CERCLA applies only if a parent company actively manages the operations of its subsidiary's facility, particularly concerning pollution. Ampco's liability would depend on its participation in the North Plant's activities. The court finds that Trinity cannot establish Ampco's liability by merely demonstrating that dual officers made policy decisions or supervised activities at the facility. 

Evidence shows that Greenlease employees managed all day-to-day operations, including waste disposal, while Ampco did not engage in operations exceeding typical parent-subsidiary relationships. Ampco employed only non-technical staff, such as accountants and lawyers, without any engineers involved in environmental compliance or waste management. Consequently, the court agrees with the District Court's determination that Ampco's involvement did not surpass the normal parent-subsidiary dynamic needed to establish direct liability under Bestfoods. As such, the court affirms the summary judgment in favor of Ampco, dismissing Trinity’s claims.

Trinity alleges that Ampco directly supervised Greenlease concerning environmental laws and operations at the North Plant. However, it fails to demonstrate how these activities exceed a typical parent-subsidiary relationship, as established in Bestfoods, which states that monitoring a subsidiary’s performance and providing general oversight does not incur direct liability. The court agrees with the District Court's ruling that Ampco’s actions fall within standard parental oversight and do not warrant direct liability. Trinity argues for substantial factual similarities with Bestfoods, suggesting Ampco’s direct liability, but the court finds no evidence of Ampco personnel significantly involved in North Plant operations, unlike the situation in Bestfoods. Furthermore, Trinity cannot hold Ampco derivatively liable under CERCLA for Greenlease’s actions without proof that the corporate veil can be pierced, which requires extraordinary circumstances that reveal misuse of the corporate form for wrongful purposes. Pennsylvania law strongly presumes against piercing the corporate veil, and Trinity relies on both federal and state laws, which share similar principles regarding a subsidiary's status as an alter ego of its parent corporation.

Trinity has not provided sufficient evidence to establish a triable issue of fact regarding its claims. Key factors for determining if a subsidiary is merely an alter ego of its parent under federal common law include gross undercapitalization, failure to adhere to corporate formalities, insolvency, and the siphoning of funds by the parent. No single factor is definitive; rather, the totality of circumstances must be assessed. The burden of proof for demonstrating that a corporation is an alter ego is high, requiring clear and convincing evidence that both entities operated as a single entity. Pennsylvania state courts also consider similar factors, including substantial intermingling of corporate and personal affairs and the use of corporate status to perpetrate fraud. Trinity argues that the District Court improperly applied the clear and convincing evidence standard, claiming it is inappropriate for summary judgment motions. However, it acknowledges that most traditional piercing factors do not apply or favor the opposing party, Ampco.

Arguments for piercing the corporate veil focus on the claim that Greenlease was undercapitalized when it issued substantial dividends to Ampco, which allegedly siphoned off its assets. Pennsylvania employs a preponderance of the evidence standard for alter-ego analysis, but the court clarifies that a clear and convincing evidence standard is also applicable when elements of fraud are involved. According to precedent, particularly in this Circuit, the burden to demonstrate alter ego status requires clear and convincing evidence, a standard Trinity has failed to meet. 

The court asserts that whether applying a preponderance or clear and convincing evidence standard, the conclusion remains that no reasonable fact-finder could justify piercing the corporate veil. Trinity argues that the issuance of approximately $50 million in dividends from Greenlease to Ampco, leaving only $250,000 in reserves, indicates undercapitalization; however, the court finds that the relevant inquiry pertains to whether the corporation was established to defraud creditors or avoid business risks. The evidence does not support claims of undercapitalization while operating the North Plant, as Trinity only suggests a lack of funds after operations ceased.

Furthermore, there is no indication that the dividends were issued with knowledge of liabilities to Trinity or intent to evade them. The court emphasizes that without deliberate intent to escape liability, the corporate entity should not be disregarded. Lastly, the relationship between Greenlease and Ampco is characterized as a standard parent-subsidiary dynamic, rather than one indicative of fraud or malfeasance.

Trinity argues that Ampco significantly dominated Greenlease and that the overlap in their boards warrants piercing the corporate veil. However, the legal standard requires more than mere control; specific unusual circumstances must be demonstrated to justify such action, as established in case law. Greenlease operated independently in most operational decisions, only requiring Ampco's approval for significant actions. The District Court found no material difference in their relationship compared to typical parent-subsidiary dynamics.

Under Pennsylvania law, piercing the corporate veil requires evidence that the controlled corporation acted merely as an agent of the controlling shareholder, which Trinity failed to establish. Additionally, Pennsylvania courts maintain a strong presumption against disregarding separate corporate entities unless it would render the corporate theory useless. Trinity's claims do not indicate any misuse of corporate form by Ampco, and allowing veil piercing would undermine this presumption.

Trinity also contends that public policy supports holding Ampco accountable for Greenlease's actions to ensure the "polluter pays." However, both federal and Pennsylvania law emphasize the importance of maintaining distinct corporate entities, especially given the lack of evidence of fraud or misuse of the corporate structure. As a result, the court concludes that public policy does not favor Trinity's position. The court affirms some aspects of the District Court's ruling but vacates the cost allocation determination, remanding for further proceedings.