United States v. Pacific Hide & Fur Depot, Inc.

Samuel McCarty formed McCarty’s Inc. in 1949 to operate a metal-recycling scrapyard. By 1970, Samuel McCarty and his wife died, and all the shares of McCarty’s Inc. were devised among their children, S.R. McCarty, William McCarty, and Richard McCarthy. Between 1970 and 1973, about 600 capacitors containing polychlorinated biphenyls (PCBs) were disposed of in the recycling yard in an area known as the gravel pit. Richard McCarty was not involved with the management or operations of the scrapyard and was away for school or work most of the time. In 1979, McCarty’s sold most of its assets to Pacific Hide & Fur Depot, Inc. (defendant) and ceased doing business. In March 1981, S.R. McCarty died and his stock in McCarty’s Inc. was devised to his wife, Dayna McCarty. By September 1982, McCarty’s transferred its assets, including the gravel pit, to existing shareholders in return for the redemption of their shares. In December 1982, William McCarty transferred all his interest in the property to Terry, Sherry, and Michael McCarty through a warranty deed. In March 1983, federal agents discovered the capacitors in the gravel pit and found that they had been leaking PCB-laden liquid into the porous soil. The Environmental Protection Agency (EPA) began clean-up efforts to remove the capacitors and PCB-contaminated soil. The United States (plaintiff) filed suit against the owners of McCarty’s Inc. under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), seeking to recoup the clean-up costs and enjoin the owners from any further PCB disposal. The owners at the time were Richard McCarty, Dayna McCarty, and Terry, Sherry, and Michael McCarty (the McCarty owners) (defendants). The McCarty owners asserted that the innocent-landowner defense protected them from liability as current landowners of the facility.