In California Department of Toxic Substances Control v. Jim Dobbas, Inc., et al, 2014 WL 4627248 (E.D. Cal. Sept. 16, 2014), the United States District Court for the Eastern District of California held that DTSC’s actions in approving work plans and directing a site cleanup constituted sufficient grounds for denying DTSC’s motion to dismiss defendant Dobbas’ counterclaim that DTSC was an “operator” under CERCLA Section 107(a)(2). The defendant argued that DTSC had botched the cleanup of the site over the course of 30 years, and therefore defendant was entitled to hold DTSC liable for response costs under CERCLA Sections 107 and 113. Furthermore, defendant asserted it was entitled to a declaratory judgment that DTSC was liable under CERCLA Section 113(g)(2) and 28 U.S.C. Section 2201. DTSC argued that it was protected by sovereign immunity in approving work plans and entering into agreements with contractors to complete the cleanup that defendants had declined to undertake.  The court found that United States v. Bestfoods, 524 U.S. 51 (1998) altered the scope of operator liability. Dobbas, 2014 WL 4627248 at p. 9 (“Bestfoods does not require an operator to play an active role.”). The court also found that CERCLA includes a waiver of sovereign immunity, and the defendant had pled that a sufficient response cost claim.  Therefore, DTSC’s motion to dismiss the counterclaim was denied.

The court did not stop there, however, in disappointing DTSC. The court also refused to grant DTSC’s motion to strike the defendant’s jury demand on the grounds that there was a sufficient split among the courts on the issue of whether a CERCLA jury demand must always be stricken. The district court found support in allowing the jury demand to survive in the Second Circuit’s decision in AMW Materials Testing, Inc. v. Town of Babylon, 584 F.3d 436 (2d Cir. 2009).

Although the decision is a welcome surprise for many CERCLA defense practitioners, the court’s decisions were made on a 12(b)(6) motion to dismiss and a 12(f) motion to strike. Thus, the district court may reverse course later in the case. Moreover, if the district court’s holdings survive through final judgment, it is a fair bet that the Ninth Circuit Court of Appeals will weigh in on the subject, which is not viewed as a favorable forum for CERCLA defendants.