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Quantum Labs, Inc. v. Maxim Integrated Products Inc.

United States District Court, N.D. California, San Jose Division

November 18, 2019

QUANTUM LABS, INC., et al., Plaintiffs,
v.
MAXIM INTEGRATED PRODUCTS INC, et al., Defendants.

          ORDER DENYING IN PART AND GRANTING IN PART DEFENDANTS' MOTION TO DISMISS THE FIRST AMENDED COMPLAINT [RE: ECF 38]

          BETH LABSON FREEMAN, United States District Judge.

         Plaintiffs Serban Porumbescu, also known as Simon Planck, and Quantum Labs, Inc. (“Quantum”) sue Defendants Maxim Integrated Products Inc. (“Maxim”) and Mr. Tunc Doluca, Maxim's CEO, claiming that Defendants deliberately caused hazardous waste to be released incident to Maxim's operations at a facility operated by Plaintiffs in San Jose, CA. Arising from these allegations, Plaintiffs assert eight (8) state and federal causes of action.

         Before the Court is Defendants' motion to dismiss four (4) causes of action in Plaintiffs' First Amended Complaint (“FAC”). Mot., ECF 38. Additionally, Defendants seek to strike Plaintiffs' request for civil penalties pursuant to California Health & Safety Code § 25359.7. The Court heard oral argument on Defendants' motion on October 10, 2019 (“the Hearing”). For the reasons stated on the record and discussed below, the motion is GRANTED IN PART (WITH LEAVE TO AMEND IN PART AND WITHOUT LEAVE TO AMEND IN PART) and DENIED IN PART.

         I. BACKGROUND

         Mr. Planck owns and Quantum operates a facility at 2108 Bering Drive, Unit B, San Jose, California (“Quantum Facility”)[1]. See FAC ¶ 2, ECF 36. On December 17, 2012, Maxim and a third party, Hyperion Group, Inc. (“Hyperion”)[2] entered into a “Research and Development Support Services Agreement” (“RDSSA”), in which Hyperion agreed to provide research and development services (related to manufacturing silicon wafers) to Maxim at the Quantum Facility. FAC ¶¶ 40, 15, 16. Maxim rented laboratory space in Quantum Facility and by approximately April 2014, had “installed its equipment for its satellite operation.” Id. ¶ 46. In June 2014, routine sampling of wastewater discharged from the Quantum Facility (conducted pursuant to San Jose Water Pollution Control District Self-Monitoring requirements) revealed presence of cobalt. Id. ¶ 47. According to the FAC, cobalt was present in “wastewater exiting the Quantum Facility” because it entered “a drain, toilet, or other connection to the sanitary sewer system.” Id. Plaintiffs allege that “the wastewater containing the Cobalt Contaminants[3] was subject to leaking from sewer conveyances by way of leaching and discharges in cracks and misaligned joints while in route to the sanitary sewer treatment works.” Id. ¶ 48.

         In December 2014, Maxim conducted sampling for cobalt inside of the Quantum Facility using a “wipe” methodology and the sampling revealed cobalt dust at levels as high as “nearly 100 times in excess of what Maxim's internal guidelines deemed to be a safe level.” Id. ¶ 56. A consultant, hired by Maxim, performed cobalt sampling at the Quantum Facility on or around January and April 2015. Id. ¶ 57. The sampling result - which Maxim shared with Mr. Planck - revealed “cobalt contamination at concentrations 10 to 100 times higher than those allowed by CAL/OSHA.” Id. On or around June 2015, Maxim shut down its operations at the Quantum Facility and by the end of September 2015, all Maxim personnel left. Id. ¶ 50.

         In November 2017, Mr. Planck hired a consulting firm to test for the presence of cobalt the Quantum Facility (with a Maxim representative in attendance)-the results of which “showed cobalt contamination several hundred times in excess of permissible concentrations.” Id. ¶ 69. Plaintiffs claim that “the Cobalt Contaminants remain present at the Quantum Facility on surfaces and in the ambient air at concentrations which may present an imminent and substantial endangerment to health and the environment.” Id. ¶ 109.

         According to the FAC, Defendants knew but concealed from Mr. Planck that “Maxim intended to use, handle, and store cobalt pellets while performing operations at the Quantum Facility” and that “that Maxim's operations would generate a waste stream consisting of the known carcinogens cobalt metal power and cobalt oxide.” Id. ¶¶ 4-5. The FAC lists over twenty communications between Mr. Planck and various Maxim representatives, in which Maxim's representatives did not disclose the use of cobalt at the Quantum Facility. See Id. ¶¶ 18-37. Additionally, Plaintiffs allege that pursuant to the RDSSA, a Maxim representative provided Mr. Planck with a schedule of materials to be utilized at the Quantum Facility but “intentionally omit[ed]” Maxim's use of cobalt. Id. ¶ 41.

         Plaintiffs allege that cobalt metal power and cobalt oxide are “known carcinogens” under California law and both are “listed hazardous substances” under the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. 9601 et seq. (“CERCLA”). Id. ¶¶ 5-6. Quantum filed this action on December 19, 2018, asserting 11 causes of action against Maxim and Mr. Doluca. See ECF 1. Defendants filed a motion to dismiss, which the Court granted with leave to amend in part and without leave to amend in part. ECF 35. Quantum, now joined by Mr. Planck, filed a First Amended Complaint, asserting eight (8) causes of action.

(1) Violations of CERCLA, 42 U.S.C. §§ 9607(a) and 9613(f)(1) - (Plaintiffs against All Defendants);
(2) Violations of the Resource Conservation and Recovery Act (“RCRA”) 42 U.S.C. §6972(a)(1)(B) - (Plaintiffs against Maxim);
(3) Fraud-Intentional Concealment of Material Facts - (Mr. Planck against Maxim);
(4) Negligence and Negligence Per Se - (Plaintiffs against Maxim);
(5) Continuing Private Nuisance - (Mr. Planck against Maxim);
(6) Waste - (Mr. Planck against Maxim);
(7) Trespass - (Mr. Planck against Maxim); and
(8) Breach of Contract - (Quantum against Maxim).

See generally FAC.

         II. LEGAL STANDARD

         “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). When considering such a motion, the Court “accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555).

         III. DISCUSSION

         Defendants move to dismiss Plaintiffs' claims for: (1) violations of CERCLA under 42 U.S.C. §§9607(a) and 9613(f)(1), (2) violations of RCRA, (3) fraud, and (4) waste. See generally Mot. Additionally, Defendants move to strike Plaintiffs' request for civil penalties pursuant to California Health & Safety Code § 25359.7. Id. at 22. In their opposition, Plaintiffs note that they are willing to “stipulate to the dismissal of their CERCLA §9613 claim without prejudice.” Opp'n at 4 n. 1, ECF 40. Plaintiffs also “submit to the dismissal of their claims for Waste and Civil Penalties with prejudice.” Id. at 15.

         A. CERCLA Claim

         i. CERCLA Claim against Maxim

         CERCLA authorizes private parties to institute civil actions to recover the costs involved in the cleanup of hazardous wastes from those responsible for their creation. See 42 U.S.C. § 9607(a). To prevail in a private cost recovery action under CERCLA, a plaintiff must establish that (1) the site on which the hazardous substances are contained is a “facility” under CERCLA's definition of that term[4], (2) a “release” or “threatened release” of a “hazardous substance” from the facility has occurred; (3) such “release” or “threatened release” has caused the plaintiff to incur response costs that were “necessary” and “consistent with the national contingency plan”; and (4) the ...


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