Opinion
Index No. 7549/2013
03-08-2024
The State of New York, Town of Hempstead, Town of Brookhaven, Incorporated Village of Garden City and Long Island Power Authority ex rel. EPR Corp. and Patrick Fahey, Plaintiff(s), v. Covanta Hempstead Company and Covanta Holding Corporation, Defendant(s).
Plaintiffs David Kovel, Andrew Martin Mcneela, KIRBY MCINERNEY LLP, Reed W. Super, Super Law Group, LLC, David Scott Hoffner, HOFFNER PLLC. Defendants Elizabeth A Edmondson, JENNER & BLOCK LLP.
Plaintiffs David Kovel, Andrew Martin Mcneela, KIRBY MCINERNEY LLP, Reed W. Super, Super Law Group, LLC, David Scott Hoffner, HOFFNER PLLC.
Defendants Elizabeth A Edmondson, JENNER & BLOCK LLP.
HON. LISA A. CAIRO, J. S. C.
The following papers were read on this motion DOCS NUMBERED
(MS #8)
Notice of Motion, Affidavits, Affirmations, Exhibits, Memos 319-345, 355
Opposition Papers 371-397, 858
Reply Papers 401-410, 863-864
(MS #9)
Notice of Motion, Affidavits, Affirmations, Exhibits, Memos 357-363
Opposition Papers 411-412
Reply Papers 416-419
(MS #10)
Notice of Motion, Affidavits, Affirmations, Exhibits, Memos 364-370
Opposition Papers 413
Reply Papers 415
(MS #11)
Notice of Motion, Affidavits, Affirmations, Exhibits, Memos 433-548
Opposition Papers 665-677
Reply Papers 798-802
(MS #12)
Notice of Motion, Affidavits, Affirmations, Exhibits, Memos 549-623
Opposition Papers 629-785, 821-843, 854-857, 867-870, 872
Reply Papers 803-817, 861, 871
In this "qui tam," or whistleblower, action, Plaintiff EPR Corp (the "Relator") has brought claims on behalf of the State of New York, Town of Hempstead ("Hempstead"), Town of Brookhaven ("Brookhaven"), Village of Garden City ("Garden City") and Long Island Power Authority ("LIPA") (collectively, the "Municipalities") against Defendants Covanta Hempstead Company and Covanta Holding Corporation ("Covanta") under the New York State False Claims Act, New York Finance Law § 187 et seq., asserting that Covanta, in burning trash collected from the Municipalities, failed to properly control and dispose of the ash generated by its incinerators in violation of applicable New York State law and the terms of its contracts with the Municipalities. Patrick Fahey, the former Covanta employee who strove to bring Covanta's alleged misconduct to light, brings retaliation claims against Covanta, alleging that it terminated his employment after it learned, by improper means, that he was the whistleblower.
There are five motions currently before the Court. For the sake of judicial economy, these motions are consolidated for disposition in this decision and order. Three of the motions (Mot. Seq. No. 008, 009, 010) pertain to two of the Municipalities', Hempstead and Garden City, efforts to settle the action against Covanta. Covanta moves this Court (Mot. Seq. No. 008) for an Order approving the settlement it has reached with Hempstead and Garden City. Relator cross-moves (Mot. Seq. No. 009) for an Order declaring that Hempstead and Garden City have no authority to settle this matter. Non-party Brookhaven Landfill Action and Remediation Group moves (Mot. Seq. No. 010) for leave to file an amicus-curiae brief opposing the settlement.
The two remaining motions are for summary judgment. The Relator moves this Court (Mot. Seq. No. 011) for an Order granting it summary judgment dismissing certain of Covanta's affirmative defenses, and Covanta moves this Court (Mot. Seq. No. 012) for summary judgment dismissing the Relator's complaint in its entirety.
By Order of this Court (Jimenez, J.) entered September 19, 2022, Motion Sequences 008, 009, and 010 were held in abeyance pending the determination of certain federal court decisions that the Court believed were likely to influence the outcome of those motions. While this Order will resolve all the outstanding motion sequences herein, the Court will, technically, continue to hold those motions in abeyance and consider first Covanta's motion for summary judgment since it is potentially dispositive of all the motions before the Court.
Background
In or about 2005, Covanta purchased a "waste-to-energy" facility (the "WTE") located in Westbury, New York. The WTE would receive municipal solid waste from local municipalities, including Hempstead and Garden City, to be incinerated. The incineration process would generate electricity that Covanta sold to LIPA and would generate ash as a waste by-product of the process. Some of the ash generated by the waste incineration process contained toxic substances, leading to WTEs being heavily regulated by the New York State Department of Environmental Conservation ("DEC"). With respect to the Westbury facility, once the incineration was complete, the ash would be sent to the Brookhaven Landfill located in Yaphank, New York, which was not an approved facility for the receipt of hazardous ash. Covanta entered into contracts for the disposal of municipal waste with Hempstead on December 1, 1985, and December 11, 2007, and with Garden City in or about August 2009. The contracts with Brookhaven for the disposal of ash were made September 16, 2004, and March 10, 2009, and an Amended and Restated Municipal Solid Waste and Ash Disposal Service Agreement was entered into on September 16, 2014 (collectively, the "Agreements").
The facility generated between 500 and 750 tons of ash daily, totaling over two million tons of ash each year. The ash was divided into two types, "bottom ash" ("BA") and "fly ash" ("FA"). Both types of ash potentially contained hazardous toxins. To address this, Covanta developed an Ash Residue Management Plan ("ARMP") that was designed to minimize, if not eliminate, any hazard. The ARMP, which was approved by the DEC, required Covanta to mix the bottom ash and fly ash in a specific ratio to render the resulting combined ash non-hazardous. Failure to properly mix the BA and FA in the proper ratio would increase the likelihood that the combined ash would leach toxic chemicals at the Brookhaven landfill where the ash was disposed. In addition, to confirm the conformance of its process, Covanta was required to test representative samples of the combined ash.
Plaintiff Patrick Fahey ("Fahey") who began working for Covanta in 2011, asserts, through the Relator, that beginning in 2006 Covanta did not mix the ash as required by the ARMP, but rather, engaged in a "lasagna layering" of the ash, with alternating strata of pure BA and pure FA. This failure to properly mix the ash for disposal allegedly led to hazardous ash being sent to the Brookhaven landfill for disposal. It is further alleged that the ash samples that were sent to a third-party laboratory for testing were not "real-world" samples taken from the trucks bound for the Brookhaven landfill but were manufactured by Covanta in a laboratory from separate streams of BA and FA that were carefully measured in the required ratio and properly mixed. The Relator alleges that despite this practice, in addition to using an unaccredited laboratory, the ash resulting from the specialized mixing, failed the tests. This practice by Covanta allegedly continued for years, including into Fahey's employment with Covanta.
The Relator, EPR Corp., appears to be an entity set up by Fahey for the purpose of bringing this action. Pursuant to Finance Law § 190(6), the Relator seeks judgment of statutory penalties and three times the damages of the Municipalities, based upon the entire price of all invoices remitted during the relevant period, and seeks to recover its statutory 25-30% share of the amount recovered in the action, together with costs and attorneys' fees.
The Relator makes additional allegations about Covanta's ash-handling practices, including that the Ash House was dilapidated and allowed fugitive ash to escape to surrounding areas. Such fugitive ash was washed into the facility storm-water basin, which ash-laden water was allegedly misused inside the cooling tower.
In or about May 2014, the Relator filed the initial complaint in this action under seal. Thereafter, the DEC's facility monitor stationed at the WTE allegedly told Covanta's environmental engineer that there was a secret investigation of the WTE being conducted and that there was a whistleblower at the facility. Fahey claims that this conversation eventually led to him being identified as the whistleblower and wrongfully terminated by Covanta in retaliation for his role as the whistleblower.
Since filing and serving the initial complaint, the Relator has since amended the complaint on three additional occasions, with the Fourth Amended Complaint being the operative pleading on this motion. The complaints, as amended, expand on the allegations against Covanta concerning its failure to properly prepare the ash for disposal at the Brookhaven landfill and the overall safety of the WTE, including allegations that Covanta has lied to the press, public, Municipalities, and regulators concerning its improper ash disposal.
Covanta's Motion for Summary Judgment
Covanta seeks summary judgment dismissing the complaint. In so doing, Covanta argues that the Relator's claims under the New York State False Claims Act cannot be maintained as a matter of law. Covanta contends that the Relator does not seek recovery under a traditional False Claims Act theory, i.e., that the defendant sent false invoices to the government misrepresenting the quantity or quality of goods or service provided, but rather, under what is termed an "implied certification" theory of recovery, meaning that Covanta, by invoicing the Municipalities for its services, falsely implied that it was, as required by the contracts, in compliance with all relevant laws when it was not.
Covanta asserts that for the Relator to prevail on its "implied certification" theory, i.e., alleging that Covanta misrepresented that it was in compliance with all relevant laws and regulations throughout the duration of the contracts, the Relator must show that not only did Covanta knowingly conceal its failure to comply with the law from the Municipalities, but that this false implied certification was or would have been material to the Municipalities' decision to pay Covanta. In essence, Covanta argues that the Relator needs to show that had the Municipalities known about Covanta's failure to comply with the relevant laws, they would have refused to pay Covanta as required under the contracts.
Covanta argues that here, the Relator can make no showing that Covanta made a misrepresentation to the Municipalities to obtain payment under the Agreements because no such misrepresentations were made. And, even assuming, arguendo, that any misrepresentations or omissions by Covanta were actionable, the Relator cannot show that they were material to the Municipalities' decision to pay as required by the Agreements. Covanta argues that contrary to the Relator's arguments, the Municipalities have expressly, consistently stated in this litigation, through deposition testimony and affidavits submitted in support of Covanta's motion, that the alleged environmental violations would not have caused them to withhold the payments to Covanta that were required by the Agreements. Covanta contends that, indeed, the Municipalities continued payments to it for years, despite having become aware of the alleged environmental violations, proving that the alleged violations were not material to the Municipalities' decision to pay.
The Relator argues, in opposition, that (1) Covanta expressly certified on a regular basis, particularly to the Town of Hempstead, that it had complied with all provisions of the contract as a precondition to payment; and that, at the very least, an issue of fact exists concerning Covanta's representations; and (2) that there is a question of fact concerning whether the Municipalities considered Covanta's certifications to be material based on environmental compliance being important to the Municipalities, particularly because the Brookhaven landfill was not authorized to accept hazardous waste and because Covanta's alleged environmental violations were so significant.
The Relator further argues that the Municipalities' conduct or the fact that they continued to pay Covanta is not conclusive of the question of the materiality of Covanta's representations. The Relator asserts that a government's continued payment is only probative of materiality if the record established that the government was aware of that the defendant had committed the violations at issue, as opposed to being aware of "mere allegations" of misconduct. The Relator argues that the record herein does not demonstrate the Municipalities had "actual knowledge" of Covanta's misconduct, but rather consistently demonstrates that the Municipalities did not believe that they were the victims of fraud or false claims because the DEC had a monitor on site and never issued a Notice of Violation.
In the first instance, it must be noted that because New York's False Claims Act follows the federal False Claims Act, New York's courts have found it "appropriate to look toward federal law when interpreting the New York Act" (State ex. rel. Seiden v Utica First Ins. Co., 96 A.D.3d 67 [1st Dept 2012] [internal quotation omitted; Liss v. Heritage Health & Housing, Inc, 2023 WL 2267366 at *5 [SDNY Feb. 27, 2023]). Indeed, the parties have cited extensively to United States Supreme Court, Circuit Court, and District Court case law, all to convince this Court of what precedent it should be persuaded by.
Understanding the New York False Claims Act
The New York State False Claims Act, like its federal counterpart, exists to promote the general policy of deterring fraudulent conduct against the State (Comptroller of the City of New York and State of New York ex. rel. FX Analytics v Bank of New York Mellon Corp., 200 A.D.3d 58 [1st Dept 2021]). To do so, the New York False Claims Act, like its federal counterpart, incentivizes private parties, known in the parlance of the statute as "relators," to assist the government in rooting out fraud by bringing "qui tam" or whistleblower actions on behalf of the State or any local government for violations of the statute (FX Analytics, 200 A.D.3d at 58).
Liability under the False Claims Act, be it New York or Federal, attaches when an individual (person or entity) "presents or directly induces the submission of a false or fraudulent claim to the government" (Universal Health Services, Inc. v U.S. ex. rel. Escobar, 579 U.S. 176, 182 [2016]). The notion of what constitutes a "false or fraudulent claim" is essentially the same as it is at common law; it includes express falsehoods and, as alleged herein, misrepresentations by omission (Escobar, 579 U.S. at 187). Moreover, as noted by Covanta and confirmed by the Relator, the False Claims Act allegations in this action involve what is referred to as an "implied certification" theory of liability under the concept that "when a defendant submits a claim, it impliedly certifies compliance with all conditions of payment" (Id. at 180). For liability to attach under this theory, a defendant submits a claim for payment that "knowingly fails to disclose the defendant's non-compliance with a statutory, regulatory, or contractual requirement" (Id. at 181).
False Claims Act liability under the implied certification theory "does not turn on whether those requirements were expressly designated as conditions of payment" but rather, whether the defendant's misrepresentation, either affirmative or by omission, concerning its compliance with the requirement be "material to the Government's payment decision" (Id. at 181 and 190 ["What matters is not the label the Government attaches to a requirement, but whether the defendant knowingly violated a requirement that the defendant knows is material to the Government's payment decision."]). Indeed, the Relator acknowledges this materiality requirement. (Relator Memo, P.16).
"Material" is defined under New York's statute as "having a natural tendency to influence or be capable of influencing the payment or receipt of money or property" (New York Finance Law § 188(5)). The determination of whether the misrepresentation was "material" to the government's decision to pay is a "demanding" one, since the False Claims Act is not "a vehicle for punishing garden-variety breaches of contract or regulatory violations" (Escobar at 194). In addition, misrepresentations are not to be "deemed material merely because the Government designates compliance with a particular statutory, regulatory, or contractual requirement as a condition of payment," such a designation is merely one factor to be considered (Escobar at 194). Rather, the materiality standard "looks to the effect on the likely or actual behavior of the recipient of the alleged misrepresentation" (Id. at 193 [quotation omitted]).
In assessing whether the Government deems a misrepresentation to be material, the federal courts have adopted a "holistic, totality-of-the circumstances" approach, examining factors that include, but are not necessarily limited to "(1) whether the government has expressly designated the legal requirement at issue as a condition of payment; (2) whether the alleged violation is minor or insubstantial or goes to the essence of the bargain; and (3) whether the government made continued payments or does so in the mine run of cases despite actual knowledge of the violation" (U.S. ex. rel. Druding v Care Alternatives, 81 F.4th 361, 2023 WL 549433, *2 and fn. 1 [3rd Cir. 2023][internal quotations omitted], collecting cases on holistic approach to determining materiality).
The Court is persuaded that this holistic approach adopted by multiple federal Circuit Courts of Appeal provides the proper context in analyzing the facts of the instant case, particularly in determining whether the purported misrepresentations by omissions were material to the Municipalities' decision to continue paying Covanta under the terms of the Agreements and indeed, to continue the Agreements with Covanta. In conducting this analysis, the Court is also mindful that it must be done within the framework of a motion for summary judgment; examining whether Covanta, in the first instance, has demonstrated its prima facie entitlement to judgment as a matter of law; and, if it has, then determining whether, in response, the Relator has demonstrated the existence of an issue of fact sufficient to defeat Covanta's prima face showing (Alvarez v Prospect Hospital, 68 N.Y.2d 320, 344-325 [1986]).
First through Fourth Causes of Action
False Claims Act under New York Finance Law § 189 (1)(a) and (b)
Here, Covanta has demonstrated its prima facie entitlement to judgment as a matter of law through the submission of evidence showing that, under the totality of the circumstances, its alleged failure to properly handle and prepare the BA and FA for disposal at the Brookhaven landfill was not material to the Municipalities' decision to pay Covanta for processing their municipal solid waste as required under the Agreements and to continue the contractual relationship.
In examining the totality of the circumstances, the Court notes that the Agreements herein do not identify compliance with environmental regulations or even with the ARMP as a condition of payment by the Municipalities. Indeed, Relator, seemingly conceding no such provisions exist, predicates its theory of liability on general provisions found in the Agreements. The Town of Hempstead Agreement states that in performing under the contract, Covanta must operate in accordance with "Good Industry Practice" and "all applicable federal, state and local laws, rules, codes, ordinances and regulations," including those pertaining to the environment. Similarly, the LIPA Agreements require compliance of the facility with energy-related environmental regulations. The Village of Garden City Agreement provides that Covanta shall perform its services in compliance with "Applicable Law," including with respect to ash management but does not suggest withholding of service fees as a remedy in the case of failure to comply with the Applicable Law. The Town of Brookhaven Agreements have independent sections for "Delivery and Processing of Brookhaven Waste at the Company's Facility" (Section 4) and "Delivery and Disposal of Ash at the Brookhaven Landfill" (Section 5). None of the terms of the former provision concerning processing of Brookhaven municipal solid waste is made contingent upon performance under the latter.
The Brookhaven Agreement was later amended to employ the use of a transfer station. Additional aspects of the Brookhaven Agreement are discussed below in relation to the reverse False Claims Act causes of action.
Given the United States Supreme Court's admonition that the False Claims Act is not a vehicle for punishing "garden variety" contract breaches or regulatory violations (Escobar, 579 U.S. at 194), the Court is skeptical of whether, in the first instance, Covanta's purported violations of boilerplate, general contract provisions would be sufficient for the imposition of liability under the False Claims Act (see, e.g., U.S. ex. rel. Grupp v DHL Exp. (USA), Inc., 47 F.Supp.3d 171[WDNY 2014] quoting U.S. ex. rel. Wilson v Kellogg, Brown and Root, Inc., 525 F.3d 370, 378 [4th Cir. 2008][phrase "false or fraudulent claim" in False Claims Act cannot be construed to include "run-of-the-mill" breach of contract actions, a relator may not base a fraud claim on "nothing more than his own interpretation of an imprecise contract provision."]).
Setting its skepticism aside, the Court concludes that Covanta's purported violations of these general contract provisions were not, given the totality of these circumstances, material to the Municipalities' decisions to pay Covanta for processing their municipal solid waste as required under the Agreements or to maintain the Agreements even after the allegations came to light. In evaluating the totality of the circumstances, the court considers the fact that Municipalities paid as required under the contracts. (Escobar, 579 U.S. at 195 ["[I]f the Government regularly pays a particular type of claim in full despite actual knowledge that certain requirements were violated, and has signaled no change in position, that is strong evidence that the requirements are not material."]). In addition to the affidavits provided on Covanta's motion, the deposition testimony supplied by the Relator in opposition from Municipality witnesses expressly establishes that the Municipalities did not view compliance with the ARMP as material to their obligations to pay for municipal solid waste processing.
In particular, Francesca Capitano testified on behalf of the Town of Hempstead: "If Covanta takes our waste, we are going to pay for it" and "[t]here are regulatory agencies that are responsible for ensuring that Covanta does what it needs to be environmentally responsible." Ralph Suozzi testified on behalf of the Village of Garden City that while it is "important" that Covanta dispose of the Garden City's municipal waste in "an environmentally safe manner," "[t]he fact that they may have not notified us of a violation or a deficiency in applicable law is not linked to the payment" and the Village would "pay them for the services they're rendering...." Christopher Andrade on behalf of the Town of Brookhaven testified that "I don't think I would have not paid Covanta for taking waste" and clarified later that he "would pay Covanta for the MSW [municipal solid waste] that was delivered to the Covanta Hempstead facility." There is simply not a scintilla of objective evidence to support materiality concerning the Municipalities' payment for waste-processing.
Further, although by no means dispositive, the Court takes note of the Municipalities' conduct during the current litigation. At no point in this litigation have the Municipalities sought to intervene, as is their right. Indeed, instead of intervening and, in a sense, taking over the prosecution of this action, the Municipalities have repeatedly disavowed this action and distanced themselves from it.
To be sure, the Relator argues that the Municipalities have turned a blind eye to Covanta's purported misdeeds and "did not educate themselves about this action". However, this litigation has continued over ten years, through four amended complaints, substantive discovery, sharpened and renewed allegations, and now dispositive motions that lay bare the Relator's proof. And still, the Municipalities have filed affidavits in support of dismissal of the action.
Accordingly, given the Court's conclusion that Covanta's purported misrepresentations were not material to the Municipalities' continued payment and performance under the agreements, Covanta's motion for summary judgment is granted on the causes of action arising under New York Finance Law § 189 (1)(a) [Presenting False Claims for Payment] and § 189 (1)(b) [Use of False Statements].
Sixth and Seventh Causes of Action
Reverse False Claims under New York Finance Law § 189 (1)(g) and (h)
The Sixth and Seventh Causes of Action of the Fourth Amended Complaint are directed to Covanta's alleged failure to abide by its obligations to deliver non-hazardous ash to the Town of Brookhaven Landfill. As noted above, the Brookhaven Agreements contain a section dealing with "Delivery and Disposal of Ash at the Brookhaven Landfill."
New York Finance Law § 189(1)(g) imposes liability on any person who "knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the state or a local government." Section 189(1)(h) imposes liability on any person who "knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the state or a local government...."
Like its federal counterpart, New York's False Claims Act defines "obligation" to mean "an established duty, whether or not fixed, arising from an express or implied contractual, grantor-grantee, or licensor-licensee relationship, from a fee-based or similar relationship, from statute or regulation or from the retention of any overpayment." A duty to pay must be formally established and there is no liability for potential or contingent obligations (See U.S. ex rel. Sibley v University of Chicago Medical Center, 44 F.4th 646, 657 [7th Cir. 2022]; U.S. ex rel. Barrick v Parker-Migliorini Int'l, LLC, 787 F.3d 1224, 1231 [10th Cir. 2017]). Accordingly, "where a defendant's obligation to pay the government depends on multiple assumptions, it is potential and contingent and thus non-actionable" (Sibley, 44 F.4th at 658; see also U.S. ex. rel. Petras v Simparel, Inc., 2015 WL 7313861 [D.N.J. Nov. 19, 2015], aff'd 857 F.3d 497 [3d Cir. 2017] [finding obligation to pay corporate dividends too speculative to state a reverse FCA claim]). Although the duty to pay the government must be established at the time of the fraudulent conduct, the amount due need not be specifically known at the time (See U.S. ex rel. Kasowitz Benson Torres LLP v BASF Corp., 285 F.Supp.3d 44, 54 [D.D.C. 2017]; see also U.S. ex rel. Simoneaux v E.I. duPont Nemours & Co., 843 F.3d 1033 [5th Cir 2016] ["The most reasonable interpretation is that "established" refers to whether there is any duty to pay, while "fixed" refers to the amount of the duty."]).
As to materiality, it is clear the obligation to pay for costs associated with delivery of hazardous waste to the landfill is a significant part of those sections of the Brookhaven Agreement dealing with ash disposal. These provisions give rise to a question of fact, under the totality of the circumstances, concerning Brookhaven's likely or actual behavior had it known of Covanta's alleged conduct. In particular, Section 5.02 of the Brookhaven Agreement provided, in relevant part:
(b) The Town shall have the right to reject any deliveries of Ash made by or on behalf of the Company if such deliveries (i) are not made during the Landfill Delivery hours; (ii) do not meet the quality standards set forth by the Facility permit or the Landfill permit or by applicable New York State law and regulation; (iii) are made in vehicles not in compliance with the provisions of Section 5.06(d); (iv) would cause the Landfill Facility to contravene its permit conditions, including daily or annual tonnage limits established by said permit, or otherwise violate applicable law or regulation;
(c) The Town shall notify the Company, as soon as possible, by telephone and confirming written notice of the rejection of any delivery;
(d) In exercising its rejection rights pursuant to clause (ii) of Section 5.02(b), the Town shall, where practicable, accept such portions of the delivery as are acceptable under the Landfill's permit. For any deliveries rejected pursuant to Section 5.02(b)(ii), the Company shall be responsible, at its sole cost, for the proper transportation and disposal of such rejected Ash, and shall reimburse the Town for its costs, if any incurred in segregating, storing, handling and when necessary, disposing of such rejected Ash....
In addition, Section 6.03 provided with respect to the delivery and removal of hazardous waste:
(a) The Company and the Town shall, at their respective facilities, establish contractual requirements or other appropriate notification or inspection procedures designed to assure, in accordance with the federal Solid Waste Disposal Act, as amended, that Hazardous Wastes... are not received at, or processed or disposed in the Facility or the Landfill....
(b) The receiving party shall cause the removal of Hazardous Waste or non-Processible Waste, and the transportation and disposal of such waste, at the receiving party's sole cost and expense; provided, however, if it is established through proof, provided in writing, that such Hazardous Waste or non-Processible Waste was delivered by or on behalf of the other party, then the receiving party shall cause, with the full cooperation of the other party, the removal, transportation and disposal of such waste at the sole costs and expense of the other party....
Although the costs associated with rejection, removal, transportation and/or disposal of hazardous waste may not be fixed at the time of the delivery, the obligation to pay for the same is established under the terms of the contract and becomes due upon delivery of hazardous waste to the landfill (See State ex rel. Raw Data Analytics LLC v JP Morgan Chase & Co., 65 Misc.3d 705, 714-717 [Sup. Ct. NY County 2019] [finding obligation to pay interest on late escheated property arises as soon as the holder is late in payment or delivery of the property to the State]). Accordingly, the Court finds that the finder of fact could determine that Covanta is liable under the reverse False Claims Act causes of action and Covanta's motion for summary judgment on Causes of Action VI and VII under New York Finance Law §§ 189 (1)(g) and (h) is denied.
Fifth Cause of Action
Retaliation under New York Finance Law § 191
The complaint also contains allegations under New York Finance Law § 191 that the whistleblower in this action, Fahey, was terminated from his employment at Covanta in retaliation for his role as the whistleblower. In order to prevail on a claim for retaliation under New York's False Claims Act, the whistleblower must show that "he engaged in protected conduct within the ambit of the statute, that his employer was aware of that conduct and that he was terminated in retaliation for that conduct" (Anonymous v. Anonymous, 165 A.D.3d 19, 31 [1st Dept 2018]). "Protected activity" is to be broadly interpreted and requires only a good faith or objectively reasonable basis to believe that the defendant was engaged in fraud (Id. at 30-31).
Covanta moves for summary judgment dismissing these claims, arguing that as a matter of law, Fahey cannot establish certain essential elements of the retaliation claim, particularly that (1) Covanta was aware that he was engaged in a protected activity and (2) that Covanta took adverse action against him because he was engaged in such activity. Covanta argues that there is no evidence that Fahey's supervisor at a second Covanta facility, where he had been next recruited to work, knew about Fahey's role in this "qui tam" litigation or that he was terminated because of it.
Covanta has failed to demonstrate its prima facie entitlement to summary judgment dismissing Fahey's retaliation claims. It is well settled that a defendant may not establish its prima facie entitlement to summary judgment by pointing to purported gaps in the plaintiff's proof (MTGLQ Investors, L.P. v Cacioppo, 217 A.D.3d 939 [2d Dept 2023]). By arguing that Plaintiff has no evidence that he was fired from the second Covanta facility due to his whistleblowing activity, Covanta does just that. Moreover, as is demonstrated by the materials submitted by Fahey in opposition to Covanta's motion, which this Court need not consider given that Covanta has failed to establish its prima facie entitlement to summary judgment (see, e.g., Jean Charles v Carey, 217 A.D.3d 660 [2d Dept 2023]), there is at least some evidence that may show Covanta was aware that Fahey was the whistleblower. This evidence includes the serious allegations that the DEC employee at the Covanta Westbury facility was advising Covanta about the increased scrutiny and investigation it was under and the uncontested fact that Fahey, suddenly, began receiving negative performance reviews.
Accordingly, Covanta's motion for summary judgment dismissing Fahey's retaliation claim is denied.
The Remaining Motions
Given this Court's determination to dismiss the First through Fourth Causes of Action arising under the False Claims Act, the remaining motions, by Covanta to settle with Garden City and Hempstead, and by Brookhaven Landfill and Remediation Group ("BLARG") for leave to file an amicus brief opposing Covanta's motion to settle are denied as moot.
Finally, the Relator moves for summary judgment on Covanta's first (ratification), second (waiver), third (estoppel), fourth (statute of limitations), fifth (failure to mitigate), and sixth (standing to bring a claim under a contractual Guaranty against Covanta Holding) affirmative defenses. Covanta has withdrawn the failure to mitigate defense, without prejudice. The lack of standing defense has been rendered moot by the Court's dismissal of the Third and Fourth Causes of Action of the complaint. In addition, the defense of equitable estoppel is unavailable with respect to a government entity "in all but the rarest of cases" (Federal Trade Commission v Consumer Health Benefits Association, 2011 WL 13295634, at *6-7 [EDNY Oct. 5, 2011] [internal quotations omitted] [absence of a misrepresentation on the part of the government]). Questions of fact exist concerning the remaining affirmative defenses (ratification, waiver, and statute of limitations). With respect to the statute of limitations, the Court notes that the reverse False Claims Act cause of action was first raised in the Fourth Amended Complaint on May 18, 2022, and is subject to the statutory ten-year statute of limitations (New York Finance Law § 192(1)).
For these reasons, it hereby
ORDERED that Defendant Covanta's motion for summary judgment (MS 012) is GRANTED to the extent of dismissing Plaintiff Relator's First, Second, Third and Fourth Causes of Action in the Fourth Amended Complaint; and DENIED as to the Fifth, Sixth and Seventh Causes of Action; and it is further
ORDERED, that the Relator's motion to dismiss and for summary judgment on Covanta's affirmative defenses (MS 011) is GRANTED to the extent of dismissing Defendant Covanta's third, fifth and sixth affirmative defenses and is DENIED as to the first, second and fourth affirmative defenses; and it is further
ORDERED that the remaining motions (MS 008, 009, and 010) are DENIED as moot; and it is further
ORDERED, that the letter request of the Relator to file a supplemental affirmation in opposition to Covanta's Motion for Summary Judgment is DENIED.
The foregoing constitutes the decision and order of this Court. All applications not specifically addressed herein are denied.