A federal judge has permitted civil racketeering claims, under the Racketeer Influenced and Corrupt Organization Act (RICO Act), to proceed in a lawsuit stemming from public drinking water contamination with per-and polyfluoroalkyl substances (PFAS) near Westminster, Massachusetts. PFAS, or “forever chemicals,” have come under legislative and regulatory scrutiny due to their long half-life, which may cause them to linger in the environment for extended periods of time. Related litigation continues to rise.
On September 1, 2023, Judge David H. Hennessy recommended that racketeering claims proceed against a paper manufacturing company that allegedly dumped PFAS-contaminated waste at a composting facility in Westminster, Massachuetts. The defendant, Seaman Paper Co., initially purchased the composting facility, the Massachusetts Natural Fertilizer Co. (MassNatural), at a foreclosure auction. Seaman subsequently transferred title to the facility to a Seaman subsidiary called Otter Farm. The Otter Farm entity then leased the land, below market rate, to MassNatural. Judge Hennessy held: "This arrangement thus assured Seaman Paper a site at which to dump contaminated byproducts from its paper mill at an alleged discount," and "served to frustrate regulatory oversight: between Seaman Paper and MassNatural was Otter Farm, a separate corporation which nominally held title to the Property Seaman Paper purchased, and which served as MassNatural's landlord." Seaman, Otter Farm and MassNatural all face racketeering claims.
The court’s ruling is the first of its kind and has the potential to significantly expand the prospective liability of corporate defendants for alleged PFAS contamination. It may provide yet another tool for plaintiffs to go after property owners they believe have contributed to PFAS contamination. As such, companies should analyze their corporate structures to evaluate whether they may open themselves up to even greater liability exposure for alleged PFAS contamination.