ATTORNEYS FOR APPELLANT ATTORNEY FOR APPELLEE
Karen Freeman-Wilson Kenneth D. Reed
Attorney General of Indiana Hammond, Indiana
John B. Laramore
Deputy Attorney General
Indianapolis, Indiana
IN THE
SUPREME COURT OF INDIANA
INDIANA DEPARTMENT OF )
ENVIRONMENTAL MANAGEMENT, et. al. )
)
Appellants (Defendants Below),) 56S05-9905-CV-298
) in the Supreme Court
v. )
) 56A05-9805-CV-243
MEDICAL DISPOSAL SERVICES, INC. ) in the Court of Appeals
)
Appellee (Plaintiff Below). )
APPEAL FROM THE NEWTON CIRCUIT COURT
The Honorable Robert Smart, Judge
Cause No. 56C01-9708-MI-6
May 24, 2000
SHEPARD, Chief Justice.
In 1994, Medical Disposal Services, Inc. (MDSI), sought declaratory
judgment that its operations were not subject to the Indiana Department of
Environmental Management's (IDEM) permit requirement for solid waste
transfer stations. Though MDSI won a preliminary injunction prohibiting
any IDEM enforcement action, it ultimately lost on the merits. It did
persuade the trial court, however, that IDEM could not impose any sanction
for violations that occurred while the injunction was in effect. We
reverse.
Relevant Facts and Procedural Posture
The relevant facts in this case are largely undisputed. They were set
forth by the Court of Appeals in the previous appeal:
The undisputed facts reveal that Medical Disposal is an Illinois
corporation duly admitted to do business in Indiana. Since 1989,
Medical Disposal has collected and transported medical waste from
Indiana to a medical waste facility in Grand Rapids, Michigan where
the waste is disposed of by incineration. Medical Disposal operates
small delivery trucks which retrieve medical waste from numerous
health care providers and health care facilities in northwest Indiana.
These trucks then transport the contained waste to a central site,
leased by Medical Disposal, located at the IMK Truckstop in Hammond,
Indiana. There, the containers are removed from the smaller trucks
and loaded into the larger tractor trailers which then haul the waste
to the incinerator facility in Michigan.
In March 1994, the IDEM notified Medical Disposal that an
inspection of the IMK Truckstop revealed that by transferring medical
waste, Medical Disposal was operating a solid waste transfer station
without acquiring a solid waste processing permit in violation of
Indiana law. The IDEM ordered Medical Disposal to cease the transfer
of the medical waste until a valid permit was obtained.
In May 1994, Medical Disposal filed a complaint for a
declaratory judgment, alleging that it was not in violation of the
Indiana Environmental Management Act or any State solid waste
regulations as its transport of medical waste did not include the
transfer of solid waste and thus, was not subject to the permit
requirements.
Medical Disposal Services, Inc. v. Indiana Dept. of Envtl. Management, 669
N.E.2d 1054, 1056 (Ind. Ct. App. 1996), trans. denied. Pending resolution
of the lawsuit,[1] MDSI sought and obtained a temporary restraining order,
and then a preliminary injunction, prohibiting IDEM from interfering with
the operation of the facility. In its answer to the complaint, IDEM
counterclaimed for civil penalties for MDSI's alleged violations.
The trial court ultimately granted summary judgment in favor of IDEM,
determining that MDSI had illegally operated a disposal facility for which
a permit was required. The court ordered MDSI to cease all operations at
the IMK Truckstop within five days and remain closed until it obtained all
the proper permits. MDSI complied with the order and closed the IMK
facility. The court did not reach the issue of civil penalties.
On appeal, the Court of Appeals affirmed the summary judgment for
IDEM, stating:
[W]e determine that the trial court did not err in finding that by
transferring infectious waste at the IMK Truckstop, Medical Disposal
was transporting solid waste and operating a solid waste processing
facility without the required permit in violation of Indiana law.
Medical Disposal Services, 669 N.E.2d at 1060. This Court denied transfer.
Medical Disposal Services, Inc. v. Indiana Dept. of Envtl. Management, 683
N.E.2d 589 (Ind. 1997).
On remand, the trial court set a hearing to address the issue of civil
penalties. After a change of venue, MDSI moved for summary judgment,
requesting that the trial court prohibit IDEM from imposing any penalties
during the period of preliminary injunction. IDEM also moved for partial
summary judgment, asking the court to determine as a matter of law that
MDSI had earned over $400,000 in profit during the preliminary injunction
period, and that those profits were the direct result of its illegal
operations. IDEM asked the trial court to order MDSI to remit these
allegedly ill-gotten gains as one component of an appropriate civil
penalty. IDEM now asserts that it actually "did not ask for summary
judgment on civil penalties, believing that additional factual matters had
to be adduced at trial before penalties could be assessed." (Appellant's
Br. at 3-4.)
The trial court granted MDSI's motion and denied IDEM's motion. As
summarized by the Court of Appeals:
[T]he trial court found that penalties would not be imposed because 1)
the law governing the legality of the Hammond transfer station was not
"totally clear," and 2) a reasonable person could interpret the
preliminary injunction "to the effect that there would be no fine
levied for acts occurring while the Order was in effect." (R. [at] 679-
80). Accordingly, the trial court ruled that "IDEM is foreclosed from
assessing any type of civil penalty during the period wherein the
Preliminary Injunction was in effect." (R. [at] 680).
Indiana Dept. of Envtl. Management v. Medical Disposal Services, Inc., 700
N.E.2d 501, 502 (Ind. Ct. App. 1998) (footnote omitted). IDEM appealed, and
the Court of Appeals affirmed. This appeal ensued. We grant IDEM’s
petition to transfer.
Summary Judgment Standard of Review
A grant of summary judgment requires that the evidence show no genuine
issue of material fact exists and the moving party is entitled to judgment
as a matter of law. Ind. Trial Rule 56(C). On appeal from summary
judgment, the reviewing appellate court faces the same issues that were
before the trial court, and analyzes them in the same way. Ambassador Fin.
Services Inc. v. Ind. Nat'l Bank, 605 N.E.2d 746 (Ind. 1993). Although the
nonmovant has the burden of demonstrating the grant of summary judgment was
erroneous, we carefully assess the trial court's decision to ensure that
the nonmovant was not improperly denied its day in court. Colonial Penn
Ins. Co. v. Guzorek, 690 N.E.2d 664 (Ind. 1997).
Civil Penalties Not Barred
IDEM asserts that the trial court wrongly granted summary judgment for
MDSI on remand because civil penalties are both authorized and appropriate
in this instance. MDSI counters that summary judgment was correctly
granted because the governing law was unclear and the penalty grossly
excessive.
In the first phase of this case, the trial court and the Court of
Appeals concluded that MDSI had violated the permit requirements for solid
waste disposal facilities. See Medical Disposal Services, 669 N.E.2d at
1058-59. Accordingly, the issue of culpability has been decided against
MDSI. The only remaining issue in this transaction is whether IDEM may
impose civil fines for the period the preliminary injunction was in effect.
We hold that it can.
The Indiana Code authorizes IDEM’s commissioner to issue
administrative orders imposing civil penalties.[2] The commissioner may
also initiate a court action to recover civil penalties.[3] For violations
such as MDSI's, the Code allows the commissioner to assess civil penalties
of up to twenty-five thousand dollars per day of violation.[4] IDEM's
power, of course, is not without check. Subject to the applicable standards
of administrative review, "[t]he judiciary has authority to control the
administrative process and temper an agency's power to assess penalties."
Indiana Dept. of Envtl. Management, 700 N.E.2d at 502-03 (citing Louis J.
Jaffe, Judicial Control of Administrative Action, 318-19 (1965)).
Furthermore, the Court of Appeals correctly pointed out the now-settled
doctrine that a trial court’s entry of a preliminary injunction will not
prevent a regulatory body from imposing penalties for the willful violation
of a rule or regulation during the period of the injunction. Id. at 502
n.3 (citing Indiana High School Athletic Ass’n v. Carlberg, 694 N.E.2d 222,
227, 242-43
(Ind. 1997).[5]
If the Indiana Code authorizes IDEM to impose penalties, and the
preliminary injunction does not insulate MDSI from penalties, then how
could the trial court and the Court of Appeals both rule in favor of MDSI?
In ruling that IDEM would be prohibited from imposing civil penalties
in the present case, the trial court relied in part on the notion that the
law governing the legality of the Hammond transfer station was not "totally
clear." (R. at 678-79.) To demonstrate that point, the court noted that
the Court of Appeals had to resort to rules of statutory construction to
interpret the statute's language.[6]
MDSI also devotes several pages in its brief pointing out the
vagueness that existed within the law, and the uncertainty regarding its
applicability to MDSI's operations.[7] (Appellee's Br. at 15-23.) Both the
trial court and Court of Appeals have already held, however, that the law
was clear enough to inform MDSI that it needed a permit, and that failure
to acquire such a permit was a violation of state law. Medical Disposal
Services, 669 N.E.2d at 1060 ("Medical Disposal was transporting solid
waste and operating a solid waste processing facility without the required
permit in violation of Indiana law. . . . [T]he trial court's grant of
summary judgment in favor of IDEM was proper.").
Slightly recast, MDSI's argument becomes: the court found the law
clear enough to hold us guilty, but should find it too vague to impose any
penalty upon us. We think IDEM is correct in its characterization that
MDSI is "still trying to fight the last war in its effort to convince this
Court that the law was so vague that it could not serve as the basis for
civil penalties." (Appellant's Reply Br. at 4-5.) MDSI lost that war
below, and we decline to restage it here.
The trial court and Court of Appeals also relied heavily on the fact
that the Indiana General Assembly has since amended the Code to exclude
specifically the type of facility which had been run by MDSI.[8] The
legislature's subsequent legalization of MDSI's activities, however, did
not relieve MDSI of the obligation it faced at the time. As a general
rule, the law in place at the time an action is commenced governs. "Unless
a contrary intention is expressed, statutes are treated as intended to
operate prospectively, and not retrospectively." Chadwick v. City of
Crawfordsville, 216 Ind. 399, 413-14, 24 N.E.2d 937, 944 (1940).
What Penalty Is Proper?
Each of the arguments offered by MDSI actually speak to an issue
different from IDEM's power to assess civil penalties. MDSI asserts that
the governing laws were in a state of flux which, by IDEM's own admission,
necessitated "clarification." Moreover, argues MDSI, the legislature later
legalized these exact activities. MDSI also points to its exemplary
behavior at all stages of these proceedings, including the fact that "[t]he
minute Judge Smart entered his decision deciding that infectious waste was
included in the definition of solid waste, MDSI halted operations in
Hammond." (Appellee's Br. at 13-14.)[9] According to MDSI, "[t]hese
aren't the kind of people who should be billy-clubbed with a monstrous
assessment of civil penalties just because they disagreed with mighty
IDEM."[10] (Id. at 14.) Finally, MDSI maintains that the civil penalties
sought by IDEM here are so outlandish as to violate the United States and
Indiana Constitutions' prohibitions against excessive fines. See U.S.
Const. amend. VIII; Ind. Const. art. I, § 16.
None of these arguments abrogate IDEM's statutory power to assess
civil penalties against violators, but might well be properly considered in
determining an appropriate penalty. IDEM's "clarification" of the law and
the General Assembly's subsequent legalization of the activity might be
considered mitigating in determining the amount MDSI must pay, but do not
mean that MDSI may not be fined at all. Whether the actual fines imposed
by IDEM are appropriate is a factual matter that must be addressed at the
trial court. As IDEM itself points out:
[O]n remand, the amount of civil penalties is a matter for the trial
judge's discretion. Many of the factors Medical Disposal raises in
its brief, including its asserted good faith, could be considered by
the trial court in a discretionary determination of the proper
penalty. The trial court might also give weight to Medical Disposal's
argument that lenity is appropriate where new legal ground is being
explored, Brief of Appellee at 17-21. But that doctrine does not, by
itself, preclude penalties altogether in this case.
(Appellant's Reply Br. at 5.) The remainder of this action must be spent
figuring out the appropriate penalty, at which time MDSI's arguments about
being "billy-clubbed" for "minor violations" when in fact "Medical Disposal
at all times acted in absolute good faith," (Appellee’s Br. at 14, 25),
can be heard in full. The trial court can also hear full argument on
whether IDEM may use displacement of profits or "leveling the playing field
among competitors" as reasons for imposing the maximum penalty allowed.
The court can also weigh the parties' evidence on the seriousness of the
environmental threat posed by the IMK facility.[11] The trial court is the
proper venue for resolution of these factual matters.
The stated purpose of the Environmental Management Act is "to
preserve, protect, and enhance the quality of the environment so that, to
the extent possible, future generations will be ensured clean air, clean
water, and a healthful environment." See Ind. Code Ann. § 13-12-3-1(3)
(West 1998) (formerly Ind. Code § 13-7-1-1-(a)). The penalty assessed on
remand should reflect those principles and the relative gravity of the
infraction.
Conclusion
We reverse the summary judgment for MDSI, and remand to the trial
court for proceedings on the amount of the penalty to be assessed.
Dickson, Sullivan, Rucker, and Boehm, JJ., concur.
-----------------------
[1] Whether a declaratory judgment action is an appropriate vehicle for
raising such issues was never addressed on appeal.
[2] See Ind. Code Ann. § 13-14-2-7, -30-3-4(b)(2)(B)(ii), -30-3-11 (West
1998) (formerly Ind. Code § 13-7-5-8, -11-2, -11-5). Title 13 of the
Indiana Code was recodified in 1996. Because the analysis would not
change, we cite to the statutes currently in effect throughout this
opinion, with references to the citations in place when the action was
originally filed.
[3] See Ind. Code Ann. § 13-14-2-6, -30-4-1(b) (West 1998) (formerly Ind.
Code § 13-7-5-7, -7-13-1(a)).
[4] See Ind. Code Ann. § 13-30-4-1(a) (West 1998) (formerly Ind. Code § 13-
7-13-1(a)).
[5] Our opinion on this topic is actually Indiana High School Athletic
Ass’n v. Reyes, 694 N.E.2d 249 (Ind. 1997).
[6] The court stated:
That the statutes in force at all times relevant herein regarding
"infectious waste" and "solid waste" were not totally clear as to
whether or not "infectious waste" came within the purview of the
statute governing "solid waste" as evidenced by the fact that the
Indiana Court of Appeals was required to apply the rules of statutory
construction and interpret these statutes for the benefit of the
people of Indiana.
(R. at 678-79.)
[7] MDSI argued:
When the orginal Summary Judgment was argued, MDSI pointed out to
Judge Smart that IDEM was in the process of amending its Regulation so
as to specifically name "infectious" waste as a "solid" waste. MDSI
suggested that this meant that infectious waste had never been
included before within the definition of solid waste. IDEM disagreed,
and successfully maintained that its effort at amending its Regulation
was purely for the purposes of "clarification", and not a change in
meaning. Judge Smart recognized this "clarification" purpose in his
original Summary Judgment, and the Court of Appeals concurred in its
decision of August 26, 1996. MDSI respectfully submits that it was a
close question, in any event, and further that if one is to be
subjected to heavy-duty fines and penalties for violating a Statute or
a Regulation, then the Statute or Regulation should be crystal clear,
even to a lay-person, and not ambiguous, and certainly not in need of
"clarification."
(Appellee's Br. at 13 (emphasis omitted).)
[8] In 1997, the General Assembly amended the definition of "transfer
station" to exclude a facility where:
(A) infectious waste . . . is transferred directly between two (2)
vehicles;
(B) infectious waste is packaged in compliance with [applicable
regulations]; and
(C) packages of infectious waste are not opened at any time during the
transfer.
Pub. L. No. 128-1997 § 2; Ind. Code Ann. § 13-11-2-235 (West 1998).
In prohibiting IDEM from assessing any penalties against MDSI, the
trial court noted:
[T]he [previously mentioned ambiguity in the law] is further evidenced
by the recent amendment to the statute defining solid waste and the
Court now takes judicial notice of said amendment.
(R. at 679.) The Court of Appeals went even further in its reliance on the
new statute, likening it to a change in criminal penal statutes justifying
the use of the doctrine of amelioration. Indiana Dept. of Envtl.
Management, 700 N.E.2d at 503-04. By virtue of our grant of transfer, that
opinion is vacated. Ind. Appellate Rule 11(B)(3).
[9] With regard to MDSI's compliance with the trial court's order, as
evidence of its good faith at all stages of the proceedings, (Appellee's
Br. at 12), we observe that MDSI did not have the option not to comply.
Compliance with a cease and desist order entitles it to only the most
modest mitigation.
[10] This sort of hyperbolic and accusatory language characterize MDSI’s
briefs. (See, e.g., Appellee's Br. in Opp’n to Trans. at 1, 2, 7, 8, 9,
10.) For its inappropriate tone and lack of respect for the opposing
party, we strike MDSI's Brief in Opposition to Transfer. See Shirk v.
Hupp, 167 Ind. 509, 79 N.E. 490 (1906) ("For discourteous and
unprofessional language in a brief . . . , the brief may be stricken from
the files . . . .").
[11] The parties offer conflicting accounts of infectious waste strewn
upon the ground, and accessibility of the site to the general public.
(Appellant's Br. at 8; Appellee's Br. at 9.)