PADEP Staffers Held Personally Liable for $6.5 Million by Federal Jury Verdict in Philadelphia

May 2010Newsletters In the Zone

In a jury verdict issued on March 4, 2010, a federal jury in Philadelphia held four staffers of the Pennsylvania Department of Environmental Protection (PADEP) personally liable for a total of $6.5 million for violating Section 1983 of the Civil Rights Act and intentionally interfering with prospective contractual relations under Pennsylvania law. The case has broad and far-reaching implications for developers regulated by PADEP, county conservation districts, municipalities and others exercising permitting and enforcement authority.

The case is MFS, Inc. v. Thomas A. DiLazaro, et al. The plaintiff in the case, MFS, had owned and operated a mineral wood manufacturing facility in Bethlehem. The defendants in the case, four PADEP staffers in the Northeast Regional Office in Wilkes-Barre, included Thomas DiLazaro (the former regional air program manager), Sean Robbins (a current assistant regional counsel), Mark Wejkszner (the current regional air program manager) and Mike Bedrin (the current regional director). The underlying facts were reported in an August 3, 2009, Order and Opinion issued by Federal Judge Joel Slomsky in Civil Action No. 08-2508. In November 2001, there were allegations of malodors in the area of the MFS facility. A Field Enforcement Order was issued on January 24, 2003, at 5 p.m. on a Friday evening and required a response from MFS by the next business day. On January 28, 2003, MFS began phoning its local state legislators complaining about the actions of the PADEP staff. On February 21, 2003, a local state representative sent a letter to PADEP expressing concern about the Department's actions. On February 24, 2003, MFS appealed the Field Enforcement Order to the Environmental Hearing Board. During a telephone conference on the appeal, Judge Krancer questioned Sean Robbins about issuing the Order at 5 p.m. on a Friday. He stated that such actions evidenced hostility; he cautioned Robbins he should not take similar actions in the future; and he stated the regional air program staff were acting like "little children."

Soon after MFS complained to its local legislator, PADEP began issuing NOVs to MFS. Between February 5, 2003, and February 24, 2004, MFS received 13 NOVs, 10 of which were based on a single complainant (even though PADEP policy required three residences to complain simultaneously before an NOV could be issued). MFS alleged in its suit that the series of NOVs were in retaliation for MFS exercising its First Amendment rights and petitioning the government for redress of its grievances. The operations manager for MFS alleged that DiLazaro said in a meeting that he was "pissed off" at MFS for "going over his head," and he made that point by pounding a table with his fist. MFS complained that PADEP was aware of other potential sources of malodors in the area, including a local sewage treatment plant, but it only took enforcement action against MFS. MFS ultimately ceased operations as a result of its inability to obtain a Title V permit. The company needed to use an alternative testing method. It was able to get a consent decree with the U.S. EPA, but PADEP filed objections. The company asserted in its suit that PADEP was unfairly prejudicing the company and preventing its reopening (it had shut down without the permit in 2006) or sale. The company asked for and was given a meeting with the DEP Secretary on December 17, 2007. Subsequent to that meeting, the facility got a draft Title V permit from PADEP with 91 conditions. It objected to two of the conditions. MFS complained that one condition allowed PADEP to shut down the facility without due process. It also argued that another condition was inconsistent with the Consent Decree with EPA. In March 2008, without a resolution on its permit issues, MFS sold its machinery, liquidated its assets and brought suit against the four employees under Section 1983 of the Civil Rights Act and Pennsylvania common law.

Despite motions filed on behalf of the four employees by PADEP and the attorney general's office, the case was allowed to go to the jury, and the jury returned a verdict finding that the four named PADEP employees (1) violated MFS' right to not be retaliated against for exercising its First Amendment rights; (2) violated MFS' right to due process; (3) violated equal protection by treating MFS differently than similarly situated corporations; and (4) intentionally interfered with a contractual or prospective contractual relationship. Most importantly, the jury found that each of the four PADEP employees acted outside the scope of his employment. In finding that the employees acted outside the scope of their employment, the protection generally accorded by the doctrine of sovereign immunity or qualified governmental immunity was removed. In the end, the jury awarded MFS $6.5 million and imposed personal liability on the four PADEP employees as follows: $2.6 million owed by DiLazaro, $1,625,000 owed by Bedrin, $1,625,000 owed by Robbins and $650,000 owed by Wejkszner.

The jury verdict surprised many veteran observers of PADEP. First, it is unusual that a jury would find that state employees acted outside the scope of their employment when the actions complained of included issuing NOVs and writing permits, which are generally viewed as part of a PADEP employee's routine duties. Nevertheless, the lifting of sovereign immunity has now exposed all PADEP employees to the potential threat of litigation and damages.

Since the verdict was announced, at least one other complaint has been filed in Philadelphia against three other PADEP employees in the water quality program in the South Central Office in Harrisburg, also for alleged violations of civil rights and improper enforcement. The door has been opened and some are now walking in to the courthouse. The implications of the jury verdict, however, do not end with PADEP.

At all levels of government, developers and companies often complain about unfair treatment or decisions that are arbitrary, unfair, inconsistent or based more on personal grudges than the law. In the MFS case, the PADEP air manager got himself into trouble by pounding the table during a meeting and complaining about the company going to its elected officials to make an end run around him. What developer has not found itself on the receiving end of a tirade or chewing out, where the regulatory official acts with no fear of being held accountable for his or her actions? It happens far too often.

This verdict has implications far beyond PADEP. The same logic can be applied to any Commonwealth, county or municipal body with permitting and enforcement authority. I have had lots of clients complain about permit writers or inspectors from any number of county conservation districts. Could those inspectors or permit writers potentially find themselves as defendants in a civil rights suit if they take action to shut down a job site or repeatedly issue NOVs, actions perceived as harassing the developer? In the past, if a client complained about unfair treatment, I might try to resolve it through cooperation and negotiation with the agency. Now, I would expect some clients to want to drop the nuclear bomb by filing a civil rights complaint, and the MFS jury verdict would appear to provide the ammunition for doing that.

Motions are now pending before the judge to overturn the jury verdict. I am told PADEP feels very strongly that the judge made an error in allowing the case to go to the jury and not finding ahead of time that sovereign immunity or qualified immunity barred any damages. Regardless of what happens on the post-trial motions or on appeal, there is now a fear of prosecution permeating the Department. I am told the jury verdict has made some inspectors gun shy and caused PADEP attorneys to reconsider language routinely used in consent orders. It is only natural to think that some PADEP employees will change their behavior, knowing that a regulated entity can file a civil rights claim if it takes exception to the manner in which it is treated.

One other thing to think about when considering the implications of the MFS jury verdict: Morale at PADEP is already rock bottom because of budget cuts; freezes on pay, hiring and travel; and lack of training budgets. Recent PADEP staff reductions have left some permit writing program offices short of the staff complement necessary to get permits out the door on a timely basis. If PADEP employees operate in fear of civil rights actions and crushing personal liability, that could lead to a further slowdown in permit issuance, which will only adversely impact Pennsylvania businesses that need those permits to operate, expand and increase employment. Also, a slowdown in enforcement matters, where enforcement is fully warranted, may serve to create an unlevel playing field where companies that scrupulously comply with the law are at a disadvantage to competitors that cut corners and try to get away with things that would ordinarily subject those competitors to violation notices and civil penalties.

For more information, please contact M. Joel Bolstein at 215.918.3555 or [email protected].