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United States v. Sharon Steel Corp.

ELR Citation: 18 ELR 20242
Nos. No. C-86-0924J, 681 F. Supp. 1492/28 ERC 1137/(D. Utah, 08/18/1987)

The court holds that the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) supersedes Federal Rule of Civil Procedure (FRCP) 17(b) and state law and allows a remedial and cost recovery action to be brought against a corporation dissolved prior to CERCLA's enactment. The court first rules that CERCLA overrides FRCP 17(b), which provides that a corporation's capacity to be sued is determined by the law under which the corporation was organized. Congress indicated its intent in CERCLA to supersede Rule 17(b) by placing responsibility for cleanup of hazardous waste sites on those who created the harmful conditions. CERCLA §107 specifically states that its provisions apply notwithstanding other provisions of law, and §101 defines a corporation as a person without regard to the corporation's current legal status. Defendant's reliance on the district court and Eighth Circuit decisions in United States v. Northeastern Pharmaceutical and Chemical Co., 14 ELR 20212, 17 ELR 20603, is misplaced, since the corporation in that case was subject to suit under state law and the courts thus had no occasion to determine CERCLA's supremacy. The court rules that Congress has the authority to preempt state corporate capacity statutes, declining to follow the Ninth Circuit's ruling in Levin Metals Corp. v. Parr-Richmond Terminal Co., 17 ELR 20737. The court holds that CERCLA does preempt state capacity statutes where the effect of the state law is to limit the liability of a party that would otherwise be liable under CERCLA.

The court declines to dismiss the corporation from the suit, even though the assets may all be held by the trust established for the purpose of winding up the corporation's affairs. The fact that a defendant may be judgment-proof does not affect its capacity to be sued, which is the question before the court. Finally, the court holds that the corporation was properly served pursuant to FRCP 12(b)(4) and (5). The court holds that the officers of the trust, all former directors of the dissolved corporation, were authorized to accept service of process for the corporation.

Counsel for Plaintiff
Lawrence Blatnik, David Hackett
Department of Justice
P.O. Box 23986, Washington DC 20026-3986
(202) 633-2000

Joseph Anderson, Ass't U.S. Attorney
P.O. Box 2750, Salt Lake City UT 84110
(801) 524-5682

Counsel for Defendant
F. Allen Fletcher
Pruitt, Gushee & Fletcher
1850 Beneficial Life Tower, Salt Lake City UT 84111
(801) 531-8446

Stephen Pesner, Peter Friedman
Anderson, Russell, Peale & Olick
666 3d Ave., New York NY 10017
(212) 850-0738