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Ekotek Site PRP Comm. v. Self

ELR Citation: 27 ELR 20659
Nos. No. 94-277L, 948 F. Supp. 994/(D. Utah, 09/27/1996) defendants' motions for summary judgment granted in part

The court holds that the purchaser of the assets of a company that disposed of waste oil at the Ekotek, Inc. facility in Utah is not liable as a successor corporation for contribution to plaintiff's cleanup costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The court first holds that a defendant that asserted that used transformer oil that it recycled and sold to plaintiff potentially responsible party (PRP) for use in automatic transmission fluid was a useful product and thus was not waste under CERCLA is not entitled to summary judgment. The PRP presented evidence that the price of the recycled transformer oil was well below the market price for new or used transformer oil or for automatic transmission fluid at the time of the sale. Moreover, defendant admitted that the price of used transformer oil for use as heat transfer oil was substantially higher than the price it charged for its recycled transformer oil. Thus, an inference may be drawn that the oil defendant conveyed to the PRP was not a useful product. The court next holds that a further inference could be drawn from the low price that defendant intended to get rid of hazardous substances. The fact that defendant charged the PRP is not enough to warrant summary judgment on the issue of intent, because defendant could quite reasonably have intended both to receive income and to dispose of hazardous waste. The court also holds that it need not decide whether defendant's motion to strike shipping invoices that raised questions of fact as to whether the oil was still dirty and whether some of the oil was given to the PRP at no charge. The PRP's evidence regarding defendant's price is sufficient in itself to preclude summary judgment.

Turning to the purchaser's motion to dismiss, the court holds that CERCLA liability extends to successor corporations. Each federal circuit court of appeals that has considered the question has held that CERCLA imposes liability on successor corporations. The court next holds that the PRP has not presented sufficient evidence to show that the purchaser, as a mere asset purchaser, is liable as a successor corporation under the substantial-continuity test. The PRP failed to show any common ownership or personnel or that the corporations or the persons running them were in any way related or involved with one another. The PRP has not alleged that the consideration for the transfer of assets was inadequate or presented evidence suggesting that the asset purchase was anything more than an arm's-length transaction between competitors. The PRP has not shown that the purchaser had knowledge of the company's CERCLA liability or that the purchaser is in any way a responsible party. And there is no evidence that the seller's business was actually continued after the transaction. The court further holds that the PRP failed to raise a genuine issue of material fact that successor liability could arise under the de facto merger exception. The PRP failed to show a continuity of shareholders; that the purchaser assumed the seller's obligations, or continued its enterprise; or that the seller ceased operations, liquidated, and dissolved as soon as legally and practically possible.

[Prior decisions in this litigation are published at 25 ELR 21331 and 27 ELR 20147.]

Counsel for Plaintiff
Robert M. Pomeroy Jr.
Holland & Hart
555 17th St., Ste. 2900, Denver CO 80201
(303) 295-8000

Counsel for Defendants
David L. Dain
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000