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United States v. Iron Mountain Mines, Inc.

ELR Citation: 28 ELR 21059
Nos. Civ-S-91-768 DFL JFM, 987 F. Supp. 1233/(E.D. Cal., 09/30/1997) Corporate successor liability

The court holds that the corporate successor of a chemical company that acquired the assets of a mining company is liable for Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) response costs attributable to the mining company. From 1894 to 1968, the mining company operated a California copper mine. In 1968, a chemical company acquired all of the mining company's stock. As part of the acquisition, two agreements assigned the mining company's liabilities to the chemical company. Thereafter, the defendant acquired the chemical company. The court first holds that because the chemical company's acquisition of the mining company was an asset transfer, the chemical company will be deemed to be the mining company's successor only if the transaction falls within an exception to the general rule that asset transfers do not trigger CERCLA successor liability. The court next holds that the chemical company satisfied the first exception to the general rule that successor liability does not arise out of an asset purchase because it expressly assumed its predecessor's liability; therefore, the chemical company expressly assumed the mining company's CERCLA liability. The court rejects the defendant's argument that the two assignments were only intended to transfer liabilities that existed at the time the assignments were signed. The circumstances surrounding the dissolution of the mining company support the conclusion that the assignments' all liabilities language meant all of the mining company's liabilities, including environmental liability. The chemical company's determination to absorb all of the mining company suggests that the chemical company understood when it assumed all liabilities that the phrase referred to every aspect of the mining company's business. In addition, given that the chemical company was aware of the environmental problems at the mine, it could have chosen to exclude environmental liabilities from the liabilities it assumed, but it did not do so.

[Other decisions in this litigation are published at 28 ELR 21055 and 21064. Prior decisions in this litigation are published at 23 ELR 20651 and 20661, 25 ELR 21275, and 27 ELR 20924.]

Counsel for Plaintiff
David B. Glazer, Martin F. McDermott
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Counsel for Defendants
Paul B. Galvani, James W. Matthews
Ropes & Gray
One International Pl., Boston MA 02110
(617) 951-7000