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Carter-Jones Lumber Co. v. LTV Steel Co.

ELR Citation: 31 ELR 20406
Nos. 99-4241, 237 F.3d 745/(6th Cir., 01/23/2001) Aff'd

The court holds that the sole shareholder of a distributing company is jointly liable with the company for 50% of plaintiff's response costs incurred at a polluted site near Columbus, Ohio. The court first holds that each element of the three-prong test for piercing the corporate veil under Ohio law was present. The shareholder's control over the company was so complete that the company had no separate mind, will, or existence of its own; the plaintiff in the underlying case was harmed by the company's Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) violations; and the shareholder used his control over the company to cause it to violate the law. The court rejected the shareholder's argument that under Ohio law mere control of a corporation, no matter how complete, is insufficient as a matter of law to trigger veil-piercing. The court next holds that the imposition of personal liability upon the shareholder is not contrary to the holding of the U.S. Supreme Court in United States v. Bestfoods, 524 U.S. 51, 28 ELR 21225 (1998). The Court held that mere control of a corporation was not enough to impose direct CERCLA liability on a shareholder, but that derivative liability could exist if the corporate veil could be pierced. The Court also made it clear that courts should continue to look to the common law to determine whether to hold a corporate shareholder personally liable for the acts of the corporation in the CERCLA context. The fact that Ohio common law, in this case, allows veil-piercing under roughly the same conditions that CERCLA imposes direct liability is a coincidental fact about Ohio law. The shareholder's argument would have had more force if federal common law governed the veil-piercing question, for then it would be necessary to harmonize federal common law with the statutory scheme.

A previous decision in this litigation is published at 29 ELR 20506.]

Counsel for Plaintiff
Richard T. Schnars
Daily & Schnars
3570 Executive Dr., Ste. 202, Uniontown OH 44685
(330) 899-9144

Counsel for Defendants
R. Joseph Parker
Taft. Stettinius & Hollister
425 Walnut St., Ste. 1800, Cincinnati OH 45202
(513) 381-2838

Before Boggs and Suhrheinrich, JJ.