ELR Citation: ELR 21125
No(s). s. 92-2059, 93-1976 (E.D. Pa. Mar 7, 1994)

The court holds that an individual who operated a waste hauling business and currently owns the landfill to which his business hauled waste is liable under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) as an owner, operator, and transporter for response costs incurred in cleaning up the landfill. The court first notes that the parties do not dispute that plaintiffs incurred response costs in cleaning up the site. The court also notes that the cleanup's consistency with the national contingency plan is not at issue at this phase of the litigation. The court holds that the site is a facility, that there was a release of hazardous substances, and that plaintiffs have incurred response costs in cleaning up the site. The court next holds that the current site owner is liable as an owner under CERCLA §107(a)(1) and that as an admitted owner and operator of the site during the time that hazardous wastes were dumped there, he is liable under CERCLA §107(a)(2). The court also holds that he is liable as a transporter, because a truck driver he hired testified to transporting wastes to the site at his direction. The driver also testified that these wastes included paint that spilled on the ground, and data safety sheets indicate that the paints included xylene, toluene, and lead, which are all hazardous substances under CERCLA. The court, however, denies summary judgment motions as to the liability of the site owner's wife. The parties do not dispute that she did not, and does not, own the site. As to operator liability, the evidence of her management and/or control of the site is mixed. As to her possible liability as a transporter, conflicting inferences can be made from the undisputed facts, and her role in the waste hauling business is disputed insofar as her "joint venture" liability is concerned.

The court next turns to summary judgment motions on the liability of an alleged co-owner of the contaminated site. The court holds that to be an "owner" under CERCLA, the alleged site co-owner must have manifested some intent to own the property. His control, or even knowledge, of what went on at the site is irrelevant. The court denies the summary judgment motions because the parties presented the court with evidence to support two different versions of the events surrounding the purchase and ownership of the parcel at issue, and the differences are material. The court next holds that two corporations the current site owner formed as part of an attempt to restructure his business are liable as his alter egos. The court holds that applying a federal common-law rule on piercing the corporate veil is appropriate because the need for a uniform federal rule is great, application of state law could frustrate the objectives of CERCLA, and there is no reason to believe that application of a uniform federal law would disrupt commercial relationships. Applying the veil-piercing rule adopted by the Third Circuit in United States v. Pisani, 646 F.2d 83 (1981), the court holds that the two corporations are the site owner's alter egos because he was their sole stockholder or the dominant of two stockholders; the transition from sole proprietorship to corporate operation did not involve any changes in the business; the same employees, the same customers, and the same or similar business names existed before and after the incorporation; and the corporations did not observe corporate formalities. Also, the site owner and his wife were the only officers of the corporations, the corporations were formed with little or no capitalization, and no assets were transferred from the site owner to the corporations. The court holds that Pennsylvania's two-year limitations period for suit against dissolved corporations does not protect the corporations, because the corporations were never properly dissolved. The court further holds that a corporation controlling assets traceable to the current site owner's business is an indispensable party to the litigation and denies the corporation's motion for summary judgment.

Finally, the court holds that a corporation that purchased all the assets of the site owner's business is liable as a successor. The corporation knew of the site owner's potential CERCLA liability at the time it purchased the assets of the site owner's business; therefore, it is appropriate to apply the substantial continuity test to determine successor liability. Applying the test, the court holds that all the test's hallmarks are present: The same employees, supervisory personnel, and production facilities were used before and after the sale; the same "product"—waste hauling—was produced using essentially the same assets with continuity of business operations; and the successor business continued to use the current site owner's name and held itself out to the public, through advertising and other means, as a continuation of the previous enterprise.

Counsel for Plaintiffs
James J. Rohn, Karen M. Scheller
Conrad, O'Brien, Gellman & Rohn
1515 Market St., 17th Fl., Philadelphia PA 19102
(215) 864-9600

Counsel for Defendants
James A. Cunningham
43 High St., Pottstown PA 17108
(610) 323-1328