ELR Citation: ELR 20572
No(s). C2-00-1398 (S.D. Ohio Apr 5, 2002)

The court holds a parent company liable for contribution under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) as a successor corporation to a chemical company that owned and operated an industrial facility in Ohio from 1926 until 1946. The current owner of the facility argued that the chemical company is liable under CERCLA for a portion of the environmental cleanup costs that can be attributed to waste that was dumped between 1926 and 1946. The court first holds that because the parent company failed to come forward with any evidence rebutting the current owner's prima facie case for contribution, the court grants this portion of the current owner's motion for summary judgment. The court holds that the parent company is derivatively liable for the CERCLA liability of the chemical company. The chemical company, except for its stock, was sold to the current owner's predecessor. The chemical company's stock was then sold to the parent company, and the parent company liquidated the chemical company's stock while acquiring its assets and dissolving it as a corporate entity. Under Ohio law, the purchaser of a corporation's assets is not liable for the debts and obligations of the seller corporation. However, a successor corporation may be held responsible for the liabilities of the predecessor corporation when: (1) the buyer expressly or impliedly agrees to assume such liability; (2) the transaction amounts to a de facto consolidation or merger; (3) the buyer corporation is merely a continuation of the seller corporation; or (4) the transaction is entered into fraudulently for the purpose of escaping liability. Here, the parent company could not invoke the "mere continuation" exception to successor nonliability because when the chemical company was sold to the current owner's predecessor, the transaction did not result in the same people owning both corporations, and after the transaction, the previous owner of the chemical company continued to exist as a viable corporation. In addition, although the parent company did not expressly assume all of the liabilities of the chemical company, the parent company's act of liquidating the chemical company's stock, while contemporaneously acquiring its assets and subsequently dissolving it as a corporate entity, was a de facto merger under Ohio law. The parent company, therefore, is liable as a successor corporation.

The full text of this decision is available from ELR (14 pp., ELR Order No. L-490).

Counsel for Plaintiff
Robert M. Robenalt
Schottenstein, Zox & Dunn
41 S. High St., Columbus OH 43215
(614) 462-2700

Counsel for Defendant
John P. Gartland
Vorys, Slater, Seymour & Pease
52 E. Gay St., Columbus OH 43216
(614) 464-6400