ELR Citation: ELR 20684
No(s). s. K-86-164, -167 (W.D. Mich. Dec 13, 1989)

The court holds that two corporations are jointly and severally liable for response costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), and rules that a corporate officer is individually liable for response costs if the officer could have prevented or significantly abated the hazardous waste discharge. The court first holds that defendants do not qualify for the third-party defense in CERCLA §107(b)(3). Defendants have not argued that a third party was the sole cause of the release. The court notes that it is undisputed that the two companies are owners and operators under CERCLA §107(a). The court holds that the president of one of the companies may be an owner or operator under §107(a). The court rules that a corporate officer in a close corporation is personally liable if the officer could have prevented or significantly abated the discharge. CERCLA varies traditional corporate principles that prevent individual liability unless an individual has engaged in procedural irregularities that justify piercing the corporate veil or has had close, active involvement or direct supervision of the events leading to the alleged tortious harm. The court notes that strict liability is too harsh to apply to all corporate officer cases. In determining whether a corporate officer could have prevented or abated the discharge, courts should weigh the individual's authority to control waste management practices and the responsibility undertaken or neglected by the individual. Evidence relevant to the control factor includes whether the individual is an officer or director and distribution of power within the corporation. Under the responsibility factor, active and direct efforts to prevent or abate contamination may work for an individual. This prevention standard will encourage increased responsibility as an individual's authority increases within the corporation.

The court holds that the sites at issue are "facilities" under CERCLA §107(a). They all contain buildings, structures, and equipment, and hazardous substances have been located there. The court also holds that there have been releases of hazardous substances at both sites, and that releases from these sites have migrated to nearby well fields. It is also undisputed that the United States and Michigan have incurred response costs at the sites. The court holds that the two corporations are jointly and severally liable for the governments' response costs, since defendants have not shown that the harm is divisible.

[Other cases in this litigation are published at 20 ELR 20109 and 20694.]

Counsel for Plaintiffs
Robert P. Reichel, Ass't Attorney General
Environmental Protection Division
Law Bldg., Lansing MI 48913
(517) 373-1110

Joel M. Gross, Steven J. Willey
Land and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 633-2738

Counsel for Defendants
Charles E. Barbieri, John L. Collins
Foster, Swift, Collins & Coey
313 South Washington Sq., Lansing MI 48933-2193
(517) 372-8050

James M. Sullivan
Sullivan, Hamilton, Schulz, Kreter & Toth
25 W. Michigan Mall, Comerica Bldg., 10th Fl., Battle Creek MI 49017
(616) 965-3216