ELR Citation: ELR 20594
No(s). 4-88-692 (D. Minn. Sep 11, 1990)

The court holds that a company that purchased the corporate assets of a company that is a defendant in a Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) action is not responsible for the liabilities of the selling corporation. After the operator of a contaminated county landfill entered into a consent order to implement a cleanup operation, it subsequently sought to recover its past and future cleanup costs from 25 companies and a state agency for their part in disposing of or arranging for the disposal of hazardous substances at the landfill. In turn, one defendant brought a third-party contribution and indemnification action against the corporation that purchased the assets of a company alleged to have arranged for the disposal of hazardous substances at the landfill. The court holds that the defendant has failed to establish a corporate successor liability claim against the purchasing corporation sufficient to withstand summary judgment. First, the purchaser corporation's acquisition of the selling company's assets does not amount to a de facto merger, which would impose liability on the purchasing corporation, because there is no continuity of shareholders. Second, the defendant corporation has not demonstrated a sufficient continuity of stock, shareholders, or directors between the selling and purchasing corporations to impose liability on the purchasing corporation under the traditional mere continuation exception. The court rejects adoption of the continuing business enterprise version of the mere continuance exception, which focuses on the continuity of the business operation rather than making the continuity of stock, shareholders, and directors determinative. Defendant has not shown that application of the mere continuance exception would frustrate CERCLA's remedial purpose in this case, nor has it established that dismissal of the purchasing corporation from this suit will force the taxpayers to bear the burden of cleaning up the landfill.

Counsel for Plaintiff
Gary M. Hansen, Dawn L. Gagne
Doherty Rumble & Butler
2800 Minnesota World Trade Ctr., 30 E. 7th St., St. Paul MN 55101
(612) 291-9333

Counsel for Defendants
John B. Van de North Jr., Douglas L. Skor, Karna A. Berg, Robin L. Phillips¹
Briggs & Morgan
2200 First National Bank Bldg., St. Paul MN 55101
(612) 291-1215

Gary C. Reiter
Mahoney Dougherty & Mahoney
801 Park Ave., Minneapolis MN 55404
(612) 339-5863

1. Counsel for the Pillsbury Company also represents other defendants in this action. For the purposes of this Memorandum Opinion and Order, the arguments against the motion of Moorhead Machinery & Boiler Company are attributed to Metal-Matic, Inc.