ELR Citation: ELR 20935
No(s). 85-82-CIV-3 (E.D.N.C. Nov 17, 1989)

The court holds that an electrical transformer repair company and two of its corporate officers are liable for response costs and treble damagesunder the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The court first holds that the company is jointly and severally liable for the government's response costs under CERCLA §107(a)(1) and (a)(2). The government has established that the site is contaminated with polychlorinated biphenyls (PCBs), that the company owned and operated the site at the time of disposal and is the current owner, and that the government has incurred response costs. The court holds that the sole shareholder, former president, and former chairman of the board is personally liable and an owner or operator under CERCLA. He personally supervised the day-to-day operations of the business, including the teardown of transformers and the handling of PCB-contaminated oil. Although the government is not required to prove the exact date on which the PCBs were released, it has shown that this individual owned and operated the company during the time that PCBs were released. The court also holds that a former director and president of the company is liable under CERCLA as an operator of the facility even though he did not participate in the salvage operation that was probably the primary cause of the contamination. He was responsible for the day-to-day management of the company, and the salvage operations continued while he was president. Both individuals are also liable under the theory that corporate officers may be held individually liable if they paricipate in the tortious activity. The court holds that another company is liable as a corporate successor. Applying federal common law, the court finds that there was substantial continuity between the successor corporation and its predecessor. The successor corporation took over all of the predecessor's business operations and continued to operate the business in the same manner. The companies shared offices, employees, customers, and officers. The court holds that defendants are liable for treble damages under CERCLA §107(c)(3), since the transformer company refused to comply with the Environmental Protection Agency's CERCLA §106 cleanup order. Finally, the court holds that the company is liable for a $26,000 administrative penalty under the Toxic Substances Control Act.

Counsel for Plaintiff
Stephen West
U.S. Attorney's Office
P.O. Box 26897, Raleigh NC 27611
(919) 856-4530

Counsel for Defendants
Mark Sternlicht
Beaver, Thompson, Holt & Richardson
P.O. Box 53247, Fayetteville NC 28305
(919) 323-4600

F. Stewart Clarke
Thorpe & Clarke
P.O. Box 670, Fayetteville NC 28302
(919) 323-4111