In re Acushnet River & New Bedford Harbor

• Decision Date: 28 March 1989
• Docket Number: Civ. A. No. 83-3882-Y.
• Citation: 712 F. Supp. 1010
• Court: U.S. District Court — District of Massachusetts
• Parties: In re ACUSHNET RIVER & NEW BEDFORD HARBOR PROCEEDINGS RE ALLEGED PCB POLLUTION.

712 F. Supp. 1010

In re ACUSHNET RIVER & NEW BEDFORD HARBOR PROCEEDINGS RE ALLEGED PCB POLLUTION.

Civ. A. No. 83-3882-Y.

United States District Court, D. Massachusetts.

March 28, 1989.

Ellen M. Mahan, William D. Brighton, Environmental Enforcement Section, Land and Natural Resources Div., Washington, D.C., and Martha Sosman, Chief, Civ. Div., U.S. Attys. Office, Boston, Mass., for U.S.

Lee Breckenridge, Chief, and Nancy Preis, Asst. Attys. Gen., Environmental Protection Div., Dept. of the Atty. Gen., Boston, Mass., for the Com. of Mass.

Charles C. Bering, Office of Regional Counsel, U.S. EPA—Region I, Boston, Mass., and Alice Crowe, OECM-Waste, LE 134S, Washington, D.C., for U.S. EPA.

Hugh Schratwieser, Office of Gen. Counsel, Washington, D.C., for Nat. Oceanic and Atmospheric Admin.

Daniel J. Gleason, Mary K. Ryan and Brian T. Kenner, Nutter, McClennan & Fish, Boston, Mass., for AVX Corp.

Paul B. Galvani and Roscoe Trimmier, Jr., Ropes & Gray, Boston, Mass., for Aerovox, Inc.

David A. McLaughlin, Michael J. McGlone, McLaughlin & Folan, New Bedford, Mass., for Belleville Industries, Inc.

Verne Vance, Jr. and Richard W. Benka, Foley, Hoag & Eliot, Boston, Mass., for Cornell Dubilier Electronics Co., Inc.

John R. Quarles and Howard T. Weir, Morgan, Lewis & Bockius, Washington, D.C., for Federal Pacific Elec. Co.

Robert J. Muldoon, Jr., Daniel B. Winslow and Barbara O'Donnell, Sherin & Lodgen, Boston, Mass., for Aerovox, Inc. (Ins. Litigation).

William M. Savino and Gary D. Centola, Rivkin, Radler, Dunne & Bayh, Uniondale, N.Y., Cynthia J. Cohen and Michael B. Bogdanow, Meehan, Boyle & Cohen, Boston, Mass., for Firemen's Fund Ins. Co.

James L. Ackerman, Day, Berry, Howard, Boston, Mass., and Thomas J. Groark, Jr., Day, Berry & Howard, Hartford, Conn., for Aetna Cas. and Sur. Co.

John P. Ryan, Sloan & Walsh, Boston, Mass., for Hartford Ins. Co.

Michael S. Greco and Lisa D. Campolo, Hill & Barlow, Boston, Mass., and Timothy C. Russell and T. Andrew Culbert, Drinker, Biddle & Reath, Washington, D.C., for Lumbermen's Mut. Cas. Co. and American Motorists Ins.

Stephen J. Paris and Michael F. Aylward, Morrison, Mahoney & Miller, Boston, Mass., for CNA Ins. Co. and Reliance Ins. Co.

Roger E. Warin, Stephen A. Fennell and Anita G. Raby, Steptoe & Johnson, Washington, D.C., for Highlands Ins. Co.

Wm. Gerald McElroy, Jr. and John T. Harding, Jr., Zelle & Larson, Waltham, Mass., for Employers Ins. of Wausau.

James P. Whitters, III, Gaston & Snow, Boston, Mass., for Liberty Mut. Ins. Co.

Bert J. Capone and Deborah S. Griffin, Peabody & Arnold, Boston, Mass., for Home Ins. Co. and Lexington Ins. Group.

Robert F. Corliss and Robert A. Romero, Jr., Corliss & Romero, Boston, Mass., and Mary Ann D'Amato and Paul Moran, Mendes & Mount, New York City, for Underwriters at Lloyd's.

Pamela C. Slater and Allan E. Taylor, Taylor, Anderson & Travers, Boston, Mass., for First State Ins. Co.

Timothy P. Wickstrom, Tashjian, Simsarian & Wickstrom, Worcester, Mass., for Mission Ins. Co.

Calum B. Anderson, Parker, Coulter, Daley & White, Boston, Mass., for Northbrook Excess & Surplus Ins. Co.

Carl K. King and Gayle M. Merling, Goldstein & Manello, Boston, Mass., for EPEC, Inc.

David P. Rosenblatt, Burns & Levinson, Boston, Mass., for Plating Technologies.

Erik D. Olson, Counsel, Nat. Wildlife Federation, Washington D.C., for Nat. Wildlife Federation.

MEMORANDUM ON SUCCESSOR LIABILITY

YOUNG, District Judge.

In late 1972, Belleville Industries, Inc. ("Belleville") entered into an agreement with Aerovox Corporation ("Aerovox Corp."). Under the terms of the agreement Belleville acquired substantially all of the assets of Aerovox Corp.'s Electrical Products Division, including the physical plant and the underlying real estate located along the Acushnet River in New Bedford, Massachusetts (the "plant site"). Belleville also acquired the right to use the name "Aerovox." After the sale, Belleville changed its name to Aerovox Industries, Inc. ("Aerovox Industries"), and Aerovox Corp. merged into AVX Ceramics Corporation ("AVX"). For purposes of simplicity, both Belleville and Aerovox Industries will be referred to throughout this opinion simply as "Belleville," unless the context requires otherwise.

Aerovox, Incorporated ("Aerovox") was formed in 1978, and is a wholly owned subsidiary of RTE Corporation ("RTE"). The history of its founding begins in September, 1978 when it was organized under the laws of Massachusetts. In that same month, RTE, Aerovox, and Belleville entered into an "Agreement and Plan of Reorganization" (sometimes the "1978 agreement"). Although the terms of the agreement were somewhat complex, the deal itself was a rather straight-forward stock-for-assets transaction. Under the agreement Aerovox acquired all of Belleville's assets, property, and rights of any kind, including rights to the name "Aerovox." Aerovox agreed to assume all of Belleville's balance sheet liabilities and to perform all of its contracts, with one exception: Aerovox specifically disclaimed any liability arising out of Belleville's use or disposal of polychlorinated biphenyls ("PCBs"). In return, Belleville received one share of RTE stock for each share of Belleville stock outstanding, less 55,000 RTE shares which were placed in escrow.¹ The agreement required Belleville to liquidate and dissolve promptly after the transfer of assets, and to distribute the RTE shares to its shareholders on a pro rata basis. The deal between Aerovox, RTE, and Belleville was consumated on October 27, 1978. Since that day, Aerovox has continued to manufacture electronic products at the plant site.

In December, 1983, the United States and the Commonwealth of Massachusetts (hereinafter referred to as the United States or the sovereigns) filed these now consolidated suits. The complaints allege, inter alia, that AVX, Belleville, Aerovox, and RTE² are liable under state and federal laws for contamination of the Acushnet River and New Bedford Harbor resulting from the use and disposal of PCBs at the plant site. Pursuant to the previous orders of the Court, the sovereigns' claims against Aerovox for natural resource damages under sec. 107 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C. sec. 9607, are scheduled to be tried to a jury.³ The United States and Aerovox filed cross motions for summary judgment on the question of successor liability. These cross-motions present the question whether, in view of the nature of the sovereigns' claims, Aerovox is liable as Belleville's corporate successor as matter of law. The Court has ruled that Aerovox is so liable, at least insofar as the assets of Bellevile are insufficient to satisfy any judgment the sovereigns may obtain against Belleville. This memorandum explains the Court's reasoning.

The first issue before the Court is whether the common law doctrine of successor liability has any place in the federal jurisprudence that Congress intends the courts to develop in interpreting CERCLA. See, e.g., Smith Land & Improvement Corp. v. Celotex Corp., 851 F.2d 86, 91 (3d Cir.1988), cert. denied, ___ U.S. ___, 109 S.Ct. 837, 102 L.Ed.2d 969 (1989); United States v. Bliss, 667 F.Supp. 1298, 1308 n. 8 (E.D.Mo.1987); United States v. ChemDyne Corp., 572 F.Supp. 802, 808 (S.D. Ohio 1983). This Court follows the Third Circuit's compelling resolution of this issue in Smith Land. There, the court confronted the question whether the defendants, successors of an entity that had dumped asbestos on a parcel of land, was liable in contribution to the parcel's present owners who had cleaned up the land to the Environmental Protection Agency's satisfaction at considerable cost. The court found it appropriate to impose successor liability. See also Chem. Waste Management, Inc. v. Armstrong World Indus., Inc., 669 F.Supp. 1285, 1295 (E.D.Pa.1987); cf. Oner II, Inc. v. United States Environmental Protection Agency, 597 F.2d 184, 186 (9th Cir.1979) (holding that the successor liability theory is applicable under the Federal Insecticide, Fungicide and Rodenticide Act). Its well-reasoned opinion is worth quoting at length:

The concerns that have led to a corporation's common law liability of a corporation sic for the torts of its predecessor are equally applicable to the assessment of responsibility for clean-up costs under CERCLA. The Act views response liability as a remedial, rather than a punitive, measure whose primary aim is to correct the hazardous condition. Just as there is liability for ordinary torts or contractual claims, the obligation to take necessary steps to protect the public should be imposed on a successor corporation.

The costs associated with clean-up must be absorbed somewhere. Congress has emphasized funding by responsible parties, but if they cannot be ascertained or cannot pay the sums necessary, federal monies may be used.

Expenses can be borne by two sources: the entities which had a specific role in the production or continuation of the hazardous condition, or the taxpayers through federal funds. CERCLA leaves no doubt that Congress intended the burden to fall on the latter only when the responsible parties lacked the wherewithal to meet their obligations.

Congressional intent supports the conclusion that, when choosing between the taxpayers or a successor corporation, the successor should bear the cost. Benefits from use of the pollutant as well as savings resulting from the failure to use non-hazardous disposal methods inured to the original corporation, its successors, and their respective stockholders and accrued only indirectly, if at all, to the general public. We believe it in line with the thrust of the legislation to permit —if not require—successor liability under traditional concepts.

Smith Land, 851 F.2d at 91-92.

Moreover, this Court observes that a ruling that the successor liability doctrine has no viability in the CERCLA context...