Presenting a live 90-minute webinar with interactive Q&A Environmental Litigation: Piercing the Corporate Veil, Alter Ego, and Successor Liability WEDNESDAY , MARCH 4, 2020 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Daniel Riesel, Prinicpal, Sive Paget & Riesel , New York Thomas R. Smith, Member, Bond Schoeneck & King , Syracuse, N.Y . The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 1 .
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Piercing the Corporate Veil, Alter Ego, and Successor Liability Daniel Riesel, Esq. SIVE, PAGET & RIESEL P.C. DRIESEL@SPRLAW.COM
6 Daniel Riesel, Esq. SIVE, PAGET & RIESEL P.C. Dan Riesel started practicing environmental law and litigation in 1970, when he founded the environmental protection unit in the U.S. Attorney's Office for the Southern District of New York – the first of its kind. He has been a member of the New York City environmental and litigation firm Sive, Paget & Riesel since 1973. He recently concluded a 10-year veil-piercing litigation with a win in the Second Circuit Court of Appeals. Dan has been consistently recognized by Chambers, SuperLawyers, and Best Lawyers as a leader in the field of environmental law and litigation.
7 Direct and Derivative Liability for Parent Corporations and Stockholders under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) 42 U.S.C. §§ 9601-75
Who is Liable Under 8 CERCLA? (1) the owner and operator of a vessel or a facility E.g., Carson Harbor Village, Ltd. v. Unocal Corp. , 270 F.3d 863 (9th Cir. 2001) - “passive owners” not liable for a release that occurred prior to their ownership E.g., Commander Oil Corp. V. Barlo Equipment Corp. , 215 F.3d 321 (2d Cir. 2001) - lessees with typical leases are not liable as owners under CERCLA. E.g., City of Los Angeles v. San Pedro Boat Works , 635 F.3d 440 (9th Cir. 2011) - holder of a revocable permit to operate a harbor berth was not an owner under CERCLA. (2) any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of E.g., Litgo New Jersey Inc. v. N.J. Dep’t of Envtl. Prot. , 725 F.3d 369 (3d Cir. 2013) - current operators are held strictly liable for all releases that occur at a facility, despite whether they have actually engaged in polluting activities CERCLA § 107(A)
Who is Liable Under 9 CERCLA? (3) any person who . . . arranged for disposal or treatment . . . of hazardous substances owned or possessed by such person . . . at any facility or incineration vessel owned or operated by another party or entity and containing such hazardous substances No arranger liability where defendant sells useful product Burlington Northern & Santa Fe Ry. Co. v. United States , 556 U.S. 599 (2009) - interpreting the application of CERCLA “arranger” liability Factors to consider include foreseeability of harm, intent to dispose: "[K]nowledge alone is insufficient to prove that an entity “planned for” the disposal . . . to qualify as an arranger, Shell must have [had] . . . the intention that at least a portion of the product be disposed of during the transfer process by one or more of the methods described in [Section 107(a)(3)]." (4) any person who accepts or accepted any hazardous substance for transport to disposal or treatment facilities, incineration vessels or sites selected by such person, from which there is a release or a threatened release CERCLA § 107(A)
10 Two Claims for Private Relief CERCLA Section 107 CERCLA Section 113(f) Allows the government, or Section 113(f)(1) allows any person to private parties not confined seek contribution from any other to §113 claims, to seek cost person who is liable or potentially recovery for response costs liable under Section 107(a), with the against any other person US District Courts having exclusive who is liable or potentially original jurisdiction over all such liable under Section 107(a), controversies. with the US District Courts Section 113(f)(3)B) allows any person having exclusive original whose own liability has been resolved jurisdiction over all such by virtue of an administrative or controversies. judicial settlement or civil action to seek contribution from any other E.g., PCS Nitrogen Inc. v. Ashley II of Charleston LLC , liable or potentially liable person who 714 F.3d 161 (4th Cir. 2013) has not otherwise entered into a – discussing the bona fide settlement with respect to CERCLA prospective purchaser liability. exception to owner liability under CERCLA No joint and several liability Joint and several liability 42 U.S.C. s 107(a)(4)(B) 42 U.S.C. s 113(f)(1), 113(f)(3)(B)
Mounting Tension: Section 11 107 vs. Section 113 CERCLA Section 113(f) requires contribution plaintiff to have a judgement or order against them. 107 actions are not available to those who previously participated in 113 actions because contribution is not considered a “response cost” United States v. Atlantic Research Corp. , 551 U.S. 128 (2007) - discussing the distinction between cost recovery under Section 107 and contribution under Section 113 In particular, footnote 6 raises the possibility that there IS overlap between the two claims (e.g., where a PRP sustains expenses involuntarily pursuant to a consent decree, it is unclear whether its costs are recoverable under Section 107, Section 113, or even both). Agere Systems, Inc. v. Advanced Envtl. Tech. Corp. , 602 F.3d 204 (3d Cir. 2010) Parties who enter settlement agreements under 113(f)(2) are shielded from contribution claims against them, therefore they should not be allowed to bring a 107 claim because that would preclude the possibility of the defendant PRPs bringing a 113 contribution counterclaim
Liability for Parent Corporations and 12 Stockholders – U.S. v. Bestfoods , 524 U.S. 51 (1998) The United States sued CPC International, Inc. (Bestfoods) under CERCLA Section 107(a)(2) for the cost of cleaning up industrial waste generated by CPC’s subsidiary, Ott Chemical Co. The District Court conflated derivative with direct operator liability for parent corporations when it held Bestfoods liable. On appeal, the Sixth Circuit limited its analysis to whether Bestfoods was indirectly liable via veil-piercing, but noted that direct liability could attach if the parent actively operated the facility (e.g., as a joint venture with the subsidiary). The Supreme Court took the case to resolve a Circuit conflict as to whether a parent corporation could be held liable under CERCLA for operating a facility ostensibly belonging to its subsidiary. The Supreme Court held that a parent corporation may be held liable as an operator under CERCLA in two situations: Indirect, or derivative liability , which requires the court to pierce the corporate veil Direct liability , where the parent corporation is directly involved in the operations of the "polluting facility" - this is broader than the Sixth Circuit's characterization.
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