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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

THE SUCCESSOR AGENCY TO THE 

FORMER EMERYVILLE 

REDEVELOPMENT AGENCY AND THE 

CITY OF EMERYVILLE, 

Plaintiff, 

v. 

SWAGELOK COMPANY, et al., 

Defendants. 

Case No. 3:17-cv-00308-WHO 

FINDINGS OF FACT AND 

CONCLUSIONS OF LAW

INTRODUCTION

This lawsuit was brought by plaintiff City of Emeryville on behalf of itself as an owner of 

the property known as the FMW Site1 in Emeryville; as the Successor Agency to the former 

Emeryville Redevelopment Agency, which was authorized by statute to undertake certain 

environmental cleanup projects such as the one ongoing at the FMW Site and to recover its 

cleanup costs and attorneys’ fees from those parties liable under federal and state law; and on 

behalf of the People of the State of California as authorized by section 731 of the California Code 

of Civil Procedure.2

 After settling with three other parties3 for a total value of $33.1 million, the 

City tried this case against Hanson Building Materials Limited (“HBML”), a British Corporation 

with its principal place of business in Maidenhead, Berkshire, United Kingdom. HBML was 

1 The site is so-called because the parties refer to it as the “Former Marchant Whitney Site,” in 

reference to two of the site’s prior occupants. 

2 These plaintiffs will be collectively referred to as “the City.” 

3

 The settling parties were Swagelok Company (“Swagelok”), Whitney Research and Tool Co., 

and Catherine Lennon Lozick and her trust (“Lozick”). 

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previously known as Hanson Trust PLC and Hanson PLC,

4 a United Kingdom entity since 1950. 

Dkt. No. 266, Undisp. Fact 20. 

I held a bench trial from October 10, 2023, to November 7, 2023, including 15 days in 

court. I heard testimony from 6 live fact witnesses and 10 live expert witnesses. Some of the 

critical witnesses are now dead but in 1985 gave testimony in relevant litigation that shed some 

light on their activities at an important time for this case. I read deposition designations from that 

litigation and this one involving 15 witnesses, and I admitted approximately 358 exhibits into 

evidence. 

Many important facts were not disputed. For example, Marchant Calculating Company, 

owned the FMW Site from 1917 to 1957. The groundwater at the FMW site was polluted, and 

that fact was not known by anyone until 1999. In 1958, Marchant merged with Smith Corona, a 

conglomerate best known for its typewriter business. It changed its name to Smith Corona 

Marchant (“SCM”) and assumed Marchant’s liabilities. SCM sold the FMW Site in 1959.

Twenty-six years later, in 1985, the English conglomerate Hanson Trust and its North 

American subsidiary, Hanson Industries, Inc., launched a hostile takeover bid against SCM. After 

litigation, they acquired SCM and its 22 operating companies, which were based in five industries: 

chemicals, coatings and resins, paper and pulp, foods and typewriters. The parties dispute which 

Hanson entity was the acquiring party, but there is no dispute that, following the advice of tax 

advisors, the various companies operated by SCM were split into 20 groups, called fan companies. 

Fan company 20 was the parent, and it held various assets and liabilities that remained after the 

other 19 fan companies were sold. Fan company 20 also held the unknown environmental 

liabilities of SCM, which included the FMW Site. It was always part of a corporate structure that 

was an indirect subsidiary of Hanson Trust. 

In 1996, Hanson Trust restructured by demerging many of its assets; through this 

restructuring, the unknown liability from the FMW Site became the responsibility of Millenium 

4 To avoid confusion, I refer to HBML as Hanson Trust in this Order for acts occurring prior to 

1996, even though Hanson Trust was also referred to Hanson Trust PLC and changed its name in 

1987 to Hanson PLC. There were no material differences in the way Hanson Trust operated 

during that time period despite the name changes.

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Capital. Millenium had no corporate relationship with Hanson Trust; public shareholders owned 

it. Millenium was bought by Lyondell in 2003, which was acquired in 2007 by Basell Polyolefins, 

becoming Lyondell Basell. Two years later, it declared bankruptcy. The City did not assert these 

claims against Millenium in the bankruptcy proceedings. HBML, the successor of Hanson Trust, 

was first notified of the previously unknown liability for the FMW Site in 2015, nineteen years 

after the demerger and sixteen years after the City first learned of the environmental liability.

Those basic facts are not in dispute. The issue is whether Hanson Trust or HBML acted in 

such a way that it is responsible for the liability in Emeryville. The City asserts that Hanson Trust 

was the owner of the liability and that whatever corporate shields existed should be pierced, both

because of Hanson Trust’s control of its North American interests and because of the inequitable 

result of the City’s inability to recover from Millenium if corporate formalities are respected. 

HBML maintains that it (as Hanson Trust) never had liability for the unknown liabilities at the 

FMW Site, and that while its indirect subsidiaries may have, those entities were properly 

incorporated and had been dissolved long before it was notified of the liability. Millenium was 

also properly incorporated and capitalized; it was merged out of existence and its successor went 

bankrupt (as did Millenium). Indeed, HBML contends that there is no jurisdiction over it in this 

case. I conclude that HBML is correct.

This opinion explains that conclusion. I start by discussing the gateway issue: why there is 

no jurisdiction to consider this lawsuit. I then go on to describe my findings and conclusions even 

if there were jurisdiction. I describe the environmental problem that led to the litigation, and why 

I find that Marchant significantly contributed to it. Next, I discuss the evidence that shows that 

Hanson Trust’s North American interests were managed, controlled, and largely financed by an 

indirect subsidiary of Hanson Trust, Hanson Industries. While there is no doubt that Hanson Trust 

supported Hanson Industries at a few critical junctures, it did so properly as a parent corporation 

without causing the corporate veil to be pierced. I describe the hostile takeover of SCM and the 

corporate structure created from that date to the 1996 demerger. Following that, I discuss 

Millenium Chemical and its ultimate demise.

Threaded through this story are the facts that show that the City’s theories of HBML’s 

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liability did not hold up. Chief among them were that Hanson Trust was engaged in asset 

stripping and intentionally put the (unknown) environmental liabilities in an undercapitalized 

entity, which inevitably led to the City’s inability to seek remediation damages. There is no 

evidence to support those notions. The North American subsidiaries of Hanson Trust had 

responsibility for the unknown liability from the FMW Site, but they were adequately capitalized, 

and in fact each succeeding entity that held the liability was significantly better capitalized than 

the previous one. 

While there are many issues to untangle, made difficult by the time that has passed, what is 

clear is that if it was theoretically possible to show a unity of interest between Hanson Trust and 

its North American subsidiaries, there is no inequity that resulted from HBML’s treatment of the 

unknown FMW Site liability. Neither Hanson Trust nor any of its subsidiaries was aware of the 

potential liability (none ever held title to the property), nor was it reasonable to think that any 

should have become aware at the time. They were aware of the potential that there were unknown 

environmental liabilities arising from the hostile takeover of SCM in 1986; critically, those 

unknown liabilities were held in corporations that were adequately capitalized. Indeed, the market 

capitalization of HM Holdings, a predecessor to Millennium, exceeded that of the pre-tender offer 

to SCM, as well as the book value of HM Holdings, and from 1989 to 1996 its market value 

ranged from $1.7 billion to $4.5 billion. Millenium’s implied market value at the time of 

demerger was $1.2 billion; its debt was rated investment grade. And while I do not blame the City 

for the decisions it made to delay investigating the FMW Site and the potentially responsible 

parties, the facts remain that it learned of the pollution in 1999 and did not attempt to notify 

HBML until 2015, after Millenium’s sale in 2003 to a company that ultimately declared 

bankruptcy in 2009. 

At the end of the day, none of the City’s theories is meritorious. As shown below, HBML 

is entitled to judgment in this matter.

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TABLE OF CONTENTS

FINDINGS OF FACT

I. JURISDICTION FACTS .......................................................................................................... 7

II. The Environmental Liability ................................................................................................... 10

A. Site Description and Ownership ....................................................................................... 10

1. Background ................................................................................................................... 10

2. Ownership and Current Status of the Site..................................................................... 11

B. The Contamination ........................................................................................................... 12

1. TCE............................................................................................................................... 13

2. Cadmium, Petroleum, and Other Contaminants........................................................... 15

C. Marchant’s Use of Chemicals at the FMW Site ............................................................... 16

1. Marchant’s Operations.................................................................................................. 16

2. Evolution of Marchant’s Operations............................................................................. 17

3. Marchant’s Cadmium Use ............................................................................................ 18

4. Marchant Used TCE and Other Contaminating Chemicals.......................................... 19

D. Whitney Is Also Responsible for the Contamination at the Site ...................................... 23

1. Whitney’s Operations ................................................................................................... 23

2. Whitney’s Responsibility.............................................................................................. 25

III. Hanson Operations Prior to SCM Acquisition........................................................................ 26

A. The Hanson/White Partnership and Genesis of Hanson Industries.................................. 26

B. Hanson Trust and Hanson Industries Were Operationally, Financially and Legally 

Autonomous................................................................................................................................ 31

1. Operational Autonomy.................................................................................................. 31

2. Financial Autonomy...................................................................................................... 36

3. Legal Autonomy ........................................................................................................... 38

IV. SCM ........................................................................................................................................ 39

A. Acquisition Conduct: Hanson Industries Identified SCM as a Target, Directed and 

Managed Strategy for the Takeover and Made All Critical Decisions....................................... 39

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1. Decision to Acquire ...................................................................................................... 39

2. Financing....................................................................................................................... 43

3. Litigation and Corporate Structuring ............................................................................ 46

4. Other Acquisition Conduct ........................................................................................... 56

B. Post Acquisition Financial Investigations ........................................................................ 60

C. Post Acquisition Restructuring of SCM ........................................................................... 63

D. Subsequent Structuring of and Mergers with SCM.......................................................... 67

V. MILLENNIUM CHEMICALS AND THE DEMERGER...................................................... 70

VI. THEORIES OF HBML’S LIABILITY................................................................................... 76

A. UNITY OF INTEREST FACTORS................................................................................. 76

1. Commingling of Funds................................................................................................. 76

2. Corporate Formalities ................................................................................................... 77

3. Same Offices and Employees ....................................................................................... 81

4. Overlapping Officers and Directors.............................................................................. 83

5. Undercapitalization ....................................................................................................... 85

6. Failure to Maintain Arms-Length Dealing ................................................................... 88

7. Use of Corporate Entity as Mere Shell or Instrumentality ........................................... 92

8. Asset Stripping.............................................................................................................. 94

B. SUCCESSOR LIABILITY............................................................................................... 98

C. TILLOTSON .................................................................................................................... 99

D. KALAMAZOO .............................................................................................................. 101

VII. Post Bankruptcy History ....................................................................................................... 103

A. The City’s Acquisition of the FMW Site and Knowledge of Contamination ................ 103

B. The City’s Delay in Providing Notice to Whitney and Marchant’s Successor .............. 105

C. Notice to HBML Came Too Late To Assert Indemnity Rights Against Millennium .... 106

CONCLUSIONS OF LAW

I. This Court Does Not Have Personal Jurisdiction Over HBML............................................ 108

A. Prong 1: Purposeful Availment ..................................................................................... 109

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1. The Purposeful Availment and Purposeful Direction Tests ....................................... 109

II. Even if There Were Personal Jursidiction, The Plaintiffs Failed to Prove Either Theory of 

Liability ......................................................................................................................................... 115

A. Alter Ego Liability.......................................................................................................... 115

1. Unity of Interest .......................................................................................................... 116

2. Inequitable Result, Sanctioning Fraud, or Promoting Injustice.................................. 122

B. Successor Liability ......................................................................................................... 126

1. Asset Purchase ............................................................................................................ 126

2. Express or Implied Assumption.................................................................................. 128

III. All Claims for Relief Fail...................................................................................................... 130

FINDINGS OF FACT

I. JURISDICTION FACTS

1. In 2019 I denied HBML’s motion to dismiss for lack of personal jurisdiction. Dkt. No. 

143. I determined that the City made a prima facie showing that HBML had direct 

contacts with the State of California, that its CERCLA claim arose out of HBML’s 

successor liability, and that it was reasonable to exercise jurisdiction over HBML. After 

trial and the presentation of all the evidence, I reach a contrary conclusion: there is no 

specific jurisdiction over HBML. There are two reasons for this conclusion. First, as 

explained in depth later in this Order, the City failed to show that it could pierce Hanson 

Trust’s corporate veil, and so could not establish personal jurisdiction through alter ego or 

successor liability theory. Second, as discussed in this section, the factual evidence 

connecting the Hanson entities to California shows at most that Hanson Industries—the 

American subsidiary—availed itself of the laws of the state. But the evidence did not 

prove that Hanson Trust—the British parent—did the same. 

2. The central decisionmakers for the Hanson entities were Lord James Hanson, the 

Chairman of the Hanson Trust, and Sir Gordon White, the leader of Hanson Industries, the 

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name for the business in charge of Hanson Trust’s North American interests.5 

3. Sir Gordon lived and worked from his home in Los Angeles during the relevant time 

period. During the SCM acquisition in 1985, in which the environmental liability at issue 

in this case became the responsibility of certain Hanson-related entities, as discussed in 

great detail later, Sir Gordon orchestrated Hanson Industries’ growth-by-takeover strategy 

from his home offices, one of which was in California. Trial Tr. vol. 11, 1700:5-1701:19 

(Clarke). 

4. Lord Hanson also spent time in California, both for vacation and work. During the same 

timeframe as the SCM acquisition, Lord Hanson frequently traveled to New York, and also 

sometimes operated from his home office in Palm Springs, California, where he also 

probably employed a secretary. Trial Tr. vol. 11, 1671:7-16 (Clarke); Trial Ex. 959, 

Hellings Dep. 237:17-238:15, Oct. 1, 1985. It was not clear from trial how much time 

Lord Hanson spent in California, but it was not his primary workplace. See Trial Tr. vol. 

11, 1671:7-16 (Clarke). 

5. Hanson Trust board meeting minutes from the 1980s and early 1990s show that the 

company rented and/or owned offices and residences in Palm Springs and Los Angeles, 

though they neither provide a duration for the lease/ownership nor say how often—if at 

all—employees worked there. Trial Exs. 303, HELLINGS_0026100; 1107, 

HELLINGS_0016695; 1108, HELLINGS_0024238; and 458 at 7. In May 1986, one of 

Hanson Trust’s London-based executives sent loan-related correspondence to one of the 

lenders (Security Pacific National Bank) at its Los Angeles address. Trial Ex. 381.

6. Hanson Industries employees did come to California to conduct business, but mostly for 

Hanson Industries, and rarely for Hanson Trust. John Raos, Chief Financial Officer 

(“CFO”) of Hanson Industries at the time of the SCM hostile acquisition, testified that he 

attended business meetings at Sir Gordon’s home in Los Angeles, discussing operations, 

current deals, potential sales, acquisitions, and budgets. Trial Tr. vol. 8, 1273:23-1275:10. 

5 I refer to these gentlemen as Lord Hanson and Sir Gordon throughout, although their honorifics 

varied over time.

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He also “may” have attended one budget meeting at Lord Hanson’s California house. Id.

1273:23-25. In his later years with Hanson Industries, David Clarke, its President, would 

visit Lord Hanson in California “two or three” times a year. Trial Tr. vol. 11, 1674:8-13. 

During one of those visits, in November 1985, Clarke shared with Lord Hanson a salary 

system he had developed for a family business. Id. 1701:20-1702:12; Trial Ex. 1021. His

diaries reflect that at least two business meetings were held in Palm Springs in 1985. Trial 

Ex. 1109, CLARKE_002093, 002113. Finally, Mark Alexander, Hanson Industries 

assistant corporate comptroller, traveled to California to meet with Sir Gordon for 

acquisition-related meetings at least two to four times a year. Trial Ex. 956, Alexander 

Dep. 74:4–81:11, Oct. 27, 2021. The evidence did not show that these were related to 

Hanson Trust. See id. 

7. Sir Gordon also took actions related to the SCM acquisition from California. Shortly 

before the launch of the hostile acquisition of SCM, Sir Gordon received an updated 

valuation memo at his home in Los Angeles, and gave directions from there for early 

purchases of SCM shares. Trial Ex. 279; Trial Tr. vol. 11, 1683:3-17 (Clarke). From Los 

Angeles, Sir Gordon evaluated SCM as a target for acquisition and instructed Clarke to 

work on the potential transaction. Trial Tr. vol. 11, 1683:7-17 (Clarke). 

8. The two tender offers for SCM affected the United States as a whole, not California 

specifically. There were California specific advertisements, and Raos traveled to 

California with Hanson Industries personnel to encourage Californian investment, 

including through “dog-and-pony shows.” Trial Tr. vol. 8, 1230:3-16, 1275:21-1277:24; 

Trial Ex. 960; George Hempstead Dep. 83:17-84:18; Aug. 30, 2018; Trial Exs. 215 

(November 1986 Hanson Trust Los Angeles Times advertisement regarding the stock 

listing); 240 (Dec. 1987 Hanson Trust Los Angeles Times advertisement discussing its 

stock results). The evidence proved, however, that the tender offers were made 

“throughout the entire United States” and were advertised not just in California but 

“nationally[,] by use of the national financial press and by interstate mail and phone 

service.” Trial Ex. 213, HBML 7736-7737. The press releases were also issued 

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nationwide. See, e.g., Trial Exs. 244; 299; and 1009. 

9. For an entirely separate acquisition, of the California company Kaiser Cement, Hanson 

Trust released a press release that listed, under a section entitled “inquiries,” Sir Gordon’s 

California telephone number. Trial Ex. 1105, HBML0096742; see also Trial Ex. 840 

(Hanson Trust’s press release regarding the acquisition of Kaiser Cement). The evidence 

did not establish that Hanson Trust controlled this acquisition or had any role other than 

putting its name on the press release. 

10. This evidence all shows that Hanson Industries was deeply connected to California. It also 

knew that SCM’s businesses were diverse, far flung, with California interests and property, 

and would include unknown environmental problems. But other than the few disparate 

and insubstantial contacts with California listed above, there was no other evidence to 

connect Hanson Trust—as opposed to its American subsidiaries—to California directly. 

II. THE ENVIRONMENTAL LIABILITY

11. The central issue in this case is whether HBML is responsible for environmental pollution 

on the FMW Site in Emeryville, CA. The parties disputed whether any pollution was 

caused by Marchant, a necessary preliminary finding for HBML’s ultimate liability. I 

conclude that Marchant substantially contributed to the pollution at the FMW Site. 

A. Site Description and Ownership

1. Background

12. The “FMW Site” consists of a collection of properties located at 5679 Horton Street, 5677 

Horton Street, and 5675 Horton Street, in Emeryville, California. Dkt. No. 266 Undisp. 

Fact 1. The Site occupies approximately 1.75 acres and consists of two parcels, APN 49-

1552-1 (1.58 acres) and 49-1319-1-20 (0.18 acres). 

13. In the area surrounding the FMW Site, current land uses include: (a) industrial /

commercial land use immediately to the north and east of the FMW Site, (b) urban 

residential land use with no exposed soils to the north of the FMW Site at the intersection 

of Horton Street and Powell Street, (c) a mixture of commercial and urban residential/hotel 

land use to the west of the FMW Site, (d) and park/open space land use immediately to the 

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south of the FMW Site. The southern property boundary of the FMW Site is immediately 

adjacent to Horton Landing Park (“HLP”). The City has redeveloped the HLP Site as part 

of the Emeryville Greenway, which is a network of bike paths, walking trails, and parks 

and open space throughout the city of Emeryville. Horton Street, in front of the FMW 

Site, is also a city-designated bike boulevard. Trial Ex. 1068, 1068.0014. A property 

known as “Site A,” or alternatively as “South Bayfront,” is located to the west of the FMW 

Site across the Union Pacific railroad tracks. Trial Ex. 1068 at 122. A property known as 

“Site B” is located northeast of the FMW Site across the Union Pacific railroad tracks. 

Trial Ex. 1068 at 122. 

2. Ownership and Current Status of the Site 

14. The Marchant Calculating Company owned and conducted operations at the FMW Site 

from approximately 1917 to late 1957. Dkt. No. 266, Undisp. Fact 12. In 1958, it merged 

with Smith Corona, the typewriter company, to form Smith Corona Marchant, Inc. (later 

shortened to “SCM”), at which point SCM assumed Marchant’s liabilities. Id. Fact 13. By 

1959, SCM moved operations to a different location along the border of the cities of 

Oakland and Berkeley. Id. 

15. In 1959, SCM sold the FMW Site to a party not involved in the trial. Id. Undisp. Fact 14. 

Then, from 1963 to 1999, Whitney Tool Co. manufactured valves at the FMW Site. Id.

Undisp. Fact 15. The FMW Site was subsequently purchased by affiliates of Swagelok in 

the mid-1960s. Id. In 1988, it was conveyed to a trust benefitting Lozick. Id. In 1999, 

the City of Emeryville and the City of Emeryville Redevelopment Agency 

(“Redevelopment Agency,” now known as the “Successor Agency”) acquired the FMW 

Site. Id. Undisp. Fact 17. 

16. The current building at the FMW Site was constructed for, and used by, Whitney, as 

explained by the City’s expert, Earl James. Trial Tr. vol. 1, 147:9-21 (James). Prior to 

construction, the Marchant facilities were demolished down to ground level and a layer of 

soil was placed on top. Id. Some of Marchant’s facilities, including the building slab, 

remain under the soil layer and are referred to as the buried Marchant building features 

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(“BMBFs”). Id. The layer of soil between the current (Whitney) building slab and the 

BMBFs is referred to as the “Sandwich Layer.” Id.

B. The Contamination

17. Understanding the scientific issues requires some background information, which is where 

I will start. The FMW Site is contaminated with chemicals and materials resulting from 

the industrial activities that formerly occurred onsite. Dkt. No. 266, Undisp. Fact 5-8. The 

Parties do not dispute that: (a) the FMW Site is contaminated; (b) there have been 

“releases” of one or more “hazardous substances” at and from the FMW Site, including 

within the meaning ascribed to those terms under the Comprehensive Environmental 

Response, Compensation, and Liability Act (“CERCLA”) and its implementing 

regulations, 42 U.S.C. § 9601(22); and (c) the FMW Site constitutes a “facility” under 

CERCLA. Id. 

18. Contaminants at the FMW site, including volatile organic compounds (“VOCs”), have 

impacted groundwater, soil, and soil vapor. Trial Ex. 1068 at 0016. “Soil vapor” is the air 

between the soil particles above the groundwater table—the top level of the groundwater—

and the vapor can migrate up through soil and into the atmosphere unless the site is 

“capped” to prevent vapor migration. Trial Tr. vol. 1, 105:24-106:10 (James). Soil vapor 

can rise into and collect within a building if there are cracks or other places where the 

vapor can find a pathway. Id. 

19. Some contaminants at the FMW site are called non-aqueous phase liquids (“NAPLs”) 

which do not become fully soluble when in water, meaning they do not fully dissolve. Id.

107:13-15. A light NAPL (“LNAPL”) floats on groundwater. Id. 107:22-108:4 (James). 

Dense NAPLs (“DNPAL”) are heavier than water and tend to sink through water columns 

underground. Id.

20. The primary contaminant at the FMW Site is a chlorinated solvent called trichloroethylene 

(“TCE”). Dkt. No. 266, Undisp. Fact 3. TCE is not naturally occurring at the FMW Site 

and necessarily came from human activity. Id. Undisp. Fact 4. Other contaminants at the 

FMW Site include other chlorinated solvents, such as tetrachloroethylene (“PCE”), 

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cadmium, and total petroleum hydrocarbons (“TPH”). Trial Ex. 1068 at 17. 

21. There were “releases” of one or more “hazardous substances” at and from the FMW Site, 

including within the meaning of Section 101(22) of CERCLA, 42 U.S.C. § 9601(22). Dkt. 

No. 266, Undisp. Fact 6, 8. Some or all of the hazardous substances (including but not 

limited to TCE) that were discharged, deposited, disposed, spilled, or emitted into the soil 

and groundwater at the Property constitute “hazardous substances” under Section 101(14) 

of CERCLA, 42 U.S.C. § 9601(14), and the regulations promulgated under Section 102 of 

CERCLA, 42 U.S.C. § 9602. Id. Undisp. Fact 7. 

22. The CERCLA releases warrant response actions in the form of investigation and 

remediation work. Id. Undisp. Fact 9. The conditions at the FMW Site are such that the 

Department of Toxic Substances (“DTSC”) issued an Imminent and Substantial 

Endangerment Order to address the contamination. Dkt. No. 266, Undisp. Fact 10. 

23. The VOCs—primarily TCE—that are present in elevated concentrations in groundwater 

generate a vapor gradient running from underground, up and through the soil, to the 

surface structure or building if present, and into the atmosphere. Trial Tr. vol. 1, 146:8-

147:8 (James). In some areas of the FMW Site, TCE in soil vapor is in a range of greater 

than 23,000 micrograms per cubic meter. Trial Tr. vol. 2, 213:14-18 (James). Other 

VOCs at the site include 1,1,1-trichloroethane (“1,1,1-TCA”), PCE, and TCE breakdown 

products, such as 1,2-dichloroethylene and vinyl chloride. Trial Tr. vol. 1, 161:7-12 

(James). Vapors that go into a building create a human health risk. Id. 147:6-8 (James). 

24. A human health risk assessment (“HHRA”) evaluated the health risks associated with 

TCE, cadmium, petroleum hydrocarbons, and other VOCs detected at the FMW site. Id.

160:8-161:12 (James). An HHRA looks at how humans are exposed to chemicals in soil, 

water, and air, including through touching, breathing, drinking, or otherwise ingesting the 

chemicals. Id. 160:12-21 (James). Such an assessment helps “to create an overall set of 

goals for cleanup.” Id. 160:22-24 (James). Id.

1. TCE

25. TCE, if in non-aqueous phase, is a DNAPL that sinks through groundwater because it is 

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heavier than water, as explained by James and another expert for the City, Peter Mesard. 

Trial Tr. vol. 1, 108:5-9 (James); Trial Tr. vol. 3, 444:13 (Mesard). DNAPL has relatively 

low solubility, meaning that it does not dissolve easily into water; what does dissolve in 

water results in concentrations of contaminants that are much higher than the drinking 

water standard. Id. 444:15-18 (Mesard). And because DNAPL is less viscous than water, 

it flows more freely through soil. Id. 444:14-15 (Mesard). DNAPLs tend to migrate 

because of their viscosity and density characteristics, which drive them downward through 

soil. Id. 444:22-445:2 (Mesard). 

26. TCE is volatile, so it evaporates into the vadose zone, which is the name for a particular 

level underground, right above the permanent groundwater. Trial Tr. vol. 3, 444:3-8 

(Mesard). When DNAPL TCE leaves the vadose zone, it leaves residual “saturation,” 

known as ganglia. Id. 446:12-16 (Mesard). The ganglia remain behind in soil particles as 

DNAPL moves through the soil. Id. 446:15-19 (Mesard). 

27. TCE is the most widespread chemical at the FMW Site, and it has impacted the largest area 

on- and off-site. Trial Tr. vol. 2, 206:5-10 (James). TCE concentrations at the FMW site 

are far above the “remedial goals”—the cleanup goals for health and safety—approved by 

DTSC. Id. 206:10 (James). Concentrations of TCE in groundwater exceed 100,000 parts 

per billion, which is approximately 20,000 times higher than the standard for safe drinking 

water. Id. 206:14-21; 211:22-25 (James). 

28. TCE present at greater than 100,000 parts per billion may indicate “free-phase product,” 

which requires aggressive remediation. Id. 216:21-25 (James). And the highest 

concentrations within the “S10 unit”6 exceed 100,000 parts per billion. Id. 211:18-25 

6 Environmental professionals working at the FMW Site have identified various stratigraphic units 

that represent geologic and hydrologic continuity. Trial Tr. vol. 1, 143:24-144:2 (James). The 

stratigraphic units are identified by reference to mean sea level. Id. 144:6-10 (James). 

The “S10” unit is from the surface to 10 feet below mean sea level, referred to as “sea 

level” in these Findings for readability. Trial Tr. vol. 2, 208:15-16 (James); Trial Tr. vol. 13, 

1899:4-10 (Mutch). The S10 unit is fairly clayey, meaning it consists of primarily fine-grained 

material. Trial Tr. vol. 13, 1899:11-12 (Mutch). The S10 has scattered lenses of sandy material, 

but it is mostly silts and clays. Id. 1899:11-16 (Mutch). Fine-grained materials have lower 

permeability. Id. 13, 1900:17-1901:1 (Mutch). It is more difficult for groundwater to flow 

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(James). The highest concentrations in the S10 unit are located in the northeastern corner 

of the existing building as depicted on Figure 2-7a of Exhibit 1068. Trial Ex. 1068 at 132. 

The TCE contamination in the 1032 Unit also exceeds 100,000 parts per billion, but the 

contamination is spread more broadly across the layer, and also migrates off-site to the 

west. Trial Tr. vol. 2, 216:4-17 (James). And the deepest interval of high TCE 

concentration is in the 3243 unit, where concentrations are as high as 1,000 to 10,000 parts 

per billion. Id. 221:4-11 (James). Deeper groundwater samples down to 110 feet remain 

above the maximum contaminant level. Id. 221:15-21 (James). 

2. Cadmium, Petroleum, and Other Contaminants

29. Concentrations of cadmium and total extractable petroleum hydrocarbons are also present 

at the FMW Site above DTSC screening goals for soil and groundwater. Trial Tr. vol. 2, 

226:1-6 (James). The area around the northeast corner of the current building is 

contaminated at least 8.5 feet deep with concentrations of these chemicals above remedial 

goals. Id. 228:1-8 (James); see also Trial Tr. vol. 1, 149:2-11 (James). The petroleum 

hydrocarbon contamination, present as LNAPL, has been characterized as a “stable oil,” 

which is a lubricating or cutting oil. Trial Tr. vol. 1, 108:18-109:5, 149:2-11 (James). 

through fine-grained materials. Id. By comparison, coarse-grained sediment layers are primary 

migration pathways for contaminants because they act as channel features. Trial Tr. vol. 2, 209:2-

7, 219:5-9 (James). 

The “1032” unit is located between 10 feet below msl and 32 feet below sea level. Trial 

Tr. vol. 2, 208:16-18 (James); Trial Tr. vol. 13, 1899:17-18 (Mutch). The 1032 unit is more 

granular and contains lenses of sand and some gravels. Trial Tr. vol. 13, 1899:18-20 (Mutch). 

Some of the lenses are connected so groundwater can travel through the unit. Id. 1899:21-22 

(Mutch). 

Other units include the “3243” unit, the “4360” unit, the “6080” unit, and the “80110” unit. 

Trial Ex. 1068 at 15-16. The 3243 zone is more clayey. It consists mostly of silts and clays but 

has sand lenses scattered in it. Trial Tr. vol. 13, 1900:7-10 (Mutch). Beneath the 3243 unit is 

older Bay mud, consisting of mostly silts and clays, but some scattered sands. Id. 1900:11-13 

(Mutch). 

Within the stratigraphic units are subunits of coarser-grained sediments that are found as 

depositional features. Trial Tr. vol. 2, 208:19-25 (James). Within the 1032 unit is the “1825” 

subunit, located between 18 feet below sea level and 25 feet below sea level. Id. There is also a 

2732 subunit. Id. 

Groundwater at the FMW Site is at approximately five to seven feet below ground surface. 

Trial Tr. vol. 1, 149:12-18 (James). 

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30. Cadmium is found in groundwater up to 8.38 parts per billion. Trial Tr. vol. 2, 284:15-17 

(James). The maximum concentration of cadmium in groundwater is above the drinking 

water standard. Id. 228:1-8 (James). Cyanide is also found in groundwater, co-located 

with cadmium. Id. 284:18 (James); Trial Ex. 1124. Cyanide in groundwater appears to be 

emanating from the former hardening and plating room. Trial Tr. vol. 2, 284:18-19 

(James). 

C. Marchant’s Use of Chemicals at the FMW Site

1. Marchant’s Operations

31. Marchant manufactured mechanical calculators at the FMW Site. Dkt. No. 266, Undisp. 

Fact 12. There was no firsthand testimony from former Marchant employees about 

operations at the site, given the length of time that has passed since it operated there, so the 

evidence about that important topic required historical analysis and inference from 

conditions today.

32. Marchant was producing millions of metal pieces every day in the 1950s. Trial Tr. vol. 2, 

276:24-25 (James). The metal parts were covered with oils that required cleaning prior to 

performing tasks necessary to build the calculating machines, such as painting or plating. 

Id. 276:11-14; 278:9-12 (James). 

33. Historical Sanborn fire insurance maps indicate that Marchant’s operations included metalplating and metal-hardening operations. Dkt. No. 266, Undisp. Fact 12. Plating is a 

process involving coating one metal with another thin layer of a different metal, as noted 

by HBML’s expert, Jay Vandeven. Trial Tr. vol. 9, 1446:13-19 (Vandeven). Hardening is 

a process of heating the metal up such that the molecular structure changes to become 

more stable, then quickly quenching the metal to retain stability. Id. 1446:4-12 

(Vandeven). 

34. Photographs from a 1920 salesmen’s prospectus confirm that an enameling room existed in 

Marchant’s factory. Trial Tr. vol. 2, 279:5-13 (James). The enameling process included 

heating the metal parts. Id. A furnace room was also identified in the 1920 prospectus. Id.

279:19-23 (James). 

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35. Marchant performed metal-forming, machining, metal-cleaning, painting, hardening, 

enameling, spraying, and other activities to manufacture calculating machines. Trial Tr. 

vol. 2, 192:9-12, 200:13-16, 264:19-265:2 (James). The 1934 Sanborn map identifies a 

hardening and plating room, enameling and spraying room, and a pressing and cutting 

room. Trial Tr. vol. 3 456:5-9 (Mesard). Nickel plating is also specifically identified on 

the 1934 Sanborn map. Trial Tr. vol. 2, 267:23-268:2 (James). 

36. A sandblasting room or sandblasting bin was identified on the 1934 Sanborn map. Id.

272:18-23 (James). There are no Sanborn maps that identify a sandblasting bin after 1934. 

Trial Tr. vol. 10, 1625:4-17 (Vandeven). An article in the American Machinist, including 

a photograph from approximately 1918, confirms that sandblasting occurred before 

enameling to clean metal parts. Trial Tr. vol. 9, 1442:25-1443:18 (Vandeven). The article 

does not specify that sandblasting was used to clean oil off the metal parts. Trial Tr. vol. 

10, 1622:20-24 (Vandeven). 

2. Evolution of Marchant’s Operations 

37. Analysis of Sanborn maps demonstrates that operations at the Marchant facility changed 

over time. Trial Tr. vol. 2, 269:7-14 (James). For example, the 1934 Sanborn map shows 

a sandblasting room or sandblasting bin but no nickel-plating or hardening rooms. Trial 

Tr. vol. 2, 272:18-23 (James). But the sandblasting room/bin is not included in the 1949 

map, which instead shows that a new building was constructed at the northeast corner of 

the current building sometime between the mid-1930s and late 1940s, , and is identified as 

the hardening and plating room. Trial Tr. 270:8-18, 272:21-23 (James); Trial Tr. vol. 3, 

456:10-14 (Mesard). The enameling and spraying room were also enlarged. Trial Tr. vol. 

3, 456:10-14 (Mesard). 

38. Changes to facility operations are consistent with Marchant’s efforts to remain on the 

cutting edge of technology by being cost efficient and improving production. Trial Tr. vol. 

3, 461:2-6, 462:17-25, 463:6-19 (Mesard); Trial Ex. 1075 at 19 (Marchant’s 1938 Annual 

Report); 1076 (Marchant’s 1946 Annual Report); Trial Ex. 1077 (Marchant’s 1951 Annual 

Report, emphasizing efficiency, cost-effectiveness, and installing faster and more modern 

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equipment). Marchant’s 1951 Annual Report, for example, stated that Marchant had 

implemented “improved cleaning of parts and better plating at reduced cost were effected 

with new equipment.” Trial Ex. 1077 at 10; Trial Tr. vol. 3, 463:22-24 (Mesard). 

39. By 1949, the hardening and plating room had moved. It is reasonable to infer that when 

the operation was moved, Marchant put in new, more state-of-the-art equipment. Trial Tr. 

vol. 3, 463:20-464:4 (Mesard). 

3. Marchant’s Cadmium Use

40. A September 1955 issue of the Plating Journal of the American Electroplaters Society 

included an advertisement for the Udylite Corporation. Trial Tr. vol. 15, 2150:11-22 

(James); Trial Ex. 1102 (journal advertisement); Trial Ex. 1102a (slide with journal 

advertisement). The advertisement touts new equipment that Marchant had installed to do 

cadmium plating. See Trial Exs. 1102, 1102a. This electroplating with cadmium is 

usually done with a cadmium cyanide salt. Trial Tr. vol. 2, 284:23-24 (James). Plating is 

conducted in tanks as parts are dipped into the solution such that the metal in the solution 

will adhere to the metal placed in the solution. Trial Tr. vol. 15, 2149:13-18 (James). 

41. Today, cadmium and cyanide are co-located in groundwater. Trial Tr. vol. 15, 2152:15-20 

(James). There is no other known process on the FMW Site where cyanide would have 

been used, in part because cyanide is specific to electroplating with cadmium. Id. 2152:16-

21 (James). The primary release of cadmium is from the electroplating process. Id. And, 

the same company that provided a machine to Marchant had patents that involved the use 

of cadmium and cyanide for plating purposes. Id. 2152:21-2153:2 (James). 

42. The coincidence of cadmium, cyanide, and TCE indicates that Marchant’s plating room 

was a source of all three compounds, likely related to cadmium plating and cleaning of 

metal. Trial Tr. vol. 15, 2154:19-23 (James). The maximum cyanide concentrations are 

found in the same portion of the upper zone where TCE is found at concentrations of 

100,000 parts per billion TCE, further supporting this finding. Id. 2154:24-2155:6 

(James). 

43. Additionally, the coincidence of both cadmium and cyanide indicates cadmium 

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electroplating in the area, which is consistent with the historical record. Trial Tr. vol. 2, 

284:25-285:1 (James). The bulk of the cadmium data is from below the BMBFs, 

demonstrating that it is more likely related to Marchant operations and not Whitney’s. Id.

287:1-8 (James). 

4. Marchant Used TCE and Other Contaminating Chemicals 

44. The parties dispute whether Marchant ever used TCE for its operations. There is no direct 

evidence when or if Marchant ever switched to using TCE as part of its operations at the 

FMW Site. Trial Tr. vol. 3, 520:9-12 (Mesard); Trial Tr. vol. 2, 340:3-5, 345:9-14

(James); Trial Tr. vol. 9, 1436:2-10 (Vandeven). From the record at trial, however, the 

preponderance of evidence shows that Marchant used TCE on the site and caused other 

chemicals as well to pollute the groundwater. 

45. TCE first came into use in the 1930s. Trial Tr. vol. 9, 1439:2-4 (Vandeven). It was 

heavily rationed during and just after World War II, between the 1940s and 1950s, for use 

by Boeing, North American Aviation, and Lockheed, which were mandated by the military 

to use TCE in their aerospace and plane parts. Id. 1438:23-1439:21 (Vandeven). It came 

into more common usage in manufacturing in the 1950s and 1960s. Trial Tr. vol. 2, 

343:13-15 (James); Trial Tr. vol. 3, 455:7-8 (Mesard). 

46. In 1949, a conference paper concluded that older methods of degreasing were inefficient, 

uneconomical in most cases, and unable to accomplish the high quality of finishes 

demanded. Trial Tr. vol. 3, 457:14-19 (Mesard). The paper opined that the only process 

that addresses quality and efficiency is degreasing by TCE. Id. 457:20-22 (Mesard). The 

production of TCE in the United States started to increase rapidly in 1949. Id. 459:16-18 

(Mesard). TCE was widely accepted for metal degreasing and rapidly replaced other 

solvents in the late 1950s and early 1960s. Id. 458:17-25 (Mesard). Industry eventually 

transitioned from TCE to 1,1,1-TCA in the 1960s and 1970s because it was not as toxic. 

Trial Tr. vol. 9, 1441:12-14 (Vandeven). 

47. Marchant is responsible for many of the chemicals that are currently found at the FMW 

Site. First, a promotional video shot by Marchant in 1953 “call[s] out the golden oil 

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lubricant that’s being splashed over the [machine] parts to keep it all running properly.” 

Trial Tr. vol. 2, 273:11-14, 277:16-19 (James). The use of golden lubricant is consistent 

with the TPH identified in the subsurface. Id. 277:20-24 (James). Second, the hardening 

and plating room (first noted on the 1949 Sanborn map located at the northeast corner of 

the site near and partially within the current building), is the area of the property that is the 

primary source of contamination and overlies the most intense VOC, TPH, and cadmium 

contamination, including TCE as DNAPL. Id. 270:15-23 (James); Trial Tr. vol. 3, 456:14-

17 (Mesard). That is strong evidence that the VOC, TPH, cadmium, and TCE DNAPL 

came from Marchant. 

48. Third, and importantly, TCE releases at the FMW Site correspond to Marchant’s 

operations. Trial Tr. vol. 2, 281:20-23 (James). Free phase TCE was found at the current 

FMW site in the area of where the Sanborn maps indicate the plating room stood. Id.

285:9-14 (James). There is also no documentation of Marchant using other degreasing 

chemicals, such as alkalide cleaners, Stoddard solvents, or petroleum products. Trial Tr. 

vol. 3, 467:18-22 (Mesard). 

49. And while using sand to clean metal is viable for removing scale and rust, it is not for 

grease. Trial Tr. vol. 3, 469:15-25 (Mesard). Indeed, the sandblasting bin present on the 

FMW Site in 1929 was gone by 1949. Id. 459:22-25 (Mesard). If Marchant was using 

sandblasting to clean parts, it had stopped by at least 1949, and it would have needed other 

degreasing solutions. Id. 459:25-460:2 (Mesard). HBML’s expert could not think of and 

did not testify to any site operating in the 1950s that used sandblasting rather than 

chlorinated solvents to clean metal parts before painting, and only one that used 

sandblasting prior to plating or enameling. Trial Tr. vol. 10, 1626:13-20 (Vandeven). 

50. Sampling data from upgradient of the main source area on the FMW Site shows TCE 

impacts. Trial Tr. vol. 2, 288:6-289:8 (James). Because those upgradient data points are 

outside the footprint of the current building, the impacts are more likely from Marchant 

than Whitney, because Whitney did not use that area besides for parking. Id. 

51. Proof of Marchant’s TCE use also comes from analysis of toxins in the “sandwich layer.” 

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When Whitney commenced operations at the FMW Site in 1962 or 1963, it demolished the 

Marchant facilities down to the ground level, put a layer of fill on top of the site and then 

built the current building foundation and associated infrastructure on top, leaving 

Marchant’s concrete slab in place below everything. Trial Tr. vol. 1, 174:14-21 (James); 

Trial Tr. vol. 10, 1525:25-1526:12 (Vandeven). Whitney added a layer of fill on top of the 

slabs of the former Marchant buildings, poured a layer of concrete on top of the fill, and 

built the Whitney building on top of that. Trial Tr. vol. 1, 147:9-21 (James). That layer of 

fill between the two companies’ concrete slabs was referred to by experts at trial as the 

“sandwich layer.” It ranges from one to one-and-a-half feet thick, as explained by 

HBML’s expert Robert Mutch. Trial Tr. vol. 13, 1941:1-24 (Mutch) (describing 

investigation of the sandwich layer). 

52. In connection with its redevelopment of the site, Whitney installed 10 columns to hold up 

the roof around the parameter of the new building, which involved cutting out 12 sections 

of the Marchant slab to install the footings and other material to support the columns and 

building infrastructure. Trial Tr. vol. 13 1954:6-1956:19 (Mutch) (Mutch Slide Ex. Fig. 4-

18). Whitney also excavated trenches through the lower slab to install sewer and other 

utility lines. Trial Tr. vol. 2, 350:2-5 (James). The cutouts in the Marchant slab that were 

made to install these utilities, as well as the footings for Whitney’s structure, created “gaps 

and holes and trenches and cracks” in the slab, rendering the slab “very permeable.” Trial 

Ex. 2269. 

53. The sandwich layer, of course, did not exist when Marchant was at the site. Trial Tr. vol. 

3, 443:4-9 (Mesard). Accordingly, it affords a unique opportunity to evaluate the timing 

and sources of contamination both within the sandwich layer and beneath it. See id. 

Molecules of the same chemical used by both Whitney and by Marchant cannot be 

differentiated. Trial Tr. vol. 2, 295:12-16 (James); Trial Tr. vol. 10, 1608:15-17 

(Vandeven). But contaminants found in the sandwich layer would generally be attributable 

to Whitney, except for vapors, while contaminants below the sandwich layer—below the 

Marchant slab—would generally be attributable to Marchant. See Trial Tr. vol. 3, 472:4-8 

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(Mesard). No free-phase oils or DNAPL were found in the Sandwich Layer. Trial Tr. vol. 

2, 294:19-20 (James). 

54. Soil vapor concentrations of TCE are much higher beneath the Marchant slab than they are 

within the sandwich layer. Trial Tr. vol. 3, 450:2-4 (Mesard). Critically, the average 

concentration of TCE below the Marchant slab is four times higher than in the sandwich 

layer. Id. 451:4-9 (Mesard). And the maximum concentration of TCE below the Marchant 

slab is 12 times higher than the concentration in the sandwich layer. Id. 452:1-3 (Mesard). 

55. By comparison, 1,1,1-TCA and Freon 113 were not yet available during the time period 

when Marchant was at the FMW Site. Trial Tr. vol. 3, 471:24-472:3 (Mesard). Those 

contaminants could only have been released by Whitney. Id. The concentrations of Freon 

113 and 1,1,1-TCA are three times higher and two times higher, respectively, within the 

Sandwich Layer than below. Id. 449:16-21, 451:7-9 (Mesard). 

56. The relative soil vapor concentrations of TCE above and below the Sandwich Layer are 

opposite of the two “Whitney only” compounds, 1,1,1-TCA and Freon 113. Id. 450:1-6 

(Mesard). This is particularly relevant for 1,1,1-TCA, which has similar characteristics as 

TCE as so would be expected to move similarly through the soil. Id. 510:4-6 (Mesard). 

57. It is likely that TCE from Whitney released into the sandwich layer migrated below the 

BMBF and Marchant slab. Id. 503:21-25 (Mesard); Trial Tr. vol. 13, 1957:20-1958:5 

(Mutch). But contamination beneath the BMBF cannot be explained by the contaminants 

found in the sandwich layer. Trial Tr. vol. 3, 504:13-23 (Mesard). That is because there 

are no significant quantities of residual TCE or DNAPL ganglia in the sandwich layer, 

meaning DNAPL was never present in any significant quantities in the sandwich layer. Id.

447:6-14; 505:4-7 (Mesard). In other words, Whitney’s discharges to the sandwich layer 

may have included dissolved TCE, but they did not include DNAPL. Id. 505:7-9 

(Mesard). That means that some of the TCE vapor in the sandwich layer comes from 

Marchant releases, as it migrates naturally into the sandwich layer from below. Id., 

531:17-23 (Mesard); Trial Tr. vol. 10, 1609:1-1610:6 (Vandeven) (explaining that the 

BMBF is not a barrier to vapor partitioning into the sandwich layer). 

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58. In light of this, I conclude that the data from the sandwich layer demonstrates that the 

significant TCE contamination at the FMW Site cannot be attributable solely to Whitney. 

59. In fact, Marchant appears to be the source of the majority of the TCE contamination.7 

TCE was the most effective chemical that could be used for degreasing during the time 

when Marchant was operating. Trial Tr. vol. 3, 468:14-469:7 (Mesard). Because 

Marchant tried to operate the facility according to the most efficient methods it could find, 

id., 468:14-17 (Mesard), and because TCE contamination below the BMBFs in the 

concentrations found there cannot be explained by anything other than Marchant 

discharging TCE to the subsurface, I find that Marchant used TCE in its manufacturing 

operations at the FMW Site, id. 441:11-15 (Mesard), and that Marchant released TCE into 

the subsurface at the site, id., 442:6-12 (Mesard). 8

D. Whitney Is Also Responsible for the Contamination at the Site 

1. Whitney’s Operations

60. Whitney manufactured brass and stainless-steel valves. Trial Tr. vol. 9, 1455:15-18 

7 HBML also argues that mistakes by Emeryville’s environmental consultant EKI exacerbated the 

contamination because it used long well screens for two of the eight wells it dug. The State 

(DTSC) warned that long well screens should not be used because they potentially “create a 

conduit for contaminant transport across hydraulically separated geologic units,” particularly 

where “high concentrations of [chemicals of concern] are confined to relatively thin water-bearing 

zones and vertical hydraulic gradients are present [...], especially where DNAPL is present.” 

Trial Tr. vol. 13, (Mutch), 1966:19-25; 1967:1-10. The State ordered Emeryville to abandon those 

two wells, and the experts dispute whether and to what extent the two wells that the State required 

be sealed exacerbated contamination at the Site. But the evidence was so strong that Marchant 

used TCE, released DNAPL, and heavily contributed to the contamination at the site, that even if 

the well screens increased the DNAPL in particular areas, that does not detract from or affect the 

finding that Marchant is responsible for the contamination at the site. And because I do not need 

to apportion liability as a result of my resolution of this case, I will not wade into this issue further. 

8 Use of TCE in two other facilities linked to Marchant also suggests that Marchant used TCE at 

the FMW site. Marchant had another facility in Berkeley that operated from 1946 to 1972. Trial 

Tr. vol. 3, 453:10-12 (Mesard). The Marchant Berkeley facility did not begin any manufacturing 

until after 1958, when Marchant transferred all manufacturing operations from Emeryville to 

Berkeley. Id. 453:13-16 (Mesard). The Berkeley site has DNAPL concentrations with TCE in 

groundwater and soil gas. Id. 453:17-18 (Mesard). In addition, Carl Friden was a former 

employee of Marchant who moved to San Leandro to start his own factory to make calculators. 

Id. 453:24-454:4 (Mesard). The Friden site operated between 1936 and 1976. Id., 453:19-23 

(Mesard). The Friden facility has significant TCE contamination. Id.

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(Vandeven). It did not perform hardening, metal plating, enameling, or painting. Trial Tr. 

vol. 2, 290:13-15, 290:21-23 (James); Trial Tr. vol. 10, 1569:16-1570:4 (Vandeven). 

61. Whitney used a vapor degreaser and TCE during at least part of the time that it operated at 

the FMW Site. Dkt. No. 266, Undisp. Fact 15. According to HBML’s expert, Whitney 

used TCE between 1963 and 1978. Trial Tr. vol. 9, 1457:4-8 (Vandeven). In addition to 

TCE, Whitney used lubricating oils and other chemicals. Trial Tr. vol. 2, 293:18-21 

(James). After 1978, Whitney switched to Freon 113. Trial Tr. vol. 9, 1457:4-8 

(Vandeven). Whitney used large volumes of Freon 113. Trial Tr. vol. 3, 449:13-14 

(Mesard). Whitney also used significant amounts of the chlorinated solvent, 1,1,1-TCA. 

Trial Tr. vol. 3, 448:12-13 (Mesard).

62. The sewer pipe that Whitney installed at the site slopes through the Marchant slab. Trial 

Tr. vol. 13, 1951:1-8 (Mutch). The Whitney sewer pipe is made of vitrified clay pipe. Id.

1946:1-3 (Mutch). Vitrified clay pipe wears out over time. Id. 1946:13-14 (Mutch). Such 

pipe is subject to significant amounts of leakage. Id. 1947:23-24 (Mutch). 

63. The evidence showed that Whitney cleaned up various minor spills and releases by 

routinely disposing of cleaning fluids down certain drains at the facility. Trial Tr. vol. 2, 

294:2-14 (James); Trial Tr. vol. 9, 1456:3-5 (Vandeven). The sewers beneath the facility 

leaked into the subsurface. Id. Some of the Whitney sewers become disjointed and 

misaligned over time, which can facilitate TCE releases. Trial Tr. vol. 13, 1948:21-1949:8 

(Mutch). TCE can sink into joints in the sewer and then go through the pipe. See id. 

Video evidence demonstrated water impounding behind some of the displaced joints and 

seepage coming into the joints. Id. 1949:11-21 (Mutch). Whitney’s sewers were also 

located in generally the same portion of the site where Marchant’s hardening and plating 

operations were located. Trial Tr. vol. 2, 348:12-15 (James). That is the most 

contaminated area of the FMW Site. Id. 349:3-8 (James). But Whitney sufficiently diluted 

its disposal down the drain that it is not plausible that all of the TCE at the FMW Site is 

attributable to Whitney. Trial Tr. vol. 3, 424:1-8 (James).

64. Significantly higher concentrations of 1,1,1-TCA and Freon 113 in soil vapor are found 

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within the Sandwich Layer than the concentrations below the BMBFs. Trial Tr. vol. 

3,449:2-21 (Mesard). TCA and Freon 113 identified at the FMW Site could only have 

been released by Whitney. Id. 471:24-472:3 (Mesard). 

65. Whitney’s cleaning activities generated a waste known as “sump cake” or “filter cake,” 

which contained cadmium. Trial Tr. vol. 9, 1468:6-12 (Vandeven). They also generated 

cleaning liquid waste and waste dusts from machining valves, both of which contained 

cadmium. Id. 1468:13-19 (Vandeven). Whitney’s activities related to cadmium would not 

result in the same concentration or intensity of release as would liquid solutions associated 

with cadmium plating for Marchant. Trial Tr. vol. 15, 2148:21-2149:1 (James). And 

Whitney’s waste solids containing cadmium and filter cake were generally disposed offsite. Id. 2148:15-20, 2156:2-25. 

2. Whitney’s Responsibility 

66. There is no doubt that Whitney was a source of contamination at the FMW Site. Trial Tr. 

vol. 2, 290:13-14 (James). Environmental investigations at the site have identified 

contamination from 1,1,1-TCA and Freon 113, which as discussed, could only be from 

Whitney. Trial Tr. vol. 3, 448:17-25, 447:13-16, 449:13-16 (Mesard). 

67. Whitney released large volumes of TCE at the FMW Site, and its concrete floor also 

developed cracks. Trial Tr. vol. 9, 1481:10-11 (Vandeven). Some TCE released into the 

sandwich layer migrated through into the soil below the Marchant slab. Trial Tr. vol. 13, 

1939:5-1940:25 (Mutch). The sandwich layer, which consists of sand fill, does not retain 

TCE. Id. 1939:9-16. Relatively little TCE was detected in the sandy, sandwich layer, 

while much higher concentrations are found in the clayey soils below the Marchant slab. 

Id. 1939:5-1940:25 (Mutch). 

68. I do not need to decide whether Marchant or Whitney was a bigger contributor of TCE; 

they both were contributors. It is noteworthy that there was no significant residual TCE in 

the sandwich layer, Trial Tr. vol. 3, 447:6-10 (Mesard), and that contamination is not 

symmetrical around Whitney’s sewers, id. 529:4-9 (Mesard), which does not support a 

finding that Whitney’s sewer line was the sole or primary cause of the high TCE 

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concentration area at the site, id., 529:10-21 (Mesard).9

III. HANSON OPERATIONS PRIOR TO SCM ACQUISITION

69. Having found that Marchant contributed to the contaminants that need to be remediated, I 

turn to the factual findings related to whether HBML is liable for it. HBML’s connection 

to the FMW Site, to the extent it exists, is that Marchant merged with Smith Corona in 

1959 to become SCM, which had responsibility for the environmental liability at the FMW 

Site until 1986, when Hanson Trust and Hanson Industries acquired SCM through a hostile 

takeover. To understand my conclusion that HBML is not liable, one must follow the very 

complicated corporate history and practices of Hanson Trust and its North American 

operations through Hanson Industries to trace the ultimate responsibility for Marchant’s 

environmental liability from the time of the hostile takeover to the present.

70. Today HBML is not widely known. But during the time frame I am about to address, it (as 

Hanson Trust) was a corporate colossus. In North America, its indirect subsidiaries 

included Kaiser Cement, Glidden Paints, Smith Corona typewriters, Peabody Coal, 

Durkee’s Foods, Allied Steel, and a host of other well-known American companies. It was 

the fifth largest corporate entity in North America. But while its corporate structure was 

complex, its operating philosophy and decision-making principles were deceptively 

simple. 

A. The Hanson/White Partnership and Genesis of Hanson Industries

71. In the 1950s, Lord Hanson and Sir Gordon started a greeting card company in the United 

Kingdom, according to testimony from the City’s expert, Dr. Charles Hill. Trial Tr. vol. 5, 

705:8-25 (Dr. Charles Hill). In 1963, they sold the greeting card company and bought 

Oswald Tillotson, a U.K.-based vehicle distribution company. Id. 706:1-4 (Hill). 

72. In the mid-1960s, Oswald Tillotson was acquired by the Wiles Group, a manufacturer of 

9 The parties debate whether pollutants travelled from the FMW site to Site B. Because I conclude 

that HBML is not liable for the pollution created by Marchant and this particular issue is not 

pivotal for understanding the nature of the dispute, I need not and will not make findings regarding 

this issue.

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fertilizer and fertilizer sacks. Id. 706:5-7 (Hill). As part of that transaction, Lord Hanson 

and Sir Gordon were given significant shares in the Wiles Group, and the two eventually 

gained management control of it. Id. 706:7-12 (Hill). The Wiles Group was renamed 

Hanson Trust. Id. 706:10-13 (Hill). The company was a “partnership” between Lord 

Hanson and Sir Gordon, and they merely “chose the name Hanson Trust because they 

thought Hanson’s name had a nicer ring to it than White’s.” Id. 706:14-19 (Hill). Lord 

Hanson became Chairman of Hanson Trust and remained so at all relevant times to this 

case. Trial Ex. 948 (L. Hanson Dep.), 5:8; Trial Ex. 261, MCT_00008871; Trial Ex. 226, 

HBML 0013013. 

73. Between 1969 and 1973, Lord Hanson and Sir Gordon refined their business strategy. 

They soon became known for making acquisitions (most of the early acquisitions were 

“friendly”), and by 1973, Hanson Trust owned 24 small and mid-sized companies, 

primarily in the U.K. Id. 706:20-707-2 (Hill). 

74. Lord Hanson and Sir Gordon stayed close friends and business partners throughout their 

lives. Trial Tr. vol. 5, 707:3-18 (Hill). In 1973, Sir Gordon moved to New York to 

acquire and run new U.S. subsidiaries for Hanson Trust while Lord Hanson remained in 

England to run the U.K. operations. Trial Ex. 951 (E. Hanson Dep.), 211:17-212:20; Trial 

Ex. 949 (White Dep.), 4:18-5:5; Trial Ex. 1082, pdf p.2. 

75. On June 24, 1974, Sir Gordon sent a letter of resignation to Hanson Trust confirming his 

resignation from the boards of Hanson Trust and any subsidiary of which he was a 

director, as noted by HBML witness Wendy Rogers, who is the current company secretary 

at HBML. Trial Ex. 2376; Trial Tr. vol. 14, 2092:11-2093:1 (Wendy Rogers). Hanson 

Trust set up Hanson Industries, Inc., a U.S. company, to support Sir Gordon and to execute 

Hanson Trust’s strategy in the U.S. Trial Tr. vol. 5, 709:16-20 (Hill); see also Trial Ex. 

1114 at 10. Hanson Industries Inc. was an indirect subsidiary of Hanson Trust. Trial Tr. 

vol. 14, 2075:10-14 (Rogers). 

76. Hanson Industries grew rapidly, and there is no doubt that Hanson Trust was pivotal in its 

birth. A 1988 article in Fortune magazine described how Sir Gordon arrived in the U.S. 

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with only $3,000 (“the most that British currency controls permitted at that time”). But in 

the course of 15 years, Hanson’s U.S. businesses had grown into an “American 

conglomerate” with a net asset value of more $10 billion, “without touching the company’s 

British parent for a loan.” Trial Ex. 2273. 

77. In 1974, Hanson Industries acquired Seacoast, the family business of David Clarke. Trial 

Tr. vol. 11, 1640:6-10, 1644:15-21 (Clarke). Seacoast’s sales were about $40 to $50 

million when it became Hanson Industries’ first U.S. business in 1974; Hanson Industries’

North American companies had sales about $14 billion when Clarke left in 1995. Id.

1646:14-1647:1 (Clarke). Clarke rose to become President of Hanson Industries in 1978, a 

position that he retained until he left in 1995. Id. 1640:6-10, 1644:15-21 (Clarke). He was

widely regarded as the second in command to Sir Gordon. Id. 1641:4-1644:4 (Clarke). 

78. The City’s expert, Dr. Hill, testified that Hanson’s success came “primarily” through its 

“brokerage,” making its money by buying and selling businesses. Trial Tr. vol. 5, 713:11-

715:3, 747:21-748:16, 780:12-19 (Hill). Hill described this strategy “unreservedly” as 

“quite brilliant.” Id. 780:12-19 (Hill). Witnesses who worked for Hanson Industries made 

clear, however, that it was not simply a “brokerage.” Although businesses were bought 

and sold, Hanson Industries also managed, invested heavily in, modernized, and grew the 

businesses that it retained. Trial Tr. vol. 8, 1202:5-20 (Raos); Trial Tr. vol. 11, 1646:14-

1648:8 (Clarke) (“Well, if that’s all you are [a brokerage], how did your sales go from 40 

million to 14 billion? I don’t know. You do it by growing the businesses. We spent a lot 

of money.”). Clarke stated they were “not bashful to spend money on growing 

businesses,” and he provided examples of investing hundreds of millions of dollars per 

plant to improve Hanson Industries’ titanium dioxide business. Trial Tr. vol. 11, 1647:2-

19 (“Clarke”).

79. Hanson Industries utilized Hanson Trust’s strategy in the U.S. Trial Tr. vol. 5, 709:24-

710:2 (Hill). Clarke referred to Sir Gordon’s team at Hanson Industries as Hanson Trust’s 

“boots on the ground” in America. Trial Tr. vol. 11, 1735:1-15 (Clarke). Lord Hanson 

stated that it was necessary to have personnel in the U.S. to do certain things: review 

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budgets, monitor performance, etc. Trial Tr. vol. 5, 738:16-22 (Hill); Trial Ex. 949, Lord 

Hanson Dep. 15-21, Oct. 7, 1985. It was not possible to run all of Hanson Trust’s

operations in the U.S. out of the London office, due to differences in time, business 

systems, distance, and accounting systems. Trial Tr. vol. 5, 738:23-739:1 (Hill).

80. Critical to this case is the degree to which Hanson Industries and Hanson Trust were 

separate entities. It was not always clearly delineated. Sir Gordon ran, and was the 

ultimate decisionmaker for, the U.S. operations at all relevant times until he got sick in 

1995. Trial Tr. vol. 8, 1110:20-1111:4; 1114:21-24; 1115:12-14, 1146:4-8 (Raos); Trial 

Tr. vol. 5, 723:1-4, 775:8-11 (Hill); Trial Ex. 960 (Hempstead Dep.), 210:3-9. He 

identified and led acquisitions of companies both in the United States and the U.K., 

however, and was in constant contact with Lord Hanson. Trial Tr. vol. 5, 734:17-19 (Hill). 

In practice if not legal form, Lord Hanson and Sir Gordon were partners in leading the 

success of Hanson Trust. 

81. That said, Sir Gordon was never identified as an officer or director of Hanson Trust; he 

was identified as a director, and in later years as Chairman, of Hanson Industries. See, e.g., 

Trial Ex. 1114 (1979 Annual Report), MCT_00003898; Trial Ex. 260 (1986 Annual 

Report), HBML 00065919 (1986); Trial Ex. 209 (1987 Form 20-F), HBML 0008320. 

None of the minutes of meetings of Hanson Trust’s Board of Directors indicate that Sir 

Gordon attended board meetings. See, e.g., Trial Ex. 249 (discussing announcement of the 

SCM tender offer), 303 (discussing SCM tender offer); Trial Ex. 383; Trial Ex. 458; Trial 

Ex. 1107. Separate pension schemes were created for Hanson Industries and Hanson 

Trust. Ex. 952 (Ludlam Dep.), 130:10-17. When Sir Gordon resigned from Hanson Trust 

in 1974, a pension scheme letter confirms that his date of withdrawal from the Hanson 

Trust pension scheme was March 31, 1974, and that he ceased being an employee of 

Hanson Trust on June 30, 1974. Trial Ex. 2375, pdf p.4; Trial Tr. vol. 14, 2096:11-2097:3

(Rogers).10 Clarke and Professor Robert Glenn Hubbard, an HBML expert, both explained

10 For whatever reason, it took more than eight years for the Hanson Industries Board to recognize 

pursuant to a Hanson Industries Inc. Action by Unanimous Written Consent of the Board of 

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that Sir Gordon’s compensation was based on the performance of the U.S. operations. 

Trial Tr. vol. 11, 1652:3-20 (Clarke); Trial Tr. vol. 9, 1428:13-20 (Hubbard).11

82. In a 1985 SEC proceeding, Sir Gordon was asked who he was employed by; he answered, 

“Hanson Trust.” Trial Ex. 1093, EMY009367. He then testified that his position was 

“chairman of Hanson Industries Inc. in New York,” and that “Hanson Trust is the parent 

company which owns Hanson Industries.” Trial Ex. 1093, EMY009367. This last 

statement clarifies his role and that of Hanson Industries. It is unclear why he answered 

the initial question “Hanson Trust”; it may have been because Hanson Industries was not a 

party to the litigation and Hanson Trust was. His answer is not a basis to conclude that Sir 

Gordon was a Hanson Trust employee, especially given all the evidence to the contrary. 

83. There is a question about how seriously Hanson Trust and Hanson Industries took 

corporate formalities, and what the effect of that is on the liability of HBML. In 1984, 

Hanson Industries Inc. was acquired by Tillotson Commercial Motors, a U.K. subsidiary of 

Hanson Trust incorporated under the laws of the U.K., perhaps for tax reasons. Hanson 

Industries Inc. was dissolved and liquidated. Trial Tr. vol. 14, 2100:11-15 (Rogers). 

“Hanson Industries” subsequently became a division of Tillotson Commercial Motors. Id.

2103:15-2104:2 (Rogers). In May 1985, a “Registration of Fictious Name” form was filed 

in connection with Hanson Industries’ operations in New Jersey. Trial Ex. 1096. In it, 

Tillotson Commercial Motors stated that it would use the fictious name of Hanson 

Industries. Id. The address listed for Tillotson Commercial Motors was the address for 

Hanson Trust’s headquarters in London. Id. at 3. 

84. No one who testified at trial had an explanation for this change in form in 1985, but 

everyone agreed that there was no substantive difference in the way the businesses in 

North America were managed. Trial Tr. vol. 12, 1854:4-1855:1 (Landuyt); Trial Tr. vol. 

Directors that Sir Gordon became an employee of Hanson Industries Inc., effective January 1, 

1983. Trial Ex. 2374, MCT_00009327; Trial Tr. vol. 14, 2097:4-24 (Rogers). 

11 Curiously, no documents were offered in evidence to show the amount of that compensation or 

how it was determined. 

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11, 1666:2-12, 1725:9-1726:2 (Clarke); Trial Tr. vol. 8, 1128:22-1129:10, 1267:8-12

(Raos); Ex. 956 (Alexander Dep.), 122:19-123:2. William Landuyt, who was the CFO of 

Hanson Industries and a Tillotson Commercial Motors board member, and a witness for 

HBML, testified that Tillotson “was just a payroll vehicle” for the executives of Hanson 

Industries, and that the company did not have a budget. Trial Tr. vol. 12, 1854:4-9 

(Landuyt). The Hanson Industries executives also testified that they did not report to or 

take direction from anyone at Tillotson. When asked what direction or control anyone 

from Tillotson exercised over Clarke or Sir Gordon, Clarke testified, “[a]bsolutely none at 

all.” Trial Tr. vol. 11, 1665:18-22 (Clarke). George Hempstead, Hanson Industries’ 

General Counsel, “received no direction from Tillotson.” Ex. 960 (Hempstead Dep.), pdf 

p. 210/331 Trans. p. 2111:17-20.12 Terms such as “Hanson North America,” “Hanson’s 

U.S. interests,” and the like were used synonymously to describe Hanson Industries or the 

U.S operations generally. See, e.g., Trial Tr. vol. 8, 1115:15-25 (Raos); Trial Ex. 948 (L. 

Hanson Dep.), 93:15-16.

85. There was only evidence of one board meeting of Hanson Industries submitted at trial. It 

was conducted in London. Trial Ex. 485. 

B. Hanson Trust and Hanson Industries Were Operationally, Financially and 

Legally Autonomous

1. Operational Autonomy

86. From 1985 to 1996, Hanson Trust was a publicly listed company with thousands of 

shareholders. Trial Tr. vol. 14, 2071:4-5 (Rogers). Hanson Trust PLC changed its name to 

Hanson PLC on December 3, 1987 (Tr. Ex. 261, MCT _00008897), and became Hanson 

Building Materials Limited in 1996. Trial Tr. vol. 14, 2091:17-18 (Rogers). Hanson 

Building Materials Limited is not owned by the same shareholders as it was in the 1985 to 

12 Trial Exhibit 960 consists of four volumes of George Hempstead’s deposition. Page numbers 

213-14 appear in two volumes of transcripts, which disrupts the consecutive pagination. The same 

is true of Trial Exhibit 959, Hellings’ deposition, because it includes the 1985 testimony, which 

results in duplicative page numbers with the deposition transcripts from this case. Therefore, a 

citation to the pdf page number (e.g., “pdf p. 212-13/331”) is provided followed by the specific 

number and lines on the transcript page (e.g., “Trans. p. 213:3-9”).

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1996 timeframe. Id. 2070:19-2071:13 (Rogers). It is not presently listed on any stock 

exchange. Id. 2070:14-18 (Rogers). The ultimate owner of HBML is Heidelberg 

Materials AG, a German company listed on various German stock exchanges, which has 

an individual shareholder who owns over 25 percent of the company. Id. 2070:22-2071:13 

(Rogers). 

87. At the corporate center of Hanson Trust prior to 1995 were Lord Hanson and Sir Gordon, 

who, as partners, made decisions regarding corporate strategy. Trial Tr. vol. 5, 722:23-

723:4 (Hill). Lord Hanson primarily operated in the U.K. and Sir Gordon primarily 

operated in the U.S. Id. 722:22-723:4 (Hill). That said, Hanson Industries executives—

specific Sir Gordon, the Chairman, and Clarke, the President—managed and controlled the 

U.S. companies. Trial Tr. vol. 8, 1114:21-1115:1 (Raos); Trial Ex. 388. They made the 

key decisions on the management and strategy for the U.S. companies. Trial Tr. vol. 8, 

1138:10-1139:9 (Raos). 

88. The 1986 Hanson Trust annual report states “[t]he unique relationship between Hanson 

Industries and Hanson Trust continues to be fundamental to our success. While 

constituting a single corporate entity and sharing a common business strategy, we operate 

as two separate companies on either side of the Atlantic.” Trial Tr. vol. 5, 720:17-24 

(Hill); Trial Ex. 260. The same report further explained the company’s business strategy 

by stating that “two small central teams” in the U.S. and in the U.K. managed the acquired 

businesses in each country by “exert[ing] effective financial control over [their] subsidiary 

companies.” Trial Ex. 260 at HBML 0006522; Trial Tr. vol. 5, 719:11-25 (Hill). 

89. From the late 1970s through the 1980s, both Hanson Trust and Hanson Industries used “the 

same organizational philosophy” and “one unified strategy”: growth through acquisitions, 

looking to the same key metric of return on capital employed. Trial Tr. vol. 5, 710:6-21, 

737:1-14 (Hill). For Hanson Industries’ acquisitions, Sir Gordon specifically targeted 

large, diversified conglomerates in basic industries that he felt were mismanaged. See id. 

Following an acquisition in the U.S., Hanson Industries’ personnel would conduct due 

diligence on the acquired company. Trial Tr. vol. 8, 1180:6-1182:17 (Raos). This 

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included understanding the newly acquired businesses as well as looking for unrecorded 

assets and liabilities. Id. 

90. Clarke was ultimately in charge of all operational aspects of the U.S. operations, reporting 

to Sir Gordon. Trial Tr. vol. 11, 1670:21-1671:3, 1672:4-7 (Clarke); Trial Tr. vol. 8, 

1107:25-1108:5, 1116:1-7 (Raos); Trial Ex. 960 (Hempstead Dep.), pdf p. 208-209/331 

Trans. p. 209:24-210:2 (Clarke and Raos directed U.S. operations). Clarke built up the 

Hanson Industries’ infrastructure, including its headquarters and the group executive 

structure. Trial Tr. vol. 11, 1645:13-1646:13 (Clarke). Other Hanson Industries 

executives reported to Clarke and Sir Gordon. Id. 1675:3-8 (Clarke).

91. Hanson Industries and its U.S. companies operated autonomously from Hanson Trust with 

respect to day-to-day operations. Trial Tr. vol. 5, 767:25-768:7, 768:24-769:9 (Hill). 

Hanson Industries oversaw and made personnel decisions for the U.S. companies. Trial 

Tr. vol. 8, 1144:11-19 (Raos); Trial Ex. 962 (Lee Dep.), 299:4-24. Hanson Industries used 

the same tight controls on capital spending and exercised a common set of levers as 

Hanson Trust in the U.K. to create incentives for managers at the operating company level 

to behave in a certain way. Trial Tr. vol. 5, 737:8-12 (Hill). But Hanson Trust did not 

manage U.S. operations. 

92. High-level Hanson Industries employees confirmed that Hanson Trust did not have a role 

in Hanson Industries’ daily operations. Clarke testified that although he was open to 

receiving advice from Hanson Trust, he would not allow Hanson Trust to “make decisions 

for us.” Trial Tr. vol. 11, 1658:11-22 (Clarke). Similarly, Raos, who began as corporate 

controller and ultimately became President and Chief Operating Officer (“COO”) before 

leaving in 1995, testified that he was never given direction from Hanson Trust’s board on

how to conduct business in the U.S. Trial Tr. vol. 8, 1110:20-1111:9 (Raos). Hempstead, 

Hanson Industries’ General Counsel, testified that Hanson Trust personnel “did not 

participate in or direct anything in the United States.” Trial Ex. 960 (Hempstead Dep.), 

pdf p. 208/331 Trans. p. 209:18-23. Mark Alexander concurred. He was the head of 

Hanson Industries’ mergers and acquisitions department and was the lead negotiator for a 

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possible buyout of the Kalamazoo Mill by local management, which I discuss later. Trial 

Ex. 956 (Alexander Dep.), 12:7-13:3 and 29:8-19. He testified that the “U.S. ran 

completely independent of the U.K.,” that Hanson Industries was “completely 

autonomous,” and that it had “full autonomy to make all decisions with regard to anything, 

frankly.” Id. 17:10-18:22. 

93. Lord Hanson and Sir Gordon spoke frequently; there is no record of what they said or 

whether Lord Hanson ever directed Sir Gordon to do anything. For example, there is no 

record of Hanson Trust playing a role in identifying companies for acquisition or 

disposition in the U.S. Trial Tr. vol. 11, 1672:12-14, 1673:16-22, 1660:16-18 (Clarke) 

(Lord Hanson had “no involvement” in making decisions to purchase or sell businesses in 

the U.S.); Trial Tr. vol. 8, 1125:5-15 (Raos) (Hanson Trust personnel had no role in 

management or control of SCM or HM Holdings or any of HM Holdings’ subsidiaries); 

Trial Ex. 952 (Ludlam Dep.), 111:17-112:2. There is no evidence of Hanson Trust playing 

a role in deciding strategy for the U.S. companies. Trial Tr. vol. 8, 1121:21-23, 1138:10-

1139:9 (Raos). And Hanson Trust played no role in personnel decisions for the U.S. 

companies. Id. 1144:20-23 (Raos).

94. In 1980s, Hanson Trust-acquired corporations were diverse in terms of the range of 

products and services offered. Trial Tr. vol. 5, 710:13-711:2 (Hill). Both in the U.S. and 

the U.K., the acquired corporations were in “unrelated markets,” i.e., there was no obvious 

technological manufacturing or process similarity between the products or services offered 

by those companies. Id. 710:22-711:2 (Hill). On behalf of both Hanson Trust and 

Hanson Industries, Sir Gordon targeted for acquisition businesses that were mature, low 

tech, and provided basic goods and services. Id. 711:5-8 (Hill). Sir Gordon would try to 

identify organizations that were fundamentally sound but that were going through a period 

of performance shortfall that impacted their stock price. Id. 711:9-17 (Hill). These 

acquisitions were primarily debt financed, and the debt was primarily secured on the assets 

of the target. Id. 711:18-20 (Hill). 

95. As a general practice and corporate strategy, following an acquisition Hanson Trust and 

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Hanson Industries would immediately reduce costs through cutting overhead at an acquired 

company, principally by selling off real estate and dramatically reducing staff. Id. 713:4-

10 (Hill). They would also sell off major assets to pay down debt. Id. 713:11-715:3 (Hill). 

Hill testified that Hanson Trust could not possibly manage the U.S. from London due to 

various factors, including differences in financial and accounting systems and regulations, 

as well as banking regulations. Id. 738:9-739:19 (Hill). He testified that the only form of 

“control” that Hanson Trust exercised over its U.S. subsidiaries was budgetary oversight, 

incentive structure, and capital allocation. Id. 765:23-767:13, 777:12-17 (Hill). He further 

conceded that this was a normal set of controls for a parent company. Id. 777:12-17 (Hill).

96. Hanson Industries decentralized operating decisions. It gave the managers of subsidiary 

companies autonomy to pursue strategies and actions while making them accountable to 

the corporate center. Id. 715:14-717:12 (Hill). In this way, Hanson Industries held its 

operating companies to account, set goals and budgets, measured performance, and set 

behavioral incentives. Id. After an acquisition, the lower-level managers of the operating 

companies were left in place, while Hanson Industries conducted layoffs at an acquired 

company’s corporate levels. Id. 730:19-23 (Hill); see also Trial Ex. 1082. 

97. Although Hanson Industries’ operating companies had certain autonomy, they were not 

independent of Hanson Industries, which provided managers at the operating companies 

responsibility to make decisions within bounds it set and held the managers to account. 

Trial Tr. vol. 5, 739:20-740:12 (Hill). There was not much evidence about how Hanson 

Trust managed its U.K. operating companies, but it appears to have pioneered the 

management strategy adopted by Hanson Industries.

98. The only Hanson Trust employee who appears to have had any meaningful interactions 

with the Hanson Industries U.S. operations was Brian Hellings. He acted in an advisory 

capacity on tax and insurance issues. Trial Tr. vol. 11, 1658:23-1659:7 (Clarke); Trial Tr. 

vol. 12, 1775:17-23 (Landuyt); Trial Ex. 962 (Lee Dep.), 325:21-326:5. But Hanson 

Industries maintained its own risk management department and had its own relationships 

with U.S. insurance brokers. Trial Ex. 962 (Lee Dep.), 301:9-302:12. And even in

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Hellings’ role as an advisor, Raos testified that Hellings “was not a decision-maker,” and 

he would have to “convince me, he’d have to convince David Clarke, or he’d have to 

convince Lord White.” Trial Tr. vol. 8, 1234:13-1235:3 (Raos). Hellings played no role in 

acquisitions, including deciding which companies to purchase and at what price. Id.

1122:10-23 (Raos); Trial Tr. vol. 11, 1659:11-13 (Clarke). As will be discussed later, he 

was involved in the SCM takeover, securing some of the financing and helping devise and 

implement the corporate restructuring after the takeover succeeded.

2. Financial Autonomy

99. Hanson Industries and the U.S. subsidiaries were primarily financially autonomous from 

Hanson Trust. Hanson Industries was responsible for and controlled the financial aspects 

of the U.S. companies. Trial Tr. vol. 8, 1135:5-11 (Raos); Trial Ex. 962 (Lee Dep.), 

285:17-286:23, 288:2-20, 293:25-294:3. Raos, Landuyt, and Bob Lee were the ranking 

Hanson Industries financial officers during most of the relevant time period, and they were 

responsible for financing U.S. operations and acquisitions. Trial Tr. vol. 8, 1132:22-

1133:6 (Raos); Trial Tr. vol. 12, 1768:3-16 (Landuyt); Trial Ex. 962 (Lee Dep.), 22:7-15, 

294:5-10.

100. Hanson Trust had no involvement in the treasury function of the U.S. subsidiaries, no 

involvement in the preparation of the U.S. financial accounts, and no involvement in 

payroll. Trial Tr. vol. 12, 1771:23-25, 1772:1-6, 1776:16-23 (Landuyt); Trial Tr. vol. 8, 

1144:24-1145:4 (Raos). Hanson Industries financed the U.S. operations through bank 

loans and cash flows from the U.S. subsidiaries. Trial Ex. 962 (Lee Dep.), 300:4-10. The 

cash flows and earnings generated from the U.S. operations were then used to continue 

growing the U.S. operations. Id. 294:16-295:8. Hanson Industries charged management 

fees to the U.S. subsidiaries to cover its own fees. Id. 300:14-301:8. Hanson Trust never 

guaranteed the loans procured for acquisitions or financing of North American operations 

and never provided collateral for those loans. Trial Tr. vol. 8 1135:5-1136:25 (Raos). 

101. Hanson Industries oversaw the budgeting process of the U.S. companies. Id. 1142:6-8

(Raos). Each of the operating companies had its own officers and directors that 

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participated in developing each company’s budget and capital expenditures. Trial Tr. vol. 

12, 1773:4-23 (Landuyt). Those budgets were reviewed by Hanson Industries’ executives 

as part of creating consolidated budgets for the U.S. operations. Id. 1773:4-1774:21

(Landuyt). The budgets were then submitted up the chain for consolidation, ultimately to 

Hanson Trust. Trial Tr. vol. 8, 1142:9-17 (Raos). Hanson Trust did not directly oversee 

the budgeting in the U.S., did not direct or control the process, and did not dictate changes 

to the U.S. budgets. Id. 1142:9-1143:4 (Raos); Trial Tr. vol. 11, 1678:6-14 (Clarke); Trial 

Ex. 962 (Lee Dep.), 289:12-18. 

102. Hanson Industries also oversaw and approved capital expenditures for the U.S. companies. 

Trial Tr. vol. 8, 1143:10-24 (Raos). Hanson Trust did not make decisions on capital 

expenditures in the U.S. Trial Tr. Id. 1144:7-10 (Raos). And Hanson Industries, not 

Hanson Trust, funded capital expenditures for the U.S. companies. Trial Ex. 962 (Lee 

Dep.), 290:2-291:2. 

103. Hanson Industries managed a sweep account for all U.S. operations. Id. 295:9-24. Each of 

the U.S. companies had an individual account in connection with the sweep account and 

daily records were kept on how much money each company had in their account. Id.

295:9-296:15. Hanson Trust had no role in and no control over the U.S. sweep account. 

Id. 296:16-297:20. Hanson Trust had no control over what funds were deposited in or 

withdrawn from the U.S. sweep account, and Hanson Trust personnel did not have 

authority to withdraw funds from the U.S. sweep account. Id. 296:16-297:20. The 

banking relationships for the U.S. companies were managed by Hanson Industries, not 

Hanson Trust. Trial Tr. vol. 8, 1137:20-1138:4 (Raos); Trial Tr. vol. 12, 1772:25-1773:3, 

1779:17-1780:2 (Landuyt); Trial Ex. 962 (Lee Dep.), 279:3-18, 281:4-24, 285:17-286:23, 

298:7-12. 

104. Kenneth Ludlam served in various financial positions at Hanson Trust and HBML from 

1977 to 2003, including as financial controller, treasurer, and chief accountant. Trial Ex. 

952 (Ludlam Dep.), 26:16-27:16. His responsibilities included financial management of 

the U.K. companies, overseeing day-to-day cash flows in the U.K., interfacing with banks, 

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and budgeting for the U.K. companies. Id. 29:8-22, 32:1-12, 113:10-21. He testified that 

the U.S. companies were “totally controlled” and “totally managed” by the group of 

executives at Hanson Industries in the U.S. Id. 102:11-22. The accounting personnel in 

the U.S. were “totally independent,” and the U.K. accounting personnel played no role in 

developing financial forecasts, budgeting, accounts payable and receivable, or any other 

accounting for the U.S. companies. Id. 115:17-116:13, 119:12-15. The U.K. operated on 

the basis “that the USA was self-sufficient in that it would borrow locally to support its 

operations.” Id. 105:6-12.

105. Ludlam also testified that the cash of the U.K. companies was managed separately from the 

cash of the U.S. companies, and that sales and profits were tracked separately. Id. 101:23-

102:6, 127:21-128:9. He could not recall a time where a U.S. company requested cash 

from the U.K, nor was such evidence presented at trial. Id. 104:14-19. Other than 

coordinating on U.S. GAAP and U.K. GAAP issues for consolidation, Hanson Trust had 

no role in accounting for the U.S. companies. Id. 114:18-22. 

3. Legal Autonomy

106. Hanson Industries and the U.S. companies had separate legal counsel from Hanson Trust.

Hempstead was Hanson Industries’ General Counsel from approximately 1982 to 1996. 

Trial Ex. 960 (Hempstead Dep.), pdf p. 205/331 Trans. p. 206:9-11, pdf p. 206/331 Trans. 

p. 207:8-13. His primary duty was to provide legal advice to the U.S. operations and the 

in-house attorneys at the operating companies. Id. pdf p. 205/331 Trans. p. 206:12-23, pdf 

p. 207-208/331 Trans. p. 208:8-209:3. He testified that, other receiving quarterly updates 

from the U.S., Hanson Trust’s legal personnel “had nothing to do” with directing the legal 

affairs of the U.S. operations. Id. pdf p. 208/331 Trans. p. 209:4-17.

107. Hempstead reported to Clarke. Id. pdf p. 206/331 Trans. p. 207:22-25, pdf p. 208/331 

Trans. p. 209:4-11. With respect to legal issues that arose in the U.S., Hempstead and 

Clarke were the decisionmakers. Trial Ex. 960 (Hempstead Dep.), pdf p. 209/331 Trans. p. 

210:10-14. Alan Hagdrup, Hanson Trust’s chief in-house lawyer, stated that he did not 

direct the legal affairs of the U.S. operations and did not make decisions about litigation 

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matters: Hempstead managed the U.S. legal affairs and “he [Hempstead] would make the 

decisions” on litigation matters. Trial Ex. 958 (Hagdrup Dep.), 27:10-15, 236:7-8, 258:12-

21, 259:2-8. Hagdrup would be “informed and could make suggestions, but [Hagdrup] 

didn’t manage any at all.” Id. 259:14-21. Similarly, Hagdrup was not responsible for 

transactional legal matters in the United States either; Hempstead was in charge. Id. 262:7-

11. 

IV. SCM

108. A central question in establishing HBML’s liability is Hanson Trust’s role in the hostile 

takeover of SCM in 1985 and 1986 and whether Hanson Trust assumed legal responsibility 

for the Marchant environmental liability as a result. As detailed below, Hanson Trust had 

an important supporting role in acquiring SCM: it provided a comfort letter letting the 

investment bank know that it stood behind the deal; it provided some of the funding for the 

acquisition; and, as the parent company, it issued press releases, filed SEC statements, and 

was a named party in litigation. That said, the acquisition was planned, executed, and 

primarily funded by Hanson Industries and its personnel, and the decisions on the structure 

of the acquired companies, assets, and liabilities were made by Hanson Industries. Though 

during the acquisition, the participants often referred to “Hanson” without clarifying the 

corporate entity involved or explaining the purpose of its involvement, it is clear from the 

facts that Hanson Trust did not assume real or implied control of SCM or the Marchant 

environmental liability in the acquisition process. I will discuss the facts and the 

inferences the City attempts to draw from them. 

A. Acquisition Conduct: Hanson Industries Identified SCM as a Target, Directed 

and Managed Strategy for the Takeover and Made All Critical Decisions

1. Decision to Acquire

109. SCM was a large and diversified conglomerate, comprised of twenty-two operating 

companies based in five industries: chemicals, coatings and resins, paper and pulp, foods, 

and typewriters. Trial Ex. 1082; Trial Tr. vol. 5, 712:3-20 (Hill). Sir Gordon viewed it in 

1985 as an attractive target for acquisition for various reasons, including because it was, in 

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his opinion, poorly managed and had a depressed stock price. Id. 712:21-24. SEC filings 

show that Hanson affiliates commenced purchasing shares of SCM on July 12, 1985. Trial 

Ex. 243, HBML 0015571. 

110. Christian Guntner, an Acquisitions Analyst for Hanson Industries from 1982 through 1985, 

brought SCM to Sir Gordon’s attention. Trial Ex. 950 (Guntner Dep.), 32:2-15. Guntner 

prepared multiple reports about SCM, two of which were admitted into evidence. Trial 

Exs 278 and 279. Both were both addressed to “Sir GW.” No one from Hanson Trust was 

copied on either report. 

111. Sir Gordon decided to retain Rothschild as an investment advisor following his review of 

Guntner’s updated report. Trial Ex. 949 (White Dep.), 22:6-27:6. Lord Hanson played no 

role in the decision to select or retain Rothschild as an investment advisor. Trial Ex. 948 

(L. Hanson Dep.), 35:24-37:11. Robert Pirie at Rothschild recommended that Skadden 

Arps, Slate, Meagher & Flom (“Skadden”) be engaged to assist. Trial Tr. vol. 11, 1686: 1-

9 (Clarke).

112. Clarke met with the Skadden law firm at Rothschild’s office on August 6, 1985. Id.

1686:10-15 (Clarke). Because SCM was not looking to be acquired, Clarke and others 

discussed doing a unilateral, hostile takeover, something that neither Hanson Trust nor 

Hanson Industries had done in the United States. Id. 1686:16-25 (Clarke). The agenda for 

a meeting the following week identifies the participants by company affiliation: HM 

Holdings, Rothschild Inc., Skadden. Trial Ex. 305. The office address listed for HM 

Holdings was 100 Wood Avenue South, Iselin, New Jersey, (Trial Ex. 305, 

MCT_00052216), the same office address as Hanson Industries, Trial Tr. 1149:17-1150: 1. 

The Participants’ List identified six Hanson Industries employees, seven individuals 

affiliated with Rothschild, and sixteen individuals affiliated with Skadden. Trial Ex. 305, 

MCT_00052216–19. The meeting concerned a seven-page “Proposed Timetable,” which 

listed “actions to be taken” and the party responsible for taking the actions. Trial Ex. 305, 

MCT_00052222-28. No one from Hanson Trust was involved. 

113. Lord Hanson’s knowledge of and involvement in SCM was limited. Sir Gordon first 

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mentioned the name “SCM” to Lord Hanson sometime during July 1985. Trial Ex. 948 (L. 

Hanson Dep.), HBML 7:6-13. That same month, Lord Hanson became aware of internal 

reports of investments that showed that some purchases of SCM stock had been made.

Trial Ex. 948 (L. Hanson Dep.), 33:9-34:18. But all he learned was that Sir Gordon had 

“authorized the purchase of a relatively few shares of SCM.” Trial Ex. 948 (L. Hanson 

Dep.), 36:5-8. Prior to launching the hostile acquisition, a Hanson Trust subsidiary 

acquired 283,400 shares of SCM, as described by the City’s expert, Professor Steven 

Solomon. Trial Tr. vol. 5, 806:8-11 (Solomon). Lord Hanson was not advised about the 

details of the purchases or ultimate plans. Trial Ex. 948 (L. Hanson Dep.), 34:4-36:8. No 

employee or Board member of Hanson Trust, other than Lord Hanson, was advised of the 

SCM tender offer before it was announced, Trial Ex. 950 (Guntner Dep.), 203:18-205:16, 

except perhaps Hellings. Hellings was not involved in any decision making. Trial Ex. 951 

(E. Hanson Dep.), 214: 5-215:16; Trial Tr. vol. 8, 1146:23-25 (Raos). James “Eric” 

Hanson (no relation to Lord Hanson, Ex. 3, HBML 0007479), who was a key player in 

Hanson Industries’ team pursuing SCM, was not aware of any involvement by Lord 

Hanson in the SCM tender offer before or after the August 21 meeting. Trial Ex. 951 (E.

Hanson Dep.), 214:14-215: 25. 

114. On August 20, 1985, Sir Gordon advised Lord Hanson that he was planning to meet with 

Rothschild the following day (August 21). Trial Ex. 949, Lord Hanson Dep. 32:13-19, 

52:3-24, Oct. 7, 1985. In a 1985 deposition, Sir Gordon said that he had retained 

Rothschild “[b]ecause we had no permanent relationship with a bank in the United States. 

We have a longstanding relationship with Rothschild in London.” Id. 25:22-26:12. Sir 

Gordon did not mention SCM during that conversation, but Lord Hanson surmised that the 

meeting concerned SCM. Trial Ex. 948 (L. Hanson Dep.), 52:3-24; 59:24-63:25; 70:6-

71:7.13 

13 Prior to this, in June of 1985, Hanson Trust raised 500 million pounds for a rights issue through 

the Rothschild Inc. bank in London. Trial Tr. vol. 5, 727:7-728:16 (Hill). At the time, Lord 

Hanson stated that Hanson Trust was going to use that money to make acquisitions in the U.S. and 

not in the U.K. Id.

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115. At the meeting the next day, Lord Hanson characterized his role at the meeting as that of 

an “observer.” Trial Ex. 948 (L. Hanson Dep.), 85:15- 86:9. The other attendees from 

Hanson Industries and its advisors concluded that news of the tender offer had leaked and 

that an announcement of the tender offer had to be made immediately. Trial Tr. vol. 8, 

1152: 20-4 (Raos). Sir Gordon stated his intention to proceed with the tender offer at $60 

per share, and Lord Hanson nodded his agreement. Trial Ex. 948 (L. Hanson Dep.), 84:10-

88:23. When it came to the decision to attempt to acquire SCM at $60 per share, and later 

increase that offer, Lord Hanson supported the decision that was being made by “his highly 

expert group in America, Sir Gordon heading them up,” whose judgment he trusted 

implicitly. Trial Ex. 949, Lord Hanson Dep. 91:12-18, Oct. 7, 1985. Sir Gordon was 

quoted in a 1988 article in Forbes magazine article as saying that “all of the decisions” 

were his, and that he had been “careful not to tell [Lord] James [Hanson” what I was up 

to,” and that Lord Hanson was “not involved” in the SCM tender offer. Trial Ex. 2273, p. 

3. Lord Hanson also testified that Sir Gordon did not have the authority to go forward with 

a tender offer at $60 per share over Lord Hanson’s objection, Sir Gordon did have the 

authority to go forward with Lord Hanson’s concurrence. Id. at 176:14-21 (Lord Hanson).

116. Lord Hanson understood that Sir Gordon was buying shares of SCM. Trial Ex. 949, Lord 

Hanson Dep. 53:14-56:3, Oct. 7, 1985. Sir Gordon also updated Lord Hanson on “certain 

developments . . . from time to time” regarding SCM, but did not, for example, keep Lord 

Hanson abreast of the increased tender offer or negotiations at a higher price. Id. 191:2-

192:10. There is nothing in Lord Hanson’s deposition to indicate that Sir Gordon needed 

or asked for Lord Hanson’s approval in these decisions. Lord Hanson considered Sir 

Gordon to be as a representative of Hanson Trust during the meetings in which the 

decision to announce the tender offer was made; Lord Hanson considered himself a 

director of both Hanson Trust and Hanson Industries during the same period. Id. at 74:8-

25. 

117. A press release issued on August 21 announced, in pertinent part: 

Sir Gordon White, Chairman of Hanson Trust PLC’s North American 

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interests, announced today that Hanson Trust PLC, directly or through one or 

more affi1iates intends to commence a tender offer for any and all 

outstanding shares of common stock of SCM Corporation at $60.00 in cash 

per share net to the seller. The tender offer will be made pursuant to the terms 

and conditions contained in the definitive tender offer documents which will 

be filed with the Securities & Exchange Commission as soon as possible.

Trial Ex. 292. As of that date, Lord Hanson had not discussed the possibility of the SCM 

tender offer with members of Hanson Trust’s board of directors. Trial Ex. 948 (L. Hanson 

Dep.), 81:13-25. The tender offer was announced without consulting the Hanson Trust board 

of directors in advance. Trial Ex. 948 (L. Hanson Dep.), 83:3-11.

118. That same day, Lord Hanson signed a “bear hug” letter to Paul Elicker, the Chairman of 

SCM. Trial Ex. 269. It proposed a meeting between Elicker and Sir Gordon, whom the 

letter referred to as “Chairman of our US interests.” Id. And the next day, Hanson Trust’s 

board of directors met to discuss it, the first time the Board heard of the offer. See Trial 

Ex. 948 (L. Hanson Dep.), 83:3-86:9. The board was advised that the tender offer would 

be made by wholly owned subsidiaries of Hanson Trust. Trial Ex. 249. The board

approved and ratified the announcement and appointed a four-person committee to enable 

and facilitate the tender offer. Id. 

2. Financing

119. Financing for the transaction was initially arranged by Clarke and Raos through Chemical 

Bank. Trial Tr. vol. 8, 1152: 9-19 (Raos). When Chemical Bank had to withdraw because 

of a conflict, Clarke and Raos arranged for CitiBank to step in. Id. 1153:10-1154:12 

(Raos). Raos testified that it would normally have been his responsibility to get the 

financing to purchase SCM’s shares, but after the Chemical Bank loan fell through, 

Hanson Industries needed the money quickly and did not have time to put together a loan 

for purchases on the open market. Id. 171:3-12 (Raos). Raos and his team secured the 

remaining $775 million through his relationship with Citibank. Id. 1153:20-1154:12, 

1155:20-1156:2, 1165:21-1166:6-10 (Raos); Trial Ex. 959 (Hellings Dep.), pdf p. 171-

172/305 Trans. p. 262:13-263:14; Trial Tr. vol. 11, 1688:15-1689:3 (Clarke); Trial Exs. 

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2205, 2206; Trial Ex. 962 (Lee Dep.), 282:4-19, 284:9-11, 334:6-16. Hanson Trust 

personnel played no role in arranging the financing to be borrowed from those banks. 

Trial Tr. vol. 11, 1688: 1-3 (Clarke). 

120. HSCM Industries Inc., HHNBV, and Hanson Trust entered into a “Dealer-Management” 

agreement with Rothschild, Inc. on August 24, 1985. Trial Ex. 376. Rothschild acted as 

the financial advisor to Hanson Trust, HSCM Industries, and HHNBV. Trial Ex. 280, 

HBML 0025201. Raos testified that, as among the three Hanson affiliates, HSCM 

Industries Inc. was the “lead” for the SCM tender offer. Trial Tr. vol. 8, 1160:17-1162:2 

(Raos). HSCM Industries Inc. was managed by the U.S. management team from Hanson 

Industries. Trial Ex. 466; Trial Tr. vol. 8, 1162:3-1163:4 (Raos). According to Raos, the 

reason that Hanson Trust signed the Dealer-Management Agreement was that Hanson 

Industries did not yet have a firm commitment for financing. Trial Tr. vol. 8, 1216:9-

1218:9 (Raos). Hanson Trust never paid anything on Rothschild’s engagement. Trial Tr. 

vol. 11, 1733:11-21 (Clarke). 

121. On September 5, 1985, Raos finalized a term sheet with Citibank for a $721,500,000 loan 

to finance the initial tender offer. Trial Ex. 2206. It reflected that the borrower would be 

HM Anglo-American Ltd., and that the guarantors would be HSCM Investments, HSCM 

Holdings, HSCM Industries and any subsidiaries of HM Anglo-American that acquired 

SCM stock. Id. HM Anglo-American Ltd. was a “dual resident” company of both the 

United States and United Kingdom for the sole purpose of enabling a tax deduction for

interest expense to be taken in both the United States and United Kingdom. Trial Tr. vol. 

8, 1125:16-1127:3 (Raos). Raos negotiated the “major things” in the loan, such as the term 

and the amount, and the rest of his team finalized the negotiations. Id. 1165:1-1166:10

(Raos). Bob Lee testified that Raos and Landuyt negotiated the “macro of the deal,” and 

Lee negotiated the details, such as the loan covenants. Trial Ex. 962 (Lee Dep.), 282:4-14. 

Raos and Lee both testified that no one from Hanson Trust had anything to do with the 

negotiation of the loan terms. Trial Tr. vol. 8, 1166:7-10 (Raos); Trial Ex. 962 (Lee Dep.), 

48:23-49:8; 282:15-19; 284:9-11. Hanson Trust also did not provide any collateral for the 

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financing of the SCM acquisition. Trial Tr. vol. 8, 1136:20-25 (Raos).

122. On September 9, 1985, Citibank issued a commitment letter addressed to Raos at Hanson 

Industries, though the formal loan agreement was not executed until October 30, 1985. 

Trial. Ex. 2207. Alan Hagdrup and Martin Taylor signed on behalf of HM AngloAmerican. Id. Notices to HM Anglo-American were to be given c/o Hanson Trust PLC in 

London with a copy to Hempstead, Hanson Industries’ in-house lawyer. Trial Ex. 40, p. 

352, pdf p. 116/127. 

123. Later, when it became clear that additional financing would be necessary in a hurry as part 

of the “street sweep” after the initial tender offer was terminated, Hanson Trust provided it. 

Trial Ex. 959 (Hellings Dep.), pdf p. 55-56/305 Trans. p. 58:3-59:6; Trial Tr. vol. 8, 

1170:6-21 (Raos). Eric Hanson contacted Hellings, the Finance Director of Hanson Trust,

to obtain $300 million for share purchases. Trial Ex. 951 (E. Hanson Dep.), 80:22-82:17. 

Hellings agreed to provide $180 million, id. 83:1-8, by having Hanson Trust borrow the 

money, and then loan the money to Hanson Holdings Netherlands (“HHNBV”), Trial Ex. 

280, HBML 0025190-91. Hellings testified that he made the decision to allocate most of 

the purchase of shares of SCM—worth $180 million—to HHNBV during Hanson Trust’s 

“open market” purchases in September 1985. Trial Ex. 959, Hellings Dep. 58:3-59:6, Oct. 

1, 1985. The funds for those open market purchases came from three British credit 

facilities, one of which was Lloyd’s International. Hellings Dep. 97:14-18. Hellings 

played no role in making substantive decisions regarding the tender offer, however. Trial 

Tr. vol. 8, 1146:23-25 (Raos). 

124. Hanson Trust also provided backing by way of what Raos described as “comfort letter.” 

Trial Tr. vol. 8, 1155:5-11 (Raos). On August 22, 1985, Derek Bonham, the Finance 

Director of Hanson Trust, wrote a letter to Rothschild, which was expected to act as Dealer 

Manager for the tender offer. Trial Ex. 273. It was written in response to Rothschild’s 

“nervous[ness]” about funding for the tender offer, because “Hanson North America” did 

not have a firm commitment for financing as of that date. Trial Tr. vol. 8, 1156: 14-

1157:12 (Raos). Raos described Hanson Trust’s role as that of a “backstop” in the event 

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that something went wrong with the financing. Id. The letter advised Rothschild that 

Hanson Trust had sufficient cash resources and lines of credit to finance the SCM 

acquisition. Trial Ex. 273 (written on Hanson Trust letterhead and send by Derek Bonham, 

a finance director at Hanson Trust); Trial Ex. 376. Raos testified that he and Hanson 

Industries “could have gotten” the money without Hanson Trust’s backing but could not 

have done so “that fast” and “[t]here wasn’t enough time” for him to do it on his own. 

Trial Tr. vol. 8, 1207:15-1208:2. Besides the money loaned to HHNBV, however, no 

other Hanson Trust resources were used or ultimately needed to complete the hostile 

takeover. 

3. Litigation and Corporate Structuring

125. A flurry of litigation and corporate structuring followed the initial tender offer. Hanson 

Trust filed a lawsuit on August 22, naming SCM and the New York Attorney General as 

defendants. Trial Ex. 213. The complaint alleged that “Hanson” (which the complaint 

defined as “Hanson Trust PLC”) had announced that, either directly or through one or 

more affiliates, it intended to commence a cash tender offer for all outstanding shares of 

common stock of SCM and sought declaratory and injunctive relief against enforcement of 

New York’s state “Takeover Act.” Id. HBML 0007733, ¶ 1.

126. HSCM Industries Inc. was incorporated the following day, August 23, 1985. Trial Ex. 

2054-17. In the “Action by Unanimous Written Consent of the Board of Directors of 

HSCM Industries in Lieu of First Meeting of Board of Directors,” Clarke and 

Hempstead—Hanson Industries’ President and General Counsel—were listed as the 

corporation’s directors. Trial Ex. 466, HBML 0000088. The board of directors appointed 

officers of HSCM Industries Inc., including Clarke as the President; Raos as a Vice 

President and the CFO; Hempstead as a Vice President and the Secretary and Treasurer; 

and Eric Hanson as a Vice President. Id. HBML 0000089. All of these men were Hanson 

Industries’ employees; as stated above, none were officers or directors of Hanson Trust. 

This Action also documented, among other things, that HSCM Industries Inc. was 

authorized to make a tender offer for SCM; commence litigation relating to the tender 

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offer; and execute a Dealer-Manager Agreement with Rothschild, Inc. Trial Ex. 466, 

HBML 000093. 

127. On August 23, 1985, Hanson Trust filed a second lawsuit in connection with the tender 

offer, this time against SCM. Trial Ex. 212. The complaint sought to enjoin SCM from 

allegedly falsely disparaging Hanson Trust with respect to the tender offer, and therefore 

violating federal securities laws. Id. The complaint alleged that on August 21, “Hanson” 

had announced its intention to make a tender offer for the shares of SCM, either directly or 

through one or more affiliates, and the following day SCM commenced making false and 

misleading statements about the tender offer. Id. HBML 0007754, ¶ 6. That case was 

apparently resolved quickly—according to the formal tender offer made on August 26, 

SCM agreed on August 23 to a temporary restraining order and to not make further 

statements until after making the required, regulatory filings. Trial Ex. 3, HBML 0007475.

128. The City makes much of the fact that Hanson Trust, not HSCM Industries Inc. or HHNBV, 

was the plaintiff in these first two lawsuits, and it argues that Hanson Trust’s role as the 

plaintiff in those actions demonstrates that Hanson Trust dominated, controlled and, 

ultimately, “made” the tender offer for SCM. It is correct that Hanson Industries was not 

included or mentioned in either complaint, and neither was HSCM Industries Inc. or 

HHNBV, which were the nominal purchasers in the offer. Trial Tr. vol. 5, 803:22-804:2 

(Solomon); Trial Tr. vol. 11, 1692:15-20 (Clarke). 

129. But the City misunderstands the import of those facts. For example, HSCM Industries Inc. 

had not been created as of the date of the first complaint and was created the same day as 

the second complaint. See Trial Ex. 212. And the City’s portrayal of Hanson Trust as the 

sole litigant is inconsistent with the published federal court decisions regarding the tender 

offer litigation, which make clear that the “Purchasers,” HSCM Industries Inc. and 

HHNBV, were either co-plaintiffs or co-defendants in the litigation. See Hanson Trust 

PLC v. SCM Corp., 774 F.2d 47, 54 (2d Cir. 1985); Hanson Trust PLC v. ML SCM 

Acquisition, Inc., 781 F.2d 264 (2d Cir. 1986). 

130. And, the evidence shows that Hanson Trust did not initiate, manage or control the 

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litigation with SCM. Hempstead, Hanson Industries’ General Counsel, appeared as 

counsel for Hanson Trust during the depositions that took place during the 1985 takeover 

litigation. Trial Ex. 959, Hellings Dep. 10:24-11:2, Oct. 1, 1985. In that capacity, he also 

assisted Lord Hanson in preparing him for his deposition. Trial Ex. 960, Hempstead Dep. 

43:17-44:9, Aug. 30, 2018. Clarke testified that he, Sir Gordon, and Hempstead managed 

the litigation with SCM, and that no one from Hanson Trust was involved. Trial Tr. vol. 

11, 1692:9-20 (Clarke). Skadden represented the Hanson entities in both lawsuits. Trial 

Exs. 212; 213. 

131. Hempstead also selected and managed outside counsel who worked on the tender offer and 

litigation, and Hanson Industries paid the bills. Trial Ex. 960 (Hempstead Dep.), pdf p. 

212-213/331 Trans. p. 213:11-214:7. Skadden was the law firm that, at least initially, 

worked on the tender offer. Trial Tr. vol. 8, 1219:6-8. It is significant that Clarke hired 

Skadden and was the primary client contact. It is less telling that an August 26, 1985,

letter sent on Skadden letterhead identified the firm’s client as “Hanson Trust PLC,” Trial 

Ex. 625, and that the “deal book” for the SCM acquisition stated that Skadden represented 

“Hanson Trust,” and the book has “Hanson Trust PLC” on its cover, Trial Ex. 304, 

MCT_00034583, MCT_00034594; see also Trial Exs. 47; 48 (two volume “deal book” for 

the SCM restructuring with “Hanson Trust PLC” on its cover). No evidence was presented 

explaining why Skadden referred to its client as Hanson Trust PLC instead of the 

Purchasers. 

132. Hempstead handled the incorporation of HSCM Industries Inc., HSCM Holdings, Inc., and 

HSCM Investments Limited under Delaware law. Dkt. No. 266, Undisp. Fact 22. HSCM 

Industries Inc. was wholly owned by HSCM Holdings, Inc., which in turn was wholly 

owned by HSCM Investments Limited. Id. HSCM Investments Limited was wholly 

owned by HM Anglo-American Ltd., which was a Delaware corporation wholly owned by 

HBML. Id. HSCM Industries Inc. was formed for the sole purpose of purchasing SCM 

shares, and it had no assets other than the stock of SCM. Trial Exs. 41, HBML25530-

25531; 959, Hellings Dep. 332:19-333:11, Sept. 27, 2019; 960, Hempstead Dep. 65:4-7, 

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14-17, Aug. 30, 2018; 339, HBML61451. Raos testified that “HSCM Industries was the 

alter ego of Hanson Industries.” Trial Tr. vol. 8, 1217:9-10. And, as relevant for the 

tender offer, Hanson Trust had previously set up HHNBV, a subsidiary company that 

served as a vehicle to be used to position (or re-position) Hanson Trust’s cash during crossborder transactions. Id.; see also Trial Tr. vol. 5, 797:19-24 (Solomon). 

133. The formal tender offer says that Sir Gordon, “Chairman of Hanson Trust PLC’s North 

American interests,” announced that Hanson Trust intended to commence the offer. Trial 

Ex. 3 at 21. In pertinent part, the tender offer identified HSCM Industries Inc. and 

HHNBV as the “Purchasers.” Id. at 18. It described them as “indirect wholly owned 

subsidiaries of Hanson Trust.” Trial Ex. 3, HBML 0007450. The tender offer further 

provided:

• “As soon as practicable, Hanson Trust intends to seek to influence the management 

of the Company [SCM] . . . to seek to effect a business combination between the 

Company and Hanson Trust or an affiliate of Hanson Trust.” Id.

• The business combination could take the form of a merger of SCM with Hanson 

Trust or a direct or indirect subsidiary of Hanson Trust, “which could be either of 

the Purchasers or one or more subsidiaries or affiliates of either of the Purchasers.” 

Id.

• An indirect, wholly owned subsidiary of Hanson Trust had purchased 2.9% of 

SCM’s shares in open market transactions between July 12, 1985 and August 19, 

1985. Id. HBML 0007467.

• “Hanson Trust and the Purchasers” intended to borrow all funds necessary to 

purchase SCM’s shares, but Hanson Trust and its subsidiaries had sufficient, 

available cash to contribute or loan funds to HSCM Industries Inc. or HHNBV to 

the extent necessary, if other financing could not be arranged. Id. HBML 0007467-

68.

• “Hanson Trust” had reviewed publicly available information regarding SCM. 

Based on that review, “Hanson Trust” had “considered on a preliminary basis,” the 

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possible disposition of SCM’s typewriter operations, which had not been profitable. 

“Hanson Trust” planned to conduct a further review of SCM if it acquired control.

Id. HBML 0007470.

134. Hellings, in his capacity as financial director of Hanson Trust (a position equivalent to a 

CFO in a U.S. corporation), testified that he made the decision regarding which entities 

would be the tender offerors and that Hanson Industries “really had no role” in the SCM 

tender offer. Trial Ex. 959, Hellings Dep. 69:23-70:14, Oct. 1, 1985; Trial Ex. 960, 

Hempstead Dep. 27:1-15, Dec. 8, 2020. Correspondence to the SEC states that Hanson 

Trust “controls” both purchasers. Trial Ex. 379. Hempstead executed an affidavit with the 

SEC stating Hanson Trust’s intention to acquire SCM. Trial Ex. 1008. 

135. SCM attempted to block the tender offer by employing what was referred to as a “crown 

jewels” defense, which involved transferring two of SCM’s best businesses, the pigments 

and Durkee’s Famous Food businesses, to a Merrill Lynch affiliate at a favorable price to

effectively “kill” the tender offer. Trial Tr. vol. 8, 1167:12-1168:10 (Raos). As a result, 

and after discussions with Robert Pirie at Rothschild, Sir Gordon decided to terminate the 

tender offer. Id. 1167:16-1170:2 (Raos); Trial Ex. 280, HBML 0025193; Trial Ex. 243, 

HBML 0015576. But on the same day, Sir Gordon decided to purchase shares of SCM 

through privately negotiated transactions. Trial Ex. 243, HBML 0015576; Trial Ex. 280, 

HBML 0025193. No one from Hanson Trust was consulted about either the termination of 

the tender offer or the decision to purchase shares on the open market following 

termination of the tender offer. Trial Tr. vol. 8, 1169:24-1170:5 (Raos). Those market 

purchases of shares were referred to by Hanson Industries personnel as the “Street Sweep.” 

Trial Tr. vol. 8, 1170:6-16 (Raos).1169:10-1170:5. Raos testified that the Street Sweep 

required him to procure approximately $200 million within three to five days to pay for the 

shares, which is why the additional money from Hanson Trust was needed. Id. 1170:6-16 

(Raos). 

136. A SEC Form 13D prepared as of September 11, 1985 stated that HSCM Industries Inc. had 

acquired approximately 6.9% of SCM’s shares, Trial Ex. 280, HBML 0025197; HHNBV

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had acquired approximately 24.4% of SCM’s shares, Trial Ex. 280, HBML 0025198; and 

HMAC had acquired 2.8% of SCM’s shares, Trial Ex. 280, HBML 0025198. The first 

page identified Hempstead of Hanson Industries as the person authorized to receive 

notifications. Trial Ex. 280, HBML 0025520. Hempstead was also a vice president and 

officer of HSCM Industries, Inc. Ex. 466, HBML 0000089. 

137. Hanson Trust was identified in the Form 13D as a beneficial owner of 34.1% of SCM’s 

shares. Trial Ex. 280, HBML 0025179. Its beneficial ownership consisted of the total 

shares owned by HSCM Industries Inc., HHNBV, and HMAC. The Schedule 13D states 

that Hanson Trust obtained the loans to fund the transaction, that those funds were 

provided to HHNBV to make subsequent share purchases, and that the loans came from 

Lloyds of London (Hanson Trust’s banker). Id.; Trial Tr. vol. 5, 808:1-18 (Solomon). It 

also states that Hanson Trust reported sole voting and dispositive power of approximately 

3.416 million SCM shares that were purchased on September 11, 1985. Trial Ex. 41 at 2.14

138. The Street Sweep led to a third and fourth lawsuit, in which HSCM Industries and 

HHNBV were co-litigants, in contrast to the first two cases where they were not parties. 

The third was between SCM, HSCM Industries Inc., HHNBV, and Hanson Trust PLC. 

See Hanson Trust PLC v. SCM Corp., 774 F.2d 47 (2d Cir. 1985). The U.S. District Court 

for the Southern District of New York entered a preliminary injunction barring Hanson 

Trust PLC, HSCM Industries Inc., and HHNBV from acquiring additional shares or voting 

of the shares that had been acquired. See id. at 54; see also Trial Ex. 243, HBML 

0015576-77; Trial Ex. 280, HBML 0025193-94. Shortly thereafter, Hanson Trust, HSCM 

Industries Inc. HHNBV and HMAC filed yet another complaint against SCM, its directors 

and certain officers challenging the “Crown Jewels” defense. Trial Ex. 2026. After that, 

the shareholders of Hanson Trust met in London and adopted a resolution approving the 

acquisition by Hanson Trust’s affiliates on such terms as the directors of Hanson Trust 

deemed appropriate. Trial Ex. 243, HBML 0015580.

14 Outside of the Schedule 13D (Trial Ex. 41), there was no other documentation of HBML’s loan 

to HHNBV. Trial Tr. vol. 5, 810:1-12 (Solomon). 

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139. On September 30, 1985, the Second Circuit Court of Appeals reversed the preliminary 

injunction. See Hanson Trust PLC, 774 F.2d 47. The reversal permitted a new tender 

offer at a higher price. Trial Ex. 243, HBML 0015580.

140. On October 8, 1985, Hanson Trust announced a second tender offer at $75 per share for all 

the remaining shares of SCM. Trial Ex. 244. That tender offer, dated October 11, 1985, 

stated that Hanson Trust or its affiliates intended to seek to influence the management of 

SCM, a majority representation on SCM’s board of directors, and to effectuate a business 

combination. Trial Ex. 243 at 25; Trial Tr. vol. 5, 814:12-21 (Solomon). The offer went 

on to say that Hanson Trust would consider the possible disposition of SCM’s typewriter 

operations. Trial Ex. 243.

141. On December 5, 1985, Clarke and Raos attended a meeting of Hanson Trust’s Board of 

Directors, the first time either individual attended one of the Board’s meetings. Trial Ex. 

303; Trial Tr. vol. 8, 1174:11-16 (Raos). Raos recalled that, at that meeting, Clarke 

reported on North American operations and the SCM tender offer. Trial Tr. vol. 8, 

1173:24-1175:9 (Raos). The Board did not tell Clarke or Raos what to do or give any 

directions regarding the SCM tender offer. Id. The Board ratified the tender offer. Id. 

The minutes also include a board resolution ratifying the execution of the Citibank loan by 

HM Anglo American Ltd., to be secured by guarantees and pledges of the stock of various 

of HM Anglo American Ltd.’s subsidiaries. Trial Ex. 303, HELLINGS_0026102.

142. On January 6, 1986, the Second Circuit Court of Appeals issued its decision in Hanson 

Trust PLC v. ML SCM Acquisition, Inc., 781 F.2d 264 (2d Cir. 1986), which was the action 

filed by Hanson Trust, HSCM Industries Inc., HHNBV, and HMAC Investments Inc.,

seeking to enjoin SCM and Merrill Lynch from consummating the “crown jewels” defense. 

The Second Circuit reversed the district court’s denial of a preliminary injunction. Id. at 

272. That decision effectively decided the tender offer battle in favor of the Hanson 

entities.

143. The next day, Hanson Trust used its letterhead to issue a press release announcing that 

“Hanson had . . . accepted for payment approximately four million shares of SCM.” Trial 

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Ex. 455 (noting that “Hanson had again demonstrated that it was one of the few U.K. 

companies that was able successfully to compete in the world’s most sophisticated 

market”). Sir Gordon commented “that this was a great victory . . . and completely 

vindicated Hanson’s strategy over the past months.” Id. 

144. HSCM Industries Inc. and HHNBV entered into a “Transaction Agreement.” Trial Ex.

2054-22. It recited that those two parties had jointly commenced a tender offer for SCM’s 

shares, the various amendments to the tender offer, and the desire to form a corporation to 

be called “HSCM Merger Co. Inc.” to merge with and into SCM. Trial Ex. 2054-22, 

HBML 0000113-14. HSCM Merger Co. Inc. was incorporated on January 8, 1986. Trial 

Ex. 2054-28. Of HSCM Merger Co.’s 1,000 outstanding shares, HSCM Industries Inc. 

owned 804 shares and HHNBV owned 196 shares, which corresponded to their 

proportionate ownership of SCM shares. Trial Ex. 13, HBML 0000128. 

145. Also on January 8, 1986, SCM, HSCM Industries Inc., HHNBV, and Hanson Trust 

executed an agreement resolving the litigation and the tender offer. Trial Exs. 11, 211. It 

was executed by Sir Gordon on behalf of HSCM Industries, and by George Hempstead on 

behalf of both HHNBV and Hanson Trust.15 Id.

146. The first paragraph of the January 8 agreement defined all three Hanson entities 

collectively as “Hanson.” “Hanson” agreed to promptly effect a merger with SCM. Trial 

Exs. 11, 211. HSCM Industries Inc. and HHNBV had already agreed to incorporate a 

company called HSCM Merger Co. Inc. for the purpose of merging with SCM, and that 

company was, in fact, incorporated on January 8, 1986. Trial Exs. 2054-22, 2054-28. The 

agreement also provided for mutual dismissals of pending litigation concerning the tender 

offer. Trial Exs. 11; 211 at HBML 0024754. The parties understood at the time that they 

executed this agreement that the merger discussed in the letter would be a merger between 

an indirect wholly owned subsidiary of Hanson Trust and SCM, and that the result of the 

15 Hanson Trust had given Hempstead its Power of Attorney to execute documents in connection 

with the SCM tender offer in Trial Exhibit 340. There is a dispute whether it granted authority to 

him to sign this agreement. Trial Tr. vol. 5, 818:11-14 (Solomon).

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merger would be that SCM would become an indirect wholly owned subsidiary of Hanson 

Trust. Trial Ex. 345, MCT 00008527 (Shareholder Circular sent to SCM shareholders 

explaining that, “The Settlement Agreement provided for the Merger on the terms 

described” in the circular); Trial Ex. 345, MCT 00008518 (“As a result of the Merger, 

SCM will become an indirect wholly owned subsidiary of Hanson Trust”). That is what 

happened. The January 8, 1986, agreement recited that SCM had elected Sir Gordon, 

Clarke, Raos, Hempstead and Eric Hanson to the Board of Directors of SCM. Trial Exs. 

11, 211. No one from Hanson Trust was added to SCM’s board.

147. Hanson Industries was not a party to the settlement agreement. Nor was it a party to the 

tender offer or the related litigation. See id. Clarke pointed out, however, that HSCM 

Industries Inc. was a party, and he and other Hanson Industries personnel were the 

directors and officers of HSCM Industries Inc. Trial Tr. vol. 11, 1745:4-1746:16 (Clarke). 

148. In a January 15, 1986 letter to HBML shareholders, Lord Hanson stated that “Hanson 

Trust, through Hanson Industries, won control of SCM Corporation in the United States.” 

Ex. 271, HBML 0015539. The letter goes on to say that “[t]he benefits of the acquisition 

will flow to Hanson Trust shareholders . . . .” Id. 

149. On February 21, 1986, HSCM Merger Co. Inc. and SCM executed a “Plan and Agreement 

of Merger.” Trial Ex. 13. Clarke executed it in his capacity as President of HSCM Merger 

Co. Inc., with Hempstead attesting Clarke’s signature. Trial Ex. 13, HBML 000031. The 

agreement recited that Hanson Trust indirectly owned all of the outstanding capital stock 

of HSCM Merger Co. Inc. and, through two indirect wholly owned subsidiaries, 

beneficially owned approximately 11 million out of approximately 12 million issued and 

outstanding shares of SCM stock (i.e., 91.6%). Id. at HBML 000028, recitals and Section 

1.01(c); Trial Ex. 345 (Circular sent by SCM to its shareholders), MCT 00008533. 

150. The Shareholder Circular sent to SCM shareholders explained that, “As a result of the 

Merger, the separate corporate existence of Sub [HSCM Merger Co. Inc.] will cease and 

SCM will continue its business as an indirect wholly owned subsidiary of Hanson Trust.” 

Trial Ex. 345, MCT 00008522. The shares of owners who had not tendered their shares to 

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one of the Purchasers were converted into a right to receive $75 per share, id. at HBML 

000029, Section 2.06, which resulted in the buyout of the SCM shareholders who had not 

tendered their shares, Trial Ex. 345, MCT 00008522. 

151. The merger of HSCM Merger Co. Inc. and SCM was effected on March 31, 1986. Trial 

Ex. 2054-32. SCM was the surviving corporation in the merger, and the company 

continued to be named “SCM Corporation. Id. at HBML 0000146. A Certificate of 

Merger was filed indicating that SCM was the surviving company in the merger. At this 

point, the acquisition of SCM was complete and Marchant’s liabilities remained with the 

merged company, SCM. Dkt. No. 266, Undisp. Fact 26. Since SCM was the surviving 

company, as opposed to Newco, and Hanson Trust is the only other entity referenced in the 

February Plan and Agreement of Merger, the assumption of SCM’s liabilities was 

necessarily by a Hanson entity other than Newco. See Trial Ex. 13.

152. At Hanson Trust’s February 26th board meeting (held nearly a month before the 

shareholder vote called for in the Plan and Agreement of Merger), SCM was listed as a 

“divisional report” to Hanson Trust. Trial Ex. 306. Remnants of SCM continued to be 

listed as “divisional reports” in Hanson Trust board minutes as late as mid-1989. See, e.g., 

Trial Ex. 383. 

153. In connection with the merger, SCM sent a March 4, 1986, notice of a special meeting of 

shareholders to vote on the merger of SCM into the newly created Newco. Trial Ex. 14 at 

2. Pursuant to SEC requirements, SCM disclosed in the notice that Hanson Trust had 

“commenced a review of its business operations with a view toward the possible sale of 

certain operations of SCM . . . .” Trial Ex. 14 at 8. This document made no reference to 

Hanson Industries, though it refers to the “Hanson Affiliates,” and states that Hanson Trust 

is reviewing SCM and “may sell certain operations.” Id. Raos was unsure why the 

document says Hanson Trust instead of Hanson Industries. Trial Tr. vol. 8, 1213:20-

1214:16 (Raos).

154. An SEC Form 20-F filed by Hanson Trust on July 23, 1986, describes Hanson Trust’s role 

in financing the SCM acquisition. Trial Ex. 40. An exhibit to it is the October 30, 1985,

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loan agreement among HM Anglo-American Ltd. and several banks. Trial Ex. 40 at 2. 

Raos testified that Hanson Trust’s board of directors ratified the loan agreement. Trial Tr. 

vol. 8, 1175:7-9 (Raos). The agreement stated that any notices of defaults or other issues 

with financing should go directly to Hanson Trust, with a copy also going to Hempstead of 

Hanson Industries. Trial Exs. 40; 701 at 7-8. 

4. Other Acquisition Conduct

a. Regulatory Filings Concerning the Tender Offer 

155. Hanson Trust’s name appeared on Hart-Scott-Rodino Act pre-clearance notification to the 

Federal Trade Commission. Trial Ex. 2015, MCT_00004850. As Clarke explained, 

Hanson Trust had to make the Hart-Scott-Rodino Act pre-merger notification because it 

was the ultimate parent of the acquirors. Id.; Trial Tr. vol. 11, 1735:16-1737:14 (Clarke). 

Clarke’s testimony is consistent with Section 803.2 of the premerger notification 

regulations (16 C.F.R. § 803.2) promulgated under the Hart-Scott-Rodino Antitrust 

Improvements Act of 1976 (15 U.S.C. section 18a) requires that the “ultimate parent” 

entity file the pre-merger notification.

156. Hanson Trust’s name appeared on SEC filings made in connection with the tender offer. 

Those included Forms 13D (Trial Ex. 41) and 14D (Trial Ex. 3). In connection with the 

SCM tender offer, Hanson Trust, HHNBV, HSCM Industries Inc., and HMAC 

Investments Inc. jointly filed a Schedule 13D with the Securities Exchange Commission 

(“SEC”) on or about September 23, 1985. Trial Ex. 41. Only HSCM Industries Inc. and 

HHNBV were referred to as the “Purchasers” of SCM’s stock in the Schedule 13D. Id.

HBML 0025527. Hempstead, of Hanson Industries and HSCM Industries Inc., was 

identified as the person authorized to receive notices and communications regarding the 

Schedule 13D. Id. HBML 0025520. Hanson Trust was identified as the “beneficial 

owner” of 34.1% of SCM’s outstanding shares at the time of the Schedule 13D filing. T Id.

HBML 0025521; Trial Tr. vol. 5, 847:17-24 (Solomon). As Professor Solomon 

acknowledged, Hanson Trust was required to file the Schedule 13D with the SEC because 

it was the “beneficial owner” of more than 5% of SCM’s stock. Id. 846:11-21, 847:13-24

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(Solomon). 

157. SEC rules also required the filing of a Schedule 14D-1 in connection with the SCM tender 

offer. Id. 879:21-25 (Solomon). On or about January 13, 1986, HSCM Industries Inc., 

HHNBV, and Hanson Trust jointly filed a Schedule 14D-1. Trial Ex. 2048, 

MCT_00036234, MCT_00036240. The “Bidders” and “Purchasers” of SCM’s stock were 

identified as HSCM Industries Inc. and HHNBV. Trial Ex. 2048, MCT_00036234, 

MCT_00036238. Hempstead, of Hanson Industries and HSCM Industries Inc., was 

identified as the person authorized to receive notices and communications on behalf of the 

Bidders. Trial Ex. 2048, MCT_00036234. Hanson Trust’s name appeared in the Schedule 

14D-1 as a “beneficial owner” of 80.7% of SCM’s shares at the time the Schedule 14D-1 

was filed. Trial Ex. 2048, MCT_00036235. As discussed in the conclusions of law, the 

“bidders” (HSCM Industries Inc. and HHNBV) and “beneficial owner” of more than 5% 

of SCM’s stock (Hanson Trust) were required by law to file the Schedule 14D-1 with the 

SEC in connection with the SCM tender offer.

158. Hempstead testified that Hanson Trust was identified because “SEC rules required the 

ultimate parent entity to be disclosed” together with the ultimate parent’s financial 

statements. Trial Ex. 960 (Hempstead Dep.), pdf p. 213/331 Trans. p. 214:16-20. As 

discussed in the conclusions of law, the Williams Act amended the Securities and 

Exchange Act of 1934 (15 U.S.C. § 78a et seq.) to require mandatory disclosure of 

information regarding cash tender offers. Those disclosures are required to be made by 

any person who would “directly or indirectly” become the “beneficial owner” of more than 

five percent of the required that Hanson Trust be disclosed in the tender offer documents.

15 U.S.C. § 78m(d)(1); 15 U.S.C. § 78n(d)(1). The Form 14D and Form 13D both make 

clear that Hanson Trust indirectly owns the purchasers of SCM’s shares, and is, therefore, 

the beneficial owner of the shares owned by its subsidiaries. Trial Ex. 3, HBML 0007450, 

HBML 0007467; Trial Ex. 41, HBML 0025539-40, HBML 0025577. 

b. Press Releases Concerning the Tender Offer 

159. Hanson Trust issued numerous press releases regarding the SCM tender offer. Some of the 

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press releases were issued in the name of Hanson Trust. See, e.g., Trial Exs. 298, 2339. 

Sometimes, press releases discussing the SCM tender offer commenced by stating, “Sir 

Gordon White, Chairman of the North American interests of Hanson Trust PLC, 

announced today . . . ,” see, e.g., Trial Exs. 269, 445, 1094, or “Sir Gordon White, 

Chairman of Hanson Trust PLC’s North American interests, announced today . . . ,” see 

Trial Ex. 292. Press releases from November 8, 1985 and November 15, 1985 both stated 

that Sir Gordon, “Chairman of the North American interests of Hanson Trust PLC, 

announced today that Hanson Trust (through two of its affiliates)” extended the expiration 

date for its tender offer. Trial Exs. 1094; 1111. Further, a November 4, 1985 letter from 

Hempstead to the SEC stated that Hanson Trust controlled the two purchasers of SCM. 

Trial Ex. 379. And on March 31, 1986, SCM issued a press release regarding the merger. 

Trial Ex. 307. It stated that Hanson Trust “completes merger of SCM Corporation” in 

which “SCM Corporation has become an indirect wholly owned subsidiary of” Hanson 

Trust. Id. at 1. The press release made no mention of Hanson Industries, SCM’s nominal 

purchasers, or any other entity affiliated with Hanson Trust. Trial Ex. 307. 

160. The press releases are not entitled to the weight the City gives them. Edward Bridges, an 

expert in corporate communications for companies listed on the London Stock Exchange,

testified that a listed company was obligated by London Stock Exchange rules (referred to 

as “listing rules”) to make announcements disclosing “market-sensitive information,” and 

that the press releases that he reviewed were consistent with the stock exchange’s listing 

rules. Trial Tr. vol. 13, 2015:8-2019:9 (Bridges). He further opined that press releases 

about prospective acquisitions by a listed company’s subsidiaries often fail to mention the 

particular subsidiaries involved in the acquisition since the obligation under the listing 

rules lies with the listed company, not the subsidiaries. See id. 2011:5-16, 2018:25-2019:5, 

2020:15-2021:6 (Bridges). That is especially the case where an announcement is made 

because of a premature leak of the information, and the acquiring subsidiary has not even 

been formed as of the date of the announcement. Id. 2019:16-2021:6 (Bridges). 

161. The tender offer stated that “Hanson Trust” had done, and would do, various things in 

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connection with SCM, such as “Hanson Trust has reviewed publicly available 

information” about SCM. Trial Ex. 3, HBML 0007470. Evidence from depositions taken 

in 1985, as well as this litigation, demonstrate that the review of publicly available 

information was performed by Hanson Industries personnel in the U.S. Trial Tr. vol. 8, 

1116:12-1117:1 (Raos); Trial Tr. vol. 12, 1781:3-1784:8 (Landuyt). 

162. That usage of Hanson Trust is consistent with how the term “Hanson Trust” was used in 

other SEC filings. Alan Hagdrup, the head lawyer for Hanson Trust during the period 

1985 to 1992, testified that the term “Hanson Trust” in SEC filings describing the tender 

offer was used to refer “collectively for all the companies in the group.” Trial Ex. 958 

(Hagdrup Dep.), 280:2-8. He said that “Hanson Trust is used both for the company and for 

the group as a whole, of which Hanson Trust was the parent company”; and that “Hanson 

Trust” or “Hanson PLC” referred to the company “globally rather than just as an individual 

company.” Id. 278:1-285:17 (referring to discussion of the tender offer and various 

business activities in 1986 Form 20-F).

163. It was clear to SCM from the litigation and the documents who the purchasers were. SCM 

identified HSCM Industries and HHNBV as the parties making the tender offer. Trial Ex. 

345 (Circular sent by SCM to its shareholders), MCT 00008525 (“On August 26, 1985, 

HH [HHNBV] and HSCM [Industries] commenced a tender offer”); (“On September 5, 

1985, HH and HSCM amended their tender offer”); (“On September 11, 1985, HH and 

HSCM terminated their amended tender offer”); (“HH and HSCM purchased 3,133,200 

shares of Common Stock in six separate transactions.”); p. MCT 00008526 (“On October 

8, 1985, Hanson Trust announced that HH and HSCM would make a tender offer”).

164. Despite the language in the tender offer documents indicating that “Hanson Trust” would 

be doing certain things, witness testimony demonstrated that Hanson Industries personnel, 

through their roles as the directors and officers of HSCM Industries Inc., would make and 

control decisions regarding SCM if the tender offer was successful, and that Hanson Trust 

played no role in making or controlling decisions regarding SCM other than approving or 

ratifying decisions already made by Hanson Industries’ personnel. In short, while Hanson 

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Trust supported and partially financed the tender offer, the hostile takeover had been 

conceived of, planned, decided on, and announced by Hanson Industries personnel who 

managed and controlled acquisitions in the United States.

B. Post Acquisition Financial Investigations

165. One issue in this case was whether Hanson Trust should have learned about the Marchant 

environmental liability from due diligence investigations. Hanson Trust’s investigations 

were reasonably thorough and did not disclose the problems at the FMW Site.

166. With the takeover battle won, Hellings, Raos, Landuyt, and Don Schowenwolf, head of 

Hanson Industries’ insurance department, began evaluating SCM’s liability insurance 

coverage. Trial Ex. 327; Trial Tr. vol. 8, 1279:11-1280:23 (Raos). The team concluded 

that SCM lacked adequate liability insurance in 1986, and that “Hanson will have to selfassume all risk of loss from pollution arising out of exposure in 1986.” Trial Ex. 460. 

Seven years later, Hellings circulated a memorandum regarding his concerns about the 

insurance market, stating that Hanson Trust “took over substantial liabilities to clean up 

toxic sites due to contamination of ground at chemical sites.” Trial Ex. 450. 

167. Under Generally Accepted Accounting Principles (“GAAP”), liabilities could be added to 

the acquired company’s balance sheet during the first year following the acquisition. Trial 

Tr. vol. 8, 1183:20-1184:8; 1185:14-21 (Raos). That way, later-discovered liabilities 

would not adversely impact earnings per share. Trial Tr. vol. 12, 1781:24-1782:11 

(Landuyt). Raos testified that “it behooved us to find and accrue as many of the liabilities 

as we could” after the acquisition of SCM. Trial Tr. vol. 8, 1183:20-1184:8 (Raos). He

did “everything I could to basically find as much about the company as I possibly could.” 

Id. 1178:14-1179:1 (Raos). Several witnesses testified that it was “very important” to 

investigate SCM following the acquisition in order to discover liabilities that were not 

already accounted for in its financial statements. Based on his experience with other major 

acquisitions, Raos went into the SCM acquisition expecting to find unreported liabilities 

approximating 10 to 15% of the purchase price. Id. 1179:2-1180:5 (Raos). 

168. The post-acquisition investigation was performed by a group of professionals within 

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Hanson Industries that referred to themselves as the “ferrets.”16 Trial Tr. vol. 8, 1180:6-20

(Raos). The “ferrets” included the acquisition team, accounting team, human resources 

team, and treasury team, including Raos, Guntner, Eric Hanson, Bill Landuyt and Mark 

Alexander. Id. 1116:12-1117:1 (Raos); Trial Tr. vol. 12, 1781:3-23 (Landuyt). All of the 

“ferrets” were certified public accountants whose jobs were to look for unrecorded 

liabilities and assets that were overstated so that the financial statements of an acquired 

company could be corrected, under GAAP, within the one year following the acquisition. 

Trial Tr. vol. 8, 1180:6-1181:8 (Raos). In addition to the internal team from Hanson 

Industries, the post-acquisition investigation of SCM utilized lawyers from Skadden and

Weil Gotshal, Hanson Industries’ outside accounting firm, Ernst & Whinney, and SCM’s 

outside auditors, Deloitte, Haskins + Sells (“Deloitte”). Id. 1178:14-22 (Raos); Trial Tr. 

vol. 12, 1782:24-1783:23 (Landuyt). No one from Hanson Trust participated in the postacquisition investigation. Trial Tr. vol. 8, 1180:21-23 (Raos).

169. The post-acquisition investigation process included interviewing SCM management from

all the operations to “get the best information [they] possibly could,” including from 

SCM’s divisional controllers. Id. 1181:10-14, 1187:18-1188:6 (Raos); Trial Ex. 336, 

MCT_00052077. Raos testified that he involved SCM’s outside auditors “[b]ecause they 

know where all the bodies are hidden,” including the things that the auditors had argued 

with SCM about. Trial Tr. vol. 8, 1181:10-1182:2-6 (Raos). Deloitte also prepared at least 

two memoranda for Hanson Industries. One was a February 1985 memorandum regarding 

tax considerations relating to the acquisition, including the use of “fan companies.” The 

other was a March 31, 1985 letter addressed to Raos at Hanson Industries. The 

accompanying, 26-page memorandum prepared by Deloitte concerned due diligence and 

purchase accounting issues, as well as a detailed discussion of potential adjustments to 

SCM’s balance sheet that Deloitte considered. Exh. 336. 

16 Sir Gordon referred to the group as his “ferrets” in a news article, and the term was adopted as 

the name Hanson Industries’ softball team—the “Ferrets.” Trial Tr. vol. 8, 1118:1-2-1119:9

(Raos); Trial Tr. vol. 12, 1781:3-13 (Landuyt). 

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170. As a result of the fast-moving and adversarial nature of the SCM acquisition, Hanson Trust

and Hanson Industries were unable to perform the same due diligence before closing that 

they would have in a friendly acquisition. Trial Tr. vol. 5, 762:1-25 (Hill); see also Trial 

Tr. vol. 12, 1871:21-25 (Landuyt) (acknowledging that receiving legacy environmental 

obligations is a risk of doing a hostile tender offer). Nonetheless, prior to the launch, the 

acquisition team at Hanson Industries had identified that it should investigate SCM’s 

environmental liabilities as part of its due diligence. Trial Ex. 305 at 5. Agenda item 12 in 

its to-do list identifies “Environmental investigation – superfund claims and pending 

lawsuits.” Trial Ex. 305, MCT_00052220. It was no surprise that Hanson Trust acquired 

unknown liabilities from SCM, including SCM’s legacy environmental liabilities. Trial 

Tr. vol. 5, 749:14-751:22 (Hill). But the investigation noted in Agenda item 12 could not 

have identified the FMW Site liability, which was unknown by anyone until 1999; it was 

not a superfund site and there were no pending lawsuits concerning it in 1986. HBML was 

not notified about it until 2015. 

171. HBML’s expert Jay Vandeven testified regarding the state of the practice regarding 

environmental due diligence during 1985, when the tender offer for SCM started. At that 

time, companies engaged in environmental due diligence about a prospective company 

focused on involvement in Superfund sites and pending litigation, as indicated by item 12. 

Environmental due diligence consistent with the state of the practice in 1985 would not 

have uncovered a link to the Emeryville site. Trial Tr. vol. 10, 1576:4-1578:18

(Vandeven). Any diligence at that time would “absolutely not” have included a search of 

the entire corporate history of all SCM-related entities to find out if a discontinued 

business “might” have generated future superfund claims or litigation.17 Id. 1577:24-

17 Perhaps an investigation in 1985 might have revealed that Marchant operated at the FMW Site 

from approximately 1917 to 1957. But invasive sampling would have been required in order to 

discover that the site was contaminated. Trial Tr. vol. 10, 1458:16-1459:1 (Vandeven); Trial Ex. 

503, EKI0456236 (Stellar’s 1999 report for Emeryville stating that “a Phase II subsurface 

investigation is needed to identify to what degree, if any, subsurface contaminants exist in the soil 

or groundwater beneath the parcel.”). And if the then-current owner had permitted invasive 

sampling, and the sampling discovered the TCE contamination, even the City’s experts were 

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1578:18 (Vandeven). Vandeven opined that Hanson Industries’ due diligence practices 

were at the “front end” of the art for the time and that it was “surprising” that they were 

identifying “anything environmental in 1985.” Id. 1577:24-1578:18 (Vandeven). 

172. Plaintiffs have contended that Hanson Industries did not undertake serious efforts to 

discover liabilities of SCM following its acquisition. Landuyt characterized Emeryville’s 

allegations as “absurd” and “incorrect.” Trial Tr. vol. 12, 1783:24-1784:8 (Landuyt). 

Hanson Industries made substantial and serious efforts to understand the liabilities of SCM 

following the acquisition to the extent that was reasonably possible. It had an incentive to 

discover as many unrecorded liabilities as possible. The identification of previously 

unrecorded liabilities allowed Hanson Industries to add them to the balance sheet during 

the first year following the acquisition. The process led to the discovery of substantial 

liabilities which SCM had not previously accounted for. As a result of Hanson Industries’ 

post-acquisition investigation, Hanson Industries added 168.8 million dollars in purchase 

accounting reserves (approximately 16% of the total purchase price) for liabilities that 

SCM had not previously accrued. 

C. Post Acquisition Restructuring of SCM

173. On September 6, 1985, ten days following the formal tender offer, HSCM-20, Inc. was 

incorporated. Trial Ex. 2054-11. That same day, Hempstead, acting as the sole director of 

HSCM-20, appointed himself and several other Hanson Industries employees as the 

officers of HSCM-20: Clarke (President), Raos (Vice President and CFO), Hempstead 

unable to locate any direct evidence that Marchant had used TCE, the contaminant that is driving 

the remedy. It is implausible that Hanson Industries could have learned about the FMW Site, 

inferred based on circumstantial evidence that Marchant had possibly used TCE, and then gained 

access from unrelated, later property owners and operators in order to procure soil and 

groundwater samples at a site without known contamination issues. And then even if it had, the 

City presented no evidence on what Hanson Industries could have or should have done with that 

information in light of the fact that the FMW Site was owned and operated by independent third

parties. For example, the City’s accounting expert did not opine that discovery of this information 

would have triggered reserves or other accounting obligations under GAAP. There is no evidence 

that an investigation exceeding the standards of practice in 1985 would have uncovered a link 

between SCM and contamination at the FMW site.

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(Vice President and Secretary) and Eric Hanson (Vice President). Trial Ex. 2054-8. 

HSCM-20 was the owner 19 other “fan companies” (HSCM 1 through 19) that were used 

to restructure SCM following the tender offer. 

174. Two documents drafted during the restructuring process described the purposes of the 

restructuring. Both stated that the restructuring had two primary purposes: to set up 

SCM’s subsidiaries as stand-alone, autonomous companies, and to establish a tax basis for 

the restructured companies by allocating the SCM purchase price among them. Trial Ex. 

461; Trial Ex. 374, MCT 00027594. Witnesses confirmed that these accurately described 

the purposes of the restructuring. Trial Tr. vol. 8, 1198:18-1199:16 (Raos); Trial Ex. 960 

(Hempstead Dep.), pdf p. 267/331 Trans. p. 268:21-270:18 (discussing Schedule 4.11 of 

Trial Ex. 374). Raos and Landuyt also testified at trial that the restructuring had two 

additional purposes: (i) to put related businesses (such as food) into separate companies, 

and (ii) get a “tax step-up” to what was paid, instead of what the book values had been. 

Trial Tr. vol. 8, 1197:6-21 (Raos); Trial Tr. vol. 12, 1786:22-1789:2 (Landuyt).

175. Different witnesses had different recollections about whose idea it was to restructure SCM 

if the tender offer was successful, and the fan company structure was not unique to 

Hanson. Trial Tr. vol. 12, 1791:17-19 (Landuyt). Hempstead testified that Hanson 

Industries personnel decided how to restructure SCM. Trial Ex. 960 (Hempstead Dep.), 

pdf p. 244-245/331 Trans. p. 245:23-246:13. Raos first recalled that it was an idea of 

Brian Hellings and Bill Landuyt, but he also said that the “basic fan structure” came from 

Ernst & Young or one of two outside law firms. Trial Tr. vol. 8, 1196:13-1197:5 (Raos). 

It was apparently also suggested in the memorandum sent to Raos by SCM’s outside 

auditing firm, Deloitte. Trial Ex. 334, MCT 00051996-00051997. Hellings also testified 

that the fan structure was proposed by Rosen at the Skadden law firm. Trial Ex. 959 

(Hellings Dep.), pdf. p. 151-152/305 trans. p. 217:8-218:19; see also Trial Exs. 450; 818; 

825. Additionally, outside counsel Marty Ginsburg was responsible for the tax planning of 

the restructuring. Trial Ex. 960 (Hempstead Dep.), pdf p. 245/331 Trans. p. 246:14-17. 

176. Hellings was the only employee of Hanson Trust who had any role in the restructuring of 

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SCM. Trial Ex. 960 (Hempstead Dep.), pdf p. 116/331 Trans. p. 401:3-22. He was in 

charge of overall tax strategy for the Hanson group, and his role in the restructuring of 

SCM was limited to the plan to set up a fan structure. He did not play any role in deciding 

what company went into which fan company, how to manage the fan companies, or 

whether to sell or retain fan companies. Trial Tr. vol. 8, 1199:17-1200:13 (Raos); Trial 

Ex. 960 (Hempstead Dep.), pdf p. 245/331 Trans. p. 246:14-23. Those decisions were 

made by the acquisition team at Hanson Industries, which included Sir Gordon, Eric 

Hanson, Guntner, and Raos. Trial Ex. 959 (Hellings Dep.), pdf p. 283/305 Trans. p. 

443:11-19. 

177. The fan companies were set up as holding companies. Trial Tr. vol. 12, 1789:3-11 

(Landuyt). Preexisting subsidiaries of SCM were moved into the fan companies. There 

were a few exceptions for assets that were owned by SCM’s corporate center and became 

part of HSCM-20, but “there weren’t many of those.” Id. 1789:20-1790:4 (Landuyt). 

HSCM-20 owned all the other fan companies. Id. 1796:25-1798:11 (Landuyt) (discussing 

Trial Ex. 43). It also owned “odds and ends” and the titanium dioxide (TIO2) business,

which was the “most valuable piece” of SCM. Id. 1795:1-24 (Landuyt). 

178. Through a series of transactions, SCM’s former businesses were distributed to various fan 

companies and in several instances sold to third parties as 1986 progressed. Id. Those 

sales generated several hundred million dollars of proceeds. See, e.g., Trial Tr. vol. 5, 

822:17-823:15 (Solomon). Hellings sent a memorandum to Lord Hanson explaining that

the fan companies were used to break up SCM for tax purposes to create a tax benefit to 

Hanson Trust. Trial Ex. 818; Trial Tr. vol. 5, 811:16-812:9 (Solomon). Specifically, 

Hellings wanted to reduce intercompany dividend taxes, which are typically applied when 

companies transfer money from an abroad subsidiary to a parent company. Trial Tr. vol. 5, 

812:3-9 (Solomon). Raos testified that Hellings “was basically our tax guru, our tax 

genius.” Trial Tr. vol. 8, 1123:1-6 (Raos). He also testified that Hellings “basically, he 

oversaw the—basically what we were doing” with respect to the fan structure. Id.

1119:17-22 (Raos). Raos further testified that he recalled at least two instances where 

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Hellings recommended that Hanson Trust shift assets outside of North America. Id.

1233:4-1234:25 (Raos). One such recommendation was moving the SCM Pigment assets 

out of SCM and into foreign ownership for certain tax advantages. Trial Ex. 315. 

179. Landuyt was directly involved in the restructuring. He denied that the purpose of the 

restructuring was to move valuable assets and leave behind companies without the ability 

to pay their liabilities. Trial Tr. vol. 12, 1791:20-1792:2 (Landuyt). He emphasized that it 

was important for all of the fan companies to be adequately capitalized in order to have a 

valid transaction. Id. 1789:12-19 (Landuyt). 

180. In the restructuring, liabilities associated with operating companies were aligned with 

those operating companies, meaning that they remained with those operating companies. 

Hempstead testified to the following example: if money was borrowed to build a new 

factory for Glidden (one of SCM’s subsidiaries), the debt for that loan went with Glidden 

into the fan company to which Glidden was assigned. Trial Ex. 960 (Hempstead Dep.), 

pdf p. 247-248/331 Trans. p. 248:4-22. 

181. Liabilities that were not related to operating companies’ businesses remained with SCM, 

and later became liabilities of HSCM-20 when the two companies merged. Id. pdf p. 247-

248/331 Trans. p. 248:4-.22. Similarly, Raos agreed that “things that didn’t fit” with a 

business went into HSCM-20, which was “affectionately” nicknamed “the Rump.” Trial 

Tr. vol. 8, 1192:24-1193:19, 1203:13-1204:13 (Raos). Raos pointed out that the Rump had 

a greater ability to pay liabilities because it owned all of the operating subsidiaries. Id. As 

an example, Landuyt testified that SCM’s assumption of the Kalamazoo Mill liability from 

its subsidiary, Allied Paper, as well as subsequent mergers of SCM into HSCM-20, 

increased the ability to pay for that liability. Trial Tr. vol. 12, 1785:17-1786:10; 1791:20-

1792:2 (Landuyt). Raos testified that entities interested in purchasing Allied Paper, Inc. 

did not want to also purchase the environmental liability associated with Kalamazoo Mill, 

and that the mill “was a dog.” Trial Tr. vol. 8, 1272:23-1273:16 (Raos). The Rump also 

received shares of stock for the remaining SCM chemical industry units (e.g., “Pigments”) 

that had not previously been moved out of U.S.-based ownership. Trial Ex. 43; Trial Tr. 

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vol. 6, 903:17-905:1 (Owens).18

182. SCM had several businesses that could be sold off to pay down debt. Trial Tr. vol. 5, 

713:19-20 (Hill). One of those businesses was Glidden Paint, which was sold in August 

1986 for approximately $500 million dollars to ICI, a large British chemical company that 

already possessed a large paint division. Trial Ex. 374. By selling Glidden Paint, Hanson 

Trust and Hanson Industries procured a significant premium performing what was 

essentially a brokerage function—buying a diversified conglomerate and reselling the parts 

to entities that did not want the entire conglomerate but valued one part or division of said 

conglomerate. Trial Tr. vol. 5, 713:25-714:3 (Hill). Through the Glidden Paint 

transaction, along with selling other SCM divisions/parts, Hanson Trust and Hanson 

Industries were able to recoup the SCM purchase price while still holding on to several 

other SCM businesses. Id. 714:8-12 (Hill); Trial Tr. vol. 11, 1647:23-1648:8 (Clarke) (“If 

you can get tomorrow’s price today . . . you should sell it”). 

183. A September 27, 1986 Hanson Industries quarterly report stated that $205 million was 

remitted to Hanson Trust. Trial Ex. 365 at 6. The cash came, at least in large part, from 

the reorganization and sale of SCM assets, including that of Glidden Paint. Id. All the 

documents in evidence that concern the Glidden Paint sale were signed by Hanson Trust

and HSCM-20. See, e.g., Trial Exs. 374, MCT_00027562; 322 at 1; 323 at 4 (containing a 

provision providing ICI certain rights and insurance contracts). Hanson Industries was not 

a signatory to any agreement concerning Glidden Paint. See id. Raos testified that Hanson 

Trust, as part of the sale, “did guarantee or give a guarantee for the environmental.” Trial 

Tr. vol. 8, 1242:8-18 (Raos). Clarke testified that having Hanson Trust in the transaction 

allowed it to achieve the desired price. Trial Tr. vol. 11, 1750:4-1751:4 (Clarke). 

D. Subsequent Structuring of and Mergers with SCM 

184. A series of corporate moves followed that resulted in the transfer of the Marchant 

18 When Allied Paper and other, similar companies were sold, they were sold without certain 

liabilities. Trial Tr. vol. 6, 915:10-13 (Owens). The environmental liabilities were separated from 

Allied Paper when it was sold. Id. 

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environmental liability from HSCM-20 ultimately to HM Holdings, which became the 

primary holding company for Hanson Trust in North America. First, SCM merged with 

HSCM Merger Co. Inc. effective March 31, 1986. Trial Ex. 2054-32. SCM, as the 

surviving corporation, retained the name “SCM Corporation.” Id. On May 16, 1986, 

SCM, by unanimous written consent of its board of directors and shareholders, passed a 

“Plan of Liquidation and Dissolution.” Trial Ex. 42. The document was executed by 

Hempstead on behalf of all signatories. Id. 

185. SCM’s typewriter business was placed into HSCM-10, and SCM’s headquarters were sold. 

Trial Tr. vol. 5, 822:23-823:1 (Solomon). Defunct operations and unknown liabilities, 

such as Marchant’s operations and liabilities, were not distributed and remained with 

SCM. Dkt. No. 266, Undisp. Fact 29. This included the environmental liability for 

Marchant and the Kalamazoo Mill (relating to Allied Paper, Inc., which company was part 

of SCM). Trial Ex. 451.

186. Next, SCM merged with HSCM-20, Inc. on November 3, 1986. Dkt. No. 266, Undisp. 

Fact 30; Trial Ex. 19. HSCM-20 was the survivor of the merger, and it assumed all of 

SCM’s liabilities. Trial Ex. 19, HBML 0000320. HSCM-20 was renamed SCM 

Corporation. Trial Ex. 19, HBML 0000322-23.

187. SCM Corporation then merged with HSCM Holdings Inc., a Delaware corporation and the 

parent of SCM (formerly named “HSCM-20, Inc.”) on November 17, 1986. Dkt. No. 266, 

Undisp. Fact 31; Trial Ex. 2054-16. HSCM Holdings Inc. was the survivor of the merger, 

and it assumed all of SCM’s liabilities. Trial Ex. 2054-16, HBML 0000955. HSCM 

Holdings Inc. was renamed “SCM Corporation.” Trial Ex. 2054-16, HBML 0000957. As 

part of the merger, HSCM Holdings, Inc. (now named “SCM”) assumed Marchant’s 

liabilities. Id. 

188. Finally, SCM Corporation then merged with HM Holdings, a Delaware corporation, on 

October 14, 1988. Dkt. No. 266, Undisp. Fact 32; Trial Ex. 2367. HM Holdings was the 

surviving corporation. Trial Ex. 2367, p. MCT 00013084. As a result of the merger 

between SCM and HM Holdings, the liabilities of SCM became liabilities of HM 

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Holdings. Trial Ex. 960 (Hempstead Dep.), pdf p. 259/331 Trans. p. 260:11-19.

189. HM Holdings had been incorporated in Delaware on October 28, 1980. Trial Ex. 2369. Its 

corporate offices were located at 100 Wood Avenue, the same address as Hanson 

Industries’ offices. Trial Tr. vol. 8, 1149:20-1150:1 (Raos). The directors of HM 

Holdings were all Hanson Industries personnel: Sir Gordon, Clarke, Raos and Hempstead. 

Trial Ex. 2373 (unanimous written consent of board of directors approving mergers); Trial 

Ex. 2372, HBML 0007351, HBML 0007354, HBML 0007358 (listing directors and offers 

as part of 1993, 1994 and 1995 Delaware tax filings). Hanson Industries personnel 

handled the accounting for HM Holdings. Trial Tr. vol. 12, 1776:16-23 (Landuyt). 

190. HM Holdings was a holding company that was the “top company” or “primary holding 

company” for Hanson Trust in the United States. Trial Ex. 956 (Alexander Dep.), 64:7-14; 

Trial Ex. 962 (Lee Dep.), 71:6-14. By 1989, it owned almost all of the U.S. subsidiaries, 

and so almost all U.S. operating companies were direct or second tier subsidiaries. Trial 

Ex. 2183, HBML 0072870 (“Note that SCM Corporation was merged into [HM Holdings] 

on October 14, 1988. Hanson Trust personnel played no role in the management or 

decision making of HM Holdings or the companies that it owned. Trial Tr. vol. 8, 1125:9-

15 (Raos). It was “completely autonomous” from the U.K. business. Trial Ex. 956 

(Alexander Dep.), 18:17-19:11. 

191. A July 1991 corporate organization chart shows the companies owed by HM Holdings. 

Trial Ex. 375. Raos estimated that, by 1991, the operating profit of HM Holdings was 

close to a billion dollars. Trial Tr. vol. 8, 1132:2-15 (Raos). It was owned, directly and 

indirectly, by several layers of other corporations. Trial Ex. 375; Trial Ex. 960 

(Hempstead Dep.), pdf p. 116/331 Trans. p. 401:3-22. HM Investments, Ltd. owned 85.59

percent of HM Holdings and HHNBV owned 14.41 percent. Trial Ex. 375. HM 

Investments, Ltd. was, in turn owned by HM Anglo-American, Ltd. Id. HM AngloAmerican, Inc. was owned by Hanson Overseas Holdings (Ltd.), which was in turn owned 

by Hanson Holdings (1) Limited. Id. Hanson Holdings (1) was incorporated in the U.K. 

Trial Tr. vol. 14, 2090:5-13 (Rogers). Hanson Holdings (1) Limited was owned by 

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Hanson Trust. Trial Ex. 375.

192. As of July 1991, HM Holdings owned more than 100 corporations, some of which owned 

so many corporations that they required their own organization charts. Trial Ex. 375; see, 

e.g., Peabody Holdings’ organization charts shown at HELLINGS_0024029-0024030. 

HM Holdings’ subsidiaries included large corporations such as Kaiser Cement, Peabody 

Coal, and SCM Chemicals, one of the “crown jewels” of SCM. Trial Tr. vol. 11 16691:13-

23 (Clarke) (identifying SCM Chemicals as the “real crown jewel” of SCM). Raos 

testified that at the time of the SCM tender offer, the pigments business alone was 

estimated to have a value of between $300 million to $500 million. Its operating profits 

quadrupled following the acquisition from $50 million to $200 million annually, and Raos 

estimated that business, alone, was worth one billion dollars. Trial Tr. vol. 8, 1200:22-

1201:7 (Raos). Peabody Coal had been purchased for approximately $600 to $625 million. 

Trial Tr. vol. 11, 1676:16-19 (Clarke).

V. MILLENNIUM CHEMICALS AND THE DEMERGER

193. Hanson Trust’s North American interests were primarily demerged in 1996 as a result of 

Sir Gordon’s failing health and Lord Hanson’s belief that the company had too much debt 

and should sell its smaller and mid-sized companies. Trial Tr. vol. 11, 1697:9-1698:5

(Clarke). Raos, who was on the Board of Directors of Hanson Trust when it decided to 

break itself up, testified that the share price of Hanson Trust had stopped increasing, 

although profits continued to increase. Trial Tr. vol. 8, 1112:3-25 (Raos). Landuyt, also a 

Board member at that time, said that Hanson Trust was a conglomerate, and conglomerates 

had fallen out of favor with the investing public. Trial Tr. vol. 12, 1817:1-24, 1819:10-12 

(Landuyt). The company concluded that investors would prefer companies that were 

focused on specific business sectors. Id. 1819:13-1820:7 (Landuyt). 

194. The demerger was designed to divide Hanson Trust into four separate publicly traded 

companies with distinct financial, investment, and operating characteristics: a utility and 

coal company, a U.S. chemical company, a U.K.-based tobacco company, and a U.S.- and 

U.K.-based building materials businesses. Id. 1819:8-1820:7 (Landuyt). Hanson Trust 

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decided to hang onto the building materials business (which subsequently became HBML) 

and demerge, or spin off, the rest. In England, a “demerger” is a tax-free distribution.

Trial Ex. 801, MCT 00040200.19 The demerger transaction was designed in part to ensure 

that the debt of each of the businesses would be at least investment grade. Trial Tr. vol. 

12, 1822:5-1823:9 (Landuyt).

195. The City’s expert, Dr. Hill, testified that Hanson Trust was the only Hanson entity that 

could make the decision to effect a demerger because it was the ultimate parent 

company. Trial Tr. vol. 5, 779:2-21 (Hill). He further testified that Hanson Trust was not 

alone in making that sort of decision during that time period; a number of other companies, 

such as AT&T, made similar decisions to demerge. Id. 779:22-780:11 (Hill).

196. On January 30, 1996, Hanson Trust announced that it was “demerging” its chemicals, 

tobacco and energy businesses. Trial Ex. 801. According to the circular describing the 

demergers that was sent to Hanson Trust’s shareholders, a newly created company called 

Millennium Chemicals (“Millennium”) would own and operate Hanson Trust’s chemicals 

businesses. The chemicals businesses consisted of Quantum Chemical Corporation and 

two businesses that had been acquired from SCM, SCM Chemicals Inc. and Glidco Inc. 

197. Millenium would be a publicly traded company, and in the year ending December 31, 

1995, the businesses comprising Millennium had net sales of approximately $3.8 billion 

and operating income of $842 million. Trial Ex. 801, MCT 00040202-03. It was not, as 

the City implies, designed as an undercapitalized vessel into which the still unknown 

FMW Site environmental liability could be dumped. 

198. From the start of the demerger process, it was clear that Landuyt would become the 

chairman and CEO of Millennium. Trial Tr. vol. 12, 1820:8-10 (Landuyt). The plans for 

its senior leadership team, consisting of Landuyt, Bob Lee, Hempstead, and others, were 

19Before that major demerger occurred, Raos and Clarke left Hanson Industries in 1995 to spin off, 

or “demerge,” a publicly traded company called U.S. Industries. U.S. Industries consisted of the 

smaller, North American businesses managed by Hanson Industries—those that had operating 

profits of less than $50 million. Trial Tr. vol. 8, 1111:10-1112:2 (Raos).

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publicly announced by May 16, 1996. Trial Ex. 1115, HBML 0006113. The “first thing” 

Landuyt did was to hire independent counsel and independent bankers so that each of the 

soon-to-be separate public companies had their own set of independent advisers. Trial Tr. 

vol. 12, 1820:12-1821:18 (Landuyt). Millennium’s advisors included large and 

sophisticated investment banks: Goldman Sachs International, PaineWebber Inc. and 

Merrill Lynch International. Trial Ex. 1115, HBML 0006114. 

199. Immediately before the demerger, HM Holdings was owed by Hanson America 

(93.624%), HHNBV (5.6%), and Hanson Holdings (1) Limited (.776%). Trial Ex. 2131-1. 

Hanson Holdings (1) Limited also indirectly owned Hanson America. Id. Hanson 

Holdings (1) Limited was a U.K. corporation, which was, in turn, owned by ARC Limited, 

another U.K. corporation. Id.; Trial Tr. vol. 14, 2089:13-2090:13 (Rogers). Hanson PLC, 

a U.K. corporation, owned ARC Limited.

200. As a result of the demerger, HM Holdings owned the three chemicals businesses, 

Quantum, SCM Chemicals, and Glidco. Trial Ex. 2131-2. HM Holdings was owned by 

Hanson America, a U.S. corporation. Id. Hanson America was owned by HM AngloAmerican, Inc., a U.S. corporation. Id. HM Anglo-American, Inc. was owned by Hanson 

Overseas Holdings, a U.K. corporation. Id. Millennium, a U.S. corporation resident in the 

U.K., owned Hanson Overseas Holdings. Id. Public shareholders owned Millennium. 

201. HM Holdings owned an entity called “HMB Holdings,” which in turn owned a number of 

companies. Id. Landuyt explained that those were not chemicals businesses and were 

never intended to be retained by Millennium; however, Millennium had to retain 

ownership of them until after the Demerger was completed. Trial Tr. vol. 12, 1825:12-

1827:7; 1880:22-1881:7 (Landuyt).

202. Under the Demerger Agreement, Hanson Trust transferred ownership of Hanson Overseas 

Holdings to Millennium Chemicals. Dkt. No. 266, Undisp. Fact 34. In exchange, 

Millennium Chemicals issued its then-outstanding common stock to HBML’s shareholders 

as a dividend. Id. HM Holdings, Inc. merged with Millennium Holdings, Inc. 

(“Millennium Holdings”), a Delaware company and subsidiary of Millennium Chemicals. 

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Id. Undisp. Fact 35. HM Holdings, Inc. was the surviving entity but changed its name to 

“Millennium Holdings, Inc.” Id.

203. Landuyt, Lee (the President and later CEO of Millennium), defense witness Suzanne 

Thompson, and Professor Hubbard all testified that Millennium was adequately 

capitalized. Millennium had a market value of more than $1.2 billion. Trial Tr. vol. 9, 

1357:20-1359:25 (Hubbard). From the time of its formation until Landuyt left in 2003,20

Millennium always had sufficient capital to pay its liabilities as they came due and to 

conduct its normal business activities. Trial Tr. vol. 12, 1828:14-21 (Landuyt); Trial Ex. 

962 (Lee Dep.), 303:21-304:18. Millennium was formed with more than five billion

dollars in assets and was comprised of companies that had hundreds of millions in annual 

operating income. Trial Ex. 332, HBML 0005078. The chemical companies had sufficient 

capital to spend tens of millions annually just on environmental compliance, environmental 

capital investments, and remediation costs during the three years preceding the demerger. 

Trial Ex. 332, HBML 0005122; Trial Tr. vol. 12, 1802:21-1804:20 (Landuyt).

204. Landuyt testified that Millennium had the ability to pay the debt allocated to it in the 

demerger. Trial Tr. vol. 12, 1827:16-24 (Landuyt). The amount of debt and the debt-toequity ratio resulted in Millennium’s debt being investment grade. Id. 1827:16-24; 

1875:23-1876:11 (Landuyt). Landuyt explained that this was important because 

“responsible leverage” like investment grade debt “increases the return on capital for a 

company.” Id. 1875:23-1876:11 (Landuyt). 

205. The City’s expert, John Owens, testified that Millennium’s balance sheet “doesn’t 

necessarily demonstrate its ability to pay liabilities,” in part because a substantial portion 

of Millennium’s assets consisted of goodwill. Trial Tr. vol. 6, 934:5-935:20 (Owens). But 

Owens did not dispute that the goodwill was properly included on Millennium’s balance 

sheet. Id. He conceded that the financial statements would not have conformed to GAAP 

20 Millennium merged with Lyondell Chemical in 2004. Dkt. No. 266, Undisp. Fact 37. No 

evidence regarding capitalization following Landuyt’s departure from Millennium in 2003 was 

introduced at trial.

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had goodwill had been omitted. Id. 958:12-16 (Owens). And even if goodwill were

ignored, in contravention of GAAP, Millennium still had billions of dollars in other assets. 

Trial Ex. 332, HBML 0005177. Owens was unwilling to opine that Millennium lacked the 

ability to pay its liabilities when they came due, and he could not identify any liabilities 

that Millennium was unable to pay. Trial Tr. vol. 6, 945:9-24 (Owens). None of the City’s 

witnesses testified that Millennium was undercapitalized.

206. Another expert for the City, Professor Solomon, testified that the demerger allocated $2.25 

billion in debt to Millennium on a non-arm’s length basis, which was detrimental to 

Millennium and beneficial to Hanson Trust. Trial Tr. vol. 5, 834:4-17, 883:10-20

(Solomon). An Information Statement, which was required by SEC regulations to be filed 

as part of the demerger, provided information to the new shareholders of Millennium 

Chemicals. Trial Ex. 242. It discloses transactions between Millennium Chemicals and 

Hanson Trust and specifically states that a “$2.25 billion debt was allocated to Millennium 

Chemicals at a non-arm’s length basis.” Id. 71-73. However, Solomon conceded that the 

shareholders of Hanson Trust and Millennium were the same. Trial Tr. vol. 5, 883:21-

884:6 (Solomon). Thus, Hanson Trust had no incentive to allocate “too much” debt to 

Millennium so that it could benefit the same shareholders of Hanson Trust. See id. 

Solomon did not do any quantitative analysis to show whether the debt allocated to 

Millennium had any impact on Millennium’s ability to pay its debts after the demerger. Id.

858:17-859:12 (Solomon). 

207. The $2.25 billion debt was clearly disclosed and discussed in the Information Statement 

for the demerger. Trial Ex. 242. The so-called “Allocated Loan” was a $2.25 billion loan 

borrowed in conjunction with the acquisition of Quantum, one of the Chemicals 

Businesses that was becoming part of Millennium. Trial Ex. 242, HBML 0008132 (“In 

conjunction with the acquisition of Quantum Chemical, a subsidiary of the Company 

established a long-term financing agreement with Hanson under which $2,250 [million]

was borrowed in October 1993.”). The Allocated Loan was allocated to Millennium 

because it “relates directly to the Chemicals Business.” Trial Ex. 242, HBML 0008045. It 

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was also paid off immediately prior to the effective date of the demerger in exchange for 

Millennium’s transfer of the non-chemicals businesses. Trial Ex. 242, HBML 00080030 

(“[O]n the day before the Dividend Payment Date [October 1, 1996], Hanson will purchase 

from a Company Subsidiary certain of the Non-Chemicals Business pursuant to the PreDemerger SPAs for cash and all or a portion of the proceeds of such sale, together with 

cash balances and borrowings under the New Credit Facility, if necessary, will be used to 

repay the Allocated Loan in the amount of $2.25 billion.”). That debt did not saddle 

Millennium with unrelated debt and was extinguished as part of the Demerger.

208. Millennium’s independent investment advisor provided a fairness opinion in connection 

with the terms of the demerger. Trial Tr. vol. 12, 1827:25-1828:8 (Landuyt). Landuyt 

approved the amount of debt because it resulted in Millennium’s debt being rated 

investment grade and because it provided the “optimal structure” and leverage to achieve 

the investment grade rating. Id. 1823:2-9, 1873:23-1876:11 (Landuyt). Landuyt, who 

negotiated the amount of the debt, testified that Millennium had the ability to repay the 

debt, and that the leverage ratio with that level of debt was appropriate for investment 

grade rating. Id. 1827:16-24 (Landuyt).

209. As part of the demerger, Hanson Trust and Millennium entered into a crossindemnification agreement. Trial Ex. 32. Millennium had to indemnify Hanson Trust for 

liabilities associated with its legacy businesses, and Hanson Trust had to indemnify 

Millennium for liabilities arising from Hanson Trust’s legacy businesses. Id. Because HM 

Holdings had succeeded to SCM’s liabilities through its 1988 merger, that meant that 

Millennium had to indemnify HBML for the claims and liabilities arising from the 

Marchant environmental liability, as noted by the witness Edward Gretton, Legal Director 

of Hanson Group and Hanson Limited. Trial Tr. vol. 4, 659:13-664:25 (Gretton). Landuyt 

explained why that allocation of liabilities amongst the parties made sense: Millennium 

was not required to take on liabilities from other businesses, such as Peabody Coal’s black 

lung obligations or Beazer’s environmental liabilities that went with other demerged 

companies. Trial Tr. vol. 12, 1869:20-1870:11 (Landuyt).

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210. While it was no longer a Hanson Trust subsidiary after the demerger in 1996, Millennium 

was paying on, and continued to pay on, its environmental obligations before and after the 

demerger. For example, Millennium’s 1996 Form 10 filed with the SEC upon the 

demerger shows costs and operating expenses relating to environmental matters of $67 

million in 1995, $61 million in 1994, and $60 million in 1993. Trial Ex. 332, 

HBML_0005122; Trial Tr. vol. 12, 1804:4-10 (Landuyt). Similarly, capital expenditures 

for environmental compliance and remediation were $22 million in 1995, $7 million in 

1994, and were projected to be approximately $40 million in 1996. Trial Ex. 332, 

HBML_0005122; Trial Tr. vol. 12, 1804:11-20 (Landuyt). And in the three years leading 

up to Landuyt’s departure in 2002, Millennium spent $63 million, $65 million, and $54 

million, respectively. Trial Tr. vol. 12, 1807:1-12 (Landuyt); Trial Ex. 445, 

HBML_0103791. 

211. Following the demerger, Hanson Industries ceased to exist. Trial Tr. vol. 5, 748:17-749:1 

(Hill). 

VI. THEORIES OF HBML’S LIABILITY 

A. UNITY OF INTEREST FACTORS

212. To evaluate plaintiffs alter ego theory, I need to evaluate the unity of interest factors. The 

critical factors and facts are described in this section.

1. Commingling of Funds

213. As outlined in Section III.B.2, the evidence establishes that Hanson Industries and the U.S. 

operations were financially autonomous from Hanson Trust. The evidence demonstrated 

that the U.S. funds were kept separate from the U.K. The U.S. companies had separate 

bank accounts from Hanson Trust and that there was no commingling of funds. Trial Tr. 

vol. 8, 1138:6-9 (Raos); Trial Tr. vol. 12, 1780:3-5 (Landuyt). The only signatories on the 

U.S. accounts were the employees from Hanson Industries in the U.S. Trial Tr. vol. 8, 

1291:19-1292:2 (Raos).

214. Hanson Industries managed a sweep account for all of the cash from the U.S. operations. 

Trial Ex. 962 (Lee Dep.), 295:9-24. Hanson Trust had no role in and had no control over 

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the U.S. sweep account. Id. 296:16-297:20. Hanson Trust had no control over what funds 

were deposited into or withdrawn from the U.S. sweep account, and Hanson Trust

personnel did not have authority to withdraw funds from the U.S. sweep account. Id.

296:16-297:20. When asked whether funds of the U.S. companies were commingled with 

Hanson Trust, Lee testified definitely that “[t]hey weren’t. We kept all the funds in the 

United States.” Id. 293:20-24. Hill testified that it was “highly unlikely” that U.S. funds 

would have been swept into the U.K. due to regulatory controls in place during the 1985-

1996 time period. Trial Tr. vol. 5, 778:18-779:1 (Hill).

215. The City has argued that there was commingling of funds based on a statement in the July 

28, 1989, prospectus for the Smith Corona Corporation IPO. Trial Tr. vol. 8, 1292:3-14

(Raos). The prospectus states that surplus cash from SCC’s operations “has been remitted 

to Hanson,” and “Hanson” in that document is defined as “Hanson PLC.” Id. 1292:3-14

(Raos); Trial Ex. 21, HBML_0002981. Notwithstanding the definition of “Hanson” in the 

prospectus, the overall evidence regarding the financial autonomy of the U.S. operations 

suggests that it was unlikely that cash was ever remitted directly to Hanson Trust. There 

was no other evidence or analysis identifying how much money was purportedly remitted 

to Hanson Trust, how it was remitted, or when or why it was remitted. The City failed to 

establish that funds of U.S. subsidiaries were commingled with the funds of its U.K. 

parent.21

2. Corporate Formalities

216. Hanson Trust and its relevant U.S. subsidiaries adequately followed corporate formalities. 

For instance, when Hempstead signed documents as attorney in fact on behalf of Hanson 

Trust in connection with SEC filings for the tender offer, he did so pursuant to a formal 

21 As Raos explained, even if cash was remitted or transferred to Hanson Trust, that would not 

establish commingling. Trial Tr. vol 8, 1292:8-14 (Raos). The money may have been remitted 

through a dividend or some other proper transfer of funds. Id. Plaintiffs have identified no other 

evidence demonstrating that Smith Corona Corporation’s surplus cash was actually remitted 

directly to Hanson Trust, or that, if it was, it was done improperly or in a manner that would 

establish commingling. 

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power of attorney document. Trial Ex. 340. Solomon conceded this fact. Trial Tr. vol. 5, 

876:3-877:5 (Solomon).

217. Landuyt testified that the U.S. subsidiaries, including the holding companies, maintained 

their own separate financial books and records. Trial Tr. vol. 12, 1772:12-22 (Landuyt). 

He testified that the U.S. holding companies had boards of directors and that the persons 

on those boards “certainly met” and that most corporate actions were done by resolution. 

Id. 1842:1-10 (Landuyt).

218. Similarly, Clarke testified that the U.S. operating companies “had all been around for a 

long time . . . I’m sure they all had directors,” but that he did not attend their meetings.

Trial Tr. vol. 11, 1759:3-21 (Clarke). For the U.S. holding companies, he explained that 

all the directors of those companies were the Hanson Industries executives and that they 

met daily. Id. 1759:3-21 (Clarke). When necessary, or when a decision needed to be 

formalized, Hempstead would prepare the minutes or otherwise memorialize on paper what 

had been agreed to. Id. 1759:3-21 (Clarke). Examples of such documentation were 

admitted into evidence. See, e.g., Trial Ex. 2373.

219. The formalities with respect to the SCM acquisition and restructuring are illustrative of 

Landuyt’s and Clarke’s testimony. I find that Hanson Industries and the U.S. companies 

followed corporate formalities with respect to those transactions. HBML introduced 

documentation regarding the formation documents, board actions, and various transaction 

agreements with respect to the companies that acquired SCM and were involved in its 

restructuring. Trial Exhibit 1116 is the index to the deal binder for the SCM acquisition. It 

identifies several hundred documents created in connection with the acquisition. Trial 

Exhibit 47 is the index to the deal binder for the SCM restructuring. It also identifies 

several hundred documents in connection with the restructuring. Below are examples of 

the comprehensive formalities documents in the record:

220. HSCM Merger Co. Trial Exhibit 2054-22 is the Transaction Agreement between 

HSCM Industries Inc. and HHNBV to create a joint venture, HSCM Merger Co. 

Inc., to acquire SCM. Trial Exhibit 2054-28 is the Certificate of Incorporation and 

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Trial Exhibit 2054-30 is a unanimous written consent of its shareholders 

authorizing the Plan and Agreement of Merger and merger with SCM. Trial 

Exhibit 13 is the Plan and Agreement of Merger between HSCM Merger Co. Inc. 

and SCM. Trial Exhibit 2054-32 is the Certificate of Merger between HSCM 

Merger Co. Inc. and SCM, with the surviving company retaining the name “SCM.” 

221. HSCM Industries Inc. Trial Exhibit 2054-17 is the Certificate of Incorporation 

for HSCM Industries Inc. and Trial Exhibit 2054-19 is a certificate of amendment 

to allow it to issue different amounts of stock. Trial Exhibit 466 is a unanimous 

written consent authorizing HSCM Industries Inc. to appoint officers, issue stock, 

and purchase shares via the tender offer for SCM. Trial Exhibit 2054-35 is HSCM 

Industries Inc.’s share certificates for its ownership of SCM shares. Trial Exhibit 

2054-23 is an action by written consent authorizing HSCM Industries Inc. to 

purchase stock in HSCM Merger Co. Inc. Trial Exhibit 2054-21 is an action by 

written consent authorizing HSCM Industries Inc. to accept an offer from HSCM20 to purchase shares of HSCM Industries Inc.’s common stock. 

222. HSCM Holdings Inc. Trial Exhibit 2054-13 is the Certificate of Incorporation for 

HSCM Holdings Inc. Trial Exhibit 467 is HSCM Holdings Inc.’s Board of 

Directors’ unanimous written consent authorizing it to appoint officers, issue stock, 

and purchase shares in HSCM Industries Inc. Trial Exhibit 10 is a consent of the 

Board of Directors in adopting resolutions to comply with requirements of the 

Citibank financing. Trial Exhibit 2054-16 is the Certificate of Merger, merging 

SCM (formerly HSCM-20) into HSCM Holdings Inc. with HSCM Holdings as the 

surviving company and changing its name to SCM.

223. HSCM-20. Trial Exhibit 2054-11 is the Certificate of Incorporation for HSCM-20.

Trial Exhibit 7 is an action of unanimous written consent adopting resolutions for 

HSCM-20 to appoint officers, issue stock, and accept a capital contribution of 

HSCM Holdings Inc.’s shares. Trial Exhibit 2054-12 is action by written consent 

authorizing HSCM-20 to subscribe to shares of HSCM Industries Inc. and Trial 

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Exhibit 2054-20 is the executed subscription agreement. Trial Exhibit 2054-10 is 

the Certificate of Ownership and Merger, merging SCM into HSCM-20, with 

HSCM-20 as the surviving company and changing its name to SCM. Trial Exhibit 

2054-44 is the Memorandum of Distribution in Liquidation assigning all property, 

rights, and assets, and liabilities of SCM to HSCM-20 not previously distributed. 

224. HSCM Investments Limited. Trial Exhibit 2054-24 is the Certificate of 

Incorporation for HSCM Investments Limited. Trial Exhibit 468 is an action by 

unanimous written consent authorizing HSCM Investments Limited to appoint 

officers, issue stock, and purchase shares of HSCM Holdings Inc. 

225. Hanson Holdings Netherlands, B.V. Trial Exhibit 2054-1 are the Board minutes 

authorizing HHNBV. to subscribe to shares in HSCM Merger Co. and the 

subscription agreement. Trial Exhibit 2054-2 is an action by written consent 

authorizing HHNBV to purchase shares in HSCM-20 and Trial Exhibit 2054-4 is 

the subscription agreement. Trial Exhibit 2054-5 is the share certificate for 

HHNBV’s shares in HSCM-20.

226. HM Holdings, Inc. Trial Exhibit 2369 is the Certificate of Incorporation of HM 

Holdings, Inc. Trial Exhibit 2371 are amended and restated bylaws of HM 

Holdings, Inc. Trial Exhibit 2367 is the Agreement of Merger between SCM and 

HM Holdings, Inc., merging SCM into HM Holdings, Inc. Trial Exhibit 2370 is a 

written consent adopting resolutions fixing the board at four directors and 

appointing Sir Gordon, David Clarke, John Raos, and George Hempstead as 

directors until the next annual meeting. Trial Exhibit 2368 is the Certificate of 

Merger between Millennium Holdings Inc. and HM Holdings, Inc., merging HM 

Holdings, Inc. into Millennium Holdings Inc., with HM Holdings, Inc. as the 

surviving company but changing its name to Millennium Holdings Inc. Trial 

Exhibit 2118-1 is the Demerger Agreement demerging Millennium Holdings Inc.’s 

parent, Millennium Chemicals Inc., from the Hanson group. 

227. To be sure, Hanson Industries did not create documents for many intra-Hanson entity 

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actions. There were no contracts between Hanson Industries and the U.S. holding 

companies like HSCM Holdings and HM Holdings, nor were there contracts for 

intercompany services provided by Hanson Industries. Trial Tr. vol. 8, 1255:21-1256:11 

(Raos). Clarke and Landuyt agreed that Hanson Industries likely did not have 

management contracts with the subsidiary/operating or holding companies, and Landuyt 

testified that there were no payments for the management services Hanson Industries 

provided the U.S. holding companies. Trial Tr. vol. 11, 1742:13-1743:20 (Clarke); Trial 

Tr. vol. 12, 1842:15-1843:5 (Landuyt). 

228. Landuyt could not “recall any of the holding companies having outside directors.” Id.

1844:10-13 (Landuyt). Hempstead testified that Hanson Industries did not have any 

written contract with Hanson Trust for providing any management services. Trial Ex. 960, 

Hempstead Dep. 329:8-11, May 18, 2021. Nor did Hanson Industries have any 

management services contracts with any of the fan companies, HSCM Holdings Inc., HM 

Holdings, or HM Anglo-American. Id. at 329:12-18 (Hempstead). 

229. Clarke testified that Hanson Industries was involved in the day-to-day operations of the 

U.S. holding companies. Trial Tr. vol. 11, 1738:8-16 (Clarke). He also testified that the 

holding companies “probably” would not have had separate budgets from Hanson 

Industries, nor did he believe the holding companies had board of director meetings. Id.

1741:17-1742:12 (Clarke). Landuyt confirmed that the U.S. holding companies did not 

have budgets like the operating companies did. Trial Tr. vol. 12, 1841:23-25 (Landuyt). 

3. Same Offices and Employees

230. I find that Hanson Trust and Hanson Industries did not share the same offices, and that 

Hellings appeared to be the only employee shared by both the U.S. and the U.K.

231. Hanson Industries’ offices were located at 100 Wood Avenue, South, Iselin, New Jersey, 

and 410 Park Avenue, New York City, New York. Trial Tr. vol. 11, 1666:18-24 (Clarke); 

Trial Tr. vol. 8, 1149:20-1150:1 (Raos). Hanson Trust’s offices were located at 180 

Brompton Road, London, U.K., and later at 1 Grosvenor Place, London, U.K. Trial Ex. 

260, HBML 0006519; Trial Ex. 226, HBML 0013013.

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232. No Hanson Trust employees worked at either Hanson Industries location. Trial Tr. vol. 11, 

1666:25-1667:4 (Clarke); Trial Tr. vol. 8, 1114:10-20 (Raos). Hanson Industries and 

Hanson Trust “never” operated out of the same offices. Trial Tr. vol. 11, 1667:16-18

(Clarke); Trial Tr. vol. 8, 1114:10-20 (Raos). Lord Hanson visited New York up to 12 

times per year, but the evidence did not show he used that office as his own. see Trial Tr. 

vol. 11, 1671:4-1672:11 (Clarke). And Clarke visited HBML’s London offices a few 

times per year, but only in later years once he joined the Hanson Trust board. Id. 1649:1-

1651:4 (Clarke). 

233. With respect to employees, Landuyt is a good example of how Hanson Industries and 

Hanson Trust employees were separate. After Landuyt became the financial director of 

Hanson Trust in 1992, he did not retain any of the responsibilities he had as the CFO at 

Hanson Industries, and those responsibilities were assumed by other persons at Hanson 

Industries. Trial Tr. vol. 12, 1768:14-1769:14 (Landuyt). In 1995, Landuyt transitioned to 

President and CEO of Hanson Industries after David Clarke and John Raos left in 

connection with the demerger of U.S. Industries. Id. 1769:15-177:1 (Landuyt). He did not 

retain any of his responsibilities as the financial director of Hanson Trust. Id. 1770:2-5 

(Landuyt). When he was employed at Hanson Industries, his office was in Iselin, New 

Jersey. Id. 1770:6-8 (Landuyt). When he was employed by Hanson Trust, his office was 

in London, England. Id. 17709-11 (Landuyt). And each time he transitioned, he had to 

change payrolls. Id. 1770:12-18 (Landuyt).

234. Hellings appears to have provided advisory services on tax and insurance issues for both 

the U.S. operations and the U.K. Trial Tr. vol. 11, 1658:23-1659:7 (Clarke). Notably, 

however, the Hanson Trust 1986 Annual Report identifies approximately 92,000 

employees in the overall Hanson group, of which 54,000 worked in the United Kingdom. 

Trial Ex. 260, HBML 0006521; HBML 0006552. As of September 20, 1987, the overall 

Hanson group had 88,000 employees, of whom approximately 50,000 were based in the 

United Kingdom and 34,000 in the United States. Trial Ex. 209, HBML 0008304. The 

shared use of just one employee in this context is insufficient to demonstrate that there 

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were shared employees between the U.S. and the U.K. That is further supported by the 

consistent testimony from the Hanson Industries executives that Hellings was not a 

decisionmaker for U.S. operations and did not direct or control U.S. operations. Supra

Section III.B.1. Professor Solomon agreed that it is “common in conglomerates for the 

parent to be involved in tax planning for the entire group, including the subsidiaries.” Trial 

Tr. vol. 5, 856:6-9 (Solomon). 

235. With respect to attorneys, the evidence establishes that Hanson Trust and the U.S. 

operations did not share in-house attorneys or in-house legal functions. Supra Section

III.B.3. 

236. The parties introduced evidence suggesting that Hanson Trust and the U.S. subsidiaries 

shared outside counsel in connection with the SCM tender offer and underlying litigation. 

Trial Exs. 4, 212, 213, 625, 2026, 2031, 2032. That said, Hempstead testified that it was 

ultimately his decision to hire the Skadden law firm and that he later hired Weil Gotshal.

Trial Ex. 960 (Hempstead Dep.), pdf p. 33/331 Trans. p. 81:19-23; pdf p. 212-213/331 

Trans. p. 213:21-214:11. Hempstead managed those lawyers, they submitted their bills to 

Hempstead, and Hanson Industries paid the bills. Trial Ex. 960 (Hempstead Dep.), pdf p. 

33/331 Trans. p. 81:19-23; pdf p. 212-213/331 Trans. p. 213:21-214:11.

4. Overlapping Officers and Directors

237. Consistent with my findings in Section III.B, on the operational and financial autonomy of 

the U.S. operations, I find that any overlap in officers and directors between the relevant 

U.S. companies and Hanson Trust does not demonstrate that Hanson Trust controlled the 

U.S. operations.

238. Some executives at Hanson Industries became directors of Hanson Trust. Clarke became a 

director of Hanson Trust during part of the relevant time period. Trial Tr. vol. 11, 

1648:11-1649:7 (Clarke). He testified that joining the Hanson Trust board did not change 

how he managed or ran the U.S. operations. Id. 1650:25-1651:4 (Clarke). He further 

testified that he “absolutely never” received instruction from the Hanson Trust board about 

how to run the U.S. operations, and that the board never exercised control over the way he 

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managed the U.S. Id. 1651:7-11 (Clarke). After he was appointed “president of the U.S. 

operations,” he went to London at least five times a year; Trial Ex. 303 (listing Clarke as 

an associate director of HBML as of December 5, 1985).

239. Similarly, in 1990, Raos joined Hanson Trust’s board of directors. Trial Tr. vol. 8, 1109:4-

6 (Raos). His role was to report on U.S. operations. Id. 1110:15-19 (Raos). The Hanson 

Trust board never gave him directions or instructions on how to conduct business in the 

U.S. Id. 1110:20-1111:9 (Raos).

240. Hempstead also testified that he was at some point an associate director on the board of 

Hanson Trust. Trial Ex. 960 (Hempstead Dep.), pdf p. 210-211/331 Trans. p. 211:21-

212:7. But he explained that “Associate Director” was merely an “honorary” title, that he 

was not entitled to attend board meetings, that he had no voting rights, and that the primary 

purpose was to allow him to sign SEC documents for Hanson Trust when necessary. Id.

pdf p. 210-211/331 Trans. p. 211:21-212:7. Hempstead also testified that Hanson Trust

“did not participate in or direct anything in the United States.” Id. pdf p. 208/331 Trans. p. 

209:18-23.

241. Landuyt testified that he became the financial director of Hanson Trust in 1992. However, 

he did not retain any of the responsibilities that he had as CFO at Hanson Industries, and 

those responsibilities were assumed by other persons at Hanson Industries. Trial Tr. vol. 

12, 1768:14-1769:14 (Landuyt). In 1995, Landuyt transitioned to back to Hanson 

Industries as President and CEO after David Clark and John Raos left in connection with 

the demerger of U.S. Industries. Id. 1769:15-177:1 (Landuyt). He did not retain any of his 

responsibilities as the financial director of Hanson Trust. Id. 1770:2-5 (Landuyt). 

242. In addition, numerous executives at Hanson Industries held multiple positions for North 

American interests. Trial Tr. vol. 5, 826:18-827:4 (Solomon). The Hanson Industries 

personnel were outside the corporate chain of SCM, and they were placed in positions by 

HBML in part for the acquisition of SCM. Id. For example, Clarke held at least 17 

positions, Raos held 17 positions, and Landuyt held 11 positions, among others. Id.

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5. Undercapitalization

243. The testimony of HBML’s experts Thompson and Hubbard established that the corporate 

successors of SCM – and specifically those who succeeded to the FMW Site liability –

were adequately capitalized. In fact, they were better capitalized than the entire SCM 

conglomerate was before the tender offer.

244. HBML’s forensic accounting expert, Thompson, testified that SCM Corporation and its 

successor entities were adequately capitalized such that they could carry on their normal 

business operations, and they were able to meet their obligations as they came due. Trial 

Tr. vol. 7, 1026:4-12 (Thompson). In reaching this conclusion, Thompson analyzed 

multiple different metrics on the book value of various entities in the corporate 

successorship chain at various relevant points: the pre-tender offer SCM conglomerate in 

1985; HSCM-20; HSCM Holdings; HM Holdings; and Millennium Chemicals in 1996. Id.

991:13-992:12 (Thompson). Her analysis showed that, by a variety of measures, each and 

every successor to pre-tender offer SCM was better capitalized, from a book-value 

perspective, than pre-tender offer SCM was.

245. Thompson reached that conclusion as to the following metrics: total assets, id. 1002:4-

1003:15 (Thompson); Trial Ex. 2185, total current assets, Trial Tr. vol. 7, 1004:19-1005:25

(Thompson); Trial Ex. 2186, total fixed assets, Trial Tr. vol. 7, 1006:12-1007:14

(Thompson); Trial Ex. 2187, shareholders’ equity, Trial Tr. vol. 7, 1008:2-1009:10

(Thompson); Trial Ex. 2188, working capital, Trial Tr. vol. 7, 1009:20-1010:23

(Thompson); Trial Ex. 2189, and the ratio of total assets to total liabilities, Trial Tr. vol. 7, 

1011:9-1012:8 (Thompson); Trial Ex. 2190.

246. Thompson also compared the book value of SCM and its successors to certain similar 

conglomerates: General Electric; Kidde; LTV; Berkshire Hathaway; Litton; and ITT. Trial 

Tr. vol. 7, 1012:19-1013:19 (Thompson). To identify these contemporaneous similar 

conglomerates, she identified entities present in the United States, that operated during the 

same time frame, and were publicly traded. Id. 1013:20-1014:8 (Thompson). She 

compared the entities on three measurements: current assets to current liabilities, total 

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assets to total liabilities, and long-term debt to equity. Id. 1014:14-1015:7 (Thompson). In 

all but one instance, every successor entity was within the range of the other similar 

conglomerates on all three metrics, and thus were similarly liquid and similarly capitalized 

as the other conglomerates. Id. 1018:8-12; 1020:11-1023:11 (Thompson).

247. Thompson further relied on the deposition testimony of Hanson personnel in a position to 

know whether the successors to the FMW Site liability were adequately capitalized. Id.

1023:12-15 (Thompson). Six individuals testified that Hanson Industries’ holding and 

operating companies were adequately capitalized. Id. 1023:12-1024:14 (Thompson); see

also Trial Tr. vol. 8, 1209:9-16 (Raos) (Raos testified that there was never a time when 

U.S. subsidiaries were unable to pay their debts as they came due, or lacked sufficient 

capital to carry on normal business activities); Trial Tr. vol. 12, 1789:12-19 (Landuyt) 

(Landuyt testified that in capitalizing the fan companies, it was important to make sure that 

each one was solvent, or people could claim that there was an invalid transfer); Trial Ex. 

960 at 401:23-402:6 (Hempstead testified that HSCM-20 was perceived to be adequately 

capitalized); Trial Ex. 962 at 303:21-304:18 (Lee testified that Millennium was adequately 

capitalized).

248. Hubbard, HBML’s expert economist, testified that from a market value analysis, SCM’s 

successors had vastly greater resources than the value he estimated from the record of the 

liabilities. Trial Tr. vol. 9, 1328:10-21 (Hubbard). In augmenting Thompson’s various 

book-value metrics, Hubbard looked at whether SCM’s successors had sufficient financial 

resources at market prices to meet obligations as they come due. Id. 1347:21-1348:8

(Hubbard). To do this, Hubbard calculated the market equity capitalization for SCM, HM 

Holdings, and Millennium, and compared that to what was known or knowable about those 

entities’ environmental liabilities. Id. 1350:10-1351:2 (Hubbard). Hubbard testified that 

the market equity capitalization of HM Holdings, a predecessor to Millennium, exceeded 

that of pre-tender offer SCM, as well as the book value of HM Holdings, and during the 

period from 1989 to 1996, the market value of HM Holdings ranged from $1.7 billion to 

$4.5 billion. Id. 1356:6-22, 1364:12-23 (Hubbard). Hubbard further found that 

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Millennium at the time of the demerger had an implied market value of $1.2 billion, and its 

debt was rated investment grade. Id. 1357:20-1359:25 (Hubbard). The implied market 

value of SCM, HM Holdings, and Millennium at all relevant times vastly exceeded the 

amount of known and knowable environmental liabilities, which was approximately $150 

million at most. Id. 1367:25-1376:19 (Hubbard); Trial Exs. 445, 470, and 2149.

249. The City’s chief witness on capitalization was John Owens, an accountant and auditing 

expert. Owens’ testimony did not fully reach the issue of capitalization. He did not opine

that SCM’s successors were in fact undercapitalized. Instead, his first opinion was that he 

did not believe that a balance sheet with positive equity “necessarily” means that that entity 

is solvent or has adequate capital. Trial Tr. vol. 6, 902:14-21 (Owens). That was not an 

opinion on undercapitalization. Id. 905:3-906:10 (Owens). His second opinion was that 

HSCM-20’s pro forma balance sheet did not necessarily demonstrate the ability to pay 

HSCM-20’s liabilities. Id. 911:17-23 (Owens). That was too equivocal to be helpful. His

third opinion was that “the asset sale starting immediately in 1986, immediately after the 

acquisition—and those were sales of the operating subsidiaries and then additional sales, 

generally over the next couple of years, of those subsidiaries—limited the ability of 

HSCM-20 to pay its liabilities.” Id. 931:22-932:6 (Owens). Whether HSCM-20’s ability 

to pay its liabilities was “limited” is not the issue—the issue is undercapitalization. His

fourth opinion was similarly unhelpful because again, it is that Millennium’s positive 

equity does not necessarily demonstrate its ability to pay its liabilities. Id. 933:15-22

(Owens).

250. The core of Owens’ opinion was that HSCM-20’s pro forma balance sheet did not 

necessarily demonstrate the ability to pay HSCM-20’s liabilities, because HSCM-20 would 

need to sell certain assets in order for some other entity in the ownership chain to repay 

certain debt related to the acquisition of SCM, and because the midpoint of potential 

liability for the Kalamazoo site was $350 million. Id. 914:3-928:18 (Owens). But he

admitted that neither of these liabilities needed to be addressed in HSCM-20’s financial 

statements under GAAP, and that the exercise Owens did was not something he would do 

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as an accountant or in order to value the liabilities in HSCM-20. Id. 915:17-916:7; 928:19-

930:11 (Owens). When I asked, “Is that a valuation that you would make as an accountant 

for a company?”, Owens responded, “Well, no, no[.]” Id. 928:19-930:11 (Owens). And 

when I asked, “you’re not opining that that’s fair value?”, Owens responded, “Absolutely, 

right.” Id. 928:19-930:11 (Owens). He agreed with me that he’s “just picking that 

number” while “not opining that that’s a fair value.” Id. 928:19-930:11 (Owens). He had 

no opinion on whether HSCM-20 or Millennium were able to pay their liabilities, or 

whether they had ever failed to pay a liability that had come due. Id. 943:9-14; 945:4-24

(Owens). He did not account for the fact that, ultimately, HSCM-20 merged with a much 

better-capitalized entity, HM Holdings. Id. 943:22-944:9 (Owens). Nor did he account for 

the fact that Millennium had earnings that could be used to pay for the environmental 

liabilities to which Millennium had succeeded. Id. 958:5-11 (Owens).

251. The City did not present sufficient evidence or prove that any successor to the FMW Site 

liability was undercapitalized. 

6. Failure to Maintain Arms-Length Dealing

252. As outlined in Section III.B, Hanson Industries and the U.S. operations were generally 

autonomous from Hanson Trust, and I find that there was no failure to maintain an armslength relationship between the U.S. operations and Hanson Trust. The issue under this 

factor, and piercing the corporate veil in general, is whether Hanson Trust’s corporate veil 

can be pierced via Hanson Industries/North American interests, not whether the operating 

companies in the United States could pierce Hanson Industries’ corporate veil. 

253. The City makes much of testimony from Clarke that he saw Hanson Trust and Hanson 

Industries as akin to a family business. See, e.g., Trial Tr. vol. 11, 1679:1-24 (Clarke). He 

was not sure that the Hanson Industries operating companies had boards of directors. Id. 

With respect to making decisions about large acquisitions, Clarke testified that he did not 

go “through the whole board structure and agreement” nor were there requirements to 

obtain fairness opinions. Id. Landuyt testified that there were no loan documents or 

contracts associated with loans issued to the U.S. operating companies, nor were the loans 

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secured. Trial Tr. vol. 12, 1845:7-1846:3 (Landuyt). This all relates to how Hanson 

Industries did its business, not Hanson Trust.

254. Professor Solomon noted that there was “no indicia of arm’s-length bargaining” normally 

seen in intercompany transactions setting up the fan companies. Trial Tr. vol. 5, 824:17-19 

(Solomon). There is no evidence that the fan companies had “any will of their own, no 

evidence that Hempstead was acting with the hat of the fan companies rather than acting at 

the direction of Mr. Hellings’ memo, which was implemented.” Id. 824:13-16 (Solomon). 

Raos testified, that as to his dealings involving HSCM-20, the transactions were not made 

at arm’s-length, as he was “dealing with himself.” Trial Tr. vol. 8, 1262:15-19 (Raos). 

But the alter ego issue is not whether Hanson Industries could be pierced from the 

operating companies, it is whether Hanson Trust itself could be pierced. 

255. Solomon provided three examples that purport to support his opinions on lack of an armslength relationship. First, he opined that the SCM restructuring did not involve armslength dealing. Trial Tr. vol. 5, 823:16-22 (Solomon). But as outlined in Sections IV.B–

D, Hanson Industries, not Hanson Trust, controlled and directed the post-acquisition 

investigation and restructuring of SCM. The relevant legal issue is whether Hanson Trust

failed to engage in arms-length dealing with the relevant U.S. subsidiaries. Whether 

Hanson Industries did or did not maintain an arms-length relationship with the various U.S. 

subsidiaries during the SCM reorganization is unimportant to this analysis.

256. Solomon based his opinion in part on Trial Exhibit 42, which is a unanimous written 

consent of the fan companies and SCM to dissolve SCM. Solomon noted that Hempstead 

“is signing for everyone here, all of the fan companies” purportedly without evidence that 

Hempstead was acting on behalf of the fan companies’ best interest. Trial Tr. vol. 5, 

824:9-19 (Solomon). Hempstead was a vice president for each of the fan companies, so he 

appears to have had proper authority. Trial Ex. 42, HBML 0000814-816. This shows the 

relationship between Hanson Industries and the U.S. fan companies–e.g., it is a Hanson 

Industries employee signing on behalf of other U.S. companies. It is not evidence of 

Hanson Trust failing to maintain arms-length relationships. And as Landuyt explained, the 

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type of intergroup mergers involved in the restructuring would not have merited 

involvement of outside advisors because it involved a series of mergers up into a company 

that already owned the merged entity. Trial Tr. vol. 12, 1856:8-1857:11 (Landuyt). 

257. Solomon also opined that there were no indicia of arms-length dealing with the July 14, 

1989 Amended and Restated Cross-Indemnification Agreement between Smith Corona 

Corporation and HM Holdings as part of the Smith Corona Corporation IPO. Trial Tr. vol. 

5, 829:24-832:2 (Solomon). While acknowledging that “[i]t’s not unusual” to have 

indemnification agreements when “IPO-ing a subsidiary,” Professor Solomon said that he 

did not see any indicia of arms-length dealing because he did not see HM Holdings acting 

directly, that “this is Hanson that’s dictating these transactions,” and that “they’re also 

stating specifically they’re not on arm’s-length basis.” Id. 831:18-832:2 (Solomon).

258. I do not agree. First, HM Holdings did act directly—it entered into and signed a document 

identifying it as a party to the agreement. Trial Ex. 26, HBML 0003060. Hempstead was 

an officer and director of HM Holdings, along with eleven other officers and directors as of 

1989. Trial Ex. 2372, HBML0007364. Second, it was not Hanson Trust “dictating” these 

transactions. The idea to do an IPO for Smith Corona Corporation came from Smith 

Corona Corporation’s chief executive, Lee Thompson, not someone at Hanson Trust. Trial 

Tr. vol. 11, 1695:25-1696:6 (Clarke). The ultimate decisionmakers on whether do to it 

were Sir Gordon and David Clarke. Id. 1696:1-6, 1696:13-20 (Clarke). Hanson Trust

played no role in that decision. Id. 1696:7-12, 1696:21-1697:1 (Clarke). Finally, the 

document itself does not “stat[e] specifically” it is not an arm’s-length agreement. Trial 

Ex. 26. Regardless, the indemnification agreement is at most evidence of the relationship 

between HM Holdings and Smith Corona Corporation and has no bearing on whether 

Hanson Trust failed to maintain arms-length relationships.

259. Finally, Solomon opined that the Millennium demerger was not a non-arm’s length 

transaction. Trial Tr. vol. 5, 832:21-833:11 (Solomon). Professor Solomon cited the risk 

disclosure statement in the August 23, 1996 Millennium Information Statement (Tr. Ex.

242). Trial Tr. vol. 5, 833:12-834:3 (Solomon). The disclosure states:

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In connection with the Demerger Transactions, the Company and Hanson 

will enter into several agreements for the purpose of giving effect to the 

Stock Dividend and defining their ongoing relationship. These agreements 

will not be the result of arm’s-length negotiations, and there can be no 

assurance that each of such agreements, or that each of the transactions 

provided for therein, will be effected on terms at least as favorable to the 

Company or to Hanson as could have been obtained from unaffiliated third 

parties.

Trial Ex. 242, HBML 0008081.

260. Solomon used that statement to conclude that a $2.25 billion debt was allocated to 

Millennium on a non-arm’s length basis. Trial Tr. vol. 5, 834:4-17 (Solomon). I find to 

the contrary. As explained in Section V, the $2.25 billion “Allocated Loan” “relate[d] 

directly to the Chemicals Business” and arose from the acquisition of Quantum Chemicals, 

one of the companies that would be demerged with Millennium. Aside from pointing to 

the general language in the risk disclosure statement, Solomon did not explain why 

allocating debt to Millennium that was associated with the acquisitions of one 

Millennium’s subsidiaries constitutes a non-arm’s length transaction. And Landuyt 

testified that Millennium hired an independent investment advisor who provided a fairness 

opinion in connection with the demerger. Trial Tr. vol. 12, 1827:25-1828:8 (Landuyt). 

Further, Solomon also acknowledged, but inexplicably discounted, that Millennium’s 

shareholders were Hanson Trust shareholders. Trial Tr. vol. 5, 883:17-884:6 (Solomon). 

That means that Hanson Trust’s shareholders held the $2.25 billion debt that was allocated 

to Millenium, see id., which further undermines Solomon’s opinion that this was not an 

arm’s-length transaction.

261. Finally, the plaintiffs make much of the “typewriter IPO” as evidence of non-arms-length 

transactions. The tender offer indicated “the possible disposition” of the typewriter 

business. Trial Ex. 243 at 32. The HBML subsidiary that was created to hold the 

typewriter business, HSCM-10 or “SCC” (Smith Corona Corporation), was listed on the 

New York Stock Exchange via an initial public offering (“IPO”) in 1989. Dkt. No. 266, 

Undisp. Fact 33. But the information in the prospectus on the IPO is not evidence of nonarms-length transactions. See Trial Ex. 21. Once again, this transaction merely showed a 

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standard, non-controlling relationship between a parent and indirect subsidiary. See 

generally id.; see also Trial Ex. 454. The document also does not say that the money from 

this transaction was “received” by Hanson Trust, and none of the City’s experts provided 

the analysis necessary to understand where the money went. See Trial Ex. 401, 

Hellings_0027829; Trial Ex. 952 (Ludlam Dep.), 133:2-135:7.. Finally, the evidence 

about the cross-indemnity agreement between SCC and HM Holdings says nothing about 

whether HBML’s actions were taken at arms-length. See Trial Ex. 26. 

7. Use of Corporate Entity as Mere Shell or Instrumentality

262. I find that Hanson Trust did not use the U.S. companies as mere shells or instrumentalities. 

As outlined in Section III and incorporated herein, the evidence establishes that Hanson 

Industries and the U.S. operations were managerially, operationally, and financially 

autonomous from Hanson Trust. They maintained their own independent businesses and,

although they were subsidiaries of the ultimate parent company, Hanson Trust, they were 

not merely shells or instrumentalities.

263. The City has emphasized that Hanson Trust, as the ultimate parent, nonetheless benefited 

from all of from the U.S. operations, suggesting that the U.S. operations were therefore 

merely instruments for Hanson Trust. But it is normal for a parent company to benefit 

from a subsidiary. Trial Tr. vol. 5, 777:18-25 (Hill). Hill agreed that benefiting the parent 

company is “essentially the purpose of the subsidiary’s existence.” Id. 778:1-3 (Hill).

264. The City also elicited testimony from Hill that from a “strategic, organizational, and 

management perspective,” Hanson Trust and Hanson Industries, including the U.S. 

operations, were a “single enterprise.” Id. 733:21-734:4 (Hill). But he acknowledged that 

he was not using that term in a “legal sense.” Id. 763:5-12 (Hill). And he conceded that 

his definition of “single enterprise” was so broad as to encompass any collection of 

companies that operate with strategic, operational, and economic cohesion, and that it 

would include “most conglomerates,” and companies such as Microsoft. Id. 763:18-

764:25 (Hill). To the extent that the City contends that this demonstrates the U.S. 

companies were mere instrumentalities of Hanson Trust, it is wrong. That definition of a 

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“single enterprise” is too broad and is inapplicable to the facts and legal questions at issue.

265. Professor Solomon opined that HHNBV and HSCM Industries Inc. were mere “conduits or 

instrumentalities” used to implement Hanson Trust’s tender offer for SCM. Trial Tr. vol. 

5, 889:21-890:13 (Solomon). His opinion was based on his view that “Hanson Trust PLC 

is making the decisions” for the SCM acquisition and restructuring. Id. 890:1-13

(Solomon). He testified that Hanson Trust was “making the decisions for the acquisition 

of the shares and otherwise,” “engaging the investment banker,” “organizing the loans,” 

and that it created the entity used for the merger. Id. 890:5-11 (Solomon). He cited 

Hempstead’s involvement, noting that Hempstead did not have a position with HHN and 

did not otherwise appear to be authorized to act on Hanson Trust’s behalf for the 

restructuring transactions. Id. 890:14-891:6 (Solomon).

266. As I found in Section IV, Hanson Trust was not making the decisions with respect to the 

SCM acquisition and restructuring—it was Hanson Industries personnel. Solomon’s 

critique of Hempstead’s role does not account for the role of HSCM Industries Inc., the 

lead purchaser on the SCM acquisition, and Hempstead’s role with HSCM Industries Inc. 

Solomon did not consider the series of August 23, 1985 corporate resolutions for HSCM 

Industries Inc. Trial Tr. vol. 5, 892:3-19, 893:1-3 (Solomon); Trial Ex. 466, 

HBML_0000089, 0000092-93. They appoint HSCM Industries Inc.’s officers, all of 

whom were Hanson Industries personnel, not Hanson Trust personnel. Trial Tr. vol. 5, 

893:1-3 (Solomon); Trial Ex. 466, HBML_0000089. They authorize HSCM Industries 

Inc. to engage in the SCM tender offer and in litigation related to the tender offer. Trial Tr.

vol. 5, 893:7-17 (Solomon); Trial Ex. 466, HBML_0000092-93. And they authorize 

HSCM Industries Inc. to execute the dealer-manager agreement with Rothschild Inc. Trial 

Tr. vol. 5, 893:18-24 (Solomon); Trial Ex. 466, HBML_0000093.

267. The decisionmakers for HSCM Industries Inc. were Clarke, Raos, Hempstead, and Eric 

Hanson. Trial Ex. 960 (Hempstead Dep.), pdf p. 222/331 Trans. p. 223:17-24. Hanson 

Trust personnel “had no role at all” with respect to decisions concerning HSCM Industries 

Inc. Trial Ex. 960 (Hempstead Dep.), pdf p. 221/331 Trans. p. 222:1-4.

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268. Additionally, the engagement letter with Rothschild was not signed only by Hanson Trust. 

Trial Ex. 376. It was signed by HSCM Industries Inc., HHNBV, as well as Hanson Trust. 

Trial Ex. 376. According to Clarke, Hanson Trust never paid anything on Rothschild’s 

engagement. Trial Tr. vol. 11, 1733:11-21 (Clarke).

269. Solomon cited that Hanson Trust signed a “backstop” letter, verifying to Rothschild that it 

had the funds to complete the tender offer as evidence that Hanson Trust was making the 

decisions. Trial Tr. vol. 5, 800:25-801:21 (Solomon); Trial Ex. 273. He acknowledged 

that he was “not exactly sure” of the reason for this letter. Trial Tr. vol. 5, 801:7-8

(Solomon). Raos explained that the reason Hanson Trust signed the backstop letter was 

that Chemical Bank, which had committed to fund the tender offer, discovered a conflict 

late in the tender offer process, forcing Raos to seek alternate funding from Citibank. Trial 

Tr. vol. 8, 1156:14-1157:12 (Raos). Since Hanson Industries did not have a firm 

commitment for financing, Rothschild was “nervous” about going to market with a tender 

offer without a backstop from Hanson Trust that there were sufficient funds to cover the 

tender offer. Id. 1156:14-1157:12 (Raos). It was strictly in case “something goes wrong” 

with the financing. Id. Ultimately, Raos did secure the necessary financing and the 

backstop was never invoked.

8. Asset Stripping

270. I find that there is no evidence that Hanson Trust engaged in asset stripping of any of the 

U.S. companies. The City attempted to elicit testimony from Solomon that Hanson Trust

engaged in asset stripping. But I asked him directly, “Are you saying that asset stripping 

occurred here, or you’re saying this gives the potential for it?” Trial Tr. vol. 5, 825:8-25

(Solomon). Solomon declined to state that asset stripping had occurred. He responded 

that, “I think this is consistent with asset-stripping.” Id. 825:8-25 (Solomon).

271. In supporting his opinion that there was conduct “consistent” with asset stripping, Solomon 

then identified two purported examples. First, he claimed that “[t]here’s a billion dollars in 

assets being transferred up” to Hanson Trust. Id. 825:8-826:5 (Solomon). Second, he 

claimed that there was “also asset stripping” in connection with the Millennium demerger. 

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Id. 825:8-25 (Solomon). The evidence does not support those opinions and neither 

example demonstrates asset stripping. 

272. Solomon was unable to identify evidence supporting his opinion that $1 billion was 

transferred to Hanson Trust. When challenged to identify documents demonstrating this 

transfer, Solomon could not identify any specific documents showing any transfer of $1

billion to Hanson Trust; he instead deferred to his expert report. Id. 844:10-845:18

(Solomon). When given the opportunity to review his report, he merely paraphrased 

various sections of the written opinions in his report. Id. 870:13-874:3 (Solomon). But his

report is not evidence. When asked a final time, “[w]here is the evidence that a billion 

dollars went to Hanson PLC?”, he pointed only to a portion of his report that discussed the 

$180 million used to purchase back the SCM shares HHNBV had purchased as part of the 

SCM acquisition. Id. 873:15-874:3 (Solomon). As Raos explained, the SCM shares 

owned by HHNBV were bought back so that the U.S. operations “would own a hundred 

percent” of SCM. Trial Tr. vol. 8, 1202:21-1203:4, 1246:11-1247:2 (Raos). Additionally, 

Solomon conceded that the $1 billion in cash proceeds was ultimately used to pay off the 

debt used to finance the SCM acquisition. Trial Tr. vol. 5, 875:23-876:2 (Solomon). He 

testified that this benefited Hanson Trust because Hanson Trust arranged for $765 million 

in financing from its banker, Lloyd’s of London. Id. 885:20-886:10 (Solomon). But there 

is no evidence that Hanson Trust arranged a $765 million loan with Lloyd’s to purchase 

SCM. Solomon relied on the October 11, 1985 tender offer document, id. 885:20-886:4

(Solomon), but that document does not mention Lloyd’s at all or state that Hanson Trust 

directly obtained the loan. Trial Ex. 243, HBML_0015572. Instead, it states that Hanson 

Trust’s “indirect subsidiary” obtained a commitment from a “U.S. bank” for a loan facility 

up to $775 million. Trial Ex. 243, HBML_0015572. That “U.S. bank” was Citibank, not 

Lloyd’s, and Raos, not Hanson Trust, arranged for and negotiated the terms of that loan. 

Supra Section IV.A.2. And even if proceeds had been used to pay off debt incurred 

directly by Hanson Trust, neither the City nor Solomon explained why paying off debt 

incurred to acquire SCM demonstrates asset stripping or is otherwise improper. Finally, 

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his opinion that $1 billion was transferred to Hanson Trust is inconsistent with the 

evidence on the financial separateness between the U.S. and the U.K. operations. Supra

Section III.B; Trial Ex. 962 (Lee Dep.), 294:16-295:8 (the cash flows and earnings 

generated from the U.S. operations were used to continue growing the U.S. operations.).

273. Solomon also opined that the $2.25 billion debt allocated to Millennium as part of the 

demerger was also consistent with asset stripping. Trial Tr. vol. 5, 834:4-14, 882:21-

883:3, 883:17-20 (Solomon). As explained in Sections V, VI.A.7, he mischaracterizes that 

debt and failed to take into consideration that the $2.25 billion “Allocated Loan” “relate[d] 

directly to the Chemicals Business” and arose from the acquisition of Quantum Chemicals, 

one of the companies that would be demerged with Millennium. He did not otherwise 

explain why keeping a debt used to acquire Quantum Chemicals with the company, 

Millennium, that would demerge with and own Quantum Chemicals, is “consistent” with 

asset stripping. 

274. I am persuaded by the testimony of HBML’s corporate expert, Hubbard. He testified that 

asset stripping “would refer to removing assets from a firm and transferring them to the 

point that you would question the financial viability of the subject firm; in other words, 

pushing it closer to bankruptcy or insolvency.” Trial Tr. vol. 9 1376:20-24 (Hubbard). His 

analysis “ruled out” that asset stripping occurred because the successors to SCM always 

had more than enough assets to satisfy the known amounts of liabilities. Id. 1328:10-21; 

1376:20-1377:15 (Hubbard). 

275. Even under Solomon’s definition, there was no asset stripping. He described asset 

stripping as being “about consistently transferring assets to a party while leaving the 

liabilities behind.” Trial Tr. vol. 5, 824:20-825:7 (Solomon). That did not happen in this

case. Supra Sections V, VI.A.7. 

276. As Landuyt testified, as HSCM-20 merged up the chain to eventually merge with HM 

Holdings, those intercompany mergers “included all of the assets and liabilities of the 

merged company, not just any specific liability.” Trial Tr. vol. 12, 1856:8-1857:3 

(Landuyt). There was no transferring out of specific liabilities without the assets. Id.

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1856:8-1857:3 (Landuyt). And at the end of the merging up of HSCM-20, the result was a 

company, HM Holdings, that was more adequately capitalized and better able to pay for 

liabilities than the original SCM entity at the time of acquisition.

277. While Solomon did not include it as part of his asset stripping opinion, he referred to a 

document that “all proceeds flowed to” Hanson Trust. Trial Tr. vol. 5, 832:3-20

(Solomon). There is an August 8, 1989 cash report from S. Butler to Lord Hanson, Sir 

Gordon, and others, that states that “£218mn ($353mn) was received upon the flotation 

[IPO] of Smith Corona.” Trial Ex. 401, Hellings_0027829. Based on this, Solomon 

opines that “Hanson PLC received the benefits of this transaction, which was $353 

million,” inferring that the $353 million raised on the Smith Corona Corporation IPO was 

transferred to Hanson Trust. But on its face the document does not state that the money 

was “received” by Hanson Trust. Trial Ex. 401, Hellings_0027829. Ludlam testified that 

in order to see where the $353 million went, one would need conduct an analysis of the 

“cash reports week-on-week to see where that went.” Trial Ex. 952 (Ludlam Dep.), 133:2-

135:7. Neither Solomon nor the City’s accounting expert, John Owens, provided that

analysis. 

278. The evidence undermines any inference that, despite Hanson Trust not being involved in 

the IPO, it received the $353 million raised on the IPO. Solomon’s inference is 

inconsistent with the substantial evidence on the financial autonomy of the U.S. operations. 

Lee testified that he could not recall a time the U.S. companies ever sent money to Hanson 

Trust. Trial Ex. 962 (Lee Dep.), 294:11-15. As he explained, the U.S. operations retained 

the earnings generated in the U.S. to continue growing the U.S. operations. Trial Ex. 962 

(Lee Dep.), 294:16-295:8. Moreover, as described above, the Smith Corona Corporation 

IPO was conceived of by Smith Corona Corporation’s chief executive, Lee Thompson, not 

someone at Hanson Trust. Trial Tr. vol. 11, 1695:25-1696:6 (Clarke). The ultimate 

decisionmakers on whether do to it were Sir Gordon and Clarke. Id. 1696:1-6, 1696:13-20

(Clarke). Hanson Trust played no role in that decision. Id. 1696:7-12, 1696:21-1697:1

(Clarke). 

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B. SUCCESSOR LIABILITY

279. The City also argued that Hanson Trust took direct responsibility for the Marchant 

environmental liability. This section traces the relevant facts that disprove that contention. 

280. As described in more detail in the Conclusions of Law, I find that the SCM tender offer 

was a stock transaction, not a purchase of assets. The City presented no evidence that any 

assets belonging to SCM or its subsidiaries were ever transferred to Hanson Trust. Raos 

testified that Hanson Trust did not assume the liabilities of SCM; HM Holdings ultimately 

assumed the liability. Trial Tr. vol. 8, 1106:23-1107:24, 1203:17-1204:8 (Raos). Clarke 

also testified that Hanson Trust did not assume SCM’s liabilities. Trial Tr. vol. 11, 

1645:15-21, 1693:23-1694:12 (Clarke).

281. Millennium Holdings was the successor to Marchant’s alleged FMW Site liabilities. To 

repeat, the line of successorship is well-documented and largely undisputed. On February 

21, 1986, SCM and HSCM Merger Co. Inc. entered into the Plan and Agreement of 

Merger and on March 31, 1986, they filed a Certificate of Merger in which the surviving 

entity retained the name “SCM.” Trial Exs. 2054-33, 2054-32. On November 3, 1986, 

SCM merged into HSCM-20, at which point HSCM-20 assumed the Marchant liability. 

Dkt. No. 266, Undisp. Fact 30. On November 17, 1986, former HSCM-20 merged into its 

parent company, HSCM Holdings, Inc., then changed its name to SCM. As part of the 

merger, HSCM Holdings, Inc. (now named “SCM”) assumed Marchant’s liabilities. Dkt. 

No. 266, Undisp. Fact 31. On October 14, 1988, SCM (the former HSCM Holdings, Inc.) 

was merged into HM Holdings, Inc., which had been formed in approximately 1980 as a 

Delaware corporation. Dkt. No. 266, Undisp. Fact 32. HM Holdings, Inc. assumed 

Marchant’s liabilities as a result of the merger. Dkt. No. 266, Undisp. Fact 32. On 

September 30, 1996, HM Holdings, Inc. merged with Millennium Holdings, Inc. 

(“Millennium Holdings”), a Delaware company and subsidiary of Millennium. Dkt. No. 

266, Undisp. Fact 35. HM Holdings, Inc. was the surviving entity but changed its name to 

“Millennium Holdings, Inc.” Dkt. No. 266, Undisp. Fact 35. It was the successor to the 

Marchant liabilities.

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282. The City relies on two internal Hanson Industries memoranda discussing SCM’s legacy 

environmental obligations to argue that Hanson Trust either expressly or impliedly 

assumed SCM’s legacy environmental liabilities. Trial Exs. 450, 460. Trial Exhibit 450 is 

a memorandum authored by Brian Hellings that provides in relevant part that “[w]ith our 

acquisitions of SCM, Quantum, Kaiser and particularly Beazer we took over substantial 

liabilities to clean up toxic sites due to contamination of ground at chemical sites.” And 

Trial Exhibit 460 is a memorandum from Don Schoenwolf, who was Hanson Industries’ 

head of insurance. The memorandum provides in relevant part that “[i]t therefore appears 

that Hanson will have to self-assume all risk of loss from pollution arising out of exposure 

in 1986.” Trial Ex. 460. 

283. Neither memorandum identifies that Hanson Trust itself—as opposed to one of its 

subsidiaries, such as HM Holdings—assumed or would bear the costs of SCM’s legacy 

environmental liabilities. The witness testimony is consistent that Hellings provided tax 

and insurance related advice for the entire group of Hanson companies, so it is not unusual 

that he might use the word “our” or “we.” Neither memorandum is an express agreement 

that Hanson Trust will assume any liability of SCM, and the City has not introduced any 

evidence of any such agreement.

284. An assumption of SCM’s liabilities by Hanson Trust would be inconsistent with the 

substantial testimony that the operations finances of the U.S. and U.K. were kept separate. 

Equally important, the City has offered no evidence explaining why HBML would have 

made an exception to its long-standing practice of separating U.S. and U.K. finances in 

order to assume the liabilities of SCM, when the liabilities had already been assumed by 

HM Holdings, an entity that had sufficient financial resources to pay for SCM’s liabilities. 

C. TILLOTSON

285. The City identified the transfer of Hanson Industries into Tillotson as a potential way 

Hanson Trust’s corporate form could be pierced. But the City’s accounting expert, John 

Owens, conceded that he “did not form an opinion at all on whether or not Tillotson 

Commercial Motors was undercapitalized,” which would go to piercing the corporate veil. 

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Trial Tr. vol. 6, 946:17-948:8 (Owens). To the contrary, it appears that Tillotson regularly 

maintained its corporate books and records and was adequately capitalized to carry on its 

ordinary business and pay its liabilities when they became due: HBML’s accounting 

expert, Suzanne Thompson, testified that from 1986 to 1993, Tillotson “had millions and 

millions of British pounds in net current assets, meaning they had more current assets than 

current liabilities.” Trial Tr. vol. 7, 1036:17-1037:14 (Thompson). For example, 

according to Tillotson’s financial statements, in 1986 Tillotson had £21,310,611 in net 

current assets, and in 1993 Tillotson had £35,831,801 in net current assets. Trial Ex. 418, 

TCM_0000125; Trial Ex. 219, HBML 0013053. 

286. Rogers, the current company secretary of HBML, testified that from the 1980s to 1990s, 

Tillotson maintained regular corporate minutes and annual directors’ reports and accounts. 

Trial Tr. vol. 14, 2077:20-2078:4, 2080:4-2081:6, (Rogers); Trial Ex. 2378 (1985-1996 

Tillotson corporate minutes); Trial Ex. 2377 (1985-1996 Tillotson annual directors’ reports 

and accounts). Tillotson’s annual directors’ reports from 1985 to 1996 include various 

financial information, such as profit and loss accounts, balance sheets, accounting policies, 

operating costs, and information concerning amounts falling due after more than one year. 

See, e.g., Trial Ex. 2377, TCM_0000005-0000012. Rogers explained that, based on this 

information from 1985 to 1996, Tillotson had net current assets sufficient to pay its 

liabilities as they became due. Trial Tr. vol. 14, 2084:15-2085:15, 2087:18-22 (Rogers). 

Rogers further testified that Tillotson still exists today and continues to go through annual 

corporate formalities, such as preparing annual accounts that are audited, having board 

meetings, and doing an annual return and tax comp every year. Id. 2073:11-2074:2

(Rogers).

287. In terms of the fundamental accounting concept disclosed in Tillotson’s annual directors’ 

reports, see, e.g., Trial Ex. 2377, TCM_0000007, Rogers explained that generally the 

accounts are prepared under a going concern concept “on the basis that the company will 

continue as a going concern for the foreseeable future.” Trial Tr. vol. 14, 2087:25-2088:16

(Rogers). Rogers added that the going concern concept does not have any impact on 

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Tillotson’s net working capital, nor does it mean that Tillotson would not be able to meet 

its obligations within the year without the parent company’s financial support. Id.

2088:17-2089:12 (Rogers).

D. KALAMAZOO

288. The City introduced evidence regarding a contaminated Superfund site located in 

Kalamazoo, Michigan, to support its various theories to pierce the corporate veil regarding 

the Marchant environmental liabilities: operations from a paper mill owned and operated 

by one of SCM’s subsidiaries, Allied Paper, had contributed to Polychlorinated biphenyls 

(“PCB”) contamination at Allied Paper’s mill as well as downstream in Portage Creek and 

the Kalamazoo River. HSCM-20 ultimately received SCM’s environmental liability for 

the Kalamazoo Mill during HBML’s reorganization of SCM, which ultimately flowed to 

Millennium Chemicals. See Trial Exs. 451, 2007 (SCM receives liabilities), 2054-10 

(SCM merges with HSCM-20); Trial Tr. vol. 12, 1797:2-1798:11 (Landuyt) (HSCM-20 

“owned everything” formerly owned by SCM); Dkt. No. 266, Undisp. Facts 30-32 

(ultimately merged with HM holdings); see also Trial Exs. 332, 472, 478 (Millenium held 

the liability). The City asserts that HBML knew or should have known during the period 

when it indirectly owned SCM and its successors (i.e., 1986 to 1996) that the Kalamazoo 

Mill environmental liability would be valued much higher than it was, close to the 

approximately $1.1 billion in a 2010 bankruptcy settlement agreement entered into by 

LyondelBasell, a successor owner, with the U.S. Environmental Protection Agency and 

other state and federal agencies. 

289. In 2004, Lyondell acquired Millennium, and in 2009, Lyondell declared bankruptcy. Dkt. 

No. 266, Undisp. Fact. 37. The bankruptcy occurred over a decade after HBML had any 

potential responsibility for the FMW Site liability following the demerger of Millennium. 

Lyondell agreed to pay approximately $100 million in cash in relation to the Allied Paper 

site and allowed claims against its bankruptcy estate totaling more than a billion dollars. 

See Trial Ex. 449 at 13, 16, 23. No evidence was introduced to explain how the amounts 

in the settlement were calculated. None linked the 2010 settlement with the conditions that 

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were known or knowable during the years 1986 to 1996, when Hanson Trust indirectly 

owned SCM and its successors. Nothing showed what the expected recovery on allowed 

claims would be, or what was actually recovered as a result of the non-cash, allowed 

claims. The settlement also addressed claims by other states and their agencies arising 

other contaminated properties other than the Allied Paper site. Id. 3-5 (referring, inter alia, 

to claims arising from nine “Transferred Real Properties”) and 9-10 (referring to nineteen 

“Liquidated Sites”). 

290. There is no evidence that the Kalamazoo site rendered SCM’s successor corporations 

undercapitalized. Supra Section VI.A.5. To the contrary, as with the FMW Site liabilities, 

the legal entities responsible for it increased in capitalization during the time it was 

Hanson’s responsibility. 

291. And there is no evidence that Hanson Trust was involved in any way in decisions 

regarding the Kalamazoo Mill. Mark Alexander testified that Hanson Trust was not 

involved in any decisions relating to the Kalamazoo mill. Trial Ex. 956 (Alexander Dep.), 

27:7-28:2. DeWitt, outside counsel for the site owner/operator recalled that a company 

called HM Holdings was involved, but he did not recall its corporate relationship to Allied 

Paper. (DeWitt Dep.) Trial Ex. 954, 16:16:21. He recalled working primarily with a 

lawyer named Sam Friedman. Id. 15:4-7, 15:22-16:10. Friedman was the in-house counsel 

for SCM Chemicals, who managed environmental issues. Trial Ex. 960 (Hempstead Dep.), 

pdf p. 285/331 Trans. p. 286:21-25 (discussing Exhibit 453). DeWitt did not recall ever 

working with, or reporting to, people having British accents. Trial Ex. 954 (DeWitt Dep.), 

17:12-15. The 1988 cost estimates (Tr. Exs. 782 and 783) were sent to Grant Annable and 

Sam Friedman at Hanson Industries. No one from Hanson Trust was copied. 

292. I do not find the Kalamazoo Mill evidence particularly relevant to this case: it does not 

shed light on whether HBML is liable for the Marchant environmental liabilities. I 

excluded evidence at trial under Federal Rule of Evidence 403 that the City offered 

regarding the extent of the pollution but allowed it to offer evidence of how HBML 

handled the liability and whether it showed undercapitalization in some way. It does not.

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VII. POST BANKRUPTCY HISTORY

293. HBML argues that the City contributed to the contamination at the FMW site and that its 

failure to notify potentially responsible parties as soon as the Stellar report (discussed 

below) disclosed the contamination resulted in the City’s inability to obtain damages from 

the successor to Millennium, which was responsible for the Marchant liability. I find that 

Emeryville was not a meaningful contributor (if at all) to the pollution on the Marchant 

site. And its timing in addressing the FMW remediation was understandable. That said, it 

is undeniable that timely notice of the issue at the FMW site to Millenium or Lyondell or 

even HBML would have substantially increased the likelihood that the proper party could 

have provided some relief.

A. The City’s Acquisition of the FMW Site and Knowledge of Contamination 

294. The City, through the Redevelopment Agency of the City of Emeryville (the 

“Redevelopment Agency”), acquired the FMW Site in 1999 through use of eminent 

domain authority consistent with California Gov. Code § 7267.7, which directs entities to 

offer to acquire the entire property if the owner desires. Although Emeryville acquired the 

FMW Site through its Redevelopment Agency as part of a negotiated purchase, it did so as 

the culmination of the eminent domain process as directed by this statute. 

295. After the Purchase and Sale Agreement was executed, the City conducted environmental 

due diligence prior to closing on the property. An environmental consultant, Stellar 

Environmental Solutions (“Stellar”), was engaged to conduct a pre-acquisition 

environmental investigation. Dkt. No. 266, Undisp. Fact 18. 

296. On May 21, 1999, the initial results of environmental due diligence conducted by Stellar 

were sent to Lozick’s trust, as noted by the City’s witness, Michael Biddle. Trial Tr. vol. 

4, 562:13–563:15 (Biddle). Subsequently, on May 28, 1999, the First Amendment to the 

Purchase and Sale Agreement was executed. Id. 563:16–563:25 (Biddle); Trial Ex. 502. 

The First Amendment acknowledged the presence of contaminants at the FMW Site and 

stated that the purchase price was for an “as if clean” fair market value. Dkt. No. 266, 

Undisp. Fact 19; Trial Tr. vol. 4, 564:1-566:3 (Biddle); Trial Ex. 502 ¶ 9. Emeryville 

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insisted on contract provisions that preserved its rights in order to be able to later seek 

compensation from Lozick’s trust (or the other WSL Parties) for environmental cleanup 

costs to remediate conditions at the FMW Site. Dkt. No. 266, Undisp. Fact 19. 

297. In June 1999, Stellar submitted a Phase II Investigation report to the City and the Agency. 

Trial Ex. 503. Stellar’s report advised the City Redevelopment and the Agency of the 

following: (1) the FMW Site was contaminated with TCE, including TCE in DNAPL 

form; (2) using the FMW Site as corporate yard could subject the City or Redevelopment 

Agency to liability as a responsible party; (3) the City or Redevelopment Agency should 

conduct further investigations into the source of groundwater contamination; (4) the City 

or Redevelopment Agency should install three monitoring wells to track the groundwater 

contamination; (5) the groundwater contamination, include TCE, was migrating and could 

impact downgradient properties; and (6) the findings and report should be presented to 

relevant regulatory agencies, including Alameda County Department of Environmental 

Health and State Regional Water Quality Control Board. Trial Ex. 503, EKI0456237-

EKI0456238; Trial Tr. vol. 4, 620:18-624:10 (Biddle).

298. The First Amendment expressly acknowledged that the Agency discovered the presence of 

hazardous chemicals in groundwater, including TCE, pursuant to its on-site environmental 

investigation. Trial Ex. 502, CLL000103-CLL000104. With knowledge of the 

contamination, the Redevelopment Agency proceeded with purchasing the FMW Site. 

Trial Tr. vol. 4, 629:14-16 (Biddle); Trial Ex. 502, CLL000103-CLL000104.

299. The City used the FMW Site for approximately thirteen years, until 2012. Trial Ex. 530, 

pdf p. 11/177. It then vacated the site because remediation of soil, soil vapor, and 

groundwater was required to protect potential users of the site. Trial Tr. vol. 2, 232:21-24 

(James). Prior to vacating the site, Emeryville stored hazardous waste and other materials 

at the site. Trial Tr. vol. 9, 1475:15-1476:3 (Vandeven). County inspections noted 

violations and leaks and releases of material. Id. 1475:8-11, 1479:5-14 (Vandeven). 

However, there is no evidence that Emeryville contributed any TCE or petroleum 

hydrocarbons to the contamination at the FMW Site. Trial Tr. vol. 10, 1585:20-21; 

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1586:1-5 (Vandeven). Similarly, there is no evidence that drums of cuttings, purge water, 

or paints contributed to contamination at the site. Id. 1586:8-1587:1 (Vandeven). Waste 

identified in drums on the site during Emeryville’s ownership had been picked up off of 

city streets and then were due to be hauled away; there is no indication that the drums were 

not properly hauled away or that the containers, if leaking, contributed to the 

contamination at the site. Id. 1589:3-1590:3 (Vandeven). 

B. The City’s Delay in Providing Notice to Whitney and Marchant’s Successor

300. In its 1999 report, Stellar advised the City that the historical operations of Marchant and 

Whitney were two potential sources of contamination at the FMW Site. Trial Ex. 503, 

EKI0456242, EKI0456245, EKI0456257-EKI0456259; Trial Tr. vol. 4, 624:18-625:2

(Biddle). Biddle confirmed that, although notice letters could have been sent, which 

would have provided an opportunity to address the contamination, neither the City nor the 

Agency sent notice letters to either entity or those entities’ successors. Trial Tr. vol. 4, 

625:3-11, 646:21-647:2 (Biddle). He admitted that notice letters under the Polanco Act 

followed “templates,” and that they do not take long to draft. Id. 625:23-626:2 (Biddle). 

When asked why notice letters were not sent, Biddle testified that the City “wasn’t focused 

on that at the time.” Id. 647:3-4 (Biddle). Ultimately, the City would not attempt to send 

the alleged successor of Marchant, HBML, notice letters until 2015, approximately sixteen 

years later. See Trial Ex. 1052. 

301. Prior to its remediation work on the FMW Site, Emeryville had been engaged on a series 

of ultimately successful remediations on other nearby sites, including Sites A and B. Trial 

Tr. vol. 4, 568:14-572:21 (Biddle). Emeryville worked with DTSC to clean up sites as 

resources would allow. Id. 569:13-18 (Biddle). 

302. Emeryville sent proper notices under both the Polanco Act and the Resources Conservation 

and Recovery Act (“RCRA”) in 2015 and again in 2019. Trial Tr. vol 4., 589:13-590:7, 

592:24-593:19, 594:9-597:6; Trial Ex. 1052. On December 21, 2015, Plaintiffs sent a 

Notice of Intent to File Citizen suit for the “facility located at 5679 Horton Street in 

Emeryville, California” under Section 7002(a) of RCRA, 42 U.S.C. 6972(a) to Patrick 

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O’Shea, the then CEO of Hanson U.K., located in the United Kingdom, for an “imminent 

and substantial endangerment to health or the environment” (“2015 RCRA Notice”). Trial 

Ex. 1052, 1052.0006 and 1052.0013-15; Trial Tr. vol. 4, 651:21-24 (Gretton). On 

December 28, 2015, Plaintiffs, sent a Polanco Act notice letter, also addressed to O’Shea at 

“Hanson U.K.”, pursuant to California Health and Safety Code section 33459.1(b)(2).

Trial Ex. 1052, 1052.0013. HBML did not respond.

303. Plaintiffs filed this lawsuit on January 20, 2017. Dkt. No. 1. On August 5, 2019, Plaintiffs 

sent a Notice of Intent to Commence RCRA Citizen Suit Litigation along with a Notice of 

Opportunity to Submit a RAP under the Polanco Act (“2019 RCRA/Polanco Notice”) to 

Ed Gretton, Legal Director of Hanson Group and Hanson Limited, also located in the U.K. 

Trial Exs. 1052, 1052.0002. The 2019 RCRA/Polanco Notice enclosed the 2015 RCRA 

Notice. Trial Exs. 1052, 1052.0006; Trial Tr. vol. 4, 652:22-653:2 (Gretton). 

C. Notice to HBML Came Too Late To Assert Indemnity Rights Against 

Millennium 

304. HBML did not submit a cleanup plan in response to either notice letter. Trial Tr. vol. 4, 

652:10-17, 653:24-654:6 (Gretton). Its corporate representative, Gretton, explained that 

upon first receiving the 2015 notice letters, HBML did not have an understanding about the 

purported connection between HBML and the FMW Site. Id. 654:17-21 (Gretton). In 

response, Gretton had HBML’s corporate secretary conduct a multi-week search to 

ascertain the connection between the 2019 RCRA/Polanco Notice, the 5679 Horton Street 

address, and any Hanson-related company, but without any success. Id. 654:22-655:10

(Gretton). Failing to identify any connection, HBML engaged outside counsel in early 

2016 for assistance in assessing any possible connection. Id. 655:11-18 (Gretton). That 

firm concluded that the 2015 RCRA Notice related to SCM; Gretton did not know what 

SCM or its corporate history was even after learning of SCM’s identity. Id. 655:11-656:6

(Gretton).

305. After discovering that SCM was the entity related to 5679 Horton Street associated with 

the 2015 notices, HBML again engaged its corporate secretary, as well as two additional 

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people, to spend multiple weeks searching the corporate records to try to understand the 

company’s relationship to SCM. Id. 656:15-657:5 (Gretton). At the completion of the 

research, apparently months later, HBML learned that SCM was a company that had been 

purchased by the “wider” Hanson group in the U.S. in 1986 and then demerged as 

Millennium in 1996. Id. 657:6-19; 660:17-25; 661:4-6 (Gretton). 

306. During the search of business records concerning Marchant and SCM, no agreements were 

located indicating that Hanson Trust had ever assumed the liabilities of SCM; rather, 

Millennium assumed them. Id. 664:10-12 (Gretton). And during the investigation, HBML 

learned that Lyondell Chemical Co. acquired Millennium, Basell Polyolefins acquired 

Lyondell Chemical and became LyondellBasell, and in 2009, LyondellBasell, including 

Millennium and Millennium Holdings, declared Chapter 11 bankruptcy. Dkt. No. 266, 

Undisp. Fact 37. HBML could not make an indemnity demand against Millennium for the 

City’s claims after receiving the 2015 notice letters because Millennium had gone through 

Chapter 11 bankruptcy in approximately 2009. Trial Tr. vol. 4, 660:14-21 (Gretton). 

CONCLUSIONS OF LAW22

Emeryville asserted claims under CERCLA, RCRA, the California Polanco and Gatto 

Acts, as well as state law claims for continuing public and private nuisance and continuing 

trespass. To prove any of these claims, Emeryville was required to pierce the corporate veil from 

SCM to HBML, through alter ego or successor liability. It failed to do so. Not only did the 

evidence at trial establish that I do not have personal jurisdiction over HBML, but also even if I 

did, the evidence shows that its corporate veil may not be pierced under the alter ego doctrine or 

successor liability. I address these legal issues in turn. 

22 “To the extent that any of the Findings of Facts may be deemed Conclusions of Law, they also 

shall be considered conclusions. Likewise, to the extent that any of the Conclusions of Law may 

be deemed Findings of Fact, they shall be considered findings.” United States v. Sterling

Centrecorp Inc., 960 F. Supp. 2d 1025, 1033 (E.D. Cal. 2013), aff’d, 977 F.3d 750 (9th Cir. 2020) 

(quoting United States v. Newmont USA Limited and Dawn Mining Co., No. CV–05–020–JLQ,

2008 WL 4621566 at *2 n. 1 (E.D. Wash. Oct. 17, 2008)); see also Miller v. Fenton, 474 U.S.

104, 113–14, (1985) (noting the difficulty, at times, of distinguishing findings of facts from 

conclusions of law). 

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I. THIS COURT DOES NOT HAVE PERSONAL JURISDICTION OVER HBML

“In exercising personal jurisdiction, a federal district court is constrained by the Fourteenth 

Amendment’s Due Process Clause and the long-arm statute of the state in which it sits.” 

Impossible Foods Inc. v. Impossible X LLC, 80 F.4th 1079, 1086 (9th Cir. 2023), cert. denied, No. 

23-874, 2024 WL 2262336 (U.S. May 20, 2024) (first citing Ford Motor Co. v. Montana Eighth

Jud. Dist. Ct., 592 U.S. 351, 358 (2021); and then citing Burri L. PA v. Skurla, 35 F.4th 1207, 

1212 (9th Cir. 2022)). Under the Due Process Clause, a court may exercise jurisdiction over a 

non-resident defendant if the defendant “has sufficient ‘minimum contacts’ with the forum state 

‘such that maintenance of the suit does not offend traditional notions of fair play and substantial 

justice.’” Id. (first quoting LNS Enters. LLC v. Cont’l Motors, Inc., 22 F.4th 852, 858 (9th Cir. 

2022); and then citing Int’l Shoe Co. v. Washington, 326 U.S. 310, 316–17 (1945)). Because

“California authorizes its courts to exercise jurisdiction ‘to the full extent that such exercise 

comports with due process,’ . . . ‘the jurisdictional analyses under [California] state law and 

federal due process are the same.’” Axiom Foods, Inc. v. Acerchem Int’l, Inc., 874 F.3d 1064, 

1068 (9th Cir. 2017) (citations omitted); see also Cal. Civ. Proc. Code § 410.10. 

“Personal jurisdiction can be either general or specific.” Impossible Foods, 80 F.4th at

1086. For a corporate defendant, general exists “when a defendant is ‘essentially at home’ in the 

State. . . . [and] is paradigmatically appropriate in the state in which the entity is incorporated or 

where it maintains its principal place of business.” Id. (citations omitted). The City does not 

argue that HBML, a British company, is subject to general jurisdiction in California. 

“Specific jurisdiction . . . covers defendants less intimately connected with a State, but 

only as to a narrower class of claims.” Ford Motor Co., 592 U.S. at 359. “In order for a court to 

have specific jurisdiction over a defendant, ‘the defendant’s suit-related conduct must create a 

substantial connection with the forum State.’” Williams v. Yamaha Motor Co. Ltd., 851 F.3d 

1015, 1022–23 (9th Cir. 2017) (citation omitted). “The relationship between the defendant and the 

forum state ‘must arise out of contacts that the “defendant [itself]” creates with the forum state.’” 

Id. at 1023 (citation omitted). In determining whether specific jurisdiction exists, courts employ a 

three-factor test: 

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(1) the defendant must either purposefully direct his activities toward the forum or 

purposefully avail himself of the privileges of conducting activities in the forum; 

(2) the claim must be one which arises out of or relates to the defendant’s forumrelated activities; and (3) the exercise of jurisdiction must comport with fair play 

and substantial justice, i.e. it must be reasonable.

Impossible Foods, 80 F.4th at 1086 (quoting Axiom Foods, 874 F.3d at 1068). 

The plaintiff bears the burden of satisfying the first two factors of the test. See id. If the 

plaintiff succeeds in satisfying the first two factors, the burden then shifts to the defendant to 

present a “‘compelling case’ that the exercise of jurisdiction would not be reasonable.” Id.

(citation omitted). 

I previously concluded that the City made a prima facie showing of personal jurisdiction 

by plausibly alleging personal jurisdiction under the standard analysis and under an alter ego 

theory of liability. (“MTD Order”) [Dkt. No. 143]. Now, because I conclude below that HBML’s 

corporate veil may not be pierced through alter ego or successor liability, any exercise of personal 

jurisdiction must be through HBML’s direct contacts with the forum state. See Am. Tel. & Tel. 

Co. v. Compagnie Bruxelles Lambert, 94 F.3d 586, 590–91 (9th Cir. 1996) (analyzing the parent 

corporation’s “own contacts” with the forum state for personal jurisdiction in a CERCLA case

where the plaintiff “failed to [show] that [the polluter] was [the defendant’s] alter ego”); see also 

Axiom Foods, 874 F.3d at 1071 n.5. Accordingly, below I analyze HBML’s contacts with 

California. 

A. Prong 1: Purposeful Availment 

1. The Purposeful Availment and Purposeful Direction Tests

The first prong of the specific jurisdiction test requires the plaintiff to show that the 

defendant “purposefully direct[ed] its activities toward the forum state, purposefully avail[ed] 

itself of the privileges of conducting activities there, or engage[d] in ‘some combination thereof.’” 

Impossible Foods, 80 F.4th at 1088 (quoting Yahoo! Inc. v. La Ligue Contre Le Racisme Et

L’Antisemitisme, 433 F.3d 1199, 1206 (9th Cir. 2006) (en banc) (per curiam)). The standards for 

purposeful availment and purposeful direction are somewhat different. See id. 

To establish purposeful availment, the plaintiff must show that the defendant “purposefully 

avail[ed] itself of the privilege of conducting activities within the forum State, thus invoking the 

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benefits and protections of its laws.” Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 

802 (9th Cir. 2004) (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)). “In return for these

‘benefits and protections,’ a defendant must—as a quid pro quo—‘submit to the burdens of 

litigation in that forum.’” Id. (quoting Burger King, 471 U.S. at 476) (subsequent citations

omitted). This showing “typically consists of evidence of the defendant’s actions in the forum, 

such as executing or performing a contract there.” Id. A company purposefully avails itself of the 

benefits of a forum state where it “‘has clear notice’ of its exposure in that State to suits arising 

from local [occurrences] . . . [a]nd the company could do something about that exposure,” such as 

affirmatively “sever[] its connection with the State.” Ford Motor Co., 592 U.S. at 363–64. 

In comparison, the purposeful direction analysis uses the “effects test,” which requires the 

plaintiff to show that the defendant: “(1) committed an intentional act, (2) expressly aimed at the 

forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state.” 

Ayla, LLC v. Alya Skin Pty. Ltd., 11 F.4th 972, 980 (9th Cir. 2021) (quoting Axiom Foods, 874 

F.3d at 1069). This showing “usually consists of evidence of the defendant’s actions outside the 

forum state that are directed at the forum, such as the distribution in the forum state of goods 

originating elsewhere.” Schwarzenegger, 374 F.3d at 802 (collecting cases). 

The decision to apply the purposeful availment or purposeful direction analysis to the first 

prong of the personal jurisdiction test “turns on the nature of the underlying claims.” Impossible 

Foods, 80 F.4th at 1088 (quoting Ayla, 11 F.4th at 979). Although purposeful availment 

“generally provides a more useful frame of analysis for claims sounding in contract, while 

purposeful direction is often the better approach for analyzing claims in tort,” id. (quoting Glob. 

Commodities Trading Grp., Inc. v. Beneficio de Arroz Choloma, S.A., 972 F.3d 1101, 1107 (9th 

Cir. 2020)), the Ninth Circuit has repeatedly emphasized that this is not “a hard-and-fast rule” and 

that there is no “rigid dividing line between these two types of claims,” Davis v. Cranfield 

Aerospace Sols., Ltd., 71 F.4th 1154, 1162 (9th Cir. 2023) (quoting Glob. Commodities, 972 F.3d 

at 1107). 

“At bottom,” these tests “ask whether defendants have voluntarily derived some benefit 

from their interstate activities such that they ‘will not be haled into a jurisdiction solely as a result 

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of “random,” “fortuitous,” or “attenuated” contacts.’” Glob. Commodities, 972 F.3d at 1107 

(quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474–75 (1985)). The objective of these 

tests is the same: to “frame [the court’s] inquiry into the defendant’s ‘purposefulness’ vis-à-vis the 

forum state.” Impossible Foods, 80 F.4th at 1088 (citing Glob. Commodities, 972 F.3d at 1107). 

Therefore, “when considering specific jurisdiction,” the Ninth Circuit instructs district courts to 

“comprehensively evaluate the extent of the defendant’s contacts with the forum state and those 

contacts’ relationship to the plaintiffs’ claims—which may mean looking at both purposeful 

availment and purposeful direction.” Davis, 71 F.4th at 1162; see also Yahoo!, Inc., 433 F.3d at 

1206 (noting that the first prong on the personal jurisdiction test may be satisfied “by some 

combination” of the availment and direction inquiries). 

Looking at both the purposeful availment and purposeful direction tests is appropriate here 

because of the nature of the claims and the parties. See Davis, 71 F.4th at 1162. The underlying 

CERCLA and state law claims concern pollution and so sound in tort; the purposeful direction test 

is the typical path for those claims. See Impossible Foods, 80 F.4th at 1088. Indeed, in Pakootas 

v. Teck Cominco Metals, Ltd., 905 F.3d 565, 577 (9th Cir. 2018), the court applied the purposeful 

direction analysis to determine personal jurisdiction in a CERCLA case. But there, the evidence 

showed that the defendant itself discharged the pollution, see id., while here, HBML is involved in 

this case based on its acquisition activities related to SCM. Those activities, business 

relationships, and transactions sound more in contract. The purposeful availment analysis is 

generally more useful for those types of claims. See Impossible Foods, 80 F.4th at 1088. Indeed, 

this case epitomizes where there is no “hard-and-fast rule” for applying the purposeful direction or 

purposeful availment test. See Davis, 71 F.4th at 1162. 

Ultimately, these tests are concerned with providing due process, and due process ensures 

that a defendant voluntarily benefitted from involvement in the forum state before it can be sued 

there. See Glob. Commodities, 972 F.3d at 1107. Here, a “comprehensive[] evaulat[ion]” of 

HBML’s contacts with California reveals six facts connecting the company with the forum state: 

(1) Lord Hanson had a house in Palm Springs and did work there sometimes; (2) Lord Hanson 

probably had a secretary in California; (3) HBML rented an office in California, at least at some 

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point; (4) Clarke, then-President of Hanson Industries, met with Lord Hanson two or three times 

per year in Palm Springs, only one meeting of which he specifically recalled, in which they 

discussed salary structures; (5) HBML ran two advertisements in the Los Angeles Times and “did 

. . . some dog-and-pony shows” to try to encourage California investors, though also ran 

advertisements nationally; and (6) the Hanson Trust finance director sent a “comfort letter” to a 

California bank regarding its monetary backing in the SCM acquisition. Findings of Fact (“FOF”) 

¶¶ 4–8, 108. All other evidence presented to establish jurisdiction and connect HBML to 

California merely showed that Hanson Industries—the American company—and its leader, Sir 

Gordon, had deep connections with the state. That is because most of that evidence relates to the 

acquisition of SCM (though some showed other Hanson Industries activity), and as explained at 

length below, the evidence at trial proved that Hanson Trust had little to no role in the SCM 

acquisition. The City cannot establish Hanson Trust/HBML had its “own contacts” with the state, 

see Am. Tel., 94 F.3d at 590–91, via business activity in which it had almost no role. 

The Ninth Circuit has emphasized that, “where the defendant has operated from within the 

jurisdiction,” the defendant’s “entire course of dealing” should inform the personal jurisdiction

analysis, not just the conduct giving rise to the claim. Impossible Foods, 80 F.4th at 1090 (quoting 

Glob. Commodities, 972 F.3d at 1108). For example, the Ninth Circuit held that the plaintiff 

established a prima facie case of personal jurisdiction—without specifically choosing between the 

purposeful availment and direction tests—where the defendant was a Honduras-based importer 

that voluntarily entered multiple multi-year, multimillion dollar contracts with the plaintiff, a 

California exporter; the contract was paid in California, and the goods were certified for shipment 

from California. Glob. Commodities, 972 F.3d at 1108. 

And in Impossible Foods, the Ninth Circuit held that the California court had personal 

jurisdiction in a trademark infringement action over a Texas LLC that was solely owned and 

operated by one person, the business was developed and ideas were marketed in San Diego, the 

mark at issue was created in and registered in San Diego, the owner’s LinkedIn listed San Diego 

as the headquarters and promoted it as the location for his team and meetings, and the LLC was in 

fact headquartered in San Diego for several years, until the owner began a “nomadic lifestyle,”

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during which time he continued to travel to and from California and tag the state in promotional 

posts. 80 F.4th at 1084–86, 1089. The Ninth Circuit recognized that even though the defendant 

eventually moved the LLC to Texas, “it for years operated based out of California,” and its 

contacts with the state were “constant and pervasive” rather than “sporadic.” Id. at 1089. “Under 

all these circumstances,” it was clear that the defendant deliberately directed activities toward 

California to the extent that “the defendant was in fact based there.” Id. at 1090; cf. 

Schwarzenegger, 374 F.3d at 803 (determining no purposeful availment where nonresident 

defendant was sued in California for allegedly publishing photograph in Ohio because of lack of 

evidence that defendant received a benefit, privilege, or protection from California).

But applying similar principles in Davis, the Ninth Circuit held that an Idaho court did not 

have personal jurisdiction over an English corporation, Cranfield, in a products liability case. 

There, the plaintiffs sued Cranfield in Idaho federal court after an airplane crash killed their 

relatives. Davis, 71 F.4th at 1159–60. Plaintiffs alleged that Tamarack, an Idaho corporation, 

manufactured the plane’s “load alleviation system,” which was defective and caused the crash. Id.

at 1160. Tamarack had hired Cranfield to help get FAA certification to install the system on 

planes in the U.S., and Cranfield did so successfully, holding the certificate for Tamarack until the 

lawsuit. Id. The Ninth Circuit reasoned that the business contract did not show that Cranfield 

intended to avail itself of Idaho’s laws because it had no offices or workers in Idaho, it did not 

solicit the business from Tamarack, the negotiations occurred remotely, and the contract terms did 

not invoke Idaho law, even though Cranfield was compensated from Idaho. Id. at 1163–65. 

Though Cranfield employees corresponded with Tamarack’s Idaho workers and took two trips to 

Idaho to observe the load alleviation system and testing, Cranfield’s role was “small” in the 

observation and had “no special place” in the performance of the contract as a whole, in part 

because Cranfield performed the “bulk” of the contractual work from England. Id. at 1165 

(citation omitted). 

Here, the facts parallel those in Davis and differ from those in Global Commodities and 

Impossible Foods. HBML’s “entire course of dealing” establishes almost no connection with 

California. The “comfort letter” to the California bank was, as explained below, merely a standard 

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action that a parent corporation may take on behalf of its subsidiary. And while I acknowledge the 

advertisements and “dog-and-pony shows” sought California investors for Hanson Trust, I also 

must look beyond this conduct that gave rise to the claims here to consider HBML’s “business 

reality.” See Glob. Commodities, 80 F.4th at 1108. The only evidence showing HBML had any 

connection to California—after a 15-day bench trial, thousands of pages of deposition transcripts, 

and hundreds of exhibits—was that Lord Hanson did some work from Palm Springs during 

winters, he had a secretary in Los Angeles at some point, and Hanson Trust at least briefly rented 

office space in California. See FOF ¶¶ 4–8. All other evidence showed that Hanson Trust was 

based in and made all business decisions from the UK. In other words, as in Davis, the contacts 

with California here were sporadic and had “no special place” in Hanson Trust’s business, the bulk 

of which occurred in the UK. See Davis, 71 F.4th at 1165. The contacts are simply different from 

those in Global Commodities and Impossible Foods because here the City never showed that 

Hanson Trust repeatedly or extensively sought California contracts, was paid in California for 

California products, used California as a home base, or even invented any products in the state. 

Instead, the business reality was that Hanson Trust business was based in the UK, and Hanson 

Trust’s brushes with California were merely “attenuated” and “sporadic.” See Glob. Commodities, 

80 F.4th at 1107. 

American Telephone is also useful in guiding this inquiry. There, the plaintiff sued the 

defendant corporation for CERCLA related harms, where the defendant was a Brussels-based 

corporation that owned 80 percent of the stock in the California polluting corporation. Am. Tel., 

94 F.3d at 588. The Ninth Circuit—again without clearly choosing between the purposeful 

availment and direction analyses—concluded that the defendant’s own contacts with California 

were insufficient to establish personal jurisdiction, citing the lack of business in and direct 

contacts with the United States, lack of direct involvement in the polluter’s California facility, and 

lack of office in or employees attending meetings in California. Id. at 589–90. Here, Hanson 

Trust rented an office at least once in Los Angeles—though no evidence was presented that the 

office was used—and at least one meeting took place between Lord Hanson and Clarke about 

salary structures. FOF ¶ 6. But in the context of the massive organization that was Hanson Trust

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in the 1980s, one (possibly underutilized) office and one meeting hardly differentiate these facts 

from those in American Telephone. 

At bottom, the evidence does not show that Hanson Trust voluntarily derived any benefits 

from California. See Glob. Commodities, 972 F.3d at 1107. Though the City pointed to plenty of 

evidence that Hanson Industries purposefully availed itself of California laws and benefits, the 

very few facts showing Hanson Trust was connected to California were sporadic and insufficient 

to establish the first element of the personal jurisdiction test, under both the purposeful availment 

and direction tests. And even if I accepted these facts as enough to survive the first prong of the 

test, the plaintiffs did not show that their CERCLA claim—or even the acquisition of SCM—

“arises out of or relates to” Hanson Trust’s six contacts with California. See Williams, 851 F.3d at 

1023 (citation omitted). The plaintiffs would fail at the second prong of the personal jurisdiction 

analysis. 

Accordingly, the plaintiffs failed to prove that I may exercise personal jurisdiction over 

HBML. 

II. EVEN IF THERE WERE PERSONAL JURSIDICTION, THE PLAINTIFFS 

FAILED TO PROVE EITHER THEORY OF LIABILITY

A “general principle of corporate law” is that “a parent corporation . . . is not liable for the 

acts of its subsidiaries.” United States v. Bestfoods, 524 U.S. 51, 61 (1998). But “the corporate 

veil may be pierced and the shareholder held liable for the corporation’s conduct” in certain 

situations, including via the alter ego and successor liability doctrines. Id. “[W]hen (but only 

when) the corporate veil may be pierced, may a parent corporation be charged with derivative 

CERCLA liability for its subsidiary’s actions.” Id. at 63–64 (footnotes omitted). 

A. Alter Ego Liability

California alter ego doctrine applies here.23 [Dkt. No. 254] at 5–12. “California 

23 In their proposed conclusions of law, the parties almost exclusively cited federal law regarding 

the unity of interest elements. They should have cited California law. Part of the problem might 

be that there are few cases that solely apply California law for each factor. Some cases ostensibly 

apply California law but cite back to federal law on the factors. Here, I am applying California 

law. To the extent that I cite cases that apply federal law, it is for their persuasive value because 

of the limited California cases on any particular factor. 

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recognizes alter ego liability where two conditions are met.” In re Schwarzkopf, 626 F.3d 1032, 

1038 (9th Cir. 2010). “First, where ‘there is such a unity of interest and ownership that the 

individuality, or separateness, of the said person and corporation has ceased;’ and, second, where 

‘adherence to the fiction of the separate existence of the corporation would . . . sanction a fraud or 

promote injustice.’” Id. (quoting Wood v. Elling Corp., 20 Cal. 3d 353, 572 P.2d 755, 761 n. 9 

(1977)). “[B]oth of these requirements must be found to exist before the corporate existence will 

be disregarded.” Assoc’d Vendors, Inc. v. Oakland Meat Co., 210 Cal. App. 2d 825, 837 (1962). 

“California courts emphasize that the alter ego determination is very fact specific.” Daewoo 

Elecs. Am. Inc. v. Opta Corp., 875 F.3d 1241, 1250 (9th Cir. 2017) (citation omitted). Under 

California law, “the treating of one corporation as the alter ego or another is an extreme remedy, to 

be sparingly used and is to be approached with caution.” Davidson v. Seterus, Inc., 21 Cal. App. 

5th 283, 305–06 (2018) (cleaned up) (citations omitted). 

1. Unity of Interest

California courts consider many factors under the unity of interest inquiry: 

(i) “commingling of funds and other assets,” (ii) “identical equitable ownership in the two 

entities,” (iii) “failure to maintain minutes or adequate corporate records, and the confusion of the 

records of the separate entities,” (iv) “use of the same office or business location; the employment 

of the same employees and/or attorney,” (v) “identification of the directors and officers of the two 

entities in the responsible supervision and management,” (vi) “sole ownership of all of the stock in 

a corporation by one individual or the members of a family,” (vii) “failure to adequately capitalize 

a corporation,” (viii) “failure to maintain arm’s length relationships among related entities,” 

(ix) “use of a corporation as a mere shell, instrumentality or conduit for a single venture or the 

business of an individual or another corporation,” and (x) “manipulation of assets and liabilities 

between entities so as to concentrate the assets in one and the liabilities in another.” Assoc’d 

Vendors, 210 Cal. App. 2d at 838–40 (internal citations omitted). 

Because no one factor governs the analysis, courts “look at all the circumstances to 

determine whether the alter ego doctrine applies.” Butler v. Adoption Media, LLC, 486 F. Supp. 

2d 1022, 1067 (N.D. Cal. 2007) (citing Sonora Diamond Corp. v. Superior Court, 83 Cal. App.

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4th 523, 539 (2000)); see also JPV I L.P. v. Koetting, 88 Cal. App. 5th 172, 195 (2023), review

denied (May 17, 2023) (“No single factor is determinative, and instead a court must examine all 

the circumstances to determine whether to apply the doctrine.” (quoting Greenspan v. LADT, LLC, 

191 Cal. App. 4th 486, 513 (2010)). “Because it is founded on equitable principles, application of 

the alter ego is not made to depend upon prior decisions involving factual situations which appear 

to be similar. . . . It is the general rule that the conditions under which a corporate entity may be 

disregarded vary according to the circumstances of each case.” JPV I L.P., 88 Cal. App. 5th at 

195 (internal quotation marks omitted) (quoting Las Palmas Assocs. v. Las Palmas Ctr. Assocs., 

235 Cal. App. 3d 1220, 1248 (1991)). 

As noted in the factual findings, the evidence presented at trial regarding the unity of 

interest considerations favors the defendants for all but—at most—one factor. FOF Section VI.A. 

There was no evidence of commingling of funds between Hanson Trust and Hanson Industries; 

Hanson Trust played no role in controlling Hanson Industries’ cash sweep account, and to the 

extent there may have been cash that remitted from Hanson Industries to Hanson Trust, the 

plaintiffs failed to produce evidence showing how, when, why, or how much, or that remittance 

equated to commingling. See id.; FOF Sections III.B.2, VI.A.2; cf. Stewart v. Screen Gems-EMI

Music, Inc., 81 F. Supp. 3d 938, 954–55 (N.D. Cal. 2015) (finding no evidence of commingling 

where companies used one bank account but kept “records to ensure that each . . . entity” was 

charged only for its services and liable only for its payments). The companies’ maintenance of 

separate financial books and records also demonstrated that they followed corporate formalities, as 

did the extensive documentation of the corporate formalities throughout the SCM acquisition. Cf.

Sonora Diamond, 83 Cal. App. 4th at 539 (noting that “lack of segregation of corporation records” 

could indicate unity of interest). The occasional use of the other entity’s stationary does not 

change this outcome. Cf. In re Packaged Seafood Prod. Antitrust Litig., 338 F. Supp. 3d 1118, 

1147 (S.D. Cal. 2018). And while Hanson Industries did not create documents for many of the 

intra-Hanson entity actions, see FOF ¶ 227, that evidence did not show that Hanson Trust failed to 

follow corporate formalities with respect to Hanson Industries. 

Further, there was no evidence that Hanson Trust and Hanson Industries shared offices, 

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employees, or attorneys. Neither the occasional visit by Lord Hanson to the Hanson Industries’ 

New York office nor the required visits to Hanson Trust’s London office by Hanson Industries’ 

representatives for parent/subsidiary updates, supra FOF Section VI.A.3, show that the entities 

shared offices, and even if they did, this would be insufficient on its own to show unity of interest. 

See In re Packaged Seafood, 338 F. Supp. 3d at 1146 (citing federal law but applying California 

law and noting that a shared office “without further evidence of day-to-day control” does not 

support a finding of unity of interest). While I found that Hellings was a shared employee, that 

does not favor finding unity of interest where, at the time, Hanson Trust had between 50 and 54 

thousand employees and Hanson Industries had 28 to 34 thousand employees. FOF ¶ 234; see 

also In re Packaged Seafood Prod., 338 F. Supp. 3d at 1146 (citing federal law but applying 

California law and noting that show some individuals shared roles between organizations was 

insufficient to establish alter ego liability). And the evidence that Hellings helped secure 

financing for Hanson Industries, FOF ¶¶ 123, discussed structuring or transferring some of the 

businesses, id. ¶¶ 175–78, and drafted a memo acknowledging that environmental liabilities are 

part of acquisitions, id. ¶ 166, did not demonstrate that he was employed by Hanson Industries, cf. 

Pantoja v. Countrywide Home Loans, Inc., 640 F. Supp. 2d 1177, 1192 (N.D. Cal. 2009) (“A 

parent corporation contributing funds to a subsidiary is not enough to find alter ego or agency

liability.” (citing Sonora Diamond, 83 Cal. App. 4th at 539)). Use of the same corporate law firm 

also does not support this factor, particularly where a Hanson Industries employee—Hempstead—

made the decision to hire the firm for Hanson Industries and paid their bills through a Hanson 

Industries Account. FOF ¶¶ 131–32. 

In addition, as laid out in the findings of fact, there was no evidence of undercapitalization 

presented at trial. Id. Section VI.A.5. “Under California law, inadequate capitalization of a 

subsidiary may alone be a basis for holding the parent corporation liable for the acts of its 

subsidiary.” In re Hydroxycut Mktg. & Sales Pracs. Litig., 810 F. Supp. 2d 1100, 1123 n.11 (S.D. 

Cal. 2011) (citing Slottow v. Am. Cas. Co. of Reading, Pa., 10 F.3d 1355, 1360 (9th Cir. 1993)). 

The evidence at trial showed that every corporate success to SCM had “capital reasonably 

regarded as adequate to enable [the corporation] to operate its business and pay its debts as they

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mature.” In re Packaged Seafood, 338 F. Supp. 3d at 1155 (quoting Laborers Clean-Up Contract 

Admin. Tr. Fund v. Uriarte Clean-Up Serv., Inc., 736 F.2d 516, 524 (9th Cir. 1984)). And not 

only was every corporate successor able to carry on its normal operations, and able to meet its 

obligations as they came due, but also every corporate successor from acquisition until the tender 

offer was better capitalized than SCM was before it was acquired. FOF Section VI.A.5. The 

plaintiffs did not provide contradictory evidence; their expert did not provide a direct opinion on 

undercapitalization at all, but rather focused on the pro forma balance sheet of HSCM-20 in a way 

that did not conform with standard accounting principles and that does not find any support in the 

law. FOF ¶ 250. 

And with respect to Kalamazoo, the evidence did not prove undercapitalization. The Ninth 

Circuit has held that a corporation was not undercapitalized where it had “always been able to 

satisfy judgments against it,” it maintained almost $2 million in net assets and equity at the 

relevant time, and it could “meet its reasonably expected debts.” Perfect 10, Inc. v. Giganews, 

Inc., 847 F.3d 657, 677–78 (9th Cir. 2017) (emphasis added)). In comparison, at trial there was no 

evidence that the Kalamazoo liability calculations made in 2010 were known or knowable in 1986 

through 1996, when Hanson Trust indirectly owned SCM and its successors. FOF Section VI.D. 

Indeed, Hanson Industries undertook considerable effort to determine the extent of its liabilities, 

including its environmental ones, and it set aside millions of dollars in reserves to cover the ones it 

discovered. Id. Section VI.B. And even if the evidence showed that the defendants could not 

satisfy potential “multimillion dollar judgments” resulting from environmental liabilities—which 

it did not—the City still failed to prove inadequate capitalization because the defendants’ “capital 

was sufficient . . . to operate its normal business.” In re Hydroxycut Mktg., 810 F. Supp. 2d at 

1122–23 (citations omitted)). At bottom, the Kalamazoo evidence—like the other evidence put on 

by the plaintiffs—did not prove undercapitalization. 

Asset stripping, which is intimately tied to adequate capitalization, also did not occur. This 

is the process by which assets are stripped “from a previously legitimate corporation in order to 

avoid satisfying preexisting obligations that the corporation incurred in the ordinary course of 

business. Am. Federated Title Corp. v. GFI Mgmt. Servs., Inc., 126 F. Supp. 3d 388, 404 

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(S.D.N.Y. 2015) (citation and subsequent history omitted). First, the plaintiffs’ expert defined 

asset stripping as consistently taking the assets from one party and leaving behind only liabilities, 

FOF ¶ 275, but as explained above in the paragraph about capitalization, that did not happen. 

Second, that expert did not actually point to evidence of asset stripping, nor did he clearly opine 

that there was any. Id. ¶¶ 271–73. Third, HBML demonstrated that there was no transferring of 

assets without parallel transfers of liabilities. Id.¶ 276. Finally, as explained, the Kalamazoo 

evidence does not support the City’s theory. Id. Section VI.D. Accordingly, the City failed to 

prove any asset stripping occurred. 

There was also no failure to maintain arms-length dealings. As explained in the factual 

findings, most of the plaintiffs’ evidence related to Hanson Industries’ dealings with its 

subsidiaries, not Hanson Trust’s actions. See id. Section III. And Hanson Industries, not Hanson 

Trust, controlled and directed the post-acquisition investigation and restructuring of SCM. Id.

Sections IV.B–C. The facts about the typewriter IPO do not show that Hanson Trust played any 

role in that decision or operation; the “Prospectus” did not lead me conclude otherwise. Id.

¶¶ 215, 261. Neither do the facts about the Millenium demerger, particularly because an 

independent investment advisor provided a fairness opinion. Id. ¶ 208. This factor does not 

support finding a unity of interest. 

Nor was there evidence that Hanson Industries or its subsidiaries were used as mere shells 

or instrumentalities of Hanson Trust. Id. Section VI.A.6. This factor considers whether the 

subsidiary “is so organized and controlled, and its affairs are so conducted, as to make it merely an

instrumentality, agency, conduit, or adjunct of another corporation.” Toho-Towa Co. v. Morgan 

Creek Prods., Inc., 217 Cal. App. 4th 1096, 1107 (2013) (citations omitted); see also Ranza v.

Nike, Inc., 793 F.3d 1059, 1073 (9th Cir. 2015) (noting that under federal law, this factor requires 

proving the parent’s “pervasive control over the subsidiary,” including by “dictat[ing] every fact 

of the subsidiary’s business” (citation omitted)); Inst. of Veterinary Pathology, Inc. v. Cal. Health

Lab’ys, Inc., 116 Cal. App. 3d 111, 120 (1981) (requiring “direct evidence of specific 

manipulative conduct to warrant the piercing of the corporate veil”). As a whole, the trial 

evidence consistently proved that Hanson Industries has operational, financial, and legal autonomy 

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from Hanson Trust. See FOF Sections III.B.1–3, VI.A.6; cf. Toho-Towa Co., 217 Cal. App. 4th at 

1107–08 (considering control of finances, policies, and practices). Despite Sir Gordon and Lord 

Hanson pursuing similar business strategies in each country, FOF ¶¶ 73, 87–89, the plaintiffs did 

not prove—or even suggest—that Hanson Trust dictated every facet of Hanson Industries’ 

operations, sales or acquisitions, or other business choices, see Ranza, 793 F.3d at 1073. Hanson 

Trust did not direct or control Hanson Industries’ “day-to-day operations.” Doe v. Unocal Corp., 

248 F.3d 915, 927 (9th Cir. 2001) (per curiam) (finding no alter ego under federal law where there 

was “no evidence” that the parent was “involved in the day-to-day operations of its subsidiaries”), 

abrogated on other grounds by Williams v. Yamaha Motor Co., 851 F.3d 1015 (9th Cir. 2017). 

And as addressed, Hanson Industries, not Hanson Trust, directed and controlled the SCM 

acquisition. FOF Section IV.A. The so-called “backstop” letter does not change this finding. 

This factor does not support finding unity of interest. 

Finally, the one factor that could favor the plaintiffs was that there was some overlap 

between the officers and directors of Hanson Industries and Hanson Trust.

24 FOF Section IV.A.4; 

see Assoc’d Vendors, 210 Cal. App. 2d at 838–40. But as discussed throughout this Order, the 

City did not point to evidence showing that any officer or director used their position in Hanson 

Trust to control or direct actions in Hanson Industries in accordance with Hanson Trust’s wishes. 

As a whole, the evidence demonstrated that Hanson Trust and Hanson Industries operated 

autonomously, in terms of general operations, finances, and management. Though the overarching 

strategy was similar between the companies, and some of the officers and directors shared roles in 

both entities, ultimately no evidence was presented at trial that showed Hanson Trust controlled 

the day-to-day operations, decisions, or finances of Hanson Industries or its other subsidiaries. 

Examining “all the circumstances,” and noting that no single factor “is determinative,” JPV I L.P., 

24 There was also evidence that Hanson Trust filed certain forms with the FTC and SEC regarding 

the Tender Offer. FOF ¶¶ 155–58. It was legally obligated to file the FTC pre-merger notification 

because it was the “ultimate parent” under the Hart-Scott-Rodino Act. 16 C.F.R. § 803.2; 15 

U.S.C. § 18a. And Hanson Trust was legally required to file a Schedule 13D and 14D-1 because it 

was a “beneficial owner” of more than 5% of SCM’s stock, under the Williams Act. See 15 

U.S.C. §§ 78m(d)(1), 78n(d)(1); 17 C.F.R. §§ 240.13d–1(a), 240.13d–3(a), 240.14d-1(g). All this 

shows is that Hanson Trust complied with its legal obligations as a parent; it is not evidence of any 

of the alter ego or successor liability factors. 

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88 Cal. App. 5th at 195, I conclude that the unity of interest factors are not met. Given the 

intentional decisions to separately structure, manage, and operate Hanson Industries from Hanson 

Trust—beginning with Sir Gordon’s initial move to America, and including the SCM acquisition, 

restructuring, and demerger decisions—any other conclusion would be contrary to clear law and 

policy that allows for piercing of the corporate veil only in the rare and “extreme” cases. See 

Davidson, 21 Cal. App. 5th at 306. The first alter ego requirement is not met. The corporate veil 

cannot be pierced under this theory. 

2. Inequitable Result, Sanctioning Fraud, or Promoting Injustice 

Even if I concluded that the plaintiffs proved the unity of interest factors, they failed to 

prove that not piercing the corporate veil would cause an inequitable result, sanction a fraud, or 

promote an injustice. 

“Finding an ‘inequitable result’ under the second element of alter ego liability ‘generally 

require[s] some evidence of bad faith conduct on the part of defendants.’” Daewoo Elecs. Am. 

Inc. v. Opta Corp., 875 F.3d 1241, 1250 (9th Cir. 2017) (citation omitted). But California law 

does not require bad faith or intentional fraud to meet the second element of the alter ego doctrine 

and pierce the corporate veil. City & Cnty. of San Francisco v. Purdue Pharma L.P., 491 F. Supp. 

3d 610, 635 (N.D. Cal. 2020) (first citing RRX Indus., Inc. v. Lab-Con, Inc., 772 F.2d 543, 546 

(9th Cir. 1985); and then citing Pac. Bell Tel. Co. v. 88 Connection Corp., 15-cv-04554-LB, 2016 

WL 3257656, at *3 (N.D. Cal. June 14, 2016)); JPV I L.P. v. Koetting, 88 Cal. App. 5th 172, 200 

(2023), review denied (May 17, 2023) (“An inequitable result does not require a wrongful intent.”

(citation omitted)); see also Assoc’d Vendors, 210 Cal. App. 2d at 838 (noting the alter ego theory 

“does not depend on the presence of actual fraud” but that “bad faith in one form or another is an 

underlying consideration” (citations omitted)). 

Rather, “[s]o long as there is a unity of interest and ownership, courts will ignore the 

corporate form and attribute wrongful or inequitable conduct to the organization controlling the 

corporation.” Purdue Pharma, 491 F. Supp. 3d at 635 (citing Pac. Bell, 2016 WL 3257656, at 

*3). Wrongful or inequitable conduct includes “when the corporate form is used to perpetuate a 

fraud, circumvent a statute, or accomplish some other wrongful or inequitable purpose.” Pac. 

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Bell, 2016 WL 3257656, at *3 (quoting Sonora Diamond, 83 Cal. App. 4th at 538). Some courts 

consider undercapitalization under the inequitable result analysis. See Perfect 10, Inc., 847 F.3d at 

677 (first citing Laborers Clean-Up Contract Admin. Tr. Fund v. Uriarte Clean-Up Serv., Inc., 

736 F.2d 516, 525 (9th Cir. 1984); and then citing Automotriz del Golfo de Cal. S.A. de C.V. v.

Resnick, 47 Cal. 2d 792, 797, 306 P.2d 1 (1957)). 

Here, there was no “wrongful or inequitable conduct” by any entity, and the disputed 

evidence at summary judgment that went to this factor ultimately favored the defendants. See 

Purdue Pharma, 491 F. Supp. 3d at 635. In advance of trial, I found disputed evidence that 

Hanson Trust knew of or was willfully blind to the environmental risks and liabilities associated 

with the SCM acquisition and so wrongfully and unfairly used the corporate form to evade those 

liabilities. (“MSJ Order”) [Dkt. No. 254] 14–19. Specifically, I pointed to the disputed evidence 

that (1) HBML knew of the potential for acquiring environmental liabilities but failed to 

investigate further; (2) though it did not necessarily know about the FMW site, it knew of 

potentially costly environmental liabilities from SCM; (3) HBML understood its environmental 

liabilities could not be easily transferred away; (4) HBML chose the corporate structure to avoid 

tax liabilities; (5) HBML’s transfer of environmental liabilities to Millennium was not done at 

arms-length; and (6) HBML benefitted throughout the process. See id.

But as described in the factual findings, this is not how the evidence played out at trial. 

Rather, (1) Hanson Industries (not Hanson Trust) was in charge of the post-acquisition 

investigation and thoroughly investigated potential unknown liabilities through its team of 

“ferrets,” CPAs and attorneys who were experienced at finding and accounting for unknown 

liabilities. FOF ¶ 168. (2) The fact that the defendants learned of the Kalamazoo liability and 

included it in balance sheets and reports, id. ¶ 181, strongly discredits the plaintiffs’ theory (based 

on no evidence) that the defendants knew of or were willfully blind to the FMW liability. (3) 

Even if Hanson Trust knew of the environmental liability and understood that it could not be 

easily transferred, there is no evidence that any wrongdoing resulted from that knowledge, 

particularly where Hanson Industries controlled the acquisition and structuring decisions. See id.

Section IV. (4) Hanson Industries chose the corporate structure. Id. ¶¶ 174–76. (5) The evidence 

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did not show that the Millenium demerger was not done at arms-length. Id. Section VI.A.6. (6) 

To the extent that Hanson Trust received a financial benefit from the SCM acquisition, it was the 

standard benefit that parent corporations receive from subsidiaries, as permitted (and encouraged) 

by corporate law. Id. ¶¶ 183, 215; see also In re Packaged Seafood, 338 F. Supp. 3d at 1168 

(“[E]stablishing a tax efficient structure to acquire a company is a routine business practice and 

does not [necessarily] establish inequity.”). In other words, there was no evidence of any 

wrongful or inequitable conduct—by Hanson Trust or by Hanson Industries. 

These findings also show that Hanson Trust did not use its corporate form to perpetuate 

fraud, circumvent any statute, or take any action in bad faith. See Pac. Bell, 2016 WL 3257656, at 

*3; Daewoo Elecs. Am., 875 F.3d at 1250. There was no evidence of fraud. To the extent that the 

plaintiffs argue that the defendants tried to circumvent responsibilities under CERCLA or state 

law, this was not established at trial. Again, the key findings here are that Hanson Industries 

carried out the acquisition and structuring of SCM, and Hanson Industries investigated the 

liabilities and incorporated the knowable ones onto the balance sheets. FOF Section IV. There is 

no evidence that Hanson Trust directed or controlled those activities, and in fact the evidence 

shows that Hanson Industries exercised operational and financial autonomy in making those 

decisions. See id. Sections III.B, IV. And even if Hanson Trust somehow played a pivotal role in 

those decisions, there is no evidence that the structuring of SCM or ultimate demerger were done 

to evade the FMW liability or other environmental liabilities. Cf. United States v. Union Corp., 

259 F. Supp. 2d 356, 389-90 (E.D. Pa. 2003) (finding inequitable result where the parent company 

made structural and financial decisions on behalf of its subsidiaries in “a deliberate attempt to 

evade anticipated liability” under CERCLA (citation omitted)). Indeed, as noted, SCM was better 

capitalized at the time of the demerger than it was at the time of the acquisition, FOF ¶¶ 243–44, 

strongly suggesting there was no improper redirection of funds or abilities to pay. Cf. Toho-Towa

Co. v. Morgan Creek Prods., Inc., 217 Cal. App. 4th 1096, 1109 (2013) (“[I]t would be 

inequitable to permit [the parent company] . . . to shift liability to [the subsidiary] after ensuring 

that [the subsidiary] would have no funds to pay its debts.”). 

The plaintiffs’ reliance on McLaughlin v. L. Bloom Sons Co., 206 Cal. App. 2d 848 (1962), 

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is unconvincing. There, the defendant owned three stores named “Bloom’s” that were unionized 

and subject to the same collective bargaining agreement for that geographical area, and then it

opened a fourth shoe store with the same name in the area covered by the union agreement, but it

did so via a separate corporation that was owned, managed, and financed by the defendant. Id. at 

850–51. The court found that failure to disregard the corporate form would lead to an inequitable 

result because the separate corporation was used only to avoid the contractual obligations with the 

union, which the defendants would have been bound to if they opened the store directly. Id. at 

853. Here, in contrast, there was no evidence that the defendants used any corporate form to avoid 

contractual, financial, or statutory obligations, so McLaughlin is not dispositive. 

And L.A. Terminals, Inc. v. City of Los Angeles, No. CV-186754-MWF-RAOX, 2020 WL 

8028241, at *7 (C.D. Cal. Dec. 21, 2020), is also unpersuasive. The court denied summary 

judgment because there was a dispute of fact as to the unity of interest factors and also because 

failing to pierce the corporate veil “would lead to an inequitable result, as it would allow [the 

defendant] to escape liability for potential violations of CERCLA.” Id. The court did not explain 

its findings on the inequitable result prong, though, so it is not entirely clear what that decision 

was based on, nor can it be particularly persuasive here. At any rate, as discussed, there are no 

facts that HBML was liable for CERCLA violations, so my conclusions do not allow it to 

“escape” liability in any way. 

Finally, the thrust of the plaintiffs’ argument is that it would be inequitable and unjust to 

saddle the taxpayers of Emeryville with the responsibility for paying to clean up the FMW site. 

The City’s inability to collect a judgment from the responsible party—Millenium, as the evidence 

proved—is not by itself a sufficient inequitable result that justifies piercing the corporate veil. See 

JPV I L.P., 88 Cal. App. 5th at 200 (“[D]ifficulty in enforcing a judgment or collecting a debt does 

not, by itself, constitute an inequitable result for purposes of the alter ego doctrine.” (citing 

Sonora, 83 Cal. App. 4th at 539)); see also Sandoval v. Ali, 34 F. Supp. 3d 1031, 1041 (N.D. Cal. 

2014) (same). Unlike in JPV I L.P., 88 Cal. App. 5th at 200, where the plaintiff “did not solely 

rely on its inability to collect on the judgment” and instead pointed to evidence of “other factors 

indicating inequitable uses of the corporate form”—including management of day-to-day 

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operations, diverting the entities’ customers and business opportunities to the defendants, and 

emptying the entities’ bank accounts so that the plaintiff was unable to collect a separate damages 

award—here, the plaintiffs failed to provide similar evidence. Rather, the evidence showed that 

HBML is not legally liable for the FMW site. And the irony of the equitable claim is that the City 

knew in 1999 that the FMW Site was polluted, when it was still possible to make a claim against 

Millenium and recover damages, but the City failed to notify any successor to the Marchant 

environmental liability until 2015. It would be plainly inequitable to force HBML to pay for the 

cleanup.25 

B. Successor Liability

As relevant to this case, for successor liability to apply under CERCLA, two requirements 

must be met: first, the apparent successor corporation must have purchased the assets of another 

corporation, and second, one of four specific exceptions must be met. See Atchison, Topeka & 

Santa Fe Ry. Co. v. Brown & Bryant, Inc., 159 F.3d 358, 361–64 (9th Cir. 1997) (outlining the 

requirements of successor liability and reasoning that federal and California law are not practically 

different in this area). The exception at issue here is whether Hanson Trust “expressly or 

impliedly agree[d] to assume the liability.” Id. at 361. I address each requirement in turn. 

1. Asset Purchase

“A basic tenet of American corporate law is that the corporation and its shareholders are 

distinct entities.” United States v. Bennett, 621 F.3d 1131, 1136 (9th Cir. 2010) (quoting Dole 

Food Co. v. Patrickson, 538 U.S. 468, 474-75 (2003)). “An individual shareholder, by virtue of 

his ownership of shares, does not own the corporation’s assets.” Id. (quoting Dole Food, 538 U.S. 

at 474-75). For that reason, “a parent corporation does not own the assets of its wholly-owned 

subsidiary by virtue of that relationship alone.” Id. And under California law, “when a 

corporation acquires only capital stock [in another corporation] rather than assets, it becomes a 

‘sole shareholder’ of the acquired company.” Sunnyside Dev. Co., LLC v. Opsys Ltd., No. C 05 

25 Because I conclude that the law and facts show that the alter ego test is not met and the 

corporate veil should not be pierced, I do not need to address the merits of the defendants’ laches 

defense. 

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0553 MHP, 2007 WL 2462142, at *6 (N.D. Cal. Aug. 29, 2007) (quoting Potlatch Corp. v.

Superior Ct., 154 Cal. App. 3d 1144, 1150 (1984)). As a shareholder, the purchasing corporation 

does not own any “of the specific property of [the acquired] corporation.” Id. (quoting Potlatch, 

154 Cal. App. 3d at 1150). Because it does not own the acquired corporation’s property, the 

stock-purchasing corporation owns neither the assets nor the liabilities—just the stocks. See id. 

Purchasing stock therefore does not lead to responsibility for an acquired corporation’s 

liabilities—successor liability. Instead, successor liability “requires the purchase of assets.” Id.

(citing Potlatch, 154 Cal. App. 3d at 1150-51). 

Here, HBML acquired SCM’s stock, but it never acquired or purchased SCM’s assets.

Instead, it is undisputed that SCM merged with HSCM Merger Co. to create SCM Corporation, 

which in turn acquired SCM’s assets and liabilities, including the FMW site. FOF ¶¶ 184, 281. 

HSCM Merger Co. was jointly and wholly owned by HSCM Industries and Hanson Holdings 

Netherlands. Id. ¶ 144. It was also a subsidiary of Hanson Trust, which owned all of HSCM 

Merger Co.’s capital stock, id. ¶ 149. In other words, after HSCM Merger Co.’s merger, Hanson 

Trust indirectly owned stock in SCM Corporation, which in turn held the FMW liability. Id.

¶ 150. But acquiring and owning stock is insufficient to show that a purchasing corporation also 

acquired and became responsible for assets or liabilities. See Sunnyside Dev. Co., 2007 WL 

2462142, at *6; Bennett, 621 F.3d at 1136. And no evidence was presented at trial that Hanson 

Trust owned or acquired assets in SCM Corporation. See FOF Section IV.A.3. Because it 

acquired no assets, logically it purchased no assets—but an asset purchase is required for 

successor liability. See Sunnyside Dev. Co., 2007 WL 2462142, at *6. 

I previously declined to grant the defendants’ summary judgment based on just this 

argument, finding a dispute of fact concerning whether Hanson Trust’s actions constituted a stock 

purchase or an asset purchase. MSJ Order 20-23. In part I relied on United States v. Iron 

Mountain Mines, Inc., 987 F. Supp. 1233, 1239 (E.D. Cal. 1997), explaining: 

In Iron Mountain, the question was whether the alleged successor corporation, 

Stauffer, was a corporate successor to Mountain Copper, the undisputed polluter 

responsible under CERCLA that had been dissolved decades earlier. Id. at 1234–

35. Stauffer had initially tried to buy from Mountain Copper its stake in a separate 

company, but when Mountain Copper refused to sell its stake, Stauffer successfully 

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took control of Mountain Copper via two tender offers. Id. at 1236. Stauffer 

“became the sole shareholder of Mountain Copper and its wholly owned 

subsidiaries.” Id. After acquisition, Stauffer sought to dissolve Mountain Copper, 

in part for a tax deduction. Id. Through various other transactions, all of Mountain 

Copper’s assets were transferred to Stauffer in exchange for Stauffer assuming all 

of Mountain Copper’s liabilities. Id. at 1236–37. The court reasoned that while 

these actions were not a “straightforward asset purchase,” they were sufficient to 

constitute an asset purchase for the purposes of successor liability under CERCLA 

because “the purpose of the stock buy out was to gain control of a particular asset,” 

Stauffer gained control and ownership of Mountain Copper, and Stauffer 

subsequently liquidated Mountain Copper and distributed its assets to Stauffer. Id.

at 1239 (collecting cases reaching similar results). 

MSJ Order 20–21. 

At the summary judgment stage, I found that there was disputed evidence that Hanson 

Trust controlled and funded the acquisition of SCM for the purposes of acquiring the typewriter 

business and assets, and so a reasonable factfinder could conclude both that the purpose of the 

stock buyout of SCM was to acquire the typewriter assets, and that the assets were acquired by 

HBML as opposed to a subsidiary. See id. 21–23. I distinguished the case from Potlatch Corp., 

154 Cal. App. 3d at 1150–51, and from Sunnyside Dev. Co., 2007 WL 2462142, at *6–7, for 

similar reasons. MSJ Order 21–23. But as discussed, the evidence ultimately showed that Hanson 

Trust did not control the acquisition of SCM. Instead, acquisition decisions—including the role of 

the typewriter business in the decision to acquire SCM and its ultimate disposition and sale—were 

made by Hanson Industries. FOF ¶¶ 185, 261. And as discussed, SCM’s assets were acquired and 

held by HSCM Merger Co., a mere subsidiary of Hanson Trust. The evidence at trial ultimately 

showed that Iron Mountain is inapposite. 

Accordingly, though the plaintiffs presented sufficient evidence to create disputed facts at 

summary judgment, after weighing the evidence at trial—particularly the more nuanced and 

detailed explanations of the corporate foundings and relationships—I now find that Hanson Trust 

did not acquire any of SCM’s assets; it was merely a shareholder. Successor liability therefore 

does not apply. See Sunnyside Dev. Co., 2007 WL 2462142, at *6; Potlatch Corp., 154 Cal. App. 

3d at 1150–51. 

2. Express or Implied Assumption

Even if the evidence somehow showed that Hanson Trust acquired SCM’s assets—which 

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it does not—successor liability still does not apply because the plaintiffs failed to prove that 

Hanson Trust expressly or impliedly assumed SCM’s liabilities. 

Where a “corporation purchas[es] the principal assets of another corporation,” under 

California law the purchasing corporation does not automatically assume the liabilities of the 

selling corporation. Cleveland v. Johnson, 209 Cal. App. 4th 1315, 1327 (2012) (quoting Ray v.

Alad Corp., 19 Cal. 3d 22, 28, 560 P.2d 3, 7 (1977)). Instead, the purchasing corporation only 

assumes the liabilities of the selling corporation where: 

(1) there is an express or implied agreement of assumption, (2), the transaction

amounts to a consolidation or merger of the two corporations, (3) the purchasing 

corporation is a mere continuation of the seller, or (4) the transfer of assets to the

purchaser is for the fraudulent purpose of escaping liability for the seller’s debts. 

Pool v. F. Hoffman-La Roche, Ltd., 386 F. Supp. 3d 1202, 1213 (N.D. Cal. 2019) (quoting 

Cleveland, 209 Cal. App. 4th at 1327); see also Ray, 560 P.2d at 7 (same). 

Only the first basis for liability is at issue here.

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courts begin with the language of the parties’ written agreements. United States v. Sterling 

Centrecorp Inc., 960 F. Supp. 2d 1025, 1035 (E.D. Cal. 2013), aff’d, 977 F.3d 750 (9th Cir. 2020) 

(citations omitted). For both express and implied assumption of liability, courts also look beyond 

the language of written agreements “to consider all relevant circumstances” including “the parties’ 

conduct and representations.” Id. at 1035, 1038 (citations omitted). A corporation can assume 

unknown liabilities where the written agreement does not contain “clear and specific language . . . 

used to effect the exclusion” of the unknown liabilities. Id. at 1036 (citation omitted). But the 

intent of the parties is ultimately the most important to determine whether liabilities were 

assumed. See id. at 1035, 1038. 

The parties did not present language in any written agreement that showed HBML 

assumed the FMW liability. Rather, as outlined extensively in the Findings of Fact, the 

26 In the City’s proposed Conclusions of Law, they appear to argue not only for the first basis of 

liability—express or implied assumption—but also the second basis—de facto merger. See [Dkt. 

No. 327] 43:11–14, 44:11–18, 44:24–45:6, 47:5–7 (asserting that the acquisition of SCM was a 

merger with HBML). But I granted summary judgment to the defendants on the de facto merger 

basis. MSJ Order 24–25. To the extent that the plaintiffs attempt to reassert these arguments, I 

consider the arguments about merger only insofar as they inform the express or implied 

assumption theory. 

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assumption of the FMW liability can be clearly traced: HSCM-20 assumed the FMW liability 

when SCM merged into HSCM-20 on November 3, 1986. FOF ¶ 281. HSCM-20 then merged 

into HSCM Holdings, changed its name to SCM, merged into HM Holdings, Inc., and finally 

merged with Millenium Holdings. Id. The FMW liability followed from SCM to HSCM-20 to 

HSCM Holdings to HM Holdings to Millenium Holdings. Id. Millenium Holdings was the 

successor to the Marchant liabilities. See id. 

There is also no evidence that any of the various parties conducted themselves or 

represented themselves in such a way to suggest that Hanson Trust expressly or impliedly 

assumed the Marchant liability. See Sterling, 960 F. Supp. 3d at 1035, 1038. While the plaintiffs 

cite two Hanson Industries memoranda about SCM’s legacy environmental liabilities, neither the 

Hellings memo nor the Schoenwolf memo states or implies that Hanson Trust assumed the cost of 

those liabilities. FOF ¶¶ 282–83. Neither these memos nor any other evidence suggests that any 

party intended HBML to assume the liabilities. See id.; Sterling, 960 F. Supp. 3d at 1035, 1038. 

Though I found a dispute of fact at the summary judgment stage over whether Hanson Trust and 

its fan companies acted in a way that showed they assumed all environmental liabilities, see MSJ 

Order 21–23, again that is not how the evidence played out at trial, in part because the evidence at 

trial demonstrated that Hanson Industries, not Hanson Trust, controlled and directed the SCM 

acquisition. See FOF Section IV.A. This is simply a different case with different facts from those 

in Sterling. 

Accordingly, there was no evidence that Hanson Trust expressly or impliedly assumed 

SCM’s liabilities, including the FMW liability. The theory of successor liability fails. 

III. ALL CLAIMS FOR RELIEF FAIL

The City brought ten claims for relief: two for violation of CERCLA, and one each for 

violation of the RCRA,

27 violation of California’s Polanco Act, violation of California’s Gatto 

Act, continuing public nuisance under California Civil Code section 3480, continuing private 

nuisance under California Civil Code section 3479, continuing trespass, equitable indemnity, and 

27 The Resource Conservation and Recovery Act of 1976 (“RCRA”), 42 U.S.C. §§ 6901 et seq. 

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declaratory relief. Second Amended Complaint (“SAC”) [Dkt. No. 67]. 

Throughout this litigation, the City has only argued two theories of liability for any claim: 

alter ego and successor liability. The City has made clear that these are the only theories of 

liability for its two CERCLA claims. Because the City failed to prove alter ego or successor 

liability, HBML is not a responsible party or covered person under CERCLA and therefore not 

liable. The two CERCLA claims fail. 

The Polanco and Gatto Acts employ the same “scope and standard of liability for cost 

recovery” as CERCLA liability. Cal. Health & Safety Code § 33459.4(c) (Polanco Act); Cal. 

Health & Safety Code § 25403.5 (Gatto Act); see also Emeryville v. Elementis Pigments, Inc., No. 

99-03719, 2001 WL 964230, at *11 (N.D. Cal. Mar. 6, 2001) (same); Fireman’s Fund Ins. Co. v.

City of Lodi, Cal., 302 F.3d 928, 946 (9th Cir. 2002), as amended (Oct. 8, 2002) (explaining that 

CERCLA preempts state and local laws if they create liability that conflicts with CERCLA 

liability). Because the City failed to prove liability under CERCLA, for the same reasons the City 

failed to prove liability under the Polanco and Gatto Acts. 

For the remaining claims, the City has been less specific about whether HBML might be 

liable under another theory of liability, such as direct liability. From the SAC, motion practice, 

joint pretrial statement, and subsequent arguments, it seems clear that the City’s only available 

path to prove liability for its public and private nuisance and trespass claims is by piercing the 

corporate veil. See, e.g., [Dkt. No. 266] 21:11–22:10 (describing HBML’s alleged liability for 

nuisance claims “[b]ecause it is responsible for Marchant’s contamination”). The City never 

argued, for example, that HBML was directly liable for the contamination—nor could it, based on 

the evidence. To the extent that these claims rely on HBML as the alter ego of or successor to 

Marchant and the FMW liabilities, they fail for the same reasons above—the evidence did not 

establish alter ego or successor liability. 

That these theories of indirect liability are the only ones pursued and available also makes 

sense given the underlying legal claims. For public nuisance claims, liability “does not hinge on 

whether the defendant owns, possesses or controls the property,” but the City would have had to 

prove that HBML “created or assisted in the creation of the nuisance.” Citizens for Odor

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Nuisance Abatement v. City of San Diego, 8 Cal. App. 5th 350, 359 (2017) (emphasis omitted) 

(quoting Melton v. Boustred, 183 Cal. App. 4th 521, 542 (2010)); see also City & Cnty. of San 

Francisco v. Purdue Pharma L.P., 491 F. Supp. 3d 610, 676 (N.D. Cal. 2020) (stating, for public 

nuisance claims, that the plaintiff must prove that the defendant’s conduct “was a ‘substantial 

factor in bringing about the result’” (quoting People v. ConAgra Grocery Prod. Co., 17 Cal. App. 

5th 51, 101 (2017)). And the City also would have had to prove this for its private nuisance claim, 

for which the elements “are the same as those for a public nuisance claim,” except for one factor 

not relevant here. Schaeffer v. Gregory Vill. Partners, L.P., 105 F. Supp. 3d 951, 967 (N.D. Cal. 

2015). But the City cannot and did not prove that HBML’s conduct created or assisted in the 

creation of the pollution because HBML had no connection to the FMW site until long after the 

relevant pollution occurred. HBML is therefore not directly liable. 

Similarly, for the continuing trespass claim, the City’s theory is that the evidence of 

Marchant leaving contaminants at the FMW site proves the claim. [Dkt. No. 327] 57:1–11, [Dkt. 

No. 266] 23:13–2 (“A continuing trespass exists where ‘contaminants have been left on the 

property by a prior owner. . . .’” (quoting Newhall Land & Farming Co. v. Superior Ct., 19 Cal. 

App. 4th 334, 345 (1993)); SAC ¶ 120. The City did not assert or argue, nor did it present 

evidence at trial that proved or implied, that HBML left the contaminants onsite. Any theory of 

direct liability therefore fails, too. 

And for similar reasons, the RCRA claim fails. After failing to prove alter ego or 

successor liability, the City’s only available path would be to prove that HBML is directly liable 

under the RCRA. But that requires proving that HBML is a: 

past or present generator, past or present transporter, or past or present owner or 

operator of a treatment, storage, or disposal facility, who has contributed or who is 

contributing to the past or present handling, storage, treatment, transportation, or 

disposal of any solid or hazardous waste which may present an imminent and 

substantial endangerment to health or the environment[.] 

42 U.S.C.A. § 6972(a)(1)(B); see also Hinds Invs., L.P. v. Angioli, 654 F.3d 846, 850–51 (9th Cir. 

2011) (explaining this definition). And again, the City did not present evidence that HBML

generated, transported, owned, or operated the FMW site in such a manner. Any theory of direct 

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liability fails, too.28 

Finally, because the City failed to prove that HBML is liable for any of its claims, I 

conclude that the City is not entitled to equitable indemnity or to declaratory relief.29 

CONCLUSION

In light of the findings of fact and conclusions of law, I find in favor of defendant HBML 

and against plaintiff City of Emeryville and will enter judgment accordingly. 

IT IS SO ORDERED.

Dated: August 27, 2024 

William H. Orrick

United States District Judge

28 Because the City failed to prove alter ego, successor, or direct liability for any of the claims, I 

need not and do not address the parties’ remaining arguments, including about statutes of 

limitations or joint and several liability. 

29 Because the City failed to succeed on any of its claim, HBML’s counterclaims for contribution 

under CERCLA and the Polanco and Gatto Acts, general contribution, and equitable indemnity are 

moot. 

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