Document: 524 U.S. 51118 S.Ct. 1876141 L.Ed.2d 43 118 1876 UNITED STATES, Petitioner,v.BESTFOODS et al. No. 97-454. Supreme Court of the United States Argued March 24, 1998. Decided June 8, Syllabus * The brought this action under §107(a)(2) Comprehensive Environmental Response, Compensation, and Liability Act 1980 (CERCLA) against, among others, respondent CPC International Inc., parent corporation defunct Ott Chemical Co. (Ott II), for costs cleaning up industrial waste generated by II's chemical plant. Section 107(a)(2) authorizes suits "any person who at time disposal any hazardous substance owned or operated facility.'' trial focused on whether CPC, as a corporation, had "owned operated'' plant within meaning §107(a)(2). District said that operator liability may attach to both indirectly, when corporate veil can be pierced state law, directly, has exerted power influence over its subsidiary actively participating in, exercising control over, subsidiary's business during period disposal. Applying test, court held liable because selected board directors populated executive ranks with officials, another official played significant role in shaping environmental compliance policy. Sixth Circuit reversed. Although recognizing company might directly if it actually facility stead subsidiary, alongside joint venturer, refused go further. Rejecting Court's analysis, explained corporation's operating ostensibly depends degree which controls extent manner involvement amount abuse form will warrant piercing disregarding separate entities subsidiary. Michigan veil-piercing decided was not controlling actions, since two corporations maintained personalities did utilize perpetrate fraud subvert justice. Held: 1.When (but only when) pierced, charged derivative CERCLA actions polluting facility. It is general principle law (so-called through ownership stock) acts subsidiaries. does purport reject bedrock principle, Government indeed made no claim an owner simply owns operates But there equally fundamental applicable parent-subsidiary relationship well generally, shareholder conduct when, inter alia, would otherwise misused accomplish certain wrongful purposes, most notably fraud, shareholder's behalf. rewrite well-settled rule, either, against venerable common-law backdrop, congressional silence audible. Cf. Edmonds v. Compagnie Generale Transatlantique, 443 256, 266-267, 99 2753, 2759-2760, 61 521. CERCLA's failure speak matter implications demands application rule that, abrogate statute must question addressed common law. Texas, 507 529, 534, 113 1631, 1634-1635, 123 245. Pp. ____-____. 2.A participated exercised operations own right (a) Derivative aside, bar from direct actions. Under plain language §107(a)(2), pollution, so even facility's owner. Because define term "operate,'' however, difficult sufficient constitute parental "operation.'' In organizational sense obviously intended CERCLA, "operate'' ordinarily means workings of, manage, affairs To sharpen definition purposes concern contamination, direct, specifically related leakage waste, decisions about regulations. (b) correctly rejected analysis Court, mistakenly between premised little more than CPC's II majority directors. parent's operation kept distinct facility, should instead have itself, i.e., "operated'' evidenced participation activities. That error compounded erroneous assumption officers were necessarily attributable rather II, contrary time-honored principles. focus (rather facility), combined automatic attribution dual erroneously, unintentionally, treated though displaced fundamentally altered standards limited liability. created what essence relaxed, CERCLA-specific banish traditional expectations Such arise silence, dispositive. (c) Nonetheless, erred limiting sole venture operation, eliminate possible finding facts case. ordinary word those but extends also situations which, e.g., behalf parent, agents position manage activities Norms behavior (undisturbed provision) are crucial reference points, determining officer director served conducting distinguishing officer's oversight his There is, fact, some evidence agent alone engaged eccentric accepted norms facility: opinion speaks such conspicuous part dealing toxic risks emanating plant's operation. findings regard enough raise issue draws ultimate conclusion, leaving lower courts reevaluate resolve first instance. F.3d 572, vacated remanded. SOUTER, J., delivered unanimous Court. Lois J. Schiffer, Washington, DC, petitioner. Kenneth S. Geller, respondents. Justice SOUTER 1 before us, (CERCLA), 94 Stat. 2767, amended, 42 U.S.C. §9601 seq., may, without more, We answer no, unless pierced. itself 2 1980, enacted response serious health posed pollution. See Exxon Corp. Hunt, 475 355, 358-359, 106 1103, 1107-1108, 89 364 (1986). "As name implies, comprehensive grants President broad command government agencies private parties clean sites.'' Key Tronic States, 511 809, 814, 114 1960, 1964, 128 797 (1994). If satisfies statutory conditions, instance, use "Hazardous Substance Superfund'' finance cleanup efforts, see §§9601(11), 9604; 26 §9507, then replenish §107 §9607(a)(2). So, "responsible damage, harm, injury poisons [may tagged with] cost their actions,'' S.Rep. 96-848, pp. 6119, 13, U.S.Code Cong. & Admin.News p. 6119 (1980).1 "person'' defined include other organizations, §9601(21), "facility'' enjoys detailed well, §9601(9).2 phrase "owner operator'' tautology, owning operating'' §9601(20)(A)(ii), bit circularity prompts our review. supra, 363, S.Ct., 1109 (CERCLA, "unfortunately, model legislative draftsmanship''). 3 1957, I) began manufacturing chemicals near Muskegon, Michigan, intentional unintentional dumping substances significantly polluted soil ground water site. 1965, Inc.3 incorporated wholly buy I's assets exchange stock. new company, dubbed continued site, pollute surroundings. managers I, including founder, president, principal shareholder, Arnold Ott, II. several given positions they performed duties corporations. 4 1972, sold Story Company, Muskegon until bankruptcy 1977. Shortly thereafter, Department Natural Resources (MDNR)4 examined site found land littered thousands leaking exploding drums saturated noxious chemicals. MDNR sought buyer property willing contribute toward cleanup, after extensive negotiations, Aerojet-General arranged transfer trustee Aerojet California Cordova Company (Cordova/California), purchase property, Cordova/California turn (Cordova/Michigan), manufactured 1986.5 5 By 1981, federal Protection Agency undertaken cleaned up, long-term remedial plan called expenditures into tens millions dollars. recover money, filed 1989, naming five defendants responsible parties: Aerojet, Cordova/California, Cordova/Michigan, Ott.6 (By time, I defunct.) After (and MDNR) launched flurry contribution claims, counterclaims, cross-claims, consolidated cases three phases: liability, remedy, insurance coverage. So far, phase been completed; 1991, 15-day bench stipulated §9601(9), released incurred reimbursable issues companies, 6 Int'l, Inc. Corp., 777 F.Supp. 549, 572 (W.D.Mich.1991). while imposes cannot concepts "the history do suggest rejects entirely limits inherent law.'' Id., 573. As put it, 7 "a section waste. A actual functions decision-making creates "operator' CERCLA; mere appropriate consistent investment not.'' Ibid. 8 test case, operators. particularly telling official, G.R.D. Williams, 9 divided panel Appeals reversed part, 59 584, granted rehearing en banc decision, 67 586 (1995). This judges 6, again part. (1997). remarked possibility subsidiary: "At least conceivably, independently operate subsidiary; or, sort subsidiary.'' 579. further explanation. 10 "that where pursuant §9607(a)(2) based upon requirements necessary pierce [under law] met. words, . 580. 11 neither nor Aerojet7 subsidiaries, parents 12 certiorari, 522 ----, 621, 139 506 (1997), conflict Circuits facilities subsidiaries.8 now vacate remand. III 13 deeply "ingrained economic legal systems'' Douglas Shanks, Insulation Through Subsidiary Corporations, 39 Yale L.J. 193 (1929) (hereinafter Douglas); also, Buechner Farbenfabriken Bayer Aktiengesellschaft, 38 Del.Ch. 490, 494, 154 A.2d 684, 687 (1959); Berkey Third Ave. R. Co., 244 N.Y. 84, 85, 155 N.E. 58 (1926) (Cardozo, J.); W. Fletcher, Cyclopedia Law Private Corporations §33, 568 (rev. ed. 1990) ("Neither fact exists make one torts affiliate''); Horton, Corporation Torts Subsidiary, A.L.R.3d 1343, 1349 (1966) ("Ordinarily, chooses facilitate employment penalized judicial determination obligations subsidiary''); cf. Anderson Abbott, 321 349, 362, 64 531, 537, 88 L.Ed. 793 (1944) ("Limited exception''); Burnet Clark, 287 410, 415, 53 207, 208, 77 397 (1932) ("A stockholders generally entities''). Thus hornbook exercise "control' stock gives create beyond includes election directors, making by-laws doing all incident status stockholders. Nor duplication fatal.'' 196 (footnotes omitted). respect distinctions polluter severely criticized literature, see, Note, Parent Hazardous Waste Cleanup Damages, Harv.L.Rev. 986 (1986), nothing purports 2759, 521 (1979) ("silence eloquent, reticence contemplating important controversial change existing unlikely''). subject 14 See, 538 ("there occasions obtained qualified denied''); Chicago, M. St. P.R. Minneapolis Civic Commerce Assn., 247 501, 553, 557, 62 1229 (1918) (principles separateness "have plainly repeatedly resorted to, purpose normal usual manner, used agency instrumentality company''); P. Blumberg, Corporate Groups: Tort, Contract, Other Common Problems Substantive §§6.01-6.06 (1987 1996 Supp.) (discussing context). Nothing either. thus like many enactment giving indication entire corpus replaced plaintiff's cause statute,'' Burks Lasker, 441 471, 478, 1831, 1837, 60 404 (1979), " [i]n order law,'' 1634, 245 (1993) (internal quotation marks accordingly correct holding pierced,9 actions.10 IV 15 act rested end here; ownership, statute's terms bars (then-Professor) noted almost 70 years ago, distinguished alleged wrong seemingly traced conduit personnel management'' participant complained of.'' 208.11 instances, H. Henn Alexander, Laws 347 (3d 1983) Alexander) ("Apart principles, natural activity resulted liability''). happens nothing, then, displace "corporation [itself] wrongs committed course business,'' Mine Workers Coronado Coal 259 344, 395, 570, 577, 66 975 (1922), whereas rules limit "operator'' provision concerned primarily one's Sidney Arst Pipefitters Welfare Ed. Fund, 25 417, 420 (C.A.7 1994) ("the personal provided results veil'') properly seen being here. 16 statute, regardless owner, owner's partner, saboteur sneaks night discharge out malice. done existence irrelevant Riverside Market Dev. Bldg. Prods., 931 F.2d 327, 330 (C.A.5) ("CERCLA prevents individuals hiding behind shield "operators,' themselves participate prohibited Act''), cert. denied, 502 1004, 112 636, 116 654 (1991); Kayser-Roth 910 (C.A.1 ("a protected structure ownership'').12 17 much easy say; difficulty comes defining Here we rue uselessness leaves us best give "ordinary meaning.'' Bailey 516 137, 145, 506, 133 472 (1995) mechanical sense, [t]o functioning of; run: sewing machine. '' American Heritage Dictionary 1268 1992); Webster's New 1707 (2d 1958) ("to work; as, machine''). And manage: business. Dictionary, 1268; manage''). someone directs manages, conducts having B 18 With understanding, satisfied think appeals 19 emphasizing "CPC decision-making,'' F.Supp., 574, applied "actual control'' "actually subsidiary,'' id., 573, employed 27 (operator "requires active Jacksonville Elec. Auth. Bernuth 996 1107, 1110 (C.A.11 1993) (parent intimately involved [subsidiary] immediately facility'' omitted)). 20 well-taken objection fusion indirect liability; administered asking (an going liability) interaction (the source liability). If, enquiry different tests. "The Control enough, rise doctrine, language.'' Oswald 269; Schiavone Pearce, 79 248, 254 (C.A.2 1996) ("Any liabilities [the parent] operator, stem plant''). therefore mistaken rest premising "CPC's 100-percent II'' times directors.'' 575. itself. 21 addition perhaps reflection of) taken flawed, wrongly assumed CPC. emphasized placed high-level officials key management major policy conducted day-to-day "Although set policies need obtain formal approval high-ranking positions.'' 559; 575 (relying management, president chief officer,'' affairs, Ott''); 558 ("CPC controlled, policy-making thorough representation directors''); 559 highest levels management''). 22 imposing these grounds, failed recognize "it serve expose acts.'' Protein AB Volvo, 844 56, 57(C.A.2), 488 852, 109 136, 102 (1988); Kingston Dry Dock Lake Champlain Transp. 31 265, 267 1929) (L. Hand, J.) ("Control shares fuse corporations, each''); Alexander 355 (noting "normal'' identical officers''). 23 recognition remain corollary "well established [of "change hats' represent separately, despite ownership.'' Lusk Foxmeyer Health 129 773, 779 (C.A.5 1997); Fisser Bank, 282 231, 238 1960). Since presume wearing "subsidiary "parent acting Procedural §1.02.1, (1983); Jon-T Chemicals, 768 686, 691 1985), 1014, 1194, 309 establish here supervised show presumption contrary, capacities acts.13 here, rule. 24 sum, Indeed, directorial support resort indirect, violations academic. But, said, agree participation-and-control looking supervision especially assumes always identify resulting return indicate why stopped short confined examples exclusive ventures, declined find Congress presumably mind verb "to operate,'' recognized meant something activation pumps valves, read contemplate "operation'' direction __. indicating venture. F.3d, anticipated above, observed depart far officeholding n. supra. Yet possibility, suggested hat wear Identifying occurrence calls line drawing yet again, interference stems Again points. Just look identifying officeholder ostensible capacity, refer them [A]ctivities involve investor status, monitoring performance, capital budget decisions, articulation procedures, liability.'' 282. critical whether, detail, directed 28 just type Williams worked CPC; he employee, officer, Tr. Oral Arg. 7, thus, necessity became regulatory matters work governmental director. heavily II.'' 561. He "actively variety matters,'' ibid., "issued directives regarding responses inquiries,'' 29 Williams's draw conclusion point. Not deciding instance appellate focus, very case suggests still known factual stand, offered way concrete detail conclusions vigorously dispute involvement. Prudence counsels remand, theory reevaluation role, facility.14 V 30 judgment vacated, remanded instructions proceedings opinion. ordered. syllabus constitutes prepared Reporter Decisions convenience reader. Detroit Timber Lumber 200 321, 337, 282, 287, 50 499. contamination.'' Pennsylvania Union Gas 491 1, 2273, 2277, 105 (1989). remedy felt needed sweeping: everyone potentially hazardous-waste contamination forced cleanup.'' 21, 2285 (plurality Brennan, J.). "facility' (A) building, structure, installation, equipment, pipe pipeline (including sewer publicly treatment works), pit, pond, lagoon, impoundment, ditch, landfill, storage container, motor vehicle, rolling stock, aircraft, (B) area deposited, stored, disposed placed, come located; consumer product vessel.'' recently changed Bestfoods. Consistently briefs opinions below, herein. powers responsibilities transferred Quality. entered contract agreed undertake share funding indemnify various expenses. agreement requires subsidiaries incur connection Dept. Resources, 212 Mich.App. 144, 536 N.W.2d 860 (1995), appeal 453 Mich. 901, 554 319 (1996). settled eve trial. Unlike base defense absent unusual circumstances, veil. Rather, denies claiming (1) Brief Respondents 27-36, (2) entitled third party 107(b)(3) §9607(b)(3), 38-46. expressed measure points instructed consider 583. These Compare 580 (C.A.6 1997) (case below) pierced), Joslyn Mfg. T.L. James 893 80, 82-83 (same), 498 1108, 111 1017, 1098 (1991) companies hide veil, veil-piercing), (1991)), 1084, 957, 1045 (1991), 254-255 Lansford-Coaldale Joint Water Tonolli 1209, 1220-1225 (C.A.3 Nurad, William E. Hooper Sons 966 837, 842 (C.A.4) authority authority), 940, 377, 121 288 (1992). disagreement commentators enforcing borrow apply piercing. Compare, 584-585 (Merritt, concurring dissenting part) (arguing apply), 1225 ("given interest uniformity governs justified CERCLA''), Aronovsky Fuller, Releases U.S.F.L.Rev. 421, 455 (1990) enforcement hampered subordination goals varying alter ego theory''), with, ("Whether circumstances determined law''), Dennis, Officers, Directors Stockholders CERCLA: Case Adopting State Law, 36 Vill.L.Rev. 1367 apply). re Acushnet River Bedford Harbor Proceedings, 675 22, 33 (D.Mass.1987) "federal guidance, choice [veil-piercing present questions academic interest, practical significance''). Piercing Veil: Alter Ego Doctrine Federal 95 853 (1982) mirror veil''). none challenges Circuit's presented address Some approach operator. 1220; Oswald, Bifurcation Owner Operator Analysis 72 Wash. U.L.Q. 223, 281-282 (1994) Oswald). otherwise, however. operates, own, pervasively controlled sufficiently improper piercing, derivatively While article written together Professor passages quoted solely Douglas. 193, *. 257 ("There instances overstepped bounds Imagine, example, strictly formalities, avoided intertwining adequately capitalized active, daily escape justify attempt recite ways could parent. Here, prudent say whom claims strongest perfectly behavior, wanes distance approaches point interests nonetheless advantageous dictated by, 561 missions received how improve change''); executives members occasionally attended meetings''). written, close overcoming "Ott CPC,'' indicates opposite. Still, course, free remand additional evidence, cited tend decisionmakers acted specific orders

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