Opinion ID: 758770
Heading Depth: 2
Heading Rank: 1

Heading: Successor Liability Under CERCLA

Text: 10 In Louisiana-Pacific Corp. v. Asarco, Inc., 909 F.2d 1260 (9th Cir.1990), we adopted the Third Circuit's rationale that CERCLA authorizes successor liability and that the parameters of this successor liability are to be fashioned by federal common law. Id. at 1262-63 (citing Smith Land & Improvement Corp. v. Celotex Corp., 851 F.2d 86, 91-92 (3d Cir.1988)). We then went on to create federal common law rules of successor liability by drawing on the traditional rules of successor liability in operation in most states. Louisiana-Pacific, 909 F.2d at 1263. Thus, we recognized that asset purchasers are not liable as successor corporations unless: 11 (1) The purchasing corporation expressly or impliedly agrees to assume the liability; 12 (2) The transaction amounts to a de-facto consolidation or merger; 13 (3) The purchasing corporation is merely a continuation of the selling corporation; or 14 (4) The transaction was fraudulently entered into in order to escape liability. 15 Id. 16 In this case, the Railroads concede that the first three exceptions do not apply to PureGro. Rather, the Railroads contend that PureGro is liable under the fraudulently-entered transaction exception (discussed in Part III, below) or that PureGro is liable under a broader deviation of the mere continuation exception, sometimes referred to as the substantial continuation or the continuing business enterprise exception. Louisiana-Pacific specifically left open the availability of this broader exception, id. at 1266, and the exception has not since been adopted in this circuit. 17 At this juncture, the federal common law rules for successor liability under CERCLA in this circuit mirror the traditional successor liability rules of most states, including California. (California law applies to the contracts between PureGro and B & B.) The Railroads would have us exercise our powers under federal common law to expand CERCLA liability by adding an additional successor liability exception, which, they contend, would encompass PureGro as a successor-in-interest to B & B. PureGro, however, argues that this expansion under federal common law is not permissible, as recent Supreme Court decisions have undermined Louisiana-Pacific 's holding that federal common law governs successor liability under CERCLA. 3