Court Opinion

ID: 9481194
Source: CourtListenerOpinion
Date Created: 2023-08-05 08:10:59.208993+00
Date Added: 2024-06-11T17:48:09.158354
License: Public Domain

KENNEDY, Circuit Judge,
concurring.
I concur in the majority’s holding that Michigan law of corporations should apply including its law on mergers and successor liability. I write separately to more fully express why I believe state law should be applied.
In selecting the appropriate law to govern the meaning of “corporation” as used in 42 U.S.C. § 9601(21),1 as in all questions of statutory construction, I am guided by the language of the statute and any clear legislative intent. Neither the language nor the legislative history of CERCLA provides a basis for concluding that the creation of a uniform federal common law rule of successorship liability was intended. I would decline to create a uniform federal rule here for reasons that follow.
Although federal law ultimately controls the issue of CERCLA liability, “[cjontro-versies ... governed by federal law, do not inevitably require resort to uniform federal rules, [citations omitted] ... Whether to adopt state law or to fashion a nationwide federal rule is a matter of judicial policy 'dependent upon a variety of considerations always relevant to the nature of the specific governmental interests and to the effects upon them of applying state law.’ ” United States v. Kimbell Foods, Inc., 440 U.S. 715, 727-728, 99 S.Ct. 1448, 1458, 59 L.Ed.2d 711 (1979) (quoting United States v. Standard Oil Co., 332 U.S. 301, 310, 67 S.Ct. 1604, 1609, 91 L.Ed. 2067 (1947)).2 I believe that the existence and status of a “corporation” allegedly liable under section 9607 should be determined by reference to the law under which the “corporation” was created. All the corporations involved here are creatures of state law and such questions should be determined by reference to the law of the state of their incorporation, unless the application of that law would conflict with federal policy.3
Convenience and common sense also point to the adoption of state corporation law as the federal law to be applied in this case, for the purpose of determining whether any of the defendants are liable as a “corporation” under CERCLA. All are artificial creations, wholly dependent on *1249state law for their existence. Those state laws define their powers, rights and liabilities, prescribe their procedures, govern their continued existence, and define the terms upon which mergers may occur and the effect to be given to mergers.4
Application of the framework set out by the Supreme Court in Kimbell Foods, 440 U.S. 715, 99 S.Ct. 1448, also supports the conclusion that state corporation law should be borrowed for the federal rule of decision on questions of what constitutes a “corporation” under CERCLA §§ 101(21) and 107(a) for liability purposes. The Court in Kimbell Foods held that state priority rules would be adopted as federal law to be used in settling disputes arising under certain federal loan programs. The Court advised that we should consider the following in deciding whether to adopt applicable state law or fashion uniform federal common law to construe “corporation”: (1) whether there is a need for a nationally uniform body of law to apply in situations like this; (2) whether application of state corporation law would frustrate important federal policy; and (3) the impact a federal rule might have on existing relationships under state law. 440 U.S. at 728-29, 99 S.Ct. at 1458-59.5
First, while CERCLA is an important environmental statute, I perceive no need for a uniform federal rule to determine whether a corporation exists or can be held vicariously liable under CERCLA. I am not convinced that such issues “ ‘by their nature are and must be uniform in character throughout the Nation.’ ” Kimbell Foods, 440 U.S. at 728, 99 S.Ct. at 1458 (quoting United States v. Yazell, 382 U.S. 341, 354, 86 S.Ct. 500, 507, 15 L.Ed.2d 404 (1966)). It is true that the United States has some interest in this area, since in some cases it may be possible that only application of vicarious liability will allow recovery of response costs. It is also true that states may differ amongst themselves in some respects in this area. However, without a showing that state law is inadequate to achieve the federal interest, “we discern no imperative need to develop a general body of federal common law to decide cases such as this.” Wilson v. Omaha Indian Tribe, 442 U.S. 653, 673, 99 S.Ct. 2529, 2541, 61 L.Ed.2d 153 (1979) (adopting state property law to Indian land dispute after applying Kimbell Foods test). As the United States6 itself acknowledges, the law in the fifty states on corporate dissolution and successor liability is largely uniform. For example, all states agree that the surviving corporation in a statutory merger assumes the debts and liabilities of the constituent corporations. See 15 W. Fletcher, Cyclopedia of the Law of Private Corporations § 7121 at 185 (rev. perm. ed. 1983). And all states have statutes providing for post-dissolution liability of corporations for liabilities existing prior to dissolution. See W. Fletcher, § 8143 at 443.
CERCLA does not purport to be a source of authority for corporate existence and corporate vicarious liability; rather the Act was intended “ ‘to facilitate the prompt cleanup of hazardous waste sites by placing the ultimate financial responsibility for cleanup on those responsible for the hazardous wastes.’ ” Walls v. Waste Resource Corp., 823 F.2d 977, 980-981 (6th Cir.1987) (citation omitted). Therefore, *1250CERCLA does not require that federal law displace state laws governing corporate existence and vicarious liability unless the state laws permit action prohibited by the Act, or unless “their application would be inconsistent with the federal policy underlying the cause of action.” Johnson v. Railway Express Agency, 421 U.S. 454, 465, 95 S.Ct. 1716, 1722, 44 L.Ed.2d 295 (1975).7 In applying the “consistency” test, the courts do not accept “generalized pleas for uniformity as substitutes for concrete evidence that adopting state law would adversely affect [federal interests].” Kimbell Foods, 440 U.S. at 730, 99 S.Ct. at 1459. Review of relevant state corporation law convinces me that its application poses “no significant threat to any identifiable federal policy or interest.” Wallis v. Pan American Petroleum Corp., 384 U.S. 63, 68, 86 S.Ct. 1301, 1304, 16 L.Ed.2d 369 (1966). In incorporating state corporate law on the issue of who is a liable “corporation” under section 9607, specific state rules that are unreasonable, aberrant, or hostile to federal interests will not be applied. Burks v. Lasker, 441 U.S. 471, 479, 99 S.Ct. 1831, 1837, 60 L.Ed.2d 404 (1979).8 Adequate means are thus available to insure the protection of the federal interests protected by CERCLA without creating a federal common law of corporations.
Any fears that states will engage in a “race to the bottom” in their effort to attract corporate business and enact laws that limit vicarious liability are in my opinion groundless. States have a substantial interest in protecting their citizens and state resources. Most states have their own counterparts to CERCLA and the EPA and they share a complementary interest with the United States in enforcement of laws like CERCLA that are used to remedy environmental contamination. I see no necessity to create federal common law in this area to guard against the risk that states will create safe havens for polluters.
Finally, not unlike the property law dispute in Wilson v. Omaha Indian Tribe, 442 U.S. 653, 99 S.Ct. 2529, wherein the Court held that the impact on existing relationships under state law was important in applying the Kimbell Foods test, this is an area where the states have a substantial interest in having their own law resolve these issues. Private parties have relied on state corporation law when making corporate acquisitions and in forming and dissolving corporations. The prices paid by the buyers to the sellers in those transactions undoubtedly reflected, in part, the parties’ understanding concerning who retained the seller’s liabilities. In addition to the “disrupt[ion of] commercial relationships predicated on state law,” Kimbell Foods, 440 U.S. at 729, 99 S.Ct. at 1459, the creation of federal common law in this area will create uncertainty in future commercial transactions. State corporate law, evolved over decades and frequently codified in state statutes, is well developed and easily discovered and applied. By contrast, at least in the near term, there is no estab*1251lished body of federal common law on the issues presented in this case. Borrowing state law will also avoid arriving at one answer for CERCLA corporate liability and possibly different results for all other liabilities.
This Court recently rejected a request that we develop a uniform federal common law rule and we adopted state law as the federal rule of decision in construing the term “property” in the federal civil and criminal forfeiture statutes. United States v. Certain Real Property at 2525 Leroy Lane, 910 F.2d 343 (6th Cir.1990). The United States urged this Court to develop a federal common law of property to be applied in the forfeiture context. The government claimed that uniform rules were necessary to effectuate the goals and purposes of the federal forfeiture scheme. This Court rejected that argument and held that state property law was to be adopted as the federal rule of decision, reasoning that “property rights ... have traditionally been measured in terms of state law,” id. at 349, and that “the incorporation of state law as the federal rule of decision will not hinder the administration of” the federal forfeiture program. Id. at 347 (citing Kimbell Foods). Just as forfeiture proceedings implicate property rights which have traditionally been measured in terms of state law, so too do the questions of corporate successor and parent liability enter into the realm of traditional state law. Additionally, because consideration of the factors set out in Kimbell Foods leads me to conclude that no federal common law of corporate liability is necessary, it is appropriate to refer to state corporation law in determining corporate successor liability under CERCLA § 107.
I would also note that, in enacting CERC-LA Congress deliberately left room for the operation of state law, thus acknowledging that nationwide uniformity was not required on all liability issues. For example, in section 107(e), Congress expressly preserved the efficacy of private indemnification agreements and thereby preserved the associated body of state law under which such agreements are interpreted. See Mardan v. C.G.C. Music, Ltd., 804 F.2d 1454 (9th Cir.1986). Similarly, section 113(f)(1) of CERCLA provides that claims for contribution shall be brought “in accordance with the Federal Rules of Civil Procedure.” Those rules, in turn, provide that “[t]he capacity of a corporation to sue or be sued shall be determined by the law under which it was organized.” Fed.R. Civ.P. 17(b).

. The District Court’s error was in finding that CERCLA was unambiguous on the issue of successor liability which led to that court’s failure to undertake a federal common law analysis. However, CERCLA is silent rather than unambiguous on the issue of the meaning of "corporation" generally and successor liability specifically. That silence necessitates this Court's development of a rule of decision.

. As explained by one commentator:
The federal "command” to incorporate state law may be a judicial rather than a legislative command; that is, it may be determined as a matter of choice of law, even in the absence of statutory command or implication, that, although federal law should "govern” a given question, state law furnishes an appropriate and convenient measure of the content of this federal law. P. Bator, D. Meltzer, P. Mishkin, & D. Shapiro, Hart & Wechsler’s The Federal Courts and the Federal System 862 (3d ed. 1988).

.“Congress has never indicated that the entire corpus of state corporation law is to be replaced simply because a plaintiffs cause of action is based upon a federal statute.” Burks v. Lasker, 441 U.S. 471, 478, 99 S.Ct. 1831, 1837, 60 L.Ed.2d 404 (1979) (citing cases). See United States v. Polizzi, 500 F.2d 856, 907 (9th Cir.1974) (Duniway, J., concurring), cert. denied, 419 U.S. 1120, 95 S.Ct. 802, 42 L.Ed.2d 820 (1975); cf. Melrose Distillers v. United States, 359 U.S. 271, 79 S.Ct. 763, 3 L.Ed.2d 800 (1959) (holding that state corporation law is applicable to determine whether a dissolved corporation may be indicted under the Sherman Act for pre-dissolution activities); United States v. Michigan Carton Co., 552 F.2d 198, 200 (7th Cir.1977) (state corporation law applied to hold that Sherman Act charges were properly applied to surviving corporation after merger with indicted company).

. See also Chicago Title & Trust Co. v. Forty-One Thirty-Six Wilcox Bldg. Corp., 302 U.S. 120, 127-128, 58 S.Ct. 125, 128, 82 L.Ed. 147 (1937) (“How long and upon what terms a state-created corporation may continue to exist is a matter exclusively of state power.... [and] the federal government is powerless to resurrect a corporation which the state has put out of existence for all purposes....”) (citations omitted).

. Inexplicably, neither the Third Circuit in Smith Land & Improvement Corp. v. Celotex Corp., 851 F.2d 86 (3d Cir.1988), cert. denied, 488 U.S. 1029, 109 S.Ct. 837, 102 L.Ed.2d 969 (1989), nor the Ninth Circuit in Louisiana-Pacific Corp. v. Asarco, Inc., 909 F.2d 1260 (9th Cir.1990), mentioned the Kimbell Foods test. Both of those courts concluded, almost without analysis, that a federal common law of successor liability was required by CERCLA. See 851 F.2d at 92; 909 F.2d at 1263.

. The United States filed an amicus curiae brief urging us to develop a uniform federal rule of successor liability.

. I agree with the United States' contention that the "legislative history of CERCLA indicated that Congress intended and empowered the federal courts to enunciate the substantive law to govern [certain] liability issues not explicitly resolved by Congress." Here we must provide meaning to "corporations” who may be liable. But this does not mean that we must create a federal common law of corporations to provide rules of decision. Congress did not manifest an intent to deprive courts of their power to incorporate state law. Senator Randolph, the Chairman of the Committee on Environment and Public Works, explained that "[i]t is intended that issues of liability not resolved by this act, if any, shall be governed by traditional and evolving principles of common law. An example is joint and several liability. Any reference to these terms has been deleted, and the liability of joint tort feasors will be determined under common or previous statutory law." 126 Cong.Rec. 30,932 (1980). This plainly was a reference to pre-existing state rules of decision.

. In this respect, I would reserve the question whether CERCLA preempts certain state corporation law. See, e.g., United States v. Sharon Steel Corp., 681 F.Supp. 1492, 1498 (D.Utah 1987) (holding that CERCLA preempts state corporation dissolution law); Note, Corporate Life After Death: CERCLA Preemption of State Corporation Dissolution Law, 88 Mich.L.Rev. 131 (1989). Contra Levin Metals Corp. v. Parr-Richmond Terminal Co., 817 F.2d 1448, 1451 (9th Cir.1987).