By TONI ELLINGTON
The issue of successor liability and successor-in-interest for environmental claims arises in many cases, especially where the liability is related to a past operation or business. U.S. District Judge Claire Egan of the U.S. District Court for the Northern District of Oklahoma ruled this week that TCI Pacific Communications, Inc. (“TCI”) is liable for cleanup costs at two former zinc smelting sites based on ties to a business which was dissolved in 1926.
In the case of Cyprus Amax Minerals Co. v. CBS Operations, Inc. and TCI Pacific Communications, Inc., No. 4:11-cv-00252, the Court found that TCI was the successor to the interests and liabilities of Tulsa Fire and Management Company, which was dissolved in 1926, and which was a predecessor business for New Jersey Zinc Company. The case arose over liability for the cleanup of two former zinc smelting facilities near Collinsville, Oklahoma. The plaintiff, Cyprus Amax Minerals Company (“Cyprus”) was a successor to a company that operated one of the zinc smelters. In 2009, the Oklahoma Department of Environmental Quality (“ODEQ”) filed a complaint against Cyprus as a successor-in-interest with liability for the contamination at the site. Cyprus entered into a Consent Decree with ODEQ in 2009.
Cyprus then sought contribution for cleanup costs under CERCLA from the operators of the second smelting facility. Cyprus filed suit in the Northern District of Oklahoma against TCI, as well as Viacom, CBS Corporation, and CBS Operations, Inc. Cyprus later dismissed Viacom and CBS Corporation. Cyprus alleged that these defendants were successors or indemnitors to the liabilities of New Jersey Zinc Company.
Analyzing a series of complex corporate mergers and acquisitions between 1966 and 1995, the Court found TCI to be liable for the cleanup costs as successor to New Jersey Zinc Company. In prior rulings in the case, the Court analyzed the statutory language concerning transfer of CERCLA liability, as follows:
42 U.S.C. §9607(e)(1). Courts have noted the apparent conflict between the language in the above two sentences. See, e.g. In re Babcock & Wilcox Co., 413 B.R. 337, 349 n. 57 (Bankr. E.D. La. 2009). However, the majority of courts have interpreted this provision as allowing apportionment of CERCLA damages pursuant to indemnification agreements while barring transfer of the underlying statutory liability. The Tenth Circuit has found that while the language of the CERCLA statute says that responsible parties may not altogether transfer their CERCLA liability, they have the right to obtain indemnification for that liability. U.S. v. Hardage. 985 F.2d 1427, 1433 (10th Cir. 1993).
For more information and analysis of successor liability issues, contact Toni Ellington at (504) 599-8500.
The issue of successor liability and successor-in-interest for environmental claims arises in many cases, especially where the liability is related to a past operation or business. U.S. District Judge Claire Egan of the U.S. District Court for the Northern District of Oklahoma ruled this week that TCI Pacific Communications, Inc. (“TCI”) is liable for cleanup costs at two former zinc smelting sites based on ties to a business which was dissolved in 1926.
In the case of Cyprus Amax Minerals Co. v. CBS Operations, Inc. and TCI Pacific Communications, Inc., No. 4:11-cv-00252, the Court found that TCI was the successor to the interests and liabilities of Tulsa Fire and Management Company, which was dissolved in 1926, and which was a predecessor business for New Jersey Zinc Company. The case arose over liability for the cleanup of two former zinc smelting facilities near Collinsville, Oklahoma. The plaintiff, Cyprus Amax Minerals Company (“Cyprus”) was a successor to a company that operated one of the zinc smelters. In 2009, the Oklahoma Department of Environmental Quality (“ODEQ”) filed a complaint against Cyprus as a successor-in-interest with liability for the contamination at the site. Cyprus entered into a Consent Decree with ODEQ in 2009.
Cyprus then sought contribution for cleanup costs under CERCLA from the operators of the second smelting facility. Cyprus filed suit in the Northern District of Oklahoma against TCI, as well as Viacom, CBS Corporation, and CBS Operations, Inc. Cyprus later dismissed Viacom and CBS Corporation. Cyprus alleged that these defendants were successors or indemnitors to the liabilities of New Jersey Zinc Company.
Analyzing a series of complex corporate mergers and acquisitions between 1966 and 1995, the Court found TCI to be liable for the cleanup costs as successor to New Jersey Zinc Company. In prior rulings in the case, the Court analyzed the statutory language concerning transfer of CERCLA liability, as follows:
No indemnification, hold harmless, or similar agreement or conveyance shall be effective to transfer from the owner or operator of any vessel or facility or from any person who may be liable for a release or threat of release under this section, to any other person the liability imposed under this section. Nothing in this subsection shall bar any agreement to insure, hold harmless, or indemnify a party to such agreement for any liability under this section.
For more information and analysis of successor liability issues, contact Toni Ellington at (504) 599-8500.
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