Pierre N. Leval

“ Cleanup costs can be so extraordinarily high as to exceed the available coverage. Third, an arbitrary and unfair imposition of a substantial liability on a blameless party is no less unfair or arbitrary (although less drastic) when its impact is dispersed by the insurance mechanism among numerous blameless parties.
In conclusion, both the governing caselaw and good sense teach that, as to CERCLA liability, the so-called "substantial continuity" test for successor liability requires more than substantial continuity in the seller's business operations. ”

“ First, while courts have used the term "substantial continuity test" to designate tests in both labor law and CERCLA, the test is different in each context. In the labor law context, it is guided by the question how the imposition or non-imposition of successor liability would affect important policies of the national labor law. Crucial to such decisions are issues such as the structure of the bargaining unit, the legitimate expectations of employees, and the goal of labor peace - issues that have no bearing on whether to impose successor CERCLA liability. ”

“ The Supreme Court made clear in Bestfoods that in the absence of a statutory authorization, courts are not free to impose federal statutory liability under standards that depart from the well established principles [p688] of common law. Under common law rules, a purchaser of assets does not succeed to the liabilities of the seller, except in narrow circumstances. The "substantial continuity" test fashioned by the federal courts for CERCLA liability is unquestionably a significant deviation from the common law rules. Nor is authority for it to be found in the terms of the CERCLA statute. ”

“ The successor company in Burns had purchased no assets of the predecessor, but had simply ousted the predecessor as provider of security services in a competitive bidding process, then hired many of the predecessor's laid-off employees to fulfill its newly assumed contractual obligations. Such facts satisfied "substantial continuity" in the context of the duty to bargain, but would not in the CERCLA context. Assume that a dry-cleaning company, A, wins a contract previously held by B, which has incurred CERCLA liability. A hires some of B's employees to service its new contract. ”

“ If the employees find themselves in essentially the same jobs after the employer transition and if their legitimate expectations in continued representation by their union are thwarted, their dissatisfaction may lead to labor unrest.
Id. at 43-44. As in Burns, the application of a "substantial continuity" test focused on the composition of the workforce, and the employees' "legitimate expectations" of being represented by the union they had selected under the terms of the NLRA, while employed together in the same positions and in the same location, although under a different employer. ”

“ Businesses that engage in illegal dumping of toxic wastes often do so in [p694] secret, arranging for furtive nocturnal dumping by unlicensed carriers. Such a seller will have no records of its illegal dumping and will certainly not volunteer the information to the purchaser of its assets. In addition, in many instances the dumping that gives rise to liability was done long in the past, at a time when such activities were unregulated and no records were maintained. ”

“ The courts reasoned in a manner similar to the opinions reviewed above, with the important distinction that their reasoning concerned the objectives of CERCLA, rather than those of the labor relations Act.
Carolina Transformer dealt with successor liability in a case in which the parties had manipulated the corporate form to continue a company's operations while evading its liability. Carolina Transformer was solely owned by one individual, who was its president until being succeeded by his son. ”

“ Asset purchasers might also favor piecemeal purchases at breakup value, in preference to purchasing at going-business value to continue the operation, resulting in both depression of the market value of the assets and the destruction of the jobs of those previously employed in the seller's operation. ”

“ NLRB, 482 U.S. 27, 96 L. Ed. 2d 22, 107 S.C.t. 2225 (1987) . [2] In Burns International, Burns had won a competitive bid to oust another company, Wackenhut, as provider of security services to a Lockheed plant. ”