The opinion of the court was delivered by: JOYNER
Today we address two of eleven separate motions for summary judgment. Both motions seek a summary judgment that Elf Atochem, the plaintiff in 92-7458 and third party defendant in 94-0662, is the corporate successor to a now defunct corporation called Elko Chemical Works.
Movants are the United States, defendant in 92-7458 and plaintiff in 94-0662,
and Witco Corporation, defendant in both 92-7458 and 94-0662 and third party plaintiff in 94-0662. We presume familiarity with the general background of this case, which arises under the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601-9675 (1995) (CERCLA), and will provide additional facts only as they are required to explain and resolve the issues raised by the instant motions.
In considering a motion for summary judgment, a court must consider whether the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, show there is no genuine issue of material fact, and whether the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). "Only disputes over facts that might affect the outcome of the suit" are material, and therefore preclude summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). The court must determine whether the evidence is such that a reasonable jury could return a verdict for the non-moving party. Id.
In making this determination, all of the facts must be viewed in the light most favorable to the non-moving party and all reasonable inferences must be drawn in favor of the non-moving party. Id. at 256. Once the moving party has met the initial burden of demonstrating the absence of a genuine issue of material fact, the non-moving party must establish the existence of each element of its case. J.F. Feeser, Inc. v. Serv-A-Portion, Inc., 909 F.2d 1524, 1531 (3d Cir. 1990), cert. denied, 499 U.S. 921, 111 S. Ct. 1313, 113 L. Ed. 2d 246 (1991) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986)).
In 1942, Elko Chemical Works purchased land in Clinton, New Jersey and began manufacturing chemicals at that site. The property, now known as the Myers Plant, is a CERCLA Superfund site and is the subject of this litigation. Elko used the Myers Plant exclusively to make chemicals for the United States such as saturant for cables on the Navy's submarines, arsenic trichloride and chlorinated benzene products. Notably, Elko also produced DDT, which was a highly valued commodity during World War II. During the War, the United States encouraged production of DDT and other essential chemicals by financing and leasing the necessary equipment to private companies. These companies were then contractually bound to supply all the product made with the leased equipment to the United States. To further protect its interest in an undiminished supply of DDT as well as the leased equipment, the United States incorporated a number of approval provisions into its contracts with the private companies. The contract between the United States and Elko, the Agreement of Lease, specified that the leased equipment could only be used at the Myers Plant and that United States approval was needed before the equipment could be transferred to another entity.
In 1944, Pennsalt purchased substantially all of Elko's assets at the Myers Plant as well as the land itself.
The main dispute between the parties is whether Pennsalt's purchase of these assets constituted a continuation of Elko's business such that Pennsalt (and therefore Elf) is liable for Elko's environmental obligations, or whether the sale was simply a sale of assets such that the normal rules of corporations governs and Pennsalt is not liable.
I. Successor Liability under the Continuity of Enterprise Test
As a general principle, an asset purchaser is not liable for the obligations of the asset seller. There are four traditional exceptions to this rule that make a purchaser a successor, and therefore liable.
(1) The purchaser expressly or impliedly agrees to assume the seller's obligations;
(2) the transaction amounts to a consolidation or de facto merger;
(3) the purchaser is a mere continuation of the seller; or
(4) the transaction is fraudulent to avoid obligations.
Atlantic Richfield Co. v. Blosenski, 847 F. Supp. 1261 (E.D. Pa. 1994).
Although CERCLA is silent on the topic, the Third and other Circuits have determined that successor companies can be held accountable for the CERCLA liabilities that their predecessors incurred. Smith Land & Improvement Corp. v. Celotex Corp., 851 F.2d 86, 92 (3d Cir. 1988), cert. denied, 488 U.S. 1029, 109 S. Ct. 837, 102 L. Ed. 2d 969 (1989). To date, however, the Third Circuit has only encountered one kind of business reorganization in the CERCLA context. In Smith Land, the Court ruled that a statutory merger would give rise to successor ...