The opinion of the court was delivered by: Michael M. Baylson, United States District Judge.
The issue presented concerns the adequacy of allegations of corporate
successor liability for environmental cleanup costs. This case, which
seeks reimbursement for environmental cleanup costs, was commenced by
Plaintiff, the Commonwealth of Pennsylvania Department of Environmental
Protection ("Plaintiff") against the following defendants: Concept
Sciences, Inc. ("CSI"); PPT Research, Inc. ("PPT"); Irl E. Ward, Jr.
("Ward"); Bryan D. Heath ("Heath"); Lehigh Valley Realty, III; James H.
Readington; John Adams; and Estate of Jacob Quick do Judith Quick. The
Complaint contains three counts brought under the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42
U.S.C. § 9601 et seq.; the Pennsylvania Hazardous Sites Cleanup Act
("HSCA"), 35 Pa.
Cons. Stat. Ann. 6020.101 et. seq. and the Pennsylvania
Declaratory Judgments Act, 42 Pa. Cons. Stat. Ann. 7531 et seq.
Plaintiff seeks reimbursement of its costs allegedly incurred in
response to the release and threat of release of hazardous substances at
the CSI Site in Hanover Township, Lehigh County, Pennsylvania (the
"Site"), and a declaratory judgment on liability for response costs that
will be binding on any subsequent actions by Plaintiff to recover future
response costs incurred in connection with the Site. (Pl's Compl. ¶
1). Presently before this Court is Defendant PPT's Motion to Dismiss. All
other Defendants have answered the Complaint. For the reasons stated
below, the Motion will be denied.
Plaintiff alleges that an explosion on February 19, 1999, at a facility
owned by CSI and located on the Site resulted in the release and threat
of release of hazardous substances and contaminants, and that Plaintiff
incurred costs to implement, operate, and maintain a containment system
to ensure no further release of hazardous substances or contaminants.
(Pl's. Compl. ¶ 18, 28-29). Plaintiff further alleges that, due to
the threat to human health and the environment, it was required to
demolish CSI's facility and dispose of hazardous substances and
contaminants from the facility. Id. at ¶¶ 32, 39.
With respect to Defendant PPT, Plaintiff alleges that PPT is a
successor corporation to CSI under the substantial continuity theory and
makes the following assertions in support of its claim:
82. PPT is a successor corporation to CSI under the
substantial continuity theory as applied by this
Court. Atlantic Ridgefield Co. v. Blosenski,
847 F. Supp. 1261 (E.D. Pa. 1994); United States
v. Atlas Minerals & Chems., Inc 824 F. Supp. 46
(E.D. Pa. 1993).
83. By letter to CSI's counsel dated March 31,
1999, CSI was informed that it may be a
responsible person pursuant to section 701(a)(1)
of HSCA, and that it could be responsible for
the cost of any environmental investigations or
cleanup actions at the Site.
84. PPT purchased the assets of CSI almost one year
after CSI was informed in writing that it could
be responsible for the cost of any environmental
investigations or cleanup actions at the Site.
85. At the time PPT purchased the assets of CSI, PPT
had knowledge or should have had knowledge of
CSI's liability to the Department pursuant to
CERCLA and HSCA.
86. As a successor corporation to CSI, PPT is
subject to the liability of an "operator" at the
Site within the meaning of section 101(20) of
CERCLA, 42 U.S.C. § 9601 (20).
107. As a successor corporation to CSI, PPT is
subject to the liability of an "operator" at the
Site within the meaning of sections 103 and
701(a)(1) of HSCA, 35 P.S. §§ 6020.103 and
(Pl.'s Compl. ¶¶ 82-86, 107).
II. Legal Standard and Jurisdiction
When deciding a motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6), the Court may look only to the facts alleged in the
complaint and its attachments. Jordan v. Fox, Rothschild, O'Brien &
Frankel, 20 F.3d 1250, 1261 (3d Cir. 1994). The Court must accept as true
all well-pleaded allegations in the
complaint and view them in the light
most favorable to the plaintiff. Angelastro v. Prudential-Bache Sec.,
Inc., 764 F.2d 939, 944 (3d Cir. 1985). A Rule 12(b)(6) motion will be
granted only when it is certain that no relief could be granted under any
set of facts that could be proved by the plaintiff Ransom v. Marrazzo,
848 F.2d 398, 401 (3d Cir. 1988).
This Court has subject matter jurisdiction over the claims asserted in
Count I pursuant to 28 U.S.C. § 1331, and supplemental jurisdiction
over the claims asserted in Counts II and III pursuant to
28 U.S.C. § 1367. Venue is appropriate under 28 U.S.C. § 1391(b), (c).
1. Plaintiff Has Stated a Claim that PPT is a Successor Corporation to
CSI and Liable Under CERCLA
This Court has recognized the applicability of the "substantial
continuity" or "continuity of enterprise"*fn1 test in CERCLA proceedings
to determine if corporate successors are liable for their predecessor's
environmental liabilities. United States v. Exide Corporation, C.A. No.
00-3057, 2002 U.S. Dist. LEXIS 3303 (E.D. Pa. Feb. 27, 2002); Elf
Antochem North America v. United States and Witco Corp., 908 F. Supp. 275
(E.D. Pa. 1995); Atlantic Richfield Co. v. Blosenski, 847 F. Supp. 1261
(E.D. Pa. 1994) (Giles, J.)); United States v. Atlas Minerals and Chems.
Inc., 824 F. Supp. 46 (E.D. Pa. 1993) ("Atlas I") (Cahn, J.)). These
decisions are consistent with the Third Circuit's holding that successor
companies may be held liable for CERCLA liabilities by their
predecessors. Aluminum Company of America v. Beazer East. Inc.,
124 F.3d 551, 565 (3d Cir. 1997) (citing Smith Land & Improvement
Corp. v. Celotex Corp., 851 F.2d 86, 91-92 (3d Cir. 1988), cert. denied,
488 U.S. 1029, 109 S. Ct. 837, 102 L.Ed.2d 969 (1989)). Although it has
specifically upheld the concept of successor liability in CERCLA, the
Third Circuit has not reviewed the district courts' use of the
substantial continuity test to determine whether a corporation is subject
to such ...