Environmental Law Court: United States v Bestfoods - Case Study Example

I.United States v. BestfoodsII. The United States Supreme CourtIII. United States federal government, specifically the Environmental Protection Agency (plaintiff) v. BestFoods Inc., CPC, Ott.IV. March 24, 1998 – June 8, 1998.V. The legal issue is whether a parent company can be held wholly liable for the actions of a subsidiary under CERCLA, even if the corporate veil has not been breached; or, as the Court put it, “May a parent corporation that actively participated in, and exercised control over, the operations of a subsidiary, without more, be held liable under CERCLA Section 107(a)(2) as an operator of a polluting facility owned or operated by the subsidiary?”VI. A succession of companies, beginning with Ott Chemical Co.

followed by CPC (which became Bestfoods) followed by Story Chemical Co. owned a plant in Michigan. After Story went out of business, the Michigan Department of Natural Resources surveyed the site and found that Ott and its owners over the years had intentionally and unintentionally spilled hazardous and toxic chemicals. The MNDR, coordinating with the US Environmental Protection Agency, began to clean up the site and sued CPC as a deep pocket to recuperate cleanup costs, under the Comprehensive Environmental Response, Compensation and Recovery Act, or CERCLA.

CERCLA is one of the major enforcement protocols for the federal government as regards environmental issues. The trial court held CPC liable, whether directly or indirectly, for the mess; the appellate court reversed, and the Supreme Court upheld that decision.VII. Judges Rehnquist, Souter, O'Connor, Scalia, Kennedy, Thomas, Stevens, Ginsburg and Breyer heard the case. They affirmed the appellate court's ruling in a unanimous 9-0 decision with Souter writing the court's decision.A. The action ordered was that CPC was not liable since they were only indirectly responsible for the plant's operation and the Ott company never had them directly act (Ott was never acting as a proxy), so CPC did not have to pay the EPA cleanup costs.B. The findings of fact were that CPC had not directly acted in the Ott spills.C. The conclusions of law were that a parent company is not responsible if they merely actively participate in and exercise control over the operations of the subsidiary, but they are responsible if “a corporate parent that actively participated in, and exercised control over, the operations of the facility itself may be held directly liable in its own right as an operator of the facility”.

In other words, CPC may have controlled Ott in general, but they did not control Ott's behavior at that plant specifically, making them non-liable. Had they directly been aware of and controlled the plant, even through Ott, they would have been liable.VIII. The impact of the decision was to clarify the conditions under which CERCLA could and could not be enforced. It did not scuttle CERCLA by any stretch of the imagination, but does require the EPA or other plaintiffs to demonstrate direct responsibility or piercing of the corporate veil and demonstrate activity beyond mere ownership and involvement in the general operation of the subsidiary.IX. I personally disagree with the Court: It seems to me that CPC should have done their due diligence and known what they were getting into.

They had the capacity to stop the spillage and didn't. It strikes me that res ipsa loquitur in this instance. Nonetheless, the Court's decision is very specific and does act to make sure that companies will monitor their subsidiaries closely so they can make sure that their subsidiaries are not doing things that could land them into hot water in the first place. It is good for the specific burdens of plaintiffs to be clarified, so business is not paralyzed by confusion about where lines of responsibility are drawn.

I think the Court did not overreach and certainly kept CERCLA as a vital tool for ecological health and enforcement.Works CitedDocstoc. United States v. Bestfoods: Case Brief. http://www.docstoc.com/docs/302160/United-States- v-Bestfoods-Case-Brief Jrank. United States v. Bestfoods - Significance, Don't Drink The Water, Shifting The Burden To The Responsible Parties, A Question Of Parenthood. http://law.jrank.org/pages/13474/United-States- v-Bestfoods.html United States v. Bestfoods. 97-454. 113 F.3d 572.