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New York v. Nat'l Servs. Indus.

United States Court of Appeals for the Second Circuit

June 20, 2003, Argued ; December 17, 2003, Decided

Docket No. 02-9227

Opinion

 [*683]  JOHN M. WALKER, JR., Chief Judge:

New York State sued National Service Industries, Inc. ("NSI") under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C. §§ 9601 et seq., to recover the costs of closure and remediation of the Blydenburg Landfill in Islip, New York. In granting summary judgment for New York, the District Court for the Eastern District of New York (Jacob Mishler, District Judge) applied the substantial continuity test for successor liability articulated in B.F. Goodrich v. Betkoski, 99 F.3d 505 (2d Cir. 1996), and held that NSI, which had purchased all of Serv-All Uniform Rental Corporation, Inc.'s ("Serv-All") assets, was the successor to Serv-All and was therefore responsible for Serv-All's CERCLA liability. See New York v. Nat'l Servs. Indus., 134 F. Supp. 2d 275, 280-81 (E.D.N.Y. 2001). NSI appeals the grant of summary judgment in favor of New York on the basis that,  [**3]  among other reasons, Betkoski is no longer good law after the Supreme Court's decision in United States v. Bestfoods, 524 U.S. 51, 141 L. Ed. 2d 43, 118 S. Ct. 1876 (1998). We agree that, after Bestfoods, the substantial continuity test cannot be applied to determine successor liability under CERCLA.

BACKGROUND

Because our resolution of this appeal does not involve analysis of most of the underlying facts of this case, we provide only a sketch of the events which led to the present suit and direct those who may be interested in greater detail to the opinion below. See Nat'l Servs. Indus., 134 F. Supp. 2d at 276-77.

From 1962 to 1988, Serv-All operated an industrial garment rental service. Id. at 276. As part of its business, it dry cleaned garments at a facility that was owned separately by Serv-All's two principals. In June 1978, Serv-All arranged for the disposal of several 55-gallon drums of liquid waste that contained perchloroethylene ("PCE"), a solvent used in the dry-cleaning process. The drums were deposited at the Blydenburgh Landfill in Islip, New York. In 1983 the landfill was listed in the New York Registry of Hazardous [**4]  Waste Sites and in 1987 it was added to the federal National Priority List of contaminated sites. As of September 13, 2001, New York had spent at least $ 10,894,271 to clean up the landfill. The parties agree that because Serv-All arranged for disposal of wastes at the landfill, it is "potentially responsible" for the cost of cleaning up the landfill.

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352 F.3d 682 *; 2003 U.S. App. LEXIS 25411 **; 57 ERC (BNA) 1705

STATE OF NEW YORK, Plaintiff-Appellee, -v.- NATIONAL SERVICES INDUSTRIES, INC., Defendant-Counter-Claimant-Counter-Defendant-Appellant.

Subsequent History: On remand at, Summary judgment granted by, Complaint dismissed at New York v. Nat'l Serv. Indus., 380 F. Supp. 2d 122, 2005 U.S. Dist. LEXIS 20853 (E.D.N.Y., 2005)

Prior History:  [**1]  Appeal from the grant by United States District Court for the Eastern District of New York (Jacob Mishler, District Judge) of plaintiff's motion for summary judgment.

New York v. Nat'l Servs. Indus., 134 F. Supp. 2d 275, 2001 U.S. Dist. LEXIS 2808 (E.D.N.Y., 2001)

Disposition: Vacated and remanded.

CORE TERMS

continuity, successor, successor liability, purchaser, courts, seller, bargaining, Transformer, predecessor, employees, district court, labor law, mere continuation, cases, subsidiary, impose liability, common law rule, common law, disposal, landfill, factors, unfair, costs, federal common law, workforce, Chemical, cleanup, predecessor corporation, duty to bargain, manipulation

Environmental Law, Enforcement, Potentially Responsible Parties, General Overview, Torts, Vicarious Liability, Corporations, Predecessor & Successor Corporations, Hazardous Wastes & Toxic Substances, CERCLA & Superfund, Generators, Operators & Owners, Successors, Transporters, Cost Recovery Actions, Strict Liability, Transportation, Business & Corporate Law, Dissolution & Receivership, Termination & Winding Up, Mergers & Acquisitions Law, Liabilities & Rights of Successors, De Facto Mergers, Mere Continuation, Civil Procedure, Federal & State Interrelationships, Federal Common Law, Preliminary Considerations