United States v. Bestfoods

The Court's unanimous decision in United States v. Bestfoods provided a framework for establishing the limits of responsibility on the part of a corporate parent--parenthood being defined by the ownership of a controlling interest in another corporation's stock--for damages incurred by a polluting subsidiary. On the one hand, the Court held that derivative liability can be established only when the "corporate veil" has been "pierced"--that is, when it is established that the subsidiary is acting only as a proxy for the parent. On the other hand, the Court found that parental responsibility does not follow from simple ownership of a subsidiary; rather, it must be shown that the parent acted as an operator in the subsidiary's facility. The decision relied on the Court's distinction between subsidiaries and facilities, which invalidated a lower court's tests regarding actual control as opposed to capacity to control.