United States v. Bestfoods

In 1957, Ott Chemical Company, which manufactured products for the pharmaceutical, veterinary, and agricultural industries, began operation of a plant in a rural area near Muskegon, in western Michigan. Founder Arnold Ott served as president and principal shareholder. Eight years later, in 1965, CPC International incorporated the Ott Chemical Company as a subsidiary. Thus, there were three entities named "Ott": the original company, its founder, and the later subsidiary. To avoid confusion when the case came before it in 1998, the Supreme Court designated the first Ott Chemical Company as Ott I, and the CPC subsidiary as Ott II. Likewise when CPC changed its name to Bestfoods not long before the Court reviewed the case, this too added confusion. Hence, the named defendant is designated by its later name, but in the review of the case it is referred to by its old name, which it held at the time of the actions in question.

Soon after its incorporation, Ott II purchased Ott I's assets in exchange for CPC stock. Ott I ceased to function as such, but the new owners retained Ott I's personnel, including its managers and Arnold Ott himself. In fact Mr. Ott, along with other executives and board members, took paid positions not with Ott II, but with CPC, the parent company. In 1972, Ott II again changed hands when CPC sold it to Story Chemical Company, which retained it for five years, until it went bankrupt in 1977. Soon after Story Chemical disappeared from the scene, the Muskegon site received a visit from a Michigan Department of Natural Resources (MDNR) team, and thus began a barrage of litigation that would include the liability dispute reviewed in United States v. Bestfoods.

Regardless of owner, the purpose of the Muskegon plant remained the same: the manufacture of chemicals, which produced a hazardous by-product in the form of chemical waste. The dumping of hazardous substances, both "intentional and unintentional," in the Court's words, "significantly polluted the soil and ground water at the site." Specifically, the plant had discharged waste into on-site lagoons, which were not properly lined to prevent seepage into the water table, a practice which continued at least until 1968. In addition, through 1972, Ott II workers had buried hundreds of drums containing hazardous waste, and had scattered literally thousands of drums in the surrounding woods. This was all clearly "intentional," but in addition, there were numerous "unintentional" spills from railroad cars, and from a cement-lined basin that repeatedly overflowed.

Thus, as the Court reported, when MDNR "examined the site for environmental damage, it found the land littered with thousands of leaking and even exploding drums of waste, and the soil and water saturated with noxious chemicals." The MDNR report indicated that "Groundwater pumped to the surface contained foam and a brownish color like root beer," and the soil was "purplish" from all the hazardous waste in it. Not only was the groundwater contaminated with pollutants such as phosgene gas, benzene, phenol, methyl chloride, and methyl isocyanate, but with its introduction to the water table, the contamination was seeping ever further. As water seeks its own level, the hazardous waste moved ever onward toward two nearby creeks, from where it entered the nearby community's water supply. This situation could not continue, and MDNR proposed a solution which promised to address the environmental problem--but created a host of legal ones.