United States v. Bestfoods

Attempting to remedy the situation at the Muskegon factory, MDNR began looking for a corporation that would purchase the site and help pay for its cleanup. Naturally, given the situation, the state was not inundated with offers, but finally in late 1977, it found Aerojet-General Corporation, which agreed to buy the Muskegon plant from Story Chemical's bankruptcy trustee. In order to do so, Aerojet created Cordova Chemical Company (which the Court designated as Cordova/California) as a wholly owned subsidiary to purchase the property, and Cordova/California in turn established its own wholly owned subsidiary, Cordova Chemical Company of Michigan (Cordova/Michigan). The latter operated as a chemical manufacturer at the site until 1986.

But in the intervening years, the federal government began to take an increasing interest in cleaning up the Muskegon plant and sites like it. Congress in 1980 passed CERCLA, the Comprehensive Environmental Response, Compensation, and Liability Act, to respond to situations such as the one that occurred at the Muskegon plant. The act, the Court noted in Exxon Corp. v. Hunt, was, "As its name implies, . . . a comprehensive statute that grants the President broad power to command government agencies and private parties to clean up hazardous waste sites." In the following year, 1981, the federal Environmental Protection Agency (EPA) assessed the Muskegon site in particular, and called for a clean-up plan that would cost tens of millions of dollars. However, rather than merely shift the burden of this cleanup to the taxpayers--many of whom were themselves victims of environmental irresponsibility on the part of corporations--the federal government in 1989 took legal action against CPC, Aerojet, Cordova/California, Cordova/Michigan, and Arnold Ott himself.

The basis for the legal action was a provision in CERCLA for a "Hazardous Substance Superfund," which would pay for environmental cleanups. Money for this Superfund would come in part from lawsuits against those responsible for the hazardous substances in the first place, including "any person who at the time of disposal of any hazardous substance owned or operated any facility." The act defined "person" as a corporate entity, and similarly delineated the terms of "facility" in a common-sense fashion. With regard to "owner or operator," however, it was more vague, defining these as "any person owning or operating" a facility. This, the Court noted, was a tautology, or a redundant, information-free statement. As it pointed out in Exxon, CERCLA "unfortunately, is not a model of legislative draftsmanship." It was a fact that would be highlighted by the legal actions surrounding the cleanup.

Ott I and Ott II, both defunct by the time of the 1989 suit, were not included among the named defendants in the EPA case, and Arnold Ott himself would end up settling out of court just before the case actually came to trial. As for CPC, Aerojet, and the latter's two Cordova subsidiaries, in the Court's words these entities, along with MDNR, "launched a flurry of contribution claims, counterclaims, and cross-claims." The district court therefore opted to consolidate all the cases into liability, remedy, and insurance coverage phases. As of 1991, the case had not gone beyond the first of the three phases, liability.