Greenberg Traurig Alert
The Liability of Parent Companies Under CERCLA: United States v. Bestfoods
By Peter M. Gillon, Greenberg
Traurig, Washington, D.C. Office
View or download the PDF version of this Alert
In the explosion of superfund litigation over the past eighteen years,
an unfortunate casualty has been the time-honored doctrine of the limited
liability of parent corporations. The common perception within the corporate
boardroom, well-justified by years of conflicting appeals court decisions,
has been that parent corporations and individual directors and officers
may be subjected to liability under the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA) merely because of their exercise
of managerial control over a company that has polluted the environment--even
when they had no involvement in the polluting activity.
Naturally, many companies have taken steps to insulate themselves from
potential liability, avoiding involvement in their subsidiaries' activities
and creating complex corporate structures to isolate environmental exposures
at the subsidiary level. These are hardly the incentives the superfund law
was designed to create. Without doubt, the need for legal clarity in this
area has been great.
The Supreme Court's recent decision in United States v. Bestfoods,
118 S.Ct. 1876 (1998), represents a valiant, although not altogether successful,
attempt to provide this clarity. This Alert examines Bestfoods and
its implications for corporate management, concluding that the decision
fails to provide sufficient guidance to the corporate community. In what
is plainly intended to be a return to the rule of respect for the corporate
form, the U.S. Supreme Court held June 25th that the standard business practices
used by a parent company to monitor and maintain control over its subsidiaries,
such as management of the subsidiary's finances, expenditures, and personnel,
and the setting of policies and procedures, will not lead to direct "operator"
liability under Section 107(a) of the Comprehensive Environmental Response,
Compensation, and Liability Act.1 The Court likewise held that,
under most circumstances, a parent corporation's common practice of placing
directors and officers on the management team of the subsidiary will not
create CERCLA liability. The entire decision was premised on the legal distinction
between the liability imposed directly on a parent company when the parent
"operates" the "facility" that caused contamination, and the liability imposed
indirectly, or derivatively, on the parent for the subsidiary's actions
when the corporate veil has been pierced.2
The "Bestfoods" Decision
The Bestfoods case stems from the Environmental Protection Agency's
(EPA) action to recover response costs incurred at a Michigan site under
CERCLA Section 107(a)(2). Section 107(a)(2) imposes liability on "any person
who at the time of disposal of any hazardous substance owned or operated
any facility." The EPA is seeking to recover its costs from CPC International
Inc., parent corporation of the now defunct Ott Chemical under CPC's ownership.
After a trial on liability issues, the district court found CPC liable
as a former operator of the site.3 The trial court emphasized
several facts as probative: that CPC selected Ott's board of directors and
placed CPC officials in its executive ranks, that CPC played an active role
in day-to-day management, and that one official "played a significant role
in shaping Ott's environmental compliance policy."4 The U.S.
Court of Appeals for the Sixth Circuit, in its first decision in the case,
upheld the trial court.5 Sitting en banc, however, the court
reversed itself and the district court.6 Striking out on a path
untrodden by the other courts of appeal, the en banc court held that a parent
company may not be held liable under CERCLA as a former operator unless
there is a basis to pierce the corporate veil of the parent. 7
In that way, the appeals court superimposed the requirement of veil-piercing
on top of the statutory test for "operator" liability. CPC cannot be held
liable for controlling the actions of its subsidiary, the Sixth Circuit
held, because the parent and subsidiary corporations "maintained separate
personalities and the parent did not utilize the subsidiary corporate
form to perpetrate fraud or subvert justice"--standard tests under the traditional
veil-piercing doctrine. Bestfoods, 118 S. Ct. 1876, 1884.
The Supreme Court (per Justice David Souter) rejected the Sixth Circuit's
analysis, but declined to rule on the question of liability, remanding for
further fact-finding in light of the Court's pronouncements on corporate
"Bestfoods" Validates Two Modes of Liability: Derivative and Direct
The touchstone of the Court's decision in Bestfoods is the distinction
between liability imposed on a parent company directly as the owner or operator
of a facility, and the liability imposed on a parent company indirectly,
or derivatively, when there is a basis to pierce the corporate veil. As
the opinion makes clear, derivative liability is concerned with the parent
company's relationship with the subsidiary entity and whether the parent
has abused the corporate form to commit fraud, whereas direct CERCLA operator
liability is concerned with the parent company's operation of the physical
facility that caused the site contamination.8 In fact, as the
Court notes, there are circumstances in which a parent may have observed
the corporate formalities sufficiently to escape derivative liability on
a veil-piercing theory, but may nevertheless be liable because the parent
controlled the machinery, tank or other facility that caused the contamination.
Id at 1886, n. 12.
Drawing on this legal distinction, the Court applied a literal reading
of CERCLA operator liability as requiring proof that the parent was involved
in the "operations specifically related to pollution, that is, operations
having to do with the leakage or disposal of hazardous waste, or decisions
about compliance with environmental regulations." Id. at 1886. As the Court
put it, "[t]he question is not whether the parent operates the subsidiary,
but rather whether it operates the facility, and that operation is evidenced
by participation in the activities of the facility, not the subsidiary."
Id. at 1887 (citations omitted).
The Court thus rejected the ruling of five circuits which emphasized
the parent’s control over the subsidiary’s business affairs generally.
9 The correct analysis is not whether the parent controlled
the sub’s general business affairs, but whether it controlled the polluting
facility. Id. The Court remanded for analysis of "the relationship
between CPC [the parent] and the Muskegon facility itself." Id. at 1887.
"Bestfoods" Approves Parent Officer Involvement
By itself, the distinction between derivative liability and direct CERCLA
liability would be of primarily academic interest, but Justice Souter uses
the distinction as a foundation for laying out the factors relevant to determining
whether a parent company or shareholder is a CERCLA operator.
Focusing on the relationship between the parent and the polluting facility,
the Court announced this general test for operator liability: "an operator
must manage, direct, or conduct operations specifically related to pollution,
that is, operations having to do with the leakage or disposal of hazardous
waste, or decisions about compliance with environmental regulations." Id.
Applying this test, the Court dismissed as irrelevant a factor emphasized
by the district court: that the parent company placed officers and directors
in management positions in the subsidiary where they "made major policy
decisions and conducted day-to-day operations at the facility." Id. at 1888.
Interlocking directorates and involvement by a parent company's management
may be "entirely appropriate" and courts generally presume that such directors
and officers are acting on behalf of the subsidiary, not the parent, the
Court said. Id. To overcome this presumption, "[t]he government would have
to show that ... the officers and directors were acting in their capacities
as [parent company] officers and directors, and not as [subsidiary] officers
and directors" when they made policy decisions and supervised activities
at the facility. Id.
The Court thus adopted a subjective test for determining whether the
actions of a parent company's officer constitute parent company operation:
The question is whether the officer was wearing his "parent hat" or his
"subsidiary hat." Recognizing the difficulty trial courts will have with
such a determination, the Court offered that the presumption that the officer
is acting on behalf of the subsidiary is "strongest when the act is perfectly
consistent with the norms of corporate behavior, but wanes as the distance
from those accepted norms approaches the point of action by a dual officer
plainly contrary to the interests of the subsidiary yet nonetheless advantageous
to the parent." Id. at 1889, n. 13. Put another way, if the dual officer
acted consistent with the interest of the subsidiary, he is presumably acting
on behalf of the subsidiary, and therefore his actions will not be questioned.
Here the Court appears to be utilizing factors normally used in the veil-piercing
analysis: i.e., whether the parent, through the dual officer, is using the
subsidiary as an instrumentality or tool for the parent's purposes. Thus,
on remand, the district court will presumably be required to examine whether
the parent observed corporate formalities, and whether the dual officers
somehow provided benefit to the parent greater than that provided to the
Court's Failure to Draw Clear Lines On Meaning of "Operating"
Although Bestfoods is chock full of verbiage on the meaning of
"operation" that will no doubt be seized upon by future litigants, ultimately
the Court fails to draw clear lines. A major theme of the decision is the
Court's emphasis on who controlled the polluting facility. Id. at 1886.
As the Court notes, CERCLA Section 107(a)(2) holds directly liable anyone
who operated a facility. In numerous places the Court states that a parent
may become the facility operator only if the parent, through its officers,
directors, agents, and employees, managed or directed the facility operations
that caused the pollution. Id. at 1887. If the Court had adopted this test
fully, the Court would have created a helpful, bright line test for determining
who is an "operator."
The Court declined to go that far, however. By way of caution, the Court
stated that "operation of a facility" means "something more than mere mechanical
activation of pumps and valves, and must be read to contemplate 'operation'
as including the exercise of direction over the facility's activities."
Id. at 1889. Put another way, the government need not prove that the parent's
employee, acting on behalf of the parent, actually turned the valve that
caused the release giving rise to the government's claim. Rather, it is
sufficient that the individual directed another person to do so.10
Potential Direct Liability for Acts Of Parent's Environmental Director
Having concluded that CERCLA operator liability can result from the direction
given by the parent to its subsidiary, the Court raised the possibility
that the parent could be found to be an operator of the facility based upon
the actions of one who is strictly an employee or agent (and not an officer)
of the parent company. Id. at 1889. As in the case of dual officers and
directors, the Court held that to overcome the presumption that the employee
or agent is acting consistent with the legitimate interest and role of the
parent, "the critical question is whether, in degree and detail, actions
directed to the facility by an agent of the parent alone are eccentric under
accepted norms of parental oversight of a subsidiary's facility." Id. The
Court noted that because the district court found that the environmental
affairs director of CPC International (the parent) had played a "conspicuous
part" in dealing with the facility giving rise to the contamination at the
subsidiary's site, there was enough to raise an issue for further findings
by the trial court on whether CPC operated the subsidiary through the environmental
affairs director. Id. at 1889-1890. Accordingly, the Court remanded the
case for reevaluation of the director's role in light of the Court's ruling.
Id. at 1890.
This portion of the decision is particularly troubling both for what
is stated and what is implied. The CPC environmental director was found
to be "heavily involved in environmental issues" at the subsidiary's site,
including issuing directives regarding "responses to regulatory inquiries."
Id. This type of involvement would appear to be consistent with the general
management and control over a subsidiary's business that the Court said
was protected corporate oversight. But the Court added the important caveat
that it drew "no ultimate conclusion" from these findings, noting that the
trial court "offered little in the way of concrete detail for its conclusions
about [the environmental director's] role in the subsidiary's environmental
affairs." Id. It is therefore likely that the government will have difficulty
overcoming the presumption against parent company liability that the environmental
director acted in accordance with the parent's legitimate interests in its
Even so, Bestfoods fails to provide the guidance that corporations
need to plan and structure their activities. Moreover, in placing at the
fulcrum of its test whether the actions taken by the parent's employee are
within the "accepted norms of parental oversight of a subsidiary's facility,"
the Court opens an entirely new area of inquiry as to what is normal and
what is "eccentric" corporate involvement. Again, the Court appears less
concerned with what the employee did than with which entity's hat he was
wearing. Presumably, recognizing that a totally subjective test would be
entirely useless, the courts will use common sense when applying this test.
Court's Failure to Elaborate On the Test for Derivative Liability
Nowhere is the Court's decision more confusing than in its attempt to
distinguish the test for direct CERCLA liability from the corporate veil-piercing
As a general rule, because a corporation is recognized as a legal entity
distinct from its owners, they ordinarily are insulated from liability for
the corporation's actions beyond the amount of their equity investment.11
Id. at 1884. The rule of limited liability for the owners of a corporation
applies not only when individual shareholders are the owners, but also when
the owner is another corporation.12 Corporations have long used
this principle to limit their potential exposure to liability by conducting
operations that carry a risk of liability through bona fide, separately
incorporated, and wholly owned subsidiaries. The rights of stock ownership,
as the Court points out, include "the election of directors, the making
of by-laws ... [and] duplication of some or all of the directors or executive
officers." 13 Id. Furthermore, as the Court emphasizes, "nothing
in CERCLA purports to reject this bedrock principle, and against this venerable
common-law backdrop, the congressional silence is audible." Id. at 1885.
Notwithstanding the general rule of limited liability for corporate owners,
courts will occasionally disregard the separate identities of the corporation
and its owners, i.e., "pierce the corporate veil," to impose liability for
the corporation's actions upon its owners. Given the Congressional silence
on the issue, the Court said it saw no reason to abrogate this common-law
doctrine. Id. at 1885. Accordingly, the Court held that "when (but only
when) the corporate veil may be pierced, may a parent corporation be charged
with derivative CERCLA liability for its subsidiary's actions." Id. at 1885-1886.
The Bestfoods court did not elaborate on the application of the
veil-piercing doctrine to the case before it, or even provide general guidance.
The general common law rule may be stated as follows: Where the parent corporation
exercises such a high degree of control over its subsidiary that the latter
can be viewed as a "mere instrumentality" or "alter ego" of the parent,
courts will pierce the corporate veil where such a finding is necessary
to prevent fraud, injustice, or circumvention of a statute or public policy.14
That is where Bestfoods ends its analysis of this issue. It does
not discuss the facts that would support a claim under the catch-phrase
"mere instrumentality" or "alter ego," and no attempt is made to apply the
veil-piercing test to the facts of the case. Judicial opinions on veil-piercing
raise innumerable indicia of liability. Boiled down to the essential, it
appears that the courts have developed a two-pronged test to determine when
to disregard the corporate form, deciding that piercing is appropriate when:
(1) the subsidiary corporation is so dominated by the parent corporation
that it ceases to have any interest or existence of its own; and (2) treating
the shareholder and corporation as separate entities would lead to an unjust
The first prong of the test depends on the degree of control exercised
by the parent or a substantial (i.e., greater than 50 percent) stockholder.
The more the parent corporation or individual shareholder dominates the
management, finances, and day-to-day decisions of the subsidiary, the more
readily the court will disregard the corporate form, declaring the parent
and the subsidiary to be the same entity. Control of a subsidiary may be
proven through a number of factors, but the courts seem to focus on three
broad categories: control of management, observance of corporate formalities,
and adequacy of capitalization.15 In environmental cases, courts
evaluating the level of control look at factors such as whether the parent:
(1) approves capital expenditures such as environmental costs, (2) meets
with environmental agencies on behalf of the subsidiary, (3) approves environmental
decisions such as the method of waste disposal, and (4) retains contractors
or consultants and approves their recommendations.
As to the observance of corporate formalities, the types of lapses frequently
cited to support piercing include a subsidiary's failure to maintain proper
books and records, hold annual meetings, have functioning boards of directors,
and otherwise comply with applicable corporate law requirements.16
Also relevant is the adequacy of capitalization test, which bears little
relationship to the accounting concept, and is a legal shorthand meaning
that the subsidiary is a solvent business whose net assets, credit, third-party
guarantees and insurance coverage are adequate to cover reasonably foreseeable
The consideration of equities called for by the second prong of the traditional
test is more subjective. It allows the court to hold a parent or controlling
shareholder liable where the corporate structure has been used to perpetrate
fraud or illegality or to circumvent a statute or public policy.18
Id. at 1885.
Courts consider the two prongs of the test together when determining
whether to pierce the corporate veil so that if one prong weighs heavily
in favor of piercing, less weight need be placed on the other to justify
disregarding the corporate form.
In addition to its failure to elaborate on the veil-piercing test, the
Bestfoods court may be criticized for creating two, arguably contrary,
tests for CERCLA operator liability. In addressing the impact of CPC's environmental
affairs manager, the court concluded that a manager working for the parent
company who was "heavily involved in environmental issues" at the subsidiary's
site could, by his involvement, render the parent company an "operator"
of the subsidiary's site under CERCLA. This analysis suggests that a corporation's
central environmental manager should attempt to act under the badge of the
subsidiary to avoid any confusion as to which company is being served. However,
under the Court's veil-piercing analysis, if the parent company's environmental
manager is acting on behalf of the subsidiary, that is prima-facie evidence
that the parent is violating the subsidiary's independence. In other words,
the environmental manager could cause the parent to be held liable whether
he is acting for the parent or the subsidiary. Thus, even after Bestfoods,
the same disincentives to active parent company environmental management
remain in place. The Court's analysis is almost certainly likely to lead
to further confusion and will only exacerbate the fear of CERCLA exposure
in the corporate boardroom.
Guidance for Corporate Management
Given that Bestfoods recasts the law on the derivative and direct
liability of parent corporations under CERCLA, it is useful to summarize
the guidelines stated and implied by the Court's analysis.
Bestfoods establishes two critical tests for evaluating a corporate
parent's management practices. The first is whether the parent company rendered
the subsidiary a mere agent by ignoring corporate formalities and then utilized
its control to commit fraud or wrongdoing. The second is whether the parent
company, through general directives or the authority of its individual employees
or agents acting on behalf of the parent, operated the facility causing
the offending release of hazardous waste. The Court defined operator to
mean a person who manages, directs, or conducts operations specifically
related to pollution, "that is, operations having to do with the leakage
or disposal of hazardous waste, or decisions about compliance with environmental
regulations." Id. at 1887.
Although the Court did not intend that the direct and indirect liability
tests be considered together, a company must necessarily do just that in
evaluating its management structure prospectively. Taking these tests together,
it is clear that the Court intended to ratify as entirely appropriate the
standard management tools employed by parent companies to monitor and control
subsidiary companies. These include centralized cash management, approval
of capital expenditures, hiring and firing of employees, and the setting
of policies and procedures (without the need to obtain approval for specific
operational decisions). Such practices do not lead to derivative liability
unless they are used to commit fraud or other wrongdoing, nor do they create
direct liability so long as they are focused on the subsidiary's business
rather than the polluting facility.
Similarly, Bestfoods recognizes the standard practice of placing
certain directors and officers of the parent company, whether officially
or otherwise, in a subsidiary's management team. Again, this practice will
not lead to derivative liability unless the parent uses the employees to
commit fraud or wrongdoing. The activities of such individuals also should
not lead to direct operator liability so long as the individual director
or officer is acting on behalf of the subsidiary and not the parent (or,
if acting on behalf of both, the individual acts consistently with the subsidiary's
interests) and provided that the parent scrupulously avoids any of the other
factors that would justify a court in piercing the corporate veil.
Unresolved by Bestfoods are the issues arising in the important
area of environmental management. In remanding for further findings on the
role of CPC International's environmental manager, the Court left many unanswered
questions. Clearly a parent company is safe in issuing general environmental
policies and exercising control over major expenditures. The Court left
unresolved, however, just how involved the parent company's environmental
manager may become without crossing the line of CERCLA operation--particularly
where the activity has the potential to cause releases of hazardous waste.
If protection against parent liability were the paramount concern of a corporation,
it would be prudent to limit the role of a parent company's environmental
manager to general oversight and policy matters, avoiding issues directly
related to the operation of specific manufacturing, processing, or storage
units having the potential to cause releases. For example, a corporate environmental
health and safety manager would not be safe in instructing a plant manager
on how to store waste materials on-site, other than to issue general policy
guidance. This is an issue, however, where practicality and other competing
concerns may dictate a different conclusion, and companies will need to
evaluate the Bestfoods case in view of their unique circumstances.
1 42 U.S.C. §9607(a).
2 CERCLA Section 101(20)(A) defines "operator" circuitously as
"any person owning or operating" a facility. Section 101(9) defines "facility"
as "(A) any building, structure, installation, equipment, pipe or pipeline
(including any pipe into a sewer or publicly owned treatment works), well,
pit, pond, lagoon, impoundment, ditch, landfill, storage container, motor
vehicle, rolling stock, or aircraft, or (B) any site or area where a hazardous
substance has been deposited, stored, disposed of, or placed, or otherwise
come to be located; but does not include any consumer product in consumer
use or any vessel."
3 CPC Int'l. v. Aerojet General, 777 F. Supp. 549 (W.D.
4 Id. at 573.
5 United States v. Cordova Chemical Co., 59 F.3d 584 (6th
6 United States v. Cordova Chemical Co., 113 F.3d 572 (6th
Cir. 1997) (en banc, 7 to 6).
8 118 S.Ct. at 1886.
9 United States v. Kayser-Roth Corp., 910 F.2d 24, 27 (1st
Cir. 1990) (parent actively involved in the affairs of its subsidiary may
be held directly liable as an operator of the facility, regardless of whether
the corporate veil can be pierced), cert. denied, 498 U.S. 1084,
111 S.Ct. 957, 112 L.Ed.2d 1045 (1991); Schiavone v. Pearce, 79 F.3d
248, 254-255 (2nd Cir. 1996) (same), Lansford-Coaldale Joint Water Auth.
v. Tonolli Corp., 4 F.3d 1209, 1220-1225 (3rd Cir. 1993) (same);
Jacksonville Elec. Auth. v. Bernuth Corp., 996 F.2d 1107, 1110 (11th
Cir. 1993) (same); and Nurad Inc. v. William E. Hooper & Sons Co.,
966 F.2d 837, 842 (4th Cir.) (parent having authority to control subsidiary
is liable as an operator, even if it did not exercise that authority),
cert. denied, 506 U.S. 940, 113 S.Ct. 377, 121 L.Ed.2d 288 (1992).
10 This test has interesting implications for other litigation
involving operator theories, such as, for example, claims against the United
States as an operator of defense contractors and war-related mining activities.
11 See, e.g., Amsted Indus. Inc. v. Pollak Industries Inc.,
382 N.E. 2d 393 (Ill. App. 1978); H. Henn & J. Alexander, Laws of Corporations
12 See, e.g., Williams v. McAllister Bros. Inc., 534 F.2d
19 (2d Cir. 1976); Kentucky Elec. Power Co. v. Norton Coal Mining Co.,
93 F.2d 923 (6th Cir. 1938); Costan v. Manila Elec. Co., 24 F.2d
383 (2d Cir. 1928); Brown v. Margrande Compania Naviera. S.A., 281
F. Supp. 1004 (E.D. Va. 1968); Garret v. Southern Ry., 173 F. Supp.
915 (D. Tenn. 1959), aff'd, 278 F.2d 424 (6th Cir.), cert. denied,
364 U.S. 833, 81 S. Ct. 49, 5 L. Ed. 2d 59 (1960); Sheridan v. Pan-American
Refining Corp., 123 F. Supp. 81 (S.D.N.Y. 1954); Gulf & Western Corp.
v. New York Times Co., 81 A.D.2d 772, 439 N.Y.S.2d 13 (1981).
13 Citing William O. Douglas, Insulation from Liability Through
Subsidiary Corporations, 39 Yale L. J. 193, 196 (1929).
14 See RRX Indus. Inc. v. Lab-Con Inc., 772 F.2d 543, 545
(9th Cir. 1985); FMC Fin. Corp. v. Murphree, 632 F.2d 413, 422 (5th
Cir. 1980); Oriental Commercial & Shipping Co. v. Rosseel, N.V.,
609 F. Supp. 75, 78 (S.D.N.Y. 1985); Noto v. CIA Secula di Armanento,
310 F. Supp. 639, 646 (S.D.N.Y. 1970).
15 See e.g., Anderson v. Abbott, 321 U.S. 349, 362, 64 S.
Ct. 531, 88 L. Ed. 793, (1944) (inadequacy of capital given the nature and
magnitude of corporate undertaking--piercing allowed); Miles v. AT&T,
703 F.2d 193, 195 (5th Cir. 1983) (factors cited include: (1) daily operations
of two corporations are separate; (2) formal barriers exist between two
corporations, and each functions in its own best interest; and (3) those
who come into contact with the corporations are apprised of their separate
identity--no piercing); C.M. Corp. v. Oberer Dev. Co., 631 F.2d 536
(7th Cir. 1980) (factors cited include: (1) subsidiary had business with
other corporations other than the parent; and (2) actions of parent did
not describe subsidiary as division or department--no piercing); Idaho
v. Bunker Hill Co., 635 F. Supp. 665, 672 (D. Idaho 1986) (parent effectively
controlled environmental decisions of subsidiary--piercing allowed);
Sabine Towing & Transp. Co. v. Merit Ventures Inc., 575 F. Supp. 1442,
1446-48 (E.D. Tex. 1983) (factors cited include: (1) intercorporate contracts
benefited parent at the expense of the subsidiary; (2) corporate formalities
were not followed; (3) subsidiary's directors acted upon the parent's orders;
(4) parent financed the subsidiary; and (5) parent used property of the
subsidiary as its own--piercing allowed).
16 See, e.g., Joslyn Mfg. Co. v. T.L. James & Co., 893 F.2d
80 (5th Cir. 1990) (piercing denied in CERCLA case based largely on the
finding that the subsidiary had adhered to basic corporate formalities,
including keeping its own books and records; holding frequent directors
and shareholders meetings; filing separate corporate tax returns; paying
its own bills; handling its own employee benefits); Trinity Indus. Inc.
v. Dixie Carrier Inc., 35 Env't Rep. Cas. (BNA) 1801, 1804-5 (E.D. La.
1992) (following Joslyn rule and declining to pierce the veil where
subsidiary was adequately capitalized, observed basic formalities, had separate
daily operations, and served customers that were competitors of parent).
17 See, e.g., Noto v. CIA Secula di Armanento, 310 F. Supp.
639, 646 (S.D.N.Y. 1970) (holding that foreign joint venture to operate
oil terminal and loading facility was adequately capitalized with net assets
of $200 million), Rice v. Oriental Fireworks Co., 75 Or. App. 627,
707 P.2d 1250 (1985) (holding that insurance is adequate capitalization
for purposes of veil-piercing analysis).
18 Joslyn, 893 F.2d 80 (holding CERCLA liability of parent
company limited to "situations in which the corporate entity was used as
a sham to perpetuate a fraud or avoid personal liability"); In re Hillsborough
Holdings Corp., 166 B.R. 461, 469 (Bankr. M.D. Fla. 1994) (in asbestos
liability case, applying Delaware and Florida law to require "proof of
deliberate misuse of the corporate form -- tantamount to fraud --
before … pierc[ing] the corporate veil." (emphasis in original)
©1998 Greenberg Traurig
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