The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
LAMMERS BARREL PRP .
GROUP,
Plaintiff, _ Case No. 3:17-cv-00135
v. "JUDGE WALTER H. RICE
CARBOLINE COMPANY, et al.,
Defendants. □
DECISION AND ENTRY SUSTAINING MOTION FOR SUMMARY
JUDGMENT OF DEFENDANTS ETC SUNOCO HOLDINGS, LLC F/K/A
SUNOCO, INC. AND CARBOLINE COMPANY (DOC. #60);
OVERRULING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY
JUDGMENT AGAINST CARBOLINE COMPANY (DOC. #65) AND
OVERRULING AS MOOT PLAINTIFF’S MOTION TO FILE
RESPONSES TO CARBOLINE COMPANY'S SECOND SET OF
REQUESTS FOR ADMISSIONS OUT OF TIME (DOC. #68);
CONFERENCE CALL SET FOR TUESDAY, APRIL 14, 2020, AT 4:30
P.M.
Plaintiff, Lammers Barrel PRP Group (“PRP Group” or “Plaintiff”), sued
several defendants under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (“CERCLA”), as amended, 42 U.S.C.
§§ 9601 et seq., seeking contribution under § 113(f), 42 U.S.C. § 9613(f), and
declaratory relief under § 113(g)(2), 42 U.S.C. § 9613(g)(2). Doc. #1. The PRP Group
alleges that these defendants are liable for past and/or future response costs
incurred by them in connection with the Lammers Barrel Factory Superfund Site
(“Site”). Pursuant to the Court’s Preliminary Pretrial Order, Doc. #56, discovery
has been completed.
This matter is currently before the Court on a Motion for Summary
Judgment filed by Defendants, ETC Sunoco Holdings, LLC f/k/a Sunoco, Inc.
(“Sunoco”), and Carboline Company (“Carboline”), a Delaware corporation
formed in 1980. Doc. #60. Sunoco and Carboline will be referred to collectively as
“Defendants.” Also, before the Court is a Motion for Partial Summary Judgment
filed by Plaintiff against Carboline, Doc. #65, and Plaintiff’s Motion to File
Responses to Carboline Company’s Second Set of Request for Admissions Out of
Time, Doc. #68.
Plaintiff has alleged that Carboline and/or Sunoco have successor liability
for an entity known as The Moran Paint Company (“Moran Paint”).' According to
the Complaint, Moran Paint was an owner and/or operator at the Site, under
CERCLA 8 9607(a)(1), until it relocated its facility in approximately 1951.
Thereafter, Plaintiff alleges that Defendants became liable as arrangers under
CERCLA 8 9607(a)(3).
In considering theses motions for summary judgment, the Court will
provide a brief background of the Site, including the relevant legal proceedings
' Plaintiff's Complaint alleges that Carboline is liable as a successor to Moran Paint and
that “[A]lternatively” Sunoco is the successor to Moran Paint due to a series of mergers
beginning in January 1980, between Carboline and Sun Company, Inc., n/k/a Sunoco.
Doc. # 1, PAGEID#8. Plaintiff's motion for partial summary judgment on the issue of
liability, however, is directed only to Carboline.
and decisions pertaining to its clean-up, as well as the legal relationship of Moran
Paint, Carboline and Sunoco. The Court will then review the standard that guides
its decisions in ruling on motions for summary judgment followed by an analysis
of the motions including the admissibility of the depositions of Anthony Kohnen
(“Kohnen”) and Cecil Brown(“Brown”), taken pursuant to Rule 27 of the Federal
Rules of Civil Procedure.”
Background and Procedural History
A. The History of the Site and Related Litigation
The Site, located at the intersection of Grange-Hall Road and East Patterson
Road in Beavercreek, Greene County, Ohio, consists of approximately 2.5 acres
with a creek running east to west through the center. Doc. #1, PAGEID#2.
From approximately 1944 until 1969, there were several industrial operations at
the Site and from 1944 to 1951, the Moran Paint Company (“Moran Paint”)
operated a paint production facility at the Site. /d,, PAGEID##2, 3 and 6. This
company also owned the Site from at least 1948 to 1951. /a., PAGEID#7. Moran
Paint manufactured paint removers, paint thinners and paint constituents as well
as blended and recycled solvents. It also stored chemicals in storage tanks on the
Site. /a., PAGEID##6 and 7. According to allegations of the PRP Group,
The admissibility of the Rule 27 depositions of Kohnen and Brown is also the subject of a
motion /n /imine, Doc. #34-1, filed by the United States of America in United States of
America v. Dayton Industrial Drum, Inc. and Sunoco, Inc., Case No. 3:16-cv-232 (S.D. Ohio
June 10, 2016) (“2016 DID Cost Recovery Case”).
“[H]azardous substances from Moran Paint’s operations were released at or from
the Site during the time period Moran Paint owned and/or operated the Site.” /d.,
PAGEID#7. In 1951, Moran Paint “moved from the Site and eventually relocated
its manufacturing operations to Xenia, Ohio, in approximately 1957.” /a.
In 1952, Kohnen, through his company, purchased the Site and “conducted
waste solvent distillation and fractionation operations until a fire destroyed
operations at the Site on September 30, 1969. 2016 DID Cost Recovery Case, Doc.
#34-2, PAGEID#474.° Also included at the Site during a portion of these 17 years,
from approximately 1955 until about 1964, was a barrel reconditioning operation
known at the time as the Lammers Barrel Corporation and later as Dayton
Industrial Drum, Inc. Doc. #1, PAGEID#9.* According to the Complaint, the Site
operations involved the “purchase, storage, reclamation and sale of industrial
solvents including chlorinated VOCs [volatile organic compounds] from about
1955 until in or about 1964.” /a.
In late 1985, wells in the vicinity of the Site were found to be contaminated
with VOCs. /a., PAGEID#3. In 1986, the EPA completed a Removal Action with
Plaintiff has cited to the motion jn /imine filed by the United States of America in the DID
Cost Recovery Case regarding the Rule 27 depositions of Kohnen and Brown and has
incorporated the arguments of the United States in its response in opposition to
Defendants’ motion for summary judgment. Doc. #68, PAGEID#1536.
two companies conducting operations at the Site during this time used a number of
names including Lammers, Inc., Kohnen Chemical Co., Kohnen-Lammers, Inc., Lammers
Barrel Inc., Kohnen Chemical and Barrel Co., Kohnen and Lammers Chemical Company
and Lammers and Kohnen Barrel Company. Doc. #65, PAGEID#1160.
nine residences connected to an existing water main. Four additional homes were
later connected to the County water supply in 2000. Doc. #61-3, PAGEID#511.
Following this discovery of VOC contamination in 1986, the United States
Environmental Protection Agency (“EPA”) conducted various response activities
and under a 2002 Administrative Order on Consent for Remedial
Investigation(“RI”)/Feasibility Study (“FS”) (“2002 AOC”), Plaintiff and others
agreed to examine ways to remedy the contamination at the Site, as well as to
reimburse oversight costs incurred by the EPA and the Ohio EPA. Doc. #1,
PAGEID#3. The Site was placed on the National Priorities List, and in August 2008,
the parties to the AOC completed, and the EPA approved, the RI for the Site. /d.
On or about June 30, 2011, the respondents to the 2002 AOC completed,
and the EPA approved, the Operable Unit 1 Feasibility Study (“OU1 FS”).5 Based
on the information collected in the RI and the OU1 FS, the EPA selected a remedy
for OU1 in a Record of Decision (“OU1 ROD”) which was issued by the EPA on
September 27, 2011. /d. Additional investigation of the contaminated groundwater
plume and the Operable Unit 2 Feasibility Study (“OU2 FS”) is ongoing. /d.
On or about May 4, 2012, EPA, the PRP Group and others began negotiating
a Remedial Design/Remedial Action (“RD/RA”) Work Plan to implement the OU1
ROD. These negotiations were completed on July 31, 2013.
° The Site was divided into Operable Unit 1 (“OU1”), for the on-site soil and groundwater
contamination, and Operable Unit 2 (“OU2”"), for the off-Site groundwater contamination.
As a result of the VOC contamination at the Site, the United States filed a
Complaint, under 88 106,107 and 113 of CERCLA, on January 31, 2014, against the
PRP Group and others entitled United States v. 3M Company, et al., No. 3:14-cv-
32. /d., PAGEID#5. On April 22, 2014, this Court entered the Remedial
Design/Remedial Action (“RD/RA”) and De Minimis Consent Decree between the
EPA and Plaintiffs, along with several non-performing settling defendants (“2014
CD”). /a.® According to the 2014 CD, the PRP Group was required to pay certain
EPA past response costs and to perform the response cost activities mandated by
the OU1 ROD at the Site.
On August 2, 2016, the United States of America sued Dayton Industrial
Drum, Inc., (“DID”) and later, in an Amended Complaint, joined Sunoco, pursuant
to § 107(a) of CERCLA. United States of America v. Dayton Industrial Drum, Inc.
Case No 3:16-cv-232, United States District Court for the Southern District of Ohio
(“2016 DID Cost Recovery Case”). The suit sought the recovery of unreimbursed
costs incurred by the United States for response activities undertaken due to “the
release or threatened release of hazardous substances from facilities” at and near
the Site. The suit also sought a declaratory judgment against DID and Sunoco
seeking joint and several liability for any further response costs that may be
incurred and not otherwise reimbursed. The United States alleges that Sunoco is
the “legal successor to one or more entities known as the Moran Paint Company”
The Complaint incorrectly alleges that the 2014 CD was entered by this Court on May 8,
2014.
which owned and operated a paint manufacturing business at the Site and later
arranged for the disposal and treatment of hazardous substances there. /d., Doc.
#4, PAGEID#20. On July 3, 2019, DID paid $825,000 to the United States and
entered into a Consent Decree (“2019 CD”) in the 2016 DID Cost Recovery Case.
2016 DID Cost Recovery Case, Doc. #56; PAGEID#805. This litigation remains
pending against Sunoco.’
On April 21, 2017, the PRP Group filed this case against Carboline® and
several other defendants seeking contribution, under CERCLA, § 113(f), for
Plaintiff's share of the response costs incurred or to be incurred by them in
connection with the release or threatened release of hazardous substances at the
Site. As of the filing of this Complaint, Plaintiff has allegedly incurred over $6
million in response costs and “will continue to incur millions of additional dollars
of response costs to perform the various response costs activities at the Site.”
Doc. #1, PAGEID#5. According to the Complaint, additional investigation of a
contaminated groundwater plume that migrates off-Site to the east (“OU2”) is the
subject of the ongoing Feasibility Study.
January 13, 2020, the United States filed a Notice of Lodging of Consent Decree, Doc.
#83, stating that it had reached a settlement with Sunoco and Carboline as an “Additional
Covered Party.” The proposed settlement included the 2016 DID Cost Recovery Case and
the instant litigation filed by the PRP Group. On March 2, 2020, the United States filed a
Motion to Enter Consent Decree, Doc. #84, and on March 20, 2020, Sunoco filed a
Response to the Motion to Enter Consent Decree, Doc. #85.
® Pursuant to Defendant Carboline Company’s Corporate Disclosure Statement, Doc. #19,
Carboline is an indirect subsidiary of RPM International Inc. (“RPM”). This company has a
financial interest in the outcome by reason of an indemnity agreement entered into
between an indirect subsidiary of RPM and Sunoco, Inc.
B. Moran Paint, Carboline and Sunoco
In either 1951 or 1952, Moran Paint, which was first incorporated in Ohio in
1939, left the Site. In 1957, it relocated its paint manufacturing facility to Xenia
Township in Greene County, Ohio. Doc. #1, PAGEID#7; Doc. #65, PAGEID##1219,
1213. On October 2, 1962, Moran Paint adopted a resolution to wind-up, dissolve
and liquidate its assets within 12 months. Doc. #60, PAGEID#302. On October 30,
1963, Moran Paint sold its “manufacturing assets, real property and buildings
located in Xenia, Ohio, along with its trade name and certain product lines” to
Carboline Company of Ohio, Inc. (“Ohio Carboline”), an Ohio corporation formed
October 14, 1963. Doc. #60-5, PAGEIDE302; Doc. #60-12, PAGEID#427; Doc. #65,
PAGEID#1219. On December 12, 1963, Moran Paint, through its President,
Michael Moran, and Secretary, John Henehan, dissolved the 1939 Ohio company
and assumed personal liability for any premiums due to the Ohio Bureau of
Workers Compensation. Doc. #60-6, PAGEID#310. Although no documentation
detailing the alleged asset purchase agreement has been located by the parties,
Defendants assert that Carboline of Ohio did not assume any liabilities of Moran
Paint. Doc. #60-12, PAGEID#427. /d. Following the October 30, 1963, sale,
Carboline of Ohio amended its articles of incorporation and changed its name to
The Moran Paint Company. Doc. #60-12, PAGEID#427.
Before Carboline’s purchase of Moran Paint, Carboline was headquartered
in St. Louis, Missouri and “manufactured none of its coating lines itself; it relied
exclusively on toll manufacturers.”? These toll manufacturers produced the
Carboline coating lines at their own facilities also located in St. Louis. /a.
Carboline purchased Moran Paint in Xenia in order to have a manufacturing
facility to eliminate the cost of the toll manufacturers, Doc. #60-3, PAGEID#290.
Moran Paint then “became a division within the new organization.” /d.,
PAGEID#292. An “engineer named Vic Flack from St. Louis” came in after the
purchase of Moran Paint, “as general manager to expand the operations at the
Xenia facility and [to] introduce Carboline’s product lines.” Doc. #60-12,
PAGEID#427. With “hundreds of thousands of dollars” borrowed “in order to
expand operations, which included acquiring machinery like high-speed
dispersers and building a new warehouse with all of Carboline’s product lines,” all
of the newly introduced lines were manufactured at the Xenia plant. Doc. #60-12,
PAGEDI#427-28. Asa result, the number of employees at Xenia increased from
15 to over 100. /a.
In January 1980, Moran Paint and other companies were merged into the
Carboline Company headquartered in St. Louis, Missouri. Doc. #1, PAGEID#8.
Thereafter, Carboline of Missouri was merged into Sun Company, Inc., which later
changed its name to Sunoco. 2016 DID Cost Recovery Case, Doc. #29-1,
Toll manufacturing or processing is an arrangement in which a company, which has
specialized equipment, manufactures or processes raw materials or semi-finished goods
for another company.
PAGEID##215 and 216." Also in 1980, Carboline, the named Defendant herein,
was incorporated as a Delaware corporation. Doc. #73, PAGEID#2508.
ll. Summary Judgment
Summary judgment must be entered “against a party who fails to make a
showing sufficient to establish the existence of an element essential to that party’s
case, and on which that party will bear the burden of proof at trial.” Ce/otex
Corp.v. Catrett, 477 U.S. 317, 322 (1986). The moving party always bears the
initial responsibility of informing the court of the basis for its motion and
identifying those portions of the record which it believes demonstrate the absence
of a genuine issue of material fact. /d. at 323; see a/so Boretti v. Wiscomb, 930
F.2d 1150, 1156 (6th Cir. 1991).
“Once the moving party has met its initial burden, the nonmoving party
must present evidence that creates a genuine issue of material fact making it
necessary to resolve the difference at trial.” T7a/ley v. Bravo Pitino Rest., Ltd., 61
F.3d 1241, 1245 (6th Cir. 1995); see also Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 250 (1986). Once the burden of production has so shifted, the party opposing
summary judgment cannot rest on its pleadings or merely reassert its previous
allegations. It is not sufficient to “simply show that there is some metaphysical
doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
'° These allegations are taken from the Amended Complaint in the 2016 DID Cost
Recovery Case, Doc. #4, but are not disputed by Sunoco.
10
475 U.S. 574, 586 (1986). Rule 56 “requires the nonmoving party to go beyond the
[unverified] pleadings” and present some type of evidentiary material in support
of its position. Ce/otex, 477 U.S. at 324. “The plaintiff must present more than a
scintilla of evidence in support of his position; the evidence must be such that a
jury could reasonably find for the plaintiff.” Michigan Prot. & Advocacy Serv., Inc.
v. Babin, 18 F.3d 337, 341 (6th Cir. 1994).
Summary judgment shall be granted “if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as
a matter of law.” Fed. R. Civ. P. 56(a). “Summary judgment will not lie if the
dispute about a material fact is ‘genuine,’ that is, if the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.” Anderson, 477
U.S. at 248. In determining whether a genuine dispute of material fact exists, a
court must assume as true the evidence of the nonmoving party and draw all
reasonable inferences in favor of that party. /d. at 255. If the parties present
conflicting evidence, a court may not decide which evidence to believe.
Credibility determinations must be left to the fact-finder. 10A Wright, Miller &
Kane, Federal Practice and Procedure Civil 3d § 2726 (1998). In determining
whether a genuine dispute of material! fact exists, a court need only consider the
materials cited by the parties. Fed. R. Civ. P. 56(c)(3). “A district court is not...
obligated to wade through and search the entire record for some specific facts
that might support the nonmoving party’s claim.” /nterRoyal Corp. v. Sponseller,
889 F.2d 108, 111 (6th Cir. 1989), cert. denied, 494 U.S. 1091 (1990). If it so
11
chooses, however, the Court may also consider other materials in the record. Fed.
R. Civ. P. 56(c)(3).
lll. Sunoco and Carboline’s Motion for Summary Judgment (Doc. #60)
A. CERCLA Liability as an Owner/Operator and Arranger
Plaintiff is seeking contribution under CERCLA 8 113(f) against Carboline,
or, alternatively, Sunoco, due to the actions of Moran Paint. In order to establish
CERCLA 8 113(f) liability, however, Plaintiff “must look to § 107 to establish the
basis and elements of the liability” of Moran Paint. Ka/amazoo River Study Grp. v.
Menasha Corp., 228 F.3d 648, 656 (6th Cir. 2000) (quoting Centerior Serv. Co. v.
Acme Scrap lron & Metal Corp., 153 F.3d 344, 350 (6th Cir. 1998)).
To establish a prima facie case for CERCLA recovery under § 107(a) against
Moran Paint, the PRP Group must prove that (1) the property is a “facility”; (2)
there has been a “release” or “threatened release” of a hazardous substance; (3)
the release has caused the plaintiff to incur “necessary costs of response” that are
“consistent” with the NCP; and (4) the defendant is in one of four categories of
potentially responsible parties (“PRPs”). Reg’! Airport Auth. of Louisville v. LFG,
LLC, 460 F.3d 697, 703 (6th Cir. 2006).
In this case, Plaintiff's Complaint alleges that Moran Paint qualifies in two of
the four categories of PRPs at the Site: (1) an owner/operator, under 42 U.S.C.
§ 9607(a)(2), from approximately 1944 to 1951, and (2) an arranger of hazardous
substances, under 42 U.S.C.8 9607(a)(3), from 1957 through 1969. Under CERCLA,
12
an owner/operator is defined as “any person who at the time of disposal of any
hazardous substance owned or operated any facility at which such hazardous
substances were disposed of.” 42 U.S.C.§ 9607(a)(2). An arranger is defined
under CERCLA as
(3) any person who by contract, agreement, or otherwise arranged
for disposal or treatment, or arranged with a transporter for transport
for disposal or treatment, of hazardous substances owned or
possessed by such person, by any other party or entity, at any facility
or incineration vessel owned or operated by another party or entity
and containing such hazardous substances,
42 U.S.C.8 9607(a)(3).
Assuming that Plaintiff can establish a prima facie case under CERCLA
§ 107(a), including showing that Moran Paint acted as an owner/operator and/or
an arranger during the relevant time period, the PRP Group must still prove that
one or both Defendants are liable as a successor to Moran Paint.
Defendants’ motion for summary judgment asserts that neither Sunoco nor
Carboline can be held liable as a successor for any conduct alleged against Moran
Paint, based on the undisputed facts of the case, as well as Plaintiff’s failure to
respond for over nine months to Carboline’s requests for admissions. Defendants
also contend that there is no “competent evidence” of any releases at the Site,
during the time that Moran Paint was either an owner/operator or an arranger.
Specifically, Sunoco and Carboline contend that (1) the Rule 27 depositions of
Kohnen and Brown cannot be used against Defendants, (2) Plaintiffs experts
cannot establish a release before the 1969 fire and (3) after the October 30, 1963,
13
transaction, Moran Paint sent hazardous substances to the Armentrout Landfill
and not to the Site. Finally, Defendants argue that Plaintiff’s claims for RI/FS costs
are time-barred.
The Court will next turn to the law of successor liability for Defendants
under CERCLA, first as an owner/operator of the Site and then as an arranger.
B. Successor Liability of Carboline and Sunoco for Moran Paint as an
Owner/Operator of the Site from 1944-1951
Plaintiff alleges that from 1944 to 1951, Moran Paint was the
owner/operator of the Site and that expert testimony will show that a release
occurred at the Site, creating liability for Moran Paint and ultimately for Carboline
and, alternatively, Sunoco. Defendants, however, argue that there is no evidence
of a release of hazardous substances at the Site during this time period, since
Richard Williams, one of Plaintiff's experts, has testified that his “5% allocation”
to Moran Paint was “an arbitrary allocation.” Although the existence of a release
of hazardous substances at the Site and the amount attributable to Moran Paint
may create a genuine dispute of material fact, the issue before the Court is
otherwise, to wit: whether successor liability exists for Carboline or Sunoco for
the actions of Moran Paint as an owner/operator of the Site.
The question of successor liability under CERCLA is governed under Ohio
corporation law. See City Mgmt. Corp. v. U.S. Chem. Co., Inc., 43 F.3d 244, 250
(6th Cir. 1994). Although the general rule is that “the purchaser of a corporation's
14
assets is not liable for the debts and obligations of the Seller corporation,” We/co
Indus., Inc. v. Applied Cos., 67 Ohio St. 3d 344, 347, 617 N.E.2d 1129, 1132 (Ohio
1993), four exceptions exist.
A successor corporation may be held liable when “(1) the buyer
expressly or impliedly agrees to assume such liability; “(2) the
transaction amounts to a de facto consolidation or merger;” (3) the
buyer corporation is merely a continuation of the seller corporation;
or “(4) the transaction is entered into fraudulently for the purpose of
escaping liability.” (citing Flaugher v. Cone Automatic Mach. Co., 30
Ohio St. 3d 60, 62 (1987)).
If one or more of these exceptions applies, the purchaser of the assets, in
this case Carboline of Ohio, will be held liable for Moran Paint’s obligations,
regardless of any agreement to the contrary. Plaintiff further alleges that if
Carboline of Ohio is liable, then Sunoco will also be liable as a successor to
Carboline and Moran Paint due to the mergers that occurred in January 1980. Doc.
#1, PAGEID##6 and 8.
Defendants argue that no successor liability exists, since Carboline of Ohio
did not assume any liabilities of Moran Paint when it acquired the Xenia paint
manufacturer in October 1963. In making this argument, Defendants cite to the
affidavit of John F. Montle, Carboline’s former Vice President of Research and
Development, Vice President of Technology, and later “President of The Moran
Paint Company, a wholly owned subsidiary of Carboline Company formed in 1963
as Carboline Company of Ohio (“Montle Affidavit”).” Doc. #60-12, PAGEID#427.
“When Carboline Company of Ohio acquired certain assets of The Moran Paint
Company in 1963, it did not assume any of that entity’s liabilities.” /d.
15
Plaintiff, however, contends that a genuine issue of a material fact exists as
to successor liability. The PRP Group argues that the Carboline purchase of Moran
Paint in October 1963, was a “de facto merger” and/or a “continuation,” of the
former Moran Paint. A “continuation,” according to the PRP Group, is “an
independent and alternate theory of liability.” Doc. #65, PAGEID#1149.
As argued by Plaintiff, a de facto merger exists when “[T]he transaction that
results in the dissolution of the predecessor corporation is in the nature of a total
absorption of the previous business into the successor.” We/co, 67 Ohio St. 3d at
349, 617 N.E.2d at 1134. Doc. #65, PAGEID#1147. A de facto merger has four
characteristics:
(1) the continuation of the previous business activity and corporate
personnel, (2) a continuity of shareholders resulting from a sale of
assets in exchange for stock, (3) the immediate or rapid dissolution
of the predecessor corporation, and (4) the assumption by the
purchasing corporation of all liabilities and obligations ordinarily
necessary to continue the predecessor's business operations.
Ia.
No single factor is determinative in concluding that a de facto merger exists and it
may be found even without all of the four characteristics being present. Cytec
Indus., Inc. v. B.F. Goodrich Co., 196 F. Supp.2d 644, 658 (S.D. Ohio 2002).
Defendants argue that the continuation of the previous business activity is
refuted by the Montle Affidavit as well as the testimony of the Carboline corporate
representative, Dwayne Meyer, Doc#60-3, PAGEID#284. According to Carboline
and Sunoco, while the name of Moran Paint continued after the acquisition of
Carboline of Ohio, the manufacturing and growth of the Xenia facility changed
16
dramatically as it became the manufacturing center for the St. Louis based entity
and eliminated Carboline’s reliance on toll manufacturing. Carboline “borrowed
hundreds of thousands of dollars to expand operations,” and brought in new
personnel, paint formulas and systems of manufacturing in order to make Moran
Paint in Xenia, Ohio, the manufacturing center for all of Carboline.
In support of Plaintiff's argument that there was a continuation of the
corporate personnel at Moran Paint after the October 1963 purchase, the PRP
Group argues that Moran Paint continued to manufacture paint. Plaintiff further
argues that there was a continuation in corporate personnel and attaches several
newspaper articles from the Xenia Gazette and the St. Louis Post Dispatch,
allegedly reporting on the sale, status of the operation and personnel changes.
Doc. #65-1, PAGEID##12225,1241,1243,1249,1251 and 1253. Although Defendants
in their reply characterize these newspaper articles as “inadmissible hearsay,”
Doc. #73, PAGEID#2509, under Fed. R. Civ. P. 56 (c)(2), the Court can consider
these articles, at the summary judgment stage, assuming they can be properly
authenticated at trial.
Even assuming admissibility at trial, however, the Court does not find that
these articles establish “a continuation of personnel.” Moran, “owner of the
company before it was sold to Carboline” and the former president of Moran
Paint, although initially described “as president” after the acquisition, is later
referenced as a “special assistant to the president” of Carboline and on the
Carboline Board of Directors. Doc. #65-1, PAGEID##1225, 1241 and 1249. The
17
articles also state that at some time after the transaction, John Henehan, the
former corporate secretary of Moran Paint, was “in charge of operations of the
local plant” and Robert Lipp, “formerly sales manager of the industrial division,
was named general manager of industrial sales and research and development.”
Doc. #65-1, PAGEID##1241. That two individuals allegedly stayed on with the new
Moran Paint is not, however, enough to establish continuation, particularly when
it is uncontested that the company grew from approximately 15 employees to
over 100 after the October 1963 transaction. Moreover, the Court notes that the
newspaper articles also reference other individuals at Moran Paint and it is
unknown if they were affiliated with the company prior to October 1963 or, as is
reported for “Victor L. Flack of St Louis,” who allegedly became manager of the
company’s plant in Xenia,” were individuals from Carboline in St. Louis. Doc.
#65-1, PAGEID#1253.
As to the second element of a de facto merger, Plaintiff simply speculates
and does not present any evidence that there was a “continuity of shareholders or
sale of assets for stock.” Doc. #65, PAGEID#1148 (“All of the assets, which Iikely
included stock, were transferred to [the Moran Paint entity purchased by
Carboline] during the acquisition.”) (emphasis added.)
Nor has Plaintiff established the third element of a de facto merger, the
immediate or rapid dissolution of the predecessor corporation. Although the Ohio
1939 Moran Paint entity dissolved two months after the October 30, 1963,
transaction, there is also evidence that this dissolution and liquidation was
18
actually planned one year earlier, as seen by the October 2, 1962, resolution to
wind-up, dissolve and liquidate the assets of Moran Paint “within 12 months.”
Doc. #60, PAGEID#302.
Finally, Plaintiff has not established that Carboline assumed Moran Paint’s
liabilities and obligations ordinarily necessary to continue the predecessor's
business operations. In fact, Plaintiff has presented no challenge to the Montle
Affidavit, stating that there was no assumption of Moran Paint’s liabilities.
The PRP Group next argues that successor liability exists since, after the
October 30, 1963, transaction, Moran Paint “existed under the same leadership,
held the same physical facilities, [officers], employees, and product lines” and
“was a reincarnation and mere continuation” of the original Moran Paint. Other
than Moran Paint remaining in Xenia, Ohio, and Carboline of Ohio changing its
name to Moran Paint, there is no evidence, for the reasons previously addressed
in the de facto merger analysis, that there was a “reincarnation” or “mere
continuation” of the former Moran Paint. Although Moran remained as the
statutory agent for Moran Paint, the leadership, officers, employees and product
line were not “unchanged.”
Based on the above-cited testimony and documents, including the
newspaper articles attached to Plaintiff's response, there is no genuine issue of a
material fact that either Carboline or Sunoco has successor liability for the actions
of Moran Paint during the time period it was a prior owner/operator of the Site.
19
C. Successor Liability of Carboline and Sunoco for Moran Paint as an
Arranger from 1957 to 1969
The PRP Group next argues that successor liability exists for Carboline and
Sunoco for the actions of Moran Paint as an arranger from 1957 through
September 1969. Because the Court has determined that no successor liability
exists for Carboline or Sunoco, prior to Carboline of Ohio’s transaction on October
30, 1963, the relevant inquiry is whether Defendants have successor liability for
the actions of Moran Paint as an arranger under CERCLA § 9607(a)(3) for the time
period after October 30, 1963, through the date of the September 30, 1969, fire.
At the heart of this dispute are the Rule 27 depositions of Brown and
Kohnen, now both deceased. These depositions were taken by the United States
pursuant to a Petition to Perpetuate Testimony, filed March 14, 2003 (“Petition”), a
hearing held on June 17, 2003 (“Hearing”) and an Order filed June 18, 2003
(“Order”). /n re Petition of the United States of America to Perpetuate Testimony
Pursuant to Rule 27 of the Federal Rules of Civil Procedure, Case No. 3:03-mc-
00005, Doc. ##1, 3, 4 and 5.
Plaintiff argues that based on the Rule 27 deposition testimony of Kohnen
taken August 8, 2003, Moran Paint has liability as an arranger. This is so,
according to Plaintiff, since Kohnen testified that Moran Paint was a customer of
Kohnen and Lammers for three to five years, material was picked up from Moran
Paint in bulk by a tanker, that a typical load would be five to six thousand gallons
of waste solvents and paint thinners and that this occurred once every five to six
20
weeks. Doc. #65, PAGEID#1216. Defendants, however, contend that the Rule 27
depositions of Kohnen and Brown cannot be used against them since Carboline
received no notice of the depositions and the notice that Sunoco received
referenced only a subsidiary of Sunoco, known as “Sunoco, Inc. (R&M),”"" and
failed to indicate that Sunoco had any connection to Moran Paint. Doc. #60-1,
PAGEID#267. Defendants argue that although Sunoco received the Petition,
notice of Hearing, and Order, and sent an attorney to the depositions to represent
a Sunoco subsidiary, the Petition failed to disclose the “the names or a
description of the persons whom the petitioner expects to be adverse parties” as
required by Rule 27(a)(1)(D). As a result, the Sunoco attorney did not question
Kohnen or Brown regarding Moran Paints and only represented the identified
Sunoco subsidiary, Sunoco, Inc. (R&M).
Plaintiff responds to this argument by adopting and incorporating “the
arguments made by the United States on this issue in its pending Motion /n
Limine in the [2016 Cost Recovery Case].” Doc. #68, PAGEID#1536; 2016 DID Cost
Recovery Case, Docs. ##34 and 39."
The Court has reviewed the Petition and Order, as well as the affidavits and
exhibits in this case concerning this issue as well as in the 2016 DID Cost Recovery
Case, Docs. ##34, 35, 37(sealed) and 39. Because the Court finds that Carboline
"Sunoco, Inc. (R&M) is n/k/a Sunoco (R&M), LLC.
Because the Consent Decree has not been entered by this Court in the 2016 Cost
Recovery Case, the case against Sunoco remains pending. Seen. 7 herein.
21
was not given any notice of the Rule 27 depositions of Kohnen and Brown and
that the notice given to Sunoco failed to comply with Fed. R. Civ. P. 27(a)(1)(D),
the depositions of these two witnesses cannot be used. Without relevant
evidence, there are no facts establishing successor liability. Therefore, no
successor liability exists for Carboline and Sunoco for the actions of Moran Paint
as an arranger from 1957 through September 1969."
Therefore, the Motion for Summary Judgment of Defendants, ETC Sunoco
Holdings, LLC f/k/a Sunoco, Inc. and Carboline Company, Doc. #60, is sustained.
IV. Plaintiff's Motion for Partial Summary Judgment Against Carboline
Company (Doc. #65) and Plaintiff's Motion to File Responses to Carboline
Company’s Second Set of Requests for Admissions Out of Time (Doc. #68)
Based upon the Court’s decision sustaining the Motion for Summary
Judgment of Defendants ETC Sunoco Holdings, LLC f/k/a Sunoco, Inc. and
Carboline Company, Doc. #60, Plaintiffs’ Motion for Partial Summary Judgment
Against Carboline Company (Doc. #65) is overruled. Plaintiff has not established a
genuine issue of a material fact that either Carboline or Sunoco is liable as a
successor to Moran Paint as the prior owner/operator of the Site. Additionally,
Plaintiff has not established a genuine issue of a material fact that either Carboline
or Sunoco is liable as a successor to Moran Paint as an arranger. Finally,
8 Decision and Entry Overruling Plaintiff's Motion /n Limine, Doc. #34, 2016 DID Cost
Recovery Case.
22
Plaintiff's Motion to File Responses to Carboline Company’s Second Set of
Requests for Admissions Out of Time (Doc. #68), is overruled as moot.”
V. Conclusion
For the reasons set forth above, the Motion for Summary Judgment of
Defendants, ETC Sunoco Holdings, LLC f/k/a Sunoco, Inc., and Carboline
Company, Doc. #60, is SUSTAINED. Plaintiff's Motion for Partial Summary
Judgment Against Carboline Company, Doc. #65, is OVERRULED. Plaintiff's
Motion to File Responses to Carboline Company’s Second Set of Requests for
Admissions Out of Time, Doc. #68, is OVERRULED as moot.
Because the Court, by separate Decision and Entry, has sustained the
Motion for Summary Judgment of Defendants, Dayton Industrial Drum, Inc., Doc.
#61, and Worthington Industries, Inc., Doc. #67, Plaintiff's claim against Defendant
Yenkin-Majestic Paint Corporation is the sole remaining claim at issue in this case.
A conference call with counsel is scheduled for Tuesday, April 14, 2020, at
4:30 p.m.
Lteine ina eee:
Date: March 27, 2020
WALTER H. RICE
UNITED STATES DISTRICT JUDGE
'4 In issuing this Decision and Entry, the alleged failure of Plaintiff to respond to
Carboline’s requests for admissions was not considered by the Court.
23