# Supplemental Brief — Joslyn Manufacturing Co. v. James > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385020_1696%3A7 ## Record - **Collection:** Supreme Court brief - **Document type:** Supplemental Brief - **Published:** January 1, 1991 - **Citation:** 498 U.S. 1108 ## Text No. 82-1973 In THE JOSEPH F. SPANIOL, JF Supreme Court of the United OcTOBER TERM, 1989 JOSLYN MANUFACTURING COMPANY, i Petitioner, V. T. L. JAMES & COMPANY, INC., Respondent. On Petition For A Writ Of Certiorari To The United States Court Of Appeals For The Fifth Circuit PETITIONER’S SUPPLEMENTAL BRIEF IN RESPONSE TO THE BRIEF OF THE UNITED STATES AS AMICUS CURIAE JAY A. CANEL Counsel of Record STEPHEN D. DAVIS CanEL, Davis & KiNG 30 North LaSalle Street Suite 1730 Chicago, Illinois 60602 (312) 372-4142 Attorneys for Petitioner JOSLYN MANUFACTURING COMPANY JAMES L. ADAMS Mipp.LeBerGc RippLte & GIANNA 3lst Floor Place St. Charles 201 St. Charles Avenue New Orleans, Louisiana 70170 (504) 525-7200 Of Counsel to Lance D. Alworth, Joining in the Petition Midwest Law Printing Co., Chicago 60611, (312) 321-0220 i TABLE OF CONTENTS MT, he Wii scab SK in dee EEK DAN one 5404S THE GOVERNMENT ABANDONED THE POSI- TION IT TOOK IN THE FIFTH CIRCUIT IN ORDER TO PROTECT A JUDGMENT IT LATER OBTAINED IN THE FIRST CIRCUIT...... Se Beer eres yet TTT etee ii TABLE OF AUTHORITIES CASES New York v. Shore Realty Corp., 759 F.2d 1032 Gan Gah SOs ks scp aeiawsee eee Town of Brookline v. Gorsuch, 667 F.2d 215 (1st Ci Reed stcs ) cay sales cates wkd ee Pe kes United States v. Jon-T Chemicals, Inc., 768 F.2d 686 (5th Cir. 1985), cert. denied, 475 U.S. 1014 GRU Ss o eves kveae be eee eek U.S. v. Kayser-Roth Corp., 724 F.Supp. 15 pg R.I. 1989), aff'd., 910 F.2d 24 (Ist Cir. 1990) . U.S. v. Northeastern Pharmaceutical and Chem- ical Company, Inc., 810 F.2d 726 (8th Cir. 1986), cert. denied, 484 U.S. 848 (1987) ..... PAGE 1,2,3 No. 89-1973 IN THE Supreme Court of the United States OcTOBER TERM, 1989 JOSLYN MANUFACTURING COMPANY, Petitioner, Vv. T. L. JAMES & COMPANY, INC., Respondent. On Petition For A Writ Of Certiorari To The United States Court Of Appeals For The Fifth Circuit PETITIONER’S SUPPLEMENTAL BRIEF IN RESPONSE TO THE BRIEF OF THE UNITED STATES AS AMICUS CURIAE I THE GOVERNMENT ABANDONED THE POSITION IT TOOK IN THE FIFTH CIRCUIT IN ORDER TO PROTECT A JUDGMENT IT LATER OBTAINED IN THE FIRST CIRCUIT In considering the brief for the United States, it must be remembered that it is the prevailing party in U.S. v. Kayser-Roth Corp., 724 F.Supp. 15 (D.R.I. 1989), affd., 910 F.2d 24 (1st Cir. 1990), petition for cert. pending, No. 90-816. In that case, the district court adopted the govern- ment’s theories of direct and indirect CERCLA liability. It found Kayser-Roth Corporation directly liable for clean- up costs at its subsidiary’s facility by virtue of its active ee participation in its subsidiary’s activities. It also found Kayser-Roth indirectly liable under a federal common law test. The First Circuit affirmed the direct liability finding and found it unnecessary to review the district court’s indirect liability analysis. The government now opposes Joslyn’s petition for cer- tiorari seeking review of the Fifth Circuit’s refusal to apply the theories of direct and indirect CERCLA liabil- ity adopted in Kayser-Roth. It does so more as a party protecting its victory than as a national representative promoting a proper development of federal law. Before the First Circuit decided Kayser-Roth, the gov- ernment filed an amicus brief supporting Joslyn in the Fifth Circuit. It argued Joslyn’s contribution claim against James Company should be remanded because the district court had not applied the proper standards for direct and indirect CERCLA liability. The government proposed the following direct liability standard in the Fifth Circuit: The United States urges this Court to establish a standard of direct liability under CERCLA based on the decisions in Shore Reality and NEPACCO. That standard would provide that a person is directly liable under §107 of CERCLA, 42 U.S.C. 9607, where that person exercised authority for a company’s hazardous substance operations by participating in (a) operating a hazardous substance facility or vessel; or (b) arrang- ing for the disposal or treatment of hazardous sub- stances; or (c) accepting hazardous substances for transportation. Under this standard, a parent corpora- tion is directly liable when its officers, directors, or employees, in the ordinary course of their activities in these roles, participates in the hazardous substance disposal activities just enumerated. C.A. Amicus Br. for U.S., 22-23. = After the First Circuit decided Kayser-Roth in its favor (and after Kayser-Roth Corperation filed its petition for certiorari), the government labors to persuade this Court that the Fifth Circuit decision does not conflict with Kayser-Roth, Shore Realty and NEPACCO. While it admits the Fifth Circuit failed to “discuss”, “directly acknowledge,” or “consider” its direct liability theory, U.S. Br., 10, the government somehow claims the court did not reject it. U.S. Br., 11. But the Fifth Circuit did not equivocate or limit its ruling to the facts: It ex- pressly declined to follow Shore Realty. See Joslyn’s Pet. App. 5a. The government now claims the Fifth Circuit rejected Joslyn’s theory, not the one it advocated (although its footnote 9 concedes ‘“‘statements in Joslyn’s court of ap- peals brief might be interpreted to coincide with the gov- ernment’s theory. . .”). Defeat is often an orphan, but “who proposed what theory” is less important than the court’s decision. It is enough that the Fifth Circuit ap- plied no direct liability theory. Joslyn agrees with the position the government took in the Fifth Circuit, i.e., that Joslyn was entitled to have its case decided under the direct liability standard adopted in Shore Realty, NEPACCO and Kayser-Roth. Joslyn sub- mits a trier of fact could reasonably find James Company liable under that standard. Lincoln’s wood treatment plant was undeniably a “hazardous substance operation.” James Company exercised authority over Lincoln’s operations. While its officers, directors and employees may not have been handling the chemicals, they were involved exten- sively in Lincoln’s operations. See Joslyn’s petition, 2-4. The government’s brief to this Court also dances away from the position it took on indirect CERCLA liability in the Fifth Circuit. The government urged that court to apply bigs a federal common law standard for indirect CERCLA lia- bility in which a subsidiary’s corporate veil would be pierced under the following circumstances: A. The financial resources of the subsidiary are not adequate to pay the CERCLA response cost for which it is liable under §107 or the subsidiary is otherwise not available to pay those costs (or the subsidiary does not have the financial re- sources to perform in response to EPA’s clean- up orders issued under or an injunction secured pursuant to §106(a) of CERCLA); and B. The subsidiary performed a function of economic importance to the enterprise of a parent, or the parent participates directly in the management of the subsidiary. C.A. Amicus Br. for the U.S., 47. The government acknowledges the Fifth Circuit did not apply this test, but still opposes review in this Court. First, it argues there is no conflict among the circuits as to the extent to which corporate forms may be disregarded under CERCLA. But the First Circuit in Town of Brook- line v. Gorsuch, 667 F.2d 215 (1st Cir. 1981), disregarded separate corporate forms to enforce the federal environ- mental policy embodied in the Clean Air Act, without plodding through the “heavily fact specific” state law analysis the lower courts employed here. We cannot per- ceive why the Clean Air Act and CERCLA should have different standards. The government’s brief provides no explanation. Second, the government suggests federal and state veil- piercing rules are based on the same broad principles, but this ignores one critical difference. The federal analysis applied in Town of Brookline looks closely at the purpose of the federal statute to determine whether the statute places importance on the corporate form. The Fifth Cir- a OS cuit’s Jon-T analysis gave no weight to CERCLA’s pur- pose of shifting clean-up costs to persons who benefitted from hazardous waste disposal. Third, the government opposes certiorari on the ground the indirect liability theory may have “limited practical importance” because the parent which had its subsidiary’s corporate identity disregarded would probably also be directly liable for its own participation in the operation of the subsidiary’s facility. The government’s dismissal of indirect liability as unim- portant rings hollow. This Court’s determination of the circumstances in which separate corporations are treated as one in CERCLA cases will also determine who will pay millions (if not billions) of dollars in clean-up costs at sites throughout the United States. The government’s discus- sion of the proper veil-piercing standard under federal common law covered 24 pages of its amicus brief to the Fifth Circuit. Moreover, the indirect liability test the government pro- posed in its Fifth Circuit brief would not hold a parent liable solely for its participation in the subsidiary’s management. It also imposes liability on the parent if the subsidiary is unable to respond to its CERCLA liability and had performed a function of economic performance to the parent. A trier of fact could reasonably find James Company liable under this test. Lincoln is unavailable to respond to its CERCLA liability, and James Company profited from Lincoln’s disposal of hazardous waste. A parent corporation may also be indirectly liable be- cause of its participation in the management of its im- pecunious or dissolved subsidiary under the government test. But the possibility this prong of the indirect theory overlaps with direct liability does not support the argu- ment that this Court should not review this case. The <—- Court may find that disregarding the subsidiary’s cor- porate form under a federal common law analysis makes the most sense in CERCLA cases. It may choose to ac- cept, reject or refine the proposed theories of indirect lia- bility, direct liability, or both. CONCLUSION CERCLA should have the same meaning throughout the nation. The conflict between the Fifth Circuit’s interpreta- tion of CERCLA liability and that adopted in the First, Second and Eighth Circuits cannot be papered over. This Court should grant Joslyn’s petition. Respectfully submitted, JAY A. CANEL Counsel of Record STEPHEN D. DAVIS CaneEL, Davis & KING 30 North LaSalle Street Suite 1730 Chicago, Illinois 60602 (8312) 372-4142 Attorneys for Petitioner JOSLYN MANUFACTURING COMPANY JAMES L. ADAMS MIDDLEBERG RIDDLE & GIANNA 3ist Floor Place St. Charles 201 St. Charles Avenue New Orleans, Louisiana 70170 (504) 525-7200 Of Counsel to Lance D. Alworth, Joining in the Petition --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385020_1696%3A7. Public record. Not legal advice.