# Petition for Writ of Certiorari — Exide Technologies Technologies v. United States (No. 05-1269) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386008_0642%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 2006 ## Text a Supreme Cot 118 \) ths 79. OFPICE OF THE Sins Int Supreme Court of the United States EXIDE TECHNOLOGIES, Petitioner, Vv. UNITED STATES OF AMERICA, Respondent. On Petition for a Writ of Certiorari To the United States Court of Appeals For the Third Circuit PETITION FOR A WRIT OF CERTIORARI TimoTHY K. Lewis ROBERT L. COLLINGS CARL A. SOLANO (Counsel of Record) JENNIFER J. NESTLE Attorneys for Petitioner SCHNADER HARRISON SEGAL & LEWIS LLP 1600 Market Street, Suite 3600 Philadelphia, Pennsylvania 19103 (215) 751-2202 Of Counsel. QUESTIONS PRESENTED 1. In light of this Court’s decisions requiring appli- cation of state law in United States v. Bestfoods, 524 U.S. 51 (1998); Atherton v. FDIC, 519 U.S. 213 (1997); and O'Melveny & Myers v. FDIC, 512 US. 79 (1994), did the Court of Appeals for the Third Circuit err in holding that corporate successor liability for environmental cleanup costs under the Comprehensive Environmental Response, Compensa- tion and Liability Act of 1980 (CERCLA) should be deter- mined by creating and applying federal common law, rather than applicable state law? 2. Did the Court of Appeals err in crafting a federal law of corporate successor liability for CERCLA cases that is at odds with the Pennsylvania law that would otherwise apply? PARTIES TO THE PROCEEDING All of the parties to the proceeding are named in the caption. Throughout the proceedings in this case, petitioner has been identified as Exide Corporation, but it has now changed its name to Exide Technologies. Exide is the suc- cessor by merger to General Battery Corporation, which no longer exists as a separate company. On April 15, 2002, Exide filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code. Exide emerged from bankruptcy in May 2004, but the claim in this case remains subject to bankruptcy court jurisdiction. CORPORATE DISCLOSURE STATEMENT Exide has no parent corporation. Except for Sterling Capital Management LLC, which owns approximately 14.1% of Exide’s stock, no company holds 10% or more of Exide’s stock. TABLE OF CONTENTS OPINIONS BELOW STATEMENT OF JURISDICTION STATUTORY PROVISIONS INVOLVED ............ 2 STATEMENT OF THE CASE REASONS FOR GRANTING THE WRIT I. THE DECISION BELOW IS IN CONFLICT WITH DECISIONS OF THIS COURT MANDATING APPLI- CATION OF STATE LAW TO FILL GAPS IN FEDE- RAL STATUTES THE DECISION BELOW PERPETUATES A SPLIT AMONG THE CIRCUIT COURTS OF APPEALS REGARDING WHAT LAW APPLIES TO SUCCESSOR LIABILITY ISSUES UNDER CERCLA THE DECISION BELOW INCORRECTLY DECIDED AN IMPORTANT QUESTION OF FEDERAL LAW REGARD- ING CERCLA LIABILITY THATSHOULD BESETTLED BY THIS COURT, AND INJECTED CONFUSION INTO CERCLA JURISPRUDENCE AS IT DID SO THE DECISION BELOW DISPLACED GOVERNING PENNSYLVANIA LAW WITH A FEDERAL RULE THAT IS AT ODDS WITH STATE POLICY, PRODUCING AN ERRONEOUS RESULT ‘CONCLUSION TABLE OF AUTHORITIES Cases Page Aluminum Co. of Amer. v. Beazer East, Inc., 124 F.3d 551 RoE eal ROPE? 5 AN ere bN beeso ek Pedeaaes 12 Anspec Co. v. Johnson Controls, Inc., 922 F.2d 1240 (6th Cae: BURRS ia i see hee OI La RS oe eaee 9 Atchison, Topeka & Santa Fe Ry. v. Brown & Bryant, Inc., Lee Ed CaO CPA. LOPON. 6 5c oinvye pv ok Chi aes 8, 10 Atherton v. FDIC, 519 U.S. 213 (1997) .......... 1,4, 6,8 B.F. Goodrich v. Betkoski, 99 F.3d 505 (2d Cir. 1996), cert. dented, S24 US: 9a6 (199) ese ie 9 Beazer East Inc. v. Mead Corp., 34 F.3d 206 (3d Cir. 1994), cert. denied, 514 U.S. 1065 (1995) ......... 12 Berg Chilling Sys. v. Hull Corp., 435 F.3d 455 (3d Cir. BO foe Oia tae ee 15 Browning-Ferris Indus. of Ill., Inc. v. Ter Maat, 195 F.3d 953 (7th Cir. 1999), cert. denied, 529 U.S. 1098 2 RAG aapeainie ree nis fe Ae yer Gaia geo nye een tr 12 Carlos R. Leffler, Inc. v. Hutter, 696 A.2d 157 (Pa. Super. je. St ee ean a eRe ME Or Fd AO ha oat ot Lee wan SCRE Ben 15 Carter-Jones Lumber Co. v. LTV Steel Co., 237 F.3d 745 (6th Cir.), cert. denied, 533 U.S. 903 (2001) ....... 12 Citizens Elec. Corp. v. Bituminous Fire & Marine Ins. Co., OE eA aA (SE, BSOOE fs ehh ees s hans 12 City Mgmt. Corp. v. U.S. Chemical Co., 43 F.3d 244 (6th oe, Ree Negeneae Geom pony puyan Wee S 10 -1V- Commonwealth v. Lavelle, 382 Pa. Super. 356, 555 A.2d 218, appeal denied, 524 Pa. 595, 568 A.2d 1246 CIs 88 ei yaw OPO One RS 15-16 Continental Ins. Co. v. Schneider, Inc., 810 A.2d 127 (Pa. Super. 2002), aff'd, 582 Pa. 591, 873 A.2d 1286 GOL Sk Ve naar Owe ca ces enema ares wee 15 Cooper Indus., Inc. v. Aviall Services, Inc., 543 U.S. 137 Pd 2 ERE SMA aren as taptnce Periine ME OY Dire may itera 11 Dawejko v. Jorgensen Steel Co., 290 Pa. Super. 15, 434 rg etme lt N41. < h Rapes aioe hey eeu A 16 Ene Railroad v. Tompkins, 304 U.S. 64 (1938) .......... 6 Exxon Corp. v. Hunt, 475 U.S. 355 (1986) ............ 11 Farris v. Glen Alden Corp., 393 Pa. 427, 143 A.2d 25 CE a Sie 2d ORS ES eee 15-16 Fisher Devel. Co. v. Boise Cascade Corp., 37 F.3d 104 (3d CR SIN SG Cs eate ORS GW Ss Be I ROR Pe Hill v. Trailmobile, Inc., 412 Pa. Super. 320, 603 A.2d LG fF 4 RR Raga pee AS SOM SRL SS ARC ear Ene 16 John S. Boyd Co. v. Boston Gas Co., 992 F.2d 401 (1st Cir. tg it) SRR Pemba e itp ete ioE eT a Ente Chen oe ae 9 Key Tronic Corp. v. United States, 511 U.S. 809 (1994) .. 11 Lackawaxen Water & Sewer Co. v. Pennsylvania Pub. Util. Comm., 85 Pa. Commw. 377, 481 A.2d 1386 PE hs FA hee EK LAREN RR SRR LE EA ES 16 Levin Metals Corp. v. Parr-Richmond Terminal Co., 817 Fe 2ESe Ce TI) oo ee ee ea ees 12 Louisiana-Pacific Corp. v. Asarco, Inc., 909 F.2d 1260 SOREN Md AMINO: 3 Sears ev sg'c gine nih Saas OOS Keke 9 Meghrig v. KFC Western, Inc., 516 U.S. 479 (1996) ..... 11 MicroSignal Corp. v. MicroSignal Corp., 147 Fed. Appx. Wet AEG AE. MPR i ns oN nab ealea hae aa Fas 16 O'Melveny & Myers v. FDIC, 512 U.S. 79 (1994) .. 1, 4-10 Polius v. Clark Equip. Co., 802 F.2d 75 (3d Cir. 1986) . Redwing Carriers, Inc. v. Saraland Apartments, 94 F.3d RAS CLUE PII i oi Sa we 12 Smith Land & Improvement Corp. v. Celotex Corp., 851 F.2d 86 (3d Cir. 1988), cert. denied, 488 U.S. 1029 CRE Ora as ene sacks avebraan eee ees 3-5, 9 Smithkline Beecham Corp. v. Rohm & Haas Co., 89 F.3d ROMO Gl SD a ew ease vb oe eee Sols 12 State of New York v. National Services Indus., Inc., 352 ue UNE AER GE: MEMEO: © Sn ae cs eek wanton eee 10 State of New York v. National Services Indus., Inc., 380 F. ULEAD, SAR TAG AES AANA As DOD ek alien Mince a aioe | 10 Terry v. Penn Central Corp., 668 F.2d 188 (3d Cir. NU ck aS ote Rete Sc a ea annie 16 United States v. Bestfoods, 524 U.S. 51 (1998) ..... passim United States v. Carolina Transformer Co., 978 F.2d 832 OPENERS ENUEE: coor sca eke neces hh cnc ieee ean 9 United States v. Davis, 261 F.3d 1 (1st Cir. 2001) .... 8,10 United States v. Kimbell Foods, Inc., 440 U.S. 715 (1979) . 6 -Vi- United States v. Mexico Feed & Seed Co., 980 F.2d 478 a te) - rei erte verer eor OO a hp Nt a ree gir 9 United States v. USX Corp., 68 F.3d 811 (3d Cir. ROE os ok Fis Ls GAA cE WS Tee AES 12 Witco Corp. v. Beekhuis, 38 F.3d 682 (3d Cir. 1994) .... 12 Statutes Comprehensive Environmental Response, Compensa- tion and Liability Act of 1980, 42 U.S.C. §§ 9601 EI SiS 5 ace sos BOK eee A Aa os passim SCOR Mis Gr bie OL ee ow Le 2,8 pection 107; 42 U.S.C. § 960? | a 6S hc ees 2,8 section 21508); 42 USC § 96158) + poe 2,8 Section 301(e), 42 U.S.C. § 9651(e) ............ 2,8 jumacial Code, 20 US4.: § THO4G i a ee 1 Pennsylvania Business Corporation Law, 15 Pa. CS. ER og REE EG BLS eS ie ee ED ie 16 Other Authorities Corp. L. Comm. Comments — 1988 to Business Cor- poration Law §§ 1105, 1904, reprinted at 15 Pa. a8 TS fy > Seenea ese we nek gene receeE rs 16 15 W.M. FLETCHER, FLETCHER CYCLOPEDIA OF THE LAW OF PRIVATE CORPORATIONS § 7124.20 (perm. ed., FOU VOR TVs eh ors wks os oe oe ke oe we pe 4 -Vil- Petition for a Writ of Certiorari To the United States Court of Appeals For the Third Circuit This Court has repeatedly instructed that federal courts are not to fashion “federal common law” to fill the interstices of federal causes of action when state rules of decision can be used instead. See United States v. Bestfoods, 924 U.S. 51 (1998); Atherton v. FDIC, 519 U.S. 213 (1997); O'Melveny & Myers v. FDIC, 512 U.S. 79 (1994). But the decision below did just that, holding that because of a perceived need for “uniformity” in federal actions under CERCLA, the court should fashion a federal rule of deci- sion to govern corporate successor liability for environ- mental cleanup costs, rather than applying ‘the law of the state at issue. The Third Circuit’s decision conflicts with the decisions of this Court and with those of courts of appeals that have followed this Court’s pronouncements. And it leaves in its wake a tattered framework for re- solving corporate liability issues under CERCLA that fos- ters neither the uniformity nor the certainty that the court sought to achieve. This Court therefore should grant cer- tiorari and direct that the Third Circuit abandon its effort to create a federal body of corporate succession law. OPINIONS BELOW The opinion below, A1-A44, is reported at United States v. General Battery Corp., 423 F.3d 294 (3d Cir. 2005). The opinions of the district court, A45-77, are unreported. STATEMENT OF JURISDICTION The Court of Appeals entered judgment on Septem- ber 6, 2005. Exide’s timely petition for rehearing was filed on October 20, 2005, and denied on November 4, 2005. On January 20, 2006, Justice Souter extended the time within which to file this petition to and including April 3, 2006. This Court has jurisdiction under 28 U.S.C. § 1254(1). 2 STATUTORY PROVISIONS INVOLVED Relevant excerpts from CERCLA — the Comprehen- sive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §§ 9601 et seq. ~ are set forth at A82- A88. They include Sections 101, 107(a), (b) & (e), 113(f), and 301(e), 42 U.S.C. §§ 9601, 9607(a), (b) & (e), 9613(f), and 9651(e). : STATEMENT OF THE CASE Exide is the successor by merger to General Battery Corporation. In 1966, General, a manufacturer of batteries and other products at plants throughout the United States, purchased the assets of Price Battery Corporation, a bat- tery manufacturer in Hamburg, Pennsylvania. This case concerns the Government's efforts to hold Exide liable for the conduct of Price prior to the 1966 asset purchase. Under the 1966 agreement, Price sold General its ma- chinery and other equipment for $2.95 million in cash and 100,000 shares (4.537% of the total outstanding shares) of General stock worth approximately $1 million. Price sold its realty to a local development fund for $1.8 million in cash, and General then leased the realty from that fund. In all, then, Price received $4.75 million in cash for its assets (82.6% of the total purchase price), plus the stock. The agreement provided that Price’s chairman and sole shareholder, William Price, Sr., would become a direc- tor of General and that General would employ Price’s mid- dle managers. General assumed Price’s contracts and the liabilities on Price’s books and agreed to indemnify Price for claims arising out of Price’s operations, but, significant- ly, not for “liabilities sounding in tort or liabilities arising out of scc:irrences for which a tort claim would apply.” Following its acquisition of Price’s assets in Ham- burg, General made batteries at the Hamburg facility (em- 3 ploying battery case disposal methods different from the practices of Price that gave rise to the CERCLA liability judgment at issue here). Meanwhile, Price changed its name, ceased operations, and dissolved in July 1967. CERCLA was not enacted until 1980. This case was filed 20 years after that, in June 2000, in the United States District Court for the Eastern District of Pennsylvania. In its complaint, the United States contended that Price dis- posed of battery casings containing lead at sites in the Hamburg area and that the United States now must remediate resulting environmental damage. The Government sought to hold General (and, there- fore, Exide) liable as Price’s corporate successor. It argued that, as a matter of “federal common law,” General should be excepted from the rule that a corporate successor is not liable for its predecessor's misconduct because the 1966 asset sale constituted a “de facto merger” or because Gene- ral engaged ina “substantial continuation” of Price’s busi- ness. The trial court (Buckwalter, J.) agreed and entered summary judgment for the United States. A50-A72. Exide appealed, contending that Pennsylvania law, rather than federal common law, should have been applied to the claims of successor corporate liability and that, under Pennsylvania law, General (and therefore Exide) would not be liable for environmental damage caused by Price. Inits response, the Government abandoned its reli- ance on federal common law, but still advocated a de facto merger theory not grounded in Pennsylvania precedent. In a September 6, 2005 opinion by Chief Judge Scirica that was joined by Judge Fisher, the Court of Appeals affirmed. In doing so, the court specifically adhered to its holding in Smith Land & Improvement Corp. v. Celotex Corp., 851 F.2d 86 (3d Cir. 1988), cert. denied, 488 U.S. 1029 (1989), that issues of corporate successor liability under CERCLA are governed by federal common law, as derived from 4 “the general doctrine of successor liability in operation in most states.” A6-A7. The Court of Appeals declined to overrule Smith Land despite this Court's recent decisions disapproving use of federal common law. It explained that O’Melveny & Myers v. FDIC, 512 U.S. 79 (1994), and Atherton v. FDIC, 519 US. 213 (1997), were inapposite because they dealt with bank- ing law, not CERCLA. A8-A9. The court said that United States v. Bestfoods, 524 U.S. 51 (1998), a CERCLA case, “cuts in favor of a uniform federal standard” because in it this Court “declined to apply Michigan law and instead looked to the general ‘hornbook’ rule of veil-piercing.” A9-A10. The Court of Appeals insisted that a need for national uni- formity in applying CERCLA should control, and it con- cluded that this objective could best be served by adopting a federal common-law rule based on the law of most states, rather than applying the non-uniform successor liability laws of individual states. A11-A17. The court then formulated a federal common-law rule to govern General's acquisition of Price’s assets. The court recognized that “most states” hold that corporate asset buyers are not liable for the selling company” S mis- conduct. But it fashioned an exception for “de facto mer- gers’ based on a four- part test derived from federal cases purportedly stating a “majority” standard and from the Fletcher Cyclopedia of the Law of Private Corporations (vol. 15, § 712...20 (perm. ed., rev. vol. 1999)). A19-A20. The court concluded that state law is “unsettled” on whether asset purchases for a mixture of cash and stock (or for a small percentage of the buyer’s stock) should be treated as de facto mergers. A12-A13. Nevertheless, after citing federal and state decisions from just six jurisdictions, the court adopted a federal rule based on what the “critical . . . in- quiry appears to be.” A21-A24 & nn. 9-10. Under this new _ rule, the court held that General’s acquisition of Price’s assets was a de facto merger for purposes of CERCLA, so that Exide was liable for Price’s conduct. A26. 5 In a separate opinion dissenting in part, Judge Ren- dell concluded that this Court's recent decisions preclude creation or application of “federal common law” and su- persede anything to the contrary in Smuth Land. The majo- rity's decision, she opined, “runs counter to recent Supreme Court pronouncements,” “perpetuates a split among the courts of appeals,” and improperly adheres to an “outdated notion of promoting uniformity.” A28-A29. Because of its decision to formulate a federal com- mon-law rule, the Court of Appeals declined to determine how Pennsylvania would decide the question before it. A16-A17. In dicta, itsuggested that its standard “ generally tracks the Pennsylvania rule,” A26, a view that Judge Rendell echoed, A44. But on the “unsettled” issue of asset sales for cash or minuscule stock interests, neither opinion cited or discussed Pennsylvania authorities. Exide filed a petition for rehearing and rehearing en banc. The court denied the petition on November 4, 2005, with Judges Rendell and Ambro voting to grant rehearing en banc. A80-A81. REASONS FOR GRANTING THE WRIT I. THE DECISION BELOW IS IN CONFLICT WITE DECISIONS OF THIS COURT MANDATING APPLICATION OF STATE LAW TO FILL GAPS IN FEDERAL STATUTES. This Court's decisions make clear that the Court of Appeals’ creation and application of a “federal common law” to determine successor liability under CERCLA was error. Even the Government recognized that fact when its brief to the Third Circuit failed to advocate such a theory. By its election nevertheless to employ “federal common law,” the court below decided this case in a way that conflicts with the law that should have been applied — that of Pennsylvania. 6 InO’Meilveny, this Court held, unanimously, that state law — not federal common law — governs actions by the FDIC tor legal malpractice and breach of eUrANY duties in connection with failed s savings and loan associations. Quoting cCrie Kairoaa’v. rompkins, 304 U.S. 64, 78 (1938}, that “there is no federal general common law,” the Court emphasized that creation of federal common law is justi- tied only “where there is a ‘significant conflict betw een some federal policy or interest and the use of state law’ and that “the existence of such a conflict [is] a rire for recognition of a federal rule of decision.” 512 U.S. a 83, 87 88. In Atherton, this Court reiterated that the holding (again, unanimously) that state law, rather a federal common law, governs the standard of care appli cable to the corporate | governance of federally naiened banks. 519 U.S. at 218-25. These decisions set forth clear limitations on employing federal common law in any type of action and are controlling here. See also United States v. Kimbeli Foods, Inc., 440 U.S. 715, 726 (1979). This Court's more recent decision in Bestfoods con- firms that state law should apply in this case. In Bestfoods, this Court unanimously affirmed the Sixth Circuit's appli- cation of Michigan veil- -piercing law in holding that a parent company may be held liable under CER CLA for its subsidiary’s conduct. 524 U.S. at 60, 63-64. Contrary to the Court of nef seme suggestion below, A9-A10, this Court did not reject application of Michigan law. While the par- ties’ positions made it unnecessary to decide whether to apply state or federal law, see 524 U.S. at 63-64 n.9, this Court pointedly noted that CERCLA had not displaced “well-settled” rules of state corporate law: CERCLA is thus like many another congres- sional enactment in giving no indication “that the entire corpus of state corporation law is to be replaced simply because a plaintiff's cause of action is based upon a federal statute,” and the failure of the statute to speak to a matter as fundamental as the liability implications of corporate ow — demands application of the rule that “in order to abrogate a common- law principle, the statute must speak directly to the question addressed by the common law.” Id. at 63 (quoted citations omitted). In the decision below, the Court of A pres failed to heed this w arming. More- over, this Court in Bestfoods rejected the trial court’s formu- lation of special rules for holding a parent company liable as a facility “operator” under CERCLA because they threatened to displace traditional state veil-piercing stan- dards without congre secre authorization to do so. /d. at 70. Nevertheless, the decision Ts adopted a CERCLA- specific rule of corporate successor liability. O'Melveny and its progeny clearly called for the rejec- tion of federal common law in this case. As the majority opinion below itself recognized — o [T]he Supreme Court in O'Melveny cautioned against the unwarranted displ acement of state law, holding that state rules of decision gene- ally fill interstitial gaps in federal statutes. 512 U.S. at 87. The displacement of state law is par- ticularly disfavored in the area of corporate law, because business decisions typically proceed in reliance on the applicable state standards. State corporation law generally should be inte- grated into the fede ral statutory regime, unless there exists’ ‘a significant conflict betwe ensome fed eral policy or interest _— the use of state ] ry ‘ >] A8 (some citations omitted); see also A41-A42 (opinion of ]. Rendell). Even the court below agreed that there is no conflict between Pennsylvania law and CERCLA’s purpose of 8 holding liable those responsible for the cost of cleaning up hazardous wastes. See A1l6. Those courts of appeals that have considered this issue since the decision in Bestfoods agrec that there is no state law conflict. See United States v. Davis, 261 F.3d 1,53 (1st Cir. 2001); Atchison, Topeka & Santa Fe Ry. v. Brown & Bryant, Inc., 159 F.3d 358, 363-64 (9th Cir. 1998). Indeed, CERCLA itself prevents state law from ad- versely affecting the Government's ability to obtain com- pensation from polluters by making the principals of pol- luting companies (such as William Price, Sr., who sold his company’s assets to General) directly liable in a cost reco- very action. See CERCLA § 107(a)(2), 42 U.S.C. § 9607(a)(2); Be stfoods, 5 524 U.S. at 64-65. By basing its deciSion on a need for “national unifor- mity” in CERCLA’s application, A16-A17, the Third Cir- cuit elevated an interest that this Court already has reject- ed. This Court held in O'Melveny that uniformity was an insufficient basis for creating a federal common law for the FDIC: “Uniformity of law might facilitate the FDIC’s na- tionwide litigation of these suits, eliminating state-by-state research and reducing uncertainty — but if the avoidance of those ordinary consequences qualified as anidentifiable federal interest, we would be awash in ‘federal common- law’ rules.” 512 US. at 88. See also Atherton, 519 US. at 219-21. That observation applies with full force here. There is no indication that Congress desired to create _ uniform federal rules to govern CERCLA’s interstices. A self-described “comprehensive” statute, CERCLA specifi- cally sets forth when federal law applies to a cause of action. E.g., CERCLA §§ 101(32), 42 U.S.C. § 9601(32) (in- corporating Clean Water Act liability standards), 113(f), 42 U.S.C. § 9613(f) (contribution standards). Moreover, in CERCLA tool Congress recognized that it was not sup- planting all state common-law rules and created a com- mission to study whether any of them should be changed through future federal legislation. See CERCLA § 301(e), 42 US.C.§ 9651(e). Under O'Melveny, when a federal statute 9 embodies selected federal rules of decision and is other- wise silent, courts are not free to tinker with Congress’ scheme by applying additional “federal common-law” rules; doing so “is not to ‘supplement’ this scheme, but to alter it.” 512 U.S. at 86-87. The Court of Appeals erred in its adoption of federal common law. This Court should grant certiorari to bring the Third Circuit's jurisprudence into compliance with that of this Court. Il. THE DECISION BELOW PERPETUATES A SPLIT AMONG THE CIRCUIT COURTS OF APPEALS REGARDING WHAT LAW APPLIES TO SUC- CESSOR LIABILITY ISSUES UNDER CERCLA. The question whether to use “federal common law “ to resolve successor liability questions under CERCLA has divided the courts of appeals for years. Before this Court's decisions in O'Melveny, Atherton, and Bestfoods, the First and Sixth Circuits had held that state law, not federal com- mon law, must control. See Jolin S. Boyd Co. v. Boston Gas Co., 992 F.2d 401 (1st Cir. 1993); Anspec Co. v. Johnson Con- trols, Inc., 922 F.2d 1240 (6th Cir. 1991). In addition to (and often in reliance on) the Third Circuit's decision in Smith Land, the Fourth, Eighth, and Ninth Circuits had opted for federal common law, sometimes using it to adopt special pro-Government liability rules for CERCLA cases , suchas the notorious “substantial continuity” doctrine (under which the Government needed to prove little more than that the defendant corporation was carrying on the same business as an earlier company). See United States v. Carolina Transformer Co., 978 F.2d 832, 837-38 (4th Cir. 1992); United States v. Mexico Feed & Seed Co., 980 F.2d 478, 487 n9 (8th Cir. 1992) (dicta); Louisiana-Pacific Corp. v. Asarco, Inc., 909 F.2d 1260, 1262-66 (9th Cir. 1990). Later, the Second Circuit joined this group. See B.F. Goodrich v. Betkoski, 99 F.3d 505, 518-520 (2d Cir. 1996), cert. denied, 524 U.S. 926 (1998). : 10 This Court’s O'Melveny trilogy could have been ex- pected to turn the tide, and it certainly was not without effect. In light of this Court's decisions, the First Circuit, in United States v. Davis, 261 F.3d 1, 53-54 (1st Cir. 2001), reaf- firmed its conclusion that state law must govern, since there is “no evidence that application of state law to the facts of this case would frustrate any federal objectiv — See also City Management Corp. v. U.S. Chemical Co., 43 F.3d 244 (6th Cir. 1994). The Second and Ninth Circuits, in State of New York v. National Services Industries, Inc., 352 F.3d 682, 686-87 (2d Cir. 2003), and Atcluson, Topeka & Santa Fe Ry. v. Brown & Bryant, Inc., 159 F.3d 358, 362-64 (9th Cir. 1998), have jettisoned their adoption of the “substantial con- tinuity” doctrine (a rejection that the Third Circuit fol- lowed in its decision below, A27). And the Ninth Circuit intimated in Afciuson that, when faced directly with the question, it will abandon federal common law as well. 159 F.3d at 363-64. In its decision below, however, the Third Circuit failed to see the light. Despite what should have been viewed as a post-O ‘Melt eny trend to the contrary in the cir- cuit case law, the Third Circuit steadfastly declared its con- tinued adherence to a “federal common law” regimen in an opinion seemingly designed to turn the tide yet again. Thus, in Judge Rendell’s words, the decision “ perpetuates a split among the courts of appeals.” A28. As things now stand, the First and Sixth Circuits apply state law and the Ninth Circuit seems poised to fol- low suit. The Third, Fourth, and Eighth Circuits are still wedded to federal common law. Though the Second Cir- cuit may be ready to switch to state law, its discussion of the issue in National Services Industries, 352 F.3d at 687 n.1, was sufficiently unclear as to cause the district court on remand to express frustration because it did “little to clari- fy which body of case law” it should apply. See State of New York v. National Services Industries, Inc., 380 F. Supp. 2d 122, 126 (E.D.N.Y. 2005). The frustration is of national a a 1] scope and cries out for resolution by this Court. The Court should grant Exide’s petition for certiorari to impose harmony on this area of the law that has remained unsettled for more than a decade. Ill. THE DECISION BELOW INCORRECTLY DE- CIDED AN IMPORTANT QUESTION OF FEDE- RAL LAW REGARDING CERCLA LIABILITY THAT SHOULD BE SETTLED BY THIS COURT, AND INJECTED CONFUSION INTO CERCLA JURISPRUDENCE AS IT DID SO. CERCLA is one of the principal tools crafted by Con- gress for remediation of the nation’s environmental da- mage. See Key Tronic Corp. v. United States, 511 U.S. 809, 814 (1994); Exxon Corp. v. Hunt, 475 U.S. 355, 359-60 (1986). As its primary purposes include imposition of liability for environmental cleanup costs and allocation of financial re- sponsibility through contribution actions, see Cooper Indus., Inc. v. Avtall Services, Inc., 543 U.S. 157, 161-63 (2004); Meghrig v. KFC Western, Inc., 516 U.S. 479, 483 (1996), it is a prodigious source of federal litigation. And as the dollar amounts of remediationjudgments often are “substantial,” Key Tronic, at 814, it is a principal source of concern for businesses seeking to structure their affairs to take poten- tial liabilities into account. The Third Circuit therefore was correct to recognize the importance of stability and predictability in the selec- tion of legal rules to govern business liabilities under CERCLA. See A8, A15. See also Polius v. Clark Equip. Co., 802 F.2d 75, 83 (3d Cir. 1986). But rather than making the law more clear, the Third Circuit’s decision has made it more uncertain and confused. Apart from successor liability, the courts of appeals frequently apply state business law to determine liability in CERCLA cases. For example, they use state law to de- termine whether a dissolved corporation may be held 12 liable under CERCLA. See Citizens Elec. Corp. v. Bituminous Fire & Marine Ins. Co., 68 F.3d 1016, 1019-20 (7th Cir. 1995) (applying Fed. R. Civ. P. 17(b)); Levin Metals Corp. v. Parr- Richmond Terminal Co., 817 F.2d 1448, 1451 (9th Cir. 1987) (same). They also apply state law to determine partners’ liability under CERCLA. See Redwing Carriers, Inc. v. Sara- land Apartments, 94 F.3d 1489, 1500-02 (11th Cir. 1996). While this Court in Bestfoods, 524 U.S. at 63 n.9, noted a dispute about the source of law that governs corporate “veil-piercing” under CERCLA, the appellate decisions on that issue since Bestfoods have applied state law there too. See Carter-Jones Lumber Co. v. LTV Steel Co., 237 F.3d 745, 746 n.1 (6th Cir.), cert. denied, 533 U.S. 903 (2001); Browning- Ferris Indus. of Ill., Inc. v. Ter Maat, 195 F.3d 953, 959 (7th Cir. 1999) (by agreement of parties), cert. denied, 529 US. 1098 (2000). Even the Third Circuit has looked to state law on some of these issues. See, e.g., Aluminum Co. of Amer. v. Beazer East, Inc., 124 F.3d 551, 567 (3d Cir. 1997) (dissolved corporation). See also United States v. USX Corp., 68 F.3d 811, 826 n.30 (3d Cir. 1995) (joint venture liability); cf also Witco Corp. v. Beekliiis, 38 F.3d 682, 686-90 (3d Cir. 1994) (liability of decedent's estate). And that court has a well- developed body of law applying state jurisprudence to determine whether a successor company has incurred lia- bility under an indemnity or release agreement. See Alumu- num Co. of Amer., 124 F. 3d at 565; Beazer East Inc. v. Mead Corp., 34 F.3d 206, 212-15 (3d Cir. 1994), cert. denied, 514 U.S. 1065 (1995). See also Smithkline Beecham Corp. v. Rohm & Haas Co., 89 F.3d 154, 158 (3d Cir. 1996); Fisher Devel. Co. v. Boise Cascade Corp., 37 F.3d 104, 109 (3d Cir. 1994). The Third Circuit did not explain why state law is sufficient to decide the foregoing issues, but insufficient to determine corporate successor liability in this case. It merely emphasized a perceived need for “national unifor- mity.” A16-A17. That need would seem to apply equally in any of these situations, however. The patchwork appli- 13 cation of state and federal law in these business liability decisions results in neither certainty nor predictability — but instead results in confusion. Although the Court of Appeals apparently believed that its decision would bring clarity to the law of successor liability, its decision did no such thing. The court vowed to base its rule of federal common law for successor corpo- rations on the law followed by a majority of states. A6-A7, A16-A17. But beyond the general framework for successor liability law, the Third Circuit found no consensus in the state decisions on how to deal with such specific issues pi- votal to this case as whether mixed cash/ stock transactions can be de facto mergers, or how much stock is sufficient to satisfy a requirement of continuity of ownership. See A11- Al4 &nn. 5-7. Deeming “the ‘majority’ standard . . .some- what unsettled” on these questions, the court instead crea- a federal common law based on what the critical inqui- y “appears to be” according to a handful of cited deci- ats from a total of only six jurisdictions. See A21-A24 & nn. 9-10. The decision thus did not benignly apply a uni- form majority state rule to this case; it created a brand new rule of federal law to supplant the absence of any state consensus whatsoever. That adhoc approach to creation of - federal law fosters neither uniformity nor predictability. There is no readily ascertainable standard for deter- mining how a federal court should craft a new federal rule of corporate law for CERCLA cases. This Court has firmly instructed against creation of “a relaxed, CERCLA-specific rule of derivative liability that would banish traditional standards and expectations.’ ’ Bestfoods, 524 U.S. at 70. Yet, it is notable that, in holding in favor of Government reco- very, the Third Circuit adopted for this case a decidedly pro-liability de facto merger rule that emphasizes continu- ity of business operations, waters down any requirement for continuity of shareholders, and fails to accord any sig- nificance to the seller’s retention of tort liabilities and sub- stantial cash with which to pay them. See A20-A26. This 14 new rule looks a great deal like the discredited, CERCLA- specific “substantial continuity” doctrine that the court purported to reject. See A20-A27. The decision thus un- derscores the dangers of special federal-court corporate law-making for CERCLA cases. The Third Circuit's hold- ing thus not only fosters confusion, but it invites pro- Government distortion of corporate law. Exide’s petition should be granted so that this Court may restore certainty to business law and thereby enable businesses purchasing assets and otherwise structuring their affairs to know how their actions may affect their CERCLA liability. IV. THE DECISION BELOW DISPLACED GOVERN- ING PENNSYLVANIA LAW WITH A FEDERAL RULE THAT IS AT ODDS WITH STATE POLICY, PRODUCING AN ERRONEOUS RESULT. The Court of Appeals’ error in creating and applying a federal common law made a significant difference here. In selling its assets to General, Price retained liability for its tort claims and received the bulk of the selling price ($4.75 million) in cash; the remaining stock component of that price constituted less than 5% of General’s outstanding, shares. Whether a sale of corporate assets is a de facto mer- ger on facts such as these has not been determined by the Pennsylvania courts, but the policy factors that control that inquiry under Pennsylvania law are inconsistent with those advanced by the Court of Appeals. Although the court below opined in dicta that Pennsylvania law on these issues is consistent with the federal law that it postulated, it cited no Pennsylvania authorities in support of that con- clusion and Exide is aware of none. Rather, the relevant guideposts signal that the sale of Price’s assets was not a de facto merger under Pennsylvania law. 1. Pennsylvania focuses on stock transfer (rather than cash payment) as an essential element of a de facto merger, 15 and no Pennsylvania court has ever found a de facto merger without such a transfer. See Farris v. Glen Alden Corp., 393 Pa. 427, 143 A.2d 25 (1958) (seller paid with majority of buyer's stock); Carlos R. Leffler, Inc. v. Hutter,696 A.2d 157, 167-68 (Pa. Super. 1997) (transfer to new company having same shareholders); Commonwealth v. Lavelle, 382 Pa. Super. 356, 555 A.2d 218, appeal denied, 524 Pa. 595, 568 A.2d 1246 (1989) (seller had hidden interest in buyer’s stock). Numerous federal courts that have > examined the issue agree that, under Pennsylvania law, the absence of a stock transfer is fatal to a claim of de facto merger, or at least creates a “strong presumption” against its existence. Berg Chilling Sys. v. Hull Corp., 435 F.3d 455, 462, 468-69 (3d Cir. 2006) (Alito, J.). These cases make clear that, rather than being a mere sorenciiy, the required stock transfer is a key deter- minant of whether the selling company has actually merged into its buyer, or merely sold assets to it. The majority below held that “only some continuity of owner- ship is required,” A23 (emphasis added), so that even the most minimal stock transfer would be sufficient. See 21- A24. But no Pennsylvania decision has ever held that the transfer of less than acontrolling interest in the purchasing company is sufficient to create successor liability. Control is a factual issue considered inappropriate for summary judgment. See Continental Ins. Co. v. Schneider, Inc., 810 /A.2d 127, 135-36 (Pa. Super. 2002), aff'd, 582 Pa. 591, 605 n.11, 873 A.2d 1286, 1294 n.11 (2005). To hold that Gene- ral’s payment of 4.537% of its stock is sufficient in this case would be a significant expansion of Pennsylvania law that is not foreshadowed by any state court precedents. 3. A holistic view of Pennsylvania corporate law makes clear that the Commonwealth would not welcome such an expansion. See Lavelle, 382 Pa. Super. at 374, 555 A.2d at 227 (factors considered for successor liability in- clude “the purposes of the provisions of the corporation law said to be applicable”), quoting Farris, 393 Pa. at 432, 16 143 A.2d at 28. Ina series of enactments designed to keep competitive with neighboring Delaware, Pennsylvania’s Legislature has liberalized allowance of corporate asset sales that do not comply with merger formalities and restricted efforts to challenge such transactions under a de facto merger theory. See Business Corporation Law (BCL), 15 Pa. C.S. §§ 1105, 1904 (declaring de facto merger doctrine “abolished”), 1932; Corp. L. Comm. Comments — 1988 to BCL §§ 1105, 1904, reprinted at 15 Pa. C.S.A. §§ 1105, 1904; MicroSignal Corp. v. MicroSignal Corp., 147 Fed. Appx. 227, 232-33 (3d Cir. 2005); Terry v. Penn Central Corp., 668 F.2d 188, 193-94 (3d Cir. 1981). While these enactments do not abrogate the equitable principles of successor liability, MicroSignal, at 232 n.9, they inform the framework within which such issues must be decided in Pennsylvania and demand caution. 4. Against this background, the Pennsylvania courts have been careful not to expand the de facto merger doc- trine. See, e.g., Dawejko v. Jorgensen Steel Co., 290 Pa. Super. 15, 26, 434 A.2d 106, 111 (1981) (rejecting de facto merger expansion to deal with product liability issues, and crea- ting special doctrine limited to product liability actions in- stead). They have declined to expand traditional successor liability law where alternate avenues of redress are availa- ble. See Hill v. Trailmobile, Inc., 412 Pa. Super. 320, 328-31, 603 A.2d 602, 607-08 (1992) (no expansion where party has alternative sources of recovery against other parties). See also Lackatvaxen Water & Sewer Co. v. Pennsylvania Pub. Util. Conm., 85 Pa. Commw. 377, 381, 481 A.2d 1386, 1388 (1984) (transferor must “no longer ha[ve] substantial assets with which to meet its contractual or tort obligations”). Here, Price retained its tort liabilities rather then making them subject to General’s indemnity, and was paid the vast bulk of the sales price in cash with which it could satisfy those obligations. Price remained in existence until 1967, and its sole shareholder could have been pursued thereafter. No Pennsylvania court ever has held that there 17 is a de facto merger where there has been such a retention of liabilities by, and such a large payment of cash (rather than stock) to, the seller. Nothing in Pennsylvania law warrants such an expansion of successor liability law by a federal court in this case, and nothing in CERCLA autho- rizes Pennsylvania law’s displacement. This Court should grant certiorari so that it may restore deference to the governing Pennsylvania corporate law. CONCLUSION Pennsylvania law did not permit entry of summary judgment against Exide. Rather than applying that law, the Court of Appeals displaced it with federal common law, even though this Court had instructed that it should not do so. This Court should grant the petition for a writ of certiorari, vacate the Court of Appeals’ decision, and re- mand for application of Pennsylvania state law to the suc- cessor liability issue. Respectfully submitted, TIMOTHY K. LEwIs ROBERT L. COLLINGS CARL A. SOLANO (Counsel of Record) JENNIFER J. NESTLE Attorneys for Petitioner SCHNADER HARRISON SEGAL & LEWIS LLP 1600 Market Street, Suite 3600 Philadelphia, Pennsylvania 19103 Of Counsel. Dated: March 31, 2006. APPENDIX TABLE OF CONTENTS Page Opinion of the Court of Appeals ................. Al OpNGGR OF TNE COUNG 605 86 5 So ac Al Concurring and Dissenting Opinion......... A28 Opinion of the District Court on Motions for Sum- SADT Y PGRN os rise a este Kueh Nes A45 Opinion of the District Court on Motion for Reconsi- deration or Certification: 5 i665 ok cece ws ts A73 Order of District Court Entering Judgment ....... A78 Order of Court of Appeals Denying Rehearing .... A80 Statutory Provisions (Excerpts).................. A82 CERCLA $101, 42 USC. 6 9601 |. 330.5... A82 CRRCLAS 107, 42 USS BOE oy ceva wus A82 CERCLA § 113, 42 US.C.§9613 .........0.. A85 CERCLA 8001, G2U SC. 8908 Sr ieee A87 OPINION OF THE COURT OF APPEALS (423 F.3d 294) United States Court of Appeals for the Chird Circuit No. 03-3515 UNITED STATES OF AMERICA v. GENERAL BATTERY CORPORATION, INC; EXIDE CORPORATION, Exide Corporation, Appellant Argued January 26, 2005 Before: SCIRICA, Cluef Judge, ~ 4 oO RENDELL and FISHER, Circurt Judge (Filed September 6, 2005) OPINION OF THE COURT SCIRICA, Cluef Judge [*296] This appeal addresses successor liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), 42 U.S.C. § 9601 et seq., for environmental response costs incurred by the United States at a lead-contaminate Supertund site. The District Court granted summary -Al- judgment in favor of the United States on a “de facto merger’ theory of successor liability. We will affirm. The matter begins with a now defunct company, Price Battery Corporation. From the 1930s through 1966, Price Battery manufactured lead acid batteries at a plant in Hamburg, Pennsylvania. During that time, it arranged for the disposal of waste materials -- including spent battery casings -- at locations in and around Hamburg. In 1992, the United States Environmental Protection Agency discovered two of the disposal sites, and upon further investigation found three more. The properties contained elevated levels of lead. After testing and monitoring, the EPA concluded remedial action was necessary to protect human health. The United States has since incurred response costs of several million dollars associated with the removal of contaminated soil and the installation of a remedial “cap” at the properties. Seeking to identify a responsible party under CERCLA, see 42 U. S.C. § 9607(a)(1)-(4), EPA determined that Price Battery, through its disposal of battery casings, was responsible for the lead contamination. Price Battery, however, was long since out of business, having been acquired for cash and stock by General Battery Corporation in 1966. General Battery, in turn, merged w ith Exide Corporation in 2000. The United States tiled this action against Exide, alleging it was responsible for Price Battery’ s CERCLA liability as a successor in interest. The parties agree that as a consequence of the 2000 merger, Exide is General ged s successor. The disputed issue is whether General Battery, by virtue of its 1966 acquisition of Price Battery, was a successor to Price Battery. The relevant aspects of the Price/General transaction are as follows. On February 11, 1966, General Battery, a diversified public company, entered into an A. agreement with Price Battery, a smaller, privately-held battery manufacturing firm. Price Battery was ow ned by a single shareholder, William F. Price Sr., who sold General Battery most of his company’s assets in exchange for $ 2.95 million in cash, 100, 000 shares of General Battery stock, and a seat on General’s board of directors.’ At = time, 100,000 General Battery shares were valued < approximately $ 1 million and represented 4.537% a General's outstanding equity. William Price Sr.’s resulting stake in General Battery was comparable to that of the company’s cofounders, W.A. Shea and H.J. Nozensky, who in 1966 remained on General’s [*297] board and held 9.12% and 4.44% of its prvordadle ie equ.ty, respectively. Under the agreement, General Battery purchased say Battery’ s equipment, aa. intellectual property nd inventory. It also assumed Price Battery’s contractual obli gations, including employment contracts, and assumed all other liabilities appearing on Price Battery’s balance sheet. General Battery indemnified Price Battery for claims, other than future tort claims, arising from Price Battery’s operations, and agreed to continue the employment of three senior Price Battery officers -- the president, the executive vice president, and the vice president of manufacturing. transaction, General Battery continued batteries at the Hamburg plant. Price The only Price Battery asset nominally excluded from the transaction was its real property, including its manufacturing plant. Price Battery sold its real property and the building toa nonprofit development organization for $ 1.8 million. The development organization, in turn, leased the facility back to General Battery until 1978, when the deed was transferred to General for S$ 1.00. Taking this into account, Price Sr. received $ 4.75 million cash and 100,000 shares of General Battery stock for the Price Battery enterprise. as: Battery’s plant superintendent and middle managers retained their positions, as did the union employees, office personnel and sales force. General Battery produced the same batteries that Price Battery had produced and ‘ honored Price Battery’s contracts with existing customers and vendors. Price Battery, meanwhile, was required under the agreement to immediately change its name to Price Investment Company and to retain $ 150,000 in cash pending completion of an audit. The agreement contemplated that following the audit and any corresponding adjustment in the purchase price, Price Investment would liquidate on or before December 31, 1966. From the transaction closing in February of 1966 until filing for a certificate of corporate dissolution in February of 1967, Price Investment Company had no operations. Oncross-motions for summary judgment, the District Court heid the Price/General transaction constituted a common law “de facto merger.” In the District Court's view, the continuity of location, assets, products, operations, management, employees, contracts, and shareholders between Price Battery and General Battery, and the subsequent liquidation and dissolution of Price Battery, establish General Battery (and now Exide) as Price Battery’s successors in interest under CERCLA. United States v. Exide Corp., 2002 U.S. Dist. LEXIS 3303 (E.D. Pa. Feb. 27, 2002). Followi ing the District Court’s entry of summary judgment, the parties stipulated to past CERCLA response costs at the Hamburg site in the amount of $ 6,500,000. Exide retained the right to file this . appeal as to liability. Il. The District Court had jurisdiction under CERCLA, 42 US.C. § 9613(b), and 28 US.C. § 1331. We have jurisdiction under 28 U.S.C. § 1291. Our summary judgment standard of review is plenary. In re Mushroom -A4- Transp. Co., 382 F.3d 325, 335 (3d Cir. 2004) (drawing all reasonable inferences in favor of the non-moving party). If. We return, once again, to the difficult area of indirect liability under CERCLA.* CERCLA is a “sweeping” federal remedial statute, enacted in 1980 to ensure that “everyone who is potentially responsible for hazardous- waste contamination may be forced to contribute to the costs of [*298] cleanup.” United States v. Bestfoods, 524 U.S. 51, 56 n.1, 141 L. Ed. 2d 43, 118 S. Ct. 1876 (1998) (quoting Pennsylvania v. Union Gas Co., 491 U.S. 1, 21, 105 L. Ed. 2d 1, 109 S. Ct. 2273 (1989) (plurality opinion of Brennan, J.)) (emphasis in original). “As its name implies, CERCLA is a comprehensive statute that grants the President broad power to command government agencies and private parties to clean up hazardous waste sites.” [d. at 55 (quoting Key Tronic Corp. v. United States, 511 US. 809, 814, 128 L. Ed. 2d 797, 114 S. Ct. 1960 (1994)). CERCLA is not, however, “a model of legislative draftsmanship,” Exxon Corp. v. Hunt, 475 U.S. 355, 363, 89 L. Ed. 2d 364, 106 S. Ct. 1103 (1986) — and successor liability is one of its puzzles. Although the statute fails to address the issue expressly, it is now settled that CERCLA incorporates common law principles of indirect ox oy liability, including successor liability. See 42 U.S.C. 2. See, ¢.g., Alcoa v. Beazer E., 124 F.3d 551 (3d Cir. 1997) (share- holder, successor and indemunitor liability); SmithKline Beecham Corp. v. Rolin & Haas Co., 89 F.3d 134 (3d Cir. 1996) (indemnitor and successor liability); United States v. USX Corp., 68 F.3d 811 (3d Cir. 1995) (shareholder and officer liability); Lansford- Coaldale joint Water Auth. v. Tonolli Corp., 4 F.3d 1209 (3d Cir. 1993) (parent-subsidiary liability); Snuth Land & Improvement Corp. v. Celotex Corp., 851 F.2d 86 (3d Cir. 1988) (corporate successor liability). 9601(21) (including “corporations” among the “persons” covered by CERCLA); 1 U.S.C. § 5 (providing, as a rule of interpretation, that “the word ‘company’ or ‘association’, when used in reference to a corporation, shall be deemed to embrace the words ‘successors and assigns of such company or association’); Bestfoods, 524 U.S. at 63-64 (holding CERCLA incorporates common law of parent/subsidiary veil-piercing); Smuth Land, 851 F. 2d at 92 (holding CERCLA imposes successor liability).* The threshold issue on appeal is whether to apply a uniform federal rule of successor liability, or whether to apply the law of a particular state. The second issue is whether Exide is liable as a successor. A. We have previously addressed and decided the threshold issue. In Smith Land, we held that CERCLA successor liability is a matter of uniform federal law, as derived from “the general doctrine of successor liability in operation in most states.” 851 F.2d at 92 (3d Cir. 1988). Likewise, we held in Lansford-Coaldale that “given the federal interest in uniformity in the application of CERCLA, it is federal common law, and not state law, which governs” matters of indirect CERCLA liability. 4 The courts of appeals that have addressed the issue are unanimous in recognizing successor liability under CERCLA. United States v. Davis, 261 F.3d 1, 54 (1st Cir. 2001); N.Y. v. Nat'l Servs. Indus., 352 F.3d 682 (2d Cir. 2003); Smith Land, 851 F.2d at 92 (3d Cir. 1988); United States v. Carolina Transformer Co., 978 F.2d 832, 837 (4th Cir. 1992); Anspec v. Johnson Controls, Inc., 922 F.2d 1240, 1245 (6th Cir. 1991); N. Shore Gas Co. v. Salomon, Inc., 152 F.3d 642, 649 (7th Cir. 1998); United States v. Mex. Feed & Seed Co., 980 F.2d 478, 486 (8th Cir. 1992); Atchison, Topeka & Santa Fe Ry. Co. v. Brown & Bryant, Inc., 159 F.3d 358, 364 (9th Cir. 1997). F.3d at 1225 (3d Cir. 1993) (discussing parent/ subsidiary veil-piercing). In the course of holding that CERCLA authorizes successor liability, we reasoned that “Congress expected the courts to develop a federal common law to supplement the statute,” that “[i]n resolving the successor liability issues here, the district court must consider national uniformity,” and that “[t]he general doctrine of successor liability in operation in most states should guide the court's decision rather than the excessively narrow statutes which might apply in only a few states.” Smith Land, 851 F.2d at 91-92. This reasoning is unambiguous, essential to the Smith Land disposition, and controlling on the issue before us. Smith Land expressly rejected the position that a particular state’s successor liability law applies under CERCLA. Lansford-Coaldale, another [*299] indirect liability case under CERCLA, is to the same effect. 4 F.3d at 1225. The Supreme Court has neither addressed nor disturbed these holdings. See Bestfoods, 524 U.S. at 64 n.9 (noting, but not resolving, disagreement over “whether, in enforcing CERCLA’s indirect liability, courts should borrow state law, or instead apply a federal common law”). Relying principally on O'Melveny & Myers v. FDIC, 312 U.S. 79, 129 L. Ed. 2d 67, 114 S. Ct. 2048 (1994), a case decided under the federal banking statutes, and Davis, 261 F.3d at 54 (1st Cir. 2001), a case applying state successor liability law under CERCLA, Exide invites us to overrule Smith Land. In United States v. Kimbell Foods, Inc., 440 U.S. 715, 59 L. Ed. 2d 711, 99 S. Ct. 1448 (1979), the Supreme Court addressed the propriety of applying state law under an ambiguous or incomplete federal statute. The Court emphasized that, “[wlhether to adopt state law or to fashion a nationwide federal rule is a matter of judicial policy ‘dependant upona variety of considerations always By ie I relevant to the nature of the specific governmental interests and to the effects upon them of applying state law.’” Id. at 728 (quoting United States v. Standard Oil, 332 U.S. 301, 310, 91 L. Ed. 2067, 67 S. Ct. 1604 (1947)). The issue in Kimbell Foods was whether, absent an express statutory directive, a uniform federal rule of lien priorities was necessary under certain federal loan programs. Id. at 718. Employing a three-factor analysis, the Court answered this question in the negative, holding state law governed the priority of the liens. Kimbell Foods considered (1) whether the federal program, by its very nature, required uniformity; (2) whether application of state law would frustrate specific objectives of the federal program; and (3) whether application of uniform federal law would disrupt existing commercial relationships predicated on state law. Id. at 728-29. Emphasizing the second Kimbell Foods factor — a conflict with an identifiable federal interest — the Supreme Court in O'Melveny cautioned against the unwarranted displacement of state law, holding that state rules of decision generally fill interstitial gaps in federal statutes. 312 U.S. at 87. The displacement of state law is particularly disfavored in the area of corporate law, because business decisions typically proceed in reliance on the applicable state standards. Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90, 105, 114 L. Ed. 2d 152, 111 S. Ct. 1711 (1991). State corporation law generally should be integrated into the federal statutory regime, unless there exists “a significant conflict between some federal policy or interest and the use of state law.” O'Melveny, 512 U.S. at 87; see also Kamen, 200 U.S. at 107; Kimbell Foods, 440 U.S. at 728; see generally Henry J. Friendly, In Praise of Erie — And of the New Federal Common Law, 39 N.Y.U. L. Rev. 383 (1964). The principal question here, then, is whether CERCLA requires a uniform federal standard of corporate successor liability. As noted, Smith Land and Lansford-Coaldale expressly held that CERCLA requires uniform federal standards of ~ Zs successor and veil-piercing liability, respectively. Neither case has been overruled. O'Melveny, a case brought under a state law cause of action (as opposed to a federal liability statute), 512 U.S. at 83, dealing with the preemptive force of the federal banking statutes, id. at 86, did not overrule our CERCLA-specific holdings in Smith Land and Lansford- Coaldale. O'Melveny involved claims brought by the Federal Deposit Insurance [*300] Corporation (FDIC), as the receiver of a federally insured bank, under California tort law. The FDIC argued, notwithstanding its reliance on a state law cause of action, that uniform federal liability standards should preempt the California rules of decision. The Supreme Court disagreed, holding the relevant federal statutes neither authorized nor required the creation of a preemptive body of federal common law in cases arising under state law causes of action. Id. at 89. Atherton v. FDIC, another decision cited by Exide Corporation in which the Court cautioned against the unwarranted “creation” of federal common law, also involved the preemptive scope of the federal banking laws. 519 U.S. 213, 218, 136 L. Ed. 2d 656, 117 S. Ct. 666 (1997). Smith Land and Lansford-Coaldale, incontrast, held that uniform standards of indirect corporate liability are necessary under CERCLA, an environmental liability statute enforced under its own federal cause of action. O'Melveny and Atherton neither addressed the CERCLA- specific reasoning of Smith Land and Lansford-Coaldale nor overruled their CERCLA-specific holdings. Bestfoods, a case decided after O'Melveny and Atherton, is the only Supreme Court decision touching on the CERCLA question at issue. But the Court there explicitly declined to resolve the circuit split on whether CERCLA borrows a particular state’s law of indirect corporate liability. Bestfoods, 524 U.S. at 64 n.9. Bestfoods neither cited O'Melveny nor otherwise suggested that uniform CERCLA successor liability standards were inappropriate. -A9- If anything, Bestfoods cuts in favor of a uniform federal standard. Bestfoods applied “fundamental” and “hornbook” principles of indirect corporate liability, not the law of any particular state. 524 U.S. at 61-62. The court of appeals in Bestfoods had applied Michigan law. United States v. Cordova Chem. Co., 113 F.3d 572, 580 (6th Cir. 1997) (en banc). But the Supreme Court declined to apply Michigan law and instead looked to the general “hornbook” rule of veil-piercing. The Court’s reliance on the general standard is a different matter than borrowing the law of a particular state. Applying a particular state’s law requires a state-by-state interpretation of the federal liability statute — a result, in the case of successor liability under CERCLA, that we believe conflicts with the statutory objectives. See discussion infra. A uniform federal standard is also consistent with recent Supreme Court decisions in which gaps in federal liability statutes were filled not with the law of a particular state, but with general common law principles. Clackamas Gastroenterology Assocs., P.C. v. Wells, 538 U.S. 440, 448, 155 L. Ed. 2d 615, 123 S. Ct. 1673 (2003) (looking to the general common law definition of “servant” to define the term “employee” under the ADA); Burlington Indus., Inc. v. Ellerth, 524 U.S. 742, 754, 141 L. Ed. 2d 633, 118 S. Ct. 2257 (1998) (relying on “the general common law of agency, rather than on the law of any particular State,” in defining the term “agent” under Title VII) (citation omitted). Just as the ADA and Title VII require uniform federal definitions of the terms “employee” and “agent,” respectively, CERCLA requires a uniform federal definition of “successor corporation.” As the Court explained in Burlington, “{t}he resulting federal rule, based ona body of case law developed over time, is statutory interpretation pursuant to congressional direction,” not the free-wheeling creation of federal common law. 524 U.S. at 755. For these reasons, we believe that Smith Land and Lansford-Coaldale have [*301] not been undermined by | -A10- recent Supreme Court decisions and remain circuit law. See Third Circuit Internal Operating Procedure 9.1 (“[T]he holding of a panel in a precedential opinion is binding on subsequent panels. Thus, no subsequent panel overrules the holding in a precedential opinion of a previous panel. Court en banc consideration is required to do so.”). Moreover, we believe Smith Land is consistent with CERCLA’s objectives. CERCLA is a federal liability statute, applicable nationwide to those responsible for hazardous- waste contamination. Liability under the statute is a matter of federal law. 42 USC. § 9613(f)(1) (CERCLA contribution actions “shall be governed by Federal law”); Kimbell Foods, 440 U.S. at 726 (“This Court has consistently held that federal law governs questions involving the rights of the United States arising under nationwide federal programs.”). [t is true that successor tort liability, including successor environmental liability, rests at the intersection of tort and corporate law — both areas largely regulated by the states. But it does not necessarily follow that CERCLA’s statutory scheme is served by borrowing a particular state’s successor liability law as the federal rule of decision. The choice of law ‘framework governing successor liability remains unsettled.* And although the 4. Compare In re Asbestos Litig. (Bell), 517 A.2d 697, 699 (Del. Super. Ct. 1986) (characterizing successor liability as a corporate/contract doctrine), with Savage Arms Inc. v. West. Auto Supply Co., 18 P.3d 49, 53 (Alaska 2001) (collecting cases, noting that “state courts have split on the question,” and characterizing successor products liability as a tort doctrine); see also Ruiz v. Blentech Corp., 89 F.3d 320, 322 (7th Cir. 1996) (describing a question of successor liability choice of law as “rather mystifying”); SmithKline Beecham Corp. v. Rohim & Haas Co., 1995 U.S. Dist. LEXIS 3361, at *12-26 (E.D. Pa. Mar. 17, 1995) (wrestling with choice of law for CERCLA successor liability). -All- a ae 7 — a a = —_ aes general doctrine of successor liability is “largely uniform” under state law, Atchison, 159 F.3d at 363 (9th Cir. 1997) (citation omitted), this uniformity is less apparent when the general standards are applied in specific cases.” Beneath a veneer of uniformity, the “entire issue of successor liability . . . is dreadfully tangled, reflecting the difficulty of striking the right balance between the competing interests at stake.” EEOC v. Vucitech, 842 F.2d 936, 944 (7th Cir. 1988). In Atchison, the Court of Appeals for the Ninth Circuit, in considered dictum, expressed doubt that a uniform federal rule of successor liability is necessary under [*302] CERCLA. 159 F.3d at 364. The court S. For example, some states emphasize “continuity of ownership” as a key element of successor liability. Cargo Partner AG v. Albatrans Inc., 352 F.3d 41, 47 (2d Cir. 2003) (New York law). Others do not. Woodrick v. Jack ]. Burke Real Estate, Inc., 306 N.J. Super. 61, 703 A.2d 306, 313-14 (N.J. Super. Ct. App. Div. 1997) (finding de facto merger absent continuity of ownership). Some states apply unique successorship rules in products liability and environmental cases. Dawejko v. Jorgensen Steel Co., 290 Pa. Super. 15, 434 A.2d 106, 111-12 (Pa. Super. Ct. 1981); Dep't of Transp. v. PSC Res., Inc., 175 N.J. Super. 447, 419 A.2d 1151 (NJ. Super. Ct. Law Div. 1980). Others do not. Bielagus v. EMRE of N.H., Corp., 149 N.H. 635, 826 A.2d 559 (N.H. 2003). In some states, the governing rules are difficult to ascertain. Compare Hart v. Bruno Mach. Corp., 250 A.D.2d 58, 679 N.Y.S.2d 740 (N.Y. App. Div. 1998) (applying product line theory of successor liability), with City of N.Y. v. Charles Pfizer & Co., 260 A.D.2d 174, 688 N.Y.S.2d 23 (N.Y. App. Div. 1999) (rejecting same theory). Even jurisdictions in broad agreement on the appropriate legal standards may apply them differently. SmithKline Beecham, 1995 U.S. Dist. LEXIS 3361, at *23-24 (E.D. Pa. Mar. 17, 1995) (noting differences between New Jersey and Pennsylvania application of common de facto merger elements). Reconciling these holdings poses some difficulty. See Cargo Partner AG v. Albatrans, Inc., 207 F. Supp. 2d 86, 93-114 (S.D.N.Y. 2001). -Al2- reasoned that “[i]f state law varied widely on the issue of successor liability, perhaps the need for a uniform federal rule would be more apparent.” Id. at 363. But we respectfully disagree with Atchison’s premise. State law does vary substantially on the issue of successor liability, and its unpredictability counsels in favor of CERCLA uniformity. The successor liability issues raised in this case are illustrative. Whether a mixed cash/stock acquisition triggers successor liability under the de facto merger doctrine does not command uniform treatment among the states.° Whether successor liability attaches to a transaction where the seller receives a “small percentage” of the buyer's outstanding equity is also unsettled.’ For example, 6. Compare Ladenburg Thalmann & Co. v. Tim’s Amusements, Inc., 275 A.D.2d 243, 248, 712 N.Y.S.2d 526 (N.Y. App. Div. 2001) (finding continuity of ownership in assets-for-promissory note transaction), and Fenderson v. Athey Prods. Corp., 220 Ill. App. 3d 832, 581 N.E.2d 288, 292, 163 Ill. Dec. 337 (Ill. Ap. Ct. 1991) (Illinois law) (no requirement “that all or even most of the purchase price” be paid in stock), with Nova Ribbon Prods. v. Lincoln Ribbon, 1995 U.S. Dist. LEXIS 4322, at *20 (E.D. Pa. Mar. 30, 1995) (Pennsylvania law) (holding de facto merger liability turns on whether transaction is “primarily” for stock). Even within New Jersey, the continuity of ownership standard appears unsettled in mixed cash/stock transactions. Compare Wilson v. Fare Well Corp., 140 NJ. Super. 476, 356 A.2d 458, 461 (N.J. Super. Ct. Law Div. 1976) (imposing successor liability where stock comprises less than half of purchase price), with McKee v. Harris-Seybold Co., 109 N.J. Super. 555, 264 A.2d 98, 104 (N.J. Super. Ct. Law Div. 1970) (no continuity of ownership in mixed cash/stock transaction). 3 Compare Cargill, Inc. v. Beaver Coal & Oil Co., Inc., 424 Mass. 356, 361, 676 N.E.2d 815 (1997) (Massachusetts law) (finding continuity of ownership where seller receives 12.5% stake in acquiring company), and Glynwed, Inc. v. Plastimatic Inc., 869 F. -Al13- New Jersey corporations may be held responsible for successor environmental liability from which New York corporations may be exempt. Compare PSC, 175 N.J. Super. 447, 419 A.2d 1151 (NJ. Super. Ct. Law Div. 1980) (applying expansive theory of successor liability to environmental torts), with Schumacher v. Richards Shear Co., 99 N.Y.2d 239, 451 N.E.2d 195, 198, 464 N.Y.S.2d 437 (N-Y. 1983) (adhering to traditional concepts of successor liability). We doubt Congress intended to incorporate such variations under a comprehensive federal liability statute. See 42 U.S.C. § 9613(f)(1) (CERCLA contribution actions “shall be governed by Federal law”); Miss. Band of Choctaw Indians v. Holyfield, 490 U.S. 30, 43, 104 L. Ed. 2d 29, 109 S. Ct. 1597 (1989) (“federal statutes are generally intended to have uniform nationwide application’). A more uniform and predictable federal liability standard corresponds with specific CERCLA objectives by encouraging settlements and facilitating a more liquid market in corporate and “brownfield” assets. See 42 U.S.C. § 9622 (encouraging CERCLA settlements “in order to expedite effective remedial actions and minimize litigation”); § 9607(r) (encouraging transfer and redevelopment of contaminated property under CERCLA’s so-called “Brownfield Amendments”)*; cf. Supp. 265, 277 (D.N.J. 1994) (New Jersey law) (“continuity of ownership, not uniformity, is the test”), with Savage Arms, 18 P.3d at 58 (Alaska 2001) (noting that percentage of shares owned is an “important fact”), and Kaleta v. Whittaker Corp., 221 Ill. App. 3d 705, 583 N.E.2d 567, 571, 164 Ill. Dec. 651 (III. App. Ct. 1991) (finding no continuity of ownership where seller received a “de minimis” .00037% stake in buyer). In 2001, Congress amended CERCLA with the Brownfields Revitalization Act in order to spur the cleanup, transfer and redevelopment of contaminated land. Pub. L. No. 107-118, 115 Stat. 2356 (the “Brownfields Amendments” ). Among other goals, -A14- Clark Equip. Co., S02 F 2c 75, 83 (3d Cir. Seeman altera tions liability rs ent necessari rily increases "Major economic dec Isic ons, critical to e certainty and aaa oredictabil tv.”) (citation ‘omitted). Snuth Land's application of the “majority” standard fosters CERCLA predictability. It ™ accords respect to existing commercial relationships predicated on the majority state law, cf. Kimbell ‘uae “440 U.S. at 728-29, while ensuring that responsible parties, including successor corporations, contribute their fair share to the cleanup of hazardous waste under the federal program. Accord B.F. Goodrich v. Betkoski, 112 F.3d 88 (2d Cir. 1997) (applying uniform federal standard); Carolina Transformer, 978 F.2d at 837 (4th Cir. 1992) (same); Mex. Feed & Seed, 980 F.2d at 487 n.9 (8th Cir. 1992) (dicta); but see Davis, 261 F.3d at 54 (1st Cir. 2001) (applying state law); Atchison, 159 F.3d at 361-64 (9th Cir. 1997) (dicta); Anspec, 922 F.2d at 1230 (6th Cir. 1991) (Kennedy, J., concurring) Davis, the most recent court of appeals decision applving state law, held that CERCLA incorporates state successor liability rules unless the particular state law is “hostile to the federal interests anim ating CERCLA.” 261 F.3d at 54 (1st Cir. 2001). Davis followed Atchison, where the Court of Appeals for the Ninth Circuit concluded that the Brownfields Amendmcnts encourage the acquisition and redevelopment of Superfund sites by according bona fide asset purchasers a defense to CERCLA liability. 42 U.S.C. § 9607(r)(1) [he principal goal ot the Amendments is to balance the interest in cost recovery under CERCLA’s liability provisions with the economic interest in a liquid market for “brownfield” assets Consistent with this purpose, a predictable test for successor liability lowers transaction costs and encourages brownfield acqu isivions borrowing state law is consistent with CERCLA, because “Tijt is unrealistic to think that a state would alter general corporate law principles to become a particularly hospitable haven for polluters.” 159 F.3d at 364 (9th Cir. 1997). As a general matter, we agree it is unlikely that States w ould a attempt to imm unize their corporations from ERCLA Hability. See generaily Richard L. Revesz, Rehabilitati ing Interstate Com petition: Rethinking the “Race to the Bottom” Rationale for Federal Environme sda Re gulation, 67 N.Y.U. L. Rev. 1210 (1992). But neither Atcison, nor Davis, nor the concurring and dissenting opinion, address the conflict between CERCLA’s objectives and borrowing unpredictable state successorship law. We believe that incorporating variable and uncertain state successor liability standards would increase significantly CERCLA litigation and transaction costs — in conflict with the statutory interests embodied in 42 USC. § 9622, which aims to encourage early settlements, and § 9607(r), which aims to facilitate a | iquid market in brownfield assets. See In re Tutu Water Wells CERCLA Litig., 326 F.3d 201, 206 (3d Cir. 2003) (emphasizing CERCL ete 3 in icy of minimizing litigation costs); United States v. DiBiase, 45 F.3d 541, 545-46 (1st Cir. 1995) (explaining CERCLA’s policy of reducing “transaction costs”); see generally Uni ted States v. Charter Int'l Oil Co., 83 F.3d 510, 520 (Ist Cir. 1996) (surveying empirical research on the “huge resources going into the transactions costs of CERCLA li itigation” and observi ing that reducing these costs was a primary objective of the 1986 amendments to the statute). To summarize, the Supreme Court has neither overruled nor directly undermined Smith Land. Furthermore, a uniform federal standard is appropriate under Kimibell Foods and O'Melveny: (1) the nature of [*304] the federal program, a comprehensive federal liability statute, counsels in favor of national uniformity; (2) a uniform successor liability standard is necessary to -Al6- advance CERCLA’s remedial objectives and to facilitate a fluid market in corporate and brownfield assets; and °) uniform application of the majority state standard accords proper respect to commercial relationships predicated on the majority state law. Therefore, we will apply “the general doctrine of successor liability in operation in most states.” Siuth Land, 851 F.2d at 92. The concurring and dissenting opinion contends that we reach an “unnecessary” holding on this issue, emphasizing that Pennsylvania law mirrors the majority “de facto merger” standard and would yield the same result. But Sth Land and Lansford-Coaldale preclude exclusive reliance on the law of a particular state. For the reasons stated, we believe these decisions remain controlling. More fundamentally, because CERCLA’s goal of minimizing litigation and transaction costs is ill-served by a case-by-case Papproach to the question of successor liability choice-of-law, we need not inquire whether Pennsylvania law conflicts with or mirrors the majority uccessor liability doctrine before holding that a federal rule applies. We add a final note on nomenclature and its pitfalls. Part of the difficulty in this area may stem from imprecise use of the term “federal common law.” In its strictest sense, federal common law represents the judicial creation” of law under a generalized statutory mandate. Atherton, 319 US. at 218. Examples include the federal labor laws, Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 1 L. Ed. 2d 972, 77 S. Ct. 912 (1957), and ERISA, Frrestone jody & Rubber Co. v. Bruch, 489 U.S. 101, 110, 103 L. Ed. 2d 80, 109 S. Ct. 948 (1989). In recent years the Supreme "es has emphasized that the cases requiring this brand of federal common law are “few and restricted.” O'Melveny, 512 U.S. at 87 (citation omitted). To view every ambiguous federal statute as authorizing an expansive body of “federal common law” would be an invitation to federal courts to eviscerate both the Erie doctrine and the concept of dual sovereignty it embodies. But the “creation” of federal common law must be distinguished from statutory interpretation. See Atherton, 519 US. at 218. Ambiguous federal statutes generally do not authorize the creation of anew (and preemptive) body of federal law. Id. But this principle does not require that everv federal statutory gap be filled by way of state-by- state interpretation. ‘In almost any statutory scheme, there may be a need for judicial interpretation of ambiguous or incomplete provisions. But the authority to construe a statute is fundamentally different from the authority to fashion a new rule or to provide a new remedy which Congress has decided not to adopt.” Northu est Airlines, Inc. v. Transport Workers Union, 451 U.S. 77,97, 67 L. Ed. 2d 750, 101 S. Ct. 1571 (1981); see also Atherton, 519 U.S. at 218 (distinguishing the “creation” of federal common law from “interpretation of a federal statute or a _ properly promulgated administrative rule”). In the case of federal liability statutes enforced under a federal cause of action, the law is generally intended to have uniform nationwide application. Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730, 740, 104 L. Ed. 2d 811, 109 S. Ct. 2166 (1989) (“federal statutes are generally intended to have uniform nationwide application”); Jansen v. Packaging Corp., 123 F.3d 490, 507 (7th Cir. 1997) (en banc) (Posner, J., concurring and dissenting). The most recent Supreme Court cases, both decided after O'Melveny and [*305] Atherton, followed this approach. Clackamas, 538 U.S. at 448 (2003); Burlington, 524 U.S. at 754-55 (1998). These decisions affirm the view that uniform interpret ation of an undefined term in a federal liability statute “is not free-wheeling common-law rulemaking,” but rather ‘ ‘tilling a statutory gap, a standard office of interpretation.” Jansen, 123 F.3d at 507. Accordingly, supplying a uniform definition of “successor corporation” under CERCLA is a matter of interpreting the federal -A18- statute. See 42 U.S.C. § 9601(21) (including “corporations” among the “persons” covered by CERCLA); 1 U.S.C. § 5 (prov iding, as a rule of interpretation, that “the word ‘company’ or ‘association’, when used in reference to a cor- poration, shall be deemed to embrace the words ‘succes- sors and assigns of such company or association’”). B. Turning to the appropriate liability standard, we are nindful of Bestfoods, where the Supreme Court held that CERCLA incorporates, but does not expand upon, “fundamental” common law principles of indirect corporate liability. 524 U.S. at 62-64. The general rule of corporate successorship accepted in most states is non- liability for acquiring corporations, with the following exceptions: The purchaser may be liable where: (1) it assumes liability; (2) the transaction amounts to a consolidation or merger; (3) the transaction is fraudulent and intended to provide an escape from liability; or (4) the purchasing corporation is a mere continuation of the selling company. Polius, 802 F.2d at 78 (3d Cir. 1986) (stating general rule); 15 William Meade Fletcher et al., Fletcher Cyclopedia of the Law of Private Corporations § 7122, at 227-48 (perm. ed., rev. vol. 1999) (collecting cases). This case involves the “de facto merger” exception, which has four elements under the majority standard. It applies where: (1) There is a continuation of the enterprise of the seller corporation, so that there is a continu- ity of management, personnel, physical location, assets, and general business operations. (2) There is a continuity of shareholders which results from the purchasing corporation paying for the acquired assets with shares of its own stock, this stock ultimately coming to be held by the shareholders of the seller corporation so that they become a constituent part of the pur- chasing corporation. (3) The seller corporation ceases its ordinary business operations, liquidates, and dissolves as soon as legally and practically possible. (4) The purchasing corporation assumes those obligations of the seller ordinarily necessary for the uninterrupted continuation of normal business operations of the seller corporation. Bud Antle, Inc. v. Eastern Foods, Inc., 758 F.2d 1451, 1457-38 (11th Cir. 1985) (stating the “majority” de facto merger standard); Keller v. Clark Equip. Co., 715 F.2d 1280, 1291 (8th Cir. 1983) (same); 15 Fletcher, supra, § 7124.20, at 302 (stating majority rule and collecting cases). The majority standard generally tracks the inquiry under Pennsylvania law. See SmithKline Beecham, 89 F.3d at 162 n.6. Based on the record, we agree with the District Court that the Price/General transaction constituted a de facto merger. (1) Under prong one — continuity of enterprise — General Battery purchased all of [*306] Price Battery’s equipment and inventory, assumed tenancy of its manu- facturing plant, and continued its production of batteries. The plant superintendent and middle managers retained their positions, as did the union employees, office person- nel and sales force. General Battery continued the employ- ment of three senior Price Battery executives — the presi- -A20- dent, executive vice president, and vice president of manu- facturing — who, among other duties, remained active in supervising the Hamburg plant. General Battery was supplied by Price Battery’s vendors, served Price Battery’s customers, and manufactured essentially the same battery products. In every operational respect — from manage- ment and employees to location and assets to products and general business operations — General Battery continued the Price Battery enterprise. We agree with the District Court's exemplary analysis under this element. (2) De facto merger prong two — continuity of shareholders — presents a closer question. Prior to the transaction, William Price Sr. was the sole shareholder of Price Battery. He received from General Battery $ 2.95 million in cash, 100,000 shares of General Battery stock, and a seat on General Battery’s board of directors in exchange for the Price Battery enterprise. At the time, 100,000 shares of General Battery stock were valued at approximately $ 1 million and represented 4.537% of its outstanding equity. Price Sr.’s resulting stake in General Battery was comparable to that of the company ‘s two co- founders, who owned 5.12% and 4.44% of its stock, respectively. The parties dispute whether this mixed cash/stock transaction evidences the requisite continuity of ownership. Exide contends continuity of ownership is lacking where the seller receives “primarily” cash and a “small percentage” of the buyer’s outstanding equity. The United States responds that “under the de facto mer ger exception, there is no requirement that the seller acquire majority control or any other specific percentage of the buyer, only that there be some continuity of shareholder ownership.” The standard applied in most states recognizes continuity of ownership where “the shareholders of the seller corporation . . . become a constituent part of the purchasing corporation.” 15 Fletcher, supra, § 7124.20, at 302 (stating general rule); Keller, 715 F.2d at 1291 (8th Cir. 1983) (same); see also SmithKline Beecham, 89 F.3d at 162 n.6 (3d Cir. 1996) (Pennsylvania law). This standard, which requires continuity rather than identity of ownership, corresponds with the general purposes of the successor liability doctrine. See” Cargo Partner AG, 352 F.3d at 47 (2d Cir. 2003) (New York law) (holding continuity of ownership “is the essence of” a de facto merger); Nat. Gypsum Co. v. Cont. Brands Corp., 895 F. Supp. 328, 337-38 (D. Mass. 1995) (collecting cases). The overriding goal of successor liability, and of the de facto merger inquiry, is to balance “the interest in preventing tortfeasors from externalizing the costs of their misconduct” with “the interest in a fluid market in corporate assets.” Vucitech, 842 F.2d at 944 (7th Cir. 1988). The continuity of shareholders element is designed to identify situations where the shareholders of a seller corporation retain some ownership interest in their assets after cleansing those assets of liability. See generally Marie T. Reilly, Making Sense of Successor Liability, 31 Hofstra L. Rev. 745 (2003); Mark J. Roe, Mergers, Acquisitions and Tort: A Comment on the Problem of Successor Corporation Liability, {*307] 70 Va. L. Rev. 1559 (1984). Successor liability in this context accords a legal remedy to injured third-parties, preventing the externalization of the seller’s costs of doing business, and deterring transactions designed to impose the costs of misconduct on third-parties. See SmithKline Beecham, 89 F.3d at 164 (discussing remedial purposes of de facto merger doctrine). Identifying these transactions is the objective of the continuity of ownership requirement. Nat'l Gypsum, 895 F. Supp. at 337 (D. Mass. 1995); Cargo Partner AG, 352 F.3d at 47 (2d Cir. 2003). But the cases do not, as Exide contends, distinguish sharply between transactions “primarily” for cash versus stock, or between large versus small percentage interests in the ongoing enterprise. Rather, only some continuity of ownership is required. There is no generally accepted common law distinction between primarily stock mergers, on the one hand, and primarily cash transactions, on the other.” Nor does successor liability necessarily turn on the seller's percentage interest in the buyer.” Although the “majority” standard is somewhat unsettled at this frontier of successor liability, the critical “continuity of ownership” See, ¢.g., Wilson, 140 N.J. Super. 476, 356 A.2d 458 (N_J. Super. Ct. Law Div. 1976) (imposing successor liability where stock comprised less than half of purchase price); Atlas Tool Co. v. Comm'r, 614 F.2d 860, 871 (3d Cir. 1980) (New Jersey law) (“Although there was no stock transfer here, and only cash was involved, there was clearly a continuation of stockholder interest.”); Bud Antle, Inc. v. E. Foods, Inc., 738 F.2d 1451, 1458 (11th Cir. 1985) (“ At the very least, there must be some sort of continuation of the stockholders’ ownership interests.” ); Ametek, Inc. v. Ptoncer Salt & Chem. Co., 709 F. Supp. 556, 560 (E.D. Pa. 1988) (holding a de facto merger is possible where the seller retains a “contingent stake . . . in its former business”); Fenderson, 581 N.E.2d at 292 (Ill. App. Ct. 1991) (no requirement “that all or even most of the purchase price” be paid in stock). See, ¢.g., Cargill, 424 Mass. 356, 676 N.E.2d 815 (1997) (Massa- chusetts law) (finding continuity of ownership where seller received 12.5% stake in acquiring company); United States v. Keystone Sanitation Co., 1996 U.S. Dist. LEXIS 13651, at *23-25 (M.D. Pa. Aug. 22, 1996) (federal law) (finding continuity of ownership where seller received less than 1% stake in buyer); T.H.S. Northstar Assocs. v. W.R. Grace & Co., 840 F. Supp. 676 (D. Minn. 1993) (Minnesota law) (finding continuity where seller's owners received 2.27% of buyer's stock); Glynwed, 869 F. Supp. at 277 (D.N.J. 1994) (New Jersey law) (“continuity of ownership, not uniformity, is the test”). -A23- inquiry appears to be whether the owners retained some ongoing interest in their assets. Continuity of ownership is established under CERCLA where the owners of the predecessor enterprise become a “constituent part” of the successor by retaining some ongoing interest in their assets. See 15 Fletcher, supra, § 7124.20, at 302 (stating majority rule and collecting cases). Under this standard, William Price Sr. became a “constituent part” of General Battery when he received 100,000 shares of General Battery stock and a seat on General’s board in exchange for the Price Battery enterprise. (3) Under the third de facto merger element, it is apparent that Price Battery ceased operations, liquidated, and dissolved as soon as legally and practically possible. The Price/ General agreement, which closed in February of 1966, required Price Battery to discontinue operations immediately and change its name to Price Investment Company. Price Battery did so. The agreement also required that Price Investment remain in existence from February through December of, 1966, maintaining cash reserves pending completion [*308] of an audit and other contingencies. After this waiting period and following any adjustments in the purchase price, the agreement contemplated that Price Battery would liquidate and dissolve. Specifically, the contract provided “for the complete liquidation of Price and the distribution of all of its assets within the twelve month period beginning [on February 8, 1966].” Price Investment filed for corporate dissolution on February 8, 1967, and formally dissolved approximately six months later. The contractual requirement that Price Battery immediately change its name, cease operations, and subsequently liquidate and dissolve, is more characteristic -A24- of a merger than an asset purchase. As recognized under the de facto merger doctrine, an essential characteristic of a merger is that one corporation survives while another ceases to exist. Knapp v. N. Am. Rockwell Corp., 506 F.2d 361, 367 (3d Cir. 1974) (Pennsylvania law). Here, the Price/General agreement expressly required the liquidation and dissolution of Price Battery as a condition of the transaction, suggesting a merger rather than the mere sale of Price Battery’s assets. Exide emphasizes Price Investment’s failure to dissolve immediately, contending that for over a year “the two companies remained completely independent of each other in management and operations.” But the more salient fact is that Price Battery immediately ceased ordinary business operations. Within one week of the closing x date, Price Battery recast itself as Price Investment Company — acorporate shell that only held cash reserves ‘pending final settlement with General Battery. Price Investment had no operations. The Knapp case presented similar facts. There we held the seller company dissolved as soon as legally and practically possible. 506 F.2d at 369 (3d Cir. 1974) (Pennsylvania law). The seller corporation in Knapp had “technically continued to exist until its dissolution approximately 18 months after the consummation of the transaction,” id. at 364, but during that period it “had no substance” and “could not undertake any active operations.” Id. at 369. As in Knapp, “barren continuation” of the seller company does not bar application of the de facto merger doctrine. Id. at 368. We agree with the District Court that Price Battery ceased operations, liquidated and dissolved as soon as legally and practically possible. (4) Finally, under prong four — assumption of obligations ordinarily necessary for the uninterrupted continuation of normal business operations — _ the Price/ General agreement expressly provided that General Battery would assume Price Battery’s contractual obligations and all other obligations appearing on Price Battery’s balance sheet. This unambiguous assumption of obligations, including employment, sales and vendor contracts, satisfies the fourth de facto merger element. Cc. In sum, the de facto merger criteria are satisfied. Citing Polius, Exide responds with the overarching objection that “imposition of successor liability on a purchasing company long after the transfer of assets defeats the legitimate expectations the parties held during negotiation and sale.” 802 F.2d at 83. But even if we accept this statement as a general proposition, the response here is twofold. First, application of the traditional de facto merger standard, which generally tracks the Pennsylvania rule, can hardly come as a surprise to sophisticated corporate parties who transacted under Pennsylvania law. Second, CERCLA by its [*309] very nature upsets party expectations. Congress nevertheless viewed retroactive CERCLA liability as necessary to ensure that those “responsible for any damage, environmental harm, or injury from chemical poisons may be tagged with the cost of their actions.” Bestfoods, 524 U.S. at 56 (quoting S. Rep. No. 96-848, 13 (1980)) (internal punctuation marks omitted). We hold that General Battery and Exide, as successors to Price Battery, are responsible for the CERCLA liability of their predecessor. -A26- D. We briefly address the District Court's alternative holding that Exide is liable under CERCLA on a “substantial continuity” theory of successor liability.” Prior to Bestfoods, several courts adopted the “substantial continuity” test as a basis for CERCLA successor liability. See New York v. Nat'l Servs. Indus., 352 F.3d 682, 687-88 (2d Cir. 2003) (collecting cases). “Substantial continuity” eliminates certain elements of the de facto merger analysis — including the continuity of ownership requirement — and in effect creates a more expansive rule of liability than is accepted in most states. Id. at 687 (noting substantial continuity is applied “by only a handful of states”). Recently, however, several courts of appeals have rejected the doctrine as inconsistent with Bestfoods, 524 U.S. 51,141 L. Ed. 2d 43, 118 S. Ct. 1876 (1998)."* We agree. Bestfoods held that CERCLA does not, sub silentio, abrogate fundamental common law principles of indirect corporate liability. 524 U.S. at 63-64. Accordingly, “substantial continuity” is untenable as a basis for successor liability under CERCLA. IV. Conclusion We will affirm the judgment of the District Court. 11. The government does not seek affirmance on the basis of “substantial continuity” and does not cite any relevant law on the issue. 12. See Nat'l Servs. Indus., 352 F.3d at 687 (2d Cir. 2003) (holding “the substantial continuity doctrine is not part of general federal common law and, following Bestfoods, should not be used to determine whether a corporation takes on CERCLA liability as the result of an asset purchase”); Davis, 261 F.3d at 53 (1st Cir. 2001) (same); Atchison, 159 F.3d 358 (9th Cir. 1998) (same). -A27- Concurring in part and dissenting in part RENDELL, Circuit Judge. I agree with the majority’s conclusion that the fact pattern presented wasa de facto merger such that successor liability for purposes of CERCLA exists and therefore concur in its ultimate ruling. However, I part company with the majority regarding its decision to announce that the issue of successor liability in this context is controlled by federal common law. This determination is unnecessary to the resolution of the issues before us and runs counter to recent Supreme Court pronouncements which both call into question the concept of federal common law and explicitly state that only in the most limited of circum- stances should we look beyond applicable state law. More- over, two other courts of appeals — the First and the Ninth — have considered the precise issue before us and our opinion perpetuates a split among the courts of appeals. Those courts have opined that the Supreme Court's recent directives cast serious doubt on the advisability of creating federal common law to dictate the contours of successor liability under CERCLA." The [*310] majority, however, embraces the application of federal common law, relying instead on the outdated notion of promoting uniformity. Over the course of the last decade, and since we decided Smith Land & Improv. Corp. v. Celotex Corp., 851 F.2d 86 (3d Cir. 1988) and Lansford-Coaldale Joint Water Auth. v. Tonolli Corp., 4 F.3d 1209 (3d Cir. 1993), the Supreme Court has issued several opinions denouncing the creation of federal common law where state law would Interestingly, as we note below, one of the courts — the Ninth Circuit — had previously followed our lead in Smith Land, but more recently reevaluated its view in light of later Supreme Court precedent concluding, as we should, that creating federal common law should be a last resort. -A28- otherwise apply. Principally, in O'Melveny & Myers v FDIC, 512 US. 79, 129 L. Ed. 2d 67, 114 S. Ct. 2048 (1994), the Court rejected the notion that a federal common law rule regarding the imputation of corporate officer know- ledge to a corporation should be applied in an action against the Federal Deposit Insurance Corporation (“FDIC”). The Court stated: The first of these contentions need not detain us long, as itis so plainly wrong. “There is no fede- ral general common law, and... the remote possibility that corporations may go into tederal receivership is no conceivable basis for adopting a special federal common-law rule divesting states of authority over the entire law of imputa- tion.” ld, at 83 (internal citation omitted) (citing Bi _ of America Nat'l Trust & Sav. Ass’n v. Parnell, 352 Us.2 9, 33-34, 1 L. Ed. 2d 93, 77 S. Ct. 119 (1956)). The O'Melveny Court went on to note that, with regard to “the central question of displacement of [state] law’ in favor of a rule federal in nature: [W]e of course would not contradict an explicit federal statutory provision. Nor would we adopt a court-made rule to supplement federal statutory regulation that is comprehensiv e and detailed; matters left unaddressed in such a scheme are presumably left subject to the disposition provided by state law. een’ As we proceed to explain, even assuming the inapplicability of FIRREA [Financial Institu- tions Reform, Recovery, and Enforcement Act of 1989] this is not one of those cases in which -A29- judicial creation of a special federal rule would be justified. Such cases are, as we have said in the past, “few and restricted,” Wheeldin v. Wheeler, 373 US. 647, 651, 10 L. Ed. 2d 605, 83 S. Ct. 1441 (1963), limited to situations where there ts a “significant conflict between some federal policy or interest and the use of state law.” Wallis v. Pan American Petro- leum Corp., 384 U.S. 63, 68, 16 L. Ed. 2d 369, 86 S. Ct. 1301 (1966). Our cases uniformly require the existence of such a conflict as a precondition for recognition of a federal rule of decision. Kimbell Foods, 440 U.S. at 728. Not only the permissi- bility but also the scope of judicial displacement of state rules turns upon such a conflict. What ts fatal to re sponde nt’s position in the prese nt case is that it has identified no significant conflict with an identifiable federal policy or interest. O'Melveny & Myers, 512 U.S. at 85, 87-88 (some internal citations omitted) (emphasis added). W hile O'Melveny did not involve CERCLA, nonetheless, the pronouncement of the Court regarding displacement of state law makes crystai clear that matters left unaddressed by a compre- hensive federal statutory scheme are presumably lett subject to the [*311] disposition provided by state law” The issue before us is not the meaning of a term contained in CERCLA, as was the case in many of the cases cited by the majority. Rather, the issue before us is whether state or federal law regarding successor liability will apply when the courts are fashioning remedies under CERCLA. No one has contended we are construing a word or phrase in the statute. If we are, we should request further briefing on this issue as it has not been addressed by the parties CERCLA now counts a “corporation” as a “person” for -A30- there must exist a conflict, identifiable and specific, withan important federal policy before we consider resorting to federal common law. Three years after deciding O’Meli eny, the Supreme Court again commented on the concept of “federal com- mon law,” in the case of Atherton v. FDIC, 519 US. 213, 136 L. Ed. 2d 656, 117 S. Ct. 666 (1997). in Atherton, the Court again emphasized the “precondition,” id. at 218, that a conflict exist to warrant the conception of a federa? rule; purposes of liability, see 42 U.S.C. § 9601(21), but the statute itself clearly does not reference or provide for successor liability. Therefore, we are confronted with a matter in an otherwise detailed federal statutory scheme, not a mere need to attach meaning to a term of artemployed but not defined by Congress, as was the case in Clackamas Gastroenterology Assocs., P.C. v. Wells, 538 U.S. 440, 448, 155 L. Ed. 2d 615, 123 S. Ct. 1673 (2003) (looking “to the common law to fill gaps in statutory text, particularly when an undefined term has a settled meaning at common law,” in this case to define “employee under the ADA) (emphasis added); Burlington Indus. v. Ellerth, 524 U.S. 742, 755, 141 L. Ed. 2d 633, 118 S. Ct. 2257 (relying on sical 3 common law of agency to define term “agent” under Title VII where state court decisions “determinations of employer liability under state law rely in large part on federal court decisions”); Mississippi Band of Choctaw Indians v. Holyfield, 490 U.S. 30, 47, n.22, 104 L. Ed. 2d 29, 109 S. Ct. 1597 (1989) (using federal common law to define “domicile” under the Indian Child Welfare Act and noting that Congress had, in other parts of the legislation, stated explicitly where it wanted terms “defined by reference to tribal law or custom and to state law”); and Cty. for Creative Non- Violence v. Reid, 490 U.S. 730, 740, 104 L. Ed. 2d 811, 109 S. Ct. 2166 (1989) (employing federal common law to define “work made for hire” under provisions of the Copyright Act of 1976, a statute intended to broadly preempt state statutory and common-law copyright regulation). These cases would be informative if we too were focusing on the meaning given to a term in a federal statute, but that is not our focus. -A31- under the facts of the case before it, the Court stated that its initial inquiry must concern whether the application of the relevant state law standard of care to banks would conflict with, and thereby significantly undermine, an identifiable federal policy or interest: States normally look to the State of a business’ incorporation for the law that provides the relevarit corporate governance general standard of care. And by analogy, it has been argued, courts should look to federal law to find the standard of care governing officers and directors of federally chartered banks. To find a justification for federal common law in this argument, however, is to substitute analogy or formal symmetry for the controlling legal requirement, namely, the existence of a need to create federal common law arising out of a significant conflict or threat te a federal interest. O’Melveny, 512 US. at 85, 87. Ves In sum, we can find no significant conflict with, or threat to, a federal interest. The federal need is far weaker than was present in what the Court has called the “few and restricted’ in- stances,” Milwaukee v. Illinois, 451 U.S. 304, 313, 68 L. Ed. 2d 114, 101 S. Ct. 1784 (1981), in which this Court has created a federal common law. Atherton, 519 U.S. at 224-25. The Court then detailed such “few [*312] and restricted” cases, which | list in the margin.” Again, the Court's focus was on the presence of 1S. As enumerated by the Court in Atherton: See Hinderlider v. La Plata River & Cherry Creek Ditch Co., 304 U.S. 92, 82 L. Ed. 1202, a significant conflict. And, to discern whether a conflict is present, we are not to evaluate the jurisprudential landscape of all fifty states; rather, “federal courts should incorporate state law into federal common law unless the particular state law in question is inconsistent with the policies underlying the federal statute.” Kamen v. Kemper Fin. Servs., 500 U.S. 90, 111 S. Ct. 1711, 1722, 114 L. Ed. 2d 152 (1991) (emphasis added). Most recently, in United States v. Bestfoods, the Court was called upon to consider whether a parent corporation that actively participated in, and exercised control over, the operations of a subsidiary may, without more, be held liable under CERCLA as an operator of a polluting facility owned or operated by the subsidiary. 524 U.S. 51, 55, 141 L. Ed. 2d 43, 118 S. Ct. 1876 (1998). The Court answered in the negative, “unless the corporate veil may be pierced.” Id. In so concluding, the Court expounded upon certain general principles of corporate law — for example, that 38 S. Ct. 803 (1938) (controversy between two States regarding apportionment of streamwater); Boyle v. United Technologies Corp., 487 U.S. 500, 101 L. Ed. 2d 442, 108 S. Ct. 2510 (1988) (Federal Government contractors and civil liability of federal officials); United States v. Standard Oil Co. of Cal., 332 U.S. 301, 305, 91 L. Ed. 2067, 67 S. Ct. 1604 (1947) (relationship between Federal Government and members of its armed forces); Howard v. Lyons, 360 U.S. 593, 597, 3 L. Ed. 2d 1454, 79S. Ct. 1331 (1959) (liability of federal officers in the course of official duty); Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 425, 11 L. Ed. 2d 804, 84S. Ct. 923 (1964) (relationships with other countries). See also Texas Industries, Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 641, 68 L. Ed. 2d 500, 101 S. Ct. 2061(1981) (“Absent some congressional authorization to formulate substantive rules of decision, federal common law exists only in such narrow areas as those concerned with the rights and obligations of the United States, interstate and international disputes implicating the conflicting rights of States or our relations with foreign nations, and admiralty cases”). parents are not liable for the acts of their subsidiaries, 1d. at 62, along with the “equally fundamental principle of corporate law” that a corporate veil may be pierced where the corporate form was misused, id. Significantly, the Court explained: Nothing in CERCLA purports to rewrite this well-settled rule, either. CERCLA is thus like many another congressional enactment in giving no indication “that the entire corpus of state corporation law is to be replaced simply because a plaintiff's cause of action is based upon a federal statute,” Burks v. Lasker, 441 US. 471, 478, 60 L. Ed. 2d 404, 99 S. Ct. 1831 (1979), and the failure of the statute to speak to a matter as fundamental as the liability implications of corporate ownership demands application of the rule that “in order to abrogate a common- law principle, the statute must speak directly to the question addressed by the common law,” United States v. Texas, 507 U.S. 529, 534, 123 L. Ed. 2d 245, 113 S. Ct. 1631 (1993) (internal quotation marks omitted). The Court of Appeals was accordingly correct in holding 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 63-64 (footnotes omitted). As noted by the majority, the Bestfoods Court declined to reach the precise issue before us, noting a “dis- agreement” as to whether “courts should borrow state law, or instead apply a federal common law of [*313] veil piercing,” 524 U.S. at 64, n.9, but sidestepping any con- clusion: “Since none of the parties challenges the Sixth Circuit’s holding that [certain companies] incurred no deri- vative liability, the question is not presented in this case, -A34- and we do not address it further,” 1d. The majority protests that the Court did not declare the use of federal common law inappropriate at this juncture or cite to O’Melveny. But the Court clearly did not need to, or choose to, reach the issue. We should infer nothing from its silence. I find more significant the Bestfoods Court's affirma- tive discussion of “norms of corporate behavior,” which it viewed as constituting crucial reference points, along with the reliability of bedrock principles of corporate law. See, e.g., 524 US. at 70n.13 & 71. 1 cannot help but conclude that reference to the “norms” bolsters the view that existing state corporate law principles should control, and we need not invent federal law, or deem them “federal”, in order to further CERCLA’s regulatory scheme. The Court's discussion of “congressional silence” concerning these “bedrock” corporate principles, which it describes as “audible,” supports this view. 524 U.S. at 62. With respect to the silence wrought by Congress’ failure to address, in the statute, the claim at issue in Bestfoods, notably, the Court stated that “CERCLA is thus like many another congressional enactment in giving no indication ‘that the entire corpus of state corporation law is to be replaced simply because the plaintiff's cause of action is based upon our federal statute.’” Bestfoods, 524 U.S. at 63 (quoting Burks v. Lasker, 441 U.S. 471, 478, 60 L. Ed. 2d 404, 99S. Ct. 1831 (1979)). Indeed, the Bestfoods Court chided the district court in that case for having “treated CERCLA as though it displaced or fundamentally altered common law standards of limited liability” because “such a rule does not arise from congressional silence, and CERCLA’s silence is dispositive.” 524 U.S. at 70. Finally, it bears noting that the Supreme Court affirmed the court of appeals’ determination applying Michigan law that a parent may be held liable only where the corporate veil may be pierced. See United States v. Cordova Chem. Co., 113 F.3d 572, 580 (6th Cir. 1997). After reading these three recent Supreme Court opi- nions, I am left with the clear impression that the notion of resorting to a federal rule of successor liability here, man- dating it as controlling in our Circuit without regard to state law, would not be endorsed by the Supreme Court. The overarching theme is that state law should not be displaced unless the particular state law at issue conflicts with an important federal policy. Noticeably absent is any reference to the majority’s guiding theme — that of the need for uniformity. And, as I discuss more fully below, uniformity for uniformity’s sake is not such a policy. The courts of appeals that have addressed this issue agree that the Supreme Court's recent decisions discussed above have moved toward reliance on state law, and away from the creation of federal common law, unless a conflict exists. In Atchison, T. & S.F. Ry. v. Brown & Bryant, 159 F.3d 358 (9th Cir. 1997), the Court of Appeals for the Ninth Circuit considered whether the Supreme Court's pro- nouncements on this issue in O’Melveny and Atherton (Bestfoods had not yet been decided) were clear enough to cause it to abandon its own previous determination in Louisiana-Pacific Corp. v. Asarco, Inc., 909 F.2d 1260 (9th Cir. 1990) (adopting Third Circuit’s rationale in Smuth Land) that the parameters of successor liability under CERCLA should be fashioned by federal common law in order to promote national [*314] uniformity. The Atchison court concluded that although the Atherton and O'Melveny opinions implicated FIRREA, and not CERCLA, the under- lying analysis was nonetheless applicable and persuasive. 159 F.3d at 362. Thus, in concluding that the promotion of national uniformity does not justify application of federal common law to CERCLA, the Court effectively rejected its previous determination in Louisiana-Pacific along with that opinion’s underlying rationale — our own opinion in Smith Land. Initially, the Atc hison Court correctly noted that “sim- ply because a federal statute is involved does not always -A36- mean that federal courts should fashion a uniform federal rule.” 159 F.3d at 362 (citation omitted). “Frequently, state rules of decision will furnish an appropriate and con- venient measure of the governing federal law.” Id. The subsequent discussion merits repeating in full: In Louisiana-Pacific, we agreed with the Third Circuit that CERCLA’s “’meager legislative history available indicates that Congress expected the courts to develop a federal com- mon law to supplement the statute.’” 909 F.2d at 1263 (quoting Smuth Land, 851 F.2d 86 at 91). This legislative history consists of a discussion in Congress that common law should govern the issue of joint and several liability under CERCLA. Louisiana-Pacific recognized that Congress did not address the particular issue of successor liability under CERCLA. O'Melveny tells us that when dealing with a “comprehensive and detailed” federal statutory regulation, a court should instead presume that matters left unaddressed in such a scheme are subject to state law. “Congress acts . . . against the background of the total corpus juris of the states ....” Atherton, 1175S. Ct. at 670 (alteration in original). The formation of corporations and the dissolution and continuing liability of corporations are traditional areas of state law. As CERCLA lacks any clear directive that federal courts develop standards for successor liability, we turn to the Kinthell Foods test, as clarified by O’Melveny and Atherton. i Although Loutsiana-Pacific refers to the “need for national uniformity” as a reason for developing federal rules for successor liability, Atherton -A37- notes that “to invoke the concept of ‘uniformity’ ...is not to prove its need.” 1175. Ct. at 671; see also O'Melveny, 114 S. Ct. at 2055 (recognizing how generic and “lightly invoked” is the need for uniformity). Although often invoked in this context, there has been no real explanation of the need for uniformity in the particular area of successor liability — especially since state law will in many other instances determine whom the EPA may or may not look to for compen- sation. If state law varied widely on the issue of successor liability, perhaps the need for a uniform federal rule would be more apparent. This is not the case, however, as “the law in the fifty states on corporate dissolution and succes- sor liability is largely uniform.” Anspec Co. v. Johnson Controls, Inc., 922 F.2d 1240, 1249 (6th Cir: 1991) (Kennedy, J., concurring) (holding . that state law determines successor liability under CERCLA). The argued “need” for unifor- mity thus stems not from disarray among the various states, but from the alleged need for a more expansive view of successor liability than state law currently provides — in other words, the notion that state law on this issue is inade- quate for CERCLA’s purposes. [*315] But O'Melveny and Atherton also speak to this argument. Before a court can recognize a federal rule of decision, there must be a “’signi- ficant conflict between some federal policy or interest and the use of state law.’” O’Melveny, 1145S. Ct. at 2055 (quoting Wallis, 384 U.S. 63 at 68). Indeed, such a conflict is a “precondition” to fashioning federal common law rules. Atherton, 117 S. Ct. at 670. The Court’s recent cases clarify that to demonstrate such a conflict, more than speculation is required — there must be a “specific, concrete federal policy or interest -A38- that is compromised” by the application of state law. O'Melveny, 1145S. Ct. at 2055. We therefore doubt that the concern noted in Louisiana-Pacific is sufficient grounds for developing a federal rule of decision. Atchison, 159 F.3d at 362-64 (certain internal citations and footnotes omitted).’® The Atchisom Court concluded that it would not adopt the “substantial continuation” exception (which would have expanded federal common law lia- bility). It then reasoned that because the same result would flow in the case before it under either state law or federal common law, it need not decide whether state or federal law governs successor liability under CERCLA. Id. at 364. Despite bypassing the question we now consider, it is abundantly clear that the Ninth Circuit, were its hand forced, would follow the recent directives of the Supreme Court and hold that state law should govern successor liability under CERCLA. 16. The majority excerpts a line of dictta from \/c/rison in which the Court muses that if “state law varied widely on the issue of successor liability, perhaps the need for a uniform federal rule would be more apparent.” (Maj. Op. at 17.) However, as the more fully excerpted passage above shows, the Court goes on to explain that this need not preoccupy it because, first and foremost, the Supreme Court has made clear that there must exist a significant conflict between some federal policy or interest and the use of state law. In disagreeing with the Atchison Court on this point, and by citing what it views as a varied set of state laws concerning successor liability as the jumping off point for application of a federal rule, the majority leapfrogs over the critical inquiry — whether there exists a conflict between Pennsylvania law and an important federal policy or interest. Lack of uniformity itself does not satisfy the requirement that a conflict exist — only after a conflict has been identified does the Supreme Court direct us to evaluate the need for a uniform rule. -A39- Even more recently, and with the benefit of the Best- foods opinion, the Court of Appeals for the First Circuit, considering displacement of Connecticut state law to determine successor liability under CERCLA, did just that: We have concluded that the majority rule is to apply state law “so long as it is not hostile to the federal interests animating CERCLA,” and have applied Massachusetts contracts law to deter- mine an issue of successor liability. John S. Boyd Co., Inc. v. Boston Gas Co., 992 F.2d 401, 406 (ist Cir. 1993). Recent Supreme Court precedent confirms that Boyd’s approach is correct. The Court applied state corporation law in a recent CERCLA case involving the potential liability of a parent corporation for its subsidiary and left little room for the creation of a federal rule of liability under the statute. See United States v. Bestfoods, 524 U.S. 51, 63, 141 L. Ed. 2d 43, 118 S. Ct. 1876 (1998) (“CERCLA is .. . like many another congressional enactment in giving no indication that the entire corpus of state cor- poration law is to be replaced simply because a plaintiff's cause of action is based upona federal statute.”) (internal quotation marks omitted). The Court's statements [*316] in Bestfoods and O'Melveny demonstrate that to justify the crea- tion of a federal rule, “there must be a specific, concrete federal policy or interest that is com- promised by the application of state law.” Atchison, Topeka & Santa Fe Railway Co. v. Brown & Bryant, inc., 159 F.3d 358, 363-64 (9th Cir. 1998) (internal quotation marks omitted). We see no evidence that application of state law to the facts of this case would frustrate any federal objective. Connecticut’s “mere continuation” test thus is the correct test for determining suc- cessor liability for the hazardous waste dis- posed. -A40- United States v. Davis, 261 F.3d 1, 54 (1st Cir. 2001). As recognized by the Atchison and Davis courts, the Supreme Court has repeatedly emphasized that a specific and identifiable conflict must be present before we should invoke and apply a federal rule of decision. Here, no such conflict exists. Absent evidence that application of Pennsylvania state law, not the hypothetical application of the law of 49 other states, does frustrate CERCLA’s purpose — holding liable parties responsible for the costs asso- ciated with the clean up of hazardous waste sites — and in the face of recent Supreme Court opinions discouraging the creation of a federal rule of decision, it is readily apparent that resort to any law other than Pennsylvania‘s is unnecessary and uncalled for. I subscribe to and seek to reiterate a number of the majority's threshold observations, which it appears to note but then discard: namely, that the Supreme Court has “cautioned against the unwarranted displacement of state law” (Maj. Op. at 11) (citing O’Melveny, 512 US. at 87); additionally, that “[iJncorporation of state law is particularly favored in the area of corporate law, because business decisions proceed in reliance on the applicable state standards” (Id.) (citing Kamen, 111 S. Ct. at 1722); and, finally, that absent some significant conflict arises between a federal policy interest and the use of state law, “state corporation law g generally should be integrated into the federal statutory regime.” (Id.) (citing United States v. Kimbell Foods, Inc., 440 U.S. 715, 59 L. Ed. 2d 711, 99S. Ct. 1448 (1979)) (other citations omitted). But, it is not clear to me why, in the face of these guiding ehebs ase the majority then frames the issue before us simply as “whether CERCLA requires a uniform federal standard of corporate successor liability.” (Maj. Op. at 11.) The majority’s determination that application of federal common law is warranted here hinges on our previous terse treatment of the issue in Smuth Land & -A41- Improv. Corp. v. Celotex Corp., 851 F.2d 86 (3d Cir. 1988) and Lansford-Coaldale Joint Water Auth. v. Tonolli Corp., 4 F.3d 1209 (3d Cir. 1993), cases in which the Court ac vanced only one animating rationale for adopting the “general doctrine of successor liability in operation in most states,” 851 F.2d at 92 — the need for a uniform and predictable body of law. We did so in a few conclusory sentences, without any meaningful discussion. Intervening Supreme Court precedent makes clear, however, that this rationale is no longer, if it ever was, paramount when evaluating whether we are confronted with “one of those extra- ordinary cases in which the judicial creation of a federal rule of decision is warranted.” O'Melveny & Myers v. FDIC, 3512:US. 79, 89, 129 L: Ed. 2d 67, 114.5. Ct 2048 (1994). To the extent SmithLand and Lansford-Coaldale com- mand us to ignore in our analysis longstanding, ingrained principles of state corporate law in favor of “that most generic (and lightly invoked) of alleged federal interests, the interest in uniformity,” id. at 88, [*317] those decisions should be reevaluated. George Harms Constr. Co. v. Chao, 371 F.3d 156, 161 (3d Cir. 2004) (“We recognize that we may reevaluate a precedent in light of intervening authority even without en banc consideration.”); United States v. Adams, 252 F.3d 276, 286 (3d Cir. 2001) (“ Although a panel of this court is bound by, and lacks authority to overrule, a published decision of a prior panel, a panel may reev aluate a precedent in light of intervening autho- rity.”) (internal quotations omitted). We must reevaluate the exalted position that we previously afforded “uniformity” in light of the Supreme Court's direction that we are to employ a different mode of analysis.' The majority asserts that resort to federal common law is necessary because state laws concerning successor 17. To the extent that it could be argued that adopting this position requires us to convene [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386008_0642%3A1. Public record. Not legal advice.