Law, Business, and Society 9th Edition by Tony McAdams

Exercise 12

Ott Chemical Co. polluted the ground at its Michigan plant. CPC International created a wholly owned subsidiary to buy Ott, which was accomplished in 1965. CPC retained the original Ott managers. Pollution continued through 1972 when CPC sold Ott. In 1981 the U.S. EPA began a cleanup of the site. To recover some of the tens of millions in cleanup costs, the EPA sued CPC (now called Bestfoods) among other potentially responsible parties. The Superfund law places responsibility on anyone who "owned or operated" a property when pollution was deposited. The district court held that CPC was liable because of its active participation in Ott's business and its control of Ott's decisions in that it selected the Ott board of directors and placed some CPC managers as executives at Ott.
a. Do you think CPC should be held liable Why or why not
b. What test would you employ to determine whether a parent corporation should be liable for a subsidiary's pollution See United States v. Bestfoods, 524 U.S. 51 (1998).