B.F. Goodrich v. Betkoski

PER CURIAM:

Following our November 1, 1996 decision in this case, B.F. Goodrich v. Betkoski, 99 F.3d 505 (2d Cir.1996), familiarity with which is assumed, defendants-appellees NRS Carting Co., Inc. and Zoilo Drum Company, Inc. petitioned for rehearing with respect to our determination that federal common law governs the question of successor liability under CERCLA Appellees suggest that our choice of federal common law to govern the issue is inconsistent with the approach set forth in Pescatore v. Pan American World Airways, Inc., 97 F.3d 1 (2d Cir.1996), for deciding when state law should be displaced in favor of a federal common law rule. We disagree. Although we deny the petition, we write to clarify our prior opinion.

As we noted in Pescatore, when determining whether to fashion a special federal rule, we consider “(1) whether the issue requires ‘a nationally uniform body of law1; (2) “whether application of state law would frustrate specific objectives of the federal program[ ]’; and (3) whether ‘a federal rule would disrupt commercial relationships predicated on state law.’” 97 F.3d at 10 n. 7 (quoting United States v. Kimbell Foods, Inc., 440 U.S. 715, 728-29, 99 S.Ct. 1448, 1458-59, 59 L.Ed.2d 711 (1979)). In conducting this analysis, we bear in mind that absent a “significant conflict between some federal policy or interest and the use of state law,” a mere federal interest in uniformity is insufficient to justify displacing state law in favor of a federal common law rule. See O’Melveny & Myers v. FDIC, 512 U.S. 79, 87-88, 114 S.Ct. 2048, 2054-55, 129 L.Ed.2d 67 (1994).

Our prior opinion in this matter does not establish a contrary rule. Although we noted the desirability of uniformity in the CERCLA context, our primary reason for adopting a federal common law rule was our concern that allowing state law rules such as the inflexible and easily evaded “identity” rule to control the question of successor liability would defeat the goals of CERCLA.

Each of the Kimbell Foods factors supports our decision — there is a significant need for a uniform rule, allowing lenient state law rules to control would defeat federal policy, and we perceive no danger that our decision to adopt a federal rule of “substantial continuity” will unduly upset existing corporate relationships.

With this clarification, the petition for rehearing is hereby denied.