oFRCE
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD~’
~4~P~Y
27
2003
2222
ELSTON LLC,
an Illinois limited
)
STATE OF ILLiNOIS
d
liability company,
)
pollution
Control Boar
)
Complainant,
)
)
PCB No.
03-5 5
v.
)
(Citizens UST Enforcement)
)
PUREX INDUSTRIES, INC.,
a
Delaware
)
corporation,
FEDERAL DIE CASTING
CO.,
)
an
Illinois corporation,
FEDERAL
)
CHICAGO CORP.,
an
Illinois corporation,
)
RAYMOND E. CROSS,
an Illinois resident,
)
BEVERLY BANK TRUST NO. 8-7611,
an
)
Illinois trustee, and
LAKESIDE BANK
)
TRUST NOS. 10-1087 &
10-1343,
an Illinois
)
trustee,
)
)
Respondents.
)
)
)
NOTICE OF FILING
To:
For
Purex Industries,
Inc.:
For
Federal Die
Casting Co.,
Federal
Chicago Corp., Raymond
E.
Cross,
Robert L. Graham
Lakeside Bank, Trust
Nos.
10-1087, 10-1343,
Bill
S. Forcade
Beverly Bank,
Trust No. 8-7611:
Jason E. Yearout
Jenner & Block, LLC
Cary R. Perlman
One IBM Plaza
Carrie L. Taubman
Chicago, Illinois
60611
Latham & Watkins
5800 Sears Tower
233
South Wacker Drive
Chicago, Illinois
60606
PLEASE
TAKE
NOTICE
that
I have today
filed with
the
Office of the Clerk of the
Pollution
Control Board
the
2222
ELSTON
LLC’S
MOTION
FOR
LEAVE
TO
FILE
ITS
COMBINED SUR-REPLY
IN SUPPORT OF ITS
RESPONSE
TO PUREX
INDUSTRIES,
INC.’S
MOTION
TO
DISMISS
AND
REPLY
IN
SUPPORT
OF
ITS
MOTION
TO
THIS FILING IS
SUBMITTED ON RECYCLED PAPER
STRIKE
THE
AFFIDAVIT
OF
JEFFREY
M.
SMITH,
2222
ELSTON
LLC’S
COMBINED SUR-REPLY IN SUPPORT OF ITS RESPONSE TO
PUREX INDUSTRIES,
INC.’S
MOTION
TO
DISMISS
AND
REPLY
IN
SUPPORT
OF
ITS
MOTION
TO
STRIKE
THE
AFFIDAVIT OF JEFFREY M.
SMITH
and
CERTIFICATE
OF SERVICE
filed on behalfof Complainant, 2222 Elston LLC, a copy ofwhich is herewith served upon you.
Dated:
May 23, 2003
Respectfully submitted,
GREENBERG TRAURIG, P.C.
By:___
~~C~i~yher
J. Neumann
Attorneys
for Complainant 2222 Elston LLC
Francis A. Citera, Esq.
Daniel
T.
Fahner, Esq.
Greenberg Traurig, P.C.
77 West Wacker Drive
Suite 2500
Chicago, Illinois
60601
Telephone: (312) 456-8400
Facsimile: (312)
456-8435
Craig V. Richardson,
Esq.
Christopher J. Neumann, Esq.
Greenberg Traurig, L.L.P.
1200 Seventeenth Street
Twenty-Fourth Floor
Denver, Colorado 80202
Telephone: (303) 572-6500
Facsimile:
(303)
572-6540
#55496
2
CLER1~
OFFICE
BEFORE
THE ILLINOIS POLLUTION CONTROL BOARD
MAY
27
2003
2222
ELSTON LLC
an
Illinois limited
)
STATE
OF ILLINOIS
liability company,
)
Pollution
Control
Board
)
Complainant,
)
)
PCB No.
03-5
5
V.
)
(Citizens
UST Enforcement)
)
PUREX INDUSTRIES, INC., a
Delaware
)
corporation,
FEDERAL
DIE CASTING CO.,
)
an
Illinois corporation, FEDERAL
)
CHICAGO CORP.,
an
Illinois corporation,
)
RAYMOND E.
CROSS,
an Illinois resident,
)
BEVERLY BANK TRUST
NO. 8-7611,
an
)
Illinois trustee, and LAKESIDE
BANK
)
TRUST NOS. 10-1087 &
10-1343, an
Illinois
)
trustee,
)
)
Respondents.
)
)
)
CERTIFICATE OF SERVICE
I, the undersigned, certify that
I have served the attached 2222
ELSTON LLC’S
MOTION FOR LEAVE TO
FILE ITS COMBINED SUR-REPLY IN SUPPORT
OF ITS
RESPONSE TO
PUREX INDUSTRIES,
INC.’S MOTION TO
DISMISS AND REPLY IN
SUPPORT OF ITS
MOTION TO
STRIKE
THE AFFIDAVIT OF JEFFREY M.
SMITH,
2222
ELSTON LLC’S COMBINED SUR-REPLY IN SUPPORT OF ITS
RESPONSE TO
PUREX INDUSTRIES, INC.’S MOTION
TO DISMISS AND REPLY IN SUPPORT OF
ITS MOTION TO
STRIKE
THE AFFIDAVIT OF JEFFREY
M. SMITH
and
NOTICE
OF
FILING upon
the Respondents on May 23, 2003, by:
certified mail
_____
registered mail
messenger service
_____
personal service
X
U.S. Mail
at the addresses below:
THIS FILING IS
SUBMITTED
ON
RECYCLED PAPER
For
Purex Industries,
Inc.:
Robert L.
Graham
Bill
S. Forcade
Steven
M. Siros
Jason E. Yearout
Jenner & Block, LLC
One IBM Plaza
Chicago, Illinois
60611
Hearing Officer:
Bradley P. Halloran
Hearing Officer
Illinois Pollution Control Board
James R.
Thompson Center
100W. Randolph Street, Suite 11-500
Chicago, Illinois
60601
Francis A.
Citera, Esq.
Daniel T. Falmer, Esq.
Greenberg Traurig, P.C.
77 West Wacker Drive
Suite 2500
Chicago, Illinois
60601
Telephone: (312) 456-8400
Facsimile: (312) 456-8435
Craig V. Richardson, Esq.
Christopher J. Neumann,
Esq.
Greenberg Traurig, L.L.P.
1200 Seventeenth Street
Twenty-Fourth Floor
Denver,
Colorado 80202
Telephone: (303) 572-6500
Facsimile:
(303) 572-6540
#55493
For
Federal Die Casting Co., Federal
Chicago
Corp., Raymond E. Cross,
Lakeside Bank, Trust
Nos. 10-1087, 10-1343,
Beverly Bank, Trust
No.
8-7611:
Cary R. Penman
Carrie L.
Taubman
Latham & Watkins
5800
Sears Tower
233
South Wacker Drive
Chicago, Illinois
60606
7
J. Neumann, Esq., Attorney
iant, 2222
Elston LLC
2
I3REENBER6
ATTORNEYS
AT
LAW
TRAURIG
MAY
272003
STATE
OF ILLINOIS
Pollution
Control
Board
Christopher
.1. Neumann
(303) 572-6551
May 23, 2003
VIA
U.S. MAIL
Pollution Control Board,
Attn: Clerk
100 West Randolph Street
James R.
Thompson Center, Suite 11-500
Chicago, IL
60601-3218
Re:
2222 Elston LLC v. Punex Industries, Inc.,
et al.
PCB No. 03-55
Dear Clerk:
Enclosed please find the original
and nine copies ofthe following documents for filing
in
the above-referenced
case:
1.
2222 Elston LLC’s Motionfor Leave to File its
Combined Sur-Reply in Support of
its Response
to Purex Industries,
Inc.
‘s Motion to Dismiss and Reply in Support of
its Motion
to Strike theAffidavit ofJeffreyM
Smith;
2.
2222 Elston LLC’s Combined Sur-Reply in Support ofits Response to Purex
Industries,
Inc.
‘s Motion
to Dismiss
and Reply
in Support ofits Motion to
Strike
the Affidavit ofJeffrey M. Smith;
3.
Notice ofFiling;
and,
4.
Cert~flcateofService.
Your assistance in this
matter is appreciated.
Very truly yours,
(~I~is~her
J. Neumann
OF GREENBERG TRAURIG,
L.L.P.
Enclosures
cc:
Steven M. Siros,
Esq.
Cary R. Perlman, Esq.
55498
GREENBERG
TRAURIG,
LLP
THE
TABOR
CENTER
1200
17TH
STREET,
SUITE
2400
DENVER,
COLORADO
80202
303-572-6500
FAX 303-572-6540
www.gt1aw.com
MIA~n
N~w
YORK
WASHINGTON,
D.C.
ATLANTA
PHILADELPHIA
TYSONS
CORNER
CHICAGO
BOSTON
PHOENIX
WILMINGTON
Los
ANGELES
DENVER
FORT
LAUDERDALE
BOCA
RATON
WEST
PALM
BEACH
ORLANDO
TALLAhASSEE
BEFORE THE
ILLINOIS POLLUTION CONTROL BOARI~LFI~~~
OFFICE
MAY
2
7
2003
2222 ELSTON LLC, an
Illinois limited
)
STATE OF ILLINOIS
liability
company,
)
Pollution
Control
Board
Complainant,
)
)
PCBNo.03-55
v.
)
(Citizens UST Enforcement)
)
PUREX INDUSTRIES, INC., a Delaware
)
corporation, FEDERAL DIE
CASTING CO.,
)
an
Illinois corporation, FEDERAL
)
CHICAGO CORP.,
an Illinois corporation,
)
RAYMOND E.
CROSS,
an Illinois resident,
)
BEVERLY BANK TRUST NO.
8-7611,
an
)
Illinois trustee, and
LAKESIDE
BANK
)
TRUST NOS. 10-1087 &
10-1343, an Illinois
)
trustee,
)
)
Respondents.
)
)
)
2222
ELSTON LLC’S MOTION FOR LEAVE
TO FILE ITS
COMBINED SUR-REPLY
IN SUPPORT OF ITS RESPONSE
TO PUREX INDUSTRIES, INC.’S MOTION TO
DISMISS AND REPLY IN
SUPPORT OF ITS MOTION TO STRIKE THE AFFIDAVIT
OF JEFFREY M. SMITH, INSTANTER
Complainant 2222 Elston LLC (“Elston”), by and
through its
attorneys, Greenberg
Tnaurig, P.C., and pursuant to
35
ILL.
ADMIN.
CODE tit.
35,
§
101.500(e), respectfully requests
leave from the Illinois Pollution Control
Board (“Board”) to
file its
Combined Sun-Reply in
Support of its Response to Punex
Industries,
Inc.’s Motion
to Dismiss and Reply in
Support ofits
Motion to
Strike the Affidavit ofJeffrey M.
Smith, a copy ofwhich
is attached to this
Motion,
instanter.
In support ofthis
Motion, Elston states as follows:
1.
On December 2, 2002, Purex Industries, Inc.
(“Punex”) filed a Motion to Dismiss
the Complaint filed by Elston on the basis that the Board does not
have personal jurisdiction oven
Purex.
THIS FILING IS SUBMITTED ON RECYCLED PAPER
2.
In nesponse to this Motion to Dismiss, on
December
12, 2002,
Elston filed a
Motion to Conduct Limited Personal Jurisdiction Discovery.
The Board granted this
Motion on
December
16, 2002.
3.
On April 21, 2003,
after expending substantial
resources conducting discovery
into Purex’s contacts with the State ofIllinois and developing the factual record of Purex’s
legacy of pollution at 2228 N. Elston Avenue (the
“Site”), Elston filed its Combined Motion to
Strike and Response to
Purex Industries, Inc.’s Motion to
Dismiss.
4.
On May
5,
2003, Purex responded to
Elston’s Motion to
Strike the Affidavit of
Jeffrey M.
Smith through
its Reply to 2222 Elston LLC’s Response to Punex’s Motion to
Dismiss (the “Response to Elston’s Motion
to Strike Smith Affidavit” or “Response”).
5.
In its
Response, Punex attaches
as exhibits, and relies upon, certain documents
responsive to Elston’s personaljurisdiction discovery requests,
which Punex has never produced
to Elston.
6.
In addition,
Purex grossly mischaractenizes the factual record in its Response.
7.
Elston also
now seeks leave to
file a Reply in Support ofits Motion to
Strike the
Affidavit of Jeffrey M. Smith in
order to:
(a) respond to the “new” evidence relied
upon by Punex
and to
request that the Supplemental Affidavit ofJeffrey M.
Smith
and all attached exhibits
be
stricken, and (b) clarify and correct misstatements of fact and
law made by Purex in its
Response.
WHEREFORE,
Complainant 2222 Elston LLC respectfully requests that the Board grant
Elston leave to
file its Reply Memorandum in Support ofits
Motion to
Strike the Affidavit of
Jeffrey M. Smith, Instanter.
2
Dated:
May 23, 2003
Respectfully submitted,
GREENBERG TRAURIG, L.L.P.
By:~c~
Cl~ris~phen)TT~eumann
Attorneys fon Complainant 2222 Elston LLC
Francis A. Citera,
Esq.
Daniel T. Falmer, Esq.
Greenberg Traurig, P.C.
77 West Wacker Drive
Suite 2500
Chicago, Illinois
60601
Telephone: (312) 456-8400
Facsimile:
(312) 456-8435
Craig V. Richardson, Esq.
Christopher J. Neumann, Esq.
Greenberg Tnaunig, L.L.P.
1200 Seventeenth Street
Twenty-Fourth Floor
Denven,
Colorado 80202
Telephone: (303) 572-6500
Facsimile: (303) 572-6540
#55481
3
CLER~’$
O1~F?C-E
MAY
2?
2003
BEFORE THE
ILLINOIS POLLUTION CONTROL
BOARD
STATE
OF ILLINOIS
Pollution Control
Board
2222 ELSTON LLC,
an
Illinois limited
)
liability company,
)
)
Complainant,
)
)
PCB
No.
03-55
v.
)
(Citizens UST Enforcement)
)
PUREX INDUSTRIES, INC., a
Delaware
)
corporation,
FEDERAL
DIE CASTING CO.,
)
an Illinois corporation, FEDERAL
)
CHICAGO
CORP., an
Illinois corporation,
)
RAYMOND E. CROSS,
an
Illinois resident,
)
BEVERLY BANK TRUST NO. 8-7611,
an
)
Illinois trustee, and
LAKESIDE
BANK
)
TRUST NOS.
10-1087
& 10-1343,
an Illinois
)
trustee,
)
)
Respondents.
)
)
)
2222
ELSTON LLC’S COMBINED SUR-REPLY IN SUPPORT OF ITS
RESPONSE TO
PUREX INDUSTRIES, INC.’S MOTION TO DISMISS AND REPLY IN SUPPORT OF
ITS
MOTION TO
STRIKE THE AFFIDAVIT
OF JEFFREY M. SMITH
Complainant 2222 Elston LLC
(“Elston”), by and
through its
attorneys, Greenberg
Traunig, L.L.P.,
respectfully submits the following Combined
Sun-Reply in
Support ofElston’s
Response to Purex Industries, Inc.’s Motion to Dismiss and Elston’s Reply in Support of its
previously filed Motion to
Strike the Affidavit ofJeffrey M.
Smith.
Elston would show the
Board as follows:
I.
INTRODUCTION AND SUMMARY OF ARGUMENT
In its desperate attempt
to
evade thejurisdiction ofthis Board and to
escape
accountability for its shameful legacy ofpollution in this State, Respondent Purex Industries,
Inc.
THIS FILING IS SUBMITTED
ON
RECYCLED PAPER
(“Purex” or “Respondent”) flees not only from its corporate past.
Purex also flees from
procedural
and evidentiary fairness.
First, nearly halfof the exhibits attached to Purex’s May
5,
2003 Reply to
Elston’s
Response to Purex’s Motion to Dismiss (the “Purex Reply”) consist ofdocuments
never
produced
to Elston in these proceedings.
These documents were plainly responsive to any
number ofthe discovery requests propounded by Elston, pursuant to the Hearing Officer’s
December 16, 2002
Order.
(Compare
Exhibits 6,
7 and 8
to
the May
5,
2003 Affidavit ofJeffrey
M.
Smith (“Supplemental Affidavit ofJeffrey M.
Smith”
on “Suppi.
Smith Aff.”) (which
were
never produced to Elston by Purex) to Document Request Nos.
4,
5
and 6 set
forth in
Exhibit 2
to
the Affidavit ofJason Yearout (“Yearout Aff.”), filed in support ofthe Purex Reply.)
Second, after submitting an entirely conclusory,
half-page,
89-word affidavit in
support
ofits
opening Motion to Dismiss,
Purex now comes forward, at the eleventh hour and after the
close ofjurisdictional discovery, with
a new four-page,
18-paragraph affidavit given by the same
affiant.
In his “supplemental” affidavit, attorney Jeffrey M.
Smith provides all kinds ofself-
serving spins on Purex’s corporate pedigree,
many ofthem about periods of time when
Mr. Smith was still in school.
Shockingly, Punex then suggests that
Mn. Smith’s testimony
“concerning complicated events that occurred over an
extended period oftime,” somehow does
not constitute “binding testimony” on behalfof Punex under Illinois Supreme Court Rule 206.
See
Purex Reply, at
17
& n.9.
If that is the case, then there is absolutely
no
competent, binding
evidence now before this Board sufficient to controvert the jurisdiction-conferring allegations in
Elston’s Complaint, and Purex’s Motion must
fail on those grounds alone,
And, if that were not
enough, what
testimony
is
competent and
is
binding
—
the
1988
and
1992 testimony ofWilliam
Finck (Punex’s now-deceased President and CEO who, unlike Mn. Smith, presumably had
2
personal knowledge ofthe matters about which he was testifying), never includes any ofthe
revisionist corporate history Purex now advances.
Indeed,
Mn. Finck testified (in a
1988
declaration,
see
Ex. A,
Suppl. Neumann Aff, Ex.
1
(PUREX
003972-003979), and a
1992
prepared direct examination,
id.,
Ex. 2
(PUREX 003987-003997)), in
excruciating detail about
Purex’s relationship to,
and operations at, the Elston Site
—
a Site with which Mr. Smith now
testifies, decades later to meet his needs,
that Purex has no connections whatsoever.
Ifthere was
no
legal nexus between Purex and the Elston Site, why didn’t Mn. Finck just say that
in
1988
and
1992, years afterresponsibility for the Site was supposedly transferred to
some unfortunate
Delaware corporation?
Why did the President and CEO of Purex, a witness with the personal,
contemporaneous knowledge
Mr.
Smith clearly lacks, give page after page oftestimony
concerning the Elston Site?
All ofthat could have been cut-offby simple testimony that “you’ve
got the wrong Purex.”
The reason Mr. Finck did not take that approach, Elston respectfully
suggests, was that it would have been
false.
Third, in
its Reply, Purex completely
ignores several important points and arguments that
thoroughly undermine its position that
it
is not the lawful successor to Purex Corporation.
For
example, Purex does not even
attempt
to explain why
it
is asserting the attorney-client privilege
oven documents created by a corporate entity whose assets and liabilities, Purex now claims,
it
did not
succeed to.
Why is
Purex
asserting that privilege?
Why
not
the unfortunate corporate
entity Purex contends was left standing
—
holding the liability bag
—
when the corporate musical
chairs game ended?
If that
entity truly succeeded to
Punex Corporation’s assets and liabilities,
then
it
would
be the holder of the privilege,
not
Purex.
Purex’s own evidentiary objections belie
its argument.
Purex
is asserting the privilege over Purex Corporation’s documents simply
because Purex
is the lawful successor to Purex Corporation.
Similarly, Purex never explains
3
why it filed, under its
own letterhead, Section 103(c)
notifications with the U.S.
Environmental
Protection Agency in
1981
concerning the Eiston Site.
See
Elston Resp., Ex. A., Neumann Aff.,
Ex.
16 (EPA 00002-00004).
Presumably, Mn. Smith would testify (at his acknowledged rate of
$225 an
hour) that fact is somehow vitiated because it took place before the August
1982
leveraged buyout that
he claims gave Purex a pass to
pollute Illinois.
Then why, when
Mr. Smith was himself contacted by EPA agents
in
1986 about the Elston Site didn’t he simply
state to the agents that Purex bore
no responsibility for the Site?
Punex never bothers to
answer
that nagging question either.
Finally, Purex plays fast and
loose with the facts, picking and
choosing from
the vast
documentary landscape the granular tid-bits
that support its cause, ignoring the overwhelming
cascade of facts demonstrating its ties to Illinois.
Purex even stoops to
parsing statements out of
documents, omitting unhelpful phrases, apparently assuming such shenanigans would go
undetected.
In the face ofsuch sharp litigation tactics, Elston unfortunately has no choice but to
submit a Sur-Reply and to
bring these important matters
—
matters which go to
the heart of
Purex’s credibility for the duration of these proceedings
—
to the attention ofthe Board.’
II.
SUR-REPLY STATEMENT OF FACTS
Initially, Purex describes as “replete with errors and misstatements” Elston’s description
of the transactions that link Purex to contamination at the Elston Site caused by the operations of
its predecessors in interest
—
Purex Corporation and
its Industrial Division, and, before that,
T.F.
Washburn.
Strikingly, Punex’s four-page recitation ofits own history actually corroborates each
Elston acknowledges that Sur-Replies
—
even
Replies,
for that matter
—
are
disfavored in the Board’s jurisprudence
and practice.
Nonetheless, the
Board has stated that
it may grant leave to file
a sur-reply “when
a reply raises new
arguments
or evidence,...”
Trepanier v. Speedway Wrecking
Co.,
No. PCB
97-50
(Oct.
15,
1998), at 3.
Because
Purex
relies,
in material
part,
on documents withheld
from production in the course
ofjurisdictional
discovery,
Elston respectfully believes a Sur-Reply
is warranted and serves the
interests ofjustice.
Elston begs
the
Board’s
leave
and indulgence, and regrets
the necessity of further briefing.
4
ofthe critical
chronological bullet points set forth on page 4 ofElston’s April 21, 2003
“Combined Motion to
Strike and Response to Punex Industries, Inc.’s Motion to Dismiss (the
“Elston
Response”).
•
Purex
admits
Purex Corporation, Ltd. acquired T.F.
Washburn in
1961.
Purex Reply,
at 3.
•
Purex
does not dispute
that
in June 1964, Purex Corporation, Ltd. liquidated and
dissolved T.F. Washburn, and merged it into Purex Corporation, Ltd.
Id.
•
Purex
admits
T.F.
Washburn
was operated
as a division of Purex Corporation, Ltd.
until
1974.
Id.
•
Purex
does not dispute
that
in
June 1974, Purex Corporation, Ltd. changed its name to
Punex Corporation.
Id.
•
Purex
does not
dispute
that Purex Industries, Inc.,
a Delaware corporation, acquired
all of the stock of Punex Corporation in
1978.
Id.
•
Purex
admits
that
in August
1982, Purex Corporation changed its name
to T.P.
Industrial, Inc.
Id.
at 4.
•
Punex
does not dispute
that
in
1986, T.P.
Industrial, Inc.
merged with the respondent
in these proceedings, Purex Industries, Inc.
Second, Purex centrally relies on a document, the so-called “Plan of Partial Liquidation,”
see
Suppl.
Smith Aff, Ex.
6,2
to
suggest that Purex’s predecessor
—
what Purex now calls “Purex
California”
—
“only retained the assets and liabilities of certain businesses.”
See
Purex Reply, at
4.
Curiously, Punex relegates the critical identification ofthose “certain businesses” to footnote
2 on page 4.
Id.
In that footnote, Purex contends “Turco Products Division” and “Freshpict
Foods,
Inc.” were the
“oniy”
businesses retained
by its predecessor.
Id.
at
4 n.2 (emphasis
2
The version ofthe Plan of Partial Liquidation that is attached as Exhibit 6
to the
Supplemental
Smith Affidavit is
not the same document that
was produced
to Elston in the
course of discovery.
Exhibit
6 bears
Bates Numbers
PUREX 4816-4826.
Those Bates numbers
are not affixed to any document ever produced
to Elston inthese
proceedings.
The documents produced
to Elston bore five-digit
and, later,
six-digit
Bates
numbers
—
never four
digits.
Further, the font of the
Bates
numbers placed
on Exhibit
6 are different than
the fonts ofthe
Bates numbers
on
documents produced to Elston in discovery.
Another version of the
Plan was produced to Elston bearing Bates
Numbers PUREX 015 14-01525, but it contains
a page in addition to the
version of the
Plan attached as Exhibit 6
to
the
Supplemental
Smith Affidavit
—
Bates
Number PUREX 01515.
5
added).
Purex leaves out ofits footnoted description of the retained “certain businesses” a
critical phrase from
the Plan of Partial Liquidation.
That phrase
—
perhaps more than any other
in
these proceedings
—
is absolutely devastating to Purex’sjurisdictional challenge.
Paragraph 2
ofthe Plan ofPartial Liquidation states:
The Corporation shall retain all the assets and liabilities of the
Turco Products Division (with the exception ofthe land and
buildings located at 24600 So. Main Street, Carson, California),
the Purex Industrial Division,
the Collateral (as defined in that
certain Security Agreement,
dated August
1,
1979, from the
Corporation to
Equitable Life Insurance Company of Iowa), and all
the stock ofFreshpict Foods,
Inc., Purex Export Corporation, and
the foreign subsidiaries ofthe Corporation (the “Retained Assets
and Liabilities”).
Suppl. Smith Aff, Ex.
6, at PUREX 4817-4818 (emphasis added).
“Punex Industrial Division”
was precisely the operation within Purex Corporation that was responsible fon.activities
at the
Elston Site.
According to Purex Corporation’s own Annual
Report in
1974 (the very year Punex
sold T.F. Washburn),
Purex told the securities markets that:
The Purex Industrial Division
sells floor
maintenance products,
a
line ofinstitutional
cleaning products, hotel
bar soaps, and
synthetic
floor pads.
Ex.
A, Suppl.
Neumann Aff, Ex. 3, at PLTREX 02540 (emphasis added).
T.F.
Washburn, in turn,
described itself before its acquisition by Purex as a manufacturer of“quality paint components
and
floorfinishing and maintenance products
since
1886.”
Id.,
Ex.
4, at PUREX 004337
(emphasis added).
The operations of T.F.
Washburn were clearly subsumed
within the Purex
Industrial Division ofPurex Corporation, according to Purex Corporation’s own Annual Report.
It should now be clear to
the Board precisely why Purex found it so necessary to omit the phrase
“Purex Industrial Division” from its misleading footnote 2.
To have included that phrase
would
have truthfully informed the Board ofthe nexus between the Respondent and the Elston Site.
6
Third, conveniently omitted from Purex’s presentation of the Plan ofPartial
Liquidation
is a document
entitled “Clarifications to Plan ofPartial
Liquidation” that was obviously
contemporaneously executed by representatives of“Purex California.”
See
Ex. A,
Suppl.
Neumann Aff, Ex.
5, at PUIREX 02805-02806.
The “Clarifications” to
the Plan include the
following statement:
1.
The following assets and
liabilities are included in
Exhibit A
“Retained
Assets
and Liabilities”
to the Plan:
All
liabilities, known and
unknown, relating to
discontinued operations previously disposed of
Id.
at PUREX 02805 (emphasis added).
Therefore,
among the liabilities retained by Punex
California
—
which
Punex contends is the predecessor to
the Respondent
in these proceedings
—
were the liabilities, known and unknown, arising from Purex Corporation’s discontinued
operations at the Elston Site, which had been “previously disposed of’ in
1974 and again in
1978.
Fourth, another document conveniently ignored by Purex is one that was created
after
the
cut-offdate (August
11,
1982) at which Punex chooses to
end its
chronological presentation in
the Reply.
See
Ex. A, Suppl. Neumann Aff, Ex.
6,
at P1.JREX 02801-02802.
That document,
entitled “Instrument ofAssignment and Assumption” is dated August
13,
1982,
and it confirms
that the corporate entity Respondent now calls “Punex Delaware” transferred to
the Respondent
in these proceedings, Punex
Industries,
Inc., the liabilities of the “Discontinued Businesses.”
Id.
Obviously, by 1982, Punex’s operations at the Elston Site (through its
Industrial Division and
through T.F.
Washburn) had
ended.
By that time,
the Elston operations were patently a
“Discontinued Business.”
Thus, even assuming Respondent were remotely correct
—
which it is
not
—
that the liabilities for the Elston Site were transferred on August
11,
1982 to
“Purex
Delaware,” two days later, on August 13,
1982, those liabilities would have been further
7
transferred to the Respondent, under the plain meaning ofdocuments Purex chooses to
sweep
under the rug.
Id.
That inescapable fact perhaps explains why Respondent chose to end its story
on August
11,
1982.
“The final step
in the levanage buyout,” Purex Reply, at 4, was not so
“final” it would appear.
As the foregoing amply demonstrates, Purex’s
own
documents
—
including those it
witiTheld from production until serving its
Reply
—
contradict its
self-serving version of events.
Purex’s Motion collapses under the weight ofthe overwhelming facts.
III.
ARGUMENT
A.
Purex Industries, Inc.
Is
Subject To The Board’s
In Personam
Jurisdiction.
1.
Purex Corporation Transacted Business And Committed Torts In
Illinois.
Initially, Purex absurdly states it has provided
an “affidavit” from the Illinois Secretary of
State’s office confirming that Purex has never been registered to do business in
Illinois.
See
Purex Reply, at 7.
Certificates like the one Purex obtained from the Secretary ofState simply
indicate that
State records do not reflect any filings by Purex reporting on its business activities
in Illinois.
The information is only as good as the information voluntarily supplied by firms that
do business in Illinois.
The Illinois Secretary of State’s office lacks the resources
and personnel
actually to
investigate and
to determine which firms
in the United States conduct business in
Illinois.
The certificate is
not
remotely an
“affidavit.”
It should only be accorded the evidentiary
weight it deserves: it is probative but not dispositive.
Second, Purex incorrectly characterizes Elston’s
argument as resting on the concept that
“Respondent is or was the parent ofseveral different subsidiaries or corporations that may or
may not have done
business or otherwise had
contacts with Illinois.”
Id.
at 7-8.
Purex misstates
Elston’s argument.
Elston does not contend Respondent Purex Industries, Inc.
is
Purex
Corporation on
is
Punex
Corporation’s Industrial Division or
is
T.F.
Washburn
on was the
8
“parent” ofany ofthose entities.
Rather, Elston contends Respondent
succeeded
to the liabilities
ofthose entities by virtue of the continuity of ownership that
spans a generation ofcorporate
forms.
Elston need not show that Respondent transacted business in
Illinois
—
only that
Respondent succeeded
to the liabilities of a firm that did.
As
stated in Elston’s opposition brief:
“the controversy now before this
Board really boils down to
one, inherently legal
question:
whetherthe personal jurisdictional contacts ofa predecessor corporation with Illinois are fairly
imputed to a non-resident successor corporation.”
Elston Resp., at 23.
While Purex throws up as
much chaffas it can to
distract the Board from that
central question, it remains the dispositive
legal issue presented in
the briefing.
2.
The
Personal Jurisdictional Contacts Of Purex Corporation
Are
Imputed
To
Its
Successor, the Respondent Purex Industries, Inc.
Purex does not seriously dispute that the jurisdiction-conferring contacts of a predecessor
corporation are imputed to its
lawful successor.
See
Purex Reply, at
10 (citing
Select Creations,
Inc.
v.
PaliafitoAmerica,
Inc.,
852
F. Supp.
740,
765
(E.D. Wis.
1994), andRj.
O’Brien &
Assoc., Inc.
v.
Newport Futures & Options Corp.,
1993
WL
14685,
*5
(N.D.
Ill.
1993)).
Purex
simply contends that it is not the successor to the corporations that operated the Elston Site,
and
that Elston has failed to
make the factual case for Purex’s status
as successor.
Id.
As should be evident from Elston’s opposition brief, Elston has chosen to rely on Purex’s
own admissions and on
the findings of other courts and administrative bodies for the proposition
that Purex
is the successor to Purex Corporation.
Stated differently, if Purex has
admitted
that it
is the successor to Purex Corporation, or other fact-finders have
made
that finding already, then
Elston
does not
need
to make a factual case orput on independent
evidence in support ofthat
proposition to
defeat
Purex’s Motion.
a.
United States v.
Farber
9
Purex
concedes
that
in
nesponse to interrogatories propounded in
the
Farber
proceedings
in
1988, it stated that it was in
fact the legal successor to Purex Corporation, which it also
concedes operated the Elston Site.
See
Purex Reply, at 6-7,
14-15.
Amazingly, Purex now states
that “in
1988, it may not have been fully aware” ofthe manner in which responsibility for the
Elston Site was transferred.
Id.
at
15.
Purex seriously contends, and apparently expects this
Board seriously to believe, that while it was not fully aware in
1988
ofthe inter-corporate
allocation of responsibility effected by the
1982
leveraged buyout
—
when memories were
fresh
and witnesses with personal knowledge wene still alive and
employed by Purex
—
it has
nonetheless come to its
senses in
2003.
It is emphatically certain now, over twenty years later,
that it is
not
responsible for the Elston Site, after all.
Elston respectfully suggests that the
interrogatory responses in
1988 should be given far
greater weight than the self-serving
arguments Purex now advances to
escape thejurisdiction ofthis State.
Finally, Purex asserts, without more,
that it did not benefit in the
Farber
proceedings
from the
verUled
discovery response (verified
by the very
same Mr. Smith) indicating that it was
the corporate
successor to
Purex Corporation.
How does the Board
know
that
to be true?
Where
is the
evidence
disproving
beneficial effect?
Where is thejudicial
order rejecting Purex’s
interrogatory response as false orperjurious?
Did the assertion carry any value in the settlement
reached in
Farber?
Mr. Smith’s “supplemental” affidavit is silent on these points.
Purex is
judicially estopped from taking
a position now so directly at odds with the position it took in
Farber.
b.
In the Matter ofthe Petition ofPurex Industries, Inc.
Next, Purex contends that the California State Water Resources Control Board (the
“California Board”) somehow got
it wrong when it ruled that Purex is responsible for the
10
pollution ofPurex Corporation.
See
Purex Reply, at
11-13.
Initially, it is no defense to
a
collateral estoppel argument that the original
fact-finder was in error.
The
entire point of the
doctrine is to
avoid re-litigating decided matters
that Purex had a full and fair opportunity to
litigate.
Punex
made precisely the same argument before the California Board that it makes here.
Purex lost.
The matter is decided.
Purex further argues that the California Board ignored what
Purex says is a controlling
decision of the U.S.
District Court for the Central District ofCalifornia in
Lockheed-Martin
v.
Crane Co.,
No. 94-2717 (C.D. Cal. Apr.
7,
1997).
See
Purex Reply, at 11-12.
Purex is wrong.
Initially, according to the case caption, it does not appear Purex Industries,
Inc. was an original
party in
the
Lockheed-Martin
proceedings.
Second, none ofthe parties in
Lockheed-Martin
are
the same as the parties that were before the California Board or that are implicated in
these
proceedings.
Owing to this utter lack of party identity, it strains credulity that anything decided
by the
Lockheed-Martin
court could ever conceivably bind the California Board
—
or this Board
—
in reaching any findings of fact about Purex Industries, Inc.
Even assuming there were party
identity,
the
Lockheed-Mai’tin
decision does not stand
for the proposition for which
Purex cites
it.
The finding of the
Lockheed-Martin
court was not some generalized, universal determination
that
all ofPurex’s environmental responsibilities, everywhere, were blissfully transferred to
others.
Such a reading ofthat
decision is patently absurd.
Rather, the ruling rested on
spec~JIc
agreements concerning
spec~flc
properties and relating
to
specUlc
liabilities
—
none ofwhich
was
at issue in the California Board proceedings or in these.
Purex also contends that the California
Board “disregarded contracts between the parties.”
See
Purex Reply, at
12.
Ofcourse the Board
did.
Those agreements did
not govern the liabilities the California Board
was weighing
concerning the Belmont Site.
Further, the California Board
took the position (a position this
11
Board should follow) that private agreements allocating responsibility on liability for pollution
never
can bind administrative pollution control boards.
See
Elston Resp., Ex.
A, Neumann Aff.,
Ex.
6, at *6*7.
On the contrary, such agreements either simply expand the scope ofliability to
include the transferees (with the transferors
still responsible) or create private rights of
contribution between contractual
parties that
do not affect the public’s right to compensation
and
remediation ofcontaminated sites.
Id.
Here, ifPurex truly believes that it has contractually
transferred its liabilities for the Elston Site to
a non-party, Purex
is free to bring that party into
these proceedings,
and to
seek appropriate contribution,
on
to bring a separate action
in the forum
ofits
choice.
Finally, rounding out a series ofselectively parsed quotations that risk misleading the
Board, Punex cites the California Board’s decision for the proposition that a stock purchase is
insufficient to impose liability on
the purchaser.
See
Purex Reply, at 8-9.
Purex quotes one
sentence
from the California Board’s decision, but omits a subsequent qualifying sentence.
The
entire quotation reads:
Although
AlliedSignal, Inc. purchased the stock ofBaron-
Blakeslee,
this fact alone is insufficient to impose liability on
AlliedSignal.
As
a general rule,
a parent corporation, like any
other stockholder,
is protected from liability by the corporate
veil.
There is some evidence in the record, however,
to indicate that the
two companies may have merged.
If this is true,
AlliedSignal, Inc.
would have acquired the liabilities ofBaron-Blakeslee-Del.
Elston Resp.,
Ex. A, Neumann Aff., Ex. 6, at
*5
(emphasis added).
Here,
Elston argues and
Purex concedes that just such
mergers
occurred between (a)
Purex Corporation and T.F.
Washburn in
1964 and
(b) between T.P.
Industrial (to which Purex Corporation changed its
name
in
1982) and
the Respondent, Purex Industries, Inc.,
in
1986.
Respondent has, in the words of
the California Board, “acquired the liabilities” ofPurex Corporation and T.F.
Washburn via a
series ofmergers.
Just as Elston does not remotely contend that Respondent
is
Purex
12
Corporation or
is
T.F.
Washburn, Elston does not suggest that Respondent is merely the
parent
or
stockholder
of those operators ofthe Elston Site.
Rather, Respondent is the lawful
successor
to
those corporations, by merger, and is fully accountable for their pollution at the Site.
c.
AssociatedAviation
Underwriters, Inc.
v. Purex Industries,
Inc.
Next,
Purex contends Elston’s reliance on
Associated Aviation
Underwriters
v. Purex
Industries, Inc.,
99 Cal. App. 4th 400 (Cal.
Ct. App.),
cert. granted,
124 Cal. Rptn. 2d
662
(Cal.
2002), is misplaced.
See
Purex
Reply, at 13-14.
Purex states that
it merely retained insurance
coverage rights under the applicable policy by virtue of a “1985
contract of sale.”
First ofall,
where
is that contract of sale?
All the Board
is given are the words of a witness whose testimony
has gone through various iterations and gyrations since
1988 on
the matter of whether Purex is
a
successor to Purex Corporation.
Second, the
AssociatedAviation
court used the precise words
“successor” to
describe Purex’s own argument
that it was entitled
to insurance coverage.
See
AssociatedAviation,
99 Cal. App. 4th at 403.
The court did not use the words contractor,
purchaser, assignee, beneficiary or any other term with legal
significance.
It used the word
“successor” to describe Respondent’s relationship to
the insurance policies of Purex Corporation.
Third, Elston has repeatedly requested that Purex produce the briefing and pleadings from the
AssociatedAviation
case in order to discover what precisely Purex argued
in those proceedings
about
its relationship to Purex Corporation.
Purex has steadfastly refused to provide those
documents.
Fourth and
finally, Purex completely glosses
oven the authority in
Columbia Cas.
Co.
v.
Playtex, Inc.,
No.
88
C 3446,
1988
WL 76976 (N.D.
Ill.
1988).
See
Purex Reply, at
14
&
n.7.
Purex does not dispute the
Columbia
court’s holding that where a corporation claims the
benefits ofan
insurance contract procured by its predecessor, “it appears to
us that
it
has taken
on the rights and
obligations of the
predecessor
and therefore that the
predecessor’s
contacts
13
with Illinois may be
imputed to
the
successor claiming the insurance rights.”
Id.
Therefore, by
its own conduct in the
AssociatedAviation
proceedings, Purex claimed the status of successor to
Purex Corporation and is now properly estopped from denying that status in these proceedings.
d.
Purex Is
Not
A
Mere Asset Purchaser; It
Merged
With Purex
Corporation And T.F. Washburn
Finally, Purex cites the
Hoppa
decision for the completely irrelevant point that there are
four limited exceptions
to the basic tenet of corporate law that “a mere transfer of assets from
one corporation to
another does not make the latter liable for the debts or liabilities ofthe first
corporation.”
See
Purex Reply,
at
15-16.
For the record, Elston is not
contending that Purex
merely purchased the assets ofPurex Corporation or T.F. Washburn.
Elston is contending,
and
the record unequivocally demonstrates,
that
Punex
succeeded to the liabilities ofthese entities
via
a series ofstatutory andformal mergers.
Therefore,
the asset purchaser case law is entirely
inapposite.
Next,
Purex ignores the
overwhelming
weight of authority from the federal and sister
state courts holding that, if successor liability is established, a corporate successor succeeds to
thejurisdictional contacts ofits predecessor.
Purex relies on unpublished
cases, proactively cited
by Elston in its opposition brief as inapposite
asset purchaser
cases, and on
a lone Southern
District of Mississippi case, for the spurious proposition that a successor corporation
is not
properly imputed with the jurisdictional contacts of its predecessor.
See
Purex Reply, at 9-10.
Elston stands on the briefing.
The Board should simply compare the
fourteen
well-reasoned
federal and
state decisions cited by Elston in its opposition brief with the paltry case authority to
which Purex directs the Board.
The result should be clear:
successor corporations are imputed
with thejurisdictional contacts oftheir predecessors,
as a matter oflaw.
14
B.
The Affidavit ofJeffrey M.
Smith Should Be Stricken.
Punex
strives mightily to
save Mr.
Smith’s opening affidavit from its
rather obvious
invalidity.
See
Purex Reply, at 17-19.
Purex utterly fails.
First,
Purex has now resolved any lingering doubts about whether Mn. Smith has even a
modicum ofactual, personal knowledge ofthe facts concerning Purex
‘
s relationship to the
1961-
1978 operations ofits T.F. Washburn
and Industrial Divisions.
He emphatically does not.
Mr. Smith has now twice provided sworn testimony that he became employed by
Punex
in
1984
—
23 years after Purex acquired T.F. Washburn,
and six years after Purex sold the assets of its
T.F. Washburn Division at the Elston Site.
Indisputably,
Mr. Smith cannot possibly have
“innate” knowledge ofany of these facts which occurred decades before the “inception” ofhis
employment with Purex.
In fact, Purex now acknowledges that
Mn.
Smith cannot even “provide
binding testimony on behalfof the corporation” on these matters.
See
Punex Reply, at
17
n.9.
Second, Mr. Smith’s rather sudden expertise in these matters is surprising, and
it is at
least contradicted by what he told EPA agents in
1986, to
wit:
“Mr. Smith wished he could help
me out but he
essentially knew
nothing of T F Washburn.”
Elston Resp.,
Ex. A, Neumann
Aff, Ex.
16, at EPA 00004.
Third, Mr. Smith
still
has not met the very specific
factual allegations set forth in
Elston’s
Complaint.
Those allegations describe in
detail the facts surrounding Purex’s succession to the
liabilities of T.F.
Washburn
Co.
and Purex Corporation at the Site.
Rather than address these
allegations head-on, Mr. Smith describes how an entity referred to
as “Purex Delaware”
succeeded to the “assets” ofPurex Corporation’s “consumer household products” operations.
Suppl.
Smith Aff.
¶
6.
Mr.
Smith then attaches, without comment, various incomplete “plans of
liquidation” which his client has never produced to Elston in these proceedings and
from which
15
Purex argues that liabilities relating to the Site were “transferred” to “Purex Delaware.”
Id.
¶~J
14
&
15;
Purex
Reply, at 4-6.
Even assuming these “plans ofliquidation” are relevant to the
Board’s deliberation ofPurex’s contacts with Illinois, Purex’s version of history derived from
these documents cannot be
“corroborated independently” as Purex suggests.
In fact, Elston
offers in support ofits
Sur-Reply a “Clarification” and subsequent “Assignment and
Assumption” relating to these “plans ofliquidation” that Purex
did
produce in these proceedings.
See
Ex. A,
Suppl.
Neumann Aff., Exs.
5
&
6.
As
stated above, these documents, when read in
conjunction with the related “plans of liquidation” relied upon by
Punex, demonstrate that Purex
has
in fact succeeded to
the liabilities of its former T.F.
Washburn and
Industrial Divisions
relating to
the Site.
Finally,
Purex does not successfully rebut the obvious, conclusory nature ofMr.
Smith’s
opening affidavit.
Rather,
it tries to salvage that affidavit by relying on a line of Illinois cases
that
suggests that
the non-conclusory portions of a
defective affidavit need not
be stricken.
See
Purex Reply, at 18-19.
Purex never identifies precisely which part ofMr. Smith’s nine-line,
89-
word opening affidavit is
not
conclusory and, therefore, not subject to
exclusion.
Perhaps the
best evidence that Purex now understands
that Mr. Smith’s
affidavit was and is inadequate to
support a jurisdictional challenge is found in
its submission ofa “supplemental” affidavit that
relies, in material part, on documents Purex has previously withheld from production.
In sum, Mr.
Smith does not have personal knowledge ofthe facts to
which he testifies in
either ofhis affidavits, and
his testimony is not “reasonably reliable.”
In addition, Mr.
Smith
relies on documents never before produced to Elston
in these proceedings.
Finally, Mr.
Smith’s
testimony regarding the alleged “transfer” ofliability relating to Purex’s T.F.
Washburn and
Industrial Divisions at the Site cannot be
“independently corroborated.”
For these reasons, even
16
under the forgiving test posited by Punex, Mr.
Smith’s original affidavit, and now his
supplemental affidavit, must be stricken and should be disregarded by the Board.
Since Purex
has proffered no competent evidence to
controvert Elston’s jurisdictional allegations, the truth of
those allegations must now be assumed by the Board, and
Purex’s Motion to Dismiss must be
denied.
IV.
CONCLUSION
WHEREFORE, for all the reasons stated herein, Elston respectfully requests that the
Board grant its Motion to
Strike, and
deny Punex’s Motion.
Dated:
May 23, 2003
Respectfully submitted,
GREENBERG TRAURIG,
L.L.P.
By:
~
C~f~topher
J. Neumann
Attorneys for Complainant
2222 Elston LLC
Francis A.
Citera, Esq.
Daniel T. Fahner, Esq.
Greenberg Tnaunig, P.C.
77
West Wacken Drive
Suite 2500
Chicago, Illinois
60601
Telephone: (312) 456-8400
Facsimile:
(312) 456-8435
Craig V. Richardson, Esq.
Christopher J. Neumann, Esq.
Greenberg Traurig, L.L.P.
1200 Seventeenth Street
Twenty-Fourth Floor
Denver, Colorado 80202
Telephone: (303) 572-6500
Facsimile: (303) 572-6540
#55117
17
