Facts

The United States of America, on behalf of the United States Environmental Protection Agency (EPA), and the California Dept. of Toxic Substances Control (DTSC) filed a lawsuit on Oct. 27, 2008, against Sterling Centrecorp Inc., Stephen P. Elder, and Elder Development Inc. under Section 107(a) of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"). They sought to recover response costs incurred and to be incurred at the Lava Cap Mine Superfund Site, located in Nevada County, California.

The site consisted of a mine area, where hard rock gold and silver mining operations occurred, downstream areas where waste materials created at the Lava Cap Mine came to be located, and groundwater underlying the site. In addition, the downstream areas of the site included Little Clipper Creek and Clipper Creek drainage, and Lost Lake, just miles downstream of the mine area of the site. The groundwater portion of the site included drinking water wells with high levels of arsenic and other areas of groundwater impacted by arsenic.

The trial involved only Sterling's liability.

PLAINTIFF'S CONTENTIONS:
Plaintiffs alleged that Sterling, a Canadian corporation, was liable for expressly and impliedly assuming the liabilities of the mine's operator, Lava Cap Gold Mining Corp. ("LCGMC"), when it acquired all of LCGMC's assets; that Sterling's acquisition of LCGMC was a de facto merger; and that Sterling's pervasive control of the mine and the subsidiary that owned it resulted in liability for clean-up costs.

Plaintiffs further alleged that the court had personal jurisdiction over Sterling because the forum contacts of LCGMC could be imputed to Sterling as LCGMC's successor, and that Sterling's own contacts with the forum were sufficient for jurisdiction.

DEFENDANT'S CONTENTIONS:
Sterling argued that it was not subject to jurisdiction in California due to insufficient contacts with the state. Sterling contended that it did not assume the liabilities of Lava Cap Gold Mining Corp. when it purchased the company's assets and that it did not continue the business of Lava Cap as a de facto merger.

Sterling also contended that its subsidiary, Keystone Copper Corp., not Sterling, was the operator of the mine until it was sold to Elder.

Damages

The government estimated that cleanup costs amounted to $22 million.

Result

The court determined that Sterling is liable for the clean-up costs and found that it had properly exerted personal jurisdiction over Sterling.