LCCS Group v. A.N. Webber Logistics, Inc. et al
ORDER Signed by the Honorable Amy J. St. Eve on 10/11/2016: The Court denies Defendant Si-Tech Industries, Inc.'s motion to dismiss 61 . Said defendant shall file its answer by 10/25/16. [For further details, see Order.] Mailed notice(kef, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
A.N. WEBBER LOGISTICS, INC., et al.,
Case No. 16 C 5827
Judge Amy J. St. Eve
The Court denies Defendant Si-Tech Industries, Inc’s (“Si-Tech”) motion to dismiss
brought pursuant to Federal Rule of Civil Procedure 12(b)(6). . Said defendant shall file its
answer by October 25, 2016.
On June 3, 2016, Plaintiff LCCS Group brought a Complaint against numerous
Defendants, including Defendant Si-Tech, pursuant to provisions of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §
9601 et seq. (“CERCLA”). Before the Court is Defendant Si-Tech’s Rule 12(b)(6) motion to
dismiss. For the following reasons, the Court denies Si-Tech’s motion.
“A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) challenges the
viability of a complaint by arguing that it fails to state a claim upon which relief may be
granted.” Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 736 (7th Cir. 2014). Under
Rule 8(a)(2), a complaint must include “a short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The short and plain statement under Rule
8(a)(2) must “give the defendant fair notice of what the claim is and the grounds upon which it
rests.” Bell Atlantic v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)
(citation omitted). Under the federal notice pleading standards, a plaintiff’s “factual allegations
must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555.
Put differently, a “complaint must contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct.
1937, 173 L. Ed. 2d 868 (2009) (quoting Twombly, 550 U.S. at 570). In determining the
sufficiency of a complaint under the plausibility standard, courts must “accept all well-pleaded
facts as true and draw reasonable inferences in the plaintiffs’ favor.” Roberts v. City of Chicago,
817 F.3d 561, 564 (7th Cir. 2016).
In its Complaint, Plaintiff alleges that there has been a release and/or threat of release of
hazardous substances from a facility known as the Lake Calumet Cluster Site (“LCCS
Site”) located in Chicago, Illinois. (R. 1, Compl. ¶¶ 1, 4.) Plaintiff further alleges that these
hazardous substances have contaminated the soil and groundwater at the LCCS Site and have
threatened the public health and environment. (Id. ¶ 1.) Also, Plaintiff maintains that each
named Defendant generated and/or transported hazardous substances that were disposed of at the
LCCS Site. (Id.)
Plaintiff alleges that Defendant Si-Tech is the successor to Reliable Liquid Control Corp.
(“Reliable Liquid”) and Reliable Oil Co. (“Reliable Oil”), which were in the business of liquid
waste hauling. (Id. ¶¶ 402, 405, 417, 420.) Plaintiff alleges that according to LCCS Site
records, Reliable Liquid by contract or agreement arranged for the disposal or treatment, and/or
arranged with a transporter for transport for disposal or treatment of waste containing hazardous
substances owned or possessed by Reliable Liquid from the LCCS Site. (Id. ¶ 415.) Also,
according to LCCS Site records, Reliable Oil by contract or agreement arranged for the disposal
or treatment, and/or arranged with a transporter for transport for disposal or treatment, of waste
containing hazardous substances owned or possessed by Reliable Oil from the LCCS Site. (Id. ¶
In the present Rule 12(b)(6) motion, Si-Tech contends that Plaintiff has failed to
plausibly allege successor liability under the federal pleading standards. Although the Seventh
Circuit has held Congress intended that successor liability applies in the context of CERCLA,
the “general rule is that an asset purchaser  does not acquire the liabilities of the seller.” N.
Shore Gas Co. v. Salomon, Inc., 152 F.3d 642, 651 (7th Cir. 1998) (applying federal common
law), overruled in part on other grounds, Envision Healthcare, Inc. v. PrefferredOne Ins. Co.,
604 F.3d 983 (7th Cir. 2010); see also Precision Brand Prod., Inc. v. Downers Grove Sanitary
Dist., No. 08 C 5549, 2011 WL 3489844, at *4 (N.D. Ill. Aug. 8, 2011). There are four
exceptions to this general rule: “(1) the purchaser expressly or impliedly agrees to assume the
liabilities; (2) the transaction is a de facto merger or consolidation; (3) the purchaser is a ‘mere
continuation’ of the seller; or (4) the transaction is an effort to fraudulently escape liability.” N.
Shore Gas, 152 F.3d at 651 (citing Vernon v. Schuster, 179 Ill. 2d 338, 345 (Ill. 1997)).
In the present motion, Si-Tech argues that Plaintiff has failed to sufficiently allege facts
that would support any of these four exceptions to the general rule that an asset purchaser does
not acquire the liabilities of a seller. Plaintiff, on the other hand, asserts that it has sufficiently
alleged factual allegations that Si-Tech is the successor to both Reliable Liquid and Reliable Oil
under either the second or third exceptions outlined in N. Shore Gas and Vernon. Turning to the
second exception, “to establish a de facto merger, the following factors need to be present: (1)
there is a continuity of the business enterprise between seller and buyer, including continuity of
management, employees, location, general business operations and assets; (2) there is a
continuity of shareholders, in that shareholders of the seller become shareholders of the buyer so
that they become a constituent part of the buyer corporation; (3) the seller ceases operations and
dissolves as soon as possible after the transaction; and (4) the buyer assumes those liabilities and
obligations necessary for the uninterrupted continuation of the seller’s business.” Steel Co. v.
Morgan Marshall Indus., Inc., 278 Ill. App. 3d 241, 248 (1st Dist. 1996). The “mere
continuation exception allows recovery when the purchasing corporation is substantially the
same as the selling corporation.” N. Shore Gas, 152 F.3d at 654; see also Vernon, 179 Ill. 2d at
346 (“The continuation exception to the rule of successor corporate nonliability applies when the
purchasing corporation is merely a continuation or reincarnation of the selling corporation.”).
The focus of this inquiry is “whether the purchaser continues the corporate entity of the seller,
not so much on whether the purchaser continues the business operations of the seller.” N. Shore
Gas, 152 F.3d at 654 (emphasis in original); see also Vernon, 179 Ill. 2d at 346. “Courts have
identified a number of factors that suggest that the seller’s corporate entity has continued on after
the sale of assets,” including, “an identity of officers, directors, and stock between the selling
and purchasing corporations.” N. Shore Gas, 152 F.3d at 654 (citation omitted).
Plaintiff maintains that it has alleged sufficient facts to show an identifiable continuity of
business operations, management, corporate officers, business location, a common ownership,
and a timely dissolution of the predecessor company to demonstrate that Si-Tech is the successor
to Reliable Liquid and Reliable Oil through either mere continuation theory or de facto merger
exceptions. More specifically, in its Complaint, Plaintiff alleges that Si-Tech, which is in the
business of liquid waste hauling, is the successor to Reliable Liquid. (Compl. ¶¶ 402, 414.) On
or about March 25, 1975, Reliable Liquid was formed as an Illinois corporation. (Id. ¶ 403.)
Reliable Liquid had a principal place of business at 7700 West 88th Street, Bridgeview, Illinois
and was in the business of liquid waste hauling. (Id. ¶¶ 404, 405.) On or about August 28, 1990,
Si-Tech filed as a foreign corporation with the Illinois Secretary of State. (Id. ¶ 406.) On or
about August 1, 1992, the Illinois Secretary of State involuntarily dissolved Reliable Liquid. (Id.
¶ 407.) The last known officer of record for Reliable Liquid was President Fred J. Sykora with
an address of 10647 South St. Louis Street, Chicago, Illinois. (Id. ¶ 408). The last known
officers of record for Si-Tech, include President Michael J. Sykora, with an address of 17202
South 70th Avenue, Tinley Park, Illinois and Secretary Gerald T. Slattery, with an address of
10844 South Maplewood, Chicago, Illinois. (Id. ¶ 409.) In or about 2001, the 7700 West 88th
Street, Bridgeview, Illinois property was sold to the Village of Bridgeview, Illinois, with the
warranty deed signed by Michael J. Sykora. (Id. ¶ 410.) According to EPA, the 7700 West 88th
Street, Bridgeview, Illinois property is associated with EPA identification number
ILD089064745, which is assigned to Si-Tech. (Id. ¶ 411.) Additionally, EPA also assigned
EPA identification number ILD089064745 to Reliable Liquid also at the 7700 West 88th Street,
Bridgeview, Illinois property and the regulatory contact is Michael Sykora. (Id. ¶ 412.)
Plaintiff also alleges that on or about January 1, 1980, Reliable Oil was formed as an
Illinois corporation. (Id. ¶ 418.) Further, Plaintiff asserts that Reliable Oil had a principal place
of business at 10647 South St. Louis Street, Chicago, Illinois, which is the same address as
Reliable Liquid’s President Fred J. Sykora. (Id. ¶ 419.) Plaintiff further alleges that Reliable Oil
was in the business of liquid waste hauling. (Id. ¶ 420.) On or about August 28, 1990, Si-Tech
filed as a foreign corporation with the Illinois Secretary of State. (Id. ¶ 421.) Plaintiff maintains
that on or about May 16, 1996, Reliable Oil was dissolved by the Illinois Secretary of State. (Id.
¶ 422.) The last officers of record for Reliable Oil were President Fred J. Sykora and Secretary
Michael J. Sykora. (Id. ¶ 423.) Plaintiff alleges the last known officers of record for Si-Tech are
President Michael J. Sykora – with an a address of 17202 South 70th Avenue, Tinley Park,
Illinois and Secretary Gerald T. Slattery – with an address of 10844 South Maplewood, Chicago,
Illinois. (Id. ¶ 424.)
Viewing the facts and reasonable inferences in Plaintiff’s favor, these allegations provide
sufficient details that plausibly allege both the mere continuation and de facto merger exceptions,
including that Si-Tech and the Reliable Entities have similar or the same corporate officers,
operate the same type of business, and utilize the same EPA identification number. See Iqbal,
556 U.S. at 679 (“Determining whether a complaint states a plausible claim for relief” is “a
context-specific task that requires the reviewing court to draw on its judicial experience and
common sense.”). Nevertheless, Si-Tech argues that Plaintiff has failed to allege sufficient facts
concerning the continuity of ownership between the Reliable Entities and Si-Tech. See General
Elec. Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1084 (7th Cir. 1997) (under
Illinois law, “a purchaser of assets will not be liable under the theory of de facto merger or mere
continuation in the absence of continuity of ownership.”).
As the Supreme Court teaches, the “[f]ederal pleading rules call for ‘a short and plain
statement of the claim showing that the pleader is entitled to relief,’ they do not countenance
dismissal of a complaint for imperfect statement[s] of the legal theory supporting the claim
asserted.” Johnson v. City of Shelby, Miss., ___ S.Ct. ___, 135 S. Ct. 346, 346, 190 L.Ed.2d 309
(2014) (per curiam) (citing Fed.R.Civ.P. 8(a)(2)). Simply put, “[a] complaint must narrate a
plausible grievance; it need not set out a legal theory or cite authority.” Frank v. Walker, 819
F.3d 384, 387 (7th Cir. 2016). Here, Plaintiff has alleged sufficient factual details plausibly
alleging Si-Tech’s successor liability under both the mere continuation and de facto merger
exceptions. See Iqbal, 556 U.S. at 678 (“A claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw a reasonable inference that the defendant is liable
for the misconduct alleged.”). That is all that is required at this juncture.
For these reasons, the Court denies Si-Tech’s motion to dismiss.
Dated: October 11, 2016
AMY J. ST. EVE
United States District Court Judge
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