The opinion of the court was delivered by: DENNY CHIN, District Judge
In this case, brought pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"),
42 U.S.C. § 9601-9675, plaintiff Consolidated Edison Company of New York,
Inc. ("Con Ed") seeks to hold defendant UGI Utilities, Inc. ("UGI") liable
for environmental response costs
related to soil and groundwater contamination from manufactured gas
plant ("MGP") activities undertaken from 1898 to 1904 at sites owned by a
subsidiary and a predecessor of UGI. Defendant moves for summary judgment
pursuant to Fed.R.Civ.P. 56. For the reasons set forth below,
defendant's motion is granted.
For purposes of this motion, the facts are construed in the light most
favorable to Con Ed as the party opposing summary judgment.
A. The Origins of UGI, 1882-1887
United Gas Improvement Company ("UGIC") was formed in June 1882 by a
group of Philadelphia business men for the purpose of "manufacturing gas
and gas-making machinery" based on the patent for a "water gas" process
and apparatus, obtained in April 1882 from inventor Thaddeus S.C. Lowe.
(Def. Exh. 2 at 32, 34-39; Gary Aff., Exh. 4 at UGI 1353; Gary Aff., Exh.
3 at UGI 5332). Lowe water gas was an improvement over coal gas because
it produced more light at a lower cost. (Gary Aff., Exh. 4 at UGI 1353).
UGIC sought ways to exploit and use this new technology, including by
purchasing certain existing gas works, establishing or building new gas
works that it would use itself or sell to others, and entering into
agreements to operate certain gas plants in return for a share of the
profits. (Def. Exh. 2 at 32-33; Def. Exh. 4 at 89; Gary Aff., Exh. 5 at
Under Pennsylvania law, UGIC could not hold stocks in another
corporation. (Gary Aff., Exh. 5 at 96). Accordingly, in 1887, the owners
of UGIC formed a new company called the Union Company and used it to
acquire an old Pennsylvania corporate charter with broad powers that
included the right to own other corporations. (Def. Exh. 4 at 89; Gary
Aff., Exh. 5 at 96-97). The name of this new company was then changed to
The United Improvement Company ("TUGIC"). (Id.).
B. UGI Acquisitions in New York. 1888-1900
TUGIC, which would later become UGI, purchased all of the assets of
UGIC in 1888 and then used the charter to acquire gas and electric
properties across the United States. (Id.; Def. Exh. 3 at
UGI*fn1 acquired ownership interests in the White Plains Lighting
Company and Hudson River Gas & Electric Company of Tarrytown in 1898
and 1900, respectively. (Gary Aff., Exh. 29; Exh. 33 at ENV 93, 95; Def.
Exh. 9 at 276).
In a January 1900 Board Meeting, UGI President Thomas Dolan reported
that UGI had acquired interests in, inter alia, New Rochelle
Electric Company, Pelham Electric Light and Power Company, Port Chester
Electric Light Company, and the White Plains Electric Company. (Def. Exh.
6 at 114). Dolan also reported that UGI had organized a company known as
Gas and Coke Company, which had gas franchises in Mount Vernon and
New Rochelle. (Id.).
In March 1900, UGI acquired the New York Suburban Gas Company ("New
York Suburban") from the American Gas Company ("American Gas") (Def. Exh.
7), itself a consolidation of utility companies owned by American Gas
the Eastchester Gas Light Company, the Pelham Gas Light Company,
the Larchmont Gas Company, the Westchester Gas and Electric Company, and
the New Rochelle Gas and Fuel Company. (Def. Exh. 8). UGI
thereby acquired interests in MGP sites in Mount Vernon, New Rochelle,
Pelham, Port Chester, and Rye.
Each company in which UGI invested had a superintendent who oversaw the
day-to-day activities of the gas plant. (Macey Dep. at 292-94). UGI
developed an audit system pertaining to its various subsidiaries'
budgets, expenditures, and best practices. (Def. Exh. 4 at 98).
According to an April 9, 1894 account in the Daily Philadelphia
Stockholder describing UGI, each UGI subsidiary
"should have a separate and independent
organization, reporting, however, to the head
office in [Philadelphia]. . . . The local
superintendents are thus kept in close touch with
the home office, and they take no important step
which is not specifically authorized. While their
instructions are to purchase in the city where
each plant is located all needful supplies
obtainable there, and thus give to each city the
benefit of outlays in part incidental with the
carrying on of the business, supplies, such as
coal, oil, cast iron pipe, etc., are purchased
through the home office, in order that here in the
East the company may secure the benefit of minimum
prices. Attached to
the company is a corps of traveling auditors,
one of whom visits each local company every three
months and makes an examination of its operations
and reports thereon to the home office. . . . Not
a dollar is outlayed for its account at any
point or for any purpose which is not first
approved at the home office, and there is the
closest scrutiny into each item of
expense. . . . Annually there is a convention of
superintendents of the local companies, presided
over by the general superintendent, at which,
besides reports of each as to the operations of
the plant or plants under his control, papers are
read on practical subjects relating to the objects
of the company, etc.
(Gary Aff., Exh. 6 at 2).
C. Formation and Operation of WLC
In November 1900, UGI organized a new subsidiary to be called the
Westchester Lighting Company ("WLC"). (Def. Exh. 10 at CE/UGI 6375). WLC
was incorporated for the purpose of "manufacturing and supplying gas for
lighting the streets and public and private buildings or cities, villages
and towns in the State of New York, and for manufacturing and using
electricity for producing light, heat and power. . . ." (Def. Exh. 10
at 281). UGI owned more than 80% of WLC's total shares. (Def. Exh. 11 at
At their first board meeting on November 9, 1900, WLC's nine directors
appointed a special committee to "investigate and make inquiry" into the
desirability of acquiring the various Westchester gas and electric
entities owned by UGI. (Def. Exh. 11 at 295, 297). The committee, with
the help of a gas and
electric light business expert, approved the proposed acquisition
and merger. (Id.).
On November 30, 1900, the WLC board acquired and then merged the
companies in which it had obtained interests: the Pelham Electric Light
and Power Company, Port Chester Electric Lighting Company, Larchmont
Electric Light Company, Eastchester Electric Company, and the Westchester
Gas and Coke Company. (Def. Exh. 11 at 307-13). Accordingly, WLC became
the owner of MGP sites in Rye, Mount Vernon, Pelham, Port Chester, and
In February 1901, WLC purchased the Hudson River Gas and Electric
Company and the White Plains Lighting Company. (Id. at 459-61).
In November 1902, WLC merged the companies into WLC. (Id.).
WLC thus became the owner of MGP sites in Tarrytown and White Plains.
Upon WLC's creation in 1900, none of the first nine men listed in the
WLC Certificate of Incorporation and selected to serve on WLC's board
were dual office-holders. (Def. Exh. 11 at 289; Def Exh. 12 at 724). At
no time during 1900 to 1904 did UGI directors, officers, or employees
constitute a majority of the directors or officers of WLC. (Def. Exh. 12
During the first months of the WLC board's existence, the directors
appointed an executive committee to help manage the company, elected its
president who would serve for the next four
years, and reviewed the strength of each constituency company
before effecting the large-scale merger. (Def. Exh. 11 at 296-301, 446).
In 1901, three of the nine WLC directors held UGI senior executive
positions. (Def. Exh. 12 at 724). Two of the other board members
A.M. Young and R.A.C. Smith had worked "in conjunction" with UGI
to acquire possession of the New Rochelle Electric Company, Pelham
Electric Light and Power Company, Port Chester Electric Light Company,
Larchmont Electric Light Company, Eastchester Electric Company, and White
Plains Electric Company. (Def. Exh. 6 at 114; Exh. 11 at 446-47).
In 1902 and 1903, four of the eleven WLC directors held UGI senior
executive positions. (Id.). In 1904, four, then five, of eleven
directors held UGI senior executive positions. (Id.).
From 1900 to 1904, UGI senior executives never held the positions of
WLC president, vice president, or secretary. (Id.). UGI
executives did hold positions as WLC treasurer, assistant secretary, and
managing director. (Id.). Specifically, UGI's treasurer Lewis
Lillie was elected to assistant secretary and treasurer of WLC. (Def.
Exh. 11 at CE/UGI 12469, 19079). UGI's general superintendent Walton
Clark was named WLC managing director. (Id. at CE/UGI 19078).
The managing director "shall have the general management of the
business and properties of the company, and shall perform such other
duties as may be imposed upon him by the
board of directors." (Def. Exh. 11 at CE/UGI 12387). According to
the WLC bylaws, the duties of WLC's president included "presid[ing] at
all meetings of the board of directors," "act [ing] as temporary chairman
at and call [ing] to order all meetings of the stockholders,"
"countersign[ing] all checks, and . . . sign[ing] drafts, notes,
certificates of stock, and all contracts and other instruments, unless
otherwise ordered by the board." (Def. Exh. 11 at CE/UGI 12385). ...