On Tuesday, the Sixth Circuit upheld the Northern District of Ohio’s prior ruling that Lockheed Martin Corporation, not Goodyear Tire & Rubber Company, is liable for more than $40 million in remediation costs at a contaminated blimp factory known as the Airdock. (Lockheed Martin, Corp. v. The Goodyear Tire & Rubber, Co., Case No. 12-4108) Through a series of transactions, ownership of the Airdock had transferred from Goodyear to Lockheed. In 2003, Lockheed discovered contamination at the Airdock and entered into a consent agreement with the United States EPA to clean up the contamination. Lockheed later sued Goodyear under CERCLA and Ohio’s Voluntary Action Program in an attempt to recover the cleanup costs.
At the trial court, Goodyear moved for summary judgment arguing that it had transferred any environmental liability for the Airdock through a 25 year old asset purchase agreement. Lockheed countered by insisting that all liabilities attendant with the Airdock had not been transferred under that agreement. The Sixth Circuit, however, agreed with Goodyear’s interpretation of the agreement and held that Goodyear was not responsible for the environmental cleanup costs based on the plain language of the agreement. This case is a textbook one of how to apply the parties’ intent to a contract, even when it happens to be a quarter-century old. It is also a good reminder when drafting contracts to take care to ensure that there is certainty in allocation of risks.