De Facto Merger, Federal Common Law, and Erie: Constitutional Issues in Successor Liability

Tuesday, January 1st, 2008 at 12:00 am by Wendy B. Davis
Wendy B. Davis, De Facto Merger, Federal Common Law, and Erie: Constitutional Issues in Successor Liability, 2008 Colum. Bus. L. Rev. 529

For many decades, the Supreme Court has directed that federal courts limit the creation of federal common law, and instead use state common law to fill in the gaps in federal statutes. Contrary to this directive, federal courts have developed rules of corporate successor liability for obligations pursuant to CERCLA and other federal statutes. Although other commentators have explored this inconsistency, none have taken the position that the creation of federal common law preempts state corporate de facto merger analysis. This Article discusses the Erie doctrine and federal common law with a focus on the preemption of the state de facto merger doctrine and the resulting impact on mergers and acquisitions. The creation of a federal common law of successor liability implicates the Constitutional requirements of separation of powers, due process, and the direct mandate of the Supreme Court.

Author Information

Associate Professor of Law, Albany Law School.