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Guerrero v. Allison Engine Company3/22/2000
l destruction of the plaintiff's remedies against the original manufacturer caused by the successor's acquisition of the business, (2) the successor's ability to assume the original manufacturer's risk-spreading rule, and (3) the fairness of requiring the successor to assume a responsibility for defective products that was a burden necessarily attached to the original manufacturer's good will being enjoyed by the successor in the continued operation of the business. Ray v. Alad, 560 P.2d at 9.
Accordingly, the court held that a successor corporation that "acquires a manufacturing business and continues the output of its line of products under the circumstances here presented assumes strict tort liability for defects in units of the same product line previously manufactured and distributed by the entity from which the business was acquired." Id. at 11.
b. The Supreme Court of New Mexico
In Garcia v. Coe Mfg. Co., 933 P.2d 243, an employee who worked at a fiberboard plant came into contact with a conveyor. The conveyor pulled the employee underneath and crushed him to death. The employee's estate brought a products liability action against Coe Manufacturing Company ("Coe"). Coe had purchased the assets of its predecessor corporation, which had manufactured the conveyor. The court rejected the estate's argument that Coe was a mere continuation of its predecessor, as Coe did not share the same directors, officers or shareholders with its predecessor. Id. at 247. However, the court went on to consider the product line exception:
When a successor corporation continues to market many of the same products and represents to the public and it's predecessor's customers that it is continuing the predecessor's enterprise, it essentially picks up where the predecessor left off. Whether liability should be imposed depends on whether the successor has the same ability as its predecessor to assess, control, and distribute the risks and costs of injuries caused by a product defect. If it does, we must still determine whether under the facts of a particular case this ability is nevertheless outweighed by the policies underlying the contract-law-based rule of successor corporation non-liability-chiefly, promoting the alienability of corporate assets. Id. at 248 (citing Ray v. Alad Corp., 560 P.2d 3, 9-11 ).
The court acknowledged that the product line exception had been rejected by many courts. Garcia v. Coe, 933 P.2d at 249 (citing Timothy E. Travers, et al., American Law of Products Liability ยง 7:27, at 44 (3d ed. 1994). However, the court chose to adopt the product line exception, reasoning in part as follows: " successor [corporation] is positioned to assess the risks before purchasing the assets, and to then decide whether to assume the potential burden associated with its acceptance of the predecessor's goodwill by continuing to produce the same product line." Moreover, "because `strict liability focuses on the product,' and not on conduct, it is not unfair to assess liability to successor manufacturers who have purchased the right to benefit from selling and servicing the product." Id. at 249-250 (quoting Brooks v. Beech Aircraft Corp., 120 N.M. 372, 378, 902 P.2d 54, 60 (1995)).
Having adopted the product line exception, the court determined that there may be genuine issues of material fact affecting its application, and reversed the summary judgment dismissing the estate's strict liability claim.
c. The Supreme Court of New Jersey
In Ramirez v. Amsted Industries, Inc., 431 A.2d 811, the plaintiff was injured while operating an allegedly defective power press on the premises of his employer. Plaintiffs filed suit against Am
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