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Simmons v. Mark Lift Industries10/24/2005
d by the Court's own research. I have studied the leading cases of Turner v. Bituminous Cas. Co., 244 N.W.2d 873 (Mich. 1976) (adopting continuity of enterprise exception) and Ray v. Alad Corp., 560 P.2d 3 (Cal. 1977) (adopting product line exception), and their progeny. E.g. Holloway v. John E. Smith's Sons Co., 432 F. Supp. 454 (D.S.C. 1977) (applying continuity of enterprise exception) ; Asher v. KCS Intern., Inc., 659 So.2d 598 (Ala. 1995) (applying continuity of enterprise exception); Savage Arms, Inc. v. Western Auto Supply Co., 18 P.3d 49 (Alaska 2001) (adopting continuity of enterprise); Huff v. Shopsmith, Inc., 786 So.2d 383 (Miss. 2001) (adopting product line exception); Ramirez v. Amsted Indus., Inc., 431 A.2d 811 (N.J. 1981) (adopting product line exception); Garcia v. Coe Mfg. Co., 933 P.2d 243 (N.M. 1997) (adopting product line exception); Kradel v. Fox River Tractor Co., 308 F.3d 328 (3d Cir. 2002) (product line exception is law of Pennsylvania); Hill v. Trailmobile, Inc., 603 A.2d 602 (Pa. Super. 1992) (applying product line exception); Martin v. Abbott Laboratories, 689 P.2d 368 (Wash. 1984) (adopting product line exception); Cyr v. B. Offen & Co., 501 F.2d 1145, 1151-56 (1st Cir. 1974) (leading case adopting continuity of enterprise); Russell v. Philip D. Moran, Inc., 449 A.2d 1208 (N.H. 1982) (favorably citing Cyr and continuity of enterprise theory); but see Simoneau v. South Bend Lathe, Inc., 543 A.2d 407 (N.H. 1988) (calling Cyr into question because risk spreading, a basis of Cyr decision, is not accepted as a rationale for strict liability in New Jersey; however, court did not reject continuity of enterprise exception).
I also have considered authority rejecting one or both exceptions. Courts rejecting successor liability in the product liability setting have done so primarily because they believe it violates the principle that only those which are responsible for manufacturing and marketing a product should bear liability for its defects; the exceptions violate traditional principles of successor liability; the exceptions defeat the parties' expectations arising from the negotiation and sale of assets; the successor has no control over products already produced and marketed; smaller successor corporations might face financial ruin if held liable for a predecessor's products; and the issue should be left to the legislature. E.g. Winsor v. Glasswerks PHX, L.L.C., 63 P.3d 1040, 1046 (Ariz. App. Div. 1 2003); Johnston v. Amsted Indus., Inc., 830 P.2d 1141, 1146-47 (Colo. App. 1992); Bernard v. Kee Mfg. Co., Inc., 409 So.2d 1047, 1049-50 (Fla. 1982); Nissen Corp. v. Miller, 594 A.2d 564, 566-73 (Md. 1991); Niccum v. Hydra Tool Corp., 438 N.W.2d 96, 99 (Minn. 1989); Jones v. Johnson Mach. and Press Co., 320 N.W.2d 481 (Neb. 1982); Simoneau v. South Bend Lathe, Inc., 543 A.2d 407 (N.H. 1988); Downtowner, Inc. v. Acrometal Products, Inc., 347 N.W.2d 118, 121-25 (N.D. 1984); Flaugher v. Cone Automatic Mach. Co., 507 N.E.2d 331, 336-37 (Ohio 1987); Fish v. Amsted Indus., Inc., 376 N.W.2d 820, 823-25 (Wis. 1985); 15 Fletcher's Cyclopedia Corporation § 7123.20; Restatement (Third) of Torts: Products Liability § 12 (1998); 1 American Law of Products Liability §§ 7:19-7:24.
The central inquiry is this: Should a successor corporation, which under the law is rightfully allowed to seek financial gain from the accumulated goodwill and reputation of a predecessor after purchasing the predecessor's assets, simultaneously be allowed to rid itself of the burden of claims brought by persons injured by an allegedly defective product made by the defunct predecessor? In other words, will the law allow the successor to embrace the benefits with one arm while evading the burdens with the other?
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