In the 2000-2001 recession, there was a consolidation in the cement mixer industry, which I solely and subjectively theorize was due to a reduction in the amount of cement produced for nefarious uses. One wonders how the current “downturn” affects such businesses. Snitches may need to select alternative footwear.
Plaintiffs like David Ryan will likely have no cement mixer manufacturer to sue. Ryan v. Smith, 2010 WL 743946, No. 06-5866 (D.N.J. Mar. 4, 2010) centers around asset sales and their effects on successor liability. Ryan worked as a driver on a cement truck. He suffered injury on December 2, 2003 when the ladder on his 1988 Rex 770 cement mixer detached from the truck while occupied by Ryan. The Rex 770 was manufactured by Rexworks, Inc., and, prior to Ryan’s injury, the assets of Rexworks underwent two different sales. First, Rexworks sold its name and cement mixer designs, along with other assets to TEMCO pursuant to agreement. The Agreement provided that no liabilities outside those named in the agreement were assumed by TEMCO, and TEMCO took possession of the assets in June 2000. TEMCO asserted that it was mainly interested in a transmission manufactured by Rexworks, which had an excellent reputation in the industry, for incorporation in its own products. After a few months, TEMCO sold the assets of its cement mixer business to Oshkosh Truck Corporation, and, again, all liabilities of TEMCO were excluded from the asset purchase. On March 6, 2001, the date of the Oshkosh purchase, “the Rex product line was no longer being manufactured by anyone.” Id.
Ryan wanted someone to be liable for his ladder-based injury, and, obviously, TEMCO and Oshkosh didn’t agree to assume any liabilities. The District of New Jersey applied New Jersey’s substantive law:
The social policies underlying strict product liability are best served by extending strict liability to a successor corporation that acquires the business assets and continues to manufacture essentially the same line of products as its predecessor . . . .
Ramirez v. Amsted Indus., Inc., 431 A.2d 811, 825 (N.J. 1981). Even though TEMCO and Oshkosh continued to manufacture dump trucks, the Rex line of dump trucks was essentially discontinued. Ryan argued that the evidence showed that TEMCO had incorporated the use of the Rex transmission in its products, which was sufficient to show the continued manufacture of the product line. Had Ryan been injured by the transmission, this argument may have won the day, but Ryan was injured by the ladder, for which there was no evidence of continued manufacture.
Ryan was then forced to argue based on fairness and policy considerations. Ryan had no remedy absent successor liability. The trial court was not persuaded and stated that the product line test was dispositive. Summary judgment for the defendants was granted. Ryan is an interesting case in transactions of asset sales. Look for potential defendants to incorporate purchased products piecemeal, trying to toe the line in taking advantage of the purchased assets while extinguishing successor liability. Plaintiffs would do better to frame these types of issues in terms of being injured by a complicated piece of machinery as a whole, rather than injury occurring due to one particular part of the machinery. Ryan may have been more (or less) fortunate had he been injured by a more integral part of the mixer.