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Leo v. Kerr-McGee Chem. Corp.

Citation: 25 ELR 20384
No. No. 93-5730, 37 F.3d 96/39 ERC 1698/(3d Cir., 09/19/1994)

The court holds that under New Jersey law, a successor corporation is not liable for toxic torts arising from contamination created by the predecessor's operations at a facility that the successor did not acquire. Two sisters brought an action to recover for their parents' deaths from cancer, injuries, and the potential risk of cancer from exposure to toxic waste. The court first notes that the instant case is distinguishable from the New Jersey Supreme Court's product line doctrine of successor liability case, Ramirez v. Amsted Industries, Inc., 431 A.2d 811 (N.J. 1981), because the injuries in the instant case were not caused by a unit in the product line, but rather by conditions created by the predecessor's operations on land that it retained at the time of the sale of a gas mantle business to the successor and on which the successor never conducted any manufacturing activities. The court holds that the rationales on which the New Jersey Supreme Court held a successor corporation liable for injuries that its predecessor's defective product caused do not support the extension of liability in the instant case. The three rationales the New Jersey Supreme Court provided were: (1) the sale of the enterprise virtually destroyed the injured party's remedy against the original manufacturer; (2) the successor had the ability to assume the original manufacturer's risk-spreading role; and (3) it was fair to require the successor to assume responsibility for defective products as that responsibility was a burden necessarily attached to the original manufacturer's good will that the successor enjoyed in the continued operation of the business. The first factor, the destruction of the injured party's remedy, is a necessary but not a sufficient basis on which to place liability on the successor. Thus, proof that the sisters cannot recover against the predecessor is not in itself a sufficient basis for the imposition of successor liability. Turning to the second rationale, the court holds that the purchaser of a product line not acquiring the real estate at which the product was manufactured cannot reasonably be expected to assume its predecessor's risk-spreading role for toxic torts caused by contamination on the land. If Ramirez applied, the successor would be subject to liabilities for toxic torts of unpredictable scope for an indefinite period. In addition, the third rationale that it is fair to require a successor to assume a responsibility for defective products because that responsibility is a burden necessarily attached to the successor's acquisition of the predecessor's good will, has no application when the good will that the successor acquired was attached to the product line it acquired, rather than to the site at which the predecessor manufactured the product. The court rejects the approach, which the district court thought was the traditional New Jersey view, that if someone is injured somebody ought to be liable for it.

Counsel for Appellee
Thomas J. Hagner
Freeman, Mintz, Hagner & Deiches
34 Tanner St., Haddonfield NJ 08033
(609) 795-1234

Counsel for Appellant
Peter J. Nickles
Covington & Burling
1201 Pennsylvania Ave. NW, Washington DC 20044
(202) 662-6000

BEFORE: GREENBERG and STAPLETON, Circuit Judges, and ATKINS, District Judge.*