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Ramirez v. Amsted Indus., Inc. - 86 N.J. 332, 431 A.2d 811 (1981)

Rule:

The Supreme Court of New Jersey has held that where one corporation acquires all or substantially all the manufacturing assets of another corporation, even if exclusively for cash, and undertakes essentially the same manufacturing operation as the selling corporation, the purchasing corporation is strictly liable for injuries caused by defects in units of the same product line, even if previously manufactured and distributed by the selling corporation or its predecessor.

Facts:

On August 18, 1975 plaintiff Efrain Ramirez was injured while operating an allegedly defective power press on the premises of his employer, Zamax Manufacturing Company, in Belleville, New Jersey. The machine involved, known as a Johnson Model 5, sixty-ton punch press, was manufactured by Johnson Machine and Press Company (Johnson) in 1948 or 1949. As a result of the injuries sustained plaintiff filed suit against Amsted Industries, Inc. (Amsted) as a successor corporation to Johnson, seeking to recover damages on theories of negligence, breach of warranty and strict liability in tort for defective design and manufacturing. After discovery had been completed, Amsted moved for summary judgment on the ground that the mere purchase of Johnson's assets for cash in 1962 did not carry with it tort liability for damages arising out of defects in products manufactured by Johnson. The trial court granted summary judgment for Amsted, holding that there is no assumption of liability when the successor purchases the predecessor's assets for cash and when the provisions of the purchase agreement between the selling and purchasing corporations indicate an intention to limit the purchaser's assumption of liability. That holding was consistent with the traditional rule governing the liability of successor corporations. 

On review, the intermediate appellate court reversed the trial court's decision and remanded the case for trial.

Issue:

Could a successor corporation, which acquired all of the assets, exclusively for cash, of the corporation that manufactured the allegedly defective power press and undertook the same manufacturing process be held strictly liable for injuries caused by defects in units of the same product line?

Answer:

Yes

Conclusion:

The court granted Amsted’s petition for certification. The court affirmed the decision of the intermediate appellate court and held that where one corporation acquires all or substantially all the manufacturing assets of another corporation, even if exclusively for cash, and undertakes essentially the same manufacturing operation as the selling corporation, the purchasing corporation is strictly liable for injuries caused by defects in units of the same product line, even if previously manufactured and distributed by the selling corporation or its predecessor. Accordingly, Ramirez was entitled to a trial in his action against Amsted.

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