The defendant, Packaging Industries Group, Sentinel Division, and the defendant Sencorp Systems, Inc., each move for summary judgment.
The question presented is whether a successor company is liable for injuries caused by a defective product manufactured by a predecessor company where it acquired the assets of the other company but did not contribute to the destruction of the selling company nor continue to manufacture its product line.
This is a novel question which has not been decided by the courts of New Jersey.
Plaintiff was injured during the course of his employment while operating a machine known as a Model 360 thermal automatic forming machine which had been designed and manufactured by the defendant, Thermtroll Corp. (Thermtroll).
In 1974, the defendant, Packaging Industries Group, (Packaging), a company which also manufactured a thermal automatic forming machine, purchased from Thermtroll selected assets relating to the Thermtroll line for $25,000.00 in cash. The sale included all rights to develop and manufacture the Thermtroll line and included blue prints, drawings, trade secrets, customer
lists, logo and inventory. The transaction did not involve an exchange of stock nor an assumption of Thermtroll's liability by Packaging. Although Packaging and Thermtroll both manufactured a thermoforming machine, Packaging contends that the two corporations were not competitors because they concentrated their sales in separate markets, i.e., Thermtroll produced "low-end" machines and Packaging "high-end."
Packaging did not continue to manufacture the machine and did not service the machines which had been manufactured by Thermtroll. It did not utilize Thermtroll's customer lists nor communicate with its customers, and it allowed the Thermtroll patents to lapse approximately two years after the acquisition. But Packaging did utilize the Thermtroll blueprints to assist in the design of its own machinery and it used the name Sentinel Thermtroll for a period of two years in marketing its own product.
In 1989, the defendant, Sencorp Systems (Sencorp) acquired the Sentinel Division of the defendant Packaging, which included the Thermtroll line previously purchased by Packaging. Sencorp did not resume the manufacture of the Thermtroll line, but agreed to defend product liability actions brought against Packaging.
The defendant Thermtroll is no longer a viable corporation.
The defendant Packaging contends that it has no liability either under traditional rules of successor liability or under the successor liability concept espoused in Ramirez v. Amsted Industries, Inc., 86 N.J. 332, 431 A.2d 811 (1981).
The defendant is correct in asserting that there is no liability under traditional rules of successor liability. Packaging did not agree to assume Thermtroll's liability; the transaction did not amount to a consolidation or merger; Packaging was not a continuation of the Thermtroll Corporation; and the transaction was not entered into fraudulently. See McKee v. Harris Seybold Co., 109 N.J. ...