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COLMAN v. FISHER-PRICE

October 16, 1996

JAMES B. COLMAN, JOHN T. COLMAN, and JANICE M. COLMAN, Plaintiffs,
v.
FISHER-PRICE, INC., a Delaware corporation, formerly a division of the Quaker Oats Company, now a division of Mattel, Inc., and FICTITIOUS DEFENDANTS I through X, Defendants.



The opinion of the court was delivered by: SIMANDLE

 SIMANDLE, District Judge:

 This is a products liability case in which plaintiff James Colman alleges that he was seriously injured while playing with a Fisher-Price toy on June 12, 1977. Presently before the Court are a variety of motions brought by the parties in this case. The most significant of those motions are the motions by plaintiffs and defendant Fisher-Price, Inc., ("Fisher") seeking summary judgment on the issue of corporate successor liability. Specifically, the parties seek a Court ruling regarding whether Fisher may be held responsible for certain allegedly tortious conduct of the Quaker Oats Company ("Quaker") on the grounds that Fisher is Quaker's corporate successor. As explained more fully herein, partial summary judgment is granted to plaintiffs on the successor liability issue.

 Background

 On June 12, 1977, when plaintiff James Colman was sixteen months old, he was allegedly injured while playing with a toy known as the "Fisher-Price Snap Lock Beads." (Second Amend. Compl. at 6). Colman alleges that a piece of the toy lodged in his throat, causing oxygen deprivation. (Id.). He is now permanently disabled. (Id.).

 From 1969 through 1991, the "Fisher-Price Snap Lock Beads" toy was marketed and sold by Quaker through its Fisher-Price division. (Df. Sum. Judg. Br., Ex. 2, affidavit of Paul Charland). Until 1990, the Fisher-Price division was an unincorporated entity that had no legal existence apart from Quaker. (Id.). In 1990, Fisher became an incorporated business, barren of assets, that was wholly owned by Quaker. (Id.).

 On June 28, 1991, Fisher and Quaker entered into a "Transfer and Assumption Agreement." (Pl. Ex. A). In that agreement Quaker transferred to Fisher all of Quaker's rights, interests, and assets in its toy division. (Id.). The agreement further provided that Fisher would assume all of Quaker's liabilities stemming from its toy business. (Id.).

 After James Colman reached the age of majority, plaintiffs instituted suit both in this Court and in New Jersey Superior Court seeking recovery for Colman's injuries allegedly caused by the Snap Lock Beads. The state court action was filed on January 22, 1996, and the federal court action was filed on January 24, 1996. (Pl. Ex. J; Pl. Ex. L). On February 28, 1996, defendants removed the state court case to this Court, where it was consolidated with plaintiffs' federal court action. (April 1, 1996, Consent Order). The present action, having been removed from state court, was designated the consolidated lead case. (Id.)

 The series of motions currently before the Court began with a motion to dismiss made by Quaker. Quaker argues that it has not been properly named as a defendant in this case and that it was not served with process within the 120-day period set forth in Fed. R. Civ. P. 4(m). Plaintiffs contest those allegations, and argue further that if the Court finds that service of process on Quaker was not made within the 120-day period, then that period should be extended in this case. Similarly, plaintiffs assert that if the Court finds that Quaker has not been properly named as a defendant, plaintiffs should be permitted to amend their complaints to make clear that plaintiffs are indeed seeking damages from Quaker. Because the applicable statute of limitations has expired, plaintiffs argue that the proposed amendment of the complaints would "relate back" to the dates of the original complaints. See Fed. R. Civ. P. 15(c).

 In addition to responding to Quaker's motion to dismiss, plaintiffs cross-moved for partial summary judgment on the issue of corporate successor liability. Specifically, plaintiffs seek a Court declaration that Fisher is the legal successor to Quaker's toy division. Plaintiffs argue that if the Court so finds, plaintiffs could proceed exclusively against Fisher and would not need to involve Quaker in this case at all.

 Fisher then cross-moved for summary judgment. Fisher argues that if the Court concludes that Fisher is not the legal successor to Quaker, then Fisher should be awarded judgment as a matter of law. Fisher correctly notes that successor liability is the only basis on which Fisher could be found liable in this case because at the time of Colman's injury Fisher was a mere unincorporated division of Quaker.

 Most recently, plaintiffs' newly retained counsel submitted a letter to the Court questioning the Court's diversity jurisdiction over this case. (Fisher is a Delaware corporation. Quaker is a New Jersey corporation. Plaintiffs are New Jersey residents.) The letter also requests that in the event the Court dismisses all of plaintiffs' claims against Quaker and Fisher, plaintiffs be permitted to amend their complaints to include a malpractice action against plaintiffs' former attorney. Plaintiffs make that request in view of New Jersey's "entire controversy doctrine." See, e.g., Circle Chevrolet Co. v. Giordano, Halleran & Ciesla, 142 N.J. 280, 662 A.2d 509 (1995).

 Discussion

 I. The Parties' Cross-Motions for Summary Judgment on the Corporate ...


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