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LOPATA v. BEMIS CO.

December 30, 1975

JAMES L. LOPATA
v.
BEMIS COMPANY, INC.



The opinion of the court was delivered by: TROUTMAN

 TROUTMAN, J.

 This diversity action is before this Court on remand from the Court of Appeals to consider a difficult conflict of laws question which has been raised in the wake of Knapp v. North American Rockwell Corp., 506 F.2d 361 (3d Cir. 1974) cert. denied, 421 U.S. 965, 95 S. Ct. 1955, 44 L. Ed. 2d 452 (1975). Plaintiff's claim stems from personal injuries he sustained in an accident which occurred at his employer's New Jersey plant on February 22, 1971. The liability of defendant, Bemis Company, Inc. (Bemis), is premised on the theory that defendant, as successor in interest to the manufacturer of the machine which allegedly caused the accident, is liable for the tortious conduct of its predecessor, Rock Wool Engineering and Equipment Company (Rock Wool).

 Since this Court's jurisdiction is premised on diversity of citizenship, we must apply the choice of law rules of the forum state, Pennsylvania. Klaxon Co. v. Stentor Electrical Mfg. Co., 313 U.S. 487, 85 L. Ed. 1477, 61 S. Ct. 1020 (1941). Accordingly, we look to Griffith v. United AirLines, Inc., 416 Pa. 1, 203 A.2d 796 (1964) to determine which jurisdiction's law applies. In Griffith, the Pennsylvania Supreme Court held that a court must scrutinize the various contacts each state has with the matter in controversy to ascertain which state has the greatest interest in the issue. The law of the state most interested in the litigation should be applied to resolve a dispute. As stated in Suchomajcz v. Hummel Chemical Company, 524 F.2d 19 (3d Cir. (1975):

 
"* * * [We] should apply the law of the predominantly concerned jurisdiction, measuring the depth and breadth of that concern by the relevant contacts each affected jurisdiction had with the specific transaction. The contacts are relevant only if they relate to the 'policies and interests underlying the particular issue before the court.'" Id., at 23.

 The factual complex of this case touches at least three states -- Indiana, New Jersey and Pennsylvania. The predecessor corporation, Rock Wool, an Indiana corporation, manufactured the machine in question at its plant in Wabash, Indiana. The "Agreement for the Purchase of Certain Assets" by which Rock Wool sold the majority of its assets to Bemis, a Missouri corporation, was executed in Indiana and covered assets and property located in Wabash. The agreement provided that it was to be construed in accord with the law of Indiana.

 Pennsylvania also has "contacts" with this case. Plaintiff had been a domiciliary of Pennsylvania almost his entire life, moved to New Jersey where he was injured, and at the time of the filing of the complaint again lived in Pennsylvania with his parents. Bemis is registered to do business in Pennsylvania and has apparently placed its goods into the national stream of commerce which includes Pennsylvania. Plaintiff was treated for his injuries by several doctors both in Pennsylvania and in New Jersey.

 New Jersey's other contacts with this case include the following: the accident occurred there, and plaintiff resided there at the time of the accident. Moreover, plaintiff's New Jersey employer paid him workmen's compensation benefits after the accident. *fn1" Finally, the machine in question had been sold to and was being utilized by a New Jersey employer at the time the injuries were suffered.

 In analyzing the relative weight to be accorded these various "contacts" with the aim of determining which of these three states has the greatest interest, Griffith suggests several pertinent threshold inquiries. Among these inquiries are: the issue involved, the nature of the alleged tort, and the purposes of the tort rule involved. Basically, the issue with which we are confronted involves the tort liability of a successor corporation to a party injured by alleged defects in a machine which had been designed, manufactured and sold prior to the transfer of assets and subsequent to the dissolution of the predecessor corporation. The alleged tortious conduct from which this issue springs involves a blend of both strict liability and negligence *fn2" theories which necessarily focus on the characteristics of the machine itself and the factual context in which the injury occurred. The purpose of these underlying tort rules is to spread the risks of loss equitably, taking from the shoulders of the injured party the burden of the expenses of his injuries and distributing these risks to those parties who are deemed better able to bear the risks. See e.g. Knapp, supra. Moreover, the more precise question involved here, the nature of tort liability of a successor corporation, requires a balancing of the competing policies, designed, on the one hand, to protect the corporate successor from the claims occasioned by conduct of its predecessor and, on the other hand, to shift the risk of loss from the injured party to those entities better able to bear the losses.

 Plaintiff argues that Pennsylvania has the greatest interest in this litigation, and as such, the applicable Pennsylvania law as set forth in Knapp, supra, controls the disposition of this case. Defendant, understandably, vigorously contends there is no liability under the law of Indiana, the state it contends has the greatest interest in this litigation. Alternatively, both parties argue that New Jersey law applies, but they reach opposite conclusions in applying the substantive law of New Jersey on the question of a corporate successor's tort liability.

 After carefully considering these contentions, we conclude that New Jersey has the greatest interest in this litigation, the underlying issues and the parties. Our reasons for reaching this conclusion are based primarily upon the quality of the contacts touching New Jersey and our assessment of the importance of the state policies which underly a resolution of the tort issue.

 Second, at the time of the injury, February 22, 1971, plaintiff had in fact been living in New Jersey, subject of course to the rights and obligations which that state places on its residents. Such rights include those which are based on the correlative duties which the state imposes on corporations which avail themselves of the opportunity to engage in commerce there. The predecessor corporation, Rock Wool, sold the machine in question to the plaintiff's New Jersey employer, and necessarily subjected itself to the applicable laws of New Jersey regulating the allocation of risks from injury caused thereby. The tort liability of a successor corporation, Bemis, bears a logical relationship to these considerations. The fact that plaintiff had resided in Pennsylvania all his life except for the three months prior to the accident and thereafter returned to Pennsylvania does not serve to tip the balance in favor of Pennsylvania in light of the quality and import of the other contacts with New Jersey.

 Third, on balance, neither the interests of Indiana nor of Pennsylvania, when closely analyzed, rise to the level of interest which New Jersey has in this litigation. The fact that the machine was manufactured in Indiana by an Indiana corporation which ultimately sold its assets to the defendant under an agreement to be construed under Indiana law does not change the significance of the fact that the machine was destined for use in and caused injury in New Jersey. We are here concerned with the issue of tort liability as to third persons who were not parties to the agreement transferring assets between corporations, an issue which requires us to focus on much more than the contractual niceties of the corporate arrangement inter se. Similarly, the possibility that plaintiff may become a "public charge" to the taxpayers of Pennsylvania is not by itself a contract of sufficient quality to call into play the application of Pennsylvania laws on this issue. See Cipolla v. Shaposka, 439 Pa. 563, 267 A.2d 854 (1970); Cavallaro v. Williams, 530 F.2d 473 (3d Cir. C.A.No. 75-1348, Slip op. December 8, 1975); Zurzola v. General Motors Corporation, 5 ...


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