The press which injured plaintiff's hand had been manufactured, sold and delivered to plaintiff's employer in 1945 by the New Era Manufacturing Company ("New Era"). Two former officers of New Era formed Powers & Eaton Industries, Inc. ("Powers & Eaton") and in February, 1965, New Era became a division of Powers & Eaton and New Era ceased to exist. See P-71(A) and (B). On June 30, 1969, Powers & Eaton changed its name to Star-New Era, Inc. ("Star-New Era"). See P-108(A) through (C). On May 19, 1971, Star-New Era sold its assets involved in the manufacture, sale and maintenance of its press machine lines to Bobst-Champlain, Inc. ("Bobst-Champlain"). See P-94(A) through (I). A few years later on June 27, 1974, Star-New Era dissolved and ceased to exist. See P-72(A) and (B). From May or June, 1971 through July, 1978, Bobst-Champlain continued to manufacture and sell this line of 12 x 12 presses. The predecessor companies of Bobst-Champlain have continued to service New Era presses and to sell parts to present owners of New Era presses. Plaintiff introduced into evidence pages from two different 1986 New Jersey Bell Telephone Directories which contain listings for the "New Era Products Department of Bobst-Champlain." See P-119 and P-120. On December 29, 1982, Bobst-Champlain merged into defendant American Bobst Holding, Inc. ("American Bobst") with a complete transfer of all assets and a dissolution of Bobst-Champlain. See P-124(A) through (I). Defendant Bobst Group, Inc. ("Bobst Group") is a part of American Bobst.
This case was tried before a jury from October 21 to October 24, 1986. The case was submitted to the jury by way of special interrogatories for its verdict. The jury answered those interrogatories and rendered a verdict in plaintiff's favor on October 24, 1986, by finding that the press machine was defective because it did not have a guard; because it did not have visible or audible warnings that would warn an operator that it was about to start up from a stopped position and because it did not have a printed warning to the operator to keep his or her hands out of the toggle head area. The jury also found that at least one of these defective conditions was the proximate cause of plaintiff's injuries; that the plaintiff did not assume the risk of injuries to his hand; and, that plaintiff was entitled to recover damages in the amount of $ 100,000.00. Judgment was entered on these verdicts on October 28, 1986, and it is from this judgment that defendants seek relief by means of the post-trial motions now before the court.
At the close of plaintiff's case-in-chief and at the close of all of the evidence, the defendants made a timely motion for a directed verdict on the issue of successor liability. With respect to the issue of the "product line" exception to the general rule of corporate successor non-liability, the court denied defendants' motion for directed verdict. The court, applying the product line exception as Pennsylvania law, ruled that plaintiff had made out his prima facie case that Bobst Group and American Bobst were successors in liability to Star-New Era and that Star-New Era in turn was the successor in liability to New Era, the manufacturer of the machine. At the close of the evidence, there being no dispute as to the various entities and their role in the chain of existence, the court concluded that there was no genuine issue as to those facts and that plaintiff was entitled to a ruling, as a matter of law, that successor liability was established.
Defendants contend that this court erred in: (1) granting plaintiff's motion for a directed verdict on the issue of the product line theory of liability; and (2) denying defendants' motion for a directed verdict on that issue. Defendants ask the court to: (1) grant their motion for judgment notwithstanding the verdict; (2) vacate and set aside the judgment on the verdict; and, (3) enter judgment in favor of defendants. Defendants ask in the alternative that the court set aside the jury verdict and grant defendants a new trial on the issues of defect, substantial change and assumption of risk. Defendants raise numerous issues and arguments in their over 130 pages of post-trial motions and supporting memoranda. Since the arguments contained in defendants' memoranda are so numerous and the court addressed many or all of them at trial, the court will not discuss each of them here. The court, however, believes a discussion of its ruling on the issue of the "product line" theory of liability is appropriate.
A. Standard For Judgment N.O.V.
The standard for granting a motion for judgment n.o.v. is the same as that for a directed verdict. E. J. Stewart, Inc. v. Aitken Products, Inc., 607 F. Supp. 883, 888 (E.D.Pa. 1985); Neville Chemical Company v. Union Carbide Corp., 422 F.2d 1205, 1210 n.5 (3d Cir. 1970), cert. denied, 400 U.S. 826, 27 L. Ed. 2d 55, 91 S. Ct. 51 (1970). The jury's verdict will be set aside only if manifest injustice will result if such verdict is allowed to stand. To grant such a motion the court must find as a matter of law that there can be but one reasonable conclusion as to the proper judgment. Woodward & Dickerson, Inc. v. Yoo Hoo Beverage Co., 502 F. Supp. 395, 397 (E.D.Pa. 1980), aff'd mem., 661 F.2d 916 (3d Cir. 1981). In ruling on defendants' motion the court should view the evidence, and all inferences therefrom, in a light most favorable to plaintiff. Thomas v. E. J. Korvette Inc., 476 F.2d 471 (3d Cir. 1973).
B. Corporate Successor Liability
Under Pennsylvania law
the general rule as to corporate successor liability is that:
. . . when one company sells or transfers all its assets to another company, the latter is not liable for the debts and liabilities of the transferor simply by virtue of its succession to the transferor's property. In order to find that this general rule is not applicable and that the transferee does acquire such liability, one of the following must be shown: (1) the purchaser expressly or impliedly agrees to assume such obligation; (2) the transaction amounts to a consolidation or merger; (3) the purchasing corporation is merely a continuation of the selling corporation; or (4) the transaction is fraudulently entered into to escape liability.
Husak v. Berkel, Inc., 234 Pa. Super. 452, 456-57, 341 A.2d 174, 176 (1975). See also, Polius v. Clark Equip. Co., 802 F.2d 75 (3d Cir. 1986), reh'g and reh'g en banc denied, (October 23, 1986); Philadelphia Elec. Co. v. Hercules, Inc., 762 F.2d 303, 308-09 (3d Cir. 1985); Knapp v. North American Rockwell Corp., 506 F.2d 361, 363-64 (3d Cir. 1974), cert. denied, 421 U.S. 965, 44 L. Ed. 2d 452, 95 S. Ct. 1955 (1975); Jacobs v. Lakewood Aircraft Serv., Inc., 512 F. Supp. 176, 179 (E.D.Pa. 1981); Savini v. Kent Mach. Works, Inc., 525 F. Supp. 711 (E.D.Pa. 1981); Woody v. Combustion Eng'g, Inc., 463 F. Supp. 817, 819 (E.D.Tenn. 1978) (applying Pennsylvania law).
Plaintiff does not assert that any of these four traditional exceptions to the general rule of the non-liability of a successor corporation apply to the instant facts. Instead plaintiff asserted that the policies underlying strict tort liability for defective products compel a fifth exception to the general rule: the product line exception or product line theory. This court must examine whether Pennsylvania law recognizes the product line exception.
C. Predicting State Law Re: Product Line Exception
In ascertaining state law in federal diversity cases, the court must look to the state's highest court. Connecticut Mut. Life Ins. Co. v. Wyman, 718 F.2d 63, 65 (3d Cir. 1983). Since the Pennsylvania Supreme Court has yet to decide this important issue, this court once again finds itself in the difficult position of having to predict Pennsylvania law.
In predicting the law in Pennsylvania with respect to the product line theory issue in the present case, the court looked to various sources. First, the court considered a Pennsylvania intermediate appellate state court decision, Dawejko v. Jorgensen Steel Co., 290 Pa.Super. 15, 434 A.2d 106 (1981), which decided the product line theory issue. Second, the court considered two United States Third Circuit Court of Appeals' decisions, Polius v. Clark Equip. Co., supra ; and Knapp v. North American Rockwell Corp., supra, which discussed the product line theory and/or Pennsylvania's public policy on strict liability. Third, the court looked to the New Jersey Supreme Court's decision, Ramirez v. Amsted Indus., Inc., 86 N.J. 332, 431 A.2d 811 (1981), which adopted the product line exception. Fourth, the court considered two earlier decisions by other members of this court, which treated the product line exception as adopted in Dawejko as the law of Pennsylvania. Amader v. Pittsburgh Corning Corp., 546 F. Supp. 1033 (E.D.Pa. 1982); McClinton v. Rockford Punch Press and Mfg. Co., Inc., 549 F. Supp. 835 (E.D.Pa. 1982).
1. Pennsylvania Superior Court Decision: Dawejko
First, the court considered Dawejko v. Jorgensen Steel Co., 290 Pa.Super. 15, 434 A.2d 106 (1981), an intermediate appellate state court decision which specifically adopted the "product line" exception. The Dawejko court adopted the product line rule as formulated in Ramirez, supra, 86 N.J. at 338, 431 A.2d at 825. The rule is stated as follows:
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.