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Leo v. Kerr-McGee Chemical Corp.

filed: September 19, 1994; As Corrected September 21, 1994.

ELAINE LEO, ADMINISTRATRIX OF THE ESTATE OF CATHERINE M. BEKES, DECEASED, ADMINISTRATRIX AD PROSEQUENDUM ON BEHALF OF THE ESTATE OF THOMAS BEKES, DECEASED, AND INDIVIDUALLY; LINDA YODER, INDIVIDUALLY
v.
KERR-MCGEE CHEMICAL CORPORATION, A DELAWARE CORPORATION, SUCCESSOR IN INTEREST TO WELSBACH COMPANY AND/OR WELSBACH INCANDESCENT GAS LIGHT CO., LINDSAY CHEMICAL CO., AMERICAN POTASH AND CHEMICAL CORP. AND AMERICAN POTASH, AN ILLINOIS CORPORATION; U.G.I., F/K/A UNITED GAS IMPROVEMENT COMPANY, A PENNSYLVANIA CORPORATION; JOHN DOES 1-20; ROBERT ROES 1-20; JAMES JOES 1-20; XYZ CORPORATION 1-20; RHEEM RUDD, A CORPORATION SUCCESSOR INTEREST TO CITY INVESTING CO., RUDD WATERHEATER DIVISION AND RUDD MANUFACTURING COMPANY KERR-MCGEE CHEMICAL CORPORATION, APPELLANT



On Appeal from the United States District Court for the District of New Jersey. (D.C. Civil No. 93-01107).

Before: Greenberg and Stapleton, Circuit Judges, and Atkins, District Judge*fn*

Author: Greenberg

Opinion OF THE COURT

GREENBERG, Circuit Judge.

I. FACTUAL AND PROCEDURAL HISTORY

This matter is before the court following entry of our

order on November 30, 1993, granting defendant-appellant Kerr-McGee Chemical Corporation permission to appeal pursuant to 28 U.S.C. § 1292(b). We will reverse the order of the district court denying Kerr-McGee's motion for summary judgment entered on September 8, 1993, and we will remand the matter to the district court for entry of a summary judgment in its favor.

The facts are largely not in dispute, and, in any event, we accept the allegations of the plaintiffs-appellees Elaine Leo and Linda Yoder for purposes of this appeal. From prior to the turn of the 20th century continuing until 1940, the Welsbach Incandescent Light Company maintained and operated a factory in Gloucester City, New Jersey, for manufacturing incandescent gas mantles, a process involving extracting thorium from monazite ores. This process generated toxic wastes consisting of thorium by-products which Welsbach deposited on the factory site, thus contaminating the surrounding land. In 1940, Welsbach's Illinois-based competitor, Lindsay Light and Chemical Company, purchased Welsbach's gas mantle business. In the sale, Lindsay acquired Welsbach's outstanding orders, records, formulas, raw materials, inventory, customer lists, gas mantle production line, and the right to use the "Welsbach" name. However, Lindsay did not acquire the Gloucester City land and factory. Rather, it moved the gas mantle business to its own plant in Illinois.

Following a series of acquisitions, Kerr-McGee acquired Lindsay, and it thus concedes that in this litigation it stands in Lindsay's shoes. Accordingly, we will refer to Lindsay and Kerr-McGee simply as Kerr-McGee. Welsbach owned a second line of business which it sold to Rheem Manufacturing Company but Rheem's successors, though originally defendants in this action, have been dismissed from the case. Welsbach was dissolved in 1944.

In 1961, Leo and Yoder, who are sisters, and their parents, Thomas and Catherine Bekes, moved to a home close to the former site of the Welsbach factory in Gloucester City, though Leo and Yoder now live elsewhere. On December 5, 1988, Thomas Bekes died from bladder cancer. In March 1991, the New Jersey Department of Environmental Protection notified Catherine Bekes of the high levels of gamma radiation and thorium on her property and on June 3, 1991, the New Jersey Spill Compensation Fund acquired her residence, forcing her to relocate. Soon thereafter she also died from bladder cancer. Leo and Yoder allege that their parents contracted their bladder cancer from exposure to thorium and other waste substances deposited on the Welsbach land.

On January 29, 1993, Leo and Yoder filed suit, individually, and on behalf of their parents' estates, in the Superior Court of New Jersey against Kerr-McGee and certain other defendants to recover for death, injuries, and the potential risk of cancer arising from their exposure to thorium and other waste substances generated in the Welsbach gas mantle operation and deposited on the Gloucester City property. As germane here, Leo and Yoder seek to impose liability on Kerr-McGee on a theory of strict liability.*fn1 While Leo and Yoder do not claim that Kerr-McGee itself generated the waste which caused the deaths and injuries, they assert that it is liable by reason of its acquisition of Welsbach's gas mantle business. On March 4, 1993, one of the other defendants removed the case to the United States District Court for the District of New Jersey on the basis of diversity of citizenship.

Subsequently, Kerr-McGee filed a motion to dismiss under Fed. R. Civ. P. 12(b)(6) on the ground that the complaint did not state a claim on which relief may be granted inasmuch as Kerr-McGee never has owned the Gloucester City land and factory. In its bench opinion the district court treated the motion as a motion for summary judgment because it considered material other than the complaint submitted on the motion. The court then predicted that the New Jersey Supreme Court would extend the product line doctrine of successor corporate liability, as explicated in Ramirez v. Amsted Indus., Inc., 86 N.J. 332, 431 A.2d 811 (N.J. 1981), to the toxic tort at issue, because the toxic by-products were generated directly from the manufacturing of Welsbach's gas mantles.*fn2 Thus, the court denied Kerr-McGee's motion by the order of September 8, 1993. Kerr-McGee then moved for an amendment of the order to allow an interlocutory appeal, and the district court granted the amendment by an order entered on November 1, 1993. We then granted Kerr-McGee leave to appeal.

II. DISCUSSION

We exercise plenary review as the appeal presents an issue of law. Epstein Family Partnership v. Kmart Corp., 13 F.3d 762, 765-66 (3d Cir. 1994). Furthermore, we will apply New Jersey law as the parties agree that it is applicable. Thus, we undertake to predict how the Supreme Court of New Jersey would resolve the issues in this case. J & R Ice Cream Corp. v. ...


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