The opinion of the court was delivered by: WILLIAM YOHN, JR., District Judge
Michael J. Mitchell and Tammitha M. Mitchell bring this action against
Powermatic Corporation, a/k/a Powermatic, Inc.,*fn1 Jet Equipment &
Tools, Inc. and DeVlieg-Bullard, Inc., a/k/a DeVlieg-Bullard II, Inc. for
damages resulting from an injury sustained by Michael Mitchell while he
was operating a Powermatic Model 27 shaper. DeVlieg-Bullard, Inc., a/k/a
DeVlieg-Bullard II, Inc. previously filed a motion for summary judgment,
which was granted without opposition from the plaintiff and all claims
against it were dismissed on December 29, 2003. Currently pending before
the court is the remaining defendants' motion for summary judgment. For
the reasons set forth below, defendants' motion for summary judgment will
On June 8, 2000, plaintiff Michael Mitchell ("plaintiff')*fn2 was
severely injured while using a "shaper" in the course of his employment
at Brubaker Kitchens. More specifically, plaintiff was feeding a work
piece with both hands through the shaper when the cutters of the shaper
violently pulled to the side and caused plaintiff's left hand to make
contact with the rotating cutters. The unguarded cutters amputated
plaintiff's thumb and parts of three fingers on his left hand. The shaper
was a Powermatic, Model 27. Plaintiff claims the shaper was defective and
that defendants should therefore be held strictly liable.
Plaintiff believes (and defendants do not otherwise dispute) that the
shaper in question was purchased from the Baer Supply Company on July
25, 1993. Def. Ex. D. The maintenance instructions and parts list for the
specific shaper in question, which was produced by plaintiff, identifies
"Powermatic, a division of DeVlieg-Bullard, Inc."*fn3 as the
manufacturer of the shaper. Def. Ex. E. The copyright date on the
instructions is 1991. Id. On July 15, 1999, DeVlieg-Bullard, Inc. ("DBI")
filed for bankruptcy under Chapter 11 of the Bankruptcy Code in the
United States Bankruptcy Court for the Northern District of Ohio. Def.
Ex. C-5. Pursuant to the reorganization of the company, substantially all
of the assets of DBI's Powermatic division were sold under the direction
of the presiding bankruptcy court. Id. Jet Equipment & Tools, Inc.
("Jet") was the prevailing bidder and agreed to pay a purchase price of
$8.5 million in exchange for the Powermatic assets. Id. On October 15,
1999, Jet assigned its right to purchase the Powermatic assets from DBI
to Powermatic Corporation, Def. Ex. C-6, a new corporation
incorporated in Delaware on October 5, 1999. Def. Ex. C-1; Pl. Ex.
B. Powermatic Corporation purchased the Powermatic assets from DBI,
pursuant to this assignment and the terms of the asset purchase agreement
originally entered into by DBI and Jet. Def. Ex. C-7. In part of an
unrelated merger, Jet changed its name to WMH Tool Group, Inc., and as
part of a June 2001 merger, Powermatic Corporation went out of existence.
Def. Br. 4; Pl. Ex. E. The parties agree WMH is now the successor of
Powermatic Corporation for purposes of this action. Pl. Ex. I.
Since the accident occurred in Pennsylvania, Pennsylvania tort law
governs the instant cause of action, including its law on successor
liability. Neither party disputes this.
Either party to a lawsuit may file a motion for summary judgment, and
the court will grant it "if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law." FED. R.
CIV. P. 56(c). "Facts that could alter the outcome are `material,' and
disputes are `genuine' if evidence exists from which a rational person
could conclude that the position of the person with the burden of proof
on the disputed issue is correct." Ideal Dairy Farms, Inc. v. John
Lebatt, LTD., 90 F.3d 737, 743 (3d Cir. 1996) (citation omitted). When a
court evaluates a motion for summary judgment, "[t]he evidence of the
non-movant is to be believed," Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 255 (1986), and "all justifiable inferences are to be drawn
in [the non-movant's] favor." Id. Additionally, "[s]ummary judgment may
not be granted . . . if there is a disagreement over what inferences can
be reasonably drawn from the facts even if the facts are undisputed."
Ideal Dairy, 90 F.3d at 744 (citation omitted). However, "an inference
based upon a speculation or conjecture
does not create a material factual dispute sufficient to defeat entry of
summary judgment." Robertson v. Allied Signal, Inc., 914 F.2d 360, 382
n.12 (3d Cir. 1990).
To defeat summary judgment, the non-moving party cannot rest on the
pleadings, but rather that party must go beyond the pleadings and present
"specific facts showing that there is a genuine issue for trial." FED.
R. Civ. P. 56(e). Similarly, the non-moving party cannot rely on
unsupported assertions, conclusory allegations, or mere suspicions in
attempting to survive a summary judgment motion. Williams v. Borough of
W. Chester, 891 F.2d 458, 460 (3d Cir. 1989) (citing Celotex v. Catrett,
477 U.S. 317, 325 (1986)). Further, the non-moving party has the burden
of producing evidence to establish prima facie each element of his
claim. Celotex, 477 U.S. at 322-23. The non-movant must show more than
"[t]he mere existence of a scintilla of evidence" for elements on which
he bears the burden of production. Anderson, 477 U.S. at 252. Thus,
"[w]here the record taken as a whole could not lead a rational trier of
fact to find for the non-moving party, there is no `genuine issue for
trial.'" Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp.,
475 U.S. 574, 587 (1986) (citations omitted).
As defendants point out, "[i]n general, [in Pennsylvania] when one
corporation sells or transfers its assets to a second corporation, the
successor does not become liable for the debts and liabilities of the
predecessor." LaFountain v. Webb Indus. Corp., 951 F.2d 544
, 546-47 (3d
Cir. 1991). There are a number of exceptions to this general rule. The
exception at issue in the instant case, i.e. the only exception discussed
by either plaintiff or defendants in their briefs regarding this motion
for summary judgment, is the "product line" exception. Pennsylvania
courts adopted this exception in Dawejko v. Jorgensen Steel Co.,
434 A.2d 106
(Pa. Super. 1981), and the Third Circuit has adopted Dawejko as the law
of Pennsylvania. Kradel v. Fox River Tractor Co., 308 F.3d 328
(3d Cir. 2002). The Dawejko court explained:
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.
Dawejko, 434 A.2d at 110 (quoting and adopting the standard from Ramirez
v. Amsted Indus., Inc., 431 A.2d 811
, 825 (N.J. 1981)). The Third Circuit
also recognized in Kradel that Pennsylvania has adopted three factors as
"prerequisites for the product line exception." Kradel, 308 F.3d at 332
(citing Hill v. Trailmobile, Inc., 603 A.2d 602, 606 (Pa. Super. 1992)).
These three factors, commonly referred to as the Ray factors because they
were originally articulated by the California Supreme Court in Ray v.
Alad Corp., 560 P.2d 3 (Cal. 1977), are:
(1) the virtual destruction of the plaintiff's
remedies against the original manufacturer caused by
the successor's acquisition of the business, (2) the
successor's ability to assume the original
manufacturer's risk-spreading rule, and (3) the
fairness of requiring the successor to assume a
responsibility for defective products that was a
burden necessarily attached to the original
manufacturer's good will being enjoyed by the
successor in the continued operation of the business.
Hill, 603 A.2d at 606 (quoting Dawejko, 434 A.2d at 109 (quoting Ray, 560
P.2d at 9)). "It is thus clear that the inability to recover from an
original manufacturer is a prerequisite in Pennsylvania to the use of the
product line exception." Kradel, 308 F.3d at 332.
The parties do not dispute that Mitchell is unable to recover from the
original manufacturer. They focus, instead, on a wrinkle in the analysis
of this factor that has yet to be addressed by either the Pennsylvania
Supreme Court or the Third Circuit: whether the successor
caused the destruction of plaintiff's remedy against the original
manufacturer.*fn4 Defendants argue that they were not responsible for
the destruction of plaintiff's remedy because DBI, from whom Powermatic
Corporation purchased the Powermatic assets, was already in bankruptcy
when the sale occurred. In other words, defendants argue that DBI's
filing for bankruptcy destroyed plaintiff's remedy against DBI and not
Powermatic Corporation's acquisition of the Powermatic assets from DBI.
Def. Br. 8-9 (citing Tracey v. Winchester Repeating Arms Co.,
745 F. Supp. 1099 (E.D. Pa. 1990) in support of their argument).
Plaintiff does not challenge defendants' contention that he has no remedy
against DBI because it went bankrupt and no longer exists.
However, plaintiff attempts to establish that the original manufacturer
of the specific Powermatic shaper involved in the accident was not DBI,
but rather Powermatic, Inc., a separate corporation doing business as
"Powermatic Division of DeVlieg-Bullard, Inc." Pl. Br. 2-5. So, plaintiff
argues that his remedy would be against Powermatic, Inc., the alleged
original manufacturer, and that this remedy was destroyed by Powermatic
Corporation when it acquired
the Powermatic assets from DBI because this sale directly led to the
dissolution of Powermatic, Inc. Id. However, plaintiff has failed to
provide sufficient evidence to allow a reasonable fact finder to conclude
that Powermatic, Inc., a separate corporation, manufactured the
Powermatic shaper in question.
If one simply follows the paper trail of the business of making tools
under the Powermatic name, which is summarized above, the name
"Powermatic, Inc." is nowhere to be found. Plaintiff relies primarily on
snippets of information about Powermatic, Inc. to support the inference
that Powermatic, Inc. was a separate corporation which owned and operated
the assets of the Powermatic division of DBI. First, plaintiff points out
that Powermatic, Inc. was incorporated in Delaware on March 10, 1986,
Def. Ex. C-2, and DBI (which was actually Stanwich Industries at that
time)*fn5 acquired the Powermatic assets from Houdaille Industries,
Inc. on April 4, 1986. Def. Ex. F at 19. However, at the time of that
transaction, the Powermatic business was called "Powermatic Division of
Houdaille Industries, Inc." Id. When Stanwich Industries purchased the
Powermatic assets, the name simply changed to "Powermatic Division of
Stanwich Industries, Inc." Id. Finally, when Stanwich Industries changed
its name to DeVlieg-Bullard, Inc., the Powermatic business name changed