HERMAN et al v. AMETEK, INC. et al
MEMORANDUM SIGNED BY HONORABLE EDUARDO C. ROBRENO ON 6/28/17. 6/29/17 ENTERED AND COPIES MAILED, E-MAILED. (va, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
IN RE: ASBESTOS PRODUCTS
LIABILITY LITIGATION (No. VI)
MAYNARD HERMAN, et al.
AMETEK, INC., et al.
MDL DOCKET NO. 875
CIVIL ACTION NO.
M E M O R A N D U M
EDUARDO C. ROBRENO, J.
June 28, 2017
Presently before the Court is Plaintiff’s motion to
remand the action to the Court of Common Pleas of Philadelphia.
For the reasons that follow, the Court will grant the motion.
FACTS AND HISTORY
This is a personal injury asbestos action, originally
brought in state court, in which Plaintiffs allege that Maynard
Herman sustained occupational exposure to asbestos for which the
Defendants are responsible. As a result of this exposure, Mr.
Herman contracted Mesothelioma.
On April 7, 2017, Defendants removed the case to this
court pursuant to 28 U.S.C. §§ 1332, 1441, and 1446, asserting
diversity jurisdiction. Since Defendant Ametek, Inc. is a
citizen of Pennsylvania, the state in which the case was
brought, 28 U.S.C. § 1441(b)(2) would typically bar
jurisdiction. However, Defendants assert that Plaintiffs
fraudulently joined Ametek in order to defeat removal and, as a
result, the Court may disregard Ametek’s citizenship. Wilson v.
Republic Iron & Steel Co., 257 U.S. 92, 97 (1921); In re
Briscoe, 448 F.3d 201, 215–16 (3d Cir. 2006).
After removal, Plaintiffs filed this motion for remand
arguing that their joinder of Ametek as a defendant was not
fraudulent since Ametek is liable as a successor for Mr.
Herman’s exposure to asbestos containing products produced by
Haveg Industries. Plaintiffs acknowledge that when Ametek bought
Haveg in 1980, the agreement facially concerned only the
purchase of the latter’s assets, and that the default rule in
Pennsylvania is for successor non-liability. However, they
correctly assert that there are several recognized exceptions
that could create successor liability between Ametek and Haveg.
See Berg Chilling Sys., Inc. v. Hull Corp., 435 F.3d 455, 468
(3d Cir. 2006). Specifically, if Ametek’s purchase of Haveg was
actually a de facto merger of the two corporations or served as
a mere continuation of Haveg, Ametek would legally be considered
Haveg’s successor regardless of how the contract between them
was framed. Id.
On this motion for remand under 28 U.S.C. § 1447(c),
the Court’s task is not to decide whether Ametek actually is a
mere continuation of Haveg’s operations such that successor
liability should apply. Instead, strictly construing the
arguments against removal and resolving all doubts in favor of
remand, 1 the Court must determine whether the Defendants have met
their heavy burden of establishing that there is no reasonable
basis for Plaintiffs’ successor liability claims – that there is
not the slimmest possibility that the state court could find in
their favor and, instead, could not but conclude that their
claims are wholly insubstantial and frivolous. Briscoe, 448 F.3d
The factors a court should consider in determining
whether a transaction amounted to a de facto merger or a mere
continuation are: (1) the existence of some sort of proof of
continuity of ownership or stockholder interest; (2) the
cessation of the ordinary business by, and dissolution of, the
predecessor; (3) the assumption by the successor of the
obligations or liabilities ordinarily necessary for the
uninterrupted continuation of the business; and (4) a continuity
of the management, personnel, physical location, and the general
In cases where the government contractor defense is
implicated, removal is favored and the burden of proof necessary
to win a remand is much different than under Section 1447(c). In
re Asbestos Prod. Liab. Litig. (No. VI) (Barnes), 770 F. Supp.
2d 736, 741 (E.D. Pa. 2011) (citing Sun Buick, Inc. v. Saab Cars
USA, Inc., 26 F.3d 1259, 1261 (3d Cir. 1994)). Although this
issue arises with frequency in asbestos-related cases, it is not
business operation. Fizzano Bros. Concrete Prod. v. XLN, Inc.,
42 A.3d 951, 969 (Pa. 2012); Cont’l Ins. Co. v. Schneider, Inc.,
810 A.2d 127, 135 (Pa. Super. 2002), aff’d, 873 A.2d 1286 (Pa.
Although a court must consider all four factors, “all
need not exist before” finding successor liability. Schneider,
810 A.2d at 135. 2 Similarly, these elements “are not a
mechanically-applied checklist, but a map to guide a reviewing
court to a determination that,” “for all intents and purposes, a
merger has” occurred. Fizzano Bros., 42 A.3d at 969.
In determining whether removal jurisdiction exists,
the Court may “look to more than just the pleading allegations
to identify indicia of fraudulent joinder” as long as it does
“not step ‘from the threshold jurisdictional issue into a
decision on the merits.’” Briscoe, 448 F.3d at 219
(quoting Boyer v. Snap-on Tools Corp., 913 F.2d 108, 112 (3d
The Pennsylvania Supreme Court has held that in the context
of contract cases, the reviewing court must at least find
continuity of ownership. Fizzano Bros., 42 A.3d at 969. However,
it left open the question of whether, in tort cases, “the
continuity of ownership prong may be relaxed.” Id. at 966-67. In
considering a motion for remand based on diversity removal, the
court must resolve any uncertainty in the law in favor of the
plaintiffs. Brisco, 448 F.3d at 219. Thus, although it is not
strictly necessary in this case, the Court will review the
continuity of ownership prong in a relaxed manner.
The Continuity of Ownership
Plaintiffs have produced “some proof” of continuity of
ownership between Ametek and Haveg through John Lux.
Specifically, Plaintiffs assert, citing business documents and
deposition testimony, that: (1) Mr. Lux was one of Haveg’s
owners in 1964; (2) after Hercules Inc. bought Haveg in 1964 as
a wholly-owned subsidiary, Hercules gave Mr. Lux a seat on its
board of directors; (3) in 1966, Mr. Lux became the president
and CEO of Ametek and, after the sale of Haveg to Ametek in
1980, was the chairman of Ametek’s board of directors.
Resolving all doubts in favor of Plaintiffs, the Court
finds that this factor supports a possibility of successor
liability and Defendants have failed to show otherwise.
The Cessation of Business
Regarding the cessation and dissolution of Haveg,
Plaintiffs note that as part of the purchase agreement, Haveg
was required to change its name and cease using Haveg
trademarks. Defendants counter that the purchase agreement also
provided that Haveg (and Hercules) were required to indemnify
Ametek and that they retained most liabilities, including those
regarding asbestos injury. They argue that this indicates that
Haveg continued to exist after the sale of its assets. It is
unclear from the record in what capacity Haveg survived, but it
is clear that it did not survive as “Haveg.”
The Pennsylvania Supreme Court indicated that the
cessation of ordinary business prong might be met if, as a
result of the asset purchase agreement, the transferor company
essentially ceased operating or had become dormant. Fizzano
Bros., 42 A.3d at 971. Here, it appears that Haveg did continue
to exist, but it is not clear in what capacity. Thus, resolving
all doubts in favor of Plaintiffs, the Court concludes that this
factor also supports a possibility of successor liability and
Defendants have not established otherwise.
The Assumption of Obligations
Regarding what liabilities and obligations Ametek
assumed as part of the purchase agreement, Defendants contend
that it did not assume any relevant liabilities. However, as
indicated by Plaintiffs, Ametek did assume all of Haveg’s
accounts payable, its rights and obligations under existing
contracts, its related purchase and sales orders, and its
obligations regarding salary payments and vacation time for
retained employees. The aforementioned obligations are exactly
the type which the Pennsylvania Supreme Court indicated would
allow the continuation of business and could meet this prong.
Id. at 972. Thus, this prong also suggests the possibility of
successor liability despite Defendants’ protestations to the
The Continuity of Business Operations
Defendants raise no real argument that this prong is
not met. Thus, they have failed to meet their heavy burden of
proof. Nonetheless, Plaintiffs provide that, according to the
purchase agreement, Ametek bought “substantially all of the
assets, property and business” of Haveg, (Purchase Agreement ECF
No. 11-3 at 10), including Haveg’s real property, fixed assets,
accounts receivable, inventories (other than its asbestos
inventory), the right to use the name “Haveg” and all brandrelated intellectual property, the technology and “know-how” of
the business, and the right to take possession of the books and
Through citation to deposition testimony, Plaintiffs
also contend that Ametek retained certain of Haveg’s key
employees including managers and engineers, as well as line
workers and security guards. They assert that Ametek also
continued to produce the Haveg product line, used the same
labels, and offered repair services for older Haveg products.
Plaintiffs conclude that:
[t]he retention of Haveg personnel, the acquisition of
substantially all of its assets, the continued
marketing of its products, use of its product labels
and material safety data [sheets], and acquisition of
all of Haveg’s intellectual property, existing
business relationships, and good will were all clearly
intended to permit Ametek continue Haveg’s operations
(Plaintiffs’ Motion ECF No. 33-1 at 9).
The Court agrees that, at this stage of the
proceedings, this factor, as well as the previous three,
indicates the possibility of successor liability, and, thus,
remand to state court is required.
Construing all of the arguments against removal and
resolving all doubts in favor of remand, the Court concludes
that Defendants have not met their heavy burden of establishing
that Plaintiffs’ claim of successor liability has no reasonable
basis and is wholly insubstantial and frivolous. Briscoe, 448
F.3d at 217-18. Thus, Plaintiff’s motion for remand must be
An appropriate order follows.
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