Ruddy et al v. Polaris Industries, Inc. et al

Filing 63

MEMORANDUM (Order to follow as separate docket entry)Because the animating principle of the doctrine of successor liability is to ensure that parties injured by defective products are not left without recourse, because the Court cannot be sure that t he business relationships between the various Defendants adequately provided for creditors of whichever party may ultimately be found responsible for Plaintiffs injuries, and because the Pennsylvania long arm statute (42 Pa. C.S.A. § 5322 (b)) p rovides for personal jurisdiction to the fullest extent allowed under the Constitution of the United States, Plaintiffs Motion to File a Third Amended Complaint (Doc. 50) will be granted. If, as discovery progresses, Moore can demonstrate conclusively that it may not be properly considered an appropriate Defendant in this case, it may then avail itself of other remedies available under the Federal Rules of Civil Procedure.Signed by Honorable Richard P. Conaboy on 7/12/18. (cc)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF PENNSYLVANIA
Eugene Ruddy and Rebecca Ruddy
husband and wife, individually
and as parents of S.R., a minor
Plaintiffs

No. 3:17-cv-423
(Judge Richard P. Conaboy)

v.
Polaris Industries, Inc., et al.
Defendants

MEMORANDUM
We consider here Plaintiffs’ Motion to File a Third Amended
Complaint in the above-captioned matter. This case evolves from
an accident in which Plaintiff Rebecca Ruddy and her minor son
suffered serious physical injuries while operating a personal
watercraft that had been manufactured by original Defendant
Polaris Industries, Inc. (“Polaris”). The case is a products
liability action and, as it has progressed, other defendants
(Federal Mogul LLC) “Federal”); Moeller Marine Products f/k/a
Tempo Products, Inc. (“Tempo”); and Carter Fuel Systems, LLC
(“Carter”)) have been joined as component manufacturers and
suppliers to Defendant Polaris. Plaintiffs now seek to join as
an additional Defendant The Moore Company (“Moore”) on the
theory that it may be liable for defects in the fuel line of the
personal watercraft that caused the accident in question.

Moore was not named initially because Plaintiffs assert
that discovery they obtained recently reveals that the sale of
the subject product line of fuel hoses from Tempo to Moore in
2008 “may have transferred all or substantially all of the
manufacturing assets of Tempo … such that Moore received and
undertook the same manufacturing operation previously owned by
current Defendant Tempo and/or assumed liability for Tempo’s
conduct.” Doc. 50-2 at 5. Plaintiff’s point out, correctly, that
Pennsylvania has adopted the product line exception as a means
of imposing liability on successor entities. Dawejko v.
Jorgensen Steel Company, 434 A. 2d 106 (Pa. Super. 1981). This
reality was recognized in our circuit in Kradel v. Fox River
Tractor Co. 308 F. 3d 328, 331-32 (3d Cir. 2002). The product
line exception exists because, without it, the successor
liability doctrine inevitably leaves some parties who are
injured by defective products without recourse against any
entity. See Hill v. Trailmobile, Inc., 603 A. 2d 602, 606 (Pa.
Super. 1992).
Plaintiffs also correctly acknowledge that a successor
corporation does not become liable for all debts and liabilities
of its predecessor simply because it acquires that predecessor’s
assets. (Doc. 50-2 at 6 citing Continental Insurance Company v.
Schneider, Inc., 810 A. 2d 127,131 (Pa. Super. 2002)). Continental
sets forth the criteria for holding an acquiring company liable

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for its seller’s liabilities. Specifically, for imposition of
successor liability, one of the following must be established: (1)
the purchaser expressly or impliedly agreed to assume the
obligations; (2) the transaction amounted to a consolidation or
merger; (3)the purchasing corporation was merely a continuation of
the selling corporation; (4) the transaction was fraudulently
entered into to escape liability;

or (5) the transfer was without

adequate consideration and no provisions were made for creditors
of the selling corporation. Continental, Supra at 131.
Defendant Tempo and prospective Defendant Moore acknowledge
the accuracy of Plaintiffs’ interpretation of the cases cited
above. Nonetheless, Tempo and Moore assert that various exhibits
to their brief compel the conclusion that Moore cannot possibly
be liable to Plaintiffs under the theory of successor liability.
Moore and Tempo also assert that Moore’s contact with the
Commonwealth of Pennsylvania is too tenuous to result in the
imposition of subject matter jurisdiction over Moore.
With respect to Tempo and Moore’s argument that an exhibit
to their brief (Doc. 54-1, Exhibit A) establishes that Moore
cannot possibly be liable to Plaintiffs on a successor liability
theory, the Court is unpersuaded that such is the case. The
exhibit in question is a “trademark assignment” dated May 26,
2017 from Moore to Inca Products Acquisition Corporation for,
inter alia, various Tempo trademarks. The Court is unprepared to

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accept that this “trademark assignment” which was made almost a
year after the accident which gave rise to this law suit,
categorically relieves Moore of any liability under a successor
analysis. The document is cryptic and the Court finds that, at a
minimum, Plaintiffs should be allowed to engage in discovery as
to the totality of the relationship between Tempo and Moore.
Rule 15(a)(2) of the Federal Rules of Civil Procedure provides
that a party may seek leave of court to amend a pleading and
that such leave “shall be freely given when justice so
requires.” The general rule is that motions to amend under Rule
15(a)(2) should be liberally

granted (Long v. Wilson 393 F.3d

390,400 (3d Cir. 2004)) in the absence of bad faith, dilatory
motive, prejudice, or futility. See Shane v. Fauver, 213 F.3d
113, 115 (3d Cir. 2000). Based upon the documents thus far
submitted, the Court cannot find with confidence that
Plaintiffs’ request to join Moore is rooted in any of the
criteria forbidden in Shane, supra. Accordingly, leave to amend
is appropriate here.
Tempo and Moore also argue that an affidavit submitted by
one of Moore’s officers (Doc. 54-1, Exhibit C) proves
conclusively that Moore lacks the relevant minimum contacts with
Pennsylvania to support this Court’s exercise of jurisdiction
over it. Tempo and Moore rely upon Wylam v. Trader Joe’s
Company, 2018 U.S. Dist. Lexis 8463, as supportive of their

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minimum contacts interpretation. Having read Wylam, the Court is
struck by two things; (1) the Defendant in Wylam who alleged
that the Court did not have personal jurisdiction over it was an
English corporation and, as such, far more removed from the
Commonwealth of Pennsylvania than is Moore, a Rhode Island
Company; and (2) despite provision of affidavits that tended to
indicate that the English corporation did not have the requisite
minimum contacts with Pennsylvania, the Wylam court permitted
the parties to engage in discovery to test the propriety of
asserting jurisdiction over the English corporation. This Court
will do no less here.
Because the animating principle of the doctrine of successor
liability is to ensure that parties injured by defective products
are not left without recourse, because the Court cannot be sure
that the business relationships between the various Defendants
adequately provided for creditors of whichever party may
ultimately be found responsible for Plaintiffs’ injuries, and
because the Pennsylvania long arm statute (42 Pa. C.S.A. § 5322
(b)) provides for personal jurisdiction “to the fullest extent
allowed under the Constitution of the United States, Plaintiffs’
Motion to File a Third Amended Complaint (Doc. 50) will be
granted. If, as discovery progresses, Moore can demonstrate
conclusively that it may not be properly considered an appropriate

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Defendant in this case, it may then avail itself of other remedies
available under the Federal Rules of Civil Procedure.

BY THE COURT

S/Richard P. Conaboy
Richard P. Conaboy
United States District Judge
Dated: July 12, 2018

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