Crowley, Timothy v. Stun-Tech Inc. et al

Filing 21

ORDER that plaintiff may have until March 1, 2016, to notify the court whether he intends to name Stuntronics and any other company as defendants. If plaintiff chooses to name one or more new defendants, he must also include all facts reasonably kn own that would establish each defendant's citizenship for the purpose of determining federal diversity jurisdiction. If it becomes clear that subject matter jurisdiction exists, the court will then revisit plaintiff's motion for assistance in recruiting counsel. Signed by District Judge William M. Conley on 2/1/2016. (jef),(ps)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN

TIMOTHY CROWLEY,

Plaintiff,

ORDER

v.
15-cv-006-wmc
STUN-TECH
INC.,
KARBON
ARMS,
STINGER SYSTEMS, INC., ELECTRONIC
DEFENSE
TECHNOLOGIES
LLC
and
R.A.C.C. INDUSTRIES INC.,
Defendants.
On January 4, 2016, the court granted plaintiff leave to proceed on his products
liability claims against five companies that allegly sold or manufactured the REACT
Shock Belt.

The U.S. Marshals Service returned summons unexecuted for each

defendant after confirming that all five defendants are no longer active. (Dkt. #20.) In
other words, the Marshals were unable to serve defendants because they are all out of
business.
This case cannot proceed without a defendant with assets who can both defend
against and, as appropriate, be held liable on plaintiff’s products liability claims. In some
situations in which a company has been renamed, reorganized, merged or dissolved, there
may be a successor company that inherits its predecessor’s liability. Here, the Marshals
identified another company, Stuntronics LLC, that appears to be an active seller or
manufacturer of a product that is somewhat similar to the REACT Shock Belt.
According to information provided by the Marshals, the founder of Stuntronics was

either the founder or a manager of four of the five defendants. Nevertheless, it is unclear
whether Stuntronics is a successor company that simply renamed itself, acquired the
stock or purchased the assets of the defendants, or if it is a wholly unrelated company
that makes a similar product to that accused in this case.
Even if Stuntronics were a successor company, it would not necessarily be liable
for faulty products sold by now defunct companies. “The general rule in the majority of
states, including Wisconsin, is that in a commercial context a corporation that purchases
the assets of another corporation does not succeed to the liabilities of the selling
corporation.” Gallenberg Equip., Inc. v. Agromac Int’l, Inc., 10 F. Supp. 2d 1050, 1053
(E.D. Wis. Aug. 12, 1998) (citing Leannais v. Cincinnati, Inc., 565 F.2d 437 (7th Cir.
1977). Four exceptions to this general rule may, however, give rise to liability for a
purchasing corporation: (1) the purchasing company expressly or impliedly agrees to
assume the selling corporation’s liabilities; (2) the transaction amounts to a consolidation
or merger of the two corporations; (3) the purchaser corporation is a “mere continuation”
of the selling corporation; or (4) the selling company enters into a fraudulent transaction
to escape liability. Gallenberg, 10 F. Supp. 2d at 1053 (citing Leannais, 565 F.2d at 439).
If plaintiff can make the necessary factual allegations in good faith under one or
more of these four categories, he may wish to amend his complaint to substitute
Stuntronics or some other active company (to the extent plaintiff is aware of any) as the
named defendant in this case. If plaintiff does not identify an active defendant, however,
this case must be dismissed.
Accordingly,
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ORDER
IT IS ORDERED that:
1. Plaintiff may have until March 1, 2016, to notify the court whether he intends to
name Stuntronics and any other company as defendants.
2. If plaintiff chooses to name one or more new defendants, he must also include all
facts reasonably known that would establish each defendant’s citizenship for the
purpose of determining federal diversity jurisdiction. If it becomes clear that
subject matter jurisdiction exists, the court will then revisit plaintiff’s motion for
assistance in recruiting counsel.

3. If plaintiff does not notify the court of his decision by March 1, 2016, this lawsuit
will be dismissed without prejudice.
Entered this 1st day of February, 2016.
BY THE COURT:
/s/
__________________________________
WILLIAM M. CONLEY
District Judge

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