USCA1 Opinion

United States Court of Appeals

For the First Circuit
____________________

No. 95-1181

RANDY JORDAN,

Plaintiff, Appellant,

v.

HAWKER DAYTON CORPORATION and EAST DAYTON TOOL & DIE CO.,

Defendants, Appellees.

____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MAINE

[Hon. Morton A. Brody, U.S. District Judge]

___________________

____________________

Before

Cyr, Boudin, and Lynch, Circuit Judges.

______________

____________________

Laurie Ann Miller, with

_________________

whom N. Laurence Willey, Jr. and

_______________________

Ferr
____

Dearborn & Willey were on brief, for appellant.

_________________
Brent A. Singer, with whom
________________

David C. King
_____________

and Rudman & Winch

_______________

were on brief, for appellee Hawker Dayton Corporation.

____________________

August 10, 1995

____________________

LYNCH,
LYNCH,

worker, appeals,

Circuit Judge.
Circuit Judge.
_____________

asking us

successor liability so

Corporation,

Jordan, an

to revisit the

that he may

which purchased

Randy

law of

reach the Hawker

the assets

of

injured

Maine on

Dayton

a division

of

another company

injured

that had

Jordan's

manufactured

hand.

Sitting

as a

the machinery

court

jurisdiction under

Erie Railroad
_____________

(1938), we decline

to do so and affirm the

judgment issued in favor of Hawker

v. Tompkins,
__ ________

which

in diversity

304 U.S.

64

grant of summary

Dayton Corporation by the

district court.

FACTS
_____

In

September

badly injured

his hand at

doweling machine.

treatment,

1991, the

appellant,

Randy Jordan,

work while attempting to

unjam a

Jordan underwent medical and psychological

and filed this

products liability action

in the

United States District Court for Maine against "Hawker Dayton

Manufacturing Company."

The doweling

Hawker

Manufacturing

machine was manufactured

Company

("Hawker

in 1973

Manufacturing"),

division of East Dayton Tool & Die Co. ("East Dayton").

Dayton

also

products.

manufactured

Around

automobile

the time

manufactured, Dorothy Darrow,

Dayton, sold

Dayton

some of her

redeemed

her

that the

the sole

components and

-22

stock

East

other

doweling machine

was

shareholder of

East

stock to family friends,

remaining

by

for

cash

and East

and

an

installment note.

The

company continued

its manufacturing

operations and even added additional product lines.

In

August 1973, East Dayton sold to Harmon Darrow,

the

president of Hawker Manufacturing, an option to purchase

the

assets of Hawker Manufacturing at

In

March 1974, Mr.

Darrow formed Hawker

("Hawker Dayton"), conveyed

in

July

1974,

Hawker

purchased the Hawker

$150,000.

Hawker

their net book value.

Dayton Corporation

his option to that

Dayton

exercised

company, and

the

Manufacturing assets for

option

and

approximately

Dayton continued the operations

of Hawker

Manufacturing and

trade name.

continued to use

the Hawker Manufacturing

East Dayton continued to manufacture woodworking

machines (including

doweling machines at

first), automobile

dies and other specialized machinery for about two years.

In

Darrow.

1976, East Dayton defaulted

It then sold the

and its real property

on its note to Ms.

rest of its equipment for $925,000

for $650,000 to entities not

in this lawsuit, and made

involved

payments out to Ms. Darrow

on the

installment note for the next ten years.

PROCEEDINGS BELOW
_________________

On

June

14, 1993,

Jordan

filed this

suit.

In

August, the district court issued a scheduling order giving a

deadline

pleadings.

of

September

The judge

15,

1993,

later amended

for

amendment

the scheduling

of

the

order,

extending the deadline for amending pleadings by fifteen days

-33

and extending the

discovery deadline by two months.

discovery, Jordan learned,

the manufacturer of

inter alia, that East

_____ ____

the doweling machine.

During

Dayton was

On February

10,

1994, five

days before discovery

the scheduling order,

name

of the

Corporation"

liability

completed under

Jordan moved to correct

defendant

from

to "Hawker

Dayton as a defendant

was to be

"Hawker

Dayton

the corporate

Dayton

Manufacturing

Corporation,"

to add

East

and to include additional theories

against Hawker Dayton.

of

The district court granted

the motion to correct the corporate name of the defendant and

to add East

Dayton, but denied the motion

to add additional

theories of liability.

Jordan filed a

issue

of whether

corporation for

Hawker

summary

Hawker

the debts

Dayton objected,

judgment

be

motion for summary judgment

Dayton was

liable as

and liabilities

and

a successor

of East

in

its

response

entered in

its

favor

on the

Dayton.

asked

that

instead.

The

Magistrate Judge recommended that Jordan's motion be

denied,

and the district

Neither

ruled

entered

on the

on

subsequently

court adopted the recommendation.

issue of

behalf

whether summary

of

Hawker

moved for

judgment should

Dayton.

summary judgment,

Hawker

and the

be

Dayton

district

court granted the motion.

Judgment

by

default

was

entered

against

Dayton, after a hearing on damages, for $2,230,088.21.

-44

East

Jordan

appeals the

grant of

summary judgment

in

favor of Hawker Dayton on the issue of successor liability.

DISCUSSION
__________

Four

years ago, albeit in a different context than

a tort suit, the Supreme Judicial

Court of Maine held, as to

corporate

successor

agreement

by the parties, or an explicit statutory provision

in

derogation

of

liability:

the

established

corporation that purchases the assets

in

a bona fide,

"[A]bsent

common

law

contrary

rule,

of another corporation

arm's-length transaction is

not liable for

_________

the

debts or

liabilities

of the

transferor

Director of Bureau of Labor Standards

________________________________________

Inc., 588 A.2d 734, 736

____

interpretation

statute.

the

of the

Conceding

asset purchase

common

law here,

(Me. 1991).

parties and

Jordan tries

holding by arguing the

v. Diamond Brands,
__ ________________

Diamond Brands involved

______________

term "employer"

that there is

corporation."

in

a severance

pay

no contrary agreement

by

statutory exception

to

no

to avoid the

Diamond Brands
______________

opinion does not foreshadow

what the

Maine Court would do in a tort action.

There

stated above, that

to

are two

responses.

First,

a mere asset purchase will

successor liability

is

articulated

the rule,

as

not give rise

by Maine's

highest

court as being "the established common law rule."

defeats

applies.

Jordan's

claim, as

This common law

he

has argued

that

rule is reinforced by

That alone

Maine law

the social

-55

policy judgment made by the Maine legislature, in the statute

at

issue in Diamond Brands.

______________

Maine

there decided that it is

benefited

by not discouraging

businesses

through

imposition

purchases of assets

of

successor

of Maine

liability

purchasing corporations, thus keeping businesses going

would otherwise

benefit

Jordan

fail, and

so continuing

from their continued

points

to

successor liability

no

legal

in Maine

since Diamond Brands to

_______________

employment.

Id. at
___

developments

in

or in

suggest that

Court would change this law.

of America, 350 U.S. 198,

__________

no confusion in the [Maine]

to have

any other

the

on

which

employees

737 n.7.

law

of

jurisdiction

the Supreme

Judicial

See Bernhardt v. Polygraph Co.

___ _________ __ _____________

205 (1956) ("[T]here appears to be

decisions, no developing line of

authorities that casts a shadow over the established ones, no

dicta,

doubts

judges

on

promises

or

the

ambiguities in

question,

opinions

no legislative

to undermine the

Brands is
______

the

development

judicial rule.").

the law of Maine,

of [Maine]

and this Court

that

Thus, Diamond
_______

must apply that

law.

Secondly, plaintiff

state forum,

presumably cognizant of this

that "litigants

suit

expect

in

chose a federal, rather than a

who reject a

federal court

that new

trails

court's statement

state forum in order

under diversity

will

Insurance Company of America,

_____________________________

-6-

jurisdiction cannot

be blazed."

916 F.2d

to bring

Ryan v.
____ __

731, 744

Royal
_____

(1st Cir.

1990).

Jordan

certified to

did not

file

the state court.

injury and East Dayton appears

which to satisfy his claim.

as

to whether

the common

recompense are left

a motion

that

the issue

Here Jordan has

be

suffered an

to no longer have assets with

But the complex policy arguments

law should

strive to

to the state, not the

assure him

federal court, to

decide.

Here

Maine has

greater weight

successor

made that

to the protection

liability.

It is

not

calculus and

given the

of jobs through

limits on

the role

of the

federal

courts to "question the policy choices of states whose law we

apply."

Krauss v. Manhattan Life Insurance Company of New

______ __ _________________________________________

York, 643 F.2d 98, 102 (2d Cir. 1981).

____

Jordan

argues

that

the

Supreme

Judicial

recently adopted a "majority rule" in another aspect

law

and so

liability.

will adopt

the

Jordan

relies

majority rule

on

as to

Court

of tort

successor

Oceanside at Pine Point

__________________________

Condominium Owners Association v. Peachtree Doors, Inc., 659

______________________________ __ ______________________

A.2d 267, 270 (Me. 1995), which held that a plaintiff did not

state a

claim in

tort for a

defective product's

damage to

itself,

thus

majority

having

of jurisdictions.

understanding

that the law

has been determined

would

not

Maine

join that

rule

Even were

we incorrect

of Maine on

by

in our

successor liability

by its highest authority,

not assist Jordan.

adopted

this argument

The Peachtree Doors decision does

_______________

expand plaintiffs' remedies, but reflects a rejection of

-77

such an

expansion.

adopt a

"majority rule"

would still

More tellingly, even

as to

not prevail.

if Maine

successor liability,

Assuming the majority rule

were to

Jordan

to be

that a corporation which purchases assets from another is not

liable in tort

of

for the actions of the

four exceptions

Products Liability
___________________

exceptions avail

is met,

7:1

at

see,
___

e.g., 1
____

10-11

Jordan naught.

transferor unless one

(3d

American Law of
________________

ed.

See also
_________

1990),

those

Ohio Bureau of
_______________

Workers' Compensation v. Widenmeyer Electric Co., 593 N.E.2d

_____________________ __ ________________________

468,

470 (Ohio 1991); Ramirez v. Amsted Industries, Inc., 86

_______ __ _______________________

N.J. 332, 340, 431

A.2d 811, 815 (1981); Ray v.

Alad Corp.,

___ __

19

Cal.3d

22, 28,

560

P.2d 3,

(1977).

__________

There

was no

agreement by Hawker Dayton, express or implied, to assume the

liabilities of East Dayton Tool

not claim

good

was

that the

and Die Co., and Jordan does

asset sale was

fraudulent, not

made in

faith, or made without sufficient consideration.

no

de facto

predecessor

Dayton,

sale.

supra,
_____

here

neither

See,
___

merger

where

consolidation and

the

dissolved nor

e.g.,
____

7:10,

nor

mere continuation

transferor

liquidated

There

of

the

corporation,

East

after the

asset

1 American Law of Products Liability,

_____________________________________

7:12,

7:14

&

7:15

(both

mere continuation exceptions

merger

or

require that

there be only one corporation at the end of the transaction).

Indeed East Dayton sold less than 10% of its assets to Hawker

-88

Dayton, continued to

do business thereafter and paid

out on

an installment note for twelve years after the asset sale.

Jordan's argument ultimately

is that the

"product

line"

doctrine of

successor

liability should

be

adopted.

Under the product line doctrine, a corporation that purchases

all

or

substantially

all

of

the

assets

of

another

corporation, continues the manufacturing operations and sells

the

same product

caused

line may

by defective

be strictly liable

products in

American Law of Products Liability,

__________________________________

that line.

supra,
_____

for injuries

See,
___

e.g., 1
____

7:25 at 42; see

___

also Ray, 19 Cal.3d 22, 560 P.2d 3; Ramirez, 86 N.J. 332, 431
____ ___
_______

A.2d 811 (1981); Dawejko v. Jorgensen Steel Company, 290

_______ __ _______________________

Super.

15,

434

Laboratories, 102
____________

A.2d

106

(1981);

Wash.2d 581, 689

Martin
______

v.
__

P.2d 368 (1984).

Pa.

Abbott
______

It is

far from clear the product line doctrine would assist Jordan.

See, e.g.,
___ ____

N.J.

Ray, 19 Cal.3d at 31; 560

___

at 358,

requires

remedy,

431 A.2d

that the

at 825

asset

P.2d at 9; Ramirez, 86
_______

(the product

purchase destroy

line exception

the

plaintiff's

for example, because all of the assets are purchased

or because the purchase agreement requires the predecessor to

liquidate).

This

doctrine is at most a

minority rule which

has plainly not been adopted by Maine.

Finally, Jordan

the

court was precluded

Hawker Dayton because

makes a

procedural argument

from entering summary

it failed to do so

-99

that

judgment for

when Hawker Dayton

had

countered his

Jordan,

was

originally

Hawker

motion in

entitled

denied

to

entry of

Jordan's

court granted it, saying it

Dayton's

request

by saying

that it,

judgment.

motion and

Dayton's counter request.

filed a formal motion for

Hawker

part

took

When Hawker

The

no

not

court

action on

Dayton later

summary judgment in its favor, the

had not considered the merits of

when it

denied

Jordan's

motion.

There was no error in this procedure and would have been none

even

if

the court

first time around.

had considered

the counter

See Burns v. Massachusetts Institute of

___ _____ __ ___________________________

Technology, 394 F.2d 416, 418 (1st Cir. 1968).

__________

an abuse of

discretion in denying

his complaint filed more than

set

in the

request the

scheduling

order

Nor was there

Jordan's motion to

amend

four months after the deadline

and only

few days

before

discovery was to be completed.

The decision of the district court granting summary

judgment to Hawker Dayton is affirmed.

-1010