Knapp v. North American Rockwell Corporation
United States Court of Appeals for the Third Circuit
506 F.2d 361 (1974)
Stanley Knapp Jr. (plaintiff) was injured by a machine designed and made by Textile Machine Works (TMW), which had sold all its assets to North American Rockwell Corporation (Rockwell) (defendant) in exchange for Rockwell stock 13 months before the injury, retaining only its corporate seal, incorporation documents, and transaction-related cash while conducting no further business and agreeing to dissolve as soon as practicable (which it did about six months after Knapp's injury). The asset agreement had Rockwell assume certain TMW liabilities except those covered by TMW's own insurance, and TMW had in fact procured insurance covering exactly this kind of injury claim before the sale; Knapp sued Rockwell for negligence, and Rockwell moved for summary judgment arguing it was neither a merger, consolidation, nor continuation of TMW, which the district court granted before Knapp appealed.
Whether a corporation that has acquired all of the assets of another corporation may be liable under the de facto merger doctrine for subsequent negligence claims related to products manufactured by the acquired company.