New Jersey Product Line Exception
In Ray v. Alad Corp., 19 Cal. 3d 22, 136 Cal. Rptr. 574, 560 P.2d 3 (1977), the California Supreme Court adopted the "product-line exception" to corporate-successor non-liability, the buyer had purchased the seller's assets, stock in trade, trade name and good will, and the seller agreed to dissolve its corporate existence as soon as practical.
In Ramirez v. Amsted Industries, Inc., 86 N.J. 332, 431 A.2d 811 (1981), the New Jersey Supreme Court adopted the rule of Ray v. Alad Corp in a case where plaintiff would similarly have been left remediless against the original manufacturer which, as in Ray, had ceased to exist after the sale of its assets.
The purchaser of the assets, who continued the same manufacturing operation, was therefore the only viable corporate entity that the plaintiff could sue for his injuries.
The Ramirez doctrine of corporate successor liability was extended to intermediate successor corporations in Nieves v. Bruno Sherman Corp., 86 N.J. 361, 431 A.2d 826 (1981), a case in which the original manufacturer distributed the cash proceeds of the sale of its business to its shareholders and underwent dissolution.
And in Lefever v. K.P. Hovnanian Enterprises, Inc., 160 N.J. 307, 734 A.2d 290 (1999), our Supreme Court applied the Ramirez "product-line" successor liability rule to the purchaser of all the assets of the original manufacturer at a bankruptcy sale, even where the injury giving rise to liability occurred before bankruptcy.