## Facts

- Edwin DeJesus was injured in Massachusetts while operating a large industrial plate-rolling “roll-pinch” machine.
- The machine had been manufactured and sold by Bertsch, Inc. in 1957, decades before DeJesus’s injury.
- DeJesus and his wife, Maria Cartagena, sued Bertsch (as manufacturer) and Park Corporation, alleging Park was liable as Bertsch’s successor.
- Bertsch was originally family owned; in 1978 a parent company, Deem International, acquired a majority of Bertsch’s shares.
- Bertsch-family descendants kept a minority interest and continued working for Bertsch after Deem’s acquisition.
- In the mid-1980s, Bertsch was liquidated through a bankruptcy-protection plan; Bertsch ceased operations when the bankruptcy became final (by about May 1985).
- Park acquired essentially all of Bertsch’s assets under an asset-purchase agreement approved in the bankruptcy process.
- The transaction did not involve any exchange of Park stock for Bertsch shares, and Bertsch’s shareholders did not become Park shareholders.
- No Bertsch officers or directors became officers or directors of Park.
- Two living Bertsch-family shareholders became Park employees; a third left the business.
- After the sale, Park continued producing similar products using Bertsch assets and held the business out as “Bertsch, a division of Park Corporation.”
- The asset-purchase agreement stated Park was not assuming Bertsch’s liabilities, while Park did take on certain obligations needed to keep operations going (such as completing backlogged purchase orders and continuing some distributor/vendor arrangements).
- Park moved for summary judgment, arguing that under Massachusetts successor-liability law it was not responsible for Bertsch’s pre-sale tort liabilities.

## Issues

1. Whether Park’s asset purchase and Bertsch’s liquidation constituted a de facto merger under Massachusetts law, making Park liable for Bertsch’s pre-acquisition torts.
2. Whether Park was a “mere continuation” of Bertsch under Massachusetts successor-liability doctrine.
3. Whether Park expressly or impliedly assumed Bertsch’s pre-closing tort liabilities despite the asset-purchase agreement’s disclaimer.

## Decision

- The court granted Park’s motion for summary judgment on the successor-liability claims.
- The court held Park did not expressly or impliedly assume Bertsch’s pre-sale tort liabilities; assuming operational obligations to continue the business did not amount to assuming legacy tort claims.
- The court held the de facto merger exception did not apply because the record showed no continuity of shareholders (no stock-for-assets transaction and no continuing equity interest or comparable control by Bertsch shareholders in Park).
- The court held the mere continuation exception did not apply because there was no continuity of ownership or corporate leadership (no overlap of officers or directors), even though Park continued the product line and used Bertsch assets and name.

## Legal Principles

- Under Massachusetts law, a corporation that buys another corporation’s assets generally does not assume the seller’s liabilities.
- Massachusetts recognizes limited exceptions to nonliability in asset purchases, including: (1) express or implied assumption of liabilities, (2) de facto merger or consolidation, (3) mere continuation, and (4) fraud designed to escape liabilities.
- In evaluating de facto merger, Massachusetts courts commonly consider factors including: continuation of the seller’s enterprise; continuity of shareholders (often shown by payment with the buyer’s stock); the seller’s cessation of ordinary business operations and dissolution; and the buyer’s assumption of obligations needed for uninterrupted continuation of business operations.
- A written disclaimer of liabilities in an asset-purchase agreement weighs against finding an express or implied assumption of pre-closing tort liabilities; carrying forward purchase orders or other operating obligations does not, by itself, show assumption of past tort exposure.
- For mere continuation, Massachusetts focuses on continuity of ownership and corporate leadership (directors, officers, and stockholders), not simply continuation of the same business, workforce, products, or trade name.

## Conclusion

The district court ruled that Park’s bankruptcy-era asset purchase of Bertsch’s business did not make Park responsible for injuries caused by a machine Bertsch manufactured decades earlier because the sale did not preserve common ownership or corporate control between the two entities, Park did not assume pre-sale tort liabilities, and Massachusetts successor-liability exceptions for de facto merger and mere continuation were not met.


DeJesus v. Bertsch, Inc., 898 F. Supp. 2d 353 (2012)