## Facts

- Welsbach Incandescent Light Company operated a gas mantle factory in Gloucester City, New Jersey, and allegedly deposited radioactive and toxic wastes, including thorium, in the surrounding environment.
- In 1940, Welsbach sold its gas mantle business to Lindsay Light and Chemical Company through an asset sale that did not include the Gloucester City real property; Lindsay relocated operations to Illinois.
- Through later corporate transactions, Kerr-McGee Chemical Corporation became a successor in interest to the gas mantle business.
- Elaine Leo and Linda Yoder alleged their parents developed bladder cancer from exposure to contamination emanating from the former Gloucester City site.
- Plaintiffs sought to impose strict successor liability on Kerr-McGee under New Jersey’s product-line doctrine, despite Kerr-McGee’s lack of ownership or operation of the Gloucester City facility.
- The case was filed in New Jersey state court, removed to federal court on diversity grounds, and the district court denied Kerr-McGee’s motion for summary judgment.
- Kerr-McGee pursued an interlocutory appeal challenging the legal availability of product-line successor liability on these facts.

## Issues

1. Whether New Jersey’s product-line successor-liability doctrine permits strict liability against a successor for injuries alleged to result from a predecessor’s historical environmental contamination at a facility the successor never owned or operated.
2. Whether a federal court sitting in diversity should extend New Jersey common law to apply the product-line doctrine beyond product-defect injuries to toxic tort claims arising from land contamination.

## Decision

- The Third Circuit reversed the district court’s denial of summary judgment and remanded with instructions to enter summary judgment for Kerr-McGee.
- The court held that the New Jersey product-line doctrine did not reach claims based on contamination at the Gloucester City site because Kerr-McGee did not acquire the property and did not conduct operations there.
- The court declined to expand New Jersey common law in diversity, explaining that significant extensions of state doctrine should be made by state courts.

## Legal Principles

- In diversity cases, federal courts must apply existing state law and should not materially expand state common law absent clear state authority.
- New Jersey’s product-line doctrine, as articulated in Ramirez, is tied to injuries caused by products placed into the stream of commerce and is not triggered merely because the predecessor is dissolved or unavailable.
- Destruction of the plaintiff’s remedy against the original manufacturer is necessary but not sufficient to impose product-line successor liability; fairness and the successor’s assumption of the manufacturer’s risk-spreading role remain central considerations.
- Product-line successor liability is not appropriate where the successor neither acquired nor controlled the facility alleged to have caused the harm and thus did not assume responsibility for site-based disposal practices.

## Conclusion

The Third Circuit held that New Jersey’s product-line successor-liability doctrine does not impose strict liability on a successor for toxic injuries allegedly caused by historical land contamination at a site the successor never owned or operated, and it refused to extend state common law in a diversity case beyond established New Jersey precedent.


Leo v. Kerr-McGee Chem. Corp., 37 F.3d 96 (3d Cir. 1994)