## Facts

- Felipe Ruiz, an Illinois resident, was severely injured and paralyzed in Illinois while operating a screw conveyor at a food-processing plant.
- The screw conveyor was manufactured in 1983 by Custom Stainless Equipment, a California corporation that dissolved in 1986.
- After dissolution, Custom Stainless sold its assets for cash to Blentech Corporation, also a California corporation.
- Blentech continued the predecessor’s product lines using the same product designs, facility, management, and employees.
- Ruiz sued on product-defect theories and sought to hold Blentech liable as a corporate successor under California’s product-line exception.
- The case proceeded in federal court in Illinois based on diversity jurisdiction.

## Issues

1. Under Illinois choice-of-law rules, whether Illinois or California law governs successor liability for a product-injury occurring in Illinois to an Illinois plaintiff when the predecessor and alleged successor are California corporations.
2. Whether the successor-liability claim could proceed by applying California’s product-line exception despite Illinois’s rejection of that doctrine.

## Decision

- The Seventh Circuit affirmed summary judgment for Blentech.
- Illinois choice-of-law rules applied because the case was in federal court under diversity jurisdiction.
- Applying Illinois’s “most significant relationship” analysis, the court held Illinois law governs successor liability in this products-liability setting.
- Because Illinois does not recognize the product-line exception, Ruiz could not impose successor liability on Blentech on that theory.

## Legal Principles

- In diversity cases, a federal court applies the forum state’s choice-of-law rules.
- Illinois uses a Restatement (Second) “most significant relationship” test and may apply issue-by-issue choice of law (dépeçage).
- Successor liability based on continuation of a product line is treated as part of products-liability law for conflicts analysis rather than as an internal corporate-law matter.
- Where Illinois has the most significant relationship to the injury and plaintiff, Illinois law governs even if the manufacturing entities and asset sale were connected to another state.
- Illinois’s successor-liability rules do not include California’s product-line exception; absent a recognized Illinois exception, an asset purchaser is not liable for the seller’s tort liabilities.

## Conclusion

The court held that Illinois law governs the successor-liability question because Illinois had the most significant relationship to the product-injury claim, and it affirmed summary judgment for Blentech because Illinois does not permit successor liability under California’s product-line exception.


Ruiz v. Blentech Corp., 89 F.3d 320 (7th Cir. 1996)