## Facts

- Wallace Steel bought a 300-ton shearing machine from Richards Shear Co. in 1964.
- In 1968, Logemann Brothers bought substantially all of Richards Shear’s assets and obtained the exclusive right to manufacture and sell Richards Shear machinery.
- The asset purchase agreement did not include an assumption of Richards Shear’s tort liabilities; there was no merger and Logemann was not a continuation of Richards Shear.
- Logemann notified Wallace Steel of the acquisition and thereafter serviced Wallace Steel’s shearing machine.
- In 1978, Otto Schumacher, a Wallace Steel employee, was struck in the eye by metal ejected from the machine and was blinded in one eye.
- Schumacher and his wife sued Richards Shear and Logemann for strict products liability and negligence, alleging (as to Logemann) successor strict liability and negligent failure to warn after the acquisition.

## Issues

1. Whether an asset purchaser that continues the predecessor’s product line can be held strictly liable for injuries caused by a product manufactured and sold by the predecessor before the asset sale.
2. Whether an asset purchaser that services the predecessor’s product and maintains a post-sale relationship with the predecessor’s customer may owe an independent common-law duty to warn of known dangers in the predecessor’s product.

## Decision

- The court held that Logemann was not strictly liable as a successor for a machine manufactured and sold by Richards Shear before the asset purchase, and summary judgment was proper on that claim.
- The court held that summary judgment was improper on the negligent failure-to-warn claim because the record raised triable issues regarding whether Logemann had an independent duty to warn and whether it breached that duty.
- The order was modified to reinstate the negligence claim against Logemann while leaving dismissal of the strict liability successor claim in place.

## Legal Principles

- Under New York law, a corporation that purchases another’s assets is generally not liable for the seller’s torts absent recognized exceptions (e.g., assumption of liability, de facto merger, mere continuation, or fraud).
- New York rejects expanded successor strict-liability doctrines that impose liability based on continuation of the product line or related “continuity of enterprise” theories.
- Even when an asset purchaser is not a successor for strict liability purposes, it may incur an independent negligence duty to warn users of defects in the predecessor’s products when its post-acquisition conduct and relationships (such as servicing the product and maintaining customer contact) place it in a position to learn of hazards and communicate warnings.
- Whether such a duty to warn exists and was breached commonly presents fact questions not suitable for summary judgment when supported by evidence of continuing service and customer relationship.

## Conclusion

The court refused to impose successor strict products liability on an asset purchaser absent traditional exceptions, but allowed a negligence claim to proceed where the purchaser’s post-acquisition servicing and customer relationship could support an independent duty to warn of dangers in the predecessor’s machine.


Schumacher v. Richards Shear Co., 59 N.Y.2d 239, 451 N.E.2d 195 (N.Y. 1983)