Successor Liability Decision Reversed in Oregon

The plaintiff appealed the trial court’s granting of the defendant’s motion for summary judgment on successor liability. This suit involves the plaintiff’s exposure to asbestos from his work in Portland shipyards during the 1950s. The defendant moved for summary judgment on the ground that any of its liabilities “that may have existed prior to 1965 were transferred to another company” and, therefore, it could not be held liable for the alleged injuries suffered prior to that transfer.

The plaintiff appealed this decision arguing that the court erred by denying the plaintiff, the nonmoving party, the benefit of all reasonable inferences. In granting the defendant’s motion, the trial court concluded that there was no specific document delineating the defendant’s transfer of liabilities and there was significant and cumulative circumstantial evidence that the transfer occurred “as part and parcel of the subsidiary’s creation.” The court further noted that the mere absence of an actual record of transfer did not support a finding that the liabilities were not transferred, especially where the plaintiff had not pointed to any evidence in the record tending to negate the inferences raised by the defendant’s evidence.

The Court of Appeals of Oregon disagreed. Upon its review in this appeal, this court pointed to the fact that the defendant acknowledged that it would have the burden of persuasion at trial as to the specific issue of whether it transferred its liability, the subject of its motion. The general rule in Oregon is that when one corporation purchases all of the assets of another corporation, the purchasing corporation does not become liable for the debts and liabilities of the selling corporation, unless one of four recognized exceptions are met. [Citation Omitted]. The defendant only claimed one of these exceptions – where the purchaser expressly or impliedly agreed to assume the seller’s debts. In light of the above, the court found that it would be the defendant’s burden at trial to establish that its subsidiary indeed expressly or impliedly agreed to assume defendant’s liabilities. In other words, it was not the plaintiff’s burden to establish that the subsidiary had not agreed to assume such liabilities.

Under Oregon law, in order for the defendant to be entitled to summary judgment, it was the defendant’s burden to demonstrate that it transferred the specific tort liability at issue in this case. Here, there was no direct evidence of the transfer and assumption of liabilities. In viewing the evidence in the light most favorable to the plaintiff, the Court of Appeals of Oregon concluded that a reasonable fact finder could reject the defendant’s defense. The decision was reversed and remanded.

Read the full decision here.