Opinion ID: 2518474
Heading Depth: 1
Heading Rank: 11

Heading: The test for mere continuation

Text: Historically, a plaintiff must meet the following two requirements to justify bringing a sale of assets within the purview of the mere continuation exception to the general rule: (1) only one corporation remains after the transfer of assets; and (2) there is an identity of stock, stockholders, and directors between the two corporations. [25] Village urges this court to adopt a more expansive interpretation of the mere continuation exception known as the continuity of the enterprise doctrine. The more expansive interpretation that Village advocates uses eight factors to determine if the exception is met. Those factors include: (1) retention of the same employees; (2) retention of the same supervisory personnel; (3) retention of the same production facilities in the same location; (4) production of the same product; (5) retention of the same name; (6) continuity of the assets; (7) continuity of general business operations; and (8) whether the successor holds itself out as the continuation of the previous enterprise. [26] We decline to adopt this more expansive test in cases similar to the one at bar. Importantly, we note that most of the courts addressing this issue have limited the application of the doctrine to cases involving claims of products liability and Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) violations. [27] Indeed, the New Hampshire Supreme Court declined to adopt the expanded doctrine in a contract or tort context, stating that it is grounded upon public policies that are not applicable to traditional commercial and contract law, which are governed by predictability of results and the intentions of the parties. [28] Courts have adopted the expanded doctrine in the limited circumstance of products liability because they recognized that sound public policy favors the protection of the public against dangerous products. [29] Likewise, courts have opined that a more expansive rule is justified in CERCLA cases in order to protect the taxpayer from the expenses incurred in remedying the pollution. [30] We will leave the consideration of this exception in CERCLA and products liability claims for another day. The instant case involves a claim of general negligence. Village did not assert a CERCLA claim against U.S. Labs or Buena Delaware. Therefore, public policy does not justify the application of such an exception in the instant case. More importantly, we are persuaded by the fact that [t]he trend in other jurisdictions appears to be away from the expansion of successor liability and in favor of retaining the traditional rule on non-liability. [31] As a result, we elect to follow the general rule and require that the two traditional factors must be met to assert a claim of successor liability under the mere continuation exception.