Opinion ID: 196374
Heading Depth: 4
Heading Rank: 3

Heading: Predicting Rhode Island Law

Text: In the absence of a definitive ruling by the highest state court, a federal court may consider analogous decisions, considered dicta, scholarly works, and any other data tending to show how the highest court in the state would decide the issue at hand, taking into account the broad policies and the trends so evinced. Gibson v. City of Cranston, 37 F.3d 731, 736 (1st Cir. 1994) (quoting Michelin -13- 13 Tires (Canada), Ltd. v. First Nat'l Bank, 666 F.2d 673, 682 (1st Cir. 1981)). However, Carreiro, in choosing a federal rather than a state forum, is presumably cognizant of this court's statement that 'litigants who reject a state forum in order to bring suit in federal court under diversity jurisdiction cannot expect that new trails will be blazed.' Jordan v. Hawker Dayton Corp., 62 F.3d 29, 32 (1st Cir. 1995)(declining invitation to extend successor liability to asset purchaser under Maine law)(quoting Ryan v. Royal Ins. Co. of America, 916 F.2d 731, 744 (1st Cir. 1990)). Carreiro cites no cases or other authority suggesting that the mere continuation or de facto merger exceptions can apply in the absence of an asset transfer. Every case that Carreiro does cite involved a sale or other transfer of assets from the original corporation to its putative successor. In our research of scholarly works, see Gibson, 37 F.3d at 736, we find that successor liability in general, and the mere continuation and de facto merger exceptions in particular, are always discussed and analyzed in the context of inter-corporate asset transfers. Scholarly interest and judicial innovation in this area of corporate law have been fueled by concern with corporate transactions structured as asset purchases to avoid successor liability, which exists in a statutory merger but generally does not in an asset purchase. Because a purchase can achieve the same -14- 14 economic result as a merger when the acquirer continues the same business with the same assets and employees, many courts have reasoned that the same liability rule -- successor liability -- should apply. See, e.g., William M. Fletcher, 15 Cyclopedia of the Law of Private Corporations 7122, 7123-23.05 (1990 and Supp. 1995); American Law of Products Liability 3d 7:1, 7:10-13 (1987 and Supp. 1995); Phillip I. Blumberg, The Law of Corporate Groups, 13.05-05.1 (1987). But these treatises and the cases Carreiro cites contain no mention nor even any hint that the mere continuation or de facto merger doctrines might apply in the absence of an asset transfer. Our research reveals three decisions where a litigant sought to impose successor liability in the absence of an asset transfer; all three hold that an asset transfer was an essential prerequisite to successor liability. See Williams v. Bowman Livestock Equip Co., 927 F.2d 1128, 1132 (9th Cir. 1991) (without a transfer of assets there is no basis to impose liability under mere continuation exception, applying Oklahoma law); Meisel v. M&N Modern Hydraulic Press Co., 645 P.2d 689, 691-92 (Wash. 1982) (transfer of assets an essential prerequisite to successor liability under de facto merger and mere continuation theories); Evanston Insur. Co. v. Luko, 783 P.2d 293, 296 -15- 15 (Haw. Ct. App. 1989) (all exceptions to general rule of no successor liability presuppose a transfer of assets). We conclude that the Supreme Court of Rhode Island would not find successor liability under the mere continuation or de facto merger doctrines absent any evidence of an inter-corporate asset transfer. Not only is it illogical to extend the scope of an exception more broadly than the general rule to which it relates, but to hold otherwise would blaze a new trail, which is inappropriate for a federal court applying state law under diversity jurisdiction. See Jordan, 62 F.3d at 32.