St. Mary's Law Journal
In today’s fast-paced business world, buyouts, takeovers, mergers, and other acquisitions are common occurrences. As a consequence of this corporate turnover, the consumer plaintiff injured while using a defective product may find the search for the proper defendant is futile, simply because the product is now marketed by a different legal entity. Generally, the consumer has no recourse against the manufacturer of the particular product which caused the injury if that manufacturer has since dissolved.
This apparent unfairness, coupled with an increase in litigation of this nature over the last decade, has led to the judicial recognition of an exception to the traditional corporate law rule of successor non-liability—the so-called “product line” exception. This exception encompasses a fact situation in which the successor corporation has purchased more than the physical assets of the seller. Rather, the successor has purchased the entire business and continues to manufacture the original product and place it into the stream of commerce.
Texas courts have chosen not to adopt the product line exception, leaving consumers injured by defective products without the right to seek a remedy in a court of law. This result seems to defy some of the most fundamental principles underlying the law of products liability.
It is time for Texas to recognize the changing marketplace and take note of the impact that this change has brought upon the individual consumer.
The product line theory of liability would serve this function as a logical extension of present product liability law. Furthermore, to deny the adequate redress of an injury solely on the bases of a “corporate technicality” is the very antithesis of the function of modern day courts. For all of these reasons, the best solution is the adoption of the product line exception in Texas.
Charles E. Cantú, Products Liability: An Argument for Product Line Liability in Texas, 19 St. Mary’s L.J. 621 (1988).