Does Utah law recognize expanded successor liability theories? Tabor v. The Metal Ware Corp. Explained

In Tabor v. The Metal Ware Corp., the Utah Supreme Court addressed critical questions about successor corporation liability and post-sale duties to warn, providing definitive guidance on Utah’s approach to corporate successor liability.

Background and Facts

The Tabors purchased a food dehydrator in 1996, unaware that the U.S. Consumer Product Safety Commission had recalled the product due to fire hazards. In 1997, Metal Ware’s subsidiary acquired the manufacturer’s assets, including the dehydrator product line, through an asset purchase agreement containing a “No Assumption of Liabilities” clause. When the dehydrator allegedly caused a house fire in 1998, the Tabors sued Metal Ware, claiming both successor liability and failure to independently warn of the product’s defects.

Key Legal Issues

The Tenth Circuit certified two questions to Utah’s highest court: whether Utah recognizes exceptions to the general rule of successor nonliability beyond the traditional four, and whether Utah law imposes an independent post-sale duty to warn on successor corporations regarding predecessor’s defective products.

Court’s Analysis and Holding

The court definitively adopted the traditional rule of successor nonliability as outlined in Restatement (Third) of Torts section 12, rejecting the minority “product line” and “continuity of enterprise” exceptions. The court found the four traditional exceptions—assumption of liability, fraudulent conveyance, merger/consolidation, and continuation—provide adequate consumer protection. However, the court recognized an independent duty to warn under Restatement section 13, requiring successors to warn of predecessor’s product defects when specific conditions are met.

Practice Implications

This decision provides clarity for Utah practitioners handling successor liability cases. Plaintiffs should focus on proving one of the four traditional exceptions rather than pursuing expanded theories. For defendants, the ruling offers protection from broader liability theories while establishing clear parameters for post-sale warning obligations. Practitioners must carefully analyze whether a successor corporation undertakes services or relationships that trigger the independent duty to warn under Restatement section 13’s multi-factor test.