Suppose my grandfather was killed by the negligent actions of the Schmuck Oil Co. in 1925. Schmucjk was purchased by Monolithis Oil in 1930, and advertises itself a a “successor” to the Schmuck Oil Co.
Is the sucessor corporation liable for the damages? Can a sucessor firm be sued on behalf of claimants from a predecessor firm? 
It happens, but is difficult to prove causality. There’s been a big problem for years regarding companies that produce asbestos and seveal companies have been driven to bankruptcy because they manufactured asbestos 30+ years ago (going from memory here, but I did a lot of reading on this in trade journals). There was even one case where a company was driven to bankruptcy even though it was 1) a spin-off company of an asbestos manufacturing company that had never manufactured asbestos itself and the parent company had shut down a decade before.
In Chicago, there’s been another running lawsuit that pops up occasionally where companies that dealt with slavery (insurers, etc.) are sued to provide reparations to descendents of the slaves in question. Sued is probably not a good term as I don’t think any of the cases have gotten to court proper. IIRC, the thing finally died a final death when the prosecutors couldn’t prove relationships between currently living people and slaves. The group then demanded that several of the companies involved apologize publically including the head of the Chicago Transit Authority who is a black woman.
On what basis are they suing someone/some entity for an act that was legal at the time it was done?
Ralph, with regard to your original question, when Company X buys Company Y, Company X takes on all the positive and negative obligations of Company Y. Say Company Y originally had a contract to supply millions of dollars worth of widgets to the US Army and also had a big debt with the bank and a few pending lawsuits. Company X buys them out, and now has the (presumably beneficial) widget contract and the debt and lawsuits. As long as Company Y never ‘dies’, eg is wound up, its obligations will continue too.
Is there some specific situation you had in mind - oil companies etc?
Kurt, it’s even possible to sue someone for something that is ‘legal’ now. There might be no law that explicitly says I may not leave my car with the brake off so that it runs you over and breaks your leg, but you can sure as hell sue me for it.
The answer to the question of whether liabilities survive a corporate combination is: it depends.
Specifically, there are several ways to arrange a corporate combination. The two most common are a merger and an asset sale. In a merger (sometimes called a consolidation), two corporations join together to become one legal entity, with the surviving entity having all of the assets and all of the liabilities of the two predecessors.
On the other hand, one corporation may just buy the assets of another (and perhaps assume some specific liabilities). The assets sold may include land and buildings, machinery and equipment, goods, intellectual property, trade names, inventory, contracts, employment contracts and relationships and corporate goodwill. In this case, liabilities of the selling company would not become liabilities of the purchasing company (unless they were specifically assumed by the purchaser). If someone had a claim against the selling company, that person would have to go after any assets held by the selling company, or if the company was wound up, the people to whom the assets were distributed. (In some cases, like environmental hazards, specific laws impose liability on successors by asset sale, but this is the exception not the rule.)
Although lambchops’ answer would be correct in the case of a merger, it would be wrong if there were an asset sale. In fact, an important reason to structure a corporate combination as an asset sale is to make the acquistion free of the liabilities of the selling company. So long as this is not being done to defraud creditors (for instance, if the selling company retains enough assets and insurance to satisfy claims and litigation before winding up), it is perfectly proper.
Please note that this is a general description of the law, and not specific legal advice. If you have a question about a particular fact situation, please see a lawyer practicing in the appropriate jurisdiction.
Billdo has it right. I’d add only that a claim based upon the death of a grandfather in 1925 would almost certainly be barred by the applicable statute of limitations, even if there were no successor liability issues.
Also, the Chicago slavery suit referred to by Chairman P was filed. The US District Court for the Northern District of Illinois dismissed it, as it failed to state a legal claim.
I know of a sucessor corporation which has been found liable in a class action suit.
I have a friend who purchased life insurance many, many years from a corporation which has been sold at least twice since her policy started. Recently a lawsuit was filed alleging that the original company illegally inflated rates for certain policies (including my friend’s). The company which currently holds the policy, which is many times removed from the company that originally sold it and committed the illegal acts, is being held liable and will have to pay restitution to my friend (in her case, by increasing the amount the policy will pay upon her death, so she will not get to see any of the reward).