Sullivan v. Running Waters Irrigation, Inc.
739 F.3d 354
| 7th Cir. | 2014Background
- Alpine Irrigation Company (Alpine) was a residential irrigation business owned by Robert Zeh until it closed in 2009.
- Alpine accrued delinquent pension fund payments to the Chicago Journeyman Plumbers Union, leading to a judgment enforcing an arbitration award.
- Jeffery Zeh, Alpine’s owner’s son, formed Running Waters Irrigation, Inc. (RWI) and JV Equipment Leasing, LLC (JV) contemporaneously with Alpine’s closing; both became successors in interest to Alpine for ERISA purposes.
- RWI and JV shared leadership, premises, employees, and customer lists with Alpine; RWI largely serviced Alpine’s former customers from Alpine’s location and used Alpine’s office space and equipment.
- Sullivan, the Union’s trustee, moved to substitute RWI and JV as judgment debtors under Rule 25(c) based on ERISA successor liability principles, and the district court granted substitution following a magistrate judge’s findings.
- The court applied a multifactor ERISA test, found notice and substantial continuity, and denied a full evidentiary hearing, affirming substitution of RWI and JV for Alpine.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ERISA successor test supports transfer of interest to RWI/JV | RWI/JV contend no notice or substantial continuity to constitute an ERISA transfer. | Alpine/Sullivan argue the district court properly applied the ERISA successor framework and found transfer of interest. | Yes; the court held there was an ERISA-transfer of interest. |
| Whether notice and substantial continuity were established | RWI/JV argue notice and continuity were lacking or not proven. | Alpine/Sullivan argue substantial evidence shows notice and continuity through control, leadership, and ongoing operations. | Yes; the court found proper notice and substantial continuity. |
| Whether Rule 25(c) substitution without an evidentiary hearing was proper | RWI/JV claim due process requires an evidentiary hearing. | Alpine/Sullivan contend discretion to decide on motion without a hearing is permissible. | Yes; the court affirmed substitution without a hearing given the record and objections. |
| Whether due process was violated by lack of hearing | RWI/JV assert denial of day in court without hearing. | Alpine/Sullivan contend no mandatory hearing under Rule 25(c) given no request and no need for cross-examination. | No; the court found no due process violation. |
Key Cases Cited
- Artistic Furniture of Pontiac v. Upholsterers' Int’l Union Pension Fund, 920 F.2d 1323 (7th Cir. 1990) (ERISA successor liability; notice and continuity standards)
- Golden State Bottling Co. v. NLRB, 414 U.S. 168 (U.S. 1973) (notice can be implied; evidentiary hearing not mandatory)
- Luxliner P.L. Export Co. v. RDI/Luxliner, Inc., 13 F.3d 69 (3d Cir. 1993) (district court de novo review on law-to-facts in Rule 25(c) context)
- Panther Pumps & Equipment Co., Inc. v. Hydrocraft, Inc., 566 F.2d 8 (7th Cir. 1977) (context on Rule 25(c) and not requiring strict hearing under certain conditions)
- U.S. v. 8136 S. Dobson St., Chicago, Ill., 125 F.3d 1076 (7th Cir. 1997) (discretion to deny evidentiary hearing when not justified by disputed issues)
- Duncan Foundry & Mach. Works, Inc. v. N.L.R.B., 458 F.2d 933 (7th Cir. 1972) (hearing requirements and evidentiary standards in administrative contexts)