Benefit Funds Can’t Use Federal Courts to Collect From Successor

A lawsuit seeking to hold a newly formed family business liable for a predecessor’s $300,000 employee benefits judgment cannot proceed in federal court because there is no federal jurisdiction over the dispute, the Seventh Circuit ruled Wednesday.

The lawsuit against Prather Plumbing & Heating Inc. asserted claims under the “federal common law doctrine of successor liability”. But that’s not enough to create jurisdiction; the benefit funds failed to identify a federal law that authorized them to sue in federal court, the U.S. Court of Appeals for the Seventh Circuit ruled.

The benefit funds cited two provisions of the Employees’ Pension Scheme…

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