- Case Type:
- Case Status:
- Affirmed in part and Reversed in part
- 16-1791 (8th Circuit, Aug 29,2017) Published
- In a case with the thinnest of connections to bankruptcy (the owners of the corporate defendant filed for bankruptcy relief; Sara Wenner then was dismissed from the federal ERISA litigation), the Court of Appeals: (1) affirmed the use of offensive collateral estoppel against a corporation that had been found to be the alter ego of a defendant in prior litigation; and (2) reversed the district court with respect to damages which were not authorized by ERISA.
- Procedural context:
- The decision arose from an appeal in which the United States District Court for the District of Minnesota held that a finding in prior litigation against defendants other than those in the present case collaterally estopped the defendants in the present case from arguing that the corporate defendant was an alter ego of a defendant in the prior litigation.
- Shawn and Sara Wenner purchased a plumbing company (OldCo) which was a party to a collective bargaining agreement (CBA). Plaintiff is a fiduciary with respect to the CBA. The Wenners subsequently purchased a "Mr. Rooter" franchise and operated it using OldCo's employees, facilities and equipment. The Wenners subsequently formed two new companies, one for residential plumbing (WQS) and the other for commercial plumbing (S&S). Shawn wrote the unions that the S&S would assume the OldCo's CBA obligations. Shawn separately wrote and stated that Mr. Rooter would cease operations. In fact, WQS continued operating as a Mr. Rooter franchisee. OldCo ceased operations. OldCo ceased operations. Plaintiff, ever vigilant, discovered that Mr. Rooter was still rooting out people's drain lines (the trucks might have been a tip off). Plaintiff sued S&S, OldCo and Shawn under ERISA, but didn't sue Sara or WQS, which was operating as Mr. Rooter. This case is "ERISA I." The district court granted OldCo summary judgment because it had ceased operating and had paid its obligations under the CBA. Even though WQS was not a party to the litigation, the court held that WQS and S&S were alter egos, so that S&S was liable for WQS's failure to pay fringe benefit contributions under the CBA. Damages, however, were never awarded because S&S and Shawn filed for bankruptcy. ERISA I was "administratively terminated." Three years after commencing ERISA I, plaintiff filed a second action against WQS and Sara (ERISA II). Sara filed for bankruptcy and was dismissed from ERISA II. The district court then granted plaintiff summary judgment, ruling that the alter-ego finding in ERISA I was binding in ERISA II even though WQS was not a party to ERISA I.
- SMITH, COLLOTON, KELLY
3335 in the system
1 Being Processed