Opinion ID: 1822373
Heading Depth: 3
Heading Rank: 1

Heading: The Federal Doctrine of Successor-Employer Liability

Text: The federal doctrine of successor-employer liability was first recognized in the context of the Labor Act. John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 544, 84 S.Ct. 909, 11 L.Ed.2d 898 (1964). The Supreme Court was required to determine whether provisions of a collective bargaining agreement survived a merger. Id. at 546, 84 S.Ct. 909. The Court held that the purchaser was obliged to consider the seller's bargain. Id. at 550-51, 84 S.Ct. 909. In so holding, the Court noted that substantial continuity of identity in the business enterprise was a determinative factor. Id. at 551, 84 S.Ct. 909. The Supreme Court expanded the recognition of successor-employer liability under the Labor Act in Golden State Bottling Co., Inc. v. NLRB, 414 U.S. 168, 94 S.Ct. 414, 38 L.Ed.2d 388 (1973). There, the question was whether a bona fide purchaser who acquires and continues the business with knowledge of a predecessor's unfair labor practices is obliged to implement the terms of NLRB orders to rectify those practices. Golden State, 414 U.S. at 170, 94 S.Ct. 414. The Court reasoned that such liability was not unfair to a purchaser who had notice of the orders, stating: Since the successor must have notice before liability can be imposed, his potential liability for remedying the unfair labor practices is a matter which can be reflected in the price he pays for the business, or he may secure an indemnity clause in the sales contract which will indemnify him for liability arising from the seller's unfair labor practices. Id. at 185, 94 S.Ct. 414 (citations and internal quotations omitted). Although the Supreme Court has not addressed the doctrine of successor-employer liability in a Title VII case, federal circuit courts have uniformly held that the same doctrine is appropriate under Title VII. The first case to address the issue was EEOC v. MacMillan Bloedel Containers, Inc., 503 F.2d 1086, 1090-91 (6th Cir.1974), where the court concluded: We are of the view that the considerations set forth by the Supreme Court in these three cases as justifying a successor doctrine to remedy unfair labor practices are applicable equally to remedy unfair employment practices in violation of Title VII.       Title VII was molded, to a large degree, after the Labor Act, supra. Indeed, the relief provisions of Title VII were derived from an analogous provision in the Labor Act.       Title VII's ban against unfair employment practices is not mutually exclusive with the Labor Act's prohibition of unfair labor practices. The two may be used as tools to remedy the same conduct.    [T]he emphasis that both Acts place on extending protection to and providing relief for the victims of prohibited practices is sufficient, in our view, to warrant imposing liability on a corporate successor for Title VII violations of the predecessor company. (Citations omitted.) See also EEOC v. G-K-G, Inc., 39 F.3d 740, 747-48 (7th Cir.1994); EEOC v. Vucitech, 842 F.2d 936, 945 (7th Cir.1988); Slack v. Havens, 522 F.2d 1091, 1094-95 (9th Cir.1975); In re National Airlines, Inc., 700 F.2d 695, 698 (11th Cir.1983); Dominguez v. Hotel, Motel, Restaurant & Misc. Bartenders Union Local # 64, 674 F.2d 732, 733 (8th Cir.1982); Trujillo v. Longhorn Mfg. Co. Inc., 694 F.2d 221, 224-25 (10th Cir.1982). Before this court, Jillian's has suggested that the federal successor-employer liability rule is dependent on the underlying state law and can be no broader than successor-corporation liability under state law. This assertion misperceives the basis for the federal rule, which does not depend on state law but is a special federal common law doctrine of successor liability that is a departure from the more limited approach of the common law   . G-K-G, Inc., 39 F.3d at 748. The court of appeals decision does not discuss federal successor-employer liability. It focuses, instead, on the method used to transfer the assets, which is only relevant to state successor-corporation liability. This led to the erroneous conclusion that Jillian's cannot be a successor to Harborage I because Harborage I was only a party to the TSA, not to the APA, which was the agreement that transferred the assets of Gators to Jillian's. Johns II, 645 N.W.2d at 766. Under the federal doctrine of successor-employer's liability, the method of transfer of assets is not determinative of whether a successor has liability. See Golden State, 414 U.S. at 182, n. 5, 94 S.Ct. 414 (refusing to distinguish between mergers or consolidations and asset purchases as long as there is continuity in the employing industry). We conclude that the federal doctrine of successor-employer liability applies to Johns' Title VII claims. Because these Title VII claims are identical to the claims made by Johns under the MHRA, and the judgments may be sustained solely on the basis of Title VII, we decline to rule on whether a similar successor-employer liability doctrine is available under the MHRA.