Court Opinion

ID: 4569217
Source: CourtListenerOpinion
Date Created: 2020-09-24 15:05:08.193255+00
Date Added: 2024-06-11T08:46:49.175786
License: Public Domain

2020 IL 124753

                                        IN THE
                               SUPREME COURT
                                            OF
                          THE STATE OF ILLINOIS

                                   (Docket No. 124753)

       THE PEOPLE OF THE STATE OF ILLINOIS ex rel. THE DEPARTMENT
          OF HUMAN RIGHTS, Appellee, v. OAKRIDGE HEALTHCARE
                         CENTER, LLC, Appellant.

                             Opinion filed September 24, 2020.

        JUSTICE KILBRIDE delivered the judgment of the court, with opinion.

        Chief Justice Anne M. Burke and Justices Garman, Karmeier, Theis, and
     Michael J. Burke concurred in the judgment and opinion.

        Justice Neville took no part in the decision.

                                         OPINION

¶1      In April 2014, a judgment was entered against Oakridge Nursing &
     Rehabilitation Center, LLC (Oakridge Rehab), for its discriminatory conduct
     against a former employee, in violation of the Illinois Human Rights Act (Act) (775
     ILCS 5/1-101 et seq. (West 2010)). Oakridge Rehab had already gone out of
     business, however, having transferred the assets and operation of its nursing home
     facility to Oakridge Healthcare Center, LLC (Oakridge Healthcare), on January 1,
     2012. Unable to enforce the judgment against Oakridge Rehab, the State instituted
     proceedings to enforce the Oakridge Rehab judgment against Oakridge Healthcare.
     Oakridge Healthcare successfully moved for summary judgment, alleging it could
     not be held liable for the judgment under Illinois’s common-law rule. On appeal, a
     majority of the appellate court reversed and agreed to adopt the federal successor
     liability doctrine. We reverse that judgment and decline to adopt the federal
     successor liability doctrine in cases arising under the Act.

¶2                                  I. BACKGROUND

¶3        In February 2011, Jane Holloway filed a charge pursuant to the Act with the
     Illinois Department of Human Rights (Department), alleging age and disability
     discrimination that violated the Act at the long-term care facility where she was
     previously employed by Oakridge Rehab; Oakridge Rehab received notice of the
     charge that spring. On January 1, 2012, Oakridge Rehab; its landlord, Oakridge
     Nursing and Rehab Properties, LLC (Oakridge Properties); and a newly formed
     entity, Oakridge Healthcare, entered into a termination agreement ending the lease
     between Oakridge Rehab and Oakridge Properties and making Oakridge
     Healthcare the new lessee. On the same date, Oakridge Rehab transferred
     substantially all its corporate assets to Oakridge Healthcare pursuant to an
     “Operations Transfer Agreement” that also declared Oakridge Healthcare was not
     a successor or successor-in-interest to the transferor and that Oakridge Healthcare
     was neither liable for the transferor’s obligations nor subject to any judgment for
     its liabilities. Oakridge Rehab then immediately ceased operations, and Oakridge
     Healthcare took over the nursing home under a new name. After concluding its
     investigation into Holloway’s allegations, the Department filed a civil rights
     complaint on her behalf with the Illinois Human Rights Commission (Commission)
     in September 2012. The complaint sought relief against only Oakridge Rehab and
     included no claim asserting personal liability.

¶4       On September 17, 2013, an administrative law judge issued a recommendation
     that Holloway be awarded $30,880 in back pay, plus prejudgment interest. The

                                            -2-
     Commission adopted the recommended order in April 2014 and granted a motion
     seeking to enforce the order against Oakridge Rehab, the sole respondent, a few
     months later. Oakridge Rehab, however, was involuntarily dissolved in November
     2014. When Oakridge Rehab failed to satisfy Holloway’s judgment, the State of
     Illinois filed a complaint in the circuit court of Cook County against both Oakridge
     Rehab and Oakridge Healthcare, its purported successor, to enforce compliance,
     but again no personal liability claim was made.

¶5       Oakridge Healthcare filed a motion for summary judgment, arguing that it could
     not be held liable for Oakridge Rehab’s liabilities as a matter of law under the
     common-law doctrine of corporate successor nonliability when no exception to that
     general rule applied. After the State asserted its inability to respond in the absence
     of any discovery, discovery commenced.

¶6       The State deposed Helen Lacek, who was a member of Oakridge Rehab as well
     as its manager prior to the transfer of its operations to Oakridge Healthcare. Helen
     testified that Oakridge Rehab began experiencing dire financial trouble when the
     State of Illinois stopped making payments on invoices. Oakridge Rehab’s financial
     problems quickly escalated until it was no longer able to pay its rent. In June 2011,
     Oakridge Rehab provided the required six-month notice to its landlord, Oakridge
     Properties, stating its intent to terminate the lease due to its financial difficulties.
     While several people visited Oakridge Rehab prior to its transfer to Oakridge
     Healthcare, none of them expressed any interest in taking over the facility
     operations.

¶7       The State also deposed Oakridge Properties manager Elisha Atkin (Eli), who
     founded Oakridge Healthcare in November or December 2011. Eli is a 50%
     member of Oakridge Healthcare, with the other 50% member being his sister-in-
     law. Eli is also involved as a member or manager in a number of other long-term
     care facilities or properties, along with several of his immediate and extended
     family members. One of those facilities is McAllister Properties, LLC, whose
     members are Eli’s wife, his brother, Helen Lacek, and Ability Insurance; Eli
     manages that business. Helen and Eli were also two of the members of McAllister
     Nursing and Rehab Center, LLC (McAllister Rehab), another long-term care
     facility. Helen serves as the administrator of McAllister Rehab and has also been a

                                              -3-
       nursing consultant at some of the other facilities connected to Eli, but she has not
       provided those services at Oakridge Healthcare.

¶8         Eli stated that negotiations about Oakridge Healthcare becoming the new lessee
       of the nursing home facility began in November 2011. Its new lease started on
       January 1, 2012, when the lease between Oakridge Properties and Oakridge Rehab
       ended. Oakridge Rehab did not notify Oakridge Healthcare of any pending claims
       filed by past or present employees prior to the transfer of the nursing home
       operation. In addition, Oakridge Healthcare did not look at any of Oakridge
       Rehab’s liabilities prior to the transfer because it was not assuming any of them
       under the terms of the transfer agreement.

¶9         In its response to Oakridge Healthcare’s motion for summary judgment, the
       State contended that the court should apply the federal doctrine of successor
       liability instead of the Illinois general nonliability rule in this case. The State argued
       that the federal doctrine should be applicable because this case involved
       employment discrimination and “Illinois courts look to standards applied to federal
       claims brought under federal employment discrimination laws in analyzing” cases
       alleging violations of the Act. 2019 IL App (1st) 170806, ¶ 20. Before it entered
       summary judgment in favor of Oakridge Healthcare, the trial court made several
       findings, concluding that (1) Oakridge Healthcare was not a successor in liability
       to Oakridge Rehab, (2) the State did not show that Oakridge Healthcare was a mere
       continuation of Oakridge Rehab, and (3) Illinois’s long reliance on the common-
       law successor nonliability rule precluded adoption of the federal successor liability
       doctrine.

¶ 10       The State appealed, and the appellate court reversed, remanding the cause for
       further proceedings. A majority of the court found that “the State presented
       sufficient evidence for a reasonable trier of fact to find that the asset transfer was
       for the fraudulent purpose of escaping Holloway’s judgment.” 2019 IL App (1st)
170806, ¶ 42. The majority cited evidence that Holloway’s discrimination charge
       was filed before the transfer and Oakridge Rehab transferred nearly all the
       corporation’s assets to Oakridge Healthcare without an appraisal or payment,
       leaving it unable to pay Holloway’s subsequent judgment. 2019 IL App (1st)
170806, ¶¶ 35-38. The appellate majority also held it could apply the federal
       successor liability doctrine to cases involving violations of the Act because this

                                                 -4-
       court “has not specifically addressed a successor corporation’s liability for
       employment discrimination.” 2019 IL App (1st) 170806, ¶ 51. Applying the version
       of the federal successor liability test from Equal Employment Opportunity Comm’n
       v. MacMillan Bloedel Containers, Inc., 503 F.2d 1086 (6th Cir. 1974), later
       articulated in Musikiwamba v. ESSI, Inc., 760 F.2d 740, 750-53 (7th Cir. 1985), the
       appellate majority found a number of relevant factors were met here. First,
       Oakridge Rehab and Helen Lacek knew about Holloway’s claim before the assets
       transfer. Second, Oakridge was “unable to provide Holloway relief” due to its
       serious financial troubles. Third, Oakridge Healthcare continued to operate the
       facility as a nursing home after the asset transfer by “using the same workforce and
       at the same location,” showing a continuity of business. For those reasons, the
       appellate court concluded that “Holloway’s judgment may be imposed on Oakridge
       Healthcare as Oakridge [Rehab’s] successor” under the federal doctrine. 2019 IL
       App (1st) 170806, ¶ 58.

¶ 11       Dissenting from the majority’s reasoning, Justice Mason asserted that its
       reliance on the fraudulent transfer exception was improper because the record
       showed the State abandoned that claim when it made the “strategic decision” to
       “unequivocal[ly] disavow[ ]” any trial argument on it. 2019 IL App (1st) 170806,
       ¶ 74 (Mason, J., dissenting). Even if the merits of the argument were considered,
       the majority’s conclusion was unsupported because the State offered “no evidence”
       that Oakridge Rehab’s pretransfer financial problems were “contrived.” In the
       dissent’s view, Oakridge Rehab’s “only viable choice was to conduct a ‘fire sale’
       of its assets, which it did” due to serious financial distress. The dissent found “no
       ‘badge of fraud’ in this scenario.” 2019 IL App (1st) 170806, ¶ 85.

¶ 12       In addition, the dissent explained that the majority’s application of the federal
       successor liability doctrine in cases addressing Act violations conflicts with long-
       standing Illinois precedent, including this court’s decision in Vernon v. Schuster,
       179 Ill. 2d 338, 344-45 (1997). There, the dissent noted, we recognized only four
       exceptions to the common-law rule of successor nonliability, contrary to the federal
       doctrine. 2019 IL App (1st) 170806, ¶¶ 68, 80. As evidence of the majority’s
       overreach, the dissent cited a heading in the majority opinion that read “ ‘Illinois
       Courts Shall Recognize Successor Liability for Violation of the Illinois Rights
       Act.’ ” 2019 IL App (1st) 170806, ¶ 80 (quoting 2019 IL App (1st) 170806, ¶ 49
       (majority opinion)). According to the dissent, “the majority modifie[d] Vernon by

                                               -5-
       creating a new exception to be applied in employment discrimination cases,” an act
       that “is beyond [the appellate court’s] power as an intermediate court of review.”
       2019 IL App (1st) 170806, ¶ 80.

¶ 13       Oakridge Healthcare filed a petition for leave to appeal in this court. We
       allowed its petition pursuant to Illinois Supreme Court Rule 315 (eff. July 1, 2018).

¶ 14                                     II. ANALYSIS

¶ 15       We are asked to decide two issues in this appeal: (1) whether we should adopt
       the federal corporate successor liability doctrine in cases involving discriminatory
       conduct that violates the Act (775 ILCS 5/1-101 et seq. (West 2010)) and
       (2) whether the trial court properly granted Oakridge Healthcare’s motion for
       summary judgment. We review both issues de novo. Blount v. Stroud, 232 Ill. 2d
302, 308 (2009) (stating that questions of law are reviewed de novo); Seymour v.
       Collins, 2015 IL 118432, ¶ 42 (stating that rulings on motions for summary
       judgment are reviewed de novo).

¶ 16                  A. Applicability of the Common-Law Nonliability Rule

¶ 17       Because the resolution of whether we should adopt the federal corporate
       successor liability doctrine in cases where the underlying conduct violates the Act
       directs the rest of our analysis, we address it first. In John Wiley & Sons, Inc. v.
       Livingston, 376 U.S. 543 (1964), the United States Supreme Court invoked federal
       Labor Management Relations Act (Labor Act) (29 U.S.C. § 185 (1958)) principles
       to support its application of the corporate successor liability doctrine. The Court
       held that the successor company in a corporate merger could be bound by the
       arbitration provisions in its predecessor’s collective bargaining agreement because
       it was enforceable under the Labor Act. John Wiley, 376 U.S. at 550.

¶ 18       Use of the successor liability doctrine in federal labor law cases was further
       developed in Golden State Bottling Co. v. National Labor Relations Board, 414
U.S. 168 (1973). There, the Court agreed with the National Labor Relations Board
       that a corporate successor that bought and continued another business, without
       substantial change and with notice of its predecessor’s National Labor Relations

                                               -6-
       Act violations, was required to follow the terms of labor board orders entered to
       remedy those violations. Golden State, 414 U.S. at 171-72. The Court explained
       that the additional liability risk taken on by the successor corporation could be fairly
       accommodated during negotiations on the business’s purchase price or by the
       insertion of an indemnity clause into the sales agreement that protected the buyer.
       Golden State, 414 U.S. at 185.

¶ 19       Federal appellate courts subsequently expanded the federal successor liability
       doctrine to employment discrimination cases filed under Title VII. In MacMillan
       Bloedel Containers, Inc., 503 F.2d at 1090, the Sixth Circuit held the Supreme
       Court’s rationale applied equally to cases involving unfair employment practices
       and that successor liability should be determined on a case-by-case basis. To aid in
       the inquiry, the Sixth Circuit identified nine factors: (1) whether the successor
       company had notice of the alleged violation; (2) the predecessor’s ability to provide
       relief; (3) whether the two businesses had a “substantial continuity” of operations;
       (4) whether the new company uses the same facility; (5) whether it “uses the same
       or substantially the same work force”; (6) whether it “uses the same or substantially
       the same supervisory personnel”; (7) whether the jobs are the same and continue
       “under substantially the same working conditions”; (8) whether it uses the same
       equipment, machinery, and production methods; and (9) whether it produces the
       same product. MacMillan Bloedel Containers, Inc., 503 F.2d at 1094. The Seventh
       Circuit, in turn, narrowed the analysis down to just five factors: whether (1) the
       transferee had notice of the legal challenge; (2) the transferor could have given the
       requested relief before the sale or dissolution; (3) the transferor could have given
       the requested relief after the sale or dissolution; (4) the transferee can give the
       requested relief; and (5) a continuity of operations and work force existed between
       the transferor and the transferee. Equal Employment Opportunity Comm’n v.
       Northern Star Hospitality, Inc., 777 F.3d 898, 902 (7th Cir. 2015) (citing Teed v.
       Thomas & Betts Power Solutions, L.L.C., 711 F.3d 763, 765-66 (7th Cir. 2013)).

¶ 20       Eschewing the federal doctrine, however, Illinois, along with the majority of
       American jurisdictions, has long applied the common-law rule that a corporate
       successor is not subject to any debts or obligations incurred by the entity that
       previously operated the business. That principle is known as the “rule of successor
       corporate nonliability.” Vernon, 179 Ill. 2d at 344-45. It was “ ‘developed as a
       response to the need to protect bonafide purchasers from unassumed liability’

                                                -7-
       (Tucker v. Paxson Machine Co., 645 F.2d 620, 623 (8th Cir. 1981)) and was
       ‘designed to maximize the fluidity of corporate assets’ (Upholsterers’ International
       Union Pension Fund v. Artistic Furniture, 920 F.2d 1323, 1325 (7th Cir. 1990)).”
       Vernon, 179 Ill. 2d at 345. Recognizing that the rule’s application may preclude a
       plaintiff from receiving court-ordered relief if the original business is dissolved or
       lacks sufficient assets, this court adopted four exceptions: (1) the parties had an
       express or implied agreement that the transferee would assume the transferor’s
       liabilities, (2) the transaction amounts to a merger or consolidation or a de facto
       merger of the transferor and the transferee, (3) the transferee is a mere continuation
       or reincarnation of the transferor, or (4) the transaction was entered into for the
       fraudulent purpose of avoiding liability for the transferor’s obligations. Most
       American courts have also recognized the same four exceptions. Vernon, 179 Ill.
2d at 345.

¶ 21       Nonetheless, the State asserts that those exceptions are inadequate to serve the
       important interests underlying the Act’s antidiscrimination provisions. It suggests,
       instead, that we adopt the federal successor liability doctrine in cases arising out of
       the Act because it permits the relevant interests to be balanced on a case-by-case
       basis. Individualized balancing, however, necessarily undercuts the concern
       underlying the creation of our current common-law nonliability rule: imposing
       successor liability harms bona fide corporate buyers by creating undue uncertainty.
       In the more than two decades since we decided Vernon, bona fide corporate buyers
       in Illinois have undoubtedly come to rely on that rule. Any shift away from our
       long-standing rule must be supported by special justification sufficient to excuse
       the harm that will necessarily flow to the many successor businesses that have relied
       on it. See Coleman v. East Joliet Fire Protection District, 2016 IL 117952, ¶ 53
       (quoting our explanation in People v. Sharpe, 216 Ill. 2d 481, 520 (2005), that “ ‘we
       have consistently held that any departure from stare decisis must be specially
       justified’ ” (quoting Vitro v. Mihelcic, 209 Ill. 2d 76, 82 (2004))). We may not
       depart from stare decisis simply because we could possibly reach a different
       conclusion now if we were to decide the matter anew. To be consistent with the
       principle of stare decisis, overturning the common-law rule we adopted in Vernon
       requires a clear showing of good cause or some other compelling rationale. See
       Coleman, 2016 IL 117952, ¶ 53 (citing Sharpe, 216 Ill. 2d at 520).

                                                -8-
¶ 22       While not disputing those standards, the State contends that Oakridge
       Healthcare provides no persuasive reason not to adopt the federal successor liability
       doctrine. That contention, however, ignores the undeniable fact that this court
       expressly adopted the common-law nonliability rule, not the federal rule, in Vernon.
       In response, the State relies on its claim that Vernon does not control the instant
       case because it did not involve workplace discrimination. The State maintains that
       the federal doctrine is better suited for use in cases involving Act violations because
       it arose out of labor law, a context that is more similar to the employment
       discrimination claim underlying this litigation.

¶ 23       Although it is true that the Court’s decision in John Wiley, 376 U.S. 543, held
       the corporate successor liability doctrine could bind the successor company in the
       corporate merger to the arbitration provisions, that decision had two critical
       considerations missing from the instant appeal. First, the Court in John Wiley
       explicitly recognized that the predecessor and successor companies had entered into
       a corporate merger. Here, the State does not attempt to claim that Oakridge
       Healthcare and Oakridge Rehab merged operations such that both continued to exist
       as a single, newly established legal entity. In fact, the State’s argument relies
       extensively on Oakridge Rehab’s continuing existence as a separate entity after
       Oakridge Healthcare took over the nursing home business. Indeed, it was Oakridge
       Rehab’s independent inability to pay the judgment entered against it due to its
       financial failure and ultimate dissolution that led to the State filing the instant action
       against its successor, Oakridge Healthcare. Here, the predecessor and successor
       corporations have absolutely no continuing relationship, while in John Wiley the
       two corporations merged to become a single entity. The vastly more attenuated
       relationship between Oakridge Rehab and Oakridge Healthcare does not, by itself,
       justify the application of the federal rule used in John Wiley. Indeed, if Oakridge
       Rehab and Oakridge Healthcare had entered into a corporate merger, the successor
       entity would, in fact, have been subject to liability under the second exception to
       our common-law rule of general successor nonliability stated in Vernon. The
       second Vernon exception allows for the imposition of liability “where the
       transaction amounts to a consolidation or merger of the purchaser or seller
       corporation.” Vernon, 179 Ill. 2d at 345. The availability of that exception provides
       a sufficient basis to reject the State’s suggestion that this court apply the rule from
       John Wiley since that exception is inapplicable under the facts of this case.

                                                 -9-
¶ 24       We note, however, that another rationale also exists for rejecting the State’s
       assertion that the federal rule is better suited to cases involving Act violations than
       the Vernon rule. In John Wiley, the Supreme Court relied heavily on the distinctive
       considerations underlying the federal Labor Act’s handling of collective bargaining
       agreements—considerations that are wholly inapplicable here. As John Wiley
       explained, the Court’s decision was based on the “impressive [national labor]
       policy considerations favoring arbitration” (John Wiley, 376 U.S. at 550), a subject
       that is irrelevant here. Even more critically, the Court expressly recognized the
       unique policies at stake in collective bargaining agreements that significantly
       differentiate them from ordinary contracts.

           “The objectives of national labor policy, reflected in established principles of
           federal law, require that the rightful prerogative of owners independently to
           rearrange their businesses and even eliminate themselves as employers be
           balanced by some protection to the employees from a sudden change in the
           employment relationship. ***

               *** While the principles of law governing ordinary contracts would not
           bind to a contract an unconsenting successor to a contracting party, a collective
           bargaining agreement is not an ordinary contract. ‘. . . [I]t is a generalized code
           to govern a myriad of cases which the draftsmen cannot wholly anticipate. . . .
           The collective agreement covers the whole employment relationship. It calls
           into being a new common law—the common law of a particular industry or of
           a particular plant.’ Warrior & Gulf, [363 U.S.] at 578-579 ***.” (Emphases
           added.) John Wiley, 376 U.S. at 549-50.

¶ 25        None of those same distinctive considerations are at issue here, however, further
       undermining the State’s claim that the federal doctrine is better suited to resolve the
       instant case than is Vernon. We are not persuaded that the State’s argument
       provides a sufficiently clear showing of good cause or other compelling rationale
       to merit overturning our adoption of the successor corporate nonliability doctrine
       as it was adopted in Vernon.

¶ 26      To bolster its argument that this court should reject our common-law doctrine
       and adopt the federal one, the State contends that, if Illinois fails to adopt the federal
       successor liability doctrine, the outcome in factually similar cases could depend on
       whether the case was filed in state or federal court. For example, a case involving

                                                 - 10 -
       an Act violation filed in Illinois could result in the corporate defendant being
       absolved of any liability while a factually similar case alleging a federal violation
       that was filed in federal court could produce a substantial judgment for the
       complainant. The State asserts that the difference in outcomes based on whether the
       court applied the Illinois common-law rule or the federal doctrine is not consistent
       with state and federal courts possessing overlapping jurisdiction over employment
       discrimination claims.

¶ 27       The potential for differences in outcomes between similar federal and state
       employment discrimination cases falls far short of providing a compelling reason
       to abandon the Vernon standard for the federal doctrine. The two systems have
       many distinctive features that can affect the outcome of a case aside from the use
       of differing standards for imposing liability on a corporate successor. As we have
       discussed, the federal doctrine is deeply rooted in the unique underpinnings of
       federal labor law and collective bargaining policies, while our common-law
       doctrine has far broader base considerations. We, along with the vast majority of
       other states, have weighed the relevant factors and determined that the four
       exceptions to the successor nonliability rule are sufficient to provide a safety valve
       for unjust uses of the rule in appropriate cases. Vernon, 179 Ill. 2d at 345. The mere
       possibility that a particular employment discrimination case could have a different
       outcome if brought in federal court is not sufficiently compelling to overturn our
       decades-old common-law rule.

¶ 28       The State next asserts that several states with antidiscrimination statutes similar
       to the Illinois Act have also adopted the federal formulation. See In re MTA
       Trading, Inc., 922 N.Y.S.2d 488, 491-92 (App. Div. 2011); Stevens v. McLouth
       Steel Products Corp., 446 N.W.2d 95, 100 (Mich. 1989); First Judicial District
       Department of Correctional Services v. Iowa Civil Rights Comm’n, 315 N.W.2d
83, 89-92 (Iowa 1982); Superior Care Facilities v. Workers’ Compensation
       Appeals Board, 32 Cal. Rptr. 2d 918, 924-25 & n.1 (Ct. App. 1994). While
       acknowledging that Illinois courts are not bound by decisions of other courts, the
       State argues that the reasoning in foreign decisions can be persuasive. It contends
       that, at most, adoption of the federal successor liability doctrine in cases arising out
       of the Act requires potential buyers to conduct due diligence before purchasing
       another company’s assets, a task already ordinarily undertaken by prudent
       businesspersons.

                                                - 11 -
¶ 29       By choosing to apply the federal standard, the few states that have adopted the
       federal doctrine have weighed the policy considerations underlying the competing
       interests of purchasing corporations and victims of employment discrimination and
       decided on a balance that is at odds with the majority of American jurisdictions
       continuing to adhere to the common-law rule. See Vernon, 179 Ill. 2d at 345
       (explaining the extensive case law basis for the common-law rule and its
       application in American courts). In Vernon, 179 Ill. 2d at 345, this court expressly
       adopted the majority approach, acknowledging the value of the need to make
       marginal and failing companies marketable and prevent them from closing their
       doors forever. While conducting due diligence before purchasing corporate assets
       is certainly a commonplace and well-advised procedure, it cannot always provide
       a solid basis to assess the value of the predecessor corporation’s future liability
       accurately when the underlying Act litigation is in its early stages, years before the
       entry of a final judgment award, as in this case. In those instances and many others,
       application of the federal rule would severely undercut Vernon’s concerns about
       promoting the salability of marginal businesses to avoid the loss of jobs, community
       resources, and revenues that result when a business is shuttered.

¶ 30        Nonetheless, recognizing the possible inequities that may result from the
       common-law rule’s application in certain cases, most jurisdictions, including this
       one, have adopted four limited exceptions to the general rule of nonliability for
       corporate successors. In its decision, however, the appellate majority created a fifth
       exception that applies solely to cases involving employment discrimination claims
       brought under the Act. The addition of that exception constitutes a significant
       modification of this court’s decision in Vernon, 179 Ill. 2d at 345, where we
       expressly limited, and listed, four exceptions. As this court has repeatedly
       admonished, our appellate court may not overrule or change our holdings.
       “ ‘ “Where the Supreme Court has declared the law on any point, it alone can
       overrule and modify its previous opinion, and the lower judicial tribunals are bound
       by such decision and it is the duty of such lower tribunals to follow such decision
       in similar cases.” ’ ” (Emphasis in original.) Blumenthal v. Brewer, 2016 IL
118781, ¶ 28 (quoting Price v. Philip Morris, Inc., 2015 IL 117687, ¶ 38, quoting
       Agricultural Transportation Ass’n v. Carpentier, 2 Ill. 2d 19, 27 (1953)).

¶ 31       Acknowledging that fundamental point, as it must, the State is left to argue that
       the appellate court’s addition of a fifth exception did not actually modify our

                                               - 12 -
       opinion in Vernon because Vernon did not rise out of an Act violation and the
       federal doctrine better suits that context. Essentially, the State asserts that the
       application of the common-law rule remained an open question after Vernon was
       decided because it did not specifically address the rule to be applied in cases
       addressing violations of the Act. Our discussion in Vernon, however, was quite
       broad. It was not limited to the narrow context of warranty and contract liability
       incurred by successive sole proprietorships, the relevant facts in that decision. As
       we have already noted, important underlying considerations distinguish the
       application of the federal liability doctrine, deeply rooted in federal labor law, and
       our common-law nonliability rule, stemming from broader policy considerations.

¶ 32       Indeed, a review of Illinois case law shows that the common-law nonliability
       rule has been applied in the context of a wide variety of legal claims, not just those
       involving labor law issues. In Vernon, 179 Ill. 2d at 343, the underlying action
       involved allegations of breach of warranty and contract, and our appellate court has
       applied the common-law rule broadly in many other types of underlying actions.
       See, e.g., A.L. Dougherty Real Estate Management Co. v. Su Chin Tsai, 2017 IL
       App (1st) 161949 (involving the breach of a commercial lease); Groves of Palatine
       Condominium Ass’n v. Walsh Construction Co., 2017 IL App (1st) 161036
       (involving defects in the construction of condominium buildings); Advocate
       Financial Group, LLC v. 5434 North Winthrop, LLC, 2015 IL App (2d) 150144
       (involving payment for financial services); Villaverde v. IP Acquisition VIII, LLC,
       2015 IL App (1st) 143187 (involving nonpayment of wages); Diguilio v. Goss
       International Corp., 389 Ill. App. 3d 1052 (2009) (involving a product liability
       claim). Although the State contends that the appellate court did not modify the rule
       in Vernon because the scope of its application remained an open question, the
       breadth of the rule’s prior application seriously undermines that contention. We
       hold that the appellate majority erred by altering this court’s enunciation of that rule
       by adding a fifth exception.

¶ 33       Finally, we note that it is within the legislature’s power to abrogate the
       common-law rule we adopted in Vernon or otherwise alter its standards through
       appropriately targeted legislation if it determined those changes to the rule and its
       exceptions necessary in a specific context, such as employment discrimination
       cases. To date, our legislature has not chosen to do so. We stand by Vernon’s
       adoption of the common-law rule of successor corporate nonliability and its four

                                                - 13 -
       exceptions because the State has failed to show good cause or other compelling
       reason to reject its application in cases involving Act violations.

¶ 34                  B. Application of the “Fraudulent Purpose” Exception

¶ 35       Having decided not to adopt the federal successor corporate liability rule in Act
       cases, we next examine whether the “fraudulent purpose” exception to our
       common-law rule of nonliability applies under the facts of this case. Oakridge
       Healthcare argues that the appellate majority erred by concluding that the
       “fraudulent purpose” exception applied to its acquisition of Oakridge Rehab’s long-
       term care facility. The fraudulent purpose exception exists “where the transaction
       is for the fraudulent purpose of escaping liability for the seller’s obligations.”
       Vernon, 179 Ill. 2d at 345. Initially, Oakridge Healthcare claims that the State
       forfeited this argument by failing to raise it in the trial court, to oppose Oakridge
       Healthcare’s summary judgment motion for summary judgment, or as a theory of
       recovery in its complaint.

¶ 36       Before the appellate court, the State claimed that court could affirm or reverse
       on any ground appearing in the record. That claim reflects a misunderstanding of
       the applicable standard. A reviewing court may only affirm on any basis in the
       record; it may not reverse on any grounds found in the record. See Tri-G, Inc. v.
       Burke, Bosselman & Weaver, 222 Ill. 2d 218, 258 (2006). Nonetheless, in this
       instance we will overlook any forfeiture of the fraudulent purpose exception and
       address the merits of the State’s claim because the appellate majority relied on it to
       reverse the summary judgment finding entered in favor of Oakridge Healthcare.
       Forfeiture is an admonition to the parties, not a limitation on a reviewing court’s
       jurisdiction. We may ignore forfeiture “in the interests of achieving a just result and
       maintaining a sound and uniform body of precedent.” Jackson v. Board of Election
       Commissioners of the City of Chicago, 2012 IL 111928, ¶ 33.

¶ 37       In Illinois, sections 5 and 6 of the Uniform Fraudulent Transfer Act (Fraud Act)
       (740 ILCS 160/5, 6 (West 2018)) recognize two types of fraud: fraud in fact and
       fraud in law (Bank of America v. WS Management, Inc., 2015 IL App (1st) 132551,
       ¶ 87). As both parties acknowledge, fraud in fact requires proof that the “debtor”
       (here, Oakridge Rehab) had an “actual intent to hinder, delay, or defraud any
       creditor of the debtor” (here, Holloway/the State). 740 ILCS 160/5(a)(1) (West

                                               - 14 -
2018). Without proof of the debtor’s “actual intent to hinder, delay, or defraud any”
of its creditors, fraud in fact cannot be established. 740 ILCS 160/5(a)(1) (West
2018). To create an inference of the requisite intent, the State must seek to prove
the factors listed in section 5(b) of the Fraud Act (740 ILCS 160/5(b) (West 2018)).
Premier Property Management, Inc. v. Chavez, 191 Ill. 2d 101, 110 (2000) (noting
that section 5(b) “lists 11 factors that may be considered in determining the debtor’s
actual intent in making the transfer”). Those factors have sometimes been deemed
“badges of fraud.” Bank of America, 2015 IL App (1st) 132551, ¶ 88. Courts are
not constrained by that list, however, and need not consider every factor. In
addition, they may consider other factors not enumerated in section 5(b). The
presence of one or more factors, however, is not conclusive evidence of fraud. Bank
of America, 2015 IL App (1st) 132551, ¶¶ 88-89. The factors expressly set out in
section 5(b) are whether:

       “(1) the transfer or obligation was to an insider;

       (2) the debtor retained possession or control of the property transferred after
   the transfer;

       (3) the transfer or obligation was disclosed or concealed;

      (4) before the transfer was made or obligation was incurred, the debtor had
   been sued or threatened with suit;

       (5) the transfer was of substantially all the debtor’s assets;

       (6) the debtor absconded;

       (7) the debtor removed or concealed assets;

       (8) the value of the consideration received by the debtor was reasonably
   equivalent to the value of the asset transferred or the amount of the obligation
   incurred;

      (9) the debtor was insolvent or became insolvent shortly after the transfer
   was made or the obligation was incurred;

      (10) the transfer occurred shortly before or shortly after a substantial debt
   was incurred; and

                                        - 15 -
             (11) the debtor transferred the essential assets of the business to a lienor
          who transferred the assets to an insider of the debtor.” 740 ILCS 160/5(b) (West
          2018).

       See Bank of America, 2015 IL App (1st) 132551, ¶ 88.

¶ 38       Before this court, the State asserts that “a reasonable fact finder would
       determine that the transfer met several ‘badges’ of fraud.” Consistent with the
       appellate majority’s analysis, the State argues that the evidence sufficiently
       established the fourth, fifth, eighth, and ninth factors to preclude the entry of
       summary judgment for Oakridge Healthcare. Because the State does not present
       any argument addressing the other statutory indicia of fraud, we will address only
       those four factors.

¶ 39       The fourth factor considers whether, “before the transfer was made or
       obligation was incurred, the debtor had been sued or threatened with suit.” 740
       ILCS 160/5(b)(4) (West 2018). Holloway filed her discrimination charge against
       Oakridge Rehab in February 2011, and Oakridge Rehab was notified of that charge
       in the spring of that year. On January 1, 2012, Oakridge Rehab transferred virtually
       all business assets to Oakridge Healthcare. Undoubtedly, Oakridge Rehab was
       aware of Holloway’s charge at the time of the transfer. That does not mean,
       however, that the fourth factor was even arguably established. The filing of a charge
       with the Department does not inexorably lead to the filing of a lawsuit. Indeed, no
       complaint was filed in this case until September 2012, at least eight months after
       the transfer, when the Department concluded its investigation. It cannot
       legitimately be said that Oakridge Rehab was “threatened with suit” at the time that
       the transfer occurred. The Department’s investigation was underway, and at that
       point neither party could reasonably foresee the outcome of that investigation. We
       conclude the evidence does not support the presence of the fourth factor.

¶ 40       Moving to the fifth factor, we examine whether “the transfer was of
       substantially all the debtor’s assets.” 740 ILCS 160/5(b)(5) (West 2018). Oakridge
       Healthcare acknowledges that the record contains sufficient evidence to show it
       received “substantially all” assets owned by Oakridge Rehab, with the latter
       keeping only its accounts receivable, consisting largely of moneys still owed to it
       by the State. While a single factor may, on occasion and under the appropriate
       circumstances, be sufficient to create an inference of fraud in fact, those

                                              - 16 -
       circumstances are not present here. See Brandon v. Anesthesia & Pain Management
       Associates, Ltd., 419 F.3d 594, 600 (7th Cir. 2005). It is, in fact, difficult to imagine
       when the mere transfer of substantially all corporate assets, standing alone, would
       be sufficient to justify an inference of fraud in fact. Many, if not most, corporate
       transfers presumably include the transfer of substantially all corporate assets since
       they typically constitute a significant portion of the business’s value and are critical
       to its operations. Here, Oakridge transferred assets, other than real property, that
       were needed to care for the facility’s residents. Transferring those assets allowed
       for the continuous care of the residents and is not, by itself, a sufficient justification
       to infer fraud in fact.

¶ 41       In considering evidence of the eighth factor, we examine whether “the value of
       the consideration received by the debtor was reasonably equivalent to the value of
       the asset transferred or the amount of the obligation incurred.” 740 ILCS
       160/5(b)(8) (West 2018). Of all the factors it cites, the State focuses most heavily
       on this one. In a related argument, it contends that the parties’ failure to obtain an
       appraisal of the asserts prior to the transfer adds support to its position.

¶ 42       The State points to evidence that, after Holloway filed her charge, Oakridge
       Rehab transferred nearly all business assets to Oakridge Healthcare without any
       negotiations or consideration in a transaction that was not made at arm’s length. As
       additional support for the inference of fraud, the State notes that Helen Lacek and
       Eli Atkin, along with his other family members, were close business associates for
       decades, that Oakridge Healthcare was founded specifically to acquire Oakridge
       Rehab’s assets, and that the assets’ value was unknown because they had not been
       appraised. In addition, Helen and Eli continued to have a close business relationship
       after the transfer, with Helen serving as a consultant for three companies affiliated
       with Eli and both Helen and Eli sharing connections to two other companies. The
       State maintains that, based on these facts, a reasonable fact finder could find that
       Helen used the transfer to avoid any potential liability to Holloway.

¶ 43       Although Helen and Eli were admittedly well acquainted with each other after
       years of working in the same industry, that does not create a reasonable inference
       that the asset transfer was not an arm’s-length transaction. In industries with fewer
       players in a particular region, such as the residential care industry, it is not
       surprising that Helen and Eli would both have connections to some of the same

                                                 - 17 -
       business entities. Taken alone, those business connections do not create any
       nefarious inferences.

¶ 44       Under the unique facts of this case, the lack of any monetary exchange when
       the assets were transferred also does not imply the transaction was structured to
       avoid liability. Oakridge Rehab was in serious financial distress due to the State’s
       ongoing failure to make its Medicaid payments. Oakridge Rehab chose to continue
       operations as long as possible, likely in the hope that those payments would be
       made before it had to close its doors. To continue caring for its residents, Oakridge
       chose to use its limited funds to pay staff instead of rent, but it recognized that
       situation could not continue indefinitely. Despite evidence that a few other
       businesses inquired about the possibility of buying Oakridge Rehab, those inquiries
       did not lead to purchase offers. Oakridge Healthcare was the only entity that
       expressed any serious interest in the facility. While no monetary consideration was
       exchanged in the transfer, Oakridge Rehab obtained a distinct benefit: it was no
       longer liable for the operation’s escalating expenses and retained its accounts
       receivable, including the Medicaid sums due from the State. Those future payments
       could then be used to pay back rent and early lease termination penalties totaling
       more than $454,000, along with any other unpaid bills. In other words, the transfer
       allowed Oakridge Rehab to stop the bleeding that was rapidly draining the
       company’s financial lifeblood.

¶ 45       And, while an asset appraisal may have been warranted under normal business
       circumstances, we cannot say that the lack of an appraisal creates a reasonable
       inference of an intent to defraud creditors in light of the serious financial stress and
       limited sale opportunities for Oakridge Rehab. The assets that were transferred to
       Oakridge Healthcare consisted of the license needed to operate the facility, beds,
       three days’ worth of perishable food, a week’s worth of frozen food, stock
       medicines, medical supplies, and some paper. Because Oakridge Rehab did not own
       the physical building used for its operations, the building was not an asset that could
       have been transferred, with possession of it reverting to Oakridge Properties when
       the lease was terminated. We conclude that, under these circumstances, the absence
       of an asset appraisal and outright monetary payment was insufficient to establish
       the eighth indicator of fraudulent intent.

                                                - 18 -
¶ 46       Finally, the ninth factor requires this court to review whether “the debtor was
       insolvent or became insolvent shortly after the transfer was made or the obligation
       was incurred.” 740 ILCS 160/5(b)(9) (West 2018). The transfer occurred on
       January 1, 2012. Although the appellate court and the State focused on Oakridge
       Rehab’s financial problems prior to the transfer, their supporting evidence is
       minimal. The appellate majority relied solely on Helen Lacek’s deposition
       statement that Oakridge Rehab began having financial troubles in June 2011 and
       that those troubles escalated until it could not pay its rent, requiring the early
       termination of its lease. The State’s brief offers even less support, perfunctorily
       asserting only that Oakridge Rehab “was insolvent before the asset transfer was
       made (badge 9).”

¶ 47       We are not persuaded that the evidence sufficiently establishes Oakridge
       Rehab’s insolvency at or shortly after the time of the transfer. Certainly, it was
       undergoing serious financial distress that would likely not have been resolved until
       the State resumed making the payments it rightfully owed. At the time of the
       transfer, however, Oakridge Rehab was still paying its staff and otherwise
       maintaining its operations, albeit at the expense of paying its rent. Nonetheless, the
       business’s financial condition would undoubtedly have brightened considerably if
       the State had resumed the timely payment of its obligations, a condition that did not
       occur prior to the transfer.

¶ 48       Assuming arguendo that Oakridge Rehab was insolvent at the time of the
       transfer, we cannot say that the presence of only two indicators of potential fraud,
       numbers five (a transfer of substantially all assets) and nine (insolvency at the time
       of the transfer), is sufficient to preclude the entry of summary judgment under the
       facts of this case. See 740 ILCS 160/5(b)(5), (9) (West 2018) (listing the factors
       relevant here). Even if all 11 factors are present, they may be insufficient to create
       an inference or presumption of fraud in fact. A.G. Cullen Construction, Inc. v.
       Burnham Partners, LLC, 2015 IL App (1st) 122538, ¶ 29. One of the touchstones
       of the Fraud Act is whether the transfer was made with “actual intent to hinder,
       delay, or defraud” a creditor, a requirement expressly stated in section 5(a)(1). 740
       ILCS 160/5(a)(1) (West 2006). If the circumstances surrounding a transfer do not
       establish it was made with the actual intent to avoid a creditor, the evidence is
       insufficient to prove the fraud. Bank of America, 2015 IL App (1st) 132551, ¶ 79.

                                               - 19 -
¶ 49       Here, the State has shown only that Oakridge transferred substantially all
       corporate assets at a time when it was at least arguably insolvent. That, without
       more, is legally insufficient to show it had an actual intent to avoid its creditors at
       the time the transfer occurred. As Oakridge Healthcare notes, Oakridge Rehab had
       serious financial problems stemming from the State’s failure to make its requisite
       payments for the care of the facility’s residents. Without enough money coming in
       to pay all its ongoing bills, Oakridge Rehab opted to pay its staff and forgo its rental
       payments. As the State grew further and further behind in its payments, Oakridge
       Rehab’s financial position became more dire until it was forced to terminate its
       lease. If it had not transferred virtually all remaining assets to Oakridge Healthcare
       at that point, it would have had to close, forcing the elderly and disabled residents
       in its care to find other accommodations or risk becoming homeless. Those
       circumstances do not support the conclusion that Oakridge Rehab was motivated to
       transfer its assets by an intent to evade its financial obligations to Holloway.

¶ 50       That conclusion is further bolstered by the fact that, at the time of the transfer
       on January 1, 2012, the Department had not even completed its investigation of
       Holloway’s allegations. Its investigation was not finished until shortly before it
       filed its complaint against Oakridge Rehab in September 2012, almost eight months
       after the transfer took place. Even after that filing, the outcome of the proceeding
       was not assured. At the time of the asset transfer, it was pure speculation that the
       Department would decide to pursue Holloway’s claim before the Illinois Human
       Rights Commission. Thus, it would have required even greater prescience to
       conclude at the time of the transfer in January 2012 that the administrative law
       judge hearing the claim would recommend an award of $30,880 in back pay, plus
       prejudgment interest, and that the Commission would formally adopt the award in
       April 2014, more than two years after Oakridge Rehab transferred the assets. In
       light of those circumstances, the State has not created a question of material fact
       about whether Oakridge Rehab had the actual intent to evade or otherwise defraud
       either Holloway or the State at the time of the transfer, the necessary prerequisites
       for fraud in fact.

¶ 51       The State next argues that the transfer constituted fraud in law. The test for
       fraud in law is closely related to the requirements needed to establish the eighth
       factor in the State’s fraud-in-fact claim. The eighth factor looks at whether “the
       value of the consideration received by the debtor was reasonably equivalent to the

                                                - 20 -
       value of the asset transferred or the amount of the obligation incurred.” 740 ILCS
       160/5(b)(8) (West 2018). Similarly, under the fraud-in-law standard, if the
       “ ‘transfer is made for no or inadequate consideration, *** the fraud is presumed.’ ”
       Bank of America, 2015 IL App (1st) 132551, ¶ 87 (quoting Northwestern Memorial
       Hospital v. Sharif, 2014 IL App (1st) 133008, ¶ 18). The latter test is drawn from
       section 5(a)(2) of the Fraud Act (740 ILCS 160/5(a)(2) (West 2018)). Both tests
       evaluate the sufficiency of the consideration underlying the transfer. Because we
       previously determined that the requirements of the eighth factor of the fraud-in-fact
       analysis were not sufficiently met here to create a question of material fact, we need
       not examine the State’s fraud-in-law claim further. We conclude that the trial court
       properly entered summary judgment for Oakridge Healthcare, and the appellate
       court erred by reversing that judgment.

¶ 52                                   III. CONCLUSION

¶ 53       For the reasons stated, we decline to adopt the federal successor liability
       doctrine in cases when a judgment has been entered for a violation of the Illinois
       Human Rights Act and, instead, adhere to this state’s long-standing common-law
       rule of corporate successor nonliability, subject to only the four exceptions we
       recognized in Vernon, 179 Ill. 2d at 344-45. The Illinois Human Rights
       Commission’s judgment in favor of Jane Holloway was entered solely against
       Oakridge Rehab, and the pleadings did not request relief from any other individual
       or entity. After analyzing the facts of this case under our common-law corporate
       successor nonliability rule, we conclude that Oakridge Healthcare did not incur any
       liability for fulfilling the judgment entered against Oakridge Rehab. Therefore, we
       reverse the appellate court judgment and affirm the trial court’s entry of summary
       judgment for Oakridge Healthcare.

¶ 54      Appellate court judgment reversed.

¶ 55      Circuit court judgment affirmed.

¶ 56      JUSTICE NEVILLE took no part in the consideration or decision of this case.

                                               - 21 -