Teed v. Thomas and Betts Power Solutions, L.L.C.

Federal 7th Circuit Court
Civil Court
Fair Labor Standards Act
Case Number: 
Nos. 12-2440 & 12-3029 Cons.
Decision Date: 
March 26, 2013
Federal District: 
W.D. Wisc.
Dist. Ct. did not err in granting under doctrine of successor liability plaintiff’s motion to substitute instant defendant, which had purchased assets of plaintiff’s employer, in action alleging that plaintiff’s employer had violated FSLA in failing to pay plaintiffs overtime. While current defendant objected to substitution where it had purchased employer’s assets under condition that it would be free of all employer’s FSLA liabilities, Dist. Ct. could properly find that successor liability applied under federal standards, even though it would not apply under Wisc. law, where: (1) successor liability is appropriate in suits to enforce federal labor and employment laws, including FSLA actions, even though purchaser of assets disclaimed liability as condition of purchase; (2) allowing current defendant to take assets without assuming liabilities would give said defendant windfall; and (3) instant $500,000 FSLA judgment was modest in relation to $22 million asset purchase. Ct. observed, though, that: (1) successor liability would not have applied if employer had sold its assets in piecemeal fashion; and (2) current defendant did not argue that successor liability should not apply where, as here, employer was insolvent at time of asset purchase, and where application of doctrine would therefore upset priority of competing creditors.