The United States Court of Appeals for the Seventh Circuit recently issued a noteworthy ruling in East Central Illinois Pipe Trades Health & Welfare Fund v. Prather Plumbing & Heating, Inc. on the application of successor liability in federal courts.1 Federal common law successor liability is an exception to the general rule in virtually every U.S. jurisdiction that the buyer corporation (i.e., acquiror) in an asset sale transaction does not assume the seller corporation’s (i.e., acquiree) liabilities simply by acquiring ownership of the assets.2 Federal appellate courts, including the Third, Sixth, Seventh, and Ninth Circuits, have carved out an exception to this general rule and recognized that “when liability is based on a violation of a federal statute relating to labor relations or employment, a federal common law standard of successor liability is applied that is more favorable to plaintiffs than most state-law standards to which the court might otherwise look.”3
