Sullivan et al v. Alpine Irrigation Company

Filing 65

WRITTEN Opinion entered by the Honorable Elaine E. Bucklo on 1/7/2013: Magistrate Judge Keys' Report and Recommendation 62 is adopted in its entirety, and defendants' objections 63 are overruled. Plaintiffs motion to substitute JV Equi pment LLC and Running Waters Irrigation, Inc. as defendants/judgment debtors pursuant to Rule 25(c) 54 is granted and judgment is entered in favor of plaintiffs and against respondents jointly and severally in the amount of $83,754.13 plus interest of $1.11 per day after March 30, 2012, with the judgment interest rate fixed at 0.49%. Mailed notice (tlm)

Order Form (01/2005)

United States District Court, Northern District of Illinois
Name of Assigned Judge
or Magistrate Judge

Elaine E. Bucklo

CASE NUMBER

09 C 2329

CASE
TITLE

Sitting Judge if Other
than Assigned Judge

DATE

1/7/2013

Sullivan, et al. vs. Alpine Irrigation Co.

DOCKET ENTRY TEXT

Magistrate Judge Keys’ Report and Recommendation [62] is adopted in its entirety, and defendants’
objections [63] are overruled. Plaintiffs’ motion to substitute JV Equipment LLC and Running Waters
Irrigation, Inc. as defendants/judgment debtors pursuant to Rule 25(c) [54] is granted and judgment is entered
in favor of plaintiffs and against respondents jointly and severally in the amount of $83,754.13 plus interest
of $1.11 per day after March 30, 2012, with the judgment interest rate fixed at 0.49%.

O[ For further details see text below.]

Docketing to mail notices.

STATEMENT
I entered default judgment in favor of plaintiffs in this ERISA action on June 1, 2009. After
attempting to collect on the judgment, plaintiffs focused on two related entities, JV Equipment Leasing, LLC
(“JVE”) and Running Waters Irrigation, Inc. (“RWI”). Plaintiffs filed a motion under Federal Rule of Civil
Procedure 25(c) to substitute JVE and RWI as defendants/judgment debtors, and Magistrate Judge Keys
issued a Report and Recommendation in favor of granting the motion. The respondents filed objections.
I have considered the record, including filings related to plaintiffs’ motion to substitute , Judge Keys’
factual findings and legal analysis, and respondents’ objections. Respondents’ objections do not have merit
and they fail to point to any error that would dictate an outcome different from the one recommended by
Judge Keys. Because I agree with Judge Keys’ well-reasoned and thorough analysis, I adopt the Report and
Recommendation dated May 31, 2012, in its entirety.
Though respondents appear to concede that the proper standard of review here is clear error, the
proper standard is de novo review. See 12 Charles Alan Wright, Arthur R. Miller, Mary Kay Kane &
Richard L. Marcus, Federal Practice and Procedure § 3068.1 (2d ed.) (“The statutory authorization for a
district court to designate a magistrate judge to hear and determine a pretrial matter does not encompass
determination of liability or damages in a civil action. Accordingly, the magistrate judge has no statutory
authority to make a final determination of the damages following an entry of default. At most, the magistrate
judge could hear the evidence and prepare a recommended decision[.]”); Alpern v. Lieb, 38 F.3d 933, 935
(7th Cir. 1996) (holding that sanctions awarded after a case was dismissed on the merits “requires one party
to pay money to another” and, therefore, “like the power to award damages, belongs in the hands of the
district judge”). “Section 636(b)(1) of Title 28 requires that, where a party files written objections to a
magistrate judge’s proposed findings or recommendations, ‘[a] judge of the court shall make a de novo
determination of those portions of the report or specified proposed findings or recommendations to which
objection is made.’” Pinkston v. Madry, 440 F.3d 879, 893 (7th Cir. 2006) (quoting United States v. Raddatz,
447 U.S. 667, 674, 100 S.Ct. 2406 (1980)). Under either standard, respondents’ objections fall short.
09C2329 Sullivan, et al. vs. Alpine Irrigation Co.

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STATEMENT
The objections largely rehash the earlier briefing, and neither set of briefing from respondents
adequately addresses the applicable legal test (the “successor in interest” test per Upholsterers’ Int’l Union
Pension Fund v. Artistic Furniture of Pontiac, 920 F.2d 1323, 1329 (7th Cir. 1990)) or the factual support
presented by plaintiffs. When respondents do finally discuss the correct test as set out in Artistic Furniture,
they focus on whether RWI or JVE purchased any assets from Alpine. But Artistic Furniture does not
require a formal purchase of assets in order to for a court to find successor liability in the ERISA context.
Furthermore, the objections do not challenge any of Judge Keys’ material factual findings. The
respondents unsuccessfully attempt to parse words, arguing that Judge Keys erred by relying on RWI’s “use”
of Alpine’s assets and employees as a basis for liability. (See Objections, p. 4). Respondents also try to
create factual distinctions between the entities where there are none (see id., p. 10, admitting that defendant
and respondents perform service and installation work but claiming that respondent RWI performs
“primarily” service work), and to use respondent JVE as a vehicle for rebutting Judge Keys’ findings (see id.,
p. 11, insisting that RWI and JVE could not have taken on “every aspect” of Alpine’s business because JVE
“transacts no irrigation business”). None of these arguments is convincing, and none directly challenges the
key findings made by Judge Keys, namely that Jeffrey Zeh exercised control over all entities, RWI hired 5
out of 6 of Alpine’s former employees, all entities are/were operating out of the same location (Jeffrey Zeh’s
house), the substantial overlap in customer lists, and the timing in the creation of the respondent entities.
Judge Keys’ factual findings are consistent with the record and strongly support the recommended
outcome. Accordingly, plaintiffs’ motion to substitute respondents as defendants/judgment debtors pursuant
to Rule 25(c) is granted and judgment is entered in favor of plaintiffs and against respondents jointly and
severally in the amount of $83,754.13 plus interest of $1.11 per day after March 30, 2012, with the judgment
interest rate fixed at 0.49%.

09C2329 Sullivan, et al. vs. Alpine Irrigation Co.

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