Background
Former employees of Bristol Compressors International, LLC obtained a class action judgment against the company for violations of the Worker Adjustment and Retraining Notification Act and the Employee Retirement Income Security Act. After the company failed to pay due to insolvency, the employees filed a new lawsuit against Garrison Investment Group and other individuals, seeking to enforce the prior judgment by piercing the corporate veil. Garrison had been voluntarily dismissed from the original suit.
The court’s reasoning
The court analyzed whether federal question jurisdiction or ancillary jurisdiction existed. Under the Supreme Court decision in Peacock versus Thomas, federal courts cannot exercise ancillary jurisdiction to impose liability for a money judgment on a person not otherwise liable for that judgment. The court found that the plaintiffs did not allege any new or independent violations of ERISA or the WARN Act against the new defendants. Instead, the suit was solely an attempt to collect the prior judgment against a party that was never found liable in the initial case. The court also noted that the WARN Act provides exclusive remedies and does not permit alternative theories like veil piercing to establish liability.
We are not aware of, and Thomas does not point to, any provision of ERISA that provides for imposing liability for an extant ERISA judgment against a third party.
Peacock v. Thomas, 516 U.S. 349, 353 (1996)
What it means going forward
Employers and employees cannot use federal courts to enforce judgments against new parties via veil piercing if those parties were not originally found liable for the underlying federal statute violations. Plaintiffs must find an independent basis for jurisdiction or pursue collection in state court.