September Ends Co., et al. v. Pension Benefit Guaranty Corporation

The Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq., expressly makes corporate successors to a business liable for unpaid pension obligations in certain circumstances. See 29 U.S.C. §§ 1369(b), 1384(b), 1398. In the decision below, however, the Sixth Circuit decided that a supplemental “federal common law of successor liability is necessary to promote fundamental ERISA policies in this case,” and therefore proceeded to enact additional rules. Pet. App. 24a. In doing so, it refused to adopt traditional state common law principles of successor liability as the federal rule, holding that courts may resort to state law only if pre-existing federal common law rules from other areas of the law are unavailable to fill the gap. The Sixth Circuit purported to find such a rule in this Court’s 1960s-era collective bargaining cases, which adopted a rule much broader than that provided by common law. In doing so, the Sixth Circuit followed a growing trend of treating the Court’s labor law cases as establishing a broad federal common law rule of successor liability for an expanding list of federal statutes. That decision conflicts with the law of other circuits and this Court’s repeated admonition that federal courts are not to create federal common law to rewrite federal statutes and that even when federal common law rules are authorized, they are to be filled by adopting state common law principles absent clear congressional direction to the contrary. The question presented is: What is the proper standard for successor liability for unpaid ERISA pension obligations?