IL Supreme Court rejects federal successor liability doctrine for IHRA cases

Over many years, federal courts have developed a doctrine for successor liability in labor and employment disputes that evaluates certain factors to determine whether to hold a successor entity responsible for the unfair practices of a predecessor company. Recently, the Illinois Supreme Court rejected the federal successor liability doctrine for cases in Illinois courts arising under the Illinois Human Rights Act (IHRA). Read on to learn why and what it means.

Nursing a claim

Jane Holloway was employed by Oakridge Nursing & Rehabilitation Center, LLC (Rehab), a long-term care facility. In February 2011, she filed a discrimination charge with the Illinois Department of Human Rights (IDHR) alleging age and disability discrimination under the IHRA. Rehab received notice of the charge shortly thereafter.

Rehab began experiencing dire financial trouble, in part because the state of Illinois was a key payor for its long-term care and, due to the state's financial problems, had stopped making payments on Rehab's invoices. This led to Rehab's inability to pay its rent. In June 2011, Rehab gave its landlord the required six-month notice of its intent to terminate the lease.

A shot in the arm

In November 2011, a newly formed entity, Oakridge Healthcare Center, LLC (Healthcare), began negotiations to become the new lessee of the nursing facility operated by Rehab. Ultimately, effective January 1, 2012, Rehab, Healthcare, and the landlord entered into a termination agreement ending the lease with Rehab and making Healthcare the new lessee.