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on its face”, sufficient to void the papers, the court said. The court would have a point if it were dealing
with a garnishment, which is derived from a statute where the strict construction rule applied. But citation
procedure is part of the Civil Practice Act, to which the liberal construction rule applies. The propriety of
allowing the respondent to snub its nose at the court in such context is much more dubious.
Partial Ownership Change Doesn’t Prevent Successor Liability

That there has been a partial change of ownership between the previous corporation and the present
entity does not prevent imposing successor liability on the latter, the Seventh Circuit Court of Appeals has
ruled.

Applying state law to an Internal Revenue Service levy upon the new corporation for the tax liability of
the old, the court said Illinois law provides that a complete change of ownership prevents a finding of
successorship but that complete identity of ownership is not essential to find successor liability. Eriem
Surgical, Inc. v. United States, 843 F.3d 1160 (7th Cir. 2016).
In Eriem, the alleged successor was incorporated the same day as the predecessor went out of
business; it took over the same office space and hired the predecessor’s employees; and it used the
predecessor’s trademark in the same line of business. To avoid liability under Illinois’ multi-factor test for
successor liability, the successor hung its hat on an alleged change in ownership: President Bernhard
Teitz owned 40% of the predecessor and none of the successor, which was wholly owned by his wife.
Treating the wife as a proxy owner for her husband, the court found that the difference between 40% and
100% was not determinative.

“The district court’s conclusion that [successor] is still conducting the [predecessor’s] business is not
clearly erroneous,” the court said.
Court Vacates Ruling On Laymen In Administrative Hearings

A majority of the Illinois Supreme Court has vacated that part of Stone St. Partners, LLC v. City of
Chicago Dep’t of Administrative Hearings, 2014 IL App (1st) 123654, which ruled that laymen could not
represent business entities in Chicago administrative proceedings.

Ruling in Stone St. Partners, LLC v. City of Chicago Dep’t of Administrative Hearings, 2017 IL 117720,
the Supreme Court this month affirmed the Appellate Court judgment but said that reaching the
unauthorized practice of law issue was “not necessary to the disposition of the case” and thus comments
concerning that issue by the Appellate Court were improper and “wholly advisory.” The majority held that
there was no evidence that the person at issue had any authority from the Stone St. organization and
hence he was powerless to waive service over it whether he was a lawyer or not.

Three justices dissented and would have ruled that that the layman could represent the limited liability
company in the administrative proceeding and that by appearing at the hearing he waived objection to the
City’s failure to give jurisdictional notice to the LLC.

Brenda\SharpThinking\\#142.pdf
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