See also #710 and #805. I've attached the full console output. It dies in the lambdalift phase How can I find out what the compiler was doing when this error arose? Its a bit hard to produce a minimal test case without this. A decidedly un-minimal test case is here: http://scalaz.googlecode.com/svn/branches/scala-2.8, SVN revision 825. I'm on version 2.8.0.r18583-b20090827020153