Why this happens:
The error can happen if you use sbteclipse to create your eclipse config. sbteclipse uses the Scala Library which in your .ivy2 folder which may not be compatible with the scalatest plugin, and hence the error.
What I learnt after breaking my head and contemplating nuking my PC
Go to Project Properties -> Java Build Path -> Libraries Remove the generated scala library pointing to ivy use 'Add Library...' to add Scala Library that comes with the scala-ide, [Optional] make sure that the Run Configuration uses the bundled Scala Library also.
This solution is brought to you by Chee Seng