Great moments in successor liability

by Walter Olson on March 12, 2014

Safer to have the failed business go through total liquidation, it seems:

An employer that acquired the assets of a defunct bar and restaurant and continued to operate a restaurant on the same premises was liable for unpaid wages owed to the defunct restaurant’s former employees, the Oregon Supreme Court has ruled. Blachana LLC v. Bureau of Labor and Industries, No. S060789 (Ore. Jan. 16, 2014).

Reversing the Oregon Court of Appeals, the Court found that the Bureau of Labor and Industries (BOLI) did not err in deciding the employer was a successor for state wage liability purposes because it conducted “essentially the same business as conducted by the predecessor,” even though it did not employ any of the predecessor’s employees. [emphasis added]

[Jackson Lewis]

{ 5 comments }

1 peter 03.12.14 at 7:02 am

Another roadblock for setting up new businesses. New rule, when taking over an old business premises, make sure you spend money getting rid of all those useful fittings and appliances

2 Bill Poser 03.12.14 at 2:56 pm

While I agree that this is a bad decision, I don’t see why it is relevant that the new owners did not employ any of the previous employees. Presumably the goal here is to determine whether the new owners are truly distinct from the previous ones or whether the change is a sham. If control and beneficial interest have in fact changed, that should be sufficient to establish that the change is not a sham. Treating employment of previous employees as evidence of a sham is bad for the very employees who may be owed wages and may well also be bad for the new business, which is motivated not to retain skilled and knowledgable staff who may be crucial to the success of the new venture.

3 ras 03.12.14 at 3:25 pm

I presume this means that politicians will now accept full responsibility for whatever was done by their predecessors. Same theory.

4 KM 03.12.14 at 4:37 pm

RAS …. when has a politician ever accepted responsibility for anything they did, let alone what another politician did

5 gitarcarver 03.18.14 at 1:31 am

I apologize for going back this far to a post to comment, but something has been nagging me about this.

GM is facing lawsuits / class action suits and recalls over failures from alleged faulty ignition assemblies.

Yet it appears that when GM went into bankruptcy in 2009, part of that bankruptcy was that the new GM was not liable for settled / decided lawsuits before 2009. In addition, GM is not responsible for defective parts prior to 2009. See:

http://gmauthority.com/blog/2014/03/gms-bankruptcy-could-shield-it-from-ignition-switch-recall-lawsuits/

My question is therefore why is GM allowed to basically write off responsibilities it incurred prior to bankruptcy but the new owners of a restaurant who had nothing to do with the previous establishment be held responsible for the wages and damages caused by the previous establishment?

Why does this new and unrelated management of the new restaurant get hammered but GM, which as far as I know is still making cars and is more than “essentially the same business” get a free pass?

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