Blanchana, LLC v. Bureau of Labor and Industries

318 P.3d 735, 354 Or. 676, 22 Wage & Hour Cas.2d (BNA) 131, 2014 WL 503646, 2014 Ore. LEXIS 10
CourtOregon Supreme Court
DecidedJanuary 16, 2014
DocketBOLI 0608; CA A143894; SC S060789
StatusPublished
Cited by38 cases

This text of 318 P.3d 735 (Blanchana, LLC v. Bureau of Labor and Industries) is published on Counsel Stack Legal Research, covering Oregon Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Blanchana, LLC v. Bureau of Labor and Industries, 318 P.3d 735, 354 Or. 676, 22 Wage & Hour Cas.2d (BNA) 131, 2014 WL 503646, 2014 Ore. LEXIS 10 (Or. 2014).

Opinion

*678 WALTERS, J.

In this wage claim case, the issue is whether the Bureau of Labor and Industries (BOLI) correctly determined that a business entity, Blachana, LLC, is a “successor” employer and must, therefore, reimburse BOLI for wages paid from the Wage Security Fund on behalf of four wage claimants. The employees had worked for NW Sportsbar Inc. (NW Sportsbar) before that corporation went out of business and surrendered its property and the business to Blachana. On judicial review of BOLI’s final order assigning liability to Blachana, the Court of Appeals reversed, holding that Blachana was not a “successor to the business” of NW Sportsbar, as that phrase is used in the wage claim statute, ORS 652.310(1). 1 Blachana, LLC v. Bureau of Labor and Industries, 250 Or App 80, 279 P3d 248 (2012). For the reasons that follow, we conclude that BOLI did not err in deciding that an entity is a successor to a business if it “conducts essentially the same business as conducted by the predecessor” or in applying that test in this case. We therefore reverse the decision of the Court of Appeals.

The following facts are undisputed. Janet and Chris Penner, mother and son, owned and managed a limited liability corporation called CP Underhill LLC (CPU). CPU owned a building in Portland and, in that building, operated a bar called the Portsmouth Club and a restaurant called Mama’s BBQ. Since 1940, five different businesses had operated a bar and restaurant in that location, and customers had referred to each business as the “Portsmouth Club.” In February 2005, CPU executed an agreement to lease the building to NW Sportsbar for five years. The same day, CPU also executed a sales agreement under which NW Sportsbar bought the inventory of the Portsmouth Club for $50,000 and the good will of the Portsmouth Club for $285,000. The president of NW Sportsbar, Dustin Drago, signed both agreements on behalf of that company. Drago then registered with the Oregon Corporation Division as the authorized representative for “Portsmouth Club,” an assumed business name that had been registered in 1988.

*679 For the rest of2005 and until May 2006, NW Sportsbar operated its business in the leased building under the names “Portsmouth Club” and “Anchor Grill.” The business offered food and drinks and live music as entertainment. Drago managed the business and hired the four wage claimants, two in 2005 and two in 2006. Drago paid some wages in 2005, but stopped paying any of the wage claimants’ wages in 2006. The two wage claimants hired in 2006 never received any wages for their work.

By May 2006, Drago also was three months behind in his payments under the lease and sales agreements and began to discuss with Janet Penner the closing, and CPU’s repossession, of the business. In early May 2006, “Portsmouth Club” closed its doors, and, on May 9, 2006, Drago and CPU entered into a Surrender and Release Agreement, under which NW Sportsbar surrendered all its businesses assets, including the business name and goodwill, and relinquished possession of the personal property left in the building to CPU. In exchange, CPU released NW Sportsbar from its obligations under the lease and sales agreements. Drago then left town without paying the four employees.

About a week later, Janet Penner registered Blachana, LLC, with the Oregon Corporation Division, listing herself as a manager and member 2 and stating Blachana’s assumed business name as “Penner’s Portsmouth Club.” Blachana then obtained a liquor license and other required permits and licenses and on June 26, 2006, opened its business in the building that CPU owned and that had been leased to NW Sportsbar. Blanchana operated “Penner’s Portsmouth Club” as a bar; its business did not initially provide meals. By late summer, the business included live musical entertainment 3 and, by May 2007, also included a restaurant that used the new assumed business name “Portsmouth Pizza and Pub.” Blachana did not employ any of the same employees as NW Sportsbar. It used most of the same bar equipment and used the same beer vendor that NW Sportsbar had used, but used a different food vendor.

*680 Meanwhile, on May 18,2006, one of NW Sportsbar’s employees filed a wage claim with BOLL The investigator assigned to the employee’s case twice called the telephone number on file for NW Sportsbar and, each time, Chris Penner answered the phone by identifying the business as “Portsmouth Club.” Three other former NW Sportsbar employees eventually also filed wage claims; the four wage claims totaled just over $7,000. The investigator attempted unsuccessfully to locate Drago and ultimately determined that the wage claims were valid, that NW Sportsbar had ceased doing business, and that NW Sportsbar’s former employees’ wage claims could not be fully and promptly paid except through the Wage Security Fund, a fund established to pay wage claimants if the employer no longer is in business or is without sufficient assets to pay the claims. See ORS 652.409 (establishing Wage Security Fund for that purpose); ORS 652.414(1) (authorizing payment of wage claims in those circumstances). BOLI paid the claims through the Wage Security Fund and then notified Blachana that it was responsible for the unpaid wages under ORS 652.414(3) (authorizing commissioner to take appropriate action to recover from “employer, or other persons or property liable for the unpaid wages” amounts paid from Wage Security Fund) and ORS 652.310(1) (defining “employer” for purposes of ORS 652.414 to include “any successor to the business of any employer, or any lessee or purchaser of any employer’s business property for the continuance of the same business”).

After a contested case hearing before an administrative law judge, BOLI’s commissioner concluded that Blachana was a “successor to the business of” NW Sportsbar. In his Final Order, the commissioner explained that BOLI consistently had held that the test to determine whether an employer is a successor in a wage claim case is “whether it conducts essentially the same business as conducted by the predecessor.” In re Blachana, LLC, 30 BOLI 197, 221 (2009). The commissioner then listed several factors that the agency considers in determining whether an employer is conducting “essentially the same business,” including the name or identity of the business, its location, the lapse of time between the previous operation and the new operation, whether the businesses employed substantially the same workforce, whether the same product was *681

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Bluebook (online)
318 P.3d 735, 354 Or. 676, 22 Wage & Hour Cas.2d (BNA) 131, 2014 WL 503646, 2014 Ore. LEXIS 10, Counsel Stack Legal Research, https://law.counselstack.com/opinion/blanchana-llc-v-bureau-of-labor-and-industries-or-2014.