New employer ordered to pay old employer's debts into pension plan

By Claudia Balthazar | Dec 16, 2018

Hotel   Wikimedia/Jürgen Matern

SAN FRANCISCO — A court ordered for Amstar hotel to make back-payments for an employee pension plan that it had no idea was underfunded when it acquired the Ohana Hotel Company’s assets.  

In the case, Heavenly Hana (Amstar) v. Hotel Union and Hotel Industry of Hawaii Pension Plan, Amstar was first favored by the court when it said that it did not owe the pension plan, but the Ninth Circuit reversed the judge’s determination.

Now, Amstar is required to pay the former hotel’s union's pension plan $358,151, plus an interest of $121,332.02, Chief Magistrate Judge Joseph C. Spero ruled. The hotel also has to pay nearly $74 per day as of Dec. 1 through the date of judgement.

According to the U.S. District Court for the Northern District of California, Amstar purchased the assets of Ohana Hotel in May 2010 which included the hotel that was operating in Ohana, Hawaii. During that time, the hotel being purchased was still under agreement to make payments to the union’s pension plan. At the time of the purchase, all 211 Ohana Hotel employees were terminated, and Amstar owed them withdrawal liability benefits since the pension plan was underfunded.

Two years later, Amstar received a letter stating that it owed the withdrawal liability payments being that it was now the owner of Ohana’s assets, the case noted. Amstar made five quarterly payments before the case was brought to court because it was responsible for paying the withdrawal liability under a former case’s “pay now, dispute later,” statute.

The Ninth Circuit Court decided that Amstar is an official Ohana Hotel employer after taking the Multiemployer Pension Plan Amendments Act under consideration, the case noted. Therefore, is required to make withdrawal liability payments regardless of not knowing the pension plan was underfunded because that kind of information could have easily been acquired.

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