Blanchana, LLC v. Bureau of Labor and Industries
318 P.3d 735
Or.2014Background
- NW Sportsbar operated the Portsmouth Club/Anchor Grill in Portland, hired four employees, then ceased operations in May 2006 and surrendered business assets to the building owner (CPU) after defaulting. Employees filed wage claims totaling about $7,000.
- CPU repossessed the business assets; shortly thereafter Janet Penner formed Blachana, LLC and reopened the premises as Penner’s Portsmouth Club (47 days after closure), later adding a restaurant. Blachana used much of NW Sportsbar’s equipment and the same location/name goodwill but employed a different workforce.
- BOLI paid the unpaid wages from the Wage Security Fund and sought reimbursement from Blachana under ORS 652.414(3) and the statutory definition of “employer” in ORS 652.310(1) (which includes “any successor to the business of any employer”).
- An ALJ / BOLI commissioner applied BOLI’s longstanding test—whether the successor “conducts essentially the same business” as the predecessor, using nonexclusive factors (name, location, time lapse, workforce, services, equipment)—and found Blachana was a successor liable to reimburse the Fund.
- The Court of Appeals reversed, adopting a narrower reading that “successor to the business” means a legal successor who, independent of ORS chapter 652, succeeds to the predecessor’s legal rights and obligations.
- The Oregon Supreme Court reversed the Court of Appeals and affirmed BOLI’s order, holding that the statutory phrase embraces entities that conduct essentially the same business as the predecessor and that BOLI reasonably applied that test to find Blachana a successor.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether “successor to the business” in ORS 652.310(1) is limited to legal successors liable under common law for predecessor’s debts | Blachana: term should be limited to entities that succeed by operation of law to predecessor’s rights/obligations (i.e., legal successor) | BOLI: term covers entities that conduct essentially the same business as the predecessor (functional successor); agency test is appropriate | Held: Phrase is inexact and includes successors who conduct essentially the same business; not limited to common-law legal successors |
| Whether BOLI’s “essentially the same business” test is a permissible interpretation of ORS 652.310(1) | Blachana: agency interpretation exceeds legislature’s intent and improperly expands liability | BOLI: longstanding, consistent agency interpretation that effectuates statute’s protective purpose | Held: BOLI’s interpretation is consistent with statutory text, context, legislative purpose, and historical usage; permissible to apply |
| Whether the statutory second clause (lessee/purchaser for continuance) makes BOLI’s reading redundant or improper | Blachana: second clause shows legislature intended to capture purchasers/lessees separately, implying first clause is narrower | BOLI: second clause may specify an acquisition circumstance but does not negate broader first-clause meaning | Held: Court finds a plausible reading that gives meaning to both clauses; redundancy concern does not invalidate the agency test |
| Whether BOLI correctly applied its test to these facts (i.e., was Blachana a successor) | Blachana: separate entity, different workforce, no contractual assumption of liabilities — not a successor | BOLI: substantial continuity in name, location, timing, services, equipment and goodwill supports successor finding | Held: BOLI properly considered nonexclusive factors and reasonably concluded Blachana conducted essentially the same business and is liable to reimburse the Wage Security Fund |
Key Cases Cited
- Trebesch v. Employment Division, 300 Or 264 (agency may interpret statutes it administers by adjudication)
- Springfield Education Assn. v. School Dist., 290 Or 217 (framework for exact/inexact/delegative statutory terms)
- Coffey v. Board of Geologist Examiners, 348 Or 494 (review of agency interpretation of inexact statutory term)
- Schleiss v. SAIF, 354 Or 637 (agency deference principles for inexact terms explained)
- State v. Gaines, 346 Or 160 (statutory interpretation methods; use of context and history)
- Erickson v. Grande Ronde Lbr. Co., 162 Or 556 (discussion of common-law successor liability contemporaneous to statute)
- Perry v. State, 336 Or 49 (use of contemporaneous dictionary definitions when construing old statutes)