Senco Brands, Inc. v. Ohio Dept. of Job & Family Servs.
2016 Ohio 4769
| Ohio Ct. App. | 2016Background
- In May 2009 Senco Products sold assets in a §363 sale; a newly formed Senco Brands (Wynnchurch designee) acquired the assets and began operating with substantially the same workforce.
- The bankruptcy court approved the sale, providing the buyer would take assets “free and clear” of any interests, including unemployment-related claims, and disclaimed successor liability.
- ODJFS treated Senco Brands as a statutory successor under Ohio Rev. Code § 4141.24(G)(1) and charged Senco Brands the seller’s unemployment contribution (experience) rate; Senco Brands paid the higher rate from 2009–2012.
- Senco Brands later sought reversal; UCRC found Senco Brands a successor under (G)(1) based on “substantially common management”; the common pleas court affirmed; Senco Brands appealed.
- Primary legal dispute: whether § 363(f)/the bankruptcy order preempted ODJFS’s assignment of the seller’s experience rate, and whether record evidence supports the successor finding under Ohio law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 11 U.S.C. § 363(f) and the bankruptcy order preempt ODJFS’s successor determination | §363(f) bars transfer of any “interest” in property; the seller’s experience rate is an interest extinguished by the §363 sale, so ODJFS is preempted | The seller’s experience rate is not an in‑rem “interest” in the sold assets; state unemployment scheme governs successor assignment | Preemption rejected — §363(f) does not extinguish the unemployment experience rate under Sixth Circuit/Wolverine approach |
| Whether Senco Brands is a successor under R.C. 4141.24(G)(1) ("substantially common ownership, management, or control") | Board composition shows distinct boards; only one overlapping director, so no substantially common management | Management team and officers post‑sale were largely the same individuals; buyer employed most of seller’s workforce and kept core officers | UCRC finding affirmed: competent, credible evidence supports substantially common management and successor status |
| Whether the UCRC decision is supported by reliable, probative, substantial evidence | Argued UCRC lacked evidence to show substantial commonality of management | ODJFS pointed to officer overlap, asset purchase obligations to hire senior management, and employment of 275 of 284 employees | Affirmed — appellate review defers to UCRC’s factual findings; evidence sufficed |
| Whether UCRC properly quashed subpoena seeking ODJFS records about other employers | Senco Brands sought comparative records to show disparate treatment | ODJFS invoked R.C. 4141.21 confidentiality; records are available only as to the particular employer/claim | Subpoena properly quashed — statute protects those records and disclosure not warranted here |
Key Cases Cited
- Michigan Emp. Sec. Comm. v. Wolverine Radio Co., Inc., 930 F.2d 1132 (6th Cir. 1991) (unemployment experience is not an in-rem interest extinguished by a §363 sale)
- Mass. Dept. of Unemp. Assistance v. OPK Biotech, LLC, 484 B.R. 860 (1st Cir. B.A.P. 2013) (takes expansive view of “any interest” under §363(f) and preemption of state assignment of experience)
- In re Chrysler, LLC, 576 F.3d 108 (2d Cir. 2009) (follows broader interpretation of §363(f) re successor liabilities)
- United Mine Workers of Am. 1992 Benefit Plan v. Leckie Smokeless Coal Co., 99 F.3d 573 (4th Cir. 1996) (broad view of interests that §363(f) can extinguish)
- Precision Indus., Inc. v. Qualitech Steel SBQ, LLC, 327 F.3d 537 (7th Cir. 2003) (discusses successor liability and §363 sales)