Successor owner must pay more to unemployment insurance

September 21, 2015

A buyer of an auto parts retail business that used the same name, same signs, same location, same phone number, same inventory, same fixtures, and hired some of the same employees lost his appeal to the finding that he is liable for a higher employer rate as a successor business.

The Indiana Department of Workforce Development’s liability administrative law judge ruled that D & D NAPA Inc. was a partial successor of Chaffins Enterprises Inc. As such, D & D was required to contribute more to unemployment benefits.

D & D appealed but the Indiana Court of Appeals affirmed in D & D NAPA, Inc. v. Unemployment Insurance Appeals of the Indiana Department of Workforce Development, 93A02-1501-EX-58.

On appeal, D & D argued its case follows closely to Indianapolis Concrete, Inc. v. Unemployment Ins. Appeals of Indiana Dep’t of Workforce Dev., 900 N.E.2d 48 (Ind. Ct. App. 2009). Although D & D purchased the business from Chaffins, it did not acquire any corporate name, goodwill, work in progress, patent rights, licenses, technical data, book of accounts or even customers.

The Court of Appeals dismissed this argument, finding a number of factors in Indianapolis Concrete are not applicable or do not favor D & D. Namely, the parties did not show that Chaffins possesses such things as patent rights, trademarks, technical data, and covenants not to compete.

Pointing to testimony from a hearing before the administrative law judge, the Court of Appeals noted D & D purchased Chaffins’ assets and hired the employees to operate the same business in the same location under the same name and that the retail store operated seamlessly between the two owners.



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