Court holds that successor employer is not bound by employer's arbitration agreement or result
Michael Rogensues was employed by Weldmation, Inc., and had executed an arbitration contract with the company. His employment was terminated and the company refused to pay the stipulated severance pay, so he demanded arbitration. In the interim, Weldmation sold its assets to Kramer International, Inc. In the contract, Kramer did not assume any of the liabilities of Weldmation.
The arbitrator ruled in Rogensues' favor and awarded him damages. When he sought to enforce the arbitration result against the two companies, however, Weldmation was uncollectible, apparently, and Kramer argued that: it was not bound by the predecessor's arbitration agreement; it had not assumed any of Weldmation's liabilities, and Rogensues' correspondence with the former CEO of Weldmation, now a consultant of Kramer, did not constitute adequate notice of the pendency of the arbitration proceeding.
The Court of Appeals agreed with Kramer on all three counts. Rogensues was unable to enforce the arbitration agreement against Kramer. If the arbitration had gone in Kramer's favor, we wonder if the Court would have so readily concluded that the arbitration agreement was not an "asset" of the successor corporation and therefore available to Kramer and binding on Rogensues?