Collapsed airline’s minority owners owe workers too, Ninth Circuit rules

By 2016, the trust had sold a two-thirds stake to entities run by a local businessman. The bleeding did not stop. By mid-2017, the airline was lurching from one payroll crisis to the next. 

On November 10, 2017, it shut down. Workers got a single day’s warning via email and were never paid their final wages or benefits. 

The bankruptcy trustee and two employee unions sued both ownership groups for violating the DWA’s 60-day notice requirement and its obligation to pay wages at closing, alongside federal WARN Act claims. A jury awarded nearly $3 million against the majority ownership group for unpaid wages and found them liable for fiduciary breaches. 

But the trial court had let the minority side walk, ruling they were not “employers” because Ohana held only a third of the stock. 

The Ninth Circuit disagreed. The DWA’s definition of “employer” – anyone who “directly or indirectly, owns, operates, or has a controlling interest” in a covered establishment – does not stop at majority owners. A minority stakeholder with actual control qualifies. The evidence here was hard to miss: a warrant that could restore majority ownership at any time for $12,000, financial leverage through affiliated lenders, and veto power over shutting the airline down.