IPI eyes restricted account for payroll

Imperial Pacific International (CNMI) LLC is seeking the federal court’s permission to be allowed to create a restricted account that is being seen as a means to solve the company’s payroll issues.

Attorney Michael Dotts informed the federal court yesterday that IPI is now working on the paperwork for an order that, if U.S. District Court for the NMI Chief Judge Ramona V. Manglona allows, will create the restricted account.

Dotts told Saipan Tribune that if Manglona agrees and the restricted account is allowed instead of the appeals bond, then no more writs of execution will be issued in the Pacific Rim Land Development LLC’s lawsuit for now, and IPI will be able to continue with the construction of the hotel in Garapan.

At a status conference yesterday in Pacific Rim’s lawsuit against IPI, U.S. Labor Secretary Eugene Scalia, through counsel Charles C. Song of the Office of the Solicitor, who appeared telephonically, told the court that he will not be making an appearance in the Pacific Rim case, but informed the court that there is a conflict in the consent judgment. According to the minutes of the hearing, Song said he will provide briefings to the court.

Last June 29, Scalia notified the court that the lawsuit filed by Pacific Rim against IPI is related to the court’s consent judgment last year in the U.S. Labor’s case against IPI.

Scalia, through Song, requested the court that any ruling the court enters in the Pacific Rim matter must ensure that IPI is able to comply with the court’s April 11, 2019, injunction requiring IPI to comply with the Fair Labor Standards Act, including remedying missed payroll and meeting its payroll obligations going forward.

Song said that in the U.S. Labor secretary’s lawsuit against IPI, the court entered the consent judgment on April 11, 2019, which barred IPI from violating the FLSA.

At yesterday’s status conference, Dotts, who appeared as a client representative for IPI, disclosed that the company’s payroll 13 should arrive yesterday, Wednesday, and distributed that day. Dotts further informed the court that payroll 14 will arrive today, Thursday, and will be paid that same day. Saipan Tribune learned that the two payrolls’ pay dates were June 19 and July 3.

Dotts said the restricted account will be treated like a bond. Dotts further stated that counsel will work on a stipulation as to the restricted account.

In response to Saipan Tribune’s request for more details, Dotts said IPI was unable to distribute two payrolls because the court issued a writ of execution and all of IPI’s money in its payroll account was taken. Dotts said this is something that can keep happening until Pacific Rim has collected the $6.9-million judgment against IPI.

The lawyer explained that what IPI did was to contract with a third-party payroll service provider for them to write the payroll checks. He said IPI sent the payroll company the money for the payroll and the first batch of payroll checks arrived on Saipan yesterday, Wednesday, and were handed out yesterday.

Dotts said the second batch arrives today, Thursday, and will be handed out also today.

Dotts said the “restricted account” talked about at yesterday’s conference is different from the payroll account.

He said IPI has already appealed the court’s $6.9-million judgment against IPI but this does not stop the other party from collecting on the judgment. “To stop them from collecting, you are supposed to post a bond equal to the amount of the judgment. Then at the end of the appeal, if you lose, the bond pays the judgment,” he said.

Dotts said these sorts of appeals bonds are not sold on Saipan, but IPI found an appeal bond it could buy in California. He said the price was at least $34,000 and IPI had to deposit with the bonding company the full $6.9 million.

Dotts said IPI proposed that it open a bank account on Saipan, put the $6.9 million in the bank account, and have the court place “restrictions” on the account so that IPI could not take the money back out again.

With respect to Song’s appearance at yesterday’s conference, Dotts said that Song’s reference to “conflicting” or “competing” was about last year’s U.S. Labor’s settlement judgment. He said IPI, under the judgment entered with U.S. Labor, is required to pay its employees on time. Dotts said that IPI’s payroll account was emptied to pay the judgment held by Pacific Rim.

“If each time IPI puts money in its payroll account Pacific Rim takes it, IPI will not be able to pay its employees, and IPI will be violating the judgment with the Department of Labor,” he said. The “restricted account”—if approved—will solve the problem.

At the Commonwealth Casino Commission’s board meeting last June 25, IPI Treasury director Frances Mafnas and IPI human resources director Redie Dela Cruz disclosed that IPI has just engaged a new payroll service provider in Guam to address the payroll problem with IPI employees.

Hundreds of IPI construction workers recently held protests in front of the District Court after they failed to get their two paychecks, allegedly because of the court’s writ of execution that resulted in the seizure and closure of IPI’s payroll account with the Bank of Saipan.

Pacific Rim counsel Colin Thompson informed the court yesterday that attorney George Hasselback will be entering an appearance in this matter as counsel for IPI and will request for an extension of time to file an opposition to Pacific Rim’s motion to dismiss IPI’s counterclaims.

Manglona continued the status conference to July 15 at 9am.