IPI won’t be able to satisfy USDOL consent judgment by March 1

Imperial Pacific International (CNMI) LLC has informed the U.S. District Court for the NMI that the crane funds it was depending on to satisfy the consent judgment and purge itself of contempt in the lawsuit filed by the U.S. Department of Labor will not be released by March 1—the date the court earlier set for IPI to make the payment.

In a status report filed by IPI lawyer Michael Dotts, he said the removal of the crane has been completed. However, Finance Secretary David Atalig has asserted the CNMI’s lien on all the crane funds, saying he will be intervening in the Superior Court action to enforce the lien.

“What this means is that the crane funds will not be available to make the payment to the U.S. Department of Labor on March 1, 2021,” Dotts said.

With less than a week until IPI’s court-issued due date to satisfy the consent judgment, USDOL has already nominated a receiver to liquidate IPI’s assets in the event IPI fails to comply.

According to USDOL attorney Charles Song, pursuant to the court’s Jan. 28 order to nominate a receiver, USDOL has nominated NMI Settlement Fund trustee Joyce Tang as the proposed receiver and proposed to place IPI in a receivership limited to the liquidation of assets enough to purge contempt and pay the receiver’s fees and costs.

Dotts said IPI is in the process of reviewing the proposed receivership and, if IPI has an objection to raise, it will do so by Feb. 25.

To date, to purge itself of contempt, IPI must pay $1.2 million to USDOL as owed under the 2019 consent judgment and fund an $800,000 escrow account by March 1.

Initially, lawyer Michael White was the proposed receiver during the Jan. 28 hearing with agreement from both IPI and USDOL but the court said that that was subject to White accepting the role.

According to Saipan Tribune archives, U.S. District Court for the NMI Chief Judge Ramona Manglona allowed the removal of one of the cranes at the worksite so IPI would petition the Superior Court to release the $2.3 million being held under the crane litigation fund.

The $2.3 million had been deposited with the CNMI Superior Court in case a lawsuit is filed relating to the cranes and their safety. Aside from one claim against those funds for $250,000, IPI can petition for the remainder of the funds after the removal of crane 4.

IPI was looking at using the crane litigation funds to satisfy the sanctions imposed on it pursuant to the USDOL lawsuit and to purge itself of contempt.

Back in April 11, 2019, USDOL, IPI, and its mother company, IPI Holdings Ltd., entered into a consent judgment related to alleged labor violations at the IPI construction site.

IPI first violated the consent judgment on Dec. 1, 2019, when it failed to pay USDOL $1,020,000.

In May 2020, USDOL discovered that IPI was not meeting its payroll obligations and was not in compliance with the judgment’s prohibition against violating the Fair Labor Standards Act.

After unsuccessfully making every effort to secure IPI’s compliance with the judgment, on Dec. 16, 2020, USDOL filed a petition for contempt because IPI failed to meet payroll obligations, required employees to work without pay, failed to provide payments to the Secretary of Labor, and other requirements per the 2019 consent judgment.

On Jan. 21, 2021, a hearing was held on USDOL’s contempt petition and, based on the evidence presented by USDOL, the court found defendants in contempt of court for the continuous violation of the 2019 consent judgment by failing to make the scheduled payments and by violating the FLSA.

In a follow-up hearing on Jan. 28, 2021, IPI reported that it satisfied a portion of the consent judgment, including paying $788,022.54 and any other wages due to current IPI employees and restoring employee housing to habitable conditions.

The court ordered on Jan. 28 that IPI satisfy the remaining portion of the judgment by March 1 or the court may proceed with the appointment of a receiver to immediately begin liquidating IPI’s assets to fulfill payment.