Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
Sept. 27 — A group of current and former Hilton Hotels Corp. executives accuse the hotel giant of failing to pay $4.7 million in retirement benefits it allegedly owes as part of its relationship with Caesars Entertainment Corp. ( Boyle v. Hilton Hotels Corp. , D. Nev., No. 2:16-cv-02250, complaint filed 9/26/16 ).
The lawsuit, filed Sept. 26 in the U.S. District Court for the District of Nevada, brings attention to the 1998 spin-off of Hilton’s gaming division—formerly known as Park Place Entertainment Corp.—which later changed its name to Caesars. After Caesars filed for bankruptcy last year, Hilton sued the gaming company for its alleged failure to pay at least $17.7 million in contributions to a pension fund for former Hilton employees. The case was settled this summer in the bankruptcy court.
As part of the 1998 spin off, Hilton unilaterally allocated to Caesars certain liabilities, including its pension obligations related to the executives, the complaint said. The executives, who were and continue to be participants in Hilton’s deferred compensation plans for highly compensated individuals, allege that the hotel company is liable for their benefits because it was never released from its contractual obligation under the plans, the complaint said.
The settlement between Hilton and Caesars allegedly provides that Hilton may pay the obligations arising under the plans at issue, the complaint said. Accordingly, for any obligation paid Hilton would be allowed a general unsecure claim against Caesars in the bankruptcy action, the complaint said.
The 10 executives, who brought the lawsuit under the Employee Retirement Income Security Act, allege that Hilton has repeatedly refused to pay their retirement benefits, which range between $91,463 and $1,435,225 for a total of $4,697,318.
There is a dispute as to whether Hilton is responsible for the benefits earned by the executives during their employment with the hotel, the complaint notes.
Hilton has denied any obligation to the executives and has pointed out that they must address their claims solely against Caesars, the complaint said. The executives allege that Hilton’s underlying obligation to pay benefits remains with Hilton despite any purported agreement between Hilton and Caesars for the gaming company to pay on behalf of Hilton those obligations.
Hilton didn’t immediately respond to Bloomberg BNA’s request for comments.
The Bourassa Law Group, LLC represents the executives.
To contact the reporter on this story: Carmen Castro-Pagan in Washington at email@example.com
To contact the editor responsible for this story: Jo-el J. Meyer at firstname.lastname@example.org
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