`Lifetime' season ski pass holders lose Killington lawsuit

A federal judge has dismissed a class action lawsuit against Killington Resort over so-called lifetime ski passes.


http://www.rutlandherald.com/article/20100706/BUSINESS/707069887

Like the article says, its being appealed

The only clear winners so far = Langrock Sperry & Wool

“The only reasonable interpretation of that language is that it requires Killington Ltd. to provide the designated passholder free use of all ski lifts operated by Killington Ltd. at the Killington Ski Area so long as it operates in that area … ,” Reiss wrote in her 31-page decision.
Reiss continued that the term corporation “clearly refers to the named corporations, Sherburne and Killington Ltd” and that the deal was structured as an asset sale and not a transfer of stock.

Sound open and shut to me...

dmc said:

“The only reasonable interpretation of that language is that it requires Killington Ltd. to provide the designated passholder free use of all ski lifts operated by Killington Ltd. at the Killington Ski Area so long as it operates in that area … ,” Reiss wrote in her 31-page decision.
Reiss continued that the term corporation “clearly refers to the named corporations, Sherburne and Killington Ltd” and that the deal was structured as an asset sale and not a transfer of stock.

Sound open and shut to me...

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No kidding. I was pummelled here a few years ago when I sided with what the judge recently decided. I can't seem to find that thread...

LOL! Of course the judge is going to word her opinion to make it sound open and shut. You think she's going to write something that casts doubt on what she wrote?

SkiDork said:

LOL! Of course the judge is going to word her opinion to make it sound open and shut. You think she's going to write something that casts doubt on what she wrote?

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Isn't that what it says on the contract? I don't actually have one in front of me so I rely on the law.

Now that you've stepped out on this - let's hear what the "real deal" is as you see it.

threecy said:

No kidding. I was pummelled here a few years ago when I sided with what the judge recently decided. I can't seem to find that thread...

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I certainly didn't - the word "lifetime" is no guarantee. I'd never purchase anything that said "lifetime" but thats just me. And if I did and got 20 years out of it - I'd probably be happy.

dmc said:

Isn't that what it says on the contract? I don't actually have one in front of me so I rely on the law.

Now that you've stepped out on this - let's hear what the "real deal" is as you see it.

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I don't have any sort of legal expertise... I'm just an IT shlub. But I do know that all people look at things through their own glasses. Just because one judge says something doesn't mean its the end all truth. As a seeker of truth yourself dmc, I would think you would agree on that. Lets see what some other judges have to say if and when this goes higher... (of course I'm looking at this through my glasses, being a passholder and part of this suit)

Here's a hypothetical question I have and I'll preface this by saying, I'm someone who sides heavily with consumer rights over corporate profits.

Say the former owners of Killington went bancrupt and the mountain closed for a couple of seasons. Then a new owner comes in and starts up operations again. Would the expectation of the lifetime pass holders be that they be allowed to ski the area for zero additional charge? Maybe I'm wrong, but I'd guess that the majority of them would not as they would view Killington as a new business.

While the circumstances are different, isn't Powdr also a new business? Because of this, unless a contingency plan for the lifetime passes was outlined when they were purchased with specific language as to how they would be treated in the event of the sale of the mountain, I don't think the lifetime pass holders have much of a leg to stand on.

I see both sides, but the longer this plays out, the more I side with Powdr. This all from just reading about the issue online over the past several years and not having seen first hand the purchase contract for the lifetime passes.

deadheadskier said:

Here's a hypothetical question I have and I'll preface this by saying, I'm someone who sides heavily with consumer rights over corporate profits.

Say the former owners of Killington went bancrupt and the mountain closed for a couple of seasons. Then a new owner comes in and starts up operations again. Would the expectation of the lifetime pass holders be that they be allowed to ski the area for zero additional charge? Maybe I'm wrong, but I'd guess that the majority of them would not as they would view Killington as a new business.

While the circumstances are different, isn't Powdr also a new business? Because of this, unless a contingency plan for the lifetime passes was outlined when they were purchased with specific language as to how they would be treated in the event of the sale of the mountain, I don't think the lifetime pass holders have much of a leg to stand on.

I see both sides, but the longer this plays out, the more I side with Powdr. This all from just reading about the issue online over the past several years and not having seen first hand the purchase contract for the lifetime passes.

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There is legal precedent where asset sales to dodge liabilities have been disallowed when the only purpose of the asset sale was to dodge the liability. It happened in the asbestos cases and in toxic waste cases. Killington as KSRP is the same business as it was as Killinngton, LTD and Sherburne Corp. Same name. Same employees. Same customers. I figure there is some slim chance that the ruling of a backwater judge in RutVegas might be overturned on appeal.

As I've written elsewhere, I think that anyone who bought a lifetime pass as a resale when ASC owned the place took a risk that I wouldn't have taken. From 2000 onwards, it was pretty clear that the company was insolvent. It was pretty smart of POWDR to get the lease rewritten by the state to transfer it to KSRP. If you want to point fingers, point them at the troll in Montpelier who didn't think to ask why that would be necessary since the lease was with Sherburne Corp and POWDR could have just bought the corporation. That was done without a public hearing.

I think it's important to note that not all lifetime passes were voided - rather, only stock-related passes were voided - stock in a now-defunct company.

Folks who received lifetime passes direct from Killington for other reasons still have their passes.

WWF-VT said:

The only clear winners so far = Langrock Sperry & Wool

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thats how it usually works....

Geoff said:

There is legal precedent where asset sales to dodge liabilities have been disallowed when the only purpose of the asset sale was to dodge the liability. It happened in the asbestos cases and in toxic waste cases. Killington as KSRP is the same business as it was as Killinngton, LTD and Sherburne Corp. Same name. Same employees. Same customers. I figure there is some slim chance that the ruling of a backwater judge in RutVegas might be overturned on appeal.

As I've written elsewhere, I think that anyone who bought a lifetime pass as a resale when ASC owned the place took a risk that I wouldn't have taken. From 2000 onwards, it was pretty clear that the company was insolvent. It was pretty smart of POWDR to get the lease rewritten by the state to transfer it to KSRP. If you want to point fingers, point them at the troll in Montpelier who didn't think to ask why that would be necessary since the lease was with Sherburne Corp and POWDR could have just bought the corporation. That was done without a public hearing.

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I agree 100% of this one...

So anyone want to partner on a new corp with me? We'll sell "lifetime*" access to our product with fine print saying that it will expire if the company is sold. We collect our money, sell the company cheap and retire to the beach. We have the money and our customers and don't have to actually provide anything.
May be technically legal but fails the common sense test IMO.

Alright, I’ve heard a lot about the price/value of a lift ticket, life time or otherwise, however I haven’t heard anything about the actual cost/overhead to the resort. If there are 1,243 of these lift time tickets and Killington gets maybe 300,000+ skier visits a year, what is the annual cost to them? What is the cost of this litigation as well as the damage to their reputation? Just what do the numbers show?

bobbutts said:

So anyone want to partner on a new corp with me? We'll sell "lifetime*" access to our product with fine print saying that it will expire if the company is sold. We collect our money, sell the company cheap and retire to the beach. We have the money and our customers and don't have to actually provide anything.
May be technically legal but fails the common sense test IMO.

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Two can play this game.

How about we do what you said, but since you failed to read the small print, me and my friends have to bail you out at our own expense.

I have zero sympathy for the people who bought their passes on the secondary market - they did nothing to invest in the original hill and weren't taking any risk (oh the irony) that Killington would not make it in its early years. I never bought into the rationale for this lawsuit as a reading of the purchase agreement indicated that the lifetime passes weren't quite the only thing held back in the transaction, though it was close.

For all of you chiming in with your "common sense test" answers, they are truly irrelevant in this case. It is a long-established legal precedent that within the context of an asset sale (as opposed to a stock sale), a buyer picks up only the assets and liabilities he/she wants (so long as the seller agrees). It is critically important that these sorts of transactions are part of the landscape b/c businesses and subsidiaries aren't always (in fact, are quite rarely) structured in a way that makes a sale of their stock to another party possible or feasible. For example, if Target wants to sell 5 stores to Wal-Mart, those stores may be part of the parent holding company and not separate legal entities. Should Target's only option be to sell the whole company or not do the deal at all? Of course not.

The fact that the judge dismissed the lawsuit before it even came to trial is a pretty good indication that the passholders should save their money and give up the ghost. The % of cases where the plaintiff wins on appeal after being dismissed at a lower level isn't high.

Does anyone know the passes say that they are transferrable?

Sparky said:

If there are 1,243 of these lift time tickets and Killington gets maybe 300,000+ skier visits a year, what is the annual cost to them?

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I can answer this one for you:

First off, the 300,000+ figure you mentioned irrelevant to the cost of letting the lifetime pass holders ride the lifts for free under new ownership. The "cost" to Killington is most simply what it's giving up in lost revenue. In this case, lost pass revenue can basically be defined as:
(% of skiers that would stay despite losing their lifetime pass) * (average price of season pass in the comming years)*(average amount of years skiers who lost their lifetime pass continue to purchase passes in the future)

Considering the current real estate market, lifetime pass holders who own property on/near Killington are likely to keep buying passes in the forseeable future. It wouldn't be surpsing if by the time its feasible for them to jump ship. the sting of losing their passes will have worn off, and they decide to stick around.

So the real wild cards are A: the % of lifetime pass holders who are tied to the area and B: the % of said passholders that will actually jump ship. Passholders that aren't invested in the area are likely harder to come by, and more likely to ski somewhere else, though I suspect these types are rather hard to find.

Clearly Powdr thought it would be worth their while to discontinue the lifetime pass. They likely ran the numbers and made a decision that was certainly their's to make. I surely won't lose any sleep over it because seriously, who's naive enough to believe that anything stamped with a lifetime approaval will last until the day they die?

Puck it said:

Does anyone know the passes say that they are transferrable?

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There are multiple sets of these passes, some with I believe unlimited transfers, others with 1 transfer.