Burlington Case Settled

Burlington Industries, NationsBank, and Morgan Stanley have agreed to pay $8.8 million each to settle a class action lawsuit brought by a group of Burlington employees. After legal fees are deducted, the remaining amount will go into Burlington's ESOP for current and former employees. Morgan Stanley took Burlington private in 1987, then set up a leveraged ESOP in 1989, in part to finance a special dividend paid to management and Morgan Stanley shareholders. NationsBank acted as the trustee. The ESOP paid $37.80 per share for the stock; in 1992 Burlington went public at $10 per share. The plaintiffs contended that the ESOP overpaid for the shares and that the plan was set up primarily to benefit management and Morgan Stanley.