Employee Ownership Legal Digest (8) Archive

Stay informed on the latest legal developments impacting employee ownership. This page provides timely and concise summaries of key cases and rulings, contributed by experienced attorneys, to help the entire employee ownership community understand their implications, and also offers access to NCEO's archive of prior content.

Corey Rosen

March 13, 2024

Case Concerning Change to Account Segregation and Valuation Rules Can Proceed

In Nguyen v. Westlake Services Holding Company, No. 8:23-cv-00854 (C.D. Cal., Feb. 5, 2024), a district court allowed a case to proceed in which the plaintiff alleges that Westlake Holding Company changed its ESOP rules in 2020 to allow the company to segregate accounts of former employees prior to their receiving a distribution as well as to allow a special interim valuation to reflect economic challenges arising from the pandemic.

Corey Rosen

February 08, 2024

Inequality Inc.: Rich Get Richer as Poor Get Poorer

In a report that received significant media attention, Oxfam, a nonprofit focusing on hunger and other poverty-related issues, found that “the combined fortunes of the world’s five richest men have more than doubled to $869 billion since 2020 while five billion people have been made poorer.”

Corey Rosen

February 08, 2024

New Rules for ESOPs and Other Defined Contribution Plans for 2024

NCEO member Vicki Graft at FORVIS wrote the following useful reminder of new rules that go into effect in 2024 for ESOPs and other defined contribution plans

Corey Rosen

February 08, 2024

Ninth Circuit Again Denies Rehearing Motion for DOL to Repay Attorneys’ Fees in Bowers & Kubota Case

In Su v. Bowers, D.C. No. 1:18-cv-00155SOMWRP (9th Cir. Jan. 7, 2024), the Ninth Circuit again said that the Department of Labor did not have to pay attorneys’ fees to the defendant attorneys in a valuation case the DOL decisively lost.

Corey Rosen

January 11, 2024

Inland Seafood ESOP Valuation Lawsuit Dismissed; Court Rules Plaintiffs Must Exhaust Plan Remedies Before Suing

In Bolton v. Inland Fresh Seafood Employee Stock Ownership Plan, No. 1:22-cv-04602-AT (N.D. Ga. Dec. 5, 2023) a district court dismissed a lawsuit at Inland Fresh Seafood over the valuation of the company when it was sold to the ESOP in 2016 for $92 million.

Corey Rosen

January 11, 2024

ESOP Participants at TPI Hospitality Can Continue Lawsuit

In Kloss v. Argent Trust Co., No. 23-cv-0301 (D. Minn. Dec. 12, 2023), a federal court allowed a case over the purchase of shares in TPI by an ESOP to continue.

Corey Rosen

January 11, 2024

ESOP Lawsuit Over Sale of ESOP Company Reaches Settlement

In Moore v. Va. Cmty. Bankshares, No. 3:19-cv00045 (W.D. Va. Nov. 28, 2023), a settlement has been reached in a lawsuit alleging fiduciary improprieties in the sale of ESOP shares at Virginia Community Bank (VCB) prior to a merger.

Corey Rosen

December 07, 2023

IRS Rules That ESOP Shares Should Have Basis Adjusted for Net Unrealized Appreciation Calculations

In Rev. Rul. 2003-27; 2003-1 C.B. 597, EB. 20, 2003, the IRS ruled that the basis of shares on an S corporation ESOP trust must be adjusted in the same way as any other S corporation shares are adjusted for the purpose of calculating net unrealized appreciation.

Corey Rosen

December 07, 2023

Ninth Circuit Says Labor Department Not Responsible for Fees in Failed ESOP Lawsuit

In Su v. Bowers, D.C. No. 1:18-cv-00155SOM-WRP (9th Cir. Oct. 23, 2023), the Ninth Circuit said that the Department of Labor did not have to pay attorneys’ fees to the defendants’ attorneys in a valuation case the DOL decisively lost.

Corey Rosen

December 07, 2023

District Court Upholds Arbitration Clause in ESOP Dispute

Courts have generally not favored arbitration clauses in ESOPs. As we reported in November 2023, the Supreme Court recently declined to hear two appeals of cases in which an arbitration clause was denied as a defense.

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