Employee Ownership Legal Digest (9) 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

November 15, 2023

Supreme Court Denies Envision Motion to Have 10th Circuit Reconsider Its Ruling That Envision Cannot Compel Arbitration in ESOP Case

On October 10, the Supreme Court, without comment, denied an effort to hear an appeal of a 10th Circuit decision to deny arbitration in an ESOP case. In Harrison v. Envision Management Holding Company, No. 22-1098 (10th Cir. Apr. 11, 2023), the 10th Circuit denied a request that it reconsider its earlier three-judge ruling that Envision Management Holding Company cannot compel arbitration in a case concerning the price an ESOP paid for shares in the company.

Corey Rosen

November 15, 2023

Supreme Court Denies Wilmington Motion to Reconsider Arbitration Ruling in BSC Case

On October 16, the Supreme Court denied a request to allow arbitration in another ESOP case. In Henry v. Wilmington Trust et al., No. C.A. 19-1925 DM (D.C. Del. June 30, 2023), a district court ruled that a plaintiff (Henry) was not subject to an arbitration clause in the company’s ESOP.

Corey Rosen

October 11, 2023

Triad Manufacturing ESOP Case Settlement Approved

In Smith v. Greatbanc Trust, No. 20 C 2350 (D. Ill. Aug. 22, 2023), a district court gave final approval to a $14.8 million settlement involving an ESOP at Triad Manufacturing.

Corey Rosen

October 11, 2023

Settlement Reached in RVR ESOP Case

In Walsh v. Reliance Trust Co., et al., No. CV-19-03178-PHX-JJT (D.C. Ariz. Aug. 30, 2023), a district court approved a $22.5 million consent decree in the case of RVR, Inc. The case originated in a 2019 lawsuit alleging that Reliance Trust allowed an ESOP to overpay for the shares of RVR, Inc.

Corey Rosen

October 11, 2023

Selling Shareholders Dismissed from Morton Buildings ESOP Case

In Lysengen v. Argent Trust, et al., No. 1:20-cv-01177MMM-JEH (D.C. Ill. Sept. 7, 2023), former shareholders of Morton Buildings were dismissed as defendants in a case concerning the valuation of their shares in a sale to the company’s ESOP.

Corey Rosen

September 11, 2023

Employee Can Sue on Behalf of Plan in ESOP Case

In Lysengen v. Argent Trust, et al., No. 1:20-cv-01177-MMM-JEH (D.C. Ill. Aug. 10, 2023) an individual plaintiff was allowed to sue on behalf of the ESOP trust. The case involved the alleged overvaluation of stock at Morton Buildings.

Corey Rosen

September 11, 2023

Arbitration Clause Not Binding in ESOP Case

In David Burnett, et al., v. Prudent Fiduciary Services LLC, et al., No. 22-270-RGA (3rd Cir. August 15, 2023), the 3rd Circuit affirmed a lower court ruling that an arbitration clause does not apply in an ESOP case.

Corey Rosen

September 11, 2023

KPC Settlement

In our previous discussion of the settlement in the KPC Healthcare ESOP, we noted that the plaintiffs pointed to a sharp drop in the company’s stock price after the ESOP.

Corey Rosen

September 11, 2023

Raytheon Defeats Bid to Reopen United Technologies Stock Plan Lawsuit

In Darnis v. Raytheon Techs. Corp., 22-2861-cv (2nd Cir. Aug. 3, 2023), the 2nd Circuit denied an effort by employees who had received equity compensation awards when United Technologies was sold to Raytheon in 2020.

Corey Rosen

September 11, 2023

In February, the IRS proposed changes to forfeiture rules for defined benefit and defined contribution plans. The comment period has now ended, and the changes should be finalized soon.

The proposed regulations would “clarify that forfeitures arising in any defined contribution plan (including in a money purchase pension plan) may be used for one or more of the following purposes, as specified in the plan: (1) to pay plan administrative expenses, (2) to reduce employer contributions under the plan, or (3) to increase benefits in other participants’ accounts in accordance with plan terms.”

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