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.
Christopher Wingard
Tufano, et al. v. Pride Mobility Products Corp., et. al., No. 3:24-cv-00765-KMA (M.D. Penn, June 17, 2025)
On June 17, 2025, the United States District Court for the Middle District of Pennsylvania approved a class action settlement in Tufano v. Pride Mobility.
James G. Steiker
Chea v. Lite Star ESOP Committee, No. 1:23-cv-00647-JLT-SAB (E.D. Cal., August 19, 2025)
Griffin O'Gara
Henry v. Wilmington Trust et al., C.A. No.19-1925-JLH (D.C. Del. May 6, 2025)
A lawsuit alleging fiduciary breaches in connection with a 2016 ESOP transaction involving BSC Ventures Holdings, Inc. has reached a $8 million settlement.
Christopher Wingard
Imber v. Lackey et al., No.1:22-cv-00004-HBK (D.C. Calif. May 21, 2025)
A lawsuit alleging fiduciary breaches in connection with a 2018 ESOP transaction involving Ritchie Trucking Service Holdings, Inc. has reached a $1.85 million settlement.
Corey Rosen
Jones v. Zander Grp. Holdings, No. 8:24CV428 (D. Neb. May 27, 2025)
In Jones v. Zander Grp. Holdings, No. 8:24CV428 (D. Neb. May 27, 2025), a district court ruled that defendants at ESOP-owned Zander Group Holdings cannot subpoena the attorneys for the plaintiff or communications between the attorneys and the plaintiffs.
Christopher Wingard
Corey Rosen
Bolton v. Inland Fresh Seafood Corp. of Am., Inc., No. 24-10084 (11th Cir.)
Bolton v. Inland Fresh Seafood Corp. of Am., Inc., No. 24-10084 (11th Cir. Oct. 15, 2025)
A three-judge panel for the 11th Circuit Court of Appeals said that they were bound by the precedent in the circuit that plaintiffs had to exhaust their remedies under the plan documents prior to proceeding with litigation.
Corey Rosen
ESOP legal experts suspect that the recent unanimous Supreme Court decision in Cunningham v. Cornell University, No. 23-1007 (U.S. Apr. 17, 2025) will make it easier for plaintiffs to file lawsuits against ESOP fiduciaries. The issue in Cornell related to ERISA’s prohibited transaction provisions and the many statutory exemptions. Under ERISA, fiduciaries are prohibited from causing plans to engage in transactions with parties in interest, subject to exemptions, including the adequate consideration exemption that authorizes ESOP stock transactions in employer stock. The question in Cornell was whether plaintiffs could adequately plead a violation of ERISA’s prohibited transaction provisions by simply stating that a transaction with a party in interest occurred, or whether plaintiffs must also plead that an exemption does not apply. Federal circuit courts have been split on this question, with some holding that plaintiffs had to plead facts to plausibly state that an exemption did not apply and others holding that plaintiffs do not have to address the exemptions. In Allen v. GreatBanc (7th Cir. 2016), the Seventh Circuit held that the plaintiffs stated a plausible breach of ERISA’s prohibited transaction provisions merely by alleging that the ESOP’s stock value dropped after the sale, that the ESOP transaction was financed by the seller, and that the loan’s interest rate was high. The Seventh Circuit did not require the plaintiffs to plead the absence of any prohibited transaction exemptions.
Corey Rosen
A $580,000 settlement was reached in Arnold v. Paredes, No. 3:23-cv-00545 (M.D. Tenn., Apr. 17, 2025). Plaintiffs at Churchill Mortgage, an 800-employee company, alleged that part of the dividends paid on shares held by the 100% ESOP were used to offset required employer contributions to the plan. Defendants argued that is what the dividends are supposed to be used for. The ESOP acquired the shares in two transactions separated by several years. Plaintiffs alleged that the second transaction paid a control price that was unjustified because parties in interest retained effective control.
Corey Rosen
In Rush v. GreatBanc, No. 19-cv-00738 (N.D. Ill., Mar. 31, 2025), a district court ruled on all counts for defendants in a case involving the sale of the Segerdahl Corporation. The company was 100% ESOP-owned until sold after a long sales process in 2016 to ICV Partners, LLC ("ICV") for $265 million. Rush, a vice president at the company, alleged that the company could have sold for more and sued, arguing that the company could have sold for a significantly higher price. Rush sued the board members and the trustee (GreatBanc). Key issues in the lawsuit included whether the board approved a sale to ICV instead of to another potential buyer, which Ruch alleged would have paid about 20% more.
