Employee Ownership Legal Digest (2) 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.

Lauren Wood

Court Allows Executive Trust Assets in Lloyd v. Argent Trust ESOP Lawsuit

Lloyd v. Argent Trust, No. 1:22-cv-04129-DLC (S.D. NY, July 10, 2025)

On July 10, 2025, the United States District Court for the Southern District of New York allowed plaintiffs to amend their original complaint to add the trustees and beneficiaries of two trusts as defendants. These trusts received proceeds from a 2016 sale to the WBBQ Employee Stock Ownership Plan (ESOP), which is the subject of the plaintiffs’ suit. The newly added trusts are now possible sources of recovery for the plaintiffs.

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Christopher Wingard

Federal Court Dismisses ESOP Valuation Lawsuit for Lack of Standing, Allows Amended Complaint

MacTaggert v. Professional Fiduciary Servs., LLC, No. 22-cv-371-wmc, (W.D. Wis. June 18, 2025)

On June 18, 2025, the U.S. District Court for the Western District of Wisconsin dismissed a class action lawsuit brought by Scott MacTaggert, a participant in the Extreme Engineering Solutions, Inc. ESOP.

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Corey Rosen

ESOP Defendants Cannot Subpoena Plaintiff’s’ Attorneys or Attorney-Client Communications

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.

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Corey Rosen

11th Circuit Panel Questions Requirement for Exhaustion of Remedies in ESOP Case

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.

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Corey Rosen

New Supreme Court Case Could Make It Easier to Take ESOP Cases to Court

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.

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