Corey Rosen
Court Allows ESOP Valuation Case to Proceed
Gamino v. KPC Healthcare allows ESOP participants to challenge an alleged overvaluation, with claims against trustee, company, and former owner allowed.
Employee Ownership Legal Digest (20) Archive
Stay informed on the latest legal developments impacting employee ownership with timely and concise summaries of key cases and rulings. Learn more about this digest »
Corey Rosen
Plaintiff Can Pursue Claim Despite Arbitration Clause
In a very similar case on arbitration Henry v. Wilmington Trust et.al., No. C.A. 19-1925 DM (DC, Del., Sept. 10, 2021), a district court ruled that a plaintiff (Henry) could pursue his claim that an ESOP had overpaid for the shares at SSC Ventures.
Corey Rosen
One 401(k) Stock Drop Case Can Proceed, One Cannot
In Myers v. Administrative Committee Seventy Seven Energy Retirement Plan, No. CIV-17-200-D (W.D., Okla., Sept. 29, 2021), a district court disallowed a class-action lawsuit to continue concerning the spinoff of Seventy Seven Energy from Chesapeake Energy. Chesapeake Energy stock continued to be held in the Seventy Seven’s 401(k) plan but declined in value.
Corey Rosen
Settlement Reached in Unusual ESOP Case
In Foster v. Adams & Assocs., Inc., No. 3:18-cv-02723-JSC (N.D. Cal. Sept. 26, 2021), a class of current and former employees agreed to pay $3 million to settle allegations that trustees and board members of Adams & Associates, a Job Corps contractor, participated in prohibited transactions, failed to make required disclosures, and improperly agreed to indemnification.
Corey Rosen
Seventh Circuit Upholds Ruling That Arbitration in ESOP Case Inapplicable
In Smith v. Greatbanc Trust, No. 20 C 2350 (7th Cir., Sept. Sept. 10, 2021), the Seventh Circuit upheld a lower court ruling that an arbitration clause in a plan document could not be used to prevent a former participant from pursuing a claim that the ESOP had overpaid for shares in a valuation case involving Triad Manufacturing.
Corey Rosen
Appeals Court: Chubb Not Liable for ESOP Claims
In Martin Resource Management Corp. v. Federal Insurance Co. (5th Cir., Aug. 6, 2021), the Fifth Circuit ruled that Chubb Ltd. did not have to cover Martin Resource Management for its reimbursement to Wilmington Trust, its ESOP trustee, for payments it made in an ESOP valuation case settled in 2020.
Corey Rosen
Court Rules Former ESOP Company CEO Must Pay Back Misappropriated Funds
In Rael & Letson v. Clark (Cal. Appeals Court, Unpublished, Apr. 14, 2021), a California court ruled that Michael Clark was liable as former CEO for misappropriating over $3 million from the company for his personal use by having the company pay personal credit card bills, charges for his home utilities, private airplanes, country club dues at four clubs, a car, and other items for his personal use.
Corey Rosen
New NCEO Publication on DOL Process Agreements Now Available
The updated NCEO publication on the Department of Labor process agreements is now available.
Corey Rosen
IRS Issues New Guidance to Voluntary Correction Program
Revenue Procedure 2021-30 lays out a number of changes to the Voluntary Correction Procedure process for the correction of plan qualification errors.
Corey Rosen
Seventh Circuit Says ERISA Does Not Preempt Certain Bankruptcy Law Claims
In Halperin v. Richards, No. 20-2793, WL 3184305 (7th Cir. July 28, 2021), the Seventh Circuit considered whether ERISA “preempts certain state-law claims brought by bankruptcy creditors on behalf of a company against its directors and officers and others alleged to have inflated the company’s stock value to conceal the company’s decline and to benefit corporate insiders.”