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
In Pfeifer v. Wawa, Inc., No. 2:16-cv-00497- PD (E.D. Pa., motion for settlement approval filed 12/29/17), a case we reported on previously, the Department of Labor argued, and the court agreed, that a company cannot indemnify an ESOP fiduciary.
Corey Rosen
On July 4, the SEC adopted new rules to increase the amount companies can offer in stock to employees without meeting reporting requirements applicable to public companies from $5 million to $10 million.
Corey Rosen
In Wis. Cent. Ltd. v. United States, U.S., No. 17-530, (U.S. June 17, 2018) the Supreme Court ruled that stock options paid to railroad employees are not taxable as “money” under the terms of Railroad Retirement Act. Wisconsin Central had paid taxes on the options, then decided it should not have because the Act states that only “money” received by employees is taxable.
Corey Rosen
In Kinra v. Chicago Bridge & Iron, 17 CV-4251 (S.D.N.Y., May 24, 2018), the Second District Court for New York continued its pattern of denying stock-drop claims in public company 401(k) plans.
Corey Rosen
In In re Allergan ERISA Litigation, No. 2:17-cv-01554-SDW-LDW, (D.-N.J., July 2., 2018), a judge dismissed a suit against Allergan and its directors in a 401(k) stock-drop suit concluding that the plaintiffs did not show that the defendants were plan fiduciaries.
Corey Rosen
In Bryant v. Community Bankshares, Inc., 17-15360 (11th. Cir., unpublished June 12, 2018) an appeals court ruled that plaintiffs were correct in alleging that the trustees of the Community Bankshares ESOP breached their fiduciary duty when they failed to follow the participants’ instructions to diversify shares, as the plan and the law provided they could do.
Corey Rosen
In a detailed decision, in Hurtado et. al. v. Rainbow Disposal Co., Inc. Employee Stock Ownership Plan, 8:17-cv-01605-JLS-DFM (C.D. Cal, July 9, 2018) the judge refused to grant summary judgment to the executives and ESOP Committee of Rainbow Disposal, as well as GreatBanc Trust and various other individuals.
Corey Rosen
In HC4, Inc. Employee Stock Ownership Plan v. HC4, Inc, 4:15-CV- 872 (S.D. TX, Houston Division, July 12, 2018), a district court granted summary judgment to HC4, which was sued as the fiduciary for the company’s failed ESOP.
Corey Rosen
In Wilson v. Edison Int’l Inc., C.D. Cal., No. 2:15-cv-09139- JAK-PJW (C.D. Cal., May 29, 2018), a district court again ruled that Edison Electric executives were not liable for not removing company stock in the 401(k) plan in the face of falling stock prices.
Corey Rosen
In Kopp v. Klein, No. 16-11590 5th Cir., June 27, 2018), employees at Idearc lost an appeal of a lower court ruling over the loss of their company stock value in the bankruptcy of Idearc, a Verizon spinoff. Employees contended executives conspired to conceal information that should have led trustees to eliminate Idearc stock from the 401(k) plan.
