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
In Su v. Ascent Construction, No. 23-4114 (10th Cir. June 24, 2024), the appeals court ruled that the president of a Utah construction company cannot appeal a preliminary injunction removing him as the fiduciary for the plan because the appeal was made moot by the district court making the preliminary injunction permanent.
Corey Rosen
In Nguyen v. Westlake Services Holding Company, No. 8:23-cv-00854 (C.D. Cal. June 28, 2024), the plaintiff alleged that Westlake Holding Company changed its ESOP rules in 2020 to allow the company to segregate accounts of former employees before their receiving a distribution as well as to allow a special interim valuation to reflect economic challenges arising from the pandemic.
Corey Rosen
In Bolton v. Inland Fresh Seafood, No. 1:22-cv-04602AT (N.D. Ga. Dec. 5, 2023), a court dismissed a lawsuit against Inland Fresh Seafood over the valuation of the company when it was sold to the ESOP in 2016 for $92 million.
Corey Rosen
In Shipp v. Central States, No. 5:23-CV-5215 (W.D. Ark. July 5, 2024), a district court ruled the plaintiffs had pleaded sufficient arguments to deny dismissal to the defendants, Central States Manufacturing and GreatBanc Trust, over charges that a releveraging at the 100% ESOP-owned company caused the share price for affected employees to fall improperly.
Corey Rosen
The 2023 National Defense Authorization Act created a pilot program, known as Sec. 874, that allows the DOD to award certain follow-on contracts without initiating a competitive process to an employee-owned business that meets the definition of a “qualified business.”
Corey Rosen
In Bonds v. Heeter, et al., No. 23-12045 (E.D. Mich. May 8, 2024), a former steel processing company employee advanced most of his proposed class action challenging a $60 million stock purchase by the company’s employee stock ownership plan.
Corey Rosen
In Lysengen v. Argent Trust, et al., No. 1:20-cv-01177MMM-JEH (D.C. Ill. May 6, 2024), a court ruled that Argent Trust can appeal a granting of class certification by the court in 2023. The lawsuit hinges on a 50% drop in the value of Morton Buildings in the year following the company’s taking on debt to fund the ESOP purchase (these declines are normal in leveraged ESOPs).
Corey Rosen
In Cedeno v. Argent Tr. Co., No. 20-CV-9987 (JGK) (2nd Cir. May 1, 2024), the Second Circuit upheld a lower court ruling that an arbitration agreement precluded participants “from seeking relief for the plan as a whole, a form of relief that is otherwise provided for by ERISA” and that such action is “contrary to the language and intent of the law.”
Corey Rosen
In Nguyen v. Westlake Services Holding Company, No. 8:23-cv-00854 (C.D. Cal. Feb. 5, 2024), the plaintiff alleged that Westlake Holding Company changed its ESOP rules in 2020 to allow the company to segregate accounts of former employees before their receiving a distribution as well as to allow a special interim valuation to reflect economic challenges arising from the pandemic.
Corey Rosen
In the long-running case of Appvion Retirement Savings Retirement and Employee Stock Ownership Plan v. Buth, No. 18-CV-1861-WCG (7th Cir. Apr. 24, 2024), the 7th Circuit overruled part of a lower court’s dismissal of the ESOP valuation lawsuit. The case involves an ESOP at Appleton Paper (later Appvion). In 1998, employees funded the $106 million transaction by investing funds from their 401(k) plan.
