The American Society of Appraisers (ASA) and The ESOP Association (TEA) have filed amicus briefs with the U.S. Supreme Court related to the Bowers ESOP case in support of the petitioners’ attempt to recover attorneys’ fees and costs from the government. Both briefs contain very harsh words about the work of the valuation expert the Department of Labor hired in the case.

DOL loss: The case involved the ESOP company Bowers + Kubota (an architecture and engineering firm) in which the DOL alleged that the ESOP paid more than fair market value for stock of the sponsor company. The DOL’s case hinged on a single valuation expert, who opined that the plan overpaid for the company. A district court ruled against the DOL, stressing that there was a failure to follow standard valuation practices.

The company sought attorneys’ fees and costs under the Equal Access to Justice Act (EAJA) but was denied, so it asked the U.S. Supreme Court to hear the case, writing: “The question presented is whether the government’s decision to take a case to trial is ‘substantially justified’ (28 U.S.C. § 2412) when the government’s case relies solely on expert evidence that it knew or should have known was error-ridden and thus unreliable.” The docket can be found if you click here, where you will also find the amicus briefs.

Serious errors: The amicus briefs from the ASA and TEA point out that courts found the valuation expert’s opinion violated generally accepted valuation standards and that the DOL knew or should have known about “serious errors” the expert made. The briefs go into detail about the “obvious and objective errors” the district court found in the valuation. According to the expert’s bio, he is a member of both the ASA and TEA.

The government’s response in the matter is due on August 9.