A district court has ruled “decisively” against the Department of Labor (DOL) in an ESOP valuation case, stressing that the DOL failed to follow standard valuation practices. “The decision is one of the most comprehensive rebukes of DOL arguments in valuation cases,” says Corey Rosen, founder and senior staff member of the National Center for Employee Ownership (NCEO), in a blog post.

The case is Walsh v. Bowers, 2021 U.S. Dist. LEXIS 177184 (Sept. 17, 2021), and it involved the ESOP company Bowers + Kubota (an architecture and engineering firm). The DOL had alleged that the ESOP paid more than fair market value for stock of the sponsor company. Valuation experts have long maintained that the DOL has been playing by its own valuation rules—rules that are not consistent with accepted valuation standards.

Stay tuned for more coverage of this important case. A copy of the opinion is available on the BVLaw platform, and a case digest analysis will be available soon.