One of the most controversial ESOP cases, Brundle v. Wilmington Trust, has now entered the appeals court phase. The case, which was decided in 2017, made headlines because it involved a trustee and a valuation firm that both have strong ESOP credentials. Yet, the district court found that the trustee had caused the plan to overpay by $29.8 million by failing to scrutinize the financial advisor’s problematic valuation analysis and value conclusions. In a subsequent ruling on the trustee’s post-judgment challenge, the court allowed that it had made some valuation-related errors and misunderstood some evidence. At the same time, the court found these mistakes did not rise to the level of requiring it to change its decision.
The trustee has filed an appeal with the 4th Circuit Court of Appeals. The ASA recently expressed strong support for the trustee and valuator in its amicus brief. The document, which serves as a vigorous defense of the valuation profession in general, blames the DOL’s ESOP-focused national enforcement project for prompting a rise in baseless lawsuits. The brief claims that, in the instant case, the district court improperly second-guessed the sound contemporaneous analysis and value conclusion of the very experienced valuator in favor of the “rough” and “after-the-fact opinion” of the plaintiff’s “underqualified ‘expert.’” The brief includes other attacks on the plaintiff’s expert, faulting him for acting out of bias in favor of the DOL and for lacking the education and training of an appraiser.
Further, the ASA brief homes in on three valuation areas in which the district court allegedly got it wrong.
To find out more about the ASA’s position, click here.