ESOP Case Appeal Stokes Controversy Over DOL Valuations
A series of court cases have generated controversy over the tactics and valuation methods the Department of Labor (DOL) has been using, including claims that the DOL has improperly redefined the term “fair market value,” does not follow generally accepted valuation principles nor standards, and continually uses an expert the valuation community deems “unqualified.”
NCEO amicus brief supporting dismissal of case details benefits from ESOP participation
The National Center for Employee Ownership (NCEO) also filed an amicus brief in which it supports the dismissal of the Lee case that is currently on appeal with the 4th Circuit.
ASA files amicus brief in Lee case, discussing FMV concerns in ESOP litigation
Responding to the appeal in the Lee case, the American Society of Appraisers recently filed an amicus brief supporting the dismissal of the case.
ESOP trustee defends dismissal of lawsuit and rejects comparison to Brundle
In response to the plaintiff’s appeal in the Lee ESOP case, the defendant trustee said the district court’s dismissal of the case for lack of standing was appropriate.
Willamette’s spring 2020 Insights focuses on ESOP valuations
The spring 2020 Insights from Willamette Management Associates focuses on ESOP employer stock valuations and contains a number of articles, such as “Employee Stock Ownership Plan Financial Feasibility Analysis: Financial Considerations for Shareholders” (Robert F. Reilly), “Valuation Treatment of the Repurchase Obligation Liability” (Kyle J. Wishing), “The Fiduciary Process for the Annual Update of the ESOP Share Value” (Frank “Chip” Brown), “Pizzella v. Vinoskey: A Costly Lesson to Learn” (Lisa H. Tran), and more.
Pension Rights Center files amicus brief in support of ESOP plaintiff
A nonprofit consumer organization whose mission is “to protect and promote the retirement security of American workers, retirees, and their families” recently filed an amicus curiae brief in support of the appeal the plaintiff in Lee filed with the 4th Circuit (see above).
DOL announces big ESOP settlement with Wilmington Trust
In yet another ESOP development, the Secretary of Labor recently announced that it reached a settlement with Wilmington Trust NA, an international financial services firm with expertise in serving as trustee in major ESOP transactions.
ESOP plaintiff appeals dismissal of lawsuit, leaning heavily on controversial Brundle case
In appealing the dismissal of her lawsuit with the 4th Circuit Court of Appeals, an ESOP plaintiff frequently invokes the Brundle case in which the same appeals court affirmed a $30 million judgment for the ESOP.
Projection Issues Raised in ESOP Litigation
Revenue growth rate, profit margins, and long-term growth rate can all meaningfully impact projections. Add in inconsistency with historical results, industry/economy impacts, and lack of adjustment for critical things such as compensation or capital expenditures, and it is easy to see how litigation can arise. Chip Brown, Chelsea Mikula, and Kyle Wishing help identify common issues raised in ESOP litigation cases (either by the Department of Labor or private plaintiffs) with respect to financial projections ...
New DOL process agreement confronts control issue in ESOP valuations
The Department of Labor recently settled ESOP litigation with the trustee Farmers National Bank of Danville (FNB).
DOL Processing Agreement Contains Stringent Rules on Controlling Interest Transactions, Indemnification
Under new processing agreement between DOL and specific ESOP trustee, trustee is bound by strict rules on how to handle controlling-interest acquisitions and indemnification issues; trustee must ensure ESOP plan acquires a series of specified rights before approving payment of a control premium.
Scalia v. Farmers National Bank of Danville & Weddle Bros. Const. Co.
Under new processing agreement between DOL and specific ESOP trustee, trustee is bound by strict rules on how to handle controlling-interest acquisitions and indemnification issues; trustee must ensure ESOP plan acquires a series of specified rights before approving payment of a control premium.
Attack on DOL’s ability to seek monetary damages in Vinoskey ESOP case fails
In the contentious Vinoskey ESOP case, the trustee recently asked for a new trial, arguing the Secretary of Labor, representing the plaintiff, lacked the statutory authority to seek monetary damages on behalf of the ESOP and the court lacked the authority to hear this claim.
DOL’s Valuation-Related Claims Against Individual Actors Survive Motion to Dismiss
Court denies individual defendants’ motion to dismiss DOL’s claims that defendants breached duties as co-fiduciaries, violated a duty to monitor the co-defendant trustee, and knowingly participated in the trustee’s breaches; DOL’s complaint states sufficient facts to support claims, court finds.
Pizzella v. Reliance Trust Co.
Court denies individual defendants’ motion to dismiss DOL’s claims that defendants breached duties as co-fiduciaries, violated a duty to monitor the co-defendant trustee, and knowingly participated in the trustee’s breaches; DOL’s complaint states sufficient facts to support claims, court finds.
Trustee’s Post-Trial Attack on DOL’s Pursuit of Monetary Relief on Plan’s Behalf Crumbles
District court denies trustee’s motion for a new trial based on argument that Secretary of Labor lacked authority to pursue monetary relief against defendants; court says the plain language of the statute on which the DOL’s claims are based allows secretary to obtain damages on behalf of the ESOP.
Pizzella v. Vinoskey (II)
District court denies trustee’s motion for a new trial based on argument that Secretary of Labor lacked authority to pursue monetary relief against defendants; court says the plain language of the statute on which the DOL’s claims are based allows secretary to obtain damages on behalf of the ESOP.
ESOP defendants sue for indemnification to limit financial exposure
In the face of several key rulings against ESOP fiduciaries, ESOP defendants, concerned about incurring substantial financial obligations, have begun to pursue claims for indemnification and/or contribution against other defendants or third parties to limit their exposure, as a recent case illustrates.
Novel issue of law raised in ESOP case that pits trustee against appraiser
A fairly routine ESOP case that is being litigated in the 4th Circuit has raised a novel legal issue in this jurisdiction as to the financial liability of co-fiduciaries and nonfiduciaries, including the ESOP appraiser.
Court whittles down damages in Vinoskey ESOP case
The trial court recently unequivocally sided with the Department of Labor in its liability findings against the defendants in the Vinoskey ESOP case, but the court made adjustments to the DOL’s damages calculation that reduced the liability to the defendants considerably.
Trial court favors DOL in Vinoskey ESOP trial
In the closely watched Vinoskey ESOP litigation, the trial court recently issued a long decision that found all the defendants liable.
Expert comments on Vinoskey ESOP ruling
ESOP appraisers are questioning the technical aspects of the Vinoskey and Brundle rulings and asking what the recent rulings may mean for the future of employee ownership plans.
Strong win for DOL in Vinoskey ESOP trial
Difficult times for the ESOP community.
Acosta v. Reliance Trust Co.
In DOL’s overpayment case against company directors and ESOP trustee, court denies directors’ pretrial motion for dismissal of case, finding DOL advanced “plausible” case theories; court also finds ESOP defendants have no right to indemnification from estate of late owner/seller of company shares.
In ‘Overpriced ESOP Insider Transaction Case,’ Defendants’ Pretrial Motion for Indemnification Fails
In DOL’s overpayment case against company directors and ESOP trustee, court denies directors’ pretrial motion for dismissal of case, finding DOL advanced “plausible” case theories; court also finds ESOP defendants have no right to indemnification from estate of late owner/seller of company shares.