Bailey Glasser ERISA Team Defeats Motion to Dismiss ESOP Lawsuit Pursuant to Arbitration Clause
Bailey Glasser attorneys representing a participant in the BSC Ventures Holdings, Inc. Employee Stock Ownership Plan (ESOP) have defeated a motion to dismiss an ERISA lawsuit for failure to comply with an amendment to the ESOP allegedly requiring arbitration, or alternatively for want of Article III standing, made by ESOP trustee Wilmington Trust, N.A. and former BSC Ventures Holdings, Inc. shareholders Brian C. Sass and E. Stockton Croft IV. The lawsuit, Henry v. Wilmington Trust, N.A., et al., will proceed in federal court in the District of Delaware, seeking relief on a representative basis for the ESOP as a whole and a proposed class of plan participants.
The plaintiff’s complaint alleges Wilmington Trust caused the ESOP to engage in an ERISA-prohibited transaction and breached its fiduciary duties when in 2016 it caused the ESOP to buy all outstanding shares of BSC common stock above fair market value, for $50 million, and that the selling shareholder defendants were parties in interest who knowingly participated in the transaction. In a decision filed on September 10, 2021, District Judge Maryellen Noreika held that the arbitration clause was not enforceable for lack of evidence the plaintiff assented to it, or even knew of it before he brought his lawsuit. Judge Noreika also held the plaintiff established standing where he alleged “that he held BSC stock in his individual account in the Plan, has a vested interest in that stock, and the value of the stock in his account was diminished due to Defendants’ ERISA violations in the stock purchase transaction that caused the Plan to pay too much for the stock and caused fewer shares to be allocated to Plaintiff.” The Court noted that Article III’s injury requirement “is not Mount Everest.”
The plaintiff is represented by Bailey Glasser attorneys Gregory Porter, Ryan Jenny, David Felice, and Patrick Muench, and Feinberg, Jackson, Worthman & Wasow LLP attorneys Daniel Feinberg and Todd Jackson.