All My Sons Moving & Storage Lawsuit Claims Employees ‘Fleeced’ By ESOP Charade
A class-action lawsuit filed against Reliance Trust Company accuses the retirement plan trustee for RVNB Holdings, which does business under the trade name “All My Sons Moving & Storage,” of violating the Employee Retirement Income Security Act (ERISA) by approving the purchase of RVNB’s stock for more than fair market value by a supposed employee stock ownership plan (ESOP) that lasted less than five years.
On behalf of the RVNB Holdings, Inc. Employee Stock Ownership Plan, RTC approved the purchase of outstanding stock in RVNB, a privately held company formed to purchase the ownership interests in All My Sons Moving & Storage locations around the country. RTC agreed to a purchase price of $85 million, financed through a 40-year loan by RVNB.
Within five years, the Plan was made to sell RVNB, the Plan was terminated, and its assets distributed. Shortly thereafter, RVNB was again sold to a private equity firm.
The lawsuit alleges that the Plan was not set up for the exclusive benefit of RVNB employees. “Rather, the Transaction fleeced Plan participants who, through their labor and the Plan’s loan, paid too much for their employer’s stock and within a few years saw their retirement plan taken from them …” The lawsuit also notes that the previous company owners received tax advantages from setting up the sale as an ESOP, even though the scheme never resulted in an enduring employee-owned company.
The lawsuit alleges that RTC failed to fulfill its duty to ensure that the Plan did not overpay for the stock it purchased in 2012, and that the trustee received fees and an indemnification agreement from RVNB in violation of ERISA’s prohibited transaction rule.
The lawsuit was brought by Gregory Porter and Ryan Jenny of Bailey Glasser’s Washington, D.C., office, as well as attorneys for Houston-based Ajamie LLP, on behalf of Jessica Casey, the Plan, and other participants and beneficiaries in the Plan.
Casey v. Reliance Trust Company, Case No. 4:18-cv-00424, is proceeding before U.S. District Judge Amos L. Mazzant III, in the U.S. District Court for the Eastern District of Texas.