Federal Judge Recognizes Participant’s Constitutional Standing in ERISA ESOP Case
On October 13, 2017, United States District Judge Rebecca Goodgame Ebinger, S.D. Iowa, held that a participant in the Telligen, Inc. Employee Stock Ownership Plan had constitutional standing to bring an Employee Retirement Income Security Act (“ERISA”) lawsuit alleging the plan overpaid when it bought Telligen, Inc. in 2013. The ruling allowed the plaintiff-participant to continue bringing claims alleging that the plan’s trustee, Defendant Bankers Trust Company of South Dakota, violated three prohibited transaction rules when it authorized the plan to overpay for the company and take on excessive debt. The court concluded that the plaintiff had constitutional standing because she “alleges an actual injury to her own Plan account” which was traceable to the defendant’s conduct and ERISA provided her a remedy.
The court also held that the plaintiff stated cognizable claims that the 2013 transaction violated three subsections of ERISA that regulate engaging with a party in interest, borrowing money from a party in interest, and acquiring shares improperly from a party in interest. That holding concludes: “The Court finds Innis identifies a party in interest and alleges Bankers Trust violated its fiduciary duties during the Transaction, thereby causing a loss to the Plan of being burdened with a loan for more than fair market value.”
Ryan T. Jenny of Bailey & Glasser LLP argued the plaintiff’s opposition to Bankers Trust’s motion to dismiss. Gregory Y. Porter and Patrick O. Muench of Bailey & Glasser, and Matthew L. Preston and Brad J. Brady of Brady Preston Gronlund PC, also represent the plaintiff, who is bringing suit on behalf of the Telligen ESOP as well as a proposed class of more than 600 plan participants.
This decision is reported at Innis v. Bankers Trust Co. of South Dakota, No. 4:16-cv-00650, 2017 WL 4876240 (S.D. Iowa Oct. 13, 2017).Contact Form »