Law360 (March 16, 2020, 3:22 PM EDT) — Reliance Trust Co. has agreed to pay $6.25 million to resolve an ERISA suit claiming the company let RVNB Holdings Inc. workers grossly overpay for their employer’s stock when it represented their retirement plan in an $85 million transaction.
The workers asked the court to greenlight the deal in a preliminary approval motion Friday, saying the agreement provided an “excellent result” to the proposed class in the Employee Retirement Income Security Act case.
“In light of the inherent uncertainty, and potential for delay, a settlement of $6,250,000 — approximately $5,000 per participant before fees and other costs are applied — is a good result for the class,” the workers said.
The motion pointed out that Reliance Trust “vigorously denied” the workers’ claims and offered affirmative defenses in the suit. The company continues to deny the allegations and any wrongdoing or liability, according to the motion.
And the workers also said that the parties have “vastly different views” about Reliance Trust’s actions and potential liabilities and “strongly disagree” on the question of damages.
“These fact intensive inquiries would have led to a battle of experts and conflicting evidence and testimony, which would have placed the ultimate outcome of the litigation in doubt, because no party could reasonably be certain that its expert or evidence would carry the day,” the workers said.
The motion further noted that the parties hadn’t resolved a dispute over Reliance Trust’s attempt to have the case booted to arbitration.
Though a magistrate judge recommended the suit be kept in court, the federal district judge hadn’t yet weighed in on Reliance Trust’s “lengthy substantive objections” to that finding, the motion said.
Jessica Casey and Jason Coleman, former employees of the storage and moving company, accused Reliance Trust in June 2018 of dropping the ball as the trustee of the RVNB Holdings Inc. Employee Stock Ownership Plan in a December 2012 transaction.
The workers said Reliance Trust failed to perform due diligence when the plan acquired 100% of RVNB’s common stock for an $85 million note, after which the shares were revalued at $24 million.
The parties notified the court that they had reached a settlement in the case in January. According to the motion, the workers’ attorneys will ask for up to a third of the settlement in fees and incentive awards of up to $25,000 for each class representative.
The workers also asked the court to certify a class for settlement purposes in their motion Friday, noting that the class would be large enough since filings with the U.S. Department of Labor showed that the plan had about 1,175 participants at the end of 2017.
The class would consist of anyone who participated in the employee stock ownership plan and vested in RVNB Holdings stock, the motion said.
Reliance Trust declined to comment Monday. Counsel for the workers also declined to comment Monday.
The workers represented by Gregory Y. Porter, Ryan T. Jenny and Patrick O. Muench of Bailey & Glasser LLP and Thomas R. Ajamie and John S. Edwards Jr. of Ajamie LLP.
Reliance is represented by W. Bard Brockman, Gregory J. Sachnik and Jeffrey S. Russell of Bryan Cave Leighton Paisner LLP.
The case is Jessica Casey et al. v. Reliance Trust Co., case number 4:18-cv-00424, in the U.S. District Court for the Eastern District of Texas.