Stock Drop Suit Dropped

January 23, 2010 (PLANSPONSOR.com) - An employee lawsuit filed against Spokane-based Sterling Financial has been dropped – and for a most unusual reason.

According to the Puget Sound Business Journal, the suit was dropped because former Sterling employee Cory Deter said he never agreed to be involved in the case, and did not give permission for his name to be used by attorneys.       

The suit, intended to be a class action, was filed last week on behalf of Deter in federal court in Eastern Washington.  As have many of these so-called “stock drop” suits, the lawsuit alleged that Sterling failed to protect employees’ investments in company stock through their 401(k) plans.  However, on Thursday, the suit was dismissed by Seattle-based Hagens Berman Sobol Shapiro, the law firm that filed the complaint.       

In an interview with the Puget Sound Business Journal, Deter said he gave Pennsylvania-based law firm Brodsky & Smith LLC, which was also working on the litigation, initial permission to represent him, but never filled out necessary paperwork to officially retain the firm. He also said he did not give permission for the firm to use his name as the lead plaintiff and hadn’t reviewed the complaint before it was filed.       

“I’m just kind of disgusted,” Deter said, according to the report. “I don’t have anything against Sterling or their management.”       

Deter worked in Sterling’s commercial banking department between 2006 and October 2009, when he left the bank voluntarily for another job, according to the report. He lost about $3,000 — less than a month’s worth of pay — in his 401(k) as a result of Sterling’s stock drop, and that led him to respond to a query by Brodsky & Smith on Google Finance regarding a potential class action, according to the Business Journal.