Senior U.S. District Judge Milton I. Shadur of the U.S. District Court for the Northern District of Illinois said GreatBanc’s assertion that the former trustee for the ESOP, who is not a party in the case, knew about the alleged breaches more than three years before the suit filing, and that knowledge could be imputed to the plaintiffs, was not the issue. Shadur said the issue was whether the plaintiff in the case was the group of participants who brought the suit or the plan for which they were asking for relief, as the trustee’s knowledge would be considered the plan’s knowledge.
However, Shadur said that “happily,” he need not come to an ultimate conclusion on the matter, because even if the plan was the plaintiff, that would be dispositive of GreatBanc’s motion to dismiss the case only if it is clear that the trustee could have acted effectively on any knowledge he might have had of the alleged breach. Shadur found that Barry Hoskins, an Antioch vice president and former trustee of the plan, was tightly constrained by the Trustee Agreement that defined his role as directed trustee and gave him very little authority to act without direction from the Plan Committee, and more specifically, prohibited him from bringing any sort of lawsuit on behalf of the plan without direction.
In addition, according to the opinion, Hoskins testified that in fact he never acted as directed trustee without direction from the Committee and that there were times when he presented concerns to the Committee that it then disregarded.
Four ESOP participants and the plan’s current trustee Evolve Bank & Trust filed the suit concerning a dispute over a complicated Antioch corporate refinancing involving a company stock buyback that court papers indicate eventually left the firm in bankruptcy and the ESOP worthless. The suit claims the company fiduciaries and Greatbanc grossly mishandled the refinancing in ways that constituted ERISA fiduciary breaches.
The case drew the attention of U.S. Department of Labor Secretary Hilda L. Solis who filed a friend of the court brief arguing that knowledge by the named plaintiffs and not the plan or a fiduciary of the plan who is not a party in the suit starts the statute of limitations period (see Solis Opposes ERISA Statute of Limitations Argument).The case is Fish v. GreatBanc Trust Co., N.D. Ill., No. 09 C 1668.
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