The class action claim led by plaintiff Nicole Vermeylen, who withdrew her investment in ProQuest’s stock three years before the February 2006 drop, had no standing because she participated in a profit-sharing plan and was entitled to additional “vested benefits,” U.S. District Judge Avern Cohn said in the ruling.
Under the ProQuest profit-sharing plan, participants had several investment options, one of which included the ProQuest Stock Fund. This meant that participants held the discretion to invest their money however they wanted and could choose not to invest in the company’s stockl.
For participants who elected to invest in ProQuest stock, the plan capped the amount of a participant’s investment at 25% of their account balance and during the relevant period, the ProQuest Stock Fund comprised less than 2% of the plan assets, the court said.
Vermeylen was an employee of ProQuest from January 1997 to October 2005. As of December 31, 2001, her plan account held approximately 28.5 shares of the ProQuest Stock Fund with a value of $338. According to the opinion, Vermeylen later took loans and withdrawals from her account that reduced the value of her investments, and in May 2003, she withdrew all of her stock fund assets and transferred them to other investments.
When she terminated her employment with ProQuest in October 2005, Vermeylen received a rollover distribution of her entire account balance that totaled $2,511.
Vermeylen filed a lawsuit against ProQuest in 2006 after the company’s stock price dropped, alleging that the company and its officers and directors breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA) from February 2003 through at least February 2006 because during that time they knew that ProQuest’s stock was overvalued, yet they continued to include it as an investment option in the profit-sharing plan.
ProQuest argued that Vermeylen couldn’t have been affected by the stock price drop, because she had sold her shares in 2003, three years before the price fell.
The district court said that Vermeylen does not claim that she didn’t receive all of the benefits that were owed to her, or that she failed to get the true value of her ProQuest stock when she sold it in 2003.
Cohn wrote in his opinion that because Vermeylen already sold her stock, “she had no vested benefit in the plan, much less ProQuest stock, at the time of the drop or when she filed the complaint.”
The case is Vermeylen v. ProQuest Co. ,E.D. Mich., No. 06-12327, 4/23/07.