Lawyers Add Stock Reimbursement Claim to EDS Suit

June 4, 2003 ( - Lawyers representing current and past participants of the EDS 401(k) plan have added to the participants' existing lawsuit a demand that the Electronic Data Systems reimburse employees who bought unregistered stock.

>According to a news release, the amended suit charges that participants should get back money they paid for shares for their 401(k) accounts between October 20, 2001 and November 18, 2002, minus any earned income. Those who no longer own the shares should receive money damages, the suit demands.

>The suit, originally filed against the Plano, Texas-based company in November 2002, alleges that the company and certain corporate officers misstated or withheld information from participants about EDS’ business, which the suit claims rendered the shares “an imprudent Plan investment.” Among other things, the suit filed in US District Court for the Eastern District of Texas alleges that the defendants improperly encouraged participants and beneficiaries to continue to buy and hold the EDS stock as part of their retirement savings.

>Specifically, the suit charges that defendants never disclosed that certain amounts of EDS’ outsourcing revenue was far from a sure thing because contracts with those clients allowed the customers to unilaterally suspend the agreements. EDS never said its outsourcing revenue relating from airlines was subject to a drastic decrease in value if an airline, such as US Airways, declared bankruptcy, according to the suit. That happened August 11, 2002.

>The company and corporate officers named as defendants are charged with a variety of fiduciary breaches and ERISA violations, including providing participants misleading information and a breach of duty to monitor and eliminate inappropriate investments and investment alternatives.

>In an May 5, 2003 order, US District Judge Leonard Davis appointed Susman Godfrey L.L.P. to serve as Lead and Liaison Counsel, and an Executive Committee composed of Keller Rohrback L.L.P., Schatz & Nobel, P.C., Abraham & Associates, and The Baskin Law Firm, to lead the efforts on behalf of the ERISA Plaintiffs and proposed class in the EDS litigation.