The plaintiffs, former ESOP participants, contended that State Street made no effort to protect the plan by diversifying the company stock held in the plan. United Airlines stock value fell over 80% from August 2001 to August 2002. The company announced in August 2002 that it may file for bankruptcy.
In the opinion for Summers, et al. v. UAL Corporation ESOP Committee, et al., the court agreed to strike and exclude the opinions and testimony of one of the plaintiffs’ expert witnesses, disagreeing with his expert status. However, the court said that its decision would have been the same with or without the witness’ testimony.
Der-Yeghiayan noted that State Street is a directed trustee and as such is required to administer the plan according to plan documents. The judge cited the opinion on a previous case involving WorldCom which stated, “directed trustee has no duty to investigate the wisdom of [investment] choices or any obligation to render advice regarding the choices.”
The court granted summary judgment to State Street and denied partial summary judgment to the plaintiffs.
Previously, the UAL trustees agreed to a $5.25 million settlement on their part in the suit (See Partial Settlement Reached In UAL ESOP Suit ).