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Compliance May 11, 2010
Court Splits Class in Company Stock Suit
A federal judge in North Dakota has granted class-action status to plaintiffs in a company stock lawsuit against Tharaldson Motels Inc. (TMI), but split the plaintiffs into current and former employees.
Reported by Fred Schneyer
Chief U.S. District Judge Ralph R. Erickson of the U.S. District Court for the District of North Dakota ruled that the two groups have different interests; the current employees have an ongoing interest in the company’s well-being. Plaintiffs had asked Erickson to certify the class as including both current and former TMI workers.
“Those Plan participants still active in TMI have an interest in continued growth and viability of TMI. Those Plan participants no longer working for TMI have no real concern whether the ongoing litigation results in adverse consequences for TMI because any money, great or slight, won by the class litigation would necessarily be coming from the fiduciary defendants, not TMI,” Erickson wrote.
The company’s current employees are “acutely concerned” about the company’s financial well-being and the potential harm that could be caused by the litigation, the court asserted.
The suit alleged that fiduciaries of the TMI employee stock ownership plan purchased company stock shares at an inflated price and, by doing so, violated their Employee Retirement Income Security Act (ERISA) fiduciary responsibilities.
The case is Hans v. Tharaldson, D.N.D., No. 3:05-cv-115.