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ERISA Litigation and Employee Stock Ownership Plans: The Evolving Landscape of Claims Against Fiduciaries & Non-Fiduciaries

Recording of a 90-minute premium CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
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Conducted on Wednesday, April 27, 2022

Recorded event now available

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This CLE course will guide counsel, advisors, trustees, and administrators on procedures and fiduciary responsibilities in employee stock ownership plan (ESOP) transactions and cover recent court rulings. The panel will discuss best practices in satisfying fiduciary duties in ESOP transactions, legal issues that arise, and lessons learned from recent cases to defend against and minimize litigation.


An ESOP is a tax-qualified defined contribution employee retirement benefit plan designed to primarily invest in the stock of the sponsoring employer. ERISA imposes the highest duties known to law on trustees and other fiduciaries of ESOPs as well non-fiduciaries who are involved with the ESOP, and some transactions involving ESOPs have led to regulatory investigations and/or litigation.

Many complex issues arise when an ESOP purchases or sells employer stock. ESOP fiduciaries face essential ERISA fiduciary standards and valuation issues. Non-fiduciaries also need to be cognizant of these issues if they engage in a transaction involving an ESOP.

Most lawsuits concerning these transactions typically involve (1) claims that selling shareholders sold company stock to the ESOP at an inflated price; (2) fiduciaries of the ESOP took insufficient action to protect the interests of participants in connection with ESOP transactions, particularly when the plan sponsor faced financial difficulties; (3) buyers purchased the ESOP's shares for less than they were worth, or (4) ESOP fiduciaries engaged in transactions whereby they profited at the ESOP’s expense.

ESOP litigation involving publicly traded companies is evolving as well. In January 2020, the Supreme Court vacated a Second Circuit decision in Retirement Plans Committee of IBM v. Jander that had held ESOP participants adequately alleged a breach of fiduciary duty in asserting that the price of company stock was artificially inflated and fiduciaries should have disclosed financial issues involving one of the company's divisions. After that, when the Second Circuit reinstated its original decision, the Supreme Court declined to hear the case again. Some have viewed the Second Circuit's decision in Jander as potentially providing a new path for other plaintiffs to pursue "stock drop" claims against fiduciaries of ESOPs holding publicly traded company stock, while others view this decision as an outlier after the Supreme Court's 2014 decision in Fifth Third Bancorp v. Dudenhoeffer.

Listen as our panel discusses best practices in satisfying fiduciary duties in ESOP transactions, legal issues that arise, and lessons learned from recent litigation to defend and minimize litigation.



  1. Fiduciary duties, policies, and procedures of ESOP transactions
  2. Recent court rulings and developments
  3. Fiduciary review process: projections, documentation, and reliance
  4. Valuation considerations
  5. Best practices for defending and minimizing litigation


The panel will review these and other key issues:

  • Recognizing guidance for fiduciaries in ESOP transactions
  • Understanding the necessary policies and procedures to be followed by trustees and other fiduciaries of ESOPs
  • Understanding the non-fiduciaries can be held liable when they engage in transactions involving ESOPs
  • Lessons from recent ESOP litigation, including new theories of liability
  • Proper documentation of valuation reports and other due diligence
  • Critical steps during the fiduciary review process and mitigating the risk of litigation


Barton, R. Joseph
R. Joseph Barton

Block & Leviton

Mr. Barton, a Partner at the Firm, is the Chair of the Firm’s Employee Benefits Group and the Firm’s...  |  Read More

Lazor, Melanie
Melanie M. Lazor

Thompson Hine

Ms. Lazor is a managing associate in the Business Litigation practice. She focuses on a variety of commercial...  |  Read More

Rudolph, Dylan
Dylan D. Rudolph

Trucker Huss

Mr. Rudolph's practices in the firm’s ERISA litigation practice group, which is ranked in the first tier...  |  Read More

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