Drinker Biddle ERISA Litigators Ted Becker and Julie Govreau recently won dismissal of a federal court action against our client GreatBanc Trust Company.
In Allen v. GreatBanc Trust Company, No. 1:15-cv-03053, the United States District Court for the Northern District of Illinois in Chicago dismissed all claims against GreatBanc Trust Company, defendant in a lawsuit filed by participants of an Employee Stock Ownership Plan (ESOP) alleging that GreatBanc, as ESOP Trustee, breached its fiduciary duty under section 404 of the Employee Retirement Income Security Act (ERISA) and caused the ESOP to engage in a prohibited transaction under ERISA Section 406.
The plaintiffs challenged the valuation of the stock purchased by the ESOP, alleging that the ESOP paid too much for the stock, and also alleged that the interest rate on a loan to purchase the stock was above market rate.
In dismissing the claims, the court reasoned that the value of the stock after the purchase is not necessarily indicative of the fair market value before the purchase, and that the plaintiffs had pleaded no factual basis for their allegation that the interest rate on the loan was too high.