Drinker Biddle Chicago attorneys Ted Becker and Rick Pearl have won summary judgment in favor of client Holden Industries, Inc. in a case brought in the U.S. District Court for the Northern District of Illinois by a former participant in Holden’s Employee Stock Ownership Plan who alleged that the company, as the administrator of the ESOP, breached fiduciary duties and miscalculated benefits allegedly due him. Lee v. Holden Indus., Inc., 2016 BL 386285, N.D. Ill., No. 1:15-cv-06405, 11/21/16.

The plaintiff terminated his employment in 2012, after which the shares of the company in his ESOP account were segregated and converted to cash at the per-share value determined by that year’s valuation. He elected and received a one-time cash payment of his entire balance. He then argued that the Plan’s summary plan description required his stock to be valued based on the 2013 stock valuation, which was higher than the 2012 stock valuation, and that he was entitled to the difference between the two values. Holden denied his claim for additional benefits on the basis that Plan documents required segregated accounts, like plaintiff’s, to be valued based on the most-recent valuation and not a subsequent valuation.

District Judge Robert Blakey entered judgment against plaintiff on his first claim—that Holden breached fiduciary duties by issuing an allegedly inaccurate summary plan description—without having to decide plaintiff’s claim that the document was inaccurate. The Court found that the company had no intent to disadvantage or deceive the plan participants and followed the general rule that a plaintiff cannot rely on summary plan descriptions when Plan documents exist. The Court also granted judgment against plaintiff on his second claim—that Holden miscalculated benefits due—because the Plan documents gave the fiduciary discretionary authority to construe the terms of the Plan, and Holden’s decision to price the stock based on the 2012 stock valuation was reasonable and consistent with the Plan documents.

Read the full opinion.