Summary of the Lawsuit
The lawsuit alleges that Raydon Corporation and other fiduciaries of the Raydon Corporation Employee Stock Ownership Plan (“the ESOP” or “the Plan”) violated the Employee Retirement Income Security Act of 1974 (“ERISA”) by breaching their fiduciary duties with respect to the September 30, 2015 transaction in which 100% of Raydon stock was sold to the ESOP.
Summary of the Claims
The Complaint alleges that Defendants Donald K. Ariel and David P. Donovan breached their fiduciary duties when they sold 100% of the stock of Raydon Corporation on September 30, 2015 to the ESOP for $60,500,000. Lubbock National Bank had valued the ESOP’s stock at only $4,550,000 as of December 31, 2017.
The Complaint alleges that the transaction was not made to be in the best interests of the ESOP participants; the selling shareholders failed to disclosure material information to the Trustee, Defendant Lubbock National Bank, about the loss of a key contract; and Defendant Lubbock National Bank failed to perform adequate due diligence and caused the ESOP to pay in excess of fair market value. As a result of these alleged ERISA violations, Plaintiff and other ESOP participants and beneficiaries allege they have not received all of the hard-earned retirement benefits or the loyal and prudent management of the ESOP to which they are entitled.
Class Action Allegations
This lawsuit was certified as a Class consisting of the following persons:
All participants in the Raydon Corporation ESOP from September 30, 2015 or any time thereafter who vested under the terms of the Plan and those participants’ beneficiaries.
Excluded from the Class are Defendants and their immediate family, any fiduciary of the Plan; the officers and directors of Adams and Associates or of any entity in which a Defendant has a controlling interest; and legal representatives, successors, and assigns of any such excluded persons.
Status of the Litigation
The Complaint was filed on December 5, 2018. The Amended Complaint was filed on April 23, 2019. Defendants filed motions to dismiss on May 28, 2019, which were denied in part and granted in part on November 4, 2019.
Plaintiff filed a Motion for Class Certification on June 27, 2019, which the Court granted on March 16, 2020.
Plaintiff and all Defendants agreed to a settlement in this case, and moved for its preliminary approval on August 26, 2020. The Court denied preliminary approval on February 17, 2021, but suggested changes that should be made to the settlement. Plaintiff and Defendants modified the Settlement Agreement consistent with the suggestions by the Court. A renewed their motion for its preliminary approval was filed on May 3, 2021. This renewed motion for preliminary approval is currently pending before the Court.
Whom to Contact for More Information
If you are a member of the proposed class or you have information which might assist us in the prosecution of these allegations, please contact one of the following persons:
Block & Leviton is co-counsel in this litigation with Feinberg Jackson Worthman & Wasow LLP and Burr & Smith LLP.