On July 13, 2018, the Court denied the Secretary of Labor’s motion for reconsideration of the Court’s April 17, 2018 dismissal of Count IV of the Secretary’s January 17, 2017 First Amended Complaint filed in Acosta v. Vinoskey, a Western District of Virginia case that relates to the December 2010 purchase of 51,000 of the outstanding shares of Sentry Equipment Erectors, Inc. by the Sentry Equipment Erectors, Inc. ESOP.1 In Count IV of the First Amended Complaint, the Secretary “alleged Defendant Evolve [Bank and Trust] violated its fiduciary duties to the ESOP by allowing the per-share value of stock held by existing participants to drop through the structure of the purchase.”
The Court noted that instead of focusing on the total value of the participants’ accounts as a result of the transaction, the Secretary solely focused on the per-share value. The Court held that because the Secretary did not counter Defendant Evolve Bank and Trust’s evidence that the value of participants’ accounts remained the same or increased due to the transaction and the Secretary’s “other measures of loss were based on excluded expert testimony,” the Secretary failed to make out its prima facie case, which would have required that the Secretary “prove a fiduciary breach and a ‘related loss.’” The case is pending.
To access our summary of the Court’s April 17, 2018, Memorandum Opinion, please click here.
Takeaways
- The Court held that Plaintiff solely focused on the decrease in per-share value as a result of the transaction, not the total value of the participants’ accounts.
- The Court also held that Plaintiff was required to prove a “related loss” as part of its prima facie Because Plaintiff did not sufficiently challenge Defendant Evolve Bank and Trust’s evidence that the value of the participants’ accounts remained the same or increased, Plaintiff failed to make out its prima facie case, and so dismissal of Plaintiff’s motion was warranted.
1 Order, Acosta v. Vinoskey, No. 6:16-cv-00062-NKM-RSB (W.D. Va. July 13, 2018), ECF No. 158.
