Fifteen-Week ESOP Trial Results in Defense Ruling for KMK Law Clients

U.S. District Court Finds for Defendants in Fish v. GreatBanc ESOP Litigation

On September 1, 2016, the United States District Court for the Northern District of Illinois granted a defense judgment to Keating Muething & Klekamp PLL (KMK Law®) clients on all claims in Fish et al v. GreatBanc Trust Company et al. Plaintiffs alleged that defendants Lee Morgan, Asha Moran, and Chandra Attiken violated ERISA relating to the Antioch Company ESOP and a corporate transaction by Antioch in 2003. Plaintiffs sought more than $233 million in damages.

Between November 2, 2015 and February 1, 2016, District Court Judge Jorge Alonso presided over the 15-week trial. KMK Law partner Michael L. Scheier represented defendants Morgan, Moran, and Attiken. The KMK litigation team also included KMK lawyers Brian P. Muething, Anthony M. Verticchio, and Jacob D. Rhode.

The Antioch ESOP was established in 1979. In 2003, external company advisors suggested management might best achieve its corporate goals by being owned 100 percent by the ESOP, which was accomplished through a tender offer transaction whereby the Antioch Company purchased all shares outside the ESOP and retired those shares to treasury. The Antioch Board engaged GreatBanc Trust as independent ESOP trustee and Duff & Phelps as the ESOP’s fairness advisor. Antioch’s share value rose or remained steady for several years after the transaction, but by 2007 events that were unforeseeable in 2003 placed Antioch in financial distress.

Plaintiffs filed the litigation alleging that the defendants (GreatBanc and the three KMK Law clients) breached their ERISA fiduciary duties in connection with the 2003 transaction and caused a prohibited transaction under ERISA. Defendant GreatBanc settled before trial.

Rejecting plaintiffs’ claims, Judge Alonso concluded that “…it is clear based on the voluminous evidence the parties have submitted that, even if defendants had a fiduciary duty to plaintiffs or the Plan in any way that was relevant to the transaction, they did not breach any such duty.” Specifically, Judge Alonso ruled that none of the KMK Law clients breached ERISA-based duties, including duties to monitor or to inform. Moreover, the Court concluded that aside from the Plaintiffs’ failure to prove liability, “…the evidence shows that defendants did not cause any of plaintiffs’ alleged damages.”

In summary, the court concluded that the demise of Antioch and its ESOP several years after the transaction was attributable solely to an unpredictable shift in how consumers use technology to share photos and the ruinous state of the American economy, circumstances which were unforeseeable in 2003.

As to the prohibited transaction claim, the Court reviewed substantial fact and expert evidence to conclude that the price Antioch paid for the non-ESOP stock was no greater than fair market value and entered a defense judgment on that claim as well.

Judge Alonso’s opinion follows on the heels of the related Miller v. Lee Morgan et al case in which a litigation trust sued 19 defendants in the United States District Court for the Southern District of Ohio (Judge Timothy Black). The 15-count complaint in that case alleged that defendants breached state law fiduciary duties as directors or officers and sought $250 million in damages. After more than a year of discovery, the district court granted the KMK Law clients a series of summary judgments, all of which were affirmed by the United States Court of Appeals for the Sixth Circuit in 2015 and 2016.

KMK lead attorney Scheier, who represented Morgan, Moran, and Attiken in both cases, said of the Fish case, “After years of discovery and 34 days of trial, it is deeply satisfying that Judge Alonso granted judgment in favor of Lee Morgan, Asha Moran, and Chandra Attiken. It has long been clear to me and the evidence at trial showed that these individuals always acted with the best interests of ESOP participants and the Antioch Company in mind. All of our clients, and certainly the Morgan family, regret that the company’s long run of success came to an end. We appreciate that Judge Alonso recognized that it was the shift in consumer habits and a difficult economy that caused this, not wrongful acts by anyone at the company.”

“A key lesson from this case relates to the process to be followed in undertaking corporate transactions, including those involving an ESOP. A well-considered process improves the chances that a transaction is successful. But this case showed that even well-designed transactions by successful companies can be challenged in litigation. And being able to present to a court evidence of a strong process and talented advisors greatly increases the chance that a hindsight challenge to a transaction will not be successful. I look forward to helping other companies structure their transactions to avoid these challenges and defend them when necessary,” said Scheier.

About Keating Muething & Klekamp PLL

The law firm of Keating Muething & Klekamp PLL (KMK Law®), based in Cincinnati, Ohio, is a nationally-recognized law firm delivering sophisticated legal solutions to businesses of all sizes — from Fortune 100 corporations to start-up companies. Chambers USA: America’s Leading Business Lawyers® 2016 recognized KMK as a leading law firm in Ohio in Corporate and Mergers & Acquisitions, General Commercial Litigation, and Bankruptcy & Restructuring. KMK Law earned three National Rankings in Commercial Litigation, Corporate Law, and Venture Capital Law and 37 Metropolitan Rankings in the U.S. News & World Report and Best Lawyers publication of its 2016 “Best Law Firms” Report. Founded in 1954, KMK has approximately 110 lawyers and a support staff of 150 employees. Additional information is available at

For more information on this topic, please contact Michael L. Scheier, Partner, Keating Muething & Klekamp PLL (KMK Law) at or 513.579.6952.

Judge Alonso’s opinion in the Fish et al v. GreatBanc Trust Company et al matter can be found at:

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