Class Certification Granted In Tribune Company ESOP Case

On March 4, 2011, Judge Rebecca Pallmeyer of the U.S. District Court for the Northern District of Illinois granted class certification in Neil, et al. v. Zell, et al, Case No. 08-CV-6833 (N.D. Ill. Mar. 4, 2011), a high profile ERISA case. The ruling is instructive to all employers facing ERISA class actions.

In Neil, the named plaintiffs, two former employees of the Tribune Company, brought suit under ERISA against GreatBanc, Sam Zell, and EGI-TRB LLC, alleging breaches of fiduciary duty stemming from the leveraged buyout of the Tribune Company by the employee stock ownership plan (the “ESOP”).  Under the leveraged buyout, the ESOP was created and then it purchased the Tribune Company.  Shortly after the purchase the company declared bankruptcy and, as a result, plaintiffs allege that the stock held by the ESOP is now worthless. 

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