Noll Manufacturing Co.

United States District Court for the Southern District of Iowa
Case No. 4:10-cv-00198-RP-TJS

Case Overview

Keller Rohrback L.L.P. has obtained a major victory for participants in Employee Stock Ownership Plans (commonly referred to as ESOPs). In Johnson v. Couturier Keller Rohrback alleged that corporate management of Noll Manufacturing Co. violated the Employee Retirement Income Security Act of 1974 (as amended) (“ERISA”) and breached their fiduciary duties to participants in the ESOP, which owned all the stock in the company, by awarding themselves grossly excessive compensation at the expense of the ESOP.

On Monday, July 27, 2009, in a 33-page published opinion, the federal appellate court in San Francisco, California, upheld the trial court’s decisions to freeze the assets of Mr. Couturier, the former President of Noll Manufacturing, and to prohibit the use of company assets to pay defense costs, noting that it was “likely” that the plaintiffs would prevail on their claim for “tens of millions of dollars.”

In the course of its wide ranging opinion, the court addressed several issues of importance in ESOP litigation, including the extent to which a company may indemnify fiduciaries for fiduciary breach—ruling that the indemnification agreements in question violated ERISA—and the important distinction between business conduct and fiduciary conduct in an ESOP-owned company.

The ruling highlights Keller Rohrback’s growing private ESOP practice, which focuses on business practices and fiduciary conduct in ESOP-owned companies. To read more about Keller Rohrback’s retirement plan practice, click here.

Proposed Class

Plaintiffs seek to represent a class of all similarly situated ERISA defined contribution plan participants and beneficiaries who have attempted to withdraw their investment from the Property Account, and whose plans have suffered losses because they were instead placed into the Withdrawal Queue.

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