Cohen Milstein Sellers & Toll PLLC as Lead Class Counsel represented a class of approximately 500 participants (and their beneficiaries) of the Azon, Inc. Employee Stock Ownership Plan ("the Azon ESOP"). The lawsuit was filed against the (1) the persons who sold their stock to the ESOP, (2) the ESOP’s trustee HSBC Bank, (3) the named fiduciary and plan administrator James Donovan, and (4) the Directors of Azon, who appointed Mr. Donovan and HSBC Bank as fiduciaries. Prior to declaring bankruptcy, Azon was a manufacturer of specialty papers headquartered in Binghamton, NY.  This lawsuit was entitledBeam v. HSBC Bank USA, et al., No. 02-CV-0682 (W.D.N.Y.) (Elfvin, J.).

Summary of the Claims

The Complaint alleged that in September of 1999, the fiduciaries of the Azon ESOP caused the plan to overpay for Azon stock purchased from certain corporate directors and other insiders for more than fair market value. The lawsuit also alleged that the $25 million Transaction with the ESOP caused Azon to take on an excessive amount of debt to engage in the Transaction and that by doing so, the Transaction destroyed the value of existing shares held by the ESOP, and helped drive Azon into bankruptcy. Plaintiffs also alleged that the defendants who were responsible for the management of the ESOP's assets knew or should have known that the stock was overpriced. The Complaint also alleged engaging in the 1999 Transaction was not in the interest of the participants and beneficiaries of the ESOP, and by doing so, they violated provisions of ERISA which imposes strict standards of conduct on those who run employee benefit plans like the Azon ESOP.

History of the Litigation

In the course of the litigation, Class Counsel on behalf of Plaintiffs successfully certified the class, defeated two motions for summary judgment by defendants and also prevailed on Plaintiffs’ motion for partial summary judgment. In addition, Plaintiffs successfully defeated the State of New York’s Motion to intervene in the litigation. After Plaintiffs had engaged in significant discovery, Defendants agreed to settle the lawsuit for $9.35 million. The final settlement was approved by the Court on November 21, 2005 and the settlement monies have been distributed.

Questions About The Settlement

The distribution of the settlement was overseen by Independent Fiduciaries, Inc. If you are a class member and have questions about your claim or distribution, please contact the following:

Caroline Klam
Independent Fiduciaries, Inc.
One Metro Center
700 12th Street NW NW
Suite 700
Washington, DC 20005
Telephone: (202) 558-5153

For More Information About the Case

If you have other questions regarding this case, you may contact:
R. Joseph Barton, Esq., jbarton@cohenmilstein.com
Cohen Milstein Sellers & Toll PLLC
1100 New York Avenue, NW
West Tower, Suite 500
Washington, DC 20005
Telephone: (888) 240-0775 or (202) 408-4600
Facsimile: (202) 408-4699