Tharaldson Motels, Inc. Employee Stock Ownership Plan Litigation II (McKay v. Tharaldson)
Practice Area: Employee Benefits
Summary of the Lawsuit
This is a class action lawsuit on behalf of participants and beneficiaries in the Tharaldson Motels, Inc. Employee Stock Ownership Plan (the “TMI ESOP”) alleging violations of the federal pension law (ERISA) in connection with breaches of fiduciary duty by Defendant Gary D. Tharaldson. The lawsuit alleges that Gary Tharaldson, the then-President of TMI, caused an affiliate of TMI (the sole asset of the TMI ESOP) to pay his ex-wife, Linda Tharaldson, approximately $4 million in TMI assets under a settlement agreement related to their divorce in exchange for unnecessary and worthless marketing and sales consulting services which were never performed and were of no value to TMI or its affiliate. The lawsuit also alleges that Gary Tharaldson, as the Trustee of the ESOP, breached his duties owed to the ESOP by failing to bring a derivative action against himself as the sole Director, President, and Chief Executive Office of TMI for breaches of corporate fiduciary duties owed to the shareholders of TMI, including the ESOP.
Class Action Allegations
This action has been certified as a class action and has been brought on behalf of participants and beneficiaries in the TMI ESOP. The certified class is defined as follows:
All persons who were participants of the TMI ESOP at any time from
December 30, 1998 to the present and who received an allocation of
Plan assets to their accounts which they did not subsequently
forfeit under the terms of the Plan and the beneficiaries of such
participants.
Current Status
The case was initially stayed during settlement discussions. After the parties agreed that settlement discussions were no longer productive, Defendant filed an answer to the Complaint. Fact discovery has been completed and this case is currently in expert discovery. On March 31, 2011, following a hearing on the motion for class certification, the Court entered an order certifying this case as a class action. On January 5, 2012, the Court entered an order granting Defendant’s Motion for Summary Judgment and entered judgment against Plaintiff. Plaintiff intends to appeal that order.
Whom to Contact for More Information
If you are a member of the proposed class or you have information which might assist us in the prosecution of these allegations, please contact one of the following persons:
Bruce F. Rinaldi, Esq., brinaldi@cohenmilstein.com
R. Joseph Barton, Esq., jbarton@cohenmilstein.com
Robyn Swanson, Esq., rswanson@cohenmilstein.com
Jason Kolcun, Paralegal, jkolcun@cohenmilstein.com
Cohen Milstein Sellers & Toll PLLC
1100 New York Avenue, N.W., Suite 500
Washington, D.C. 20005
Telephone: (202) 408-4600