Summary of the Lawsuit
This lawsuit alleges that WPN Corporation and Ronald Labow, fiduciaries of the Wheeling Corrugating Company Retirement Security Plan and the Salaried Employees’ Pension Plan of Severstal Wheeling, Inc. (nka RG Steel) (together the “Severstal Trust”), breached their fiduciary duties with respect to the investment of the Trust’s assets by failing to properly diversify the investments of those assets.
Summary of the Claims
Cohen Milstein represents the Severstal Wheeling, Inc. Retirement Committee alleging violations of the Employee Retirement Security Act of 1974 (“ERISA”), the federal law governing pension plans. The Complaint alleges that Defendants WPN Corporation and Ronald Labow (the executive officer of WPN Corp), breached their fiduciary duties under ERISA as investment managers of the Severstal Trust by failing to properly diversify the investments by investing the majority of assets of the Trust in an account with Neuberger Berman comprised almost entirely of energy stocks. The assets of the Severstal Wheeling Trust separated from the WHX Corporation Trust in November 2008. Pursuant to the Third Amendment to the WHX Investment Agreement, effective as of November 1, 2008, WPN Corp. was made the investment manager to the Severstal Trust, with an investment policy requiring proper diversification. Of the 21 accounts held within the WHX Corp. Trust the only investment assets transferred to the Severstal Trust was the Neuberger Berman account, which was comprised almost entirely of energy stocks. WPN and Labow liquidated the Neuberger Berman assets on March 24, 2009, by which time Plaintiffs allege that the assets had lost value as a result of Defendants’ breaches. From March 24, 2009 until May 19, 2009, WPN and Labow kept the assets of the Severstal Plan entirely in cash or cash equivalents, which Plaintiffs allege caused further losses to the Plan. On May 19, 2009, the relationship with WPN and Labow was terminated. This lawsuit seeks relief against WPN Corp. and Ronald LaBow to recover the losses suffered by the Severstal Trust for the failure to diversify the investments of the Trust, and seeks declaratory and injunctive relief as necessary and appropriate.
Status of the Litigation
The lawsuit is pending in the Southern District of New York. The complaint was initially filed on February 5, 2010, and was most recently amended on May 10, 2013. Defendants WPN Corp. and Ronald Labow filed a Motion for Summary Judgment on September 9, 2011, which the Court denied on August 17, 2012. Expert Discovery concluded April 30, 2013. Plaintiffs filed a Motion for Partial Summary Judgment on May 30, 2013, which was granted in part and denied in part by the Court on April 11, 2014. The final Pre-Trial Conference was held on May 30, 2014. A bench trial was held before the Honorable Laura Taylor Swain from July 8th through July 22, 2014. The Court issued a trial decision on August 10, 2015 finding that Labow and WPN breached their fiduciary duties to the two Severstal Plans while they served as investment manager for those Plans in 2008 and until May 19, 2009 and entered judgment of more than $15 million in favor of Plaintiffs.
Labow and WPN filed a Notice of Civil Appeal to the Second Circuit Court of Appeals on August 26, 2015. The district court decision was affirmed by the Circuit Court on August 30, 2016.
Whom to Contact for More Information
If you are interested in obtaining more information, please contact one of the following persons:
Scott Lempert, Esq., firstname.lastname@example.org
Norma Canas Mejia, Paralegal, email@example.com
Cohen Milstein Sellers & Toll PLLC
1100 New York Avenue, N.W., Suite 500
Washington, D.C. 20005
Telephone: 888-240-0775 (Toll Free) or 202-408-4600