In the News

ESOP Managers Can’t Force Airline Workers to Arbitrate Suit


March 9, 2023

A cargo airline’s owners and the caretakers of its employee stock ownership plan must face an Employee Retirement Income Security Act lawsuit in Delaware federal court, a judge ruled Wednesday, throwing out their bid to arbitrate workers’ claims that the defendants mismanaged the transaction that created the ESOP.

In a two-page order, U.S. District Judge Richard G. Andrews adopted U.S. Magistrate Judge Jennifer L. Hall’s Jan. 25 recommendation to toss the arbitration bid by the Western Global Airlines defendants. The ESOP’s requirement for the airline’s workers to arbitrate their issues with the plan one-on-one conflicts with ERISA’s promise that workers can sue on their benefit plan’s behalf, the judges said.

In siding with Judge Hall, Judge Andrews overruled objections to the magistrate judge’s recommendation that were filed by Western Global Airlines owners James and Carmit Neff; Prudent Fiduciary Services LLP; and Prudent’s president, Miguel Paredes, on Feb. 8.

. . .

The proposed class is represented by Carmella P. Keener of Cooch & Taylor PA; Peter K. Stris, Rachana A. Pathak, Victor O’Connell and John Stokes of Stris & Maher LLP; Michelle C. Yau, Daniel R. Sutter and Eleanor Frisch of Cohen Milstein Sellers & Toll PLLC; and Paul J. Lukas and Brock J. Specht of Nichols Kaster PLLP.

Read the article on Law360.