June 12, 2025
A California-based lighting company and the managers of its employee stock ownership plan agreed to resolve a proposed class action claiming they mismanaged the $25 million sale of company stock that established the plan, according to a filing in federal court.
Linna Chea, B-K Lighting Inc., company executives, the Lite Star ESOP Committee and the plan’s trustee, Prudent Fiduciary Services LLC, said in a notice Tuesday that they’d reached a settlement agreement following a June 3 mediation session. The parties asked the court to give them 45 days to finalize the pact and file a motion for preliminary approval.
Chea filed her Employee Retirement Income Security Act lawsuit against the company and its ESOP managers in April 2023, claiming B-K Lighting’s founder, Douglas W. Hagen, set up the Lite Star ESOP in 2017 to cash out his stake in the company. Hagen died in 2021, and Chea’s lawsuit names as defendants his estate and his wife and son, both of whom worked for B-K Lighting.
According to Chea, B-K Lighting, Prudent Fiduciary and its owner, Miguel Paredes, structured a sale of all of Hagen’s stock, valued at about $25.27 million, using a loan to the ESOP to cover the amount. In addition to saddling the plan with immense debt, this inflated price failed to account for B-K Lighting’s declining sales and market share, caused by its failure to adapt to changes in the industry and adopt a digital marketing strategy, Chea claimed.
. . .
Chea and the proposed class are represented by Daniel Feinberg of Feinberg Jackson Worthman & Wasow LLP, and by Michelle C. Yau and Caroline Bressman of Cohen Milstein Sellers & Toll PLLC.