Block on Trump's Asylum Ban Upheld by Supreme Court
In an opinion issued last Thursday, U.S. District Court Judge Rebecca Pallmeyer will allow a suit by employees of the Tribune Company to proceed against company chairman, real estate investor Sam Zell and the Greatbanc Trust Company, over the stock buy back plan that plaintiffs claim drove the company into bankruptcy. Employees claim that when Zell took the Chicago-based Tribune Co. private in an $8.3 billion stock buy back in 2007, the action violated federal pension protection laws. The company filed for chapter 11 bankruptcy protection last year.
The suit on behalf of six employees from one well known Tribune Co property, the Los Angeles Times, will be seeking class action certification to include the nearly 10,000 employees who lost money as a result of the buy back. The suit claims breaches of fiduciary duty, conflicts of interest and violations of the duty to protect employees' interests under ERISA. Plaintiffs' co-counsel, Daniel Feinberg told Bloomberg, "This deal was misguided from the very beginning. It was obvious from the start that this deal had a huge risk of insolvency because of the amount of debt." The debt accumulated by the time of the Tribune Company's bankruptcy is reported to be nearly $13 billion.
Defendants had sought to dismiss the suit, claiming among other things that the plaintiffs were taking wild shots against defendant Greatbanc. Judge Pallmeyer disagreed writing, the claims were "...not so wild that [they] must be dismissed," and adding there were serious questions as to whether Greatbanc "adequately considered the risk" created by the amount of debt the company would be taking on.
The plaintiffs' suit now has the right to proceed, but still faces many hurtles before it comes to a decision or settlement. To date, the Tribune company has laid off hundreds of employees.