$13M Bradford Hammacher Class Action Deal OK’ed

In Illinois, a federal judge has approved a $13.4 million settlement between Reliant Trust Co. and Bradford Hammacher employees ending claims that the company’s workers paid too much when they purchased stock ownership in 2018.

U.S. District Judge Gary Feinerman determined that the settlement was fair and reasonable. Expressing reservations about the incentive fee paid to named plaintiffs, he stated that the $25,000 award was “a bit high.”

Judge Feinerman based his approval of the settlement on his belief that both the company and its employees were well aware of the risks associated with continuing to litigate the issue.

Judge Feinerman did make one change to the settlement, saying the Class Members should be notified both by email and paper mail of their rights in the settlement. The proposed deal had only stated that Class Members would be notified by mail.

The net settlement amount will be divided by amongst employees allegedly affected by the stock purchase. 

The $13.4 million settlement amount comes from multiple sources. The settlement dictates that Reliant Trust, trustee for the Bradford Hammacher Group Inc. Employee Stock Ownership Plan, will pay $12 million into a settlement fund.

The additional $1.4 million will be contributed by CEO Richard Tinberg, John MacArthur (the son of the company’s founder), and CFP James Ligget. The total amount will be placed into a separate settlement fund.

The Bradford Hammacher class action lawsuit was filed in 2016 by employees who argued that the Employee Stock Ownership Plan (ESOP) paid too much to buy all of Bradford Hammacher’s stock in a transaction that transferred ownership of the company to employees.

Allegedly, Reliance Trust, administrator of the plan, breached fiduciary duty due to employees by paying too much.

According to employees, this breach of fiduciary duty represented a violation of ERISA, the Employee Retirement Income Security Act.

Allegedly, the ESOP paid $100 million to purchase all of the stock. However, the company was allegedly resold for a mere $43.4 million three months later, indicating that $100 million was much too high a price.

The employees are not alone in taking issue with the ESOP purchase of the socks. Reportedly, Reliance Trust was also hit with a similar lawsuit in April 2019 by the U.S. Department of Labor.

The employees already received Class certification in 2018, resulting in a Class of workers and retirees who participated in the ESOP during February 2018. In settling the claims, Reliance Trust denies all wrongdoing in the stock sale class action lawsuit.

Have you taken issue with how your employee stock in a company was managed? Share your experiences in the comment section below. 

Top Class Actions will post updates to this class action settlement as they become available. For the latest updates, keep checking TopClassActions.com or sign up for our free newsletter. You can also receive notifications when this article is updated by using your free Top Class Actions account and clicking the “Follow Article” button at the top of the post.

The Bradford Hammacher Group Inc. Employee Stock Ownership Plan and its participants are represented by Patrick O. Meunch, Brian A. Glasser, Gregory Y. Porter and Ryan T. Jenny of Bailey & Glasser LLP and Mark Kindall, Robert A. Izard and Douglas P. Needham of Izard Kindall & Raabe LLP.

The Bradford Hammacher Stock Sale ERISA Violation Class Action Lawsuit is Nistra, et al. v. Reliance Trust Co., Case No. 1:16-cv-047783, in the U.S. District Court for the Northern District of Illinois.

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