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Compliance October 6, 2005
Ex-Employees Lack Standing for Co. Stock Suit
October 6, 2005 (PLANSPONSOR.com) - A Texas federal
judge has thrown out a lawsuit over allegations that a
company's thrift savings plan purchased company stock at
inflated prices, because the plaintiffs were not current
employees and didn't have legal standing.
Reported by Fred Schneyer
US District Judge Ed Kinkeade of the US District Court for the Northern District of Texas ruled that the plaintiffs were not “participants” under the Employee Retirement Income Security Act (ERISA) and had already received their plan benefits, BNA reported. The suit only sought damages for defendants’ fiduciary breaches, Kinkeade said.
The employees alleged that their employer, TXU Corp., and its thrift savings plan fiduciaries breached their ERISA duties by purchasing TXU stock at artificially inflated prices after TXU made false and misleading statements about its revenues and earnings.
In denying the employees’ motion to certify the case as a class action, Kinkeade said that, as former employees, the plaintiffs would have standing as participants under ERISA if they had a reasonable expectation of returning to covered employment or had a claim to vested benefits.
The former employees “are now seeking additional damages that might have accrued but for the Defendants’ alleged misconduct . . . These additional damages are speculative and cannot be considered as vested under ERISA,” the court said.
The case is Hargrave v. TXU Corp., N.D. Tex., No. 3:02-CV-2573-K, 9/29/05.