Tribune Co. employees suing over their collapsed employee stock ownership plan have won a partial victory in the case.
U.S. District Court Judge Rebecca Pallmeyer granted partial summary judgment to the plaintiffs in one of their claims against the fiduciary, Citizens Financial Group Inc.-owned GreatBanc Trust Co.
Ms. Pallmeyer agreed with the employees that Lisle, Ill.-based GreatBanc engaged in a prohibited transaction when it approved a leveraged buyout-related stock purchase by the ESOP.
“The fact that GreatBanc may not be the only ESOP to have failed to comply with statutory requirements does not change the court's analysis,” Ms. Pallmeyer said in her opinion Nov. 9 in the U.S. District Court in Chicago.
The ruling may allow the employees to recover some of their losses from GreatBanc. The ESOP, tied to the $8.2 billion buyout of the media company in 2007, failed after the Chicago-based publisher of the Chicago Tribune and other newspapers filed for bankruptcy protection in December 2008.
Ms. Pallmeyer in August ruled that billionaire Sam Zell, now chairman of Tribune, and his EGI-TRB LLC couldn't be made to pay for the ESOP's demise.
She earlier denied a motion to dismiss the case entirely, saying plaintiffs had successfully shown that GreatBanc violated its fiduciary duty when it approved the ESOP's stock purchase.
Lynne Marek writes for Crain's Chicago Business, a sister publication of Pensions & Investments.