The Department of Labor's lawsuit against an RV rental company and its trustee over alleged ERISA breaches involving the company's employee stock ownership plan is headed to trial.
A U.S. District Court in Phoenix said the case has "plenty of disputes of material fact and most of the evidentiary arguments are not well taken," in an order Monday, directing both parties to submit availability for a trial later this year.
The Labor Department filed the lawsuit in 2019 against RVR Inc. and Reliance Trust Co., the trustee for the RVR employee stock ownership plan, that "boils down to a dispute over the value of RVR's stock in 2014," Judge Roslyn O. Silver said in the order.
In 2014, RVR, led by brothers Randall Smalley and Robert Smalley, Jr., decided to establish an employee stock ownership plan, and hired Reliance to serve as the trustee and independent fiduciary of that plan.
The ESOP then agreed to purchase 100% of RVR's stock for $105 million, but the Labor Department said that price was far too high and was only worth about $15 million at the time of the transaction, according to court documents.
The Labor Department claims that Reliance failed to hire a truly independent appraiser and then failed to provide its appraiser with complete information necessary to produce a reliable valuation report. It also did not negotiate in good faith over the stock purchase price and other terms of the transaction, the Labor Department said.
The defendants maintain that the $105 million purchase price was correct.
Representatives for Reliance and RVR could not immediately be reached for comment. A Labor Department spokesman did not respond to a request for comment.