Bloomberg Law reports Lifetouch Inc. employees lost their lawsuit alleging the group lost hundreds of millions of dollars in retirement savings when their employee stock ownership plan (ESOP) dropped in value. The original lawsuit is here.
The employees didn’t provide enough specific details backing their claim Lifetouch and its directors fraudulently inflated the company’s stock value before its 2018 sale to Shutterfly Inc., Judge Joan N. Ericksen of the U.S. District Court for the District of Minnesota said in her Nov. 7 judgement. She dismissed their proposed class action without giving them an opportunity to refile their claims.
The Lifetouch lawsuit claimed workers who invested in the ESOP weren’t sufficiently protected from losses. The stock held in Lifetouch’s ESOP declined by more than $840 million between 2015 and 2018, representing an average loss of more than $22,000 for each of the plan’s 16,000 investors, according to the lawsuit.
Ericksen said the drop in stock value was a “result one would expect from lawful conduct,” given the financial hardships alleged by the employees, the Bloomberg Law article stated. She also rejected the claim Lifetouch’s stock was too risky to be suitable for a retirement plan, noting Lifetouch experienced financial hardships but was ultimately sold for more than $800 million in early 2018.