Harrison v. Envision Mgmt. Holding, Inc.

Harrison v. Envision Mgmt. Holding, Inc.

Opinion

ORDER

This matter comes before the Court on the Defendants' Envision Management Holding, Inc. Board of Directors, et al. ("Defendants") Motion to Compel [*2]  Arbitration And To Stay Pursuant To Sections 3 And 4 Of The Federal Arbitration Act Or, In The Alternative, To Dismiss For Lack Of Jurisdiction. (ECF 34). The Plaintiff, Robert Harrison, ("Plaintiff" or "Mr. Harrison") filed a response (ECF 35), and Defendants filed a reply (ECF 36). The Plaintiff filed a Notice of Supplemental Authorities (ECF 38); the Defendants filed a response (ECF 39); and the Plaintiff filed a reply (ECF 41). The Plaintiff filed a second Notice of Supplemental Authorities (ECF 43). The Defendants filed a response (ECF 45). The Defendants filed a notice of supplemental authority (ECF 52), and the Plaintiff filed a response (ECF 53). This matter is fully briefed and is ripe for review. For the reasons that follow, the Defendants' motion is DENIED.

I. BACKGROUND

This case involves an employee stock ownership plan ("ESOP" or the "Plan"), that allows participating employees to acquire beneficial interest in company stock of their employer. The Plan is regulated by ERISA. The Plaintiff, a former employee of Envision Management Holding ("Envision") and a Plan Participant, filed this purported class action complaint for ERISA violations, alleging breach of fiduciary duties related [*3]  to the sale of Envision to the ESOP.

The Plaintiff specifically alleges that Defendants Creps, Sherwood, and Jones ("Seller Defendants") created the ESOP for the purpose of purchasing 100% of the Seller Defendants' private Envision stock. The Plaintiff alleges that the Seller Defendants installed Defendant Argent Trust Company ("Argent") as Trustee of the ESOP, but that Seller Defendants retained control over Argent. The Plaintiff alleges that he and other employee participants in the ESOP--whose retirement accounts were used the purchase the Envision stock from the Sellers--were not given the chance to negotiate or otherwise take part in the determination of the price that ESOP paid for the Envision stock. The Plaintiff alleges that ESOP paid an inflated price for the stock. The Plaintiff also alleges that the ESOP did not have sufficient funds to pay the purchase price for the stock, and it therefore borrowed over $100 million from the Seller Defendants, which the Plaintiff alleges was not in the best interest of the ESOP participants. The Plaintiff argues that the Defendants' actions related to the sale caused him and all other ESOP participants to suffer significant losses to their [*4]  ESOP retirement savings.

The Plaintiff brings six causes of action against the various defendants and seeks plan-wide relief, including a declaration that the Defendants have breeched their fiduciary duties under ERISA, removal of Defendant Argent as the trustee of the ESOP, appointment of a new independent fiduciary to manage the ESOP, an order that Defendant Argent restore losses resulting from the alleged breach, an order that Defendants provide equitable relief to ESOP, and an order enjoining the Defendants from dissipating, transferring, or disposing of any proceeds received from the allegedly improper transaction.

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