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Henry v. Wilmington Trust, N.A.

Henry v. Wilmington Trust, N.A.

United States District Court for the District of Delaware

September 10, 2021, Filed

C.A. No. 19-1925 (MN)

Opinion

MEMORANDUM OPINION

September 10, 2020

Wilmington, Delaware

/s/ Maryellen Noreika

NOREIKA, U.S. DISTRICT JUDGE

On October 10, 2019, Plaintiff Marlow Henry ("Plaintiff")1 filed this action under Sections 404, 406, 409, 410, and 502(a) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C. §§ 1104, 1106, 1109, 1110, and 1132(a), for purported losses suffered by the BSC Ventures Holdings, Inc. Employee Stock Ownership Plan ("the Plan")2 and its participants caused by Wilmington Trust when it caused the Plan to buy shares [*2]  of BSC Ventures Holdings, Inc. ("BSC") for more than fair market value in 2016 and other relief. (D.I. 1). On December 20, 2019, Defendants Wilmington Trust, N.A, Brian C. Sass and E. Stockton Croft IV (collectively "Defendants") moved to dismiss Plaintiff's complaint pursuant to a mandatory arbitration clause. (D.I. 11). The motion has been fully briefed. (D.I. 12, 13, 19, 20, 26, 28, 31, 32). On October 23, 2020, the Court heard argument. For the following reasons, Defendants' motion will be DENIED.

I. BACKGROUND

Plaintiff was an employee of BSC from January 2012 through January 2019. (D.I. 1 ¶ 13). In 2015, BSC adopted the Plan. (D.I. 1 ¶ 24). Since that time, Plaintiff has been a participant in the Plan. (D.I. 1 ¶ 13). On January 14, 2016, the Plan purchased BSC common stock from Defendants Sass and Cross and others ("the ESOP3 Transaction") (D.I. 1 ¶¶ 5-9). Wilmington Trust served as Trustee to the Plan in connection with the ESOP Transaction. (D.I. 1 ¶ 6). It is the ESOP Transaction that is the basis for this litigation. Plaintiff alleges that the Plan overpaid for the stock and that the ESOP Transaction was prohibited by ERISA §§ 406(a)(1)(A) and 406(a)(1)(D).

The Plan is administered pursuant to a document called [*3]  the "Amendment and Restatement of the BSC Acquisition Sub, LLC Profit Sharing Plan to Become A Part of the BSC Ventures Holdings, Inc. Employee Stock Ownership Plan" ("the Plan Document"). (D.I. 13-1). Since the ESOP Transaction, BSC has amended the Plan twice. (D.I. 12 at 2). On April 21, 2017, BSC adopted Amendment Number One to the Plan Document, which added Section 14 titled "ERISA Arbitration and Class Action Waiver" ("the 2017 Arbitration Provision"). (Id.; D.I. 13-2). Section 14 begins:

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2021 U.S. Dist. LEXIS 171927 *; 2021 WL 4133622

MARLOW HENRY, on behalf of the BSC Ventures Holdings, Inc. Employee Stock Ownership Plan, and on behalf of a class of all other persons similarly situated, Plaintiff, v. WILMINGTON TRUST, N.A., BRIAN C. SASS, and E. STOCKTON CROFT IV, Defendants.

CORE TERMS

arbitration, arbitration provision, parties, stock, allegations, Claimant, assent, arbitration agreement, manifestation, Defendants', asserting

Pensions & Benefits Law, ERISA, Civil Litigation, Class Actions, Civil Procedure, Pleadings, Complaints, Requirements for Complaint, Constitutional Law, Case or Controversy, Standing, Elements, Justiciability, Injury in Fact, Business & Corporate Compliance, Alternative Dispute Resolution, Arbitration, Arbitrability, Federal Arbitration Act, Arbitration Agreements, Contracts Law, Contract Conditions & Provisions, Arbitration Clauses, Scope, Defenses, Demurrers & Objections, Motions to Dismiss, Failure to State Claim, Orders to Compel Arbitration, Pretrial Matters, Validity of ADR Methods, Plan Amendments, Labor & Employment Law, Conditions & Terms, Arbitration Provisions, Enforcement, Types of Contracts, Bilateral Contracts, Pensions & Benefits Law, Plan Establishment, Acceptance, Apparent Acceptance, Overt Acts