Dan Feinberg is a partner in the firm. His practice focuses on employee benefits and wage and hour issues, including individual representation in disability and pension claims, class action litigation regarding breaches of fiduciary duties by fiduciaries of benefit plans, and violation of state vacation pay laws. Employee Stock Ownership Plan (“ESOP”) litigation is a particular focus of his practice.
Mr. Feinberg was lead counsel in the Tribune ESOP litigation which resulted in a $32 million settlement and several published decisions in favor of the plaintiffs, as listed below.
Mr. Feinberg has been retained as an expert witness or mediator in ERISA-related litigation, and he was appointed as Special Master for settlement purposes in an ERISA class action by the U.S. District Court for the Middle District of Florida.
Mr. Feinberg has also spoken on ERISA topics at many legal conferences, including Annual Meetings of the American Bar Association, Annual Conventions of the National Employment Lawyers Association, Annual Meetings of the Western Pension and Benefits Conference, the Los Angeles Benefits Conference, and the ERISA Litigation Conference. Mr. Feinberg was previously a shareholder at Lewis, Feinberg, Lee & Jackson, P.C.
- Tribune Company Employee Stock Ownership Plan Lawsuit
Dan Feinberg, Todd Jackson and Nina Wasow recovered $32 million in pension benefits for employees of the Tribune Company. The case involved an Employee Stock Ownership Plan (ESOP). ESOPs are retirement plans that invest primarily in employer stock and are supposed to motivate employees by giving them a stake in the companies where they work. Unfortunately, employers sometimes manipulate the complex legal rules for ESOPs so that the employees see little or no benefit from the ESOP. Employees at Tribune Company – which owned the Chicago Tribune, L.A. Times, WGN, and the Chicago Cubs – were left holding worthless stock after a leveraged buyout using their ESOP pushed Tribune into bankruptcy in 2008. GreatBanc, the ESOP trustee, had bought $250 million of Tribune stock with the employees’ ESOP funds as part of the leveraged buyout.
Dan Feinberg, Todd Jackson, and Nina Wasow led a legal team that represented these employee shareholders in a class action suit against GreatBanc and other ESOP fiduciaries over three years of aggressive litigation in the U.S. District Court for the Northern District of Illinois.
The District Court granted summary judgment in 2010 against GreatBanc, finding that the ESOP’s purchase of unregistered Tribune stock was an illegal transaction under the Employee Retirement Income Security Act of 1974 (ERISA) because there were other Tribune shares trading on the stock market. Even so, in 2011, the defendants tried to cap the damages they owed at $2.8 million or $15.3 million, arguing that the ESOP was similar to a gift from the employer to the employees. The class of employee shareholders responded that the ESOP’s entire payment for Tribune stock should be considered in the Court’s damages calculation, even though the ESOP used a loan to purchase the stock.
The District Court agreed with the employee shareholders’ argument. In January 2012, the Court approved a settlement which paid the ESOP $32 million in damages. The settlement payment was then allocated to the class members’ 401(k) plan accounts. There are several published decisions in the case: Neil v. Zell, 677 F.Supp. 2d 1010 (N.D. Ill. 2009); Neil v. Zell, 753 F.Supp. 2d 724 (N.D. Ill. 2010); and Neil v. Zell, 767 F.Supp. 2d 933 (N.D. Ill. 2011).
- Fernandez v. K-M Holding Co., Inc.
Todd Jackson, Dan Feinberg and Nina Wasow recovered $55 million in pension benefits for employees of Kelly Moore Paint who participated in the company ESOP. Using their expertise in ERISA law and their experience in securing full benefits for employees whose companies create ESOPs, these Feinberg, Jackson, Worthman & Wasow attorneys reached a settlement of the case after hard-fought litigation.
ESOPs are intended to motivate employees by giving them a stake in the companies where they work. Like a 401(k) plan, an ESOP holds stock for the benefit of the employees. But ESOPs only hold stock of the employer company, and employees can’t move their stock to any other investment until after they leave the company or retire.
The Plaintiffs alleged, on behalf of a class, that the stock the ESOP bought for employees was overpriced because the valuation of the stock ignored major legal liabilities for Kelly-Moore products that had contained asbestos until the late 1970s.
After the employees bought the stock it suffered a steep decline in value, shocking employee stockholders who were led to believe their company stock was a safe investment by their ESOP trustee and that the ESOP had paid a fair price. Trustees are required by ERISA to act in the interests of the ESOP. Dan Feinberg, Todd Jackson, and Nina Wasow represented clients who alleged in 2006 that K-M Industries breached their fiduciary duties under ERISA by purchasing employer stock at an inflated price.
Complicating this case, the ESOP switched trustees between the stock purchase and when the lawsuit was filed. The new trustee had an indemnification agreement with the company, but the Court ruled that the indemnification agreement was impermissible because the company was partially owned by the ESOP, so any payment by the company would have reduced the value of the stock. Attorneys for the employee stockholders fought to keep the new trustee from getting let off the hook for its own errors – and letting the plan beneficiaries bear the cost. This key ruling helped clarify a murky area of ERISA law.
Plaintiffs settled with K-M Industries, the family trust of its founder William Moore, and the successor trustee of the ESOP, North Star Trust Company, for a total of $55 million. In addition to the sizeable settlement, the litigation resulted in two published decisions: Fernandez v. K-M Industries Holding Co., 585 F.Supp.2d 1177 (N.D. Cal. 2008), and Fernandez v. K-M Industries Holding Co., 646 F. Supp. 2d 1150 (N.D. Cal. 2009).
- Abatie v. Alta Health & Life Insurance Co.
Feinberg, Jackson, Worthman & Wasow attorney Dan Feinberg, then at Lewis, Feinberg, Lee & Jackson, represented Karla Abatie, the widow of Dr. Joseph Abatie, in a landmark case. Dr. Abatie had been a radiologist at Santa Barbara Medical Foundation Clinic for over 20 years when he got sick with non-Hodgkin’s lymphoma. He had battled the disease for nearly eight years when he died in June 2000.
His widow Karla filed a life insurance claim with Alta Health & Life Insurance Company. Alta Health denied benefits, asserting that the proper paperwork had not been filed when Dr. Abatie went on permanent disability leave. The hospital where Dr. Abatie worked found the paperwork, but Alta Health denied the claim again, citing insufficient evidence that Dr. Abatie was “totally disabled” from the time he went on medical leave until his death. Alta Health had a financial conflict of interest because it both decided benefit claims under the plan and paid claims out of its own pocket.
Ms. Abatie initially lost her lawsuit against the insurance company and lost an appeal to the U.S. Court of Appeals for the Ninth Circuit. The Ninth Circuit, however, granted a petition for rehearing en banc, meaning that fifteen judges wanted to reconsider an important legal issue. The Ninth Circuit requested additional legal briefs regarding how the insurer’s financial conflict of interest should affect judicial review of the claim denial.
Dan Feinberg represented Ms. Abatie, arguing that Alta’s review of Ms. Abatie’s claim was tainted by its financial conflict of interest and that this should have reduced any judicial deference to Alta’s claim denial.
The unanimous en banc panel ruled for Ms. Abatie. The court overturned the original judgment and set a new precedent holding that benefit claim denials by Alta Health and future ERISA defendants would be subject to more searching judicial scrutiny if the defendant had a financial conflict of interest. Ms. Abatie later settled her claim against Alta Health.
- Comer v. Salomon Smith Barney
- Lee v. California Butchers’ Pension Trust Fund
- Mongeluzo v. Baxter Travenol LTD Plan
Feinberg has authored or co-authored many articles on ERISA topics published in ERISA Litigation Reporter, ABA Employee Benefits Committee Newsletter, The Practical Lawyer, Tax Management Compensation Planning Journal, and Labor Center Reporter.
