On March 16, 2020, the U.S. District Court for the Middle District of Georgia denied a motion to dismiss in Gamache v. Hogue, et al. (No. 1:19-cv-00021-LAG), allowing Plaintiffs to proceed with their claims that Defendants, who are fiduciaries of the Technical Associates of Georgia, Inc. Employee Stock Ownership Plan, breached their fiduciary duties and engaged in prohibited transactions. In 2011, Defendants refinanced the ESOP’s debt to the company’s original owners and, as part of the refinance, issued stock, options, warrants and cash to Defendants Hogue and Thompson. Plaintiffs assert that this diluted the value of the ESOP’s stake in the company and benefitted Defendants at the expense of participants and beneficiaries of the ESOP. Judge Leslie Abrams Gardner rejected Defendants’ arguments that the ESOP was not involved in the refinancing transaction, that Plaintiffs’ claims are time-barred, and that Defendants met their duties of loyalty and prudence by hiring a financial advisory to give an opinion that the transaction was fair.
A copy of the amended complaint is available here and a copy of the Court’s order is available here. For more information, please contact Nina Wasow or Dan Feinberg.