Rainbow Disposal Company, Inc. ESOP

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Summary of the Lawsuit

The lawsuit challenges the October 2014 sale by the Rainbow Disposal Company ESOP of 100% of the stock of Rainbow Disposal to Republic Services because the sale violated various provision of the Employee Retirement Income Security Act of 1974 (“ERISA”) and alleges breaches of fiduciary duty in connection with the transaction and the management of the assets of the Plan.

Summary of the Claims

Prior to the sale in October 2014, the Rainbow ESOP owned 100% of Rainbow. The Complaint alleges that the sale by the ESOP was not for adequate consideration and constituted a breach of fiduciary duty. Among other things, the Complaint alleges that the sale was based on an outdated valuation, the sale price was less than the fair market value in that valuation, that certain fiduciaries breached their fiduciary duties in connection with the sale, including by failing to provide appropriate and accurate disclosures and information . Additionally, the Complaint also alleges that the sale was accomplished without holding a vote by the ESOP participants, as required by the Plan Document and as promised in the SPD . The Complaint also alleges that the sale was accompanied by prohibited transactions by certain fiduciaries and the failure to properly manage plan assets. Finally, the Complaint alleges that of the $15 million of proceeds from the sale that was distributed for more than 2 years, the ESOP fiduciaries failed to properly invest or diversify those assets which resulted in substantial losses to the plan participants.

Class Action Allegations

This lawsuit is brought on behalf of the following persons:

All persons who were vested participants in the Rainbow ESOP as of October 1, 2014 and the beneficiaries of any such participants.

Excluded from the Class are Defendants and persons who were named fiduciaries of the Rainbow ESOP, who are alleged to have engaged in prohibited transactions or breaches of corporate fiduciary duties, or who had decision-making or administrative authority relating to the administration, modification, funding, or interpretation of the Rainbow ESOP, or relating to the decision to sell Rainbow.

Status of the Litigation

The Class Action Complaint was filed on September 15, 2017. Defendants have not yet responded to the Complaint.

Whom to Contact for More Information

If you are a member of the proposed class or you have information which might assist us in the prosecution of these allegations, please contact one of the following persons:

R. Joseph Barton, Esq. (jbarton@blockesq.com)
Ming Siegel, Paralegal (ming@blockesq.com)
Block & Leviton LLP
1735 20th Street NW
Washington DC 20009
(202) 734-7046

Block & Leviton is co-counsel in this litigation with Creitz & Serebin LLP.

Contact us to learn more about this investigation.

Block & Leviton LLP
155 Federal Street, Suite 400
Boston, MA 02110
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