You can’t please everyone, so the saying goes, but the 11th Circuit Court of Appeals in Atlanta came close in its ruling on a class-action suit by Home Depot employees under the Employee Retirement Income Security Act (ERISA).
The lawsuit alleges that former CEO Robert Nardelli and other directors, including co-founder Ken Langone, mismanaged the employees’ defined contribution plan by buying Home Depot stock even though the executives backdated stock options. When the backdating scheme came to light, the employees’ portfolio plummeted.
The appellate court overturned a dismissal by the U.S. District Court for the Northern District of Georgia, but ruled that the plaintiffs must now file an administrative appeal with The Home Depot.
“I have very little faith that The Home Depot plan administrators are going to say, ‘Yes, we think you’re right. We breached our duties to the tune of tens of millions of dollars and we’ll reimburse your plan for that,’” said Jeffrey Norton, attorney for the plaintiffs. “I presume eventually we’ll have our case back in district court.” Still, Norton said he was “pretty happy with the result.”
The Home Depot was delighted to see the ball bounce back onto its turf, and is clearly intent on keeping it there. “We’re pleased that the court of appeals said that the plaintiffs must now pursue any of their claims outside of the courtroom,” said company spokesman Ron DeFeo. “We will address their claims in the proper administrative forum.”
Of course, the courtroom is the “administrative forum” of last resort. But it’s a bit early for either side to claim victory.
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