Facts

Plaintiffs, beneficiaries of the Employee Stock Ownership Plan (ESOP) of K-M Industries Holding Co. Inc., filed suit against K-M for breach of fiduciary duty. Plaintiffs also asserted claims against the Moore Trust, the original ESOP trustees, and North Star Trust Co., successor trustee for ESOP since 2003.

PLAINTIFFS' CONTENTIONS:
Plaintiffs contended that K-M overpriced the company stock, resulting in the ESOP overpaying for the stocks purchased in 1998 and 1999. Plaintiffs further contended that North Star failed to remedy the fiduciary breaches committed by its predecessors.

DEFENDANTS' CONTENTIONS:
Defendants contended that the stock value was professionally and fairly stated at the time of the transactions and denied that ESOP overpaid for the stocks.

Result

Plaintiffs settled with K-M and the original trustees for $40 million. Plaintiffs subsequently settled with North Star for an additional $15 million. The funds will go to ESOP for the benefit of participants and beneficiaries, which include current and former employees of Kelly-Moore Paint Co. Inc. and Capital Insurance Group.