Facts

Plaintiffs alleged ERISA fiduciary violations arising out of the 2007 Tribune Company leveraged buyout.

Tribune filed for bankruptcy protection 11 months after the LBO closed.

In 2008, a group of former and current employees of the Los Angeles Times filed suit against Samuel Zell, Tribune Co., Tribune's Directors, and GreatBanc Trust, which was the trustee for an employee stock ownership plan of Tribune Co., the newspaper's corporate parent.

PLAINTIFFS' CONTENTIONS:
Plaintiffs claimed that a leveraged buyout transaction constituted a violation of federal pension law.

Plaintiffs contended the ESOP Trustee, defendant GreatBanc Trust Company, caused the ESOP to engage in a prohibited transaction because the ESOP purchased $250 million in unregistered Tribune shares at a time when Tribune stock traded on the NYSE. Plaintiffs also alleged the shares purchased by the ESOP were worthless because the LBO Transaction left Tribune insolvent.

DEFENDANTS' CONTENTIONS:
Defendants contended that the ESOP paid no more than Fair Market Value for the unregistered Tribune shares. Defendants other than GreatBanc contended they were not legally responsible for the transaction because they did not act in a fiduciary capacity.

Settlement Discussions

The parties agreed to settlement terms in face-to-face negotiations in June 2011. The settlement required approval by the U.S. Bankruptcy Court for the District of Delaware, the U.S. Department of Labor, the Internal Revenue Service, and the district court.

Result

The parties agreed to settle for $32 million, which was paid principally by insurers and partially by Tribune and GreatBanc. The case settled after the district court granted plaintiffs' summary judgment on their prohibited transaction claim, granted plaintiffs' motion for class certification, and denied defendant GreatBanc's motion for summary judgment to cap plaintiffs' damages at no more than $15 million.

Other Information

The court granted final approval to the class action settlement on Jan. 30, 2012. FILING DATE: Sept. 16, 2008.