Danielle Gamino v. KPC Healtcare Holdings Inc., et al.
Published: Jul. 28, 2023 | Result Date: Mar. 11, 2023 | Filing Date: Jun. 2, 2020 |Case number: 5:20-cv-01126-SB-SHK Settlement – $9,000,000
Judge
Court
CD CA
Attorneys
Plaintiff
R. Joseph Barton
(Barton & Downes LLP)
Richard E. Donahoo
(Donahoo & Associates PC)
Daniel M. Feinberg
(Feinberg, Jackson, Worthman & Wasow LLP)
Defendant
Andrew J. Waxler
(Kaufman, Dolowich & Voluck LLP)
Christopher A. Braham
(McDermott, Will & Emery LLP)
Julian L. Andre
(McDermott, Will & Emery LLP)
Laurie Ann Badon
(McDermott, Will & Emery LLP)
Facts
On August 28, 2015, Alerus Financial, N.A., acting as the appointed trustee of the KPC Healthcare Holdings, Inc. employee stock ownership plan (ESOP), caused the ESOP to purchase 100% of the shares of KPC common stock from Dr. Kali Pradip Chaudhuri. Danielle Gamino, a former KPC employee and ESOP participant, sued Dr. Chaudhuri and Alerus, as well as other KPC executives and board members, bringing class action claims of breach of fiduciary duty and prohibited transaction claims under the Employee Retirement Income Security Act (ERISA). The class included all participants in the KPC ESOP from August 28, 2015, to August 31, 2021 (unless they terminated employment without vesting in the ESOP) and those participants' beneficiaries. Excluded from the class are defendants, any fiduciary of the plan, the office and directors of KPC or of any entity in which one of the individual defendants has a controlling interest, the immediate family members of any of the foregoing excluded persons, and the legal representatives, successors, and assigns of any such excluded persons.
Contentions
PLAINTIFF'S CONTENTIONS: Plaintiff contended that defendants breached their fiduciary duties by causing the ESOP to purchase KPC Healthcare Holdings, Inc. stock for more than fair market value in a transaction that took place on August 28, 2015, engaged in and knowingly participated in a transaction prohibited by ERISA, and failed to make proper disclosures to participants in the ESOP.
DEFENDANTS' CONTENTIONS: Defendants denied all contentions.
Result
Defendants agreed to settle the case for $9 million, with Alerus agreeing to pay $4 million and KPC agreeing to pay $5 million.
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