Federal Court Dismisses Ex-Workers’ ESOP Suit Against Seafood Co.

February 13, 2024
Hall Benefits Law, LLC

A Georgia federal court recently dismissed an ERISA proposed class action suit filed by former Inland Fresh Seafood Corp. of America Inc. workers concerning alleged mismanagement of the employee stock ownership plan (ESOP). The judge granted the motions to dismiss from Inland, its ESOP committee, a group of company executives, and the trustee of the company ESOP based on the plaintiffs’ failure to exhaust their administrative remedies before filing suit. 

The ex-employees filed suit against Inland, a major seafood distributor in the southeastern United States, in November 2022, alleging that the company breached ERISA by allowing Inland shares to be sold to the ESOP in 2016 at an inflated price of $92 million. The former workers claimed that selling the company shares at a value far exceeding fair market value was self-dealing and, therefore, a prohibited transaction in violation of ERISA. 

However, the judge found that the plaintiffs must exhaust their administrative remedies before turning to the judicial system for relief. The judge rejected arguments from the plaintiffs that exhaustion was unnecessary, a stay was warranted if exhaustion was required, it was unnecessary to plead exhaustion in the complaint, or that precedent outside the Eleventh Circuit did not require exhaustion in these circumstances. In her ruling, Judge Leigh Martin May pointed to a long line of Eleventh Circuit precedent requiring exhaustion of administrative remedies in cases involving claims for benefits and claims for violations of ERISA. She also acknowledged the affirmative duty of plaintiffs to plead exhaustion or an exception to it on the face of the complaint. 

The case is Bolton et al. v. Inland Fresh Seafood Corp. of America Inc. et al., case number 1:22-cv-04602, U.S. District Court for the Northern District of Georgia.

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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