Tribune Employee Stock Ownership Plan Litigation

Neil v. Zell, et al., No. 1:08-06833 (N.D. Ill.)

This case arose out of the 2007 leveraged buyout of Tribune Company ("Tribune"), which resulted in the ESOP's ownership of 100% of the stock of Tribune via a complex series of agreements referred to collectively as the "Leveraged ESOP Transaction." Plaintiffs alleged that defendants were fiduciaries of the Plan and breached their fiduciary duties of prudence and loyalty and engaged in prohibited transactions under ERISA by causing the ESOP to purchase unregistered Tribune stock and causing the ESOP to pay more than fair market value for this stock, resulting in losses to the Plan. Defendants disputed these claims, and after several opinions from the district court (see decisions below), the case settled for $32 million. The fund was allocated among the approximately 13,000 class members as benefits under the Plan, and then transferred to the class members' accounts in the Tribune 401(k) Savings Plan.