Plan Participants Denied Share of Motorola Settlement

Motorola 401(k) Profit-Sharing Plan participants are excluded from the class specified in a securities lawsuit brought against the company, so they cannot share in the settlement of that litigation.

In making its decision, the 7th U.S. Circuit Court of Appeals noted that under federal securities law, an “affiliate” is defined by reference to control; one who controls, is controlled by, or is under common control with an issuer of a security is an affiliate. Motorola appointed the plan’s administrator – the Motorola 401(k) Profit-Sharing Committee – to serve at the control of Motorola’s Board of Directors, making it an affiliate and therefore excluded by the class definition.  

However, the appellate court disagreed with a district court’s denial of the plan’s claim to a share of the settlement because the plan’s participants purchased units of the Motorola Stock Fund, not Motorola common stock. The 7th Circuit noted that the claim was filed by the plan, and it is undisputed that the plan regularly purchased publicly traded Motorola common stock on the open market.  

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According to the opinion, in 2003, purchasers of Motorola, Inc. common stock brought a class-action lawsuit against Motorola and its then-principal officers alleging violations of federal securities laws. Class members were defined as investors who purchased publicly traded Motorola common stock during the class period. Excepted from the class was any purchaser who was also an affiliate of Motorola.  

The events underlying the securities-fraud case spawned parallel class-action litigation filed by current and former Motorola employees under the Employee Retirement Income Security Act (ERISA). The securities-fraud action later settled for $190,000,000, but before the proceeds were distributed, the plan submitted a claim to share in the settlement.   

The case is In re Motorola Securities Litigation, 7th Cir., No. 09-1750.

William Gallagher Hires Employee Benefits Exec

William Gallagher Associates (WGA) announced that James Kinney has joined the firm as a Senior Vice President.

Kinney will be heading the large-account initiative in the firm’s Employee Benefits Practice.   

According to the announcement, Kinney joins WGA from Frank Crystal & Company where he was the Managing Executive for the West Region. Prior to that, he was the President & CEO of USI Consulting Group. He has also held senior positions with Mercer Human Resources Consulting, Sedgwick Noble Lowndes and KPMG.   

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Kinney is a graduate of Boston University School of Law, Quinnipiac University, and State University of New York.   

William Gallagher Associates is a provider of insurance brokerage, risk management and employee benefits services to companies with complex risks, within industries that include high technology, life sciences, financial risks, healthcare services, energy, aviation, and environmental services.  

More information is at http://www.wgains.com.

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