CHICAGO, December 22, 2021 – Sanford Heisler Sharp filed a class complaint today in the U.S. District Court of Northern Illinois alleging that consulting firm West Monroe Partners short-changed more than one hundred former employees by approximately $50 million or more when it cashed out their holdings in the company’s employee stock ownership plan, also known as an ESOP. According to the complaint, in September 2021, the company bought back former employees’ shares for “less than a quarter on the dollar” of the price the company would realize in a sale of half of its stock to a third party just a month later.
In October 2021, West Monroe sold a 50% stake in the company to MSD Partners, a private equity firm associated with Michael Dell, Founder and CEO of Dell Technologies. According to the complaint, the deal valued West Monroe at around $2.5 billion, reflecting a share price almost five times higher than the valuation the company had just used to buy back its stock from its former employees, many of whom the firm laid off late last year. As a result, West Monroe and its high-ranking managers captured “exorbitant profits” at the expense of its former employees, who suffered millions of dollars in losses, according to the allegations.
The suit further claims that when West Monroe repurchased the shares of the class members, it was well aware that the stock would soon fetch a far higher price. This double-dealing violated ERISA, a federal law that requires employers to manage retirement plans in the best interests of employees, the complaint charges.
“When an employer holds company stock in a worker’s retirement account, employees trust the company to value that stock fairly and impartially,” said Charles Field, Chair of Sanford Heisler Sharp’s Financial Services Litigation Practice and counsel for the Plaintiff and proposed class. “In this case, we believe that the company breached that trust, low-balled former employees who had contributed years to the company, and benefitted itself and senior executives at the employees’ expense. Such conduct breaches the high duties of care and loyalty that ERISA imposes.”
Plaintiff Matthew Daly, a former consultant at West Monroe, filed the case individually and as a representative of approximately 146 former employees and participants in the firm’s employee stock ownership plan. Named as Defendants are West Monroe, the company’s Board of Directors, and Argent Trust Company, which served as the ESOP’s trustee.
Russell Kornblith, New York Managing Partner and General Counsel at Sanford Heisler Sharp and counsel for Plaintiffs and the proposed class, added, “like other class members, Matt Daly worked hard to make West Monroe what it is today. West Monroe advertised company stock as a key part of employees’ compensation, designed to keep consultants ‘motivated to act in the best interests’ of the firm and its clients. But when it came time to live up to these promises, West Monroe’s senior executives apparently chose their own interests over those of their employees.”
“Employees who have given their time and labor to build a company deserve to have their contributions valued fairly,” added Sean Ouellette, an associate in Sanford Heisler Sharp’s Washington, D.C. Office. “As fiduciaries, the defendants had a duty to give them their fair share when the time came.” “Instead, as far as we can tell, West Monroe cashed out Mr. Daly and his colleagues at a discount, which increased the pay-out for the firm and its high-ranking partners.”
As relief, the complaint seeks compensation for the amounts the class lost in the devalued stock buy-back, “as well as any and all equitable or other remedial relief” the court deems appropriate.
Charles Field, Russell Kornblith, and Sean Ouellette of Sanford Heisler Sharp, LLP, as well as Matt Singer of Matt Singer Law, LLC, represent the Plaintiff and the proposed class.
About Sanford Heisler Sharp, LLP
Sanford Heisler Sharp, LLP is a national public interest class-action litigation law firm with offices in New York, Washington, D.C., San Francisco, San Diego, Nashville, and Baltimore. Sanford Heisler Sharp focuses on employment discrimination, wage and hour, whistleblower, criminal/sexual violence, and financial services matters. The firm has recovered over $1 billion for its clients through many verdicts and settlements.
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