Judge Rejects Motion to Dismiss ESOP Participants' Case

ESOP-owned Rainbow Disposal was acquired in 2014 by Republic Services, and plan participants later sued, alleging several violations of ERISA. The defendants offered five separate motions to dismiss the case, but the judge on July 9 ruled that the suit could proceed. The suit (Hurtado v. Rainbow Disposal Co., Inc., C.D. Cal., No. 8:17-cv-01605-JLS-DFM), is being heard in the district court of Central California. Participants claim that the acquisition should not have relied on a valuation dated four months before the transaction; that they were not provided an opportunity to vote on the transaction, although that right was provided in the plan documents; and that certain executives engaged in prohibited transactions.