Williams v. Imhoff
| Decision Date | 14 February 2000 |
| Docket Number | 98-1449,98-1450,Nos. 98-1448,98-1456,98-1454,s. 98-1448 |
| Citation | 203 F.3d 758 |
| Parties | (10th Cir. 2000) BRIAN WILLIAMS; BRUCE BRAUER, Plaintiffs-Appellees, v. WALTER F. IMHOFF; GARY J. WILSON; RICHARD T. HUEBNER; GEORGE A. JOHNSON, Trustees and Committee Members of the Hanifen, Imhoff, Inc. Profit Sharing Plan and Trust, Defendants-Appellants. JEFFREY WALL; PAMELA HIGGINS, PAMELA McCUSKEY, Plaintiffs-Appellees, v. WALTER F. IMHOFF; GARY J. WILSON; RICHARD T. HUEBNER, Defendants-Appellants. STEVEN E. LEATHERMAN, Plaintiff-Appellee, v. WALTER F. IMHOFF; GARY J. WILSON; RICHARD T. HUEBNER, Defendants-Appellants. RUSSELL JANSKY, Plaintiff-Appellee, v. GARY J. WILSON; WALTER F. IMHOFF; RICHARD T. HUEBNER, Defendants-Appellants. GENE R. ANDRIST, Plaintiff-Appellee, v. GARY J. WILSON; WALTER F. IMHOFF; RICHARD T. HUEBNER, Defendants-Appellants |
| Court | U.S. Court of Appeals — Tenth Circuit |
[Copyrighted Material Omitted] Daniel S. Hoffman (Barbara Z. Blumenthal and Tobin D. Kern with him on the brief), of McKenna & Cuneo, L.L.P., Denver, Colorado, for the appellants.
John F. Walsh (Gary J. Ceriani, Charles W. Bess, and Margaret E. Peper, of Davis & Ceriani, P.C.; Robert F. Hill and Karen A. Tomb, of Hill & Robbins, P.C.; and Gary C. Davenport and Krista L. Tushar, of McGloin Davenport Severson & Snow P.C., on the brief), Denver, Colorado, for the appellees.
Before BRISCOE and PORFILIO, Circuit Judges, and ROGERS, Senior District Judge.1
Defendants Walter F. Imhoff, Gary J. Wilson, Richard T. Huebner, and George A. Johnson appeal from the district court's partial denial of their motion to compel arbitration and stay proceedings. At issue is the arbitrability of claims asserted under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461, by plaintiffs, former securities exchange employees who were terminated from their employment by defendants and who allegedly did not receive proper valuation for stock held in their former employer's profit sharing plan. We exercise jurisdiction pursuant to 28 U.S.C. § 1291, and reverse and remand with directions to stay the proceedings and compel arbitration.
Plaintiffs Brian Williams, Bruce Brauer, Jeffrey Wall, Pamela Higgins, Pamela McCuskey, Steven Leatherman, Russell Jansky, and Gene Andrist are all former employees of Hanifen, Imhoff, Inc. (HII), a corporation engaged in the securities business and a member of the National Association of Securities Dealers, Inc. (NASD). Prior to beginning their employment with HII, each plaintiff signed a Uniform Application for Securities Industry Registration or Transfer ("Form U-4"), which provided in pertinent part:
I agree to arbitrate any dispute, claim or controversy that may arise between me and my firm, or a customer, or any other person, that is required to be arbitrated under the rules, constitutions, or by-laws of the [NASD] as may be amended from time to time and that any arbitration award rendered against me may be entered as a judgement in any court of competent jurisdiction.
App. at 100 (item 5).
At all times relevant to this case, HII had in place an employee stock-ownership program (ESOP) and a Profit Sharing Plan and Trust (the Hanifen Plan) that provided pension benefits. During their respective periods of employment with HII, plaintiffs were allegedly encouraged to, and in fact did, accumulate significant amounts of company stock through both the ESOP and the Hanifen Plan. Plaintiffs assert the Hanifen Plan was a "qualified trust" that enjoyed favorable tax treatment under the Internal Revenue Code. Plaintiffs further allege the Hanifen Plan constituted an "employee benefit plan" for purposes of ERISA. See 29 U.S.C. § 1003(a). Finally, plaintiffs allege that defendants Imhoff and Wilson, who served as trustees of the Hanifen Plan, and defendant Johnson, who served as a committee member of the Hanifen Plan, were, for purposes of ERISA, fiduciaries with respect to the Hanifen Plan and its participants.
In 1994, HII was reorganized and Hanifen Imhoff Holdings, Inc. (Holdings) was created. Plaintiffs, who had previously worked in one of several HII divisions, became employees of one of three Holdings' subsidiaries. Notwithstanding the reorganization, plaintiffs apparently continued to purchase stock (now Holdings stock) through the ESOP program and the Hanifen Plan (which, after the reorganization, was open to all employees of Holdings and its subsidiaries).
Article IV of Holdings' articles of incorporation restricted ownership of company stock to "persons actively engaged in the business of the Corporation or any of its subsidiaries," and required any holder of company stock to sell his or her shares back to Holdings in the event that he or she ceased to work for Holdings or its subsidiaries. App. at 15. In a confidential private placement memorandum issued on September 15, 1994, Holdings indicated it would, in the event an officer or employee was terminated, purchase any company stock held by that officer or employee "at Adjusted Net Book Value." Id. at 15. The memorandum further indicated that "Adjusted Net Book Value has historically reflected the fair market value of the shares of Hanifen common stock (i.e., the price at which a third-party purchaser might value the shares if the shares could be sold without restriction)." Id. at 16. Holdings' articles of incorporation also provided that the sale and disposition of stock by and through the Hanifen Plan would "be governed by the provisions of the Plan." Id. at 16. Under the provisions of the Hanifen Plan, stock value was to "be determined at [its] fair market value, as determined in good faith by the Committee and the Trustee." Id.
In the fall of 1995, defendant Huebner, who was a director and shareholder of Holdings, allegedly directed plaintiff Leatherman to contact Fiserv Clearing, Inc. (Fiserv), a large publicly-owned financial services firm, to inquire if it was interested in acquiring Holdings. During the period of negotiations with Fiserv, the defendants, all of whom were directors, officers, and/or shareholders of Holdings, placed a moratorium on the buying and seelling of Holdings stock.
Plaintiffs assert that in early 1996, Fiserv made an offer of approximately $69 per share for the outstanding stock of Holdings and its subsidiaries, which was "equal to approximately three and a half times the 'Adjusted Net Book Value' of Holdings' stock." Id. at 18. Defendants "rejected the acquisition offer based upon an alleged problem with the terms and conditions of the offer." Id. According to plaintiffs, defendants then "embarked on a conspiracy to force a significant percentage of minority shareholders, who were also employed by Holdings, out of Holdings by terminating their employment." Id. More specifically, plaintiffs contend they were terminated and forced to sell their shares of Holdings stock back to Holdings at "Adjusted Net Book Value," which "was substantially lower than the fair market value as evidenced by Fiserv's [1996] offer." Id. On December 31, 1997, after completing the force-out of minority shareholders, defendants allegedly agreed to sell Holdings to Fiserv. The purchase price paid by Fiserv was substantially similar to its initial 1996 offer, and represented "a per-share value approximately three and a half times the price paid per share" by plaintiffs for their stock. Id. at 19.
In 1998, plaintiffs filed five separate, but substantially similar actions against defendants (plaintiffs Leatherman, Jansky, and Andrist filed actions on their own behalf; plaintiffs Williams and Brauer filed suit together, as did plaintiffs Wall, Higgins, and McCuskey). Plaintiffs' first claim for relief was for "Breach of Fiduciary Duty" against all defendants in their capacities as officers, directors, and controlling shareholders of Holdings. Id. at 20. In support of this claim, plaintiffs alleged that defendants violated their fiduciary duties to plaintiffs and the other minority shareholders by rejecting Fiserv's initial acquisition offer and subsequently forcing out the plaintiffs and other minority shareholders. In their second claim for relief, plaintiffs asserted that all defendants, in their capacities as officers, directors, and controlling shareholders of Holdings, engaged in a civil conspiracy "to force certain minority shareholders . . . to sell their . . . stock, in order to deprive [them] . . . of the increase in value in their . . . stock in order to reap that benefit for themselves." Id. at 21. In their third claim for relief, plaintiffs contended that defendants Imhoff, Wilson, and Johnson (but not Huebner), in their capacities as trustees and committee members of the Hanifen Plan, breached their fiduciary duties under ERISA in determining the price at which the Hanifen Plan would repurchase plaintiffs' shares of Holdings stock. More specifically, plaintiffs asserted these three defendants were required, but failed, "to price the shares . . . at fair market value." Id. at 24. Plaintiffs further alleged that these three defendants violated ERISA's prohibition against fiduciaries dealing with plan assets in their own interests "by engaging in a scheme to terminate employees so as to acquire the shares of these minority shareholders and by rejecting the Fiserv acquisition offer in April 1996." Id. at 24-25. As a result of these alleged ERISA violations, plaintiffs asserted they were "entitled to obtain the difference between the amount they were paid for their Hanifen Plan shares at termination, and the shares' fair market value." Id. at 26. In addition, plaintiffs contended they were "entitled to any profits made by the Defendant Hanifen Plan fiduciaries through their misuse of Hanifen Plan assets." Id.
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