Shipp et al v. Central States Manufacturing, Inc. et al

1
IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
FAYETTEVILLE DIVISION
JUSTIN SHIPP; VINCENT TATE; and
TERRENCE YAZEL, individually and
on behalf of all others similarly situated 	PLAINTIFFS
V. 	CASE NO. 5:23-CV-5215
CENTRAL STATES MANUFACTURING, INC.;
CENTRAL STATES MANUFACTURING, INC.
BOARD OF DIRECTORS;
GREATBANC TRUST CO.; JAMES SLIKER;
CHAD WARE; THOMAS FERREE;
MATT KRAMER; TINA CHANG;
and MATTHEW STITES 	DEFENDANTS
MEMORANDUM OPINION AND ORDER
Now before the Court is Defendants’ Joint Motion for Summary Judgment (Doc.
118).1 This case concerns alleged mismanagement of an employee stock ownership plan
governed by the Employee Retirement Income Security Act (“ERISA”). Plaintiffs are three
former senior employees of Central States Manufacturing, Inc., who believe the company,
its board of directors and officers, and the plan’s trustee, GreatBanc Trust Co., breached
fiduciary 	duties 	owed 	to 	the 	plan’s 	employee-participants 	by 	engaging 	in 	certain
financially imprudent transactions. For the reasons stated herein, the Court finds no
genuine, material dispute as to the existence of any ERISA violations, and therefore the
Joint Motion for Summary Judgment is GRANTED.
1 The Court has also considered the following filings: Defendants’ Brief in Support (Doc.
119) and Statement of Facts (Doc. 120); Plaintiffs’ Response in Opposition (Doc. 132),
Response to Statement of Facts and Additional Facts (Doc. 133), and Exhibits (Doc. 134);
and Defendants’ Reply (Doc. 140), Response to Plaintiffs’ Additional Facts (Doc. 145),
and Exhibits (Doc. 146). Where briefs and exhibits were redacted on the public docket,
the Court also reviewed the unredacted versions of those same documents filed under
seal.
Case 5:23-cv-05215-TLB Document 169 Filed 03/30/26 Page 1 of 20 PageID #:
<pageID>

2
I. 	BACKGROUND
The following facts are undisputed. Central States Manufacturing, Inc. is a metal
roofing and siding company headquartered in Tontitown, Arkansas. In 1991, the company
implemented an employee stock ownership plan (“ESOP”) to transition to full employee
ownership. The ESOP acquired all outstanding shares using loan proceeds, with the
shares held in trust and gradually allocated to employees’ individual accounts as
retirement benefits.
Over 	the 	next 	decade, 	Central 	States 	continued 	to 	expand, 	establishing
manufacturing and retail locations across the eastern United States. In 2011, Central
States’s Board of Directors established an ESOP Trust to own and manage all ESOP
shares and appointed Separate Defendant GreatBanc Trust Co. to serve as the ESOP’s
independent Trustee. GreatBanc was empowered to enter into stock purchase and sale
transactions on behalf of the ESOP, including “to borrow money from any lender (including
the Employer or any shareholder of the Employer) to finance the acquisition of Company
Stock with one or more Acquisition loans” for the purpose of purchasing Company Stock.”
(Doc. 	121-26, 	p. 	6, 	§ 	5.1(a)(i)). 	Under 	the 	Plan, 	Central 	States 	was 	the 	“Plan
Administrator” for purposes of performing or delegating ministerial tasks. (Doc. 121-24,
p. 10, § 2.13). The Plan also specifically contemplated “Leveraged Stock Acquisitions,”
wherein the Trustee would “borrow funds” to purchase company stock at a “reasonable
rate of interest.” Id. at p. 20, § 6.2.
Under 	the 	ESOP, 	employees 	of 	Central 	States 	automatically 	become 	Plan
“Participants” when they join the company and remain so as long as they meet Plan
requirements. Every year, the company makes stock and/or cash contributions to the
Case 5:23-cv-05215-TLB Document 169 Filed 03/30/26 Page 2 of 20 PageID #:
<pageID>

3
employees’ ESOP accounts, and the ESOP then holds these shares in trust for the benefit
of the Participants. The Plan guarantees that when Participants retire or otherwise
separate from the company, Central States will purchase all of their ESOP shares at
market value. As Participants retire and redeem their shares, those shares are removed
from circulation, reducing the total number of outstanding shares. Holding the company’s
overall value constant, this reduction increases the per-share value of the remaining
shares because that value is spread across fewer shares. Importantly, this redeem-and-
retire process does not make the company more and more valuable—it just means that
each remaining share represents a larger and larger slice of the same pie.
The parties agree that over time, Central States became a very profitable company.
Equity value increased, which meant the value of the company’s stock increased. Also
over the course of years, the ESOP’s allocated shares became concentrated in the
accounts of senior employees who had been with the company for a long period of time.
The employee with the most ESOP shares was Central States’ CEO and Board president
Rick Carpenter, who in 2018 unexpectedly announced his plan to retire. This sparked
concerned 	conversations 	among 	the 	company’s 	leadership, 	as 	the 	prospect 	of
repurchasing his ESOP shares was certain to create a dent in Central States’ overall
finances. It was Mr. Carpenter’s sudden retirement that prompted the Board to take a
hard look at near-term ESOP repurchasing obligations. The Board tasked CFO Chad
Ware with investigating the problem.2
2 Plaintiffs have sued the Board members individually. They are: Central States’s current
CEO James Sliker, Chair of the Audit and Governance Committee Thomas Ferree, Board
Chair Matt Kramer, Board Member Tina Chang, and Board Member Matthew Stites.
Company CFO Ware is an officer but not a Board member.
Case 5:23-cv-05215-TLB Document 169 Filed 03/30/26 Page 3 of 20 PageID #:
<pageID>

4
It soon became clear that at the beginning of 2019, ESOP Participants aged 50
and older who were nearing retirement age collectively held approximately $115 million
in company stock, see Doc. 121-46, p. 6; and of that total, $47.4 million was held by just
twelve employees, see Doc. 121-6, p. 28. At the same time, the number of outstanding
shares available for new or existing Participants was steadily diminishing as employees
separated and retired.
With the company’s long-term financial health in mind, the Board began pondering
solutions to mitigate the impending repurchase obligation. Mr. Ware met with the Board
on April 4, 2019, to discuss some options. Also, present were a representative from ESOP
Trustee GreatBanc; a representative from the firm of Stout Risius Ross, LLC (“Stout”),
which GreatBanc had hired as its independent financial advisor; and a representative
from Principal Financial Group (“Principal”), which Central States had hired to model
possible repurchase obligation scenarios. During the meeting, Mr. Ware announced the
following “guiding principles” he and others in management had workshopped to address
the near-term repurchase problem:
(1) sustain the company's long-term future including strategic growth;
(2) provide 	employees 	a 	“greater 	than 	market” 	contribution 	without 	being
excessive, with annual contributions within a specified band based on company
performance and all employees aligned on driving share price through business
performance;
(3) substantially correlate share price evolution to business performance or equity
value of the company;
(4) be fair to terminated employees but prioritize current employees relative to on-
going benefits; and
(5) distribute funds to terminated employees as fast as possible.
Case 5:23-cv-05215-TLB Document 169 Filed 03/30/26 Page 4 of 20 PageID #:
<pageID>

5
(Doc. 123-58, p. 3). These principles were intended as the lens through which the
company and its advisors would evaluate the potential strategies and foster discussions
for how best to manage the company. See Doc. 121-2, p. 21 (Dep. of James Silker,
Central States’s CEO).
Over the next several months, the group evaluated the pros and cons of various
proposals, including “releveraging” and “recycling” stock shares. “Releveraging” would
involve Central States buying a large number of shares from retiring Participants at
market value and then selling those shares back to the ESOP in exchange for a
promissory note. Then, the newly purchased shares would be held in a suspense account
owned by the ESOP and released to Participants over a long period of time as the
promissory note was gradually paid off. Releveraging could allow the company to
maintain the same number of shares outstanding while distributing them over time, rather
than all at once. By contrast, “recycling” would involve the ESOP buying a block of shares
from retiring Participants using cash provided by Central States and immediately
allocating those shares to the remaining ESOP Participant accounts. Of course, both
releveraging and recycling had their pros and cons, and the group considered other
possible solutions, including Central States matching stock shares with equal 401(k)
contributions, adjusting the company’s stock contribution rates, or adjusting the stock
distribution parameters. See Doc. 123-58, p. 3 (notes from April 4, 2019 meeting).
Central States asked its financial advisor, Principal, to analyze the various
scenarios and then report back to the group. Principal did so and shared its draft with Mr.
Ware, who then forwarded it to the Board. See Docs. 121-62 & 121-63. After that, on July
1, 2019, Mr. Ware met with GreatBanc’s and Stout’s representatives to discuss the
Case 5:23-cv-05215-TLB Document 169 Filed 03/30/26 Page 5 of 20 PageID #:
<pageID>

6
scenarios that Principal had prepared for the next day’s meeting. See Doc. 121-61.3 On
July 2, Mr. Ware, the Board, and representatives from GreatBanc met again to discuss
Principal’s and Stout’s five economic models. See Doc. 121-65. At the end of the meeting,
Mr. Ware emailed Principal to request that it model two more scenarios, and Principal
circulated those slides, including to GreatBanc, on July 11. See Doc. 121-69. The Board
met on July 17 to discuss all of these scenarios and asked for two more, bringing the total
to nine. See Doc. 121-71. Principal once again supplied the new models. See Doc. 121-
72.
On 	August 	27, 	2019, 	Mr. 	Ware 	emailed 	GreatBanc’s 	representatives 	“to
discuss . . . [Central States’s] options and [GreatBanc’s] thoughts on the scenarios
discussed in our repurchase obligation study and the timeline later this year for a potential
releverage situation similar to scenario #8 in our study[.]” See Doc. 121-77. Mr. Ware
asked GreatBanc whether, in its capacity as ESOP Trustee, it was “in agreement” with
the releveraging scenario the Board was considering or “want[ed] to discuss other
scenarios,” as “[t]he executive team w[ould] be offering [their] final recommendation to
the board in September and want[ed] [GreatBanc’s] buy off before presenting [their]
recommendation.” Id. Mr. Ware also emailed GreatBanc on September 3 with more
questions to consider. See Doc. 121-79.
On September 9, 2019, Mr. Ware requested that Principal and Stout each model
“one more scenario” that was “a blend” of two scenarios previously modeled (for a total
3 Stout’s managing director emailed Principal’s representative to explain that Stout—on
behalf of GreatBanc and the “trustee team”—had conducted its own independent
modeling of the various scenarios and would share that data with Principal and Mr. Ware
before the July 1, 2019 call. See Doc. 121-61.
Case 5:23-cv-05215-TLB Document 169 Filed 03/30/26 Page 6 of 20 PageID #:
<pageID>

7
of ten modeled scenarios). (Doc. 121-147). Finally, on September 18 and 19, the Board
met and approved a two-step releveraging transaction to take place in December 2019.
Before they adjourned, however, the Board decided to seek a second opinion of
Principal’s work. See Doc. 121-89. Central States hired a company called Chartwell
Financial Advisory, Inc. to model three releveraging transactions for discussion. Chartwell
provided its draft opinion in November 2019, which included updated financial estimates
as well as comparisons to the models that Principal had prepared. Chartwell followed up
with a final report on January 16, 2020. See Doc. 121-106. According to Chartwell, if the
“status quo” practice of redeeming and retiring shares were simply maintained, by fiscal
year 2026 the value of “equity related capital claims” by retiring ESOP Participants would
“exceed[ ] 100% of annual [Free Cash Flow].” Id. at p. 14. Chartwell’s opinion was that
the company should abandon the status quo and instead select a stock releveraging
alternative that would “significantly improve[ ]” Central States’s “balance sheet liquidity.”
Id. at p. 15.
A week later, on January 23, 2020, Mr. Ware emailed Chartwell’s final report to two
GreatBanc representatives and to attorney Danny Johnson, Central States’s ERISA
counsel. See Doc. 121-110. The Board met on January 31 to discuss the various options
and approved the following two-step releveraging transaction:
TRANSACTION ONE: Central States would purchase a block of approximately
2.2 million shares from Participants who were either retired/separated from the
company or nearing retirement and, after paying those Participants, remove their
shares from circulation.
TRANSACTION TWO: The ESOP would repurchase those same 2.2 million
shares from Central States in exchange for a 30-year, $40 million promissory note;
the ESOP would then hold the shares in a “suspense account” to be allocated to
active Participants little by little over time, as the promissory note was paid down.
Case 5:23-cv-05215-TLB Document 169 Filed 03/30/26 Page 7 of 20 PageID #:
<pageID>

8
See Doc. 121-9 (January 31, 2020, Board Meeting Minutes). Mr. Ware began planning
the transaction dates but paused when the COVID-19 Pandemic hit in March 2020, and
Central States, like so many other businesses, experienced financial uncertainty as
lockdown measures proliferated across the country.
It was not until August 2020 that GreatBanc re-engaged Stout to conduct a new
per-share valuation of Central States, since the last valuation was performed in December
2019 and Central States’s equity value had increased since then. Stout revalued the stock
at between $16.50 and $19.80 per share, up from the $14.97 per-share valuation from
year-end 2019. See Doc. 121-125. GreatBanc’s internal committee then met with Stout
to go over the new valuation. GreatBanc recommended that its representatives negotiate
with Central States on behalf of 	ESOP Participants to secure a price per-share in the
higher range that Stout had calculated; this higher price would be more favorable to those
ESOP Participants planning to sell their shares in Transaction One. See Doc. 121-126.
GreatBanc ultimately requested a price of $18.00 per share, in the middle of Stout’s
recommended range—and $3.00 more than the 2019 stock valuation. Central States
agreed to the price, see Doc. 121-134, and on August 31, 2020, completed Transaction
One by purchasing 2,222,222.22 shares for $18.00 per share, see Doc. 135 (Redemption
Agreement). Central States disclosed the details of Transaction One to its employee-
shareholders in an email dated August 29, 2020, calling it “the strategy to mitigate the
repurchase obligation risk.” (Doc. 121-136).
Transaction Two required the ESOP to buy back the 2.2 million shares from Central
States and place the shares in a suspense account. This transaction did not occur
immediately, and in the meantime, the per-share value of the company increased again.
Case 5:23-cv-05215-TLB Document 169 Filed 03/30/26 Page 8 of 20 PageID #:
<pageID>

9
GreatBanc re-engaged Stout to evaluate the fair market value of the shares to ensure the
ESOP did not pay too much in the buyback transaction. In November 2020, Stout’s share
price estimate was between $19.95 and $24.50 per share. See Doc. 121-143. GreatBanc
decided to once again request $18.00 per share, though that price was below fair market
value—but a good deal for the ESOP. See id. Central States agreed to the price, and
Transaction Two closed on December 2, 2020. The ESOP issued Central States a
promissory note (Doc. 121-146) in the amount of $40 million, to be repaid over the next
three decades as the ESOP released the shares over time to new or existing Participants.
Plaintiffs had large ESOP balances in their accounts when Transaction Two took
place in December 2020. Plaintiff Justin Shipp was employed by Central States from 2008
to 2019 and served as IT Manager. See Doc. 98 (Shipp Decl.). Plaintiff Vincent Tate joined
Central States in 2009 and served as CFO of the company until 2018, when the Board
“lost confidence and trust in [him]” and replaced him with Mr. Ware; Mr. Tate announced
his retirement in 2022. (Doc. 110-4, p. 29 (Tate Dep.)). Plaintiff Terrence Yazel began
working for Central States in 2012 and became a Managing Director; he ended his
employment with the company in 2018 but chose to wait until he reached age 62 to
receive his full retirement distribution. See Doc. 121-38, p. 5 (Yazel Dep.).
Importantly, none of the Plaintiffs criticize Transaction One because they agree the
ESOP suffered no injuries when Central States purchased 2.2 million shares at market
value; in fact, this transaction decreased the number of outstanding shares in the ESOP
and concentrated the stock value in Plaintiffs’ ESOP accounts. At the same time, though,
it is also undisputed that if the company had stopped at Transaction One and not
completed Transaction Two, the near-term repurchase problem the company identified
Case 5:23-cv-05215-TLB Document 169 Filed 03/30/26 Page 9 of 20 PageID #:
<pageID>

10
back in 2018 would not have been addressed and would, in fact, have worsened.
Nevertheless, Plaintiffs argue that Transaction Two was financially imprudent, caused
them injury, and violated Defendants’ fiduciary duties under ERISA.
According to Plaintiffs, the value of their existing shares was diluted when 2.2
million shares reentered the ESOP during Transaction Two and were placed in a
suspense account. Plaintiffs reason that, as a result of Transaction Two, the equity value
of the company was spread among 2.2 million more shares, which meant their existing
ESOP accounts now held a proportionally smaller slice of the company pie. They argue
that Transaction Two was unnecessary, as there is little evidence that the near-term
repurchasing obligation posed a true threat to the company’s financial health. Plaintiffs
suggest that Central States could have dealt with the near-term repurchasing obligation
through increased profitability—which the company was already experiencing. They claim
there is no evidence to prove Central States, the Board, or GreatBanc “seriously
considered” “alternative strategies that would avoid or minimize Participant harm,” such
as: (1) maintaining the status quo by not engaging in Transaction Two; (2) taking on future
corporate 	debt 	as 	needed; 	(3) 	boosting 	the 	value 	of 	all 	Participant 	shares 	after
Transaction Two by approximately $4.36 per share (to compensate for the “dilution
effect”); or (4) selling the company. (Doc. 135, pp. 29 (citing Plaintiffs’ Expert Report, Doc.
121-44, pp. 43–46), 32).
GreatBanc and Central States respond that they were always aware of the fact
that releveraging would impact the per-share value of Participants’ company stock for at
least some period of time. However, they observe—and Plaintiffs agree—that ERISA
does not prohibit releveraging transactions, per se, and the Plan permitted GreatBanc to
Case 5:23-cv-05215-TLB Document 169 Filed 03/30/26 Page 10 of 20 PageID #:
<pageID>

11
take on debt to purchase stock. Further, Plaintiffs agree that no ESOP Participant lost
shares as a result of the 2020 releveraging transaction, and no Defendant received
additional or different compensation as a result of the transaction. Plaintiffs nevertheless
accuse Central States, Mr. Ware, the Board, and GreatBanc of violating their fiduciary
duties to the Plan Participants as a result of Transaction Two. Under 29 U.S.C.
§ 1104(a)(1)(A)–(B), an ERISA fiduciary is required to “discharge his duties with respect
to a plan solely in the interest of the participants and beneficiaries” and to do so:
(A) 	for the exclusive purpose of:
(i) providing benefits to participants and their beneficiaries; and
(ii) defraying reasonable expenses of administering the plan; [and]
(B) 	with the care, skill, prudence, and diligence under the circumstances
then prevailing that a prudent man acting in a like capacity and
familiar with such matters would use in the conduct of an enterprise
of a like character and with like aims[.]
Part “A” cited above is generally referred to as ERISA’s “duty of loyalty” and part “B” is
referred to as the “duty of prudence.” See Tussey v. ABB, Inc., 746 F.3d 327, 335 (8th Cir.
2014). Plaintiffs also allege that Central States and its Board violated § 1106(b)(1) of
ERISA by charging the ESOP too much for the releveraged stock and causing the ESOP
to incur unnecessary debt in the form of a promissory note.
The Joint Motion for Summary Judgment argues that Plaintiffs’ “stock dilution”
theory does not qualify as a concrete, particularized loss sufficient to confer Article III
standing—but even if it did, neither Central States nor its Board acted as ERISA
fiduciaries in Transaction Two but rather made exclusively corporate decisions for the
benefit of the company. Further, the allegation that Central States violated ERISA by
charging too much for the shares acquired in Transaction Two is demonstrably false, as
Plaintiffs concede the fact that the ESOP paid below-market value for the releveraged
Case 5:23-cv-05215-TLB Document 169 Filed 03/30/26 Page 11 of 20 PageID #:
<pageID>

12
shares. As for GreatBanc’s liability, Defendants agree that GreatBanc functioned as an
ERISA fiduciary in Transaction Two but argue there is no genuine, material dispute over
whether GreatBanc satisfied its fiduciary duties to the ESOP in that transaction. Further,
Defendants argue that Central States could not have violated § 1106 of the ERISA as a
matter of law because ESOP paid below-market value for the releveraged shares.
Plaintiffs respond that their dilution theory satisfies all standing requirements
because their injuries are concrete and particularized. As for the merits, Plaintiffs contend
that a loyal and prudent fiduciary would never have agreed to Transaction Two because
it was unnecessary—as the company was doing well financially—and the dilutive effect
on active Participants’ shares meant the transaction was not in Participants’ best interests
and violated the duties of loyalty and prudence. Plaintiffs argue that Central States and
its Board acted as ERISA fiduciaries by “causing” the ESOP to approve and participate in
Transaction Two because Mr. Ware and the Board devised, designed, and recommended
the transaction to GreatBanc—but failed to meaningfully monitor GreatBanc’s evaluation
of the transaction. See Doc. 135, pp. 21–23. In other words, Plaintiffs believe Central
States left GreatBanc no option but to agree to a transaction that was clearly not in the
ESOP’s best interests, and GreatBanc uncritically “rubber stamp[ed] the transaction.” Id.
at p. 23.
II. 	LEGAL STANDARD
“[T]he plain language of Rule 56(c) mandates the entry of summary judgment, after
adequate time for discovery and upon motion, against a party who fails to make a showing
sufficient to establish the existence of an element essential to that party's case, and on
which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S.
Case 5:23-cv-05215-TLB Document 169 Filed 03/30/26 Page 12 of 20 PageID #:
<pageID>

13
317, 322 (1986). Subpart (a) to Rule 56 provides that summary judgment should be
granted “if the movant shows that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.” In considering a motion for
summary judgment, the Court must review the facts in the light most favorable to the
opposing party and give that party the benefit of any inferences that logically can be drawn
from those facts. Canada v. Union Elec. Co., 135 F.3d 1211, 1212–13 (8th Cir. 1998).
III. 	DISCUSSION
A. 	Standing
The Court first considers whether Plaintiffs have standing to sue for ERISA
violations. To establish Article III standing, a plaintiff must demonstrate that they suffered
an injury in fact and point to evidence to show a causal relationship between the injury
alleged and the challenged conduct. See Steger v. Franco, Inc., 228 F.3d 889, 892 (8th
Cir. 2000) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992)).
Defendants argue that Plaintiffs’ alleged injuries appear speculative rather than
concrete and particularized. After all, Plaintiffs agree that the ESOP paid a below-market
price for the shares acquired in Transaction Two in 2020, and they further agree that no
Participant lost shares in the transaction, that the ESOP’s ownership percentage
remained the same (100%), and that the transaction had no effect on Central States’s
equity value. However, Plaintiffs characterize their injuries as losses precipitated by the
dilution of their stock value after Transaction Two. After Transaction One but before
Transaction Two, active Participants’ stake in the company was spread over 2.2 million
fewer shares than usual; but after Transaction Two, active Participants’ stake in the
company was spread over 2.2 million more shares, thus, diluting the per-share value.
Case 5:23-cv-05215-TLB Document 169 Filed 03/30/26 Page 13 of 20 PageID #:
<pageID>

14
Plaintiffs present no proof that they had a legal expectation of any particular per-share
value, and their alleged injuries do not appear to pertain to the Plan’s holdings as a whole,
but rather to individual Plaintiffs’ expectations of value if they were to have immediately
cashed in their shares after Transaction Two.
The Court acknowledges that Plaintiffs’ dilution theory is a novel one, and a review
of the caselaw has failed to turn up a similar fact pattern. It therefore seems prudent to
assume for the sake of argument that the dilution theory satisfies Article III standing and
confront the merits of Plaintiffs’ § 1104 claims.
B. 	Liability of the Central States Defendants
Central States, Mr. Ware, and the Board argue that no reasonable jury could find
that the two-step releveraging transaction was anything but a corporate decision made
with the financial health of the company in mind. As a matter of law, “normal business
decisions with potential collateral effects on prospective, contingent benefits need not be
made in the interest of plan participants.” Kalda v. Sioux Valley Physician Partners, Inc.,
481 F.3d 639, 646 (8th Cir. 2007). And nothing in ERISA “prohibit[s] an employer from
acting in accordance with its interests . . . when not administering the plan.” Id. (quoting
Phillips v. Amoco Oil Co., 799 F.2d 1464, 1471 (11th Cir. 1986)). In other words, business
decisions do not give rise to liability under ERISA’s fiduciary standards. See Beck v. PACE
Int’l Union, 551 U.S. 96, 101–02 (2007).
Plaintiffs ask the Court to take a step back and view the Central States Defendants
actions in context. Plaintiffs agree with Central States that determining the best method
for managing a repurchase obligation is a corporate function and that the management
and design of an ESOP company’s repurchase obligation is also a corporate function.
Case 5:23-cv-05215-TLB Document 169 Filed 03/30/26 Page 14 of 20 PageID #:
<pageID>

15
However, Plaintiffs appear to argue that Central States’s ultimate selection of one
releveraging strategy transformed Mr. Ware and the Board into “functional fiduciaries”
who “caus[ed] the ESOP to acquire shares, incur, debt, and place shares in suspense.”
(Doc. 135, p. 21) (emphasis added). Unfortunately for Plaintiffs, this strained argument is
unsupported by the facts.
It is undisputed that the company’s near-term repurchasing problem first came to
the Board’s attention in 2018, when Central States’s CEO suddenly announced his
retirement and the company’s obligation to repurchase his ESOP shares demanded fiscal
planning. Plaintiffs agree that Mr. Ware investigated the company’s concerns about other
near-term repurchasing obligations and presented his findings to the Board. Then, over
the next several months, at least ten scenarios were workshopped by Mr. Ware, the
members of the Board, and GreatBanc. Central States hired an independent advisor to
model the scenarios, and GreatBanc hired its own financial advisor to look at the models
and weigh in. After that, Central States hired yet another independent advisor to double-
check the data and provide a second opinion, and those results were shared with the
group, including GreatBanc. Once the Board selected a strategy, there is no dispute that
it had been thoroughly vetted, including by multiple independent financial advisors.
With respect to GreatBanc’s due diligence, there is no dispute that several months
after the particulars of the releveraging transaction were selected by Central States,
GreatBanc re-engaged its financial advisor to provide updated stock valuations for the
benefit of the ESOP Participants, the result being that Transaction One utilized a stock
price of $18.00 per share––in the middle of Stout’s updated range. It is further undisputed
that GreatBanc had its advisor reevaluate the stock price again—for the ESOP’s benefit—
Case 5:23-cv-05215-TLB Document 169 Filed 03/30/26 Page 15 of 20 PageID #:
<pageID>

16
immediately before Transaction Two, and GreatBanc’s diligence resulted in Central
States accepting a below-market stock price. Given these facts, Plaintiff’s allegation that
Central 	States 	put 	on 	a 	“functional 	fiduciary” 	hat 	to 	dupe 	GreatBanc 	is 	entirely
unsupported, 	and 	their 	insinuation 	that 	GreatBanc 	merely 	“rubber 	stamp[ed]” 	the
transaction is borderline frivolous.
The Court assumes on summary judgment that Central States’s business decision
resulted in a temporary reduction in the ESOP’s per-share stock value. Even so, that does
not mean that the Central States Defendants functioned as ERISA fiduciaries. “Virtually
all of an employer’s significant business decisions affect the value of its stock, and
therefore the benefits that ESOP plan participants will ultimately receive.” Martin v. Feilen,
965 F.2d 660, 666 (8th Cir. 1992) (emphasis added). Therefore, business decisions are
not considered plan fiduciary decisions simply because they impact the plan in some
respect. “ERISA's fiduciary duties [of loyalty and prudence] under § 1104 attach only to
transactions that involve investing the ESOP's assets or administering the plan”—which
are not implicated with respect to Central States. Id.
A business decision carries with it pros and cons, but here, Plaintiffs focus only on
the cons—and only those personal to them. They ignore that Transaction Two benefited
the Plan by replenishing the ESOP with 2.2 million more shares to distribute to active and
future Participants over the next three decades. Plaintiffs—all terminated or retired
employees with large ESOP accounts—think less about the Plan than about their
individual stock portfolios. This is clear from their observation that the releveraging
transaction was not warranted in 2020 because the economic modeling showed that
Central States’s “debt capacity would far exceed its debt” through 2028. (Doc. 135, p. 14).
Case 5:23-cv-05215-TLB Document 169 Filed 03/30/26 Page 16 of 20 PageID #:
<pageID>

17
In other words, Plaintiffs suggest that releveraging may be appropriate in 2028, once their
shares have long been redeemed and the company faces a possible debt-to-profit crisis,
but they object to releveraging now.
The Court concludes there is no genuine, material dispute that the Central States
Defendants were not functioning as ERISA fiduciaries in the releveraging transaction
under § 1104—except with respect to their administrative duty to monitor the Plan Trustee,
GreatBanc. Plaintiffs accuse GreatBanc of breaching its duties of loyalty and prudence to
the Plan. If such claims are dismissed, the duty-to-monitor claim against Central States
must also be dismissed. See Allen v. Wells Fargo & Co., 967 F.3d 767, 777 (8th Cir. 2020)
(finding appropriate the dismissal of co-fiduciary liability and duty-to-monitor claims when
underlying duty-of-loyalty claim was without merit).
As for Plaintiffs’ final claim against Central States under § 1106(b), they allege
Central States “deal[t] with the assets of the plan in [its] own interest” or engaged in a
transaction “involving the plan on behalf of a party whose interests are adverse to the
interests of the plan.” Id. § 1106(b)(1)–(2). 	However, as explained above, there is no
evidence that Central States was acting as a Plan fiduciary by investigating, approving,
and consummating the two-part releveraging transaction. Moreover, even if Central
States were acting in such a capacity, the ERISA statute at § 1108(e) provides that a
§ 1106 claim is unavailable if the employer sells securities to a plan “for adequate
consideration”—defined at § 1002(18) as “the fair market value of the asset as determined
in good faith by the trustee or named fiduciary.” As it is undisputed that the ESOP
purchased shares in Transaction Two below fair market value, Plaintiffs have suffered no
injury under § 1106(b), and the claim is without merit.
Case 5:23-cv-05215-TLB Document 169 Filed 03/30/26 Page 17 of 20 PageID #:
<pageID>

18
C. 	Liability of GreatBanc
As ESOP Trustee, GreatBanc was required to maintain duties of loyalty and
prudence to the Participants. Plaintiffs assert that GreatBanc breached these duties by
approving Transaction Two. According to Plaintiffs, there is no amount of due diligence
GreatBanc could have done to avoid breaching its duties of loyalty and prudence to the
Plan because it acquiesced—without enough of a fight—to Central States’s business
decision to add shares to the ESOP through a releveraging transaction. GreatBanc’s
extensive, months’ long evaluative process of examining the releveraging transaction did
not satisfy its ERISA duties because Plaintiffs have determined “the status quo would
[have] better serve[d] Participants’ interests.” (Doc. 135, p. 31).
Plaintiffs agree that the Trust Agreement conferred upon GreatBanc “in its sole
discretion, the authority and responsibility to invest and hold the assets of the Trust
primarily 	in 	Company 	Stock 	for 	the 	exclusive 	benefit 	of 	Participants 	and 	their
Beneficiaries.” (Doc. 121-26, p. 6 , § 5.1(a)(i)). “To that end” GreatBanc was given:
(A) full and complete investment authority and responsibility with respect to
the purchase, retention, sale and pledge of Company Stock; and (B)
complete authority to contract or otherwise enter into transactions for the
purpose of acquiring or selling Company Stock, including transactions with
the Employer or any shareholders of the Employer, and to borrow money
from 	any 	lender 	(including 	the 	Employer 	or 	any 	shareholder 	of 	the
Employer) to finance the acquisition of Company Stock with one or more
Acquisition Loans[.]
Id.
Given the explicit authority vested in GreatBanc by the Plan and the lack of facts
to show collusion between GreatBanc and Central States, self-dealing by GreatBanc, or
lack of transparency, the claim that GreatBanc breached its fiduciary duties to the Plan is
without merit. First, even if Central States could have stuck with the status quo, as
Case 5:23-cv-05215-TLB Document 169 Filed 03/30/26 Page 18 of 20 PageID #:
<pageID>

19
Plaintiffs would have preferred, there is no dispute that the purpose of releveraging was
to prevent Central States from incurring future corporate indebtedness caused by near-
term 	repurchasing 	obligations. 	Second, 	it 	is 	undisputed 	that 	both 	Principal’s 	and
Chartwell’s financial models showed that a releveraging transaction was more effective
than the status quo by: (1) reducing the cost of these near-term repurchase obligations,
which were expected to top $115 million; (2) increasing the number of ESOP shares
available as a retirement benefit to employees; and (3) reducing projected debt levels for
the company.
There is no evidence that GreatBanc breached its duty of loyalty to the Participants
in evaluating the releveraging transaction at each step. Plaintiffs acknowledge that
GreatBanc retained Stout to provide independent financial advice, and Stout considered,
among other things, Central States’s audited financial statements, financial projections,
transaction documents, and financial data on comparable public companies. Stout also
had discussions with certain members of Central States and GreatBanc regarding the
operations, financial condition, future prospects, and projected performance of the
Company. Furthermore, Plaintiffs do not dispute that GreatBanc benefited Participants in
securing a middle-of-the-range share price for Transaction One and a below-market share
price for Transaction Two. The Trustee’s duty of loyalty is not to individual Plan
Participants but to all Plan Participants or the Plan as a whole, and here, there are no
facts to support a breach of the duty of loyalty.
Next, the duty-of prudence claim focuses on “the process by which [the fiduciary]
makes its decisions rather than the results of those decisions.” Braden, 588 F3d at 595.
In assessing the relevant facts, “courts must give due regard to the range of reasonable
Case 5:23-cv-05215-TLB Document 169 Filed 03/30/26 Page 19 of 20 PageID #:
<pageID>

20
judgments a fiduciary may make based on [its] experience and expertise.” Hughes v.
Northwestern Univ., 595 U.S. 170, 177 (2022). With that in mind, there is no genuine,
material dispute that GreatBanc’s decision-making process was objectively reasonable
and prudent. In 2019 and 2020, the Board and management met and communicated
multiple 	times 	with 	GreatBanc, 	Stout, 	Principal, 	and 	Chartwell 	to 	model 	financial
strategies, analyze company financial health, and consider ESOP stock prices. Plaintiffs
do not challenge the accuracy of any of the financial information that Central States
provided to Principal and Chartwell that served as the building blocks for the various
financial scenarios. Further, it is undisputed that Stout—GreatBanc’s advisor—was given
Principal’s and Chartwell’s modeling, performed its own modeling, and was re-engaged
twice in 2020 by GreatBanc to provide updated stock valuations. Plaintiffs’ disagreement
with GreatBanc is less about the process than the fact that Transaction Two happened at
all. Accordingly, the duty-of-prudence claim is dismissed on summary judgment.
As no claims remain against GreatBanc, the duty-to-monitor claim against Central
States Defendants is also dismissed.
IV. 	CONCLUSION
IT IS ORDERED that Defendants’ Joint Motion for Summary Judgment (Doc. 118)
is GRANTED. The Amended Complaint is DISMISSED WITH PREJUDICE, and all other
pending motions are MOOT. A judgment will enter separately.
IT IS SO ORDERED on this 30 th day of March, 2026.
_____________________________________
TIMOTHY L. BROOKS
CHIEF UNITED STATES DISTRICT JUDGE
Case 5:23-cv-05215-TLB Document 169 Filed 03/30/26 Page 20 of 20 PageID #:
<pageID>