Bowers

UNITED STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

___________________________________

)

RITA BOWERS, et al., )

)

Plaintiffs, )

)

v. ) Civil Action

) No. 22-cv-10457-PBS

JOHN H. RUSSELL, et al., )

)

Defendants. )

______________________________ )

FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER

May 29, 2026

Saris, J.

INTRODUCTION

This case concerns a family business.1 The family at issue is

the Russell family, whose members the Court refers to by first

name to avoid confusion. The business is Russelectric, an

electrical equipment manufacturing company founded and owned by

Raymond Russell.

Facing the threat of divorce from his wife Carol, Raymond

created an employee stock ownership plan (the “ESOP” or the

“Plan”).2 Three of the couple’s four children -- John, Suzanne,

1 In HBO’s Succession, Shiv Roy says, “Family and business are

dangerously close.” This litigation exemplifies that lesson.

2 An ESOP is “a type of pension plan that invests primarily in the

stock of the company that employs the plan participants.” Fifth

Third Bancorp v. Dudenhoeffer, 573 U.S. 409, 412 (2014).

and Lisa (“Defendants”) -- took Carol’s side in the divorce and

opposed the ESOP from its inception.

It came as no surprise, therefore, that when given the

opportunity in 2016, John -- who was then Chairman of the Board of

Directors of Russelectric (the “Board”) following his father’s

death -- embraced the opportunity to terminate the ESOP and redeem

its shares. The ESOP’s participants received payments for the

shares that were allocated to their individual accounts, but not

for shares that had not yet been allocated. Several years later,

participants received clawback payments stemming from a sale of

Russelectric to Siemens -- but again, only in proportion to the

allocated shares, not the unallocated ones. In connection with the

Siemens transaction, the Russell children also awarded bonuses to

themselves and others in their family, the Board, and Russelectric

management. The bonuses effectively reduced the amount of the

clawback payments to plan participants.

This litigation ensued. Named plaintiffs Rita Bowers, Michele

Gear-Cole, Florence Lorenzano, and Reginald Tercy are four former

Russelectric employees who represent a certified class of past

ESOP participants (collectively, “Plaintiffs”). Plaintiffs assert

that John committed violations of the Employee Retirement Income

Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., in

relation to the redemption transaction and the negotiation and

administration of the accompanying clawback provision. They

further allege that Suzanne and Lisa knowingly participated in,

and benefitted from, those violations. The crux of Plaintiffs’

claims is that Defendants should have included unallocated shares

in the clawback provision, that all shares were undervalued in the

redemption transaction, and that Defendants unlawfully reduced the

clawback payments by awarding bonuses.

The Court held a twelve-day bench trial in September and

November 2025. It now issues the following findings of fact and

conclusions of law regarding Plaintiffs’ ten ERISA claims. As the

Court will explain, it finds that Plaintiffs have failed to show

that the clawback provision should have included unallocated

shares. It further concludes that Defendants have demonstrated

that the redemption transaction was for fair value. Plaintiffs

have, however, met their burden in establishing that several of

the bonus payments were excessive and a breach of fiduciary duty.

Accordingly, judgment will enter for Plaintiffs in part and

Defendants in part. As the Court will explain, judgment will enter

for Plaintiffs against John on Counts VII and VIII and against all

Defendants on Count X. Supplemental briefing is ordered regarding

the exact calculation of damages.

FINDINGS OF FACT

The Court makes the following findings of fact based on the

testimony and exhibits presented at the bench trial.3

I. Formation of the ESOP

Russelectric was a company that manufactured electrical

equipment such as switch gears and transfer switches. Tr. 1-26:16-

24. The company was founded by Raymond Russell. Tr. 4-89:11-14.

Raymond and his wife Carol had four children: John, Suzanne, Lisa,

and James. Tr. 3-11:18-19.

The ESOP was formed on October 4, 2010, at Raymond’s

direction. Tr. 1-10:22-11:4, 14:17-21. Argent Trust Company

(“Argent”) was named as trustee of the ESOP. Tr. 1-7:16. At issue

in this litigation are the actions taken by the three elder Russell

children -- John, Suzanne, and Lisa –- with respect to the ESOP.

In the formation transaction, Russelectric lent money to the

ESOP, and the ESOP used the loan proceeds to purchase approximately

$22 million in Russelectric shares to be used as collateral for

the loan. Tr. 1-9:4-8, 14:22-24. The shares were held in a suspense

account; as contributions were gradually made by Russelectric to

the ESOP, the loan was repaid and the shares were allocated to

3 Record citations are to the trial transcripts (e.g., “Tr. 1” is

the transcript from the first day of trial), deposition testimony

played at trial (e.g., “Martin Dep.” is the transcript of the

deposition testimony of Steve Martin), or an exhibit admitted at

trial (e.g., “Ex. 245”).

individual employees’ participant accounts. Tr. 1-9:9-16. Once

placed in individual participant accounts, the shares became known

as “allocated shares”; before that time, they were considered

“unallocated shares.” Tr. 1-9:21-10:1, 10:8-12. Under the ESOP

plan document, in the event Russelectric terminated the ESOP, the

proceeds of the unallocated shares would be used to repay the

outstanding loan, with any remaining proceeds to be allocated to

participants. Ex. 245. If the unallocated shares were not valued

high enough to pay off the loan at that time, they would be returned

to the company and the outstanding loan balance would be forgiven.

Ex. 245; Tr. 2-26:7-11.

At the time the ESOP was formed, Raymond and Carol were

embroiled in bitter divorce proceedings. Tr. 4-87:18-20. John,

Suzanne, and Lisa took Carol’s side in the divorce. Tr. 4-88:1-

12. In Carol’s and the children’s view, Raymond formed the ESOP in

order to “defraud [Carol] out of her marital estate.” Tr. 4-88:15-

18. In particular, after the ESOP was created, Raymond and Carol

held a 35% interest in Russelectric, while the ESOP held a 30%

interest. Tr. 3-31:3-10, 38:19-21. The creation of the ESOP thus

ensured that Carol could not win more than half of the company in

the divorce proceedings. Tr. 4-89:11-19. As a result of Raymond’s

suspected machinations, John hated the ESOP, believing that it

“was the cause of [his] parents’ divorce.” Tr. 4-88:15-18. As John

candidly testified, he “was not a fan of the ESOP.” Tr. 4-88:15-

18.

II. Corporate Governance of Russelectric

After the death of their parents, the Russell children became

majority owners of Russelectric, holding 70% of its shares (via a

series of trusts) while the ESOP held 30%. Tr. 3-32:13-16; Ex. 90.

The corporate governance of Russelectric was set forth in a

Mediation Settlement Agreement (the “MSA”) ensuing from the

divorce proceedings. Tr. 2-17:12-15. The MSA dictated that the

Board include three members, two of which would be independent

from the Russell family. Tr. 2-17:22-25. In April 2015, Dennis

Long and Denise Wyatt were selected as the two independent Board

members, while John served as the third member and Chairman. Tr.

1-5:11-25, 14:25-15:2; Tr. 3-29:3-5; Tr. 4-86:8-10.

The MSA also created an “Advisory Board” consisting of several

Russell family members: Suzanne, Lisa, James, Jennifer Novak

(Suzanne’s daughter), and Matthew Russell (John’s son). Ex. 40;

Tr. 1-119:3-8; Tr. 3-10:13-14, 11:18-19; Tr. 5-121:16-23. The

members of the Advisory Board were not actively involved in

corporate governance, but they frequently attended Board meetings

to learn more about the company with the objective of eventually

helping lead the business. Tr. 1-119:21-22; Tr. 3-85:4-8; Tr. 5-

121:7-9. Advisory Board members were paid approximately $40,000

per year. Tr. 1-119:10-12.

III. Clawback Negotiation

On September 24, 2015, Russelectric’s Board (i.e., John,

Long, and Wyatt) voted to terminate the ESOP. Tr. 1-22:3-16; Ex.

8. The ESOP would terminate in 2016, and its shares would be

redeemed. Tr. 1-22:3-16. In conjunction with the termination of

the ESOP, the Board also voted to freeze Russelectric’s defined

benefit (i.e., pension) plan and to enhance the company’s 401(k)

plan by adding an employer contribution. Tr. 1-78:17-23, 79:8-10,

81:11-13.

At the time of the Board’s decision, the ESOP’s trust

agreement specified that Argent was a “directed trustee as

described in ERISA § 403(a).” Ex. 75; see Tr. 1-49:10-13, 21-23;

29 U.S.C. § 1103(a)(1) (allowing a trustee to be expressly made

“subject to the direction of a named fiduciary”). In particular,

Argent was made “subject to the direction of the Company” – i.e.,

Russelectric. Ex. 75. By resolution of Russelectric’s Board, John,

as Chairman, was given the authority to “terminat[e]” all

agreements with Argent and to replace Argent at any time with a

different ESOP trustee. Ex. 8; Tr. 1-24:4-15.

Despite being contractually considered a “directed trustee,”

Argent viewed itself as having the discretion and responsibility

to negotiate fair termination terms for ESOP participants. Tr. 4-

26:9-12. The first set of negotiations took place primarily between

Long (one of Russelectric’s two independent Board members) and

Steve Martin of Argent. Tr. 1-29:2-4. When Long informed Martin of

the Board’s decision to terminate the ESOP by buying out its

shares, Martin requested a three-year “clawback” provision. Tr. 1-

28:15-20, 29:4-12. The clawback provision, as finally executed on

March 28, 2016, Tr. 1-56:20-22, provided that if a “Change of

Control Transaction” occurred within three years of the ESOP’s

termination, plan participants would

receive a cash payment equal to the product of (A) the

number of the Company’s common stock allocated to such

participant’s account in the ESOP as of the ESOP

Termination Date multiplied by (B) the difference

between (i) the per share price of the Company’s common

stock as of the ESOP Termination Date as determined by

a valuation report to be prepared by Prairie Capital;

and (ii) the net per share purchase price received by

the shareholders of the Company upon the Consummation of

the Change of Control Transaction.

Ex. 69. In other words, if Russelectric was sold within three years

at a price higher than that paid upon the termination of the ESOP,

the ESOP’s participants would receive a portion of that premium

commensurate with the number of their allocated shares. The

clawback provision did not entitle participants to any amount based

on the value of unallocated shares. Tr. 1-37:5-7.

The negotiation of this clawback provision was

straightforward. After Martin requested the provision,

Russelectric’s corporate counsel, David Barbash, drafted it and

sent it to Martin. Tr. 1-34:25-35:7, 39:12-21; Ex. 729. Three days

later, Martin responded, stating that Argent had reviewed the

provision and accepted it. Tr. 1-40:20-25; Ex. 729. Martin had

discussed the clawback with his colleagues, and Argent’s counsel

reviewed the provision. Martin Dep. 53:10-54:03; Tr. 4-27:10-16.

Upon receiving Martin’s acceptance of the provision, Long

forwarded Martin’s email to John and several others, writing, “I

still expected [Martin] to have counsel review. This is a good

result.” Ex. 732. Similarly, Barbash wrote, “That was easier than

I anticipated.” Ex. 729.

John, along with Long and Wyatt, voted to approve the clawback

agreement in his capacity as a Board member. Tr. 5-14:14-16. He

was not otherwise involved in the clawback negotiation, from which

he recused himself. Tr. 4-115:13-18.

IV. Financial Improvement of Russelectric

At the time the Board decided to terminate the ESOP,

Russelectric was in freefall. The company’s financial performance

had peaked in 2010 and then steadily diminished, hitting rock

bottom in 2016. Tr. 4-120:15-121:1. In May 2016, in an effort to

save the company, John selected a new Chief Executive Officer

(“CEO”): Dorian Alexandrescu, an immigrant who had fled political

persecution in Romania and then built a career in the electrical

products industry. Tr. 1-55:12-16; Tr. 3-8:11-16; Tr. 7-133:14-

15, 134:23-135:4, 135:20-136:14.

John’s decision to hire Alexandrescu proved to be

Russelectric’s saving grace. Throughout the fall of 2016 and in

2017, Alexandrescu gradually made major improvements to the

company. Tr. 2-55:21-56:2. He built out a new management team,

including a new Chief Financial Officer (“CFO”) named Raul Tejada,

who began work in October 2016 and became CFO in January 2017, and

a new Vice President of Operations, who began work in October 2016.

Tr. 1-76:1-3; Tr. 2-21:19-22:3, 54:24-55:1; Tr. 8-17:8-20, 18:9-

16. He also changed the company’s financial reporting structure,

Tr. 2-22:4-18; developed new markets and products, Tr. 2-23:9-15;

Tr. 5-76:3-6; reorganized the sales force, Tr. 8-12:20-13:8; and

enhanced aftermarket sales, such as upgrades to the company’s

products, Tr. 8-13:23-14:17. On the operations side, Alexandrescu

introduced “lean manufacturing,” which entailed a fundamental

redesign of Russelectric’s factories to improve efficiency. Tr. 2-

22:19-23:1.

Largely due to Alexandrescu’s interventions, Russelectric’s

financial performance improved in late 2016 and 2017. Beginning

around October 2016, the company’s backlog -- i.e., confirmed

orders yet to be fulfilled -- had begun to increase. Tr. 8-23:2-

4. Likewise, as of late November 2016, the company’s bookings and

revenue had increased in comparison to late June, though many of

the sales and bookings did not come to fruition until mid-2017.

Tr. 1-76:24-77:1, 77:5-8; Tr. 8-20:1-10. By the end of 2016,

Russelectric’s outlook had been stabilized, leading to improvement

in 2017. Tr. 5-70:21-71:8.

While these developments were gradually occurring,

Russelectric’s stock was undergoing an annual financial valuation

conducted by Prairie Capital. Tr. 1-13:8-10; Ex. 99. Much of the

valuation process occurred in September 2016, and Prairie Capital

published the final valuation on October 11, 2016. Tr. 8-36:12-

17, 38:6-21; Ex. 99. Although the valuation was published in

October 2016, it valued Russelectric’s stock as of June 30, 2016.

Ex. 99. According to the final valuation report, which was

presented to Russelectric’s Board, Prairie Capital determined that

the company’s stock was worth approximately $121 per share as of

June 30, 2016. Tr. 1-65:23-25; Exs. 99, 472.

Prairie Capital’s valuation was largely based on financial

information and projections provided to it by Russelectric’s

management, including Alexandrescu. Tr. 2-40:4-7; Tr. 8-38:19-21.

Alexandrescu gave Prairie Capital the same budget projections that

he provided to the Board. Tr. 8-38:19-21. He informed Prairie

Capital of new opportunities in product development, sales

channels, market development, aftermarket sales, and lean

manufacturing. Tr. 8-41:11-45:13; Ex 188. Prairie Capital’s

valuation was also reviewed by Argent, which determined that

Prairie Capital had used appropriate financial adjustments and

projections. Tr. 4-32:2-25.

V. Redemption Transaction

The dissolution of the ESOP (by way of the redemption of its

shares) was scheduled to occur on November 30, 2016. Tr. 1-64:20-

22. In anticipation of this redemption transaction, the Board

entered a new engagement agreement with Argent, which specified

that Argent would act as a “discretionary trustee” (rather than a

“directed trustee”) with respect to the transaction. Tr. 1-49:3-

7, 51:7-10; Ex. 124. The agreement gave Argent the right to

“approve or disapprove the proposed transaction,” Tr. 2-31:15-16,

and stated that “Argent will assume the fiduciary responsibility

for determining . . . whether the price the [c]ompany pays the

ESOP for the stock in the [p]roposed [t]ransaction is adequate

consideration, and whether the [p]roposed [t]ransaction is fair

from a financial viewpoint to the ESOP and its participants.” Ex.

124; see Tr. 2-30:20-25.

Based on this engagement agreement, the Board viewed itself

as adverse to Argent in negotiating the redemption price, with

Argent representing the ESOP and the Board representing the company

as a whole. Tr. 1-71:9-12. Alexandrescu led the negotiation on

behalf of the company. Tr. 1-55:20-24.

In order to determine the fair market value of Russelectric’s

stock as of the termination date of November 30, 2016, Argent

retained Prairie Capital to perform another valuation. Tr. 2-36:7-

20, 37:14-16, 38:12-14. The valuation was again based on financial

information provided by Russelectric’s management. Tr. 2-43:3-9,

44:5-7. Russelectric provided mostly the same financial

projections that they had given Prairie Capital for purposes of

the annual valuation, along with the total current backlog. Tr. 2-

43:3-9, 44:5-7, 45:21-25, 46:17-20; Ex. 542. Because the annual

valuation largely had been prepared in September 2016, the Board

and company management felt that no major changes had occurred

between September and November that warranted altering the

financial projections. Tr. 3-45:3-7, 45:14-19. Prairie Capital

likewise identified no major changes between September and

November 2016 justifying a substantial increase in financial

forecasts. Fiore Dep. II at 95:05-10.

After reviewing the financial information and conducting its

own independent research, Fiore Dep. II at 39:13-40:01, Prairie

Capital determined that Russelectric’s stock had a value in the

range of approximately $120 to $141 as of November 30, 2016. Tr.

2-48:7-10; Ex. 470. Prairie Capital provided this estimate to

Argent. Tr. 4-34:4-13. The valuation was never shared with

Russelectric’s management, however, despite Alexandrescu’s

repeatedly requesting it. Tr. 2-36:24-37:4; Tr. 8-54:7-8. Prairie

Capital declined to provide the valuation to Alexandrescu because

it viewed Russelectric as the counterparty in the redemption

transaction, while Argent was Prairie Capital’s client. Fiore Dep.

II at 112:17-113:18. Similarly, Argent believed that showing

Russelectric the valuation report would damage Argent’s

negotiating position. Tr. 4-37:20-25.

After receiving Prairie Capital’s valuation report, Argent

made an initial offer to Russelectric’s management, suggesting

that the ESOP’s shares be redeemed at a price of $165 per share.

Tr. 1-64:25-65:2. Argent did not provide any information

supporting this figure, even after Alexandrescu requested an

explanation. Tr. 1-109:14-20; Tr. 8-56:7-11. Argent also did not

inform the Board that the offer exceeded Prairie Capital’s

valuation range of $120 to $141. Tr. 2-48:12-49:8. The $165 offer

was not based on any internal financial analysis by Argent, Tr. 4-

17:9-11; rather, Argent viewed the offer as higher than fair market

value and a “really high price to start a negotiation.” Tr. 4-

17:6-7; see Tr. 4-17:22-18:5.

Russelectric’s Board believed that $165 exceeded fair market

value. Tr. 1-64:25-65:6. In response to Argent’s offer,

Alexandrescu conducted his own analysis and shared it with the

Board. Tr. 1-66:9-14. He prepared a worksheet in which he estimated

the actual value of Russelectric’s stock to be $134 per share. Ex.

701. In Alexandrescu’s view, the financial projections from

Prairie Capital’s annual valuation (which had been prepared very

recently in September and October 2016) remained largely the same,

except that the company had more cash on hand and decreased

liability to the defined benefit plan. Tr. 8-55:9-11; Ex. 701.

Alexandrescu had provided all of this information to Prairie

Capital as it prepared the redemption valuation. Tr. 8-57:2-8.

Long and Russelectric’s counsel also believed that

Russelectric had an important bargaining chip at its disposal. Tr.

1-96:8-14, 98:3-7, 106:13-15; Tr. 2-105:16-106:2. Long told

Alexandrescu that under the ESOP’s plan document, the company had

the right to unilaterally redeem the ESOP’s shares at $121 per

share based on the most recent annual valuation. Tr. 1-96:8-14,

98:3-7, 106:13-15, 108:6-12, 109:2-5; Ex. 737. This purported

right of redemption was known as the “autoput.”4 Long suggested

that Alexandrescu inform Martin that unless Argent provided the

updated Prairie Capital valuation, the Board would exercise the

autoput and purchase the ESOP’s stock at $121 per share. Tr. 2-

108:6-109:6; Ex. 737.

Armed with the belief that the true fair market value was

$134 and that the company could exercise the autoput at $121,

Alexandrescu responded to Argent’s offer of $165. Alexandrescu

presented a counteroffer of $134 per share and stated that if

Argent did not accept that amount, the Board would exercise the

autoput the next day. Tr. 8-101:14-18. Faced with the possibility

4 Long testified that every ESOP holding non-publicly traded stock

has a “put” provision that ensures that participants receive value

if the stock is redeemed. Tr. 1-101:15-21. He further testified

that many ESOPs have an “autoput” provision, which makes the “put”

exchange instantaneous to avoid triggering other corporate

consequences. Tr. 1-101:22-102:6.

of receiving only $121 per share, and knowing (but not telling

Russelectric) that $134 was above the midpoint of Prairie Capital’s

valuation range of $120 to $141, Argent decided to accept

Alexandrescu’s offer of $134 per share. Tr. 1-109:7-13; Tr. 4-

37:1-19; Ex. 776.

Russelectric and Argent then negotiated a formal redemption

agreement, with each side represented by counsel. Tr. 2-27:3-5,

27:11-14. The redemption agreement provided that the ESOP’s

allocated stock would be redeemed at $134 per share. Ex. 72. It

incorporated the previously negotiated clawback provision. Ex. 72.

Argent never asked to renegotiate that provision or to include

unallocated shares in the clawback. Tr. 2-29:9-13, 29:18-21; Tr.

3-23:10-17.

On the same day that the redemption agreement was

finalized - - November 30, 2016 -- Prairie Capital provided a

“fairness opinion” to Argent, which Argent forwarded to

Russelectric. Tr. 2-31:21-32:1; Ex. 636. The fairness opinion

concluded that the price of $134 per share to be received by the

ESOP was “not less than ‘fair market value’ and constitute[d]

‘adequate consideration’” and that “[t]he [t]ransaction, taken as

a whole, [wa]s fair to the [ESOP] from a financial point of view.”

Ex. 636 (quoting 29 U.S.C. § 1002(18)). The Board reviewed the

fairness opinion. Tr. 2-56:8-13.

The ESOP’s shares thus were redeemed on November 30, 2016, at

a price of $134 per share. Tr. 1-64:20-24. Each plan participant

received $134 multiplied by the number of allocated shares in their

account. Tr. 1-37:23-25. Because the value of the unallocated

shares was lower than the remaining ESOP loan balance, the

unallocated shares were returned to Russelectric and cancelled,

the loan was extinguished, and the unpaid loan balance was

forgiven. Tr. 1-37:25-38:3, 38:13-14, 73:1-5. No payout was

received by plan participants for the unallocated shares. Tr. 1-

73:6-14.

John had not been directly involved in the redemption price

negotiations, instead recusing himself and allowing Alexandrescu

to use Long as his point of contact on the Board. Tr. 2-49:13-15;

Tr. 5-67:18-21; Tr. 8-53:13-20. John never communicated directly

with Argent or Prairie Capital regarding the transaction. Tr. 5-

68:1-6. He did, however, email Alexandrescu, writing: “My personal

thanks for your efforts on behalf of the company and my family to

get a fair valuation.” Ex. 706. He also signed off on the $134

redemption price. Tr. 4-124:21-23. When the redemption transaction

was complete, John emailed his siblings, celebrating that the “ESOP

ha[d] officially died” and that Russelectric was “once again 100

percent family owned.” Ex. 700.

VI. Siemens Offer

Following the termination of the ESOP, Russelectric’s

financial performance continued to improve as Alexandrescu’s

corporate reforms took effect. Several private equity firms had

offered to buy the company in 2016, but these offers generally

were not taken seriously and John had no interest in selling to a

private equity firm at a low price. Tr. 2-67:22-68:2; Tr. 3-62:22-

24; Tr. 5-22:3-4; Tr. 8-60:1-4. A more serious offer from Western

Commerce was briefly entertained in February 2017, Tr. 3-64:2-7;

Tr. 8-112:18-25, as were two offers from AMETEK and Socomec in the

summer of 2017, Tr. 2-69:5-13. In connection with the Western

Commerce offer, Alexandrescu emailed the Board that he estimated

a selling price of $90 million, which corresponded to a

substantially higher company value than the valuation of

Russelectric during the redemption transaction. Tr. 3-64:2-65:11;

Ex. 707.

In late 2017, a major disruption occurred in Russelectric’s

market when one of the company’s main competitors, ASCO, was

purchased by Schneider Electric, a supplier of components for

Russelectric’s electrical equipment. Tr. 1-27:1-2, 27:6-7; Tr. 5-

71:9-13. This acquisition posed an existential threat to

Russelectric’s control over its pricing. Tr. 2-66:23-67:2. As a

result, Alexandrescu received permission from the Board to

approach Siemens about a potential sale of Russelectric while its

value was high. Tr. 5-71:22-72:22.

On February 20, 2018, Siemens sent a letter expressing

interest in purchasing Russelectric for $340 million. Tr. 1-110:3-

6; Ex. 831. On a per-share basis, this price far exceeded the

amount that Russelectric had paid for the ESOP’s shares less than

three years prior in November 2016. Tr. 7-35:11-36:4. As a result,

the clawback provision would be implicated.

VII. Clawback Administration

In conjunction with the imminent sale to Siemens, the Board

decided to award bonuses to various members of management and the

Russell family. The Board hired Charles Schultz, an executive pay

consultant, to advise on the proper magnitude of bonus payments.

Tr. 3-49:16-18; Tr. 5-82:12-19. John, Long, and Alexandrescu

proposed specific bonus amounts to Schultz, who largely agreed

(without much analysis) that they were within reasonable ranges of

typical executive bonuses. Tr. 3-52:14-22. Schultz spent only

around ten hours on the work. Tr. 5-83:9-20. He was unaware of the

existence of a clawback, Tr. 5-87:3-6, and had never advised a

company with an ESOP, Tr. 5-98:23-99:9. At trial, Schultz testified

that he was unable to produce a complete record of his work for

Russelectric because he destroyed some of the files when he

retired. Tr. 5-101:17-102:16.

On October 1, 2018, the Board accepted a stock purchase

agreement authorizing transaction bonuses and expenses of

approximately $77 million. Tr. 1-115:7-11, 115:17-116:4; Ex. 390.

The Board awarded bonuses of approximately (1) $14 million to John;

(2) $11 million to the members of the Advisory Board (Suzanne,

Lisa, James, Jennifer Novak, and Matthew), allotted as a pool to

be divided by the family as they chose; (3) $3 million to Long;

(4) $31 million to six individuals in management, including

Alexandrescu and Tejada; and (5) $7 million in additional fees to

Alexandrescu and Tejada for the mergers and acquisitions (“M&A”)

services they provided in connection with the Siemens

negotiations. Ex. 40; see Tr. 2-64:18-22.

On October 2, 2018, Siemens and Russelectric entered into an

agreement for Siemens to purchase Russelectric for $345 million.

Ex. 647. Because the clawback amounts would be based on the “net

per share purchase price received by the shareholders” upon a

transaction with Siemens, rather than the gross sale price, the

Board determined that the bonuses could be deducted from the sale

price before calculating the clawback. Ex. 69. Accordingly, former

ESOP plan participants received lower clawback payments than they

would have if no bonuses had been awarded. Tr. 7-35:11-36:4.

PROCEDURAL HISTORY

Plaintiffs originally brought suit against John, Suzanne,

Lisa, Long, Wyatt, and Argent in March 2022. The Court denied two

motions to dismiss in February 2024 and January 2025. See Bowers

v. Russell, 717 F. Supp. 3d 165, 177 (D. Mass. 2024) (denying

motion to dismiss Counts I-VI); Bowers v. Russell, 763 F. Supp. 3d

90, 101 (D. Mass. 2025) (denying motion to dismiss Counts VII-X).

In January 2025, the Court also certified a class consisting of

former ESOP participants and beneficiaries. See Bowers v. Russell,

766 F. Supp. 3d 136, 153 (D. Mass. 2025). The Court subsequently

entered preliminary approval of settlement agreements between

Plaintiffs and Long, Wyatt, and Argent in September 2025, for $1.5

million, $3 million, and $4.5 million, respectively. See Dkts.

434-1 at 5, 491-1 at 5, 560-1 at 4, 569-71. The Court held that it

would employ a proportionate share approach in assessing damages

to the remaining Defendants (John, Suzanne, and Lisa). See Bowers

v. Russell, No. 22-cv-10457, 2025 WL 2740682, at *2 (D. Mass. Sep.

5, 2025). The Court presumes familiarity with these prior opinions.

As relevant here, the operative complaint asserts ten ERISA

claims against John, four of which are also brought against Suzanne

and Lisa. The claims fall into four categories: (1) claims

challenging the decision to exclude unallocated shares from the

clawback provision (the “Clawback Negotiation Claims”); (2) claims

challenging the adequacy of the consideration received by the ESOP

in the November 2016 redemption transaction (the “Redemption

Transaction Claims”); (3) claims challenging the decision to award

bonuses in relation to the Siemens transaction, which reduced the

clawback payments to plan participants (the “Clawback

Administration Claims”); and (4) equitable claims seeking recovery

of traceable proceeds due to Defendants’ knowingly participating

in, and benefitting from, several of the above ERISA violations.

A twelve-day bench trial was held in September and November

2025. After reviewing the trial record and the parties’ pretrial,

trial, and posttrial briefing, the Court issues the following

conclusions of law.

CONCLUSIONS OF LAW

The Court first addresses, and rejects, two affirmative

defenses raised by Defendants. The Court then analyzes the claims

asserted against John. Finally, the Court addresses the claims

brought against Suzanne and Lisa.

I. Affirmative Defenses

At the outset, the Court must address two threshold arguments

raised by Defendants. First, Defendants contend that Plaintiffs’

claims are barred by the statute of limitations. Second, Defendants

assert that Plaintiffs released their claims. As explained below,

the Court rejects both arguments.

A. Statute of Limitations

ERISA claims must be brought before the earlier of (1) six

years after a breach or violation or (2) “three years after the

earliest date on which the plaintiff had actual knowledge of the

breach or violation.” 29 U.S.C. § 1113. A plaintiff has “actual

knowledge” of a breach if she “knows ‘the essential facts of the

transaction or conduct constituting the violation.’” Edes v.

Verizon Commc’ns, Inc., 417 F.3d 133, 142 (1st Cir. 2005) (quoting

Martin v. Consultants & Adm’rs, Inc., 966 F.2d 1078, 1086 (7th

Cir. 1992)). “[M]ere knowledge of facts indicating that ‘something

was awry’” is insufficient. Id. (quoting Martin, 966 F.2d at 1086).

Defendants argue that Plaintiffs had actual knowledge of the

alleged violations more than three years prior to bringing their

claims. In particular, Defendants contend that Plaintiffs received

a memorandum explaining the redemption transaction in December

2016 and thus that the Redemption Transaction Claims are time-

barred. Defendants further argue that the Clawback Negotiation

Claims and Clawback Administration Claims are time-barred because

Plaintiffs received a letter from Alexandrescu in October 2018

explaining that Plaintiffs would receive clawback payments based

on the number of their allocated shares.

This Court has previously explained that to demonstrate

actual knowledge for purposes of the Clawback Negotiation Claims,

Defendants are required

to show that Plan participants knew “(1) [that] the Plan

possessed unallocated shares of Russelectric stock; (2)

that the Plan sold those shares to anyone; (3) that the

terms of the ESOP termination sale differed as between

allocated and unallocated shares; (4) that the Plan

received less for unallocated shares as compared to

allocated shares; [and] (5) that the sale of the

unallocated shares was tainted by wide-ranging fiduciary

misconduct that impacted their valuation.”

Bowers, 766 F. Supp. 3d at 148 (second alteration in original)

(quoting Bowers, 717 F. Supp. 3d at 174)). The testimony at the

bench trial does not reflect this degree of actual knowledge. On

the contrary, the four named Plaintiffs each testified that they

did not even know of the existence of unallocated shares until

they were contacted about the litigation. Tr. 4-42:6-9, 60:6-9,

66:18-67:2, 68:24-69:4, 75:20-76:7, 79:2-4, 93:13-15. While the

letter sent by Alexandrescu in connection with the Siemens

transaction informed certain participants that they would be

compensated “based on the number of shares [they] held at the

termination of the ESOP,” it did not explain that unallocated

shares had also existed but not been included in the clawback

calculation. Ex. 791; see Tr. 1-74:6-11. The Clawback Negotiation

Claims thus are not time-barred.

The Redemption Transaction Claims likewise survive the

statute of limitations. Plaintiffs testified that they did not

know how the shares had been appraised for purposes of the ESOP

termination and had no reason to suspect that they had been

undervalued. Tr. 4-42:3-15, 60:10-15, 78:17-23, 93:8-12. The

December 2016 memorandum informed participants that the ESOP had

been terminated but did not apprise them of any specifics about

the valuation process, such as the fact that Argent had requested

a higher price or that Alexandrescu had threatened to use the

autoput. See Ex. 639. Defendants thus have failed to show that

Plaintiffs had actual knowledge of the alleged undervaluation of

Russelectric’s shares for purposes of the redemption transaction.

Finally, this Court previously held that the Clawback

Administration Claims would be time-barred only if Defendants

demonstrate that Plaintiffs “knew that the sale price was

significantly underreported after Defendants allegedly gave

themselves . . . transaction bonuses.” Bowers, 766 F. Supp. 3d at

148. Plaintiffs’ trial testimony reflects, in contrast, that they

were unaware of the bonuses and their impact on the clawback

amounts. Tr. 4-42:16-23, 62:5-7, 79:8-10, 94:11-14. The letter

sent by Alexandrescu did not notify participants of the bonuses.

See Ex. 791. The Clawback Administration Claims therefore are not

barred by the statute of limitations.

B. Release

Defendants next contend that Plaintiffs contractually

released their claims by signing severance agreements and a release

required as a condition of closing for the Siemens transaction.

The Court has rejected these arguments at previous stages of the

litigation. See Bowers, 717 F. Supp. 3d at 173-74; Bowers, 763 F.

Supp. 3d at 97-98; Bowers, 766 F. Supp. 3d at 149-50. The Court

incorporates by reference its previous discussions of the releases

at issue.

The releases signed as part of the Siemens transaction

purported to release all claims against Russelectric directors

(and various other entities and individuals) “arising from,

relating to or in connection with, either directly or indirectly,

the ESOP, the termination of the ESOP and/or the [Siemens sale].”

Ex. 785; see Exs. 787, 789, 791. They further provided that

“[n]otwithstanding the foregoing, the term ‘Released Claims’ shall

not include claims brought by Releasors with respect to the

performance of the obligations contemplated herein.” Ex. 785; see

Exs. 787, 789, 791.

The Court previously held that “Plaintiffs plausibly

allege[d] that they were completely unaware factually of the

unallocated stock and their rights to it, and thus that the

releases were void.” Bowers, 717 F. Supp. 3d at 174. The Court

further held that the release “contain[ed] limiting language that

explicitly exclude[d] claims related to the clawback provision

from the scope of the release.” Bowers, 763 F. Supp. 3d at 97.

Defendants provide no reason to deviate from these conclusions,

and several lines of testimony from the bench trial buttress them.

For example, Bowers was not told that bonuses had been deducted

from the gross sales price of Russelectric to Siemens. Tr. 4-56:4-

13.

Defendants also allude to severance agreements with releases

that were signed by Bowers, Gear-Cole, and Lorenzano (but not by

Tercy). Tr. 4-44:14-21, 45:8-10, 72:24-73:5, 74:9-18, 103:7-9,

104:9-19; see Exs. 786, 788. The severance agreements purported to

release all claims against Siemens “and its directors, employees,

officers, representatives, agents, shareholders, related entities,

affiliates, parents, subsidiaries, and divisions, or their

respective predecessors, successors, assigns, directors,

employees, officers, representatives, agents, and shareholders.”

Ex. 786; see Ex. 788.

The Court previously discussed, at the class certification

stage, a disagreement among the parties regarding whether the plain

language of the severance agreements released claims against

Russelectric directors (including John) or only previous Siemens

directors. See Bowers, 766 F. Supp. 3d at 149-50. In the Court’s

view, the severance agreements are best read as releasing claims

only against previous Siemens directors -- i.e., “predecessors” of

Siemens’ “directors.” Ex. 786; see Ex. 788.5 And in any event,

Defendants only mention this issue in passing in their pretrial

and posttrial briefing and do not meaningfully develop the

argument. They thus have not met their burden of demonstrating

that Bowers, Gear-Cole, Lorenzano, and similarly situated class

members have released their claims through the severance

agreements. See Med. Air Tech. Corp. v. Marwan Inv., Inc., 303

5 The bench trial testimony reflects that Gear-Cole did not believe

the release would apply to anyone not affiliated with Siemens, Tr.

4-75:9-11, and that Lorenzano did not understand what claims she

was releasing, Tr. 4-95:6-9, 103:7-9.

F.3d 11, 18 n.3 (1st Cir. 2002) (“[T]he party seeking to enforce

the release bears the burden of proof.”).

II. Claims Asserted Against John

The Court now addresses the four buckets of claims brought by

Plaintiffs against John: (1) the Clawback Negotiation Claims, (2)

the Redemption Transaction Claims; (3) the Clawback Administration

Claims; and (4) the equitable claims.

A. Clawback Negotiation Claims

Plaintiffs first challenge the decision to exclude

unallocated shares from the clawback provision. In Count III,

Plaintiffs claim that John breached fiduciary duties of prudence

and loyalty in violation of 29 U.S.C. § 1104(a)(1) and failed to

monitor Argent. In Count IV, Plaintiffs assert that John is subject

to cofiduciary liability under 29 U.S.C. § 1105(a) for knowingly

participating in a fiduciary breach committed by Argent.

The parties dispute whether John was a fiduciary with respect

to the Clawback Negotiation Claims and, if he was, whether he

breached his fiduciary duties. The Court tackles each of these

issues in turn. The Court then adjudicates Plaintiffs’ arguments

that John failed to monitor Argent and is subject to cofiduciary

liability.

1. Fiduciary Status

Two types of fiduciaries exist under ERISA: named and

functional fiduciaries. See Mass. Laborers’ Health & Welfare Fund

v. Blue Cross Blue Shield of Mass., 66 F.4th 307, 316 (1st Cir.

2023). Plaintiffs first contend that Russelectric’s Board

(including John) was a named fiduciary -- i.e., a person

“identified as” a fiduciary “in a plan instrument or pursuant to

a procedure specified in the plan,” id. (quoting 29 U.S.C.

§ 1102(a)) -- with respect to the Clawback Negotiation Claims.

The Court agrees. At the time of the clawback negotiation,

the ESOP’s trust agreement provided that Argent was “subject to

the direction of” Russelectric as a “directed trustee as described

in ERISA § 403(a).” Ex. 75; see Tr. 1-49:10-13, 49:21-23. That

provision of ERISA permits a trustee (here, Argent) to be made

“subject to the direction of a named fiduciary.” 29 U.S.C.

§ 1103(a)(1). The ESOP’s plan document, in turn, specified that

“[a]ny action authorized . . . to be taken by

[Russelectric] . . . under the Plan shall be by resolution of its

board of directors.” Ex. 590. These plan instruments thus

“identified” the Board as a named fiduciary with the power to

direct Argent and the “authority to control and manage the

operation and administration of the plan.” 29 U.S.C. § 1102(a).

That named fiduciary status is attributable to the individual Board

members, including John. See Stein v. Smith, 270 F. Supp. 2d 157,

168-69 (D. Mass. 2003) (holding that corporate committee’s named

fiduciary status was attributable to individual committee

members). Indeed, the Board passed a resolution that gave John the

authority to replace Argent at any time with a different ESOP

trustee. Tr. 1-24:4-15; Ex. 8.

Plaintiffs also argue that the Board was a functional

fiduciary. “A person is a functional fiduciary ‘with respect to a

plan to the extent . . . he exercises any discretionary authority

or discretionary control respecting management of such plan or

exercises any authority or control respecting management or

disposition of its assets.’” Mass. Laborers’ Health & Welfare Fund,

66 F.4th at 316 (emphasis omitted) (quoting 29 U.S.C.

§ 1002(21)(A)(i)). Because “a person can be a fiduciary ‘for some

purposes and not for others,’” courts must assess functional

fiduciary status with respect to the specific challenged

activities. Id. at 317 (quoting In re Fid. ERISA Fee Litig., 990

F.3d 50, 55 (1st Cir. 2021)).

The Court agrees that the Board, in addition to being a named

fiduciary, served as a functional fiduciary with respect to the

Clawback Negotiation Claims because it “exercise[d] . . .

discretionary authority or discretionary control respecting

management of” the ESOP. 29 U.S.C. § 1002(21)(A)(i). A party has

discretionary authority respecting plan management when it

“select[s] from a range of options in” managing the plan. Mass.

Laborers’ Health & Welfare Fund, 66 F.4th at 318. Here, the claims

at issue challenge the Board’s decision to include allocated

shares, but not unallocated shares, in the clawback provision. The

choice to exclude unallocated shares was a discretionary one.

2. Breach of Fiduciary Duties

Having determined that John, as a member of the Board, was a

fiduciary with respect to the Clawback Negotiation Claims, the

Court now must analyze whether he breached any fiduciary duties.

“A claim for breach of a fiduciary duty under ERISA includes

proving a breach, a loss, and the causal connection between the

two.” Parmenter v. Prudential Ins. Co. of Am., 93 F.4th 13, 19

(1st Cir. 2024). Plaintiffs must “show[] a breach of fiduciary

duty and loss to the plan,” at which point “the burden shifts to

the fiduciary to prove that such loss was not caused by its

breach.” Brotherston v. Putnam Invs., LLC, 907 F.3d 17, 39 (1st

Cir. 2018).

“ESOP fiduciaries are subject to the same duty of prudence

that applies to ERISA fiduciaries in general, except that they

need not diversify the fund’s assets.” Fifth Third Bancorp v.

Dudenhoeffer, 573 U.S. 409, 412 (2014). Under ERISA’s duty of

prudence, “a fiduciary must act ‘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.’” Brotherston, 907 F.3d at 30 (quoting 29 U.S.C.

§ 1104(a)(1)(B)). “[T]he content of the duty of prudence turns on

‘the circumstances . . . prevailing’ at the time the fiduciary

acts.” Barchock v. CVS Health Corp., 886 F.3d 43, 44 (1st Cir.

2018) (second alteration in original) (quoting Dudenhoeffer, 573

U.S. at 425).

Under ERISA’s duty of loyalty, “fiduciaries ‘shall discharge

their duties with respect to a plan “solely in the interest of the

participants and beneficiaries,” that is, “for the exclusive

purpose of (i) providing benefits to participants and their

beneficiaries; and (ii) defraying reasonable expenses of

administering the plan.”’” Brotherston, 907 F.3d at 39-40 (quoting

Pegram v. Herdrich, 530 U.S. 211, 223-24 (2000)); see 29 U.S.C.

§ 1104(a)(1)(A). “[T]he duty of loyalty requires the fiduciary to

‘deal fairly and honestly with beneficiaries’ so as ‘to ensure

that a plan receives all funds to which it is entitled.’”

Cunningham v. Cornell Univ., 604 U.S. 693, 696 (2025) (citations

omitted) (first quoting Varity Corp. v. Howe, 516 U.S. 489, 506

(1996); and then quoting Cent. States, Se. & Sw. Areas Pension

Fund v. Cent. Transp., Inc., 472 U.S. 559, 571 (1985)). In

analyzing a claim of breach of the duty of loyalty, courts “ask[]

whether the fiduciary’s ‘operative motive was to further its own

interests.’” Brotherston, 907 F.3d at 40 (quoting Ellis v. Fid.

Mgmt. Tr. Co., 883 F.3d 1, 6 (1st Cir. 2018)).

Plaintiffs contend that John breached the duties of prudence

and loyalty by failing to include unallocated shares in the

clawback provision. The Court disagrees. Although John voted to

approve the clawback agreement, Tr. 5-14:14-16, he recused himself

from the negotiation, instead allowing Long to take the lead for

Russelectric. Tr. 1-42:15-20; Tr. 2-49:20-22; Tr. 4-112:1-2,

115:13-18. More importantly, even if John had been personally

involved in the formulation of the clawback provision (he was not),

Plaintiffs have failed to show that excluding unallocated shares

from the provision was imprudent or disloyal.

At the outset, the Court notes that the Board’s assent to

Argent’s request for a three-year clawback provision was a prudent

act that was beneficial to the ESOP’s participants. The plan

documents did not provide for a clawback, Tr. 1-24:20-24, and at

the time of the clawback negotiation, clawbacks were less common

than they are today in sales of privately held stock, Tr. 1-31:12-

32:3. Argent viewed the three-year term of the clawback provision

as very favorable to the ESOP. Tr. 4-25:4-6. Long testified that

in more than fifty clawback provisions he saw in his career, none

of them had a term that long, Tr. 2-57:10-23, and Plaintiffs’

experts both acknowledged that the length of the clawback was

appropriate, Tr. 6-68:22-69:6, 121:17-122:2.

As to the treatment of unallocated shares, Argent never

requested that the unallocated shares be included in the clawback

provision, and Argent had never heard of such an arrangement. Tr.

4-22:4-8. Long, John, and Russelectric’s ERISA counsel likewise

testified that the thought of including unallocated shares in the

clawback never even occurred to them because they had never heard

of unallocated shares being included in such a provision. Tr. 1-

29:20-23, 32:4-8, 42:15-21; Tr. 2-5:16-22, 57:10-23, 91:11-19,

92:4-13, 98:7-13; Tr. 4-114:23-25. The testimony reflected that

including unallocated shares in the clawback would have been

atypical given that unallocated shares act as collateral for the

unpaid ESOP loan balance. Tr. 1-32:25-33:3. If the value of the

unallocated shares had exceeded the loan balance at the time of a

redemption of ESOP stock, the surplus value would have been

allocated to participants and thus included in a future clawback.

Ex. 245.

Expert testimony at the bench trial was not to the contrary.

Defendants’ expert Richard May6 had never heard of a clawback

agreement including unallocated shares. Tr. 9-100:15-17.

Plaintiffs’ expert Kelly Driscoll7 testified that although other

types of agreements often protect unallocated shares, she has not

seen a clawback that includes unallocated shares. Tr. 6-37:16-

6 May has a graduate business degree and works at American Working

Capital, providing advisory services to company boards on

corporate governance issues. Tr. 9-90:1-23. He has advised various

boards in ESOP-related transactions. Tr. 9-90:24-91:19.

7 Driscoll is an attorney who has worked primarily with State

Street Global Advisors, representing the company’s defined

contribution business (with a focus on ESOPs) and leading its

independent fiduciary business. Tr. 6-28:10-17. She was personally

involved in negotiating various ESOP stock transactions. Tr. 6-

29:7-10.

38:6, 39:18-20, 40:17-41:7. And Plaintiffs’ expert Dana Messina8

testified he has not seen a clawback provision either expressly

include or exclude unallocated shares. Tr. 6-114:25-115:5, 119:10-

21. The Court finds that the weight of the evidence supports

Defendants’ position that excluding unallocated shares was not a

breach of fiduciary duties.

Plaintiffs resist this conclusion with several arguments.

First, Plaintiffs’ experts pointed out that the circumstances here

were unusual in that an ESOP was being terminated relatively early

in its lifespan, when most of its shares remained unallocated. Tr.

6-31:1-3, 39:18-20; Tr. 6-106:14-107:2. But it is Plaintiffs’

burden to demonstrate a breach of fiduciary duties, see

Brotherston, 907 F.3d at 39, and they fail to show that including

only allocated shares in a clawback provision -- even in an unusual

circumstance such as this one –- constitutes an insufficiently

prudent and loyal course of action.

Second, Plaintiffs point out that the clawback negotiation

took place approximately eight months before the redemption

transaction, such that no one knew whether the unallocated shares

would be underwater (and thus expended in full to repay a portion

8 Messina has a business degree, has worked in investment banking,

and was the CEO of Steinway for fifteen years. Tr. 6-102:21-103:19.

He also has consulted with the Department of Labor for several

decades, providing expert testimony and investigative work for

ESOP-related valuations. Tr. 6-103:22-104:13.

of the outstanding ESOP loan balance) or would exceed the loan

balance. Tr. 1-35:16-36:6. But the testimony reflects that the

clawback agreement was executed early in the year at Argent’s

request. Tr. 2-119:2-14. And in any event, Plaintiffs fail to

explain why the uncertainty as to the unallocated shares’ value

would change the calculus on whether it was customary or

appropriate to include them in a clawback provision.

Third, Plaintiffs highlight Long’s comment that he “expected

[Martin] to have counsel review” the clawback provision, Ex. 732,

and Russelectric’s corporate counsel’s statement that the

negotiation “was easier than [he] expected,” Ex. 729. These

comments do not indicate that the Board viewed the clawback

provision as unfavorable to the ESOP participants. And the Board’s

comments were not related to the exclusion of unallocated shares,

which is “the action subject to complaint.” Pegram, 530 U.S. at

226.

3. Duty to Monitor and Cofiduciary Liability

In addition to having fiduciary duties of its own, the Board

“had an obligation to monitor [Argent] to prevent [it] from

approving an unfair deal” with respect to the clawback negotiation.

Bowers, 717 F. Supp. 3d at 175. That is because board members “who

appoint plan administrat[ors] have an ongoing fiduciary duty under

ERISA to monitor the activities of their appointees.” Howell v.

Motorola, Inc., 633 F.3d 552, 573 (7th Cir. 2011). In such

circumstances, “individual [board] members can be found

individually liable for a failure to monitor the administrator of

the plan.” Bowers, 717 F. Supp. 3d at 175; see id. (“Implicit in

the power to appoint fiduciaries is the duty to monitor and ‘to

take action upon discovery that the appointed fiduciaries are not

performing properly.’” (quoting Kling v. Fid. Mgmt. Tr. Co., 323

F. Supp. 2d 132, 142 (D. Mass. 2004))). This duty to monitor,

however, does not “require every appointing Board member to review

all business decisions of [p]lan administrators,” as such a

stringent requirement “would defeat the purpose of having trustees

appointed to run a benefits plan in the first place.” Howell, 633

F.3d at 573.

Similarly, a fiduciary may be held liable under ERISA’s

cofiduciary provisions

(1) if he participates knowingly in, or knowingly

undertakes to conceal, an act or omission of

[an]other fiduciary, knowing such act or omission

is a breach;

(2) if, by his failure to comply with [his fiduciary

duties] in the administration of his specific

responsibilities which give rise to his status as

a fiduciary, he has enabled such other fiduciary to

commit a breach; or

(3) if he has knowledge of a breach by such other

fiduciary, unless he makes reasonable efforts under

the circumstances to remedy the breach.

29 U.S.C. § 1105(a). In other words, “[c]o-fiduciary liability

inheres if a fiduciary knowingly participates in or conceals

another fiduciary’s breach, enables such other to commit a breach,

or learns about such a breach and fails to make reasonable efforts

to remedy it.” Parmenter, 93 F.4th at 26 (quoting Beddall v. State

St. Bank & Tr. Co., 137 F.3d 12, 18–19 (1st Cir. 1998)). Notably,

however, § 1105(a) “contemplates active steps in furtherance of

the breach”; where there is no evidence that a fiduciary “knowingly

participated in, concealed, enabled, or failed to intercede in any

way to influence [the other fiduciary’s] decision,” cofiduciary

liability will not attach. Id. at 27.

Accordingly, under both a failure-to-monitor theory and a

cofiduciary liability claim, Plaintiffs must demonstrate (among

other things) that Argent itself breached a fiduciary duty or

otherwise acted improperly. Plaintiffs have failed to make that

showing with respect to the Clawback Negotiation Claims. Argent

proactively requested and obtained a three-year clawback

provision, which it viewed as favorable to the ESOP. Tr. 1-28:15-

20, 29:4-12; Tr. 4-25:4-6. The Board felt that Argent was properly

performing its fiduciary duties in advocating for the provision.

Tr. 1-20:9-19.9 And the testimony of Argent witnesses reflected

9 John did not personally monitor the clawback negotiation, instead

allowing Long to do so on the Board’s behalf. Tr. 1-42:15-20; Tr.

2-49:20-22; Tr. 4-112:1-2, 115:19-21, 115:13-18. Plaintiffs do not

contend that every Board member must individually monitor the

appointed fiduciary in order to collectively satisfy the Board’s

duty to monitor. In any event, Argent committed no wrongdoing in

the clawback negotiation.

that the clawback provision was discussed internally, Tr. 4-10:5-

15; Martin Dep. at 53:10-54:03; that Argent had its own counsel,

Tr. 4-27:15-16; and that Argent believed the clawback negotiation

was conducted fairly, Tr. 4-27:10-14.

Because Plaintiffs have failed to meet their burden of

demonstrating that John breached fiduciary duties, failed to

monitor Argent, or is subject to cofiduciary liability, judgment

will enter for John with respect to the Clawback Negotiation Claims

in Counts III and IV.

B. Redemption Transaction Claims

Plaintiffs next claim that John violated ERISA in connection

with the November 2016 redemption transaction. In Count I,

Plaintiffs assert that the redemption transaction constituted a

prohibited transaction between the ESOP and parties in interest in

violation of 29 U.S.C. § 1106(a)(1)(A) and (D). In Count II,

Plaintiffs argue that the redemption transaction constituted a

prohibited transaction between the ESOP and fiduciaries in

violation of 29 U.S.C. § 1106(b)(1) and (3). In Count III,

Plaintiffs claim that John breached fiduciary duties of prudence

and loyalty in violation of 29 U.S.C. § 1104(a)(1) and failed to

monitor Argent. And in Count IV, Plaintiffs assert that John is

subject to cofiduciary liability under 29 U.S.C. § 1105(a) for

knowingly participating in a fiduciary breach committed by Argent.

ERISA’s prohibited transactions provisions “supplement[] the

fiduciary’s general duty of loyalty . . . by categorically barring

certain transactions deemed ‘likely to injure the pension plan.’”

Brotherston, 907 F.3d at 25 (quoting Harris Tr. & Sav. Bank v.

Salomon Smith Barney Inc., 530 U.S. 238, 241-42 (2000)); see

Cunningham, 604 U.S. at 697. As relevant here, ERISA prohibits a

fiduciary from “caus[ing] the plan to engage in a transaction, if

he knows or should know that such transaction constitutes a direct

or indirect . . . (A) sale or exchange, or leasing, of any property

between the plan and a party in interest; . . . [or] (D) transfer

to, or use by or for the benefit of a party in interest, of any

assets of the plan.” 29 U.S.C. § 1106(a)(1)(A), (D). As also

relevant, ERISA prohibits a fiduciary from “deal[ing] with the

assets of the plan in his own interest or for his own account” and

from “receiv[ing] any consideration for his own personal account

from any party dealing with such plan in connection with a

transaction involving the assets of the plan.” Id. § 1106(b)(1),

(3).

Defendants do not dispute that if John is a fiduciary, the

redemption transaction was a prohibited transaction under these

provisions, as it redistributed ESOP assets to Russelectric and to

John. See id. § 1002(14)(A), (C) (defining “party in interest” to

include “any fiduciary” and the “employer” of plan participants).

Defendants maintain, however, that John was not a fiduciary with

respect to the redemption transaction. They further contend that

even if John was a fiduciary, an exception to the prohibited

transaction provisions applies because the redemption transaction

was “for adequate consideration.” Id. § 1108(e)(1); see

Brotherston, 907 F.3d at 25 (noting that “the prohibition of [§]

1106(a)(1) on transactions with parties-in-interest applies

‘[e]xcept as provided in [§] 1108’” (second alteration in original)

(quoting 29 U.S.C. § 1106(a)(1))); Solis v. Webb, 931 F. Supp. 2d

936, 947 (N.D. Cal. 2012) (noting that § 1108(e) also provides “a

statutory exemption to [§ 1106(b)’s self-dealing] restriction with

respect to ESOPs”).

The analysis under Count III, which alleges a breach of the

fiduciary duties of prudence and loyalty, amounts to the same

inquiries because “the focus of the adequate-consideration inquiry

rests on the conduct of a fiduciary, as judged by ERISA’s ‘prudent

man’ standard of care.” Brundle ex rel. Constellis Emp. Stock

Ownership Plan v. Wilmington Tr., N.A., 919 F.3d 763, 770 (4th

Cir. 2019); accord, e.g., Perez v. Bruister, 823 F.3d 250, 263

(5th Cir. 2016); Howard v. Shay, 100 F.3d 1484, 1488 (9th Cir.

1996). The questions for the Court under Counts I-III, therefore,

are (1) whether John was a fiduciary, and (2) whether the

redemption transaction was for adequate consideration. The Court

addresses each of these questions in turn and then resolves

Plaintiffs’ duty-to-monitor theory and their claim of cofiduciary

liability under Count IV.

1. Fiduciary Status

Because “a person can be a fiduciary ‘for some purposes and

not for others,’” the Court must newly determine whether John acted

as a fiduciary with respect to the Redemption Transaction Claims.

Mass. Laborers’ Health & Welfare Fund, 66 F.4th at 317 (quoting In

re Fid. ERISA Fee Litig., 990 F.3d at 55). At the outset, the Court

notes that the Board (and John) was no longer a named fiduciary at

the time of the redemption transaction. Rather, the redemption

transaction occurred under an engagement agreement that conferred

“discretionary trustee” status on Argent, such that Argent

“assume[d] the fiduciary responsibility for determining . . .

whether the price the [c]ompany pays the ESOP for the stock in the

[p]roposed [t]ransaction is adequate consideration.” Ex. 124; see

also Ex. 75 (previously designating Argent as a directed trustee

“[o]ther than to the extent [Argent] is appointed . . . as [a]

[d]iscretionary fiduciary”).

Nevertheless, the Court still must assess whether John acted

as a functional fiduciary with respect to the Redemption

Transaction Claims. It is true that John testified that he was

recused from the redemption transaction price negotiations, Tr. 2-

49:13-15; Tr. 8-53:13-20, and was not involved in communicating

with Argent or Prairie Capital, instead delegating that task to

Alexandrescu, Tr. 5-39:15-40:3, 68:1-10. But the Board (including

John) ratified and authorized all actions taken by Alexandrescu

with respect to the redemption transaction. Tr. 1-57:6-9; Ex. 383.

Moreover, John signed off on the $134-per-share redemption price.

Tr. 4-124:21-23. Although “an employer’s decision whether to

terminate an ERISA plan is a settlor function immune from ERISA’s

fiduciary obligations,” Beck v. PACE Int’l Union, 551 U.S. 96, 101

(2007), the Redemption Transaction Claims do not challenge John’s

decision to terminate the ESOP -- rather, they challenge his role

in determining what value was received by plan participants upon

termination. John approved the level of compensation and thereby

exercised authority over the management of plan assets. See 29

U.S.C. § 1002(21)(A)(i). He thus was “wear[ing] [a] fiduciary hat”

with respect to the Redemption Transaction Claims. Pegram, 530

U.S. at 225.

2. Adequate Consideration

The Court next must determine whether Defendants have shown

that the redemption transaction was for “adequate consideration.”

29 U.S.C. § 1108(e)(1). A transaction is for adequate consideration

if the price paid was “the fair market value of the asset as

determined in good faith by the trustee or named fiduciary.” Id.

§ 1002(18). Courts also assess whether the fiduciary acted

prudently, see Brundle, 919 F.3d at 770, and whether the

consideration was “the product of a determination made by the

fiduciary in good faith,” id. at 770 n.2 (quoting Proposed

Regulation Relating to the Definition of Adequate Consideration,

53 Fed. Reg. 17632, 17633 (proposed May 17, 1988)); see also id.

(“[I]n practice, the ‘fair market value’ inquiry overlaps

considerably with the ‘good faith’ inquiry.” (alteration in

original) (quoting Henry v. Champlain Enters., Inc., 445 F.3d 610,

619 (2d Cir. 2006) (Sotomayor, J.))). Because the § 1108(e)

exception is an affirmative defense to “an otherwise prohibited

transaction, the fiduciary bears the burden of proving by a

preponderance of the evidence that the sale was for adequate

consideration.” Id. at 770; see Cunningham, 604 U.S. at 696 (“[I]t

is defendant fiduciaries who bear the burden of pleading and

proving that a § 1108 exemption applies to an otherwise prohibited

transaction under § 1106.”).

Defendants have met their burden of demonstrating that the

redemption transaction was for adequate consideration and thus was

compliant with fiduciary obligations and exempt from ERISA’s

prohibited transaction provisions. See, e.g., Brundle, 919 F.3d at

770. The evidence from the bench trial supports this conclusion.

First, the Board was aware that Argent retained Prairie

Capital to conduct a new financial valuation in support of the

redemption transaction negotiations. Tr. 1-60:21-61:9. “Having

independent financial advice from a reputable firm is a good start

to a fair market value determination . . . .” Brundle ex rel.

Constellis Emp. Stock Ownership Plan v. Wilmington Tr. N.A., 241

F. Supp. 3d 610, 633 (E.D. Va. 2017), aff’d, 919 F.3d 763. Still,

“[t]he fiduciary must (1) investigate the expert’s qualifications,

(2) provide the expert with complete and accurate information, and

(3) make certain that reliance on the expert’s advice is reasonably

justified under the circumstances.” Howard, 100 F.3d at 1489

(citations omitted). “[T]he fiduciary is required to make an

honest, objective effort to read the valuation, understand it, and

question the methods and assumptions that do not make sense.” Id.

at 1490.

Here, the Board understood that Prairie Capital was a well-

known valuation firm that had performed hundreds of ESOP

valuations. Tr. 1-14:9-11. Defendants’ valuation expert, Jeffrey

Tarbell,10 viewed Prairie Capital’s reputation as “[e]xcellent.”

Tr. 8-136:4. Throughout the redemption valuation process,

Russelectric’s management provided Prairie Capital all the

financial information that Prairie Capital requested, never

concealing information or providing inaccurate data. Fiore Dep. II

at 89:05-90:01; Tr. 2-43:3-9, 44:5-7, 46:1-7, 46:17-20; Tr. 8-

52:2-10; Ex. 542. Alexandrescu provided Prairie Capital the same

10 Tarbell has a business degree, with an emphasis on finance, and

works in investment banking at Houlihan Lokey. Tr. 8-125:18-126:3.

He specializes in the valuation of closely held companies, with

approximately half of his work relating to ERISA and ESOPs. Tr. 8-

126:4-11.

budget projections that he gave to the Board, and he kept Prairie

Capital informed about new products, sales channels, markets,

aftermarket sales opportunities, and lean manufacturing

initiatives. Tr. 8-41:11-45:13; Ex. 188. Although the Board did

not review Prairie Capital’s valuation, that is because Argent

refused to provide it to the Board (despite Alexandrescu’s repeated

requests) and instead determined that keeping the valuation

confidential would best serve the ESOP’s interests. Tr. 8-54:7-8;

Fiore Dep. II at 112:17-113:18.

Next, Defendants have demonstrated that the financial

projections provided to Prairie Capital were appropriate. Argent

reviewed the financial data underlying the June 30, 2016, annual

valuation and determined that they were satisfactory. Tr. 4-32:2-

25. Those financial projections were largely prepared in September

and October 2016. Tr. 8-36:12-17, 38:6-21; Ex. 99. The

determination by Russelectric’s management and Board that the same

projections were applicable in November 2016 was reasonable given

the short amount of time that had elapsed. Tr. 2-45:21-25; Tr. 3-

45:3-7, 45:14-19. Indeed, Prairie Capital independently concluded

that no major changes had occurred between September and November

2016 to justify substantially increasing financial forecasts.

Fiore Dep. II at 39:13-40:01, 81:17-24, 95:05-10. Alexandrescu

also provided Prairie Capital with updated figures regarding the

company’s cash on hand and pension liability. Tr. 1-91:2-15, 92:16-

18; Tr. 8-57:2-8. Defendants’ valuation expert, Tarbell, testified

that Prairie Capital’s financial projections were reasonable. Tr.

9-16:14-19.

Plaintiffs object that the financial projections provided to

Prairie Capital did not account for the various positive

developments occurring at Russelectric. But the trial testimony

reflects that most of these developments were only beginning to

percolate in late 2016. Alexandrescu was hired in May 2016 and did

not build out the company’s new management team until the fall of

2016. Tr. 1-76:1-3; Tr. 2-21:25, 54:24-55:1; Tr. 8-17:8-20, 18:9-

16. The improvements he made to the company’s financial reporting

structure, product base, sales force, aftermarket sales, and lean

manufacturing took time to take effect. Tr. 1-84:2-13; Tr. 2-22:4-

23:1, 2-23:9-15; Tr. 5-76:3-6; Tr. 8-12:20-13:8, 13:23-14:17.

Russelectric’s backlog began to increase in October 2016, but many

of its new sales and bookings did not come to fruition until mid-

2017. Tr. 1-76:24-77:1, 77:5-8; Tr. 8-20:1-10, 23:2-4. Given that

Alexandrescu’s corporate reforms did not begin to have an impact

until late 2016 and that the recent annual valuation had already

taken into account some of these anticipated changes, it was

reasonable for the financial projections to stay largely the same.

Plaintiffs also take issue with Russelectric’s tough-guy

negotiating posture and specifically with Alexandrescu’s threat to

use the autoput. Alexandrescu acted as a counterparty to Argent in

the redemption transaction, and Argent and Prairie Capital viewed

him as such. Tr. 4-17:6-7; Fiore Dep. II at 112:17-113:18. But

there is no evidence that John had any involvement in the autoput

discussions or that this negotiating tactic resulted in an

inadequate redemption value. On the contrary, the autoput was never

used, Tr. 2-51:12-14, and the ultimate redemption value of $134

was above the midpoint of Prairie Capital’s valuation range of

$120 to $141, Tr. 1-109:7-13; Tr. 4-37:1-19; Ex. 776. Although

Argent had initially requested the higher value of $165, it did

not provide any information to support this figure, which it simply

viewed as a “really high price to start a negotiation.” Tr. 4-

17:6-7; see Tr. 1-109:14-20; Tr. 4-17:22-18:5; see also Cooke v.

Lynn Sand & Stone Co., 70 F.3d 201, 205 (1st Cir. 1995) (noting

that ERISA does not necessarily require “maximiz[ing] the award to

the beneficiary”).

Next, Plaintiffs point to several outside offers to buy

Russelectric, arguing that they demonstrate that the redemption

value was underestimated. First, Plaintiffs emphasize that

Alexandrescu calculated a share value higher than $134 in relation

to an offer from Western Commerce in February 2017. Tr. 3-64:2-7;

Tr. 8-112:18-25. But witnesses explained at trial that the

comparison was inapt because the redemption valuation assessed the

fair market value of the ESOP’s shares (a noncontrolling interest),

while the Western Commerce estimate was for an 100% interest and

therefore included a premium for a controlling interest and the

ability to strip the company of its liabilities (such as the

company’s defined benefit plan) and operating costs. Tr. 3-65:7-

16; Tr. 8-117:14-17, 119:3-14. Plaintiffs also highlight offers

received from AMETEK and Socomec in the summer of 2017. Tr. 2-

69:5-13. But between November 2016 and the time of these offers,

various improvements had taken effect at Russelectric, including

new product lines and lean manufacturing. Tr. 3-72:22-73:9.

Prairie Capital’s fairness opinion also weighs toward finding

that adequate consideration was paid for the ESOP’s shares. The

fairness opinion concluded that the price of $134 per share was

“not less than ‘fair market value’ and constitute[d] ‘adequate

consideration’” and that “[t]he [t]ransaction, taken as a whole,

[wa]s fair to the [ESOP] from a financial point of view.” Ex. 636

(quoting 29 U.S.C. § 1002(18)). The Board reviewed the fairness

opinion when consummating the transaction. Tr. 2-56:8-13. One of

Plaintiffs’ experts agreed that requesting a fairness opinion was

a prudent action by Argent, Tr. 6-92:1-5, and the Court likewise

finds that the Board acted sensibly by reviewing the opinion.

The bulk of Plaintiffs’ objections to the $134-per-share

consideration was presented by their valuation expert, Dana

Messina. Messina conducted his own valuation and concluded that

Russelectric’s shares were worth approximately $436 per share at

the time of redemption. Tr. 7-71:10-12. Messina offered various

critiques of Prairie Capital’s valuation. Although the Court finds

Messina qualified and credible, his critiques ultimately do not

persuade the Court that $134 per share constituted inadequate

consideration for the following reasons.

Messina first testified that Prairie Capital failed to take

into account increased demand and backlog of orders. Tr. 6-142:8-

11. But he agreed that Russelectric provided accurate backlog data:

“[T]here were criticisms I could make of the company, but not that

they didn’t give Prairie [Capital] the numbers.” Tr. 7-129:20-21;

see Tr. 7-129:13-21. Although Messina faulted the Board for failing

to correct the errors he perceived in Prairie Capital’s backlog

calculations, he acknowledged that the Board never received the

redemption valuation because Argent and Prairie Capital chose not

to share it. Tr. 7-130:1-5, 131:22-25. Furthermore, Prairie

Capital did analyze the data, including by differentiating between

released and unreleased backlog. Fiore Dep. II at 100:18-102:04.

Next, Messina stated that Prairie Capital should have

accounted for the anticipated decrease in pension expenses due to

Russelectric freezing its defined benefit plan. Tr. 6-133:8-12,

136:11-19, 137:19-20, 142:21-24. But Prairie Capital reasoned that

the pension funds were being relocated to other expenses such as

an employer contribution to 401(k) plans. Tr. 7-56:19-24, 58:19-

59:2. Prairie Capital’s witness maintained that no error in the

pension liability calculations had been made. Fiore Dep. I at

155:06-156:16. And again, Russelectric gave Prairie Capital the

necessary information about the upcoming decrease in pension

payments. Tr. 7-59:3-6.

Messina also testified that Prairie Capital failed to account

for improved margins due to lean manufacturing efficiencies. Tr.

6-144:22-25, 145:8-21, 146:12-21. But Messina admitted in his

deposition that he did not know which aspects of the lean

manufacturing initiative had been completed by November 2016. Tr.

7-72:8-22. And the trial record reflects that many of those

improvements were made in late 2016 or 2017; indeed, as of October

2016, when Tejada toured Russelectric’s facilities, he still felt

as if he was “stepping back in a time capsule.” Tr. 7-72:5; see

Tr. 7-71:23-72:7.

One of Messina’s primary critiques of Prairie Capital related

to its use of a 16% discount rate in its discounted cash flow

(“DCF”) analysis. Tr. 6-148:5-19. Messina faulted Prairie Capital

for assuming an all-equity capital structure rather than an

efficient capital structure of a mixture of equity and cash. Tr.

6-148:25-149:21, 150:20-24. But Prairie Capital’s approach was

based on the fact that Russelectric in fact used an all-equity

capital structure, Tr. 6-148:25-149:21, and Messina acknowledged

that a hypothetical buyer of a 30% stock interest -- i.e., the

amount of shares held by the ESOP -- would not be able to change

a company’s capital structure. Tr. 7-76:7-12. Defendants’

valuation expert, Tarbell, testified that a DCF analysis must use

the perspective of this hypothetical willing buyer and seller, and

Prairie Capital’s corporate representative testified that it used

that approach. Tr. 8-137:2-9, 137:18-138:4; Tr. 9-10:13-18, 11:8-

11; Hughes Dep. at 33:01-12. That hypothetical-willing-buyer

approach is the method discussed in Valuing a Business, a valuation

treatise contributed to by Tarbell which Messina admitted is relied

upon as an authoritative text on appraisal practices by various

professionals. Tr. 7-44:11-17; Tr. 8-130:4-11; Hughes Dep. at

33:01-12. Messina further admitted that the choice of discount

rate is a “reasonable point of debate.” Tr. 7-79:24-25. In

addition, Tarbell’s valuation methods followed the Uniform

Standards of Professional Appraisal Practice, while Messina’s

valuation approach was not tethered to any uniform valuation

standards. Tr. 7-43:10-44:10; Tr. 8-134:8-12.

Similarly, Messina objected to Prairie Capital valuing the

ESOP’s assets on a minority basis. Tr. 6-151:6-15. Prairie Capital

viewed a control premium as unwarranted because the ESOP owned

only a 30% stake, Fiore Dep. II at 105:18-106:05, while Messina

viewed the minority discount as inappropriate because the ESOP was

selling its shares to a majority holder (i.e., the company), Tr.

6-151:11-15, 152:10-14. While this is a reasonable point of view,

Prairie Capital’s approach was deemed correct by Tarbell, who

stressed that the ESOP’s block would be viewed by a hypothetical

willing buyer as a noncontrolling investment with limited

marketability. Tr. 9-54:17-20. The Court again finds that it was

not imprudent for Prairie Capital to use the hypothetical-willing-

buyer approach.

Another critique levied by Messina related to Prairie

Capital’s use of the guideline company method (an alternative

valuation method to DCF). Tr. 6-147:25-148:4. Messina testified

that Prairie Capital was not provided with information about M&A

activity in the industry or about offers to buy Russelectric. Tr.

6-152:15-153:9. This criticism gives pause. But the only industry

M&A activity that Alexandrescu was aware of at the time was the

sale of ASCO to a private equity firm in 2016 (the year before its

sale to Schneider Electric), which was public information that

Alexandrescu believed Prairie Capital actively monitored. Tr. 8-

106:25-107:21. Although Alexandrescu should have shared more

information about M&A activity with Prairie Capital, the Court

cannot conclude that this shortcoming substantially affected

Prairie Capital’s valuation, especially given that Prairie Capital

conducted its own research into industry M&A activity. Hughes Dep.

at 61:18-62:08.

In short, Defendants have met their burden of proving that

they acted prudently in determining the compensation paid to the

ESOP. The evidence supports Prairie Capital’s conclusion that

Russelectric’s stock should have been valued in the range of $120

to $141 -- i.e., relatively close to the 2016 annual valuation of

$121, see Exs. 99, 472 -- rather than the $436 figure estimated by

Messina. The Court takes into account that Messina had performed

a separate analysis of Russelectric on behalf of the Department of

Labor that used different approaches from his expert report, albeit

under different circumstances and with much less time. Tr. 7-

85:18-87:7, 110:25-111:7. While Messina had some fair criticisms,

the Court is mindful that the cornerstone of the adequate-

consideration analysis is “the conduct of a fiduciary, as judged

by ERISA’s ‘prudent man’ standard of care.” Brundle, 919 F.3d at

770. There is no evidence that the Board did not believe that $134

was a fair valuation of Russelectric’s stock (or even slightly

above fair value), Tr. 1-65:9-11, and that Argent’s offer of $165

was unreasonably high, Tr. 1-64:25-65:6. The Board provided all

financial information that Prairie Capital requested. Fiore Dep.

II at 89:05-90:01. The ultimate sale price of $134 was above the

midpoint of Prairie Capital’s valuation range, Tr. 1-109:7-13; Tr.

4-37:1-19; Ex. 776; was deemed to be adequate consideration in

Prairie Capital’s fairness opinion, Ex. 636; and was within

Tarbell’s valuation range, Tr. 9-26:20-22. All of these facts

reflect a prudent and loyal process that produced a value

constituting adequate consideration. Defendants thus have met

their burden of showing that the § 1108(e) exemption to ERISA’s

prohibited-transaction provisions applies.

3. Duty to Monitor and Cofiduciary Liability

The Court briefly addresses Plaintiffs’ duty-to-monitor

theory and claim of cofiduciary liability with respect to the

Redemption Transaction Claims. As with the Clawback Negotiation

Claims, these theories of liability fail because Plaintiffs have

failed to show any fiduciary breaches or wrongdoing by Argent

during the redemption transaction.

As described above, Argent hired Prairie Capital in order to

obtain a fair valuation of the ESOP’s shares. Tr. 1-60:21-61:9.

Argent reviewed Prairie Capital’s valuation and determined that

Prairie Capital had applied appropriate financial adjustments. Tr.

4-32:2-25. After learning that Prairie Capital’s analysis valued

the shares in the range of $120 to $141, Argent proposed a $165

share price to Russelectric in attempt to obtain a premium for the

plan participants. Tr. 1-64:25-65:2; Tr. 4-17:22-18:5. These

efforts resulted in a redemption price above the midpoint of

Prairie Capital’s valuation range. Tr. 4-37:1-19; Ex. 776. Argent

then had an experienced ERISA attorney negotiate the redemption

agreement with Russelectric. Tr. 2-27:11-14, 104:12-24. Finally,

Argent procured a fairness opinion in order to confirm that the

amount paid to plan participants was adequate. Tr. 2-31:21-32:1.

These actions were consistent with a prudent fiduciary process

that was loyal to the ESOP’s participants.

The Board was well aware of Argent’s actions and viewed them

as constituting an appropriate fiduciary process. Although John

was not personally involved in the redemption price negotiation or

in monitoring Argent, Tr. 2-49:13-15; Tr. 4-129:6-11, he oversaw

Alexandrescu and was kept in the loop, Tr. 4-118:25-119:1; Tr. 5-

17:1-4, 39:8-14. Long served as Alexandrescu’s point of contact,

Tr. 8-53:13-20, thus ensuring that the Board monitored Argent and

the redemption transaction generally.

In summary, Plaintiffs have failed to meet their burden of

showing a fiduciary breach by John or any wrongdoing by Argent,

and Defendants have met their burden of demonstrating that the

redemption transaction was for adequate consideration. Judgment

therefore will enter for John with respect to the Redemption

Transaction Claims in Counts I-IV.

C. Clawback Administration Claims

Finally, Plaintiffs take issue with the administration of the

clawback provision during the Siemens transaction and specifically

with John’s role in awarding bonuses that reduced the clawback

payments to participants. In Count VII, Plaintiffs claim that John

breached fiduciary duties in violation of 29 U.S.C. § 1104(a)(1)

by diverting sale proceeds to himself, his family, and certain

executives. In Count VIII, Plaintiffs assert that John caused the

ESOP to engage in a prohibited transaction with parties in interest

and fiduciaries in violation of 29 U.S.C. § 1106(a)(1)(D) and

(b)(1) and (3). And in Count IX, Plaintiffs invoke 29 U.S.C.

§ 1132(a)(1)(B) to request plan benefits allegedly owed to them by

John.

The Court first addresses Defendants’ argument that ERISA

does not apply to the Clawback Administration Claims. The Court

then determines whether John acted as a functional fiduciary with

respect to those claims. Next, the Court analyzes whether

Plaintiffs have shown breaches of fiduciary duties and, if so,

whether Defendants have demonstrated that those breaches did not

cause losses to the ESOP. Finally, the Court assesses Plaintiffs’

prohibited transaction claims.

1. Applicability of ERISA

At the outset, Defendants maintain that ERISA does not provide

causes of action for the Clawback Administration Claims because

the ESOP no longer existed at the time of the Siemens transaction.

They highlight that the ESOP was terminated in 2016, Tr. 1-64:20-

22; that participants’ account balances had all been distributed

by the end of 2017, Tr. 6-94:10-19; and that the clawback payments

were paid directly to participants and were not placed in

retirement accounts, Tr. 9-120:10-15.

The Court previously has rejected this argument, see Bowers,

763 F. Supp. 3d at 98-99, and does so again here for the same

reasons. As the Court previously explained, the ESOP, despite being

formally terminated, “retained a future interest in clawback

payments contingent on a subsequent sale of” Russelectric. Id. at

99. “This retained interest qualifies as a plan asset under ERISA,”

meaning that “ERISA governs Defendants’ actions related to the

clawback payments.” Id.; see id. at 98 (“ERISA governs post-

termination activities when a terminated plan retains assets.”).

2. Fiduciary Status

Plaintiffs argue that John exercised authority over the

clawback payments and thus was a functional fiduciary with respect

to the Clawback Administration Claims. I agree.

John was intimately involved in the process of awarding

bonuses in connection with the sale of the company to Siemens. For

example, on March 5, 2018, John suggested that Long meet with

Schultz (the executive compensation consultant) to discuss paying

executive compensation from sale proceeds. Ex. 712; Tr. 1-112:8-

14. John personally lobbied for bonuses for his family, Long, and

company executives. Tr. 5-31:22-32:4. And he believed that no one

should receive a larger bonus than himself. Tr. 5-32:5-21. Further,

John emailed his sisters that larger bonuses would make the

clawback payments smaller. Ex. 799. He wrote that if more money

was allocated to bonuses, the family would “save” money “from the

ESOP clawback.” Ex. 799. John thus knew that the bonuses were

interrelated with the clawback payments and took affirmative steps

to ensure that the bonuses were paid. These actions rendered him

a functional fiduciary.

The Court rejects Defendants’ argument that John’s actions

were “broader business decisions that simply affected the [ESOP]

and its participants.” Mass. Laborers’ Health & Welfare Fund, 66

F.4th at 322. On the contrary, John understood that the bonus

amounts were fundamentally intertwined with the clawback payments.

By exercising authority over the bonuses, he likewise exercised

control over the clawback payments, which were plan assets.

Although “setting (and receiving) executive compensation . . . is

a classically corporate act,” Bendaoud v. Hodgson, 578 F. Supp. 2d

257, 276 (D. Mass. 2008), it can also be a fiduciary act where, as

here, it “directly involve[s] the ‘management or disposition of

[the plan’s] assets,’” id. (second alteration in original)

(quoting 29 U.S.C. § 1002(21)(A)(i)); see Bowers, 763 F. Supp. 3d

at 99.

3. Breach of Fiduciary Duties

Having determined that ERISA applied to the clawback

administration and that John was a functional fiduciary, the Court

next turns to the question of whether John breached fiduciary

duties.

Plaintiffs first contend that John breached the duty to act

“in accordance with [plan] documents and instruments.” 29 U.S.C.

§ 1104(a)(1)(D); see Parmenter, 93 F.4th at 19 (noting that this

duty is part of the duty of prudence). They posit that awarding

bonuses was per se incompatible with the text of the clawback

agreement.

The Court disagrees. The clawback agreement provided that

plan participants would

receive a cash payment equal to the product of (A) the

number of the Company’s common stock allocated to such

participant’s account in the ESOP as of the ESOP

Termination Date multiplied by (B) the difference

between (i) the per share price of the Company’s common

stock as of the ESOP Termination Date as determined by

a valuation report to be prepared by Prairie Capital;

and (ii) the net per share purchase price received by

the shareholders of the Company upon the Consummation of

the Change of Control Transaction.

Ex. 69 (emphases added). The clawback provision facially

distinguishes between the “per share price” of Russelectric stock

as of the ESOP termination date -- i.e., $134 per share -- and the

“net per share purchase price received by the shareholders” after

the Siemens transaction. Id. The latter language contemplates that

the per share price be “net” of certain expenses before being used

to calculate the clawback payments. Id. The Board still was bound

by corporate and fiduciary duties to deduct only reasonable

expenses, but it had no obligation “to maximize the award to the

beneficiar[ies].” Cooke, 70 F.3d at 205. Russelectric’s corporate

counsel testified persuasively that it is customary to deduct

transaction expenses and bonuses before shareholders receive the

proceeds of a corporate acquisition. Tr. 2-127:10-14. Because the

clawback provision allows for the deduction of reasonable bonuses,

Plaintiffs may not “recover benefits due to [them] under the terms

of [the] plan” under 29 U.S.C. § 1132(a)(1)(B), and judgment thus

will enter for John on Count IX.

Although he was entitled to pay reasonable bonuses, John

remained bound by ERISA’s duties of prudence and loyalty. He was

required to “act ‘with . . . care, skill, prudence, and

diligence,’” Brotherston, 907 F.3d at 30 (quoting 29 U.S.C.

§ 1104(a)(1)(B)), and was not entitled to act with the “operative

motive” of “further[ing] [his] own interests,” id. at 40 (quoting

Ellis, 883 F.3d at 6).

Plaintiffs have met their burden of demonstrating that John

failed to satisfy these duties. John plainly acted to further his

and his family’s interests when awarding bonuses in order to “save”

money “from the ESOP clawback.” Ex. 799. His motives were in

fundamental conflict with the interests of plan participants in

receiving higher clawback payments. And he failed to act with the

diligence of a prudent fiduciary, likely because he did not believe

he was a fiduciary at all. Tr. 4-109:11-12. Although John hired

Schultz to opine on the reasonableness of the proposed bonus

amounts, Ex. 712; Tr. 1-112:8-14; Tr. 2-14:21-23, he did not

adequately monitor Schultz’s work, which -- as explained in more

detail below, see infra Section II.C.4 -- was deficient in various

respects. Indeed, Schultz only spent about ten hours analyzing the

proposed bonuses, Tr. 5-83:9-20, and he was unaware of the

existence of a clawback, Tr. 5-87:3-6. Schultz had never advised

a company with an ESOP, Tr. 5-98:23-99:9, and acknowledged at trial

that “[y]ou can’t make mistakes on an ERISA plan,” Tr. 5-99:8-9.

By relying on Schultz, who essentially rubber-stamped bonus

amounts that John and others proposed with little research, John

breached the duties of prudence and loyalty. Tr. 3-49:16-18, 52:14-

22.

4. Loss Causation

As described above, Plaintiffs have “shown a breach of

fiduciary duty.” Brotherston, 907 F.3d at 39. They likewise have

demonstrated a “loss to the plan” because the bonuses resulted in

decreased clawback payments to plan participants. Id. The burden

therefore “shifts to [John] to prove that such loss was not caused

by [his] breach.” Id. To do so, John must show that the bonuses

were “objectively prudent,” i.e., that they “most likely would

have” been awarded by a prudent fiduciary. Id. John has made this

showing with respect to the executive bonuses but not as to the

bonuses paid to himself, Long, and the Advisory Board members.

The Court first analyzes the approximately $31 million in

bonuses awarded to six individuals in management. Ex. 40. Before

the Siemens transaction, each of these individuals received a

salary and were enrolled in a long-term incentive plan (“LTIP”)

that would have provided increasing monetary value the longer the

individuals stayed at Russelectric. Tr. 2-6:18-7:2. The bonuses

thus compensated the executives for their lost salary and the

forgone opportunity to benefit from the LTIP. Tr. 2-7:14-21. John

testified, however, that the bonuses were higher than the

executives would have received under the LTIP. Tr. 5-31:15-21.

This premium served as a reward for the executives’ contributions

to the company. Tr. 5-31:15-21.

The largest executive bonus was paid to Alexandrescu. Ex. 40.

As described throughout this opinion, Alexandrescu served as CEO

during the company’s financial rebound and personally secured the

acquisition offer from Siemens. Tr. 2-20:1-6, 5-73:1-3. He, more

than anyone else at Russelectric, was responsible for saving the

company; indeed, John described Alexandrescu’s turnaround of

Russelectric as akin to a “magic trick.” Tr. 5-71:8. Alexandrescu

introduced various corporate reforms, ranging from new product

development to lean manufacturing. Tr. 2-22:19-23:1, 23:9-15; Tr.

5-76:3-6. Alexandrescu also had a relatively lower salary and

higher expected LTIP payments in order to incentivize him to remain

at Russelectric long-term. Tr. 2-20:16-23; Tr. 5-45:24-46:12. It

thus was reasonable to pay Alexandrescu a premium bonus to replace

his expected earnings and reward him for exemplary work. Tr. 2-

20:13-15. Schultz advised that Alexandrescu’s bonus was reasonable

and customary. Tr. 5-65:20-23; Ex. 746. The Court agrees.

The next-largest executive bonus was paid to Tejada, who

served as Russelectric’s CFO during Russelectric’s financial

turnaround. Ex. 40; Tr. 2-54:24-55:1; Tr. 5-58:4-9; Tr. 8-18:9-

16. Tejada helped change Russelectric’s financial reporting

structure, Tr. 2-22:4-18, and was appropriately rewarded.

The other four executive bonuses were paid to Randy Adleman

(the Vice President of Sales), Mario Frattaroli (the Director of

Operations), Ed Malley (the head of engineering), and John Doran

(the head of quality control). Ex. 40; Tr. 5-58:10-60:8. Each of

these individuals was rewarded for his role in the company

turnaround, including implementing Alexandrescu’s vision of

developing new products, redesigning Russelectric’s factories, and

reorganizing the sales force. Tr. 2-22:19-23:15; Tr. 8-12:20-13:8.

Plaintiffs do not dispute that these executives made important

contributions to the company, and the Court determines that a

prudent fiduciary would have awarded them bonuses in line with

what they received.

Alexandrescu and Tejada each received an additional fee to

compensate them for their M&A work leading up to the Siemens

transaction. Ex. 40. This work was performed on top of their

regular responsibilities, and it allowed Russelectric to undergo

the transaction without paying the usual expense of an outside M&A

firm. Tr. 2-23:16-23; Tr. 5-62:17-63:5. The fees were based on

Schultz’s recommendation of what typical M&A fees would be:

approximately 2% of the sales price. Tr. 2-23:24-24:7; Tr. 5-

63:11-15, 108:18-109:12; Ex. 746. The Court concludes that these

additional fees were reasonable.

Although the executive bonuses and M&A fees were reasonable,

the bonuses paid to John, Long, and the Advisory Board members

were not. None of these individuals were entitled to LTIP payments,

Tr. 2-7:22-8:10, meaning that the bonuses were solely designed to

replace salary and to reward contributions to the company.

The Court begins its analysis with John, who awarded himself

a whopping $14 million for his bonus. Ex. 40. John’s annual salary

was approximately $160,000, and he was Chairman of the Board. Tr.

3-7:12-22; Tr. 5-53:2-11. In his favor, John worked hard for

Russelectric from 2015 to 2019, Tr. 5-54:10-11, and built out the

company’s management team in order to kickstart the financial

rebound, Tr. 3-8:11-16. But although John’s contributions to the

company are laudable, he has not met his burden of demonstrating

that his bonus was reasonable. In advising on John’s bonus, Schultz

believed that John was the President and CEO of Russelectric in

addition to being the Chairman of the Board, and no one corrected

this misunderstanding. Tr. 5-83:24-84:9, 85:16-25. Although

Defendants’ executive compensation expert, Bruce Benesh,11

testified that John’s bonus was reasonable, he acknowledged that

11 Benesh has a business degree, with an emphasis on taxation, and

several decades of experience advising companies on executive

compensation. Tr. 10-7:2-11:25.

Schultz should have known that John was not the CEO and that

knowledge of an individual’s role at a company is important in

advising on their bonus. Tr. 10-51:17-53:6. Given this deficiency

and John’s self-interest in securing the largest bonus, Tr. 5-

32:5-21, the Court finds that such a huge bonus amount would not

have been calculated by a prudent and loyal fiduciary.

Defendants likewise failed to show that Long’s approximately

$3 million bonus was appropriate. Ex. 40. Long’s bonus replaced a

low six-figure annual salary, Tr. 2-73:4-18, and rewarded him for

his contributions to the company, which included negotiating the

clawback agreement and serving as Alexandrescu’s Board point of

contact during the ESOP redemption negotiations, Tr. 1-29:2-4; Tr.

8-53:13-20. Schultz calculated a significantly lower bonus for

Long, and he testified that a seven-digit bonus for a Board member

was very large given the scale of the company. Tr. 5-89:6-16, 90:7-

15. Similarly, Messina testified that Long’s bonus was far higher

than equivalents he has seen. Tr. 6-122:17-24, 123:11-17. Notably,

after John proposed to Schultz that Long receive an approximate

$2.5 million bonus, Schultz “decided to add half a million dollars

to the amount because it seemed like a rounder number to” him. Tr.

5-91:4-7. The Court therefore ascribes little weight to Schultz’s

report’s conclusion that Long’s bonus was reasonable, see Ex. 772,

and instead concludes that Defendants have failed to demonstrate

that a prudent fiduciary would have awarded this amount.

Finally, the Court turns to the approximately $11 million in

bonuses awarded to Russelectric’s Advisory Board, which consisted

entirely of John’s family members: Suzanne, Lisa, James, Jennifer

Novak (Suzanne’s daughter), and Matthew Russell (John’s son). Ex.

40; Tr. 1-119:3-8; Tr. 3-10:13-14, 11:18-19; Tr. 5-121:16-23. The

Advisory Board members received their bonuses as a collective pool

that they divided amongst themselves. Tr. 2-64:18-22; Tr. 3-52:1-

3. The total Advisory Board bonus was approximately 7.2% of the

gross sale price to Siemens, which Schultz opined was reasonably

close to his recommended bonus range of 5-7% of the gross sale

price. Tr. 3-51:13-19; Ex. 784.

Advisory Board members received approximately $40,000 in

annual salaries, with Novak earning $80,000. Tr. 1-119:10-12; Tr.

5-54:16-23. They served no role in corporate governance; instead,

they attended Board meetings with the long-term goal of becoming

more involved in leading the company. Tr. 1-119:21-22; Tr. 3-85:4-

8; Tr. 5-121:7-9. While Suzanne, Lisa, and Jennifer Novak attended

most Board meetings, Matthew and James typically did not. Tr. 3-

9:10-15, 10:22-23, 11:1-5, 11:14-17, 11:24-25. None of the

Advisory Board members had much knowledge about Russelectric’s

industry. Tr. 2-65:12-24.

Although Schultz advised that the collective bonus to the

Advisory Board was appropriate, he was unaware of the limited

nature of the family members’ roles. He assumed that the Advisory

Board served an important role in corporate governance and that

its members were equivalent to C-suite executives. Tr. 5-86:2-10,

88:3-7. He did not consult with anyone at Russelectric regarding

those assumptions and was not informed by company leadership that

he was mistaken. Tr. 5-86:11-14. Nor was he provided any details

on what the Advisory Board members actually did. Tr. 5-86:15-18.

At trial, Schultz testified that when family members are not

involved in corporate governance, they typically receive much

lower bonuses. Tr. 5-97:11-22. Similarly, while Benesh testified

that family advisory board members often get bonuses, he

acknowledged the importance of knowing the actual roles of those

family members at the company. Tr. 10-46:6-12, 51:17-53:6. Messina

testified that he was shocked by the minimal diligence that was

used in backing up the bonus amounts. Tr. 7-99:22-100:3. The Court

agrees. Given the limited role of the Advisory Board and the

deficiencies in Schultz’s review of their bonuses, the Court

concludes that Defendants have failed to show that a prudent

fiduciary would have awarded the bonuses.

Defendants thus have failed to meet their burden of showing

that the bonuses awarded to John, Long, and the Advisory Board

were objectively prudent. See Brotherston, 907 F.3d at 39. Judgment

therefore will enter for Plaintiffs on Count VII with respect to

these bonuses (but not the bonuses awarded to the executives).

5. Prohibited Transactions

Count VIII presents an alternate theory of recovery under

ERISA’s prohibited transactions provisions. Plaintiffs claim that

John violated 29 U.S.C. § 1106(a)(1)(D) by causing the ESOP to

engage in prohibited transactions with parties in interest and

contravened 29 U.S.C. § 1106(b)(1) and (3) by conducting a self-

dealing transaction as a fiduciary.

The Court rejects Plaintiffs’ argument as to § 1106(a)(1)(D).

That provision prohibits a fiduciary from knowingly causing an

ERISA “plan to engage in a transaction” that “constitutes a direct

or indirect . . . transfer to, or use by or for the benefit of a

party in interest, of any assets of the plan.” 29 U.S.C.

§ 1106(a)(1)(D). Here, John’s actions did not cause the ESOP to

itself “engage in a transaction,” id.; rather, he conducted a

transaction (i.e., the payment of bonuses) that impacted plan

assets (i.e., the clawback payments).

As to ERISA’s self-dealing provisions, the Court disagrees

with Plaintiffs as to § 1106(b)(1) but agrees as to § 1106(b)(3).

The former provision prohibits a fiduciary from “deal[ing] with

the assets of the plan in his own interest or for his own account.”

29 U.S.C. § 1106(b)(1). John did not directly “deal with” the

clawback payments; instead, he dealt with bonus payments that

directly affected the clawback provision. Id. Section 1106(b)(3),

though, provides that a fiduciary may not “receive any

consideration for his own personal account . . . in connection

with a transaction involving the assets of the plan.” 29 U.S.C.

§ 1106(b)(3). John’s administration of the bonus payments was “in

connection with a transaction involving” the clawback payments

because the bonuses were fundamentally intertwined with the amount

of the clawback (as John himself knew, see Ex. 799).

Because John entered into a self-dealing transaction under

§ 1106(b)(3) but did not cause the ESOP to enter a prohibited

transaction with parties in interest under § 1106(a)(1)(D),

judgment will enter for Plaintiffs on Count VIII to the extent it

concerns the bonus to John but not to the extent it concerns other

bonuses.

D. Equitable Claims

Finally, Plaintiffs assert several equitable claims against

John under 29 U.S.C. § 1132(a)(3). In Counts V and VI, Plaintiffs

seek to recover traceable proceeds of John’s knowing participation

in a prohibited transaction and in breaches of fiduciary duties

with respect to the clawback negotiation and redemption

transaction. In Count X, Plaintiffs seek to recover traceable

proceeds from John’s knowing receipt of an unlawful bonus as part

of the Siemens sale.

As relevant here, § 1132(a)(3) authorizes courts to issue

“appropriate equitable relief . . . to redress [ERISA] violations.”

29 U.S.C. § 1132(a)(3). That provision “imposes certain duties”

such that “liability under th[e] provision does not depend on

whether ERISA’s substantive provisions impose a specific duty on

the party being sued.” Harris Tr. & Sav. Bank, 530 U.S. at 245. In

particular, plan participants may recover proceeds received by “a

transferee of ill-gotten trust assets” in an unlawful transaction

where the transferee has “actual or constructive knowledge of the

circumstances that rendered the transaction unlawful.” Id. at 251.

Because the Court has concluded that no breach of fiduciary

duties occurred during the clawback negotiation or redemption

transaction and that adequate consideration was paid, see supra

Sections II.A.2-3, II.B.1-2, judgment will enter for John on Counts

V and VI. See 29 U.S.C. § 1132(a)(3) (authorizing “appropriate

equitable relief” to “redress . . . violations” of ERISA or to

enforce the statute’s provisions (emphasis added)); Harris Tr. &

Sav. Bank, 530 U.S. at 246 (noting that § 1132(a)(3) “does

not . . . authorize ‘appropriate equitable relief’ at large, but

only ‘appropriate equitable relief’ for the purpose of

‘redress[ing any] violations” (alterations in original) (quoting

Peacock v. Thomas, 516 U.S. 349, 353 (1996))).

Because the Court has determined that an ERISA violation

occurred with respect to the bonus paid to John, and because John

knew of (and was intimately involved in) the setting of that bonus,

see supra Sections II.C.3-5, judgment will enter for Plaintiffs

against John on Count X. See Tiara Yachts, Inc. v. Blue Cross Blue

Shield of Mich., 138 F.4th 457, 472 (6th Cir. 2025) (“ERISA claims

for breach of fiduciary duty and self-dealing are ‘equitable in

nature.’” (quoting Patterson v. United HealthCare Ins. Co., 76

F.4th 487, 496 (6th Cir. 2023))).12

III. Claims Asserted Against Suzanne and Lisa

The Court now turns to the four claims against Suzanne and

Lisa. In Count IX, Plaintiffs seek “to recover benefits due to

[them] under the terms of [the] [P]lan” under 29 U.S.C.

§ 1132(a)(1)(B), arguing that the clawback provision did not allow

the deduction of bonuses from the gross sale price to Siemens.

Because, as the Court has explained, see supra Section II.C.3, the

plain text of the clawback provision does permit the deduction of

reasonable bonuses to the executives, judgment will enter for

Suzanne and Lisa on Count IX.

The other three claims against Suzanne and Lisa are equitable

claims asserted under 29 U.S.C. § 1132(a)(3). See supra Section

II.D (discussing this provision). In Counts V and VI, Plaintiffs

seek to recover traceable proceeds of Suzanne’s and Lisa’s knowing

participation in a prohibited transaction and in breaches of

12 The Court leaves for damages briefing whether it should award

equitable relief (such as disgorgement) in addition to the relief

under Counts VII-VIII, which provide for damages for losses to

plan participants. See Mauser v. Raytheon Co. Pension Plan for

Salaried Emps., 239 F.3d 51, 58 (1st Cir. 2001) (noting that

equitable relief under ERISA is ordinarily available only to the

extent it is nonduplicative of other remedies).

fiduciary duties with respect to the clawback negotiation and

redemption transaction. In Count X, Plaintiffs seek to recover

traceable proceeds from the sisters’ knowing receipt of unlawful

bonuses as part of the Siemens sale.

Because the Court has concluded that no breach of fiduciary

duties occurred during the clawback negotiation or redemption

transaction and that adequate consideration was paid, see supra

Sections III.A.2-3, III.B.1-2, judgment will enter for Suzanne and

Lisa on Counts V and VI. See 29 U.S.C. § 1132(a)(3); Harris Tr. &

Sav. Bank, 530 U.S. at 246.

As to Count X, the Court has determined that substantive ERISA

violations occurred under the Clawback Administration Claims with

respect to the bonuses paid to John, Long, and the Advisory Board

members (but not the executives). The Court further concludes, as

it now will explain, that Suzanne and Lisa “had actual or

constructive knowledge of the circumstances that rendered th[ose]

[bonuses] unlawful.” Harris Tr. & Sav. Bank, 530 U.S. at 251. They

therefore can be held liable as “nonfiduciary parties in interest.”

Brotherston, 907 F.3d at 36.

Suzanne and Lisa were both members of the Advisory Board

during the relevant time period and attended most Board meetings.

Tr. 5-116:14-18; Tr. 6-10:16-21. They were kept informed by the

Board about developments at the company, Tr. 5-116:19-117:9; Tr.

6-11:6-23, and always read emails that they received from their

siblings (including John), Tr. 5-119:5-7; Tr. 6-14:8-10.

Although Suzanne and Lisa had no role in setting the bonuses

for Long or Russelectric’s executives and did not attend meetings

with Schultz, Tr. 5-127:8-21; Tr. 6-22:3-17, the evidence is clear

that the sisters knew of the bonuses and their effect on the

clawback payments to ESOP participants. Both sisters received, and

responded to, John’s email in which he wrote that higher bonuses

would allow the family to “save” money “from the ESOP clawback.”

Ex. 799. Suzanne responded:

PS I have no problem with everyone being handsomely

compensated, especially you John! We couldn’t have done

it without them! We have loyal employees who have stuck

with us through thick and thin. They deserve a cut too

via the ESOP claw back. They have all done a fantastic

job. There is plenty to go around. We will all reap the

benefits.

Id. While Suzanne expressed her view that the plan participants

“deserve[d] a cut,” the Court concludes from the email exchange

that she understood that that “cut” would be lower if the bonuses

were higher. Id. Similarly, Lisa acknowledged at trial that she

was aware that the bonus payments would reduce the clawback

amounts. Tr. 6-26:20-25.

The Court thus determines that Suzanne and Lisa knowingly

benefited from an ERISA violation by receiving bonuses. Judgment

therefore will enter for Plaintiffs against Suzanne and Lisa on

Count X.

ORDER

For the foregoing reasons, the Court resolves Plaintiffs’

claims against John, Suzanne, and Lisa as follows:

1. With respect to the Clawback Negotiation Claims (in

Counts III-IV), the Court finds in John’s favor.

2. With respect to the Redemption Transaction Claims (in

Counts I-IV), the Court finds in John’s favor.

3. With respect to the Clawback Administration Claims

(Counts VII-IX):

a. On Count VII (claim of breach of fiduciary duties),

the Court finds in Plaintiffs’ favor against John

with respect to the bonuses awarded to John, Long,

and the Advisory Board members. The Court finds in

John’s favor with respect to the bonuses awarded to

the six Russelectric executives.

b. On Count VIII (claim of prohibited transactions),

the Court finds in Plaintiffs’ favor against John

with respect to the bonus awarded to John. The Court

finds in John’s favor with respect to the bonuses

awarded to Long, the Advisory Board members, and

the six Russelectric executives.

c. On Count IX (claim of failure to pay plan benefits

owed), the Court finds in John’s favor.

4. With respect to the equitable claims (Counts V, VI, and

X):

a. On Counts V and VI, the Court finds in Defendants’

favor.

b. On Count X, the Court finds in Plaintiffs’ favor

against all Defendants.

Supplemental briefing is ordered regarding the exact

calculation of damages in this complex case. This briefing must

also discuss the potential reduction (if any) of damages pursuant

to the Court’s previous order involving the settlements of Long,

Wyatt, and Argent, imposing a proportionate share approach to

damages apportionment. See Bowers v. Russell, No. 22-cv-10457,

2025 WL 2740682, at *1-2 (D. Mass. Sep. 5, 2025). In addition, the

parties shall brief what equitable remedies the Court should impose

under Count X.

Within fourteen days of entry of this order, after conferring,

the parties shall file supplemental briefs regarding the

calculation of damages. Within fourteen days of those filings, the

parties may file opposition briefs. No reply briefs may be filed.

SO ORDERED.

/s/ PATTI B. SARIS________________

Hon. Patti B. Saris

United States District Judge