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No. 01 C 2963 Page4

conflicting interests. First, former employees who hold a promissory note at a value other than
$184.41 likely desire a lump sum payout of their remaining balance as soon as possible.
Second, former employees who terminated employment after the 2000 amendments may desire
an immediate lump sum payout or may have an interest in seeing the long-term value of
Amsted stock increase before collecting their benefits, Third, current employees likely value
the long term stability of Amsted. Defendants argue that an immediate lump sum payout to
plaintiffs who desire it may affect the long-term financial health of Amsted, putting plaintiffs
in conflict with each other. We disagree.

While plaintiffs may have differing desires as to the future financial stability of
Amsted,’ their interests in this litigation are not in conflict. In filing this suit plaintiffs seek to
right alleged wrongs committed by the plan administrators in order to receive the full value
of their retirement accounts, If successful, this litigation will necessarily preclude Amsted
from relitigating the matter (see Parklane Hosiery Co., Inc. v. Shore, 439 U.S, 322 (1979)), and,
if unsuccessful, will at a minimum adversely impact ESOP participants, whether former or
current employees, from relitigating these issues. A current employee whose primary desire
is the long-term financial health of Amsted, will be equally affected by this litigation whether
it is brought by a class of all ESOP participants or by one single former employee. Because
the rights of current employees will necessarily be adjudicated in this action, we find that the
class action is the proper device to assure that all parties are fairly represented.

Defendants argue that because a potential conflict exists between eligible class

?We note that even former employee plaintiffs have no apparent desire to put Amsted out of business
only to receive payments into their pension funds, Moreover, defendants have neither argued nor presented
evidence that an adverse result in this litigation would be so catastrophic as to harm the future stability of
Amsted, As plaintiffs point out, defendants have investigated into possible financial arrangements for
restoring funds to the retirement accounts, and there is no suggestion that these are impossible.



ss
No. 01 C 2963 Page3

In determining whether to certify a class, we have broad discretion. Keele v. Wexler,
149 F.3d 589, 592 (7" Cir. 1998). Plaintiffs bear the burden of demonstrating the four
threshold requirements of Rule 23(a): numerosity, commonality, typicality and adequacy of
representation. Id, at 594, Additionally, parties seeking certification must show that the
action is maintainable under Rule 23(b)(1), (2) or (3). Amchem Products, Inc. y. Windsor, 521
U.S. 591, 613 (1997).

Plaintiffs argue that this class meets the four initial requirements and should be
certified under either Rule 23(b)(1)(A), which allows maintenance of a class action if the
prosecution of separate actions would likely lead to inconsistent adjudications, or Rule
23(b)(3), which allows certification where questions of law and fact common to class members
predominate over any questions affecting only individual members. Defendants dispute only
the adequacy of representation of the class members, arguing that conflicts of interest exist
between perspective class members that make this action untenable.’

. Adequacy of representation consists of two prongs: the adequacy of counsel to handle
a class action and the adequacy of named plaintiffs to protect the differing interests of the class
members. Retired Chicago Police Ass’n v. City of Chicago, 7 F.3d 584, 598 (7" Cir. 1993).
Defendants do not dispute that plaintiffs’ counsel is competent to handle this matter, only that
plaintiffs, together with counsel, cannot adequately represent the differing interests of the class
members.

Defendants argue that the proposed class would include at least three groups with

"There is some dispute as to whether the defendants have waived their argument that counsel would
be conflicted in representing the class because they did not challenge adequacy of counsel in their response
brief, Defendants do not argue that plaintiffs’ counsel is incompetent to handle a class action, only that they
would be conflicted if this class was certified. As such, we address this argument as part of the overall
discussion of potential conflicts between class member.



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No. 01 C 2963 Page 5

members, plaintiffs’ counsel will not be able to adequately protect the interests of all members.
Any conflicts that may exist between potential class members are not at issue in this litigation.
Every employee, whether former or current, has the desire to repair the alleged harm to their
pension plan. This is the relief that plaintiffs (and their counsel) seek in this action. Plaintiffs’
counsel will have no conflict in vigorously prosecuting this case.

We find that no conflict of interest exists in that potential members seek the same relief
and will have their rights adjudicated in this litigation. We likewise find that plaintiffs have
met their burden of proving all necessary elements and demonstrating that class certification

is proper pursuant to Rule 23,

CONCLUSION

For the foregoing reasons, plaintiff's motion for class certification is granted.

B. Never

JAMES B. MORAN
Stnior Judge, U. S. District Court

Q... [3 _, 2002.



So Minute O69 Fore (0697) (( {
United States District Court, Northern District of Illinois ¥
seeieiette | James B. Moran | Suc
CASE NUMBER 01 C 2963 - (MDL 1417) DATE 12/13/2002
CASE Bradley et al. Vs. Amsted Industries, Inc. et al.
TITLE
[In the following box (a) indicate the party filing the motion, ¢-g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented,]
Memorandum Opinion and Order

DOCKET ENTRY:

qd) a Filed motion of [ use listing in “Motion” box above.]

(2) 0 Brief in support of motiondue____-

@) a Answer brief to motion due___. Reply to answer briefdue___.

(4) o Ruling/Hearingon___setfor__at

(5) oO Status hearing[held/continued to} [set for/re-set for]on___setfor__—_at

() Oo Pretrial conference[held/continued to] [set for/re-set for]}on___——ssetfor_— at.

(7) oa Trial[set for/re-set for] on__at

(8) o [Bench/Jury trial] [Hearing] held/continued toa

(9) o This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

OOFRCP4(m) (Local Rule 41.1 OFRCP41(a)(1) 0 FRCP41(a)(2).
(10) MM [Other docket entry] Enter Memorandum Opinion and Order. For the foregoing reasons, plaintiffs’

aly

motion for class certification is granted. Status hearing set for February 5, 2003 at 9:15am. to stand.

[For further detail see order attached to the original minute order.}

No notices required, advised in open court.
No notices required.

Notices mailed by judge's staff,

Notified counsel by telephone.

Docketing to mail notices.

Mail AO 450 form. Luho LOINLSia’s'n
Copy to judge/magistrate judge. Ye
coum CY? Nd £1 93020
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central Clerk’s Office



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

IN RE AMSTED INDUSTRIES, INC.
“ERISA” LITIGATION

DOCKETED

DEC 1 6 2002
THIS DOCUMENT RELATES TO:

JUAN ARMSTRONG, et al,
Plaintiffs,
vs. No. 01 C 2963

AMSTED INDUSTRIES, INC., et al,

we eS we Se we we eer

Defendants.

MEM [DUM OPINIO. D ORDER

Plaintiffs brought this action alleging violations of the Employee Retirement Income
Security Act of 1974, 29 U.S.C. § 1001 ef seg. (ERISA), seeking to reinstate benefits, enjoin
further denial of benefits, void improper transactions, obtain equitable remedies under
ERISA, and damages, These actions were filed individually and transferred to this court by
the judicial panel on multi-district litigation. The non-retiree plaintiffs filed a motion for class
certification pursuant to Fed.R.Civ.P. 23. For the following reasons, we grant plaintiffs’
motion.

BACKGROUND

In 1996 Amsted became a sub-chapter S corporation by becoming entirely employee-

owned. At the end of each fiscal year the Amsted Employees’ Stock Ownership Plan (ESOP)

distributed shares of the corporation into individual retirement accounts, which varied in

ne


a

No. 01 C 2963 Page2

value according to the additions of new shares and fluctuations in stock prices. Amsted
developed a cash surplus and began acquiring numerous smaller companies.

In 1999, plaintiffs allege that defendant acquired Varlen at an exaggerated price,
paying approximately $600 million, or a 60% stock price premium for the shares, without
performing an adequate independent evaluation for the benefit of the ESOP. As a result of
this purchase, Amsted’s stock value rose 32% over the previous year, reaching a high value
of $184.41 on September 30, 1999, resulting in numerous ESOP distribution requests.
Plaintiffs allege that due to defendants’ mismanagement the large volume of distribution
requests significantly depleted ESOP assets.

In response to this depletion, plaintiffs further allege that defendants amended the plan
provisions in violation of ERISA. These amendments allegedly made it more difficult to apply
for and receive distributions of the ESOP and significantly lowered the value of employees’
retirement accounts. Defendants allegedly changed the requirements for retirement from
needing either 30 years of service or reaching age 55 to requiring both 30 years of service and
reaching age 55, Another provision allegedly enacted by defendants eliminated lump sum
payments to plan participants in exchange for issuing a note promising payment of 20% of the
account value — which varied over time — over a period of four years, paying a reasonable
interest,

D) SI
Plaintiffs seek to certify a class to be defined as
All ESOP Plan Participants, excluding DEFENDANTS and excluding those

Plan Participants who retired and whose benefits under the ESOP were
calculated for the purpose of distribution at $184.41 per share.