IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

James Smith, on behalf of himself and all others 

similarly situated, and on behalf of the Triad 

Manufacturing, Inc. Employee Stock Ownership 

Plan, 

Plaintiff, 

v. 

GreatBanc Trust Company; the Board of Directors 

of Triad Manufacturing, Inc.; David Caito; Robert 

Hardie; and Michael McCormick, 

Defendants. 

 Civil Action No.: 1:20-cv-02350 

 HON. JUDGE RONALD GUZMAN 

INITIAL STATUS REPORT 

Plaintiff James Smith, Defendants David Caito; Robert Hardie; Michael McCormick and 

the Board of Directors of Triad Manufacturing, Inc.; (“Triad Defendants”) and Defendant 

GreatBanc Trust Company (collectively “Defendants”) jointly submit this Initial Status Report 

pursuant to the Court’s April 17, 2020 Order (ECF No. 17). 

I. Nature of the Case 

A. Counsel 

Plaintiff James Smith is represented by lead counsel Michelle Yau, Mary Bortscheller, and 

Daniel Sutter of Cohen Milstein Sellers & Toll PLLC, and Paul Lukas, Kai Richter, and Grace 

Chanin of Nichols Kaster, PLLP. Triad Defendants are represented by Matthew Grabell and Ben 

Fryer of FordHarrison, LLP. Defendant GreatBanc Trust Company is represented by Mark Nebrig 

and Kristen Kenley of Moore & Van Allen PLLC and Adam Glazer, Norman Finkel, and William 

Klein of Schoenberg, Finkel, Newman & Rosenberg, LLC. On May 29, 2020, counsel met and 

conferred telephonically pursuant to the Court’s April 17, 2020 Order (ECF No. 17). 

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B. Claims and Jurisdiction 

1. Plaintiff’s Position: 

Plaintiff asserts claims against Defendants under the Employee Retirement Income 

Security Act (“ERISA”). 29 U.S.C. § 1001 et seq. Plaintiff alleges that Defendants engaged in 

prohibited transactions in violation of 29 U.S.C. § 1106 and imprudent and disloyal conduct in 

violation of 29 U.S.C. § 1104 when dealing with the Triad Manufacturing, Inc. Employee Stock 

Ownership Plan (the “ESOP”). Plaintiff alleges that the Triad ESOP is a retirement plan where the 

employer’s retirement contributions, made on behalf of employees, are invested entirely in the 

employer's privately held-stock. 29 U.S.C. § 1107(d)(6); see also 29 C.F.R. § 2550.407d–6. 

Plaintiff alleges that the employees’ retirement contributions are an important part of the 

employees’ retirement savings. Plaintiff’s allegations center on Defendants’ Caito, Hardie and 

McCormick’s sale of their privately held stock in Triad Manufacturing, Inc. to the ESOP at an 

inflated value of $58.05 per share (or ($106.2 million in the aggregate). Plaintiff alleges that the 

ESOP participants did not negotiate the purchase price of $58.05 per share or any other terms of 

the ESOP transaction, and agreed to by the ESOP Trustee, GreatBanc and the Selling Shareholders. 

For the alleged conduct, Plaintiff seeks remedies pursuant to 29 U.S.C. § 1132(a)(2) and 29 U.S.C. 

§ 1109(a), including the restoration of the losses Defendants caused to the ESOP’s retirement 

assets. Plaintiff also seeks appropriate equitable relief pursuant to 29 U.S.C. § 1132(a)(3) 

including, but not limited to, declaratory judgement, injunction, surcharge, and disgorgement of 

profits. 

Plaintiff brings this case on behalf of all other similarly situated participants in the ESOP. 

Plaintiff avers that the class may be certified pursuant to either Rule 23(b)(1), Rule 23(b)(2), and 

Rule 23(b)(3). The Court has subject matter jurisdiction over Plaintiff’s claims pursuant to 29 

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U.S.C. § 1132(e)(1) and 28 U.S.C. § 1331, and Plaintiff has standing to assert his claims. The 

Court also has personal jurisdiction over the Defendants because they transact business in, and 

have significant contacts with, this District. Venue is proper pursuant to 29 U.S.C. § 1132(e)(2) 

because, inter alia, Defendant GreatBanc resides in this district, alleged breaches of fiduciary duty 

took place in this district, and Triad Defendants employ individuals in this District. The Defendants 

contend it would be premature to engage in discovery when the Triad Defendants have filed a 

Motion to Stay and Compel Arbitration and/or Dismiss Pursuant to Federal Rule Civil Procedure 

12(b)(3) and/or 12(b)(6). Plaintiff disagrees because (1) Triad Defendants’ motion will not prevail 

because the arbitration provision is not applicable to Plaintiff’s claims and (2) prior to the ruling 

on Triad Defendants’ 12(b)(6) and (b)(3) motion, Plaintiff will only seek a narrow set of documents 

related to the sale of Triad to the ESOP, such as the valuation (i.e., stock appraisal) that formed 

the basis for the purchase price the ESOP paid for Triad, and the information underlying that 

valuation. For these reasons, the Court should not stay discovery and should allow limited 

discovery to proceed at this time. 

2. Triad Defendants’ Position: 

The Triad Defendants do not believe that this case is properly before the Court in light of 

a Mandatory Arbitration and Class Action Waiver (the “Arbitration Provision”) provision in the 

Plan document. On June 1, 2020, the Triad Defendants filed a Motion to Stay and Compel 

Arbitration and/or Dismiss Pursuant to Federal Rule Civil Procedure 12(b)(3) and/or 12(b)(6) (the 

“Triad Defendants’ Motion”) (Docket No. 29). 

The Triad Defendants believe it would be unduly burdensome and potentially wasteful 

should discovery proceed before the Court rules on the Triad Defendants’ Motion. Therefore, as 

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requested in the Triad Defendants’ Motion and reiterated herein, the Triad Defendants request that 

all discovery be stayed in this matter pending a decision on the Triad Defendants’ Motion. 

3. GreatBanc’s Position: 

The deadline for Defendant GreatBanc to answer or otherwise respond to Plaintiff’s 

Complaint is June 29, 2020. Accordingly, it is GreatBanc’s position that it is premature for 

discovery to proceed at this stage. Additionally, due to the Triad Defendants’ Motion, Defendant 

GreatBanc agrees that it would be unduly burdensome and potentially wasteful should discovery 

proceed before the Court rules on the Triad Defendants’ Motion. Therefore, Defendant GreatBanc 

agrees that all discovery should be stayed in this matter pending a decision on the Triad 

Defendants’ Motion. 

II. Discovery and Motions 

A. Motions 

Plaintiff filed his complaint on April 15, 2020. (ECF No. 1). On May 11, 2020, Triad 

Defendants requested, and the Court granted, an extension of time to file a response to Plaintiff’s 

complaint by June 1, 2020. GreatBanc and Plaintiff have agreed that GreatBanc will file a response 

to the Complaint on or before June 29, 2020. 

As set forth above, on June 1, 2020, the Triad Defendants’ Motion was filed requesting 

that this Court stay this matter and compel arbitration or in the alternative dismiss the case pursuant 

to Fed. R. Civ. P. 12(b)(3) and/or 12(b)(6) (Docket No. 29). Plaintiff’s response is due June 22, 

2020 and the Triad Defendants’ Reply is due July 6, 2020. (Docket No. 32). 

B. Discovery 

The parties have agreed that initial disclosures will be exchanged 14 days after the 

Defendants file their respective responses to the Complaint. For Plaintiff and the Triad 

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Defendants, initial disclosures would be served on June 15, 2020, and for GreatBanc, initial 

disclosures will be served on July 13, 2020. 

1. Plaintiff’s Position 

Upon filing of initial disclosures, Plaintiff believes that discovery should proceed 

consistent with Rule 26(a)(1)(C). Because Plaintiff’s claims are narrowly focused on the sale of 

Triad Manufacturing to the ESOP and the valuation used to effectuate that sale, Plaintiff anticipate 

that discovery can be done within the default limits provided by the Federal Rules of Civil 

Procedure. 

Plaintiff also reports as follows regarding the contents of Rule 26(f): 

Rule 26(f)(3)(B): Prior to a ruling on Triad Defendants’ motion to compel arbitration 

and/or dismiss, Plaintiff will seek limited discovery as set forth above. Given this and 

Plaintiff’s position that the arbitration provision Triad Defendants contend is the basis for 

compelling arbitration is inapplicable to Plaintiff’s claims, Plaintiff respectfully submits 

that no limitations on discovery are necessary, beyond those contemplated by Rule 

26(b)(1). 

Rule 26(f)(3)(C): Plaintiff is awaiting further disclosures from Defendants regarding 

electronically stored information (“ESI”), including the form(s) in which it will be 

produced. 

Rule 26(f)(3)(D): Plaintiff does not believe any issues exist regarding privilege claims or 

protection of trial-preparation materials. 

Rule 26(f)(3)(E): Plaintiff proposes that each side be limited to 10 depositions, with the 

ability to seek additional depositions by agreement or with leave of Court if necessary. 

Plaintiff proposes that each side be limited to 25 written interrogatories, as provided in 

Rule 33(a)(1), with the ability to seek additional interrogatories by agreement or with leave 

of Court if necessary. 

Rule 26(f)(3)(F): Plaintiff requests the issuance of a scheduling order under Rule 

16(b). Plaintiff opposes any stay of discovery. 

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A. Defendants’ Position 

As set forth above, the Triad Defendants believe that it is premature and would be unduly 

burdensome to begin discovery at this point given the Triad Defendants’ Motion. (Docket No. 29). 

As set forth in the Triad Defendants’ Motion, the Triad Defendants do not believe this case was 

properly brought before this Court due to the Arbitration Provision, which includes a Class Action 

Waiver. If the Triad Defendants’ Motion is granted, then Plaintiff’s class claims would no longer 

be part of the lawsuit and the matter would be subject to the rules of the American Arbitration 

Association for discovery. Thus, engaging in discovery while the Triad Defendants’ Motion is 

being decided could result in a significant waste of attorneys’ fees and costs. In an effort to 

compromise, the Triad Defendants have agreed to submit 26(a)(1) disclosures by June 15, 2020, 

but believe setting other discovery deadlines at this point is premature given the relief sought by 

the Triad Defendants’ Motion. (Docket No. 29). 

Due to the Triad Defendants’ Motion and the responsive pleading deadline of June 29, 

2020, Defendant GreatBanc agrees that it would be unduly burdensome and potentially wasteful 

should discovery proceed before the Court rules on the Triad Defendants’ Motion. Therefore, 

Defendant GreatBanc agrees that all discovery should be stayed in this matter pending a decision 

on the Triad Defendants’ Motion. In making this representation, Defendant GreatBanc reserves 

all rights and defenses, including to seek a stay of the current litigation and compelling arbitration 

or in the alternative moving to dismiss the lawsuit. 

II. Settlement 

The Parties discussed the prospects of prompt settlement and believe that settlement at 

this stage of litigation is premature. 

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III. Proposed Schedule 

A. Plaintiff’s Position: 

Plaintiff’s scheduling proposals are summarized in the charts below.

Event Agreed Upon Deadline Proposal 

Rule 26(a)(1) Disclosures June 15, 2020 for Plaintiff and Triad Defendants 

July 13, 2020 for GreatBanc 

Event Plaintiff’s Proposal 

Pleading Amendment January 7, 2021 

Document Production Completion January 15, 2021 

Motion for Class Certification January 22, 2021 

Opposition to Class Certification February 26, 2021 

Class Certification Reply March 19, 2021 

Close of Fact Discovery April 30, 2021 

Opening Expert Reports June 29, 2021 

Rebuttal Reports August 10, 2021 

Close of Expert Discovery September 7, 2021 

B. Defendants’ Position 

As set forth above, Defendants believe setting discovery deadlines and engaging in 

discovery is premature given the relief requested in the Triad Defendants’ Motion. In the event 

the Triad Defendants’ Motion is denied, the Defendants propose the following schedule which 

could commence on the date of the Court’s final decision on the merits on Triad Defendants’ 

Motion: 

Event Agreed Upon Deadline Proposal 

Rule 26(a)(1) Disclosures June 15, 2020 for Plaintiff and Triad Defendants 

July 13, 2020 for GreatBanc 

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Event Defendants' Proposal 

Pleading 

Amendment 6 months after the Court’s final decision on the Triad Defendants’ Motion 

Document 

Production 

Completion

8 months after the Court’s final decision on the Triad Defendants’ Motion 

Motion for Class 

Certification 45 days after Document Production Completion 

Opposition to 

Class 

Certification

45 days after Motion for Class Certification 

Class 

Certification 

Reply

21 days after Opposition to Class Certification 

Close of Fact 

Discovery 45 days after Class Certification Reply 

Opening Expert 

Reports 60 days after Close of Fact Discovery 

Rebuttal Reports 45 days after Opening Expert Reports 

Close of Expert 

Discovery 30 days after Rebuttal Reports 

Signed: Signed: 

 

/s/Michelle C. Yau

COHEN MILSTEIN SELLERS & TOLL 

PLLC 

Michelle C. Yau (admitted pro hac vice)

Mary J. Bortscheller, Illinois Bar: 6304457 

Daniel R. Sutter, (admitted pro hac vice)

1100 New York Ave. NW ● Fifth Floor 

Washington, DC 20005 

(202) 408-4600 

myau@cohenmilstein.com 

mbortscheller@cohenmilstein.com 

dsutter@cohenmilstein.com 

Carol V. Gilden, Illinois Bar: 6185530 

190 South LaSalle Street, Suite 1705 

Chicago, IL 60603 

Tel: (312) 357-0370 / Fax: (312) 357-0369 

cgilden@cohenmilstein.com 

/s/ Matthew D. Grabell 

Matthew D. Grabell (Bar No. 6312929) 

FORD & HARRISON, LLP 

271-17th Street, NW, Suite 1900 

Atlanta, GA 30363 

Mgrabell@fordharrison.com 

(404) 888-3820 

Benjamin P. Fryer (pro hac vice forthcoming) 

North Carolina Bar No. 39254 

FORD & HARRISON, LLP 

6000 Fairview Road, Suite 1200 

Charlotte, NC 28210 

bfryer@fordharrison.com 

Telephone: (980) 282-1900 

Facsimile: (980) 282-1949 

Attorneys for Board of Directors of Triad 

Manufacturing, Inc., David Caito, Robert 

Hardie, and Michael McCormick 

Attorneys for Plaintiff 

 

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Dated: June 5, 2020 

/s/ Mark A. Nebrig 

Mark A. Nebrig (admitted pro hac vice) 

North Carolina Bar No. 28710 

Kristen J. Kenley (admitted pro hac vice) 

North Carolina Bar No. 49310 

MOORE & VAN ALLEN PLLC 

100 North Tryon Street, Suite 4700 

Charlotte, North Carolina 28205 

Telephone: (704) 331-3602 

Facsimile: (704) 339-5974 

marknebrig@mvalaw.com 

kristenkenley@mvalaw.com 

Adam J. Glazer (Bar No. 6199294) 

Norman T. Finkel (Bar No. 6183246) 

William R. Klein (Bar No. 6185715) 

SCHOENBERG, FNKEL, NEWMAN & 

ROSENBERG LLC 

222 South Riverside Plaza, Suite 2100 

Chicago, IL 60606 

Telephone: (312) 648-2300 

adam.glazer@sfnr.com 

norm.finkel@sfnr.com 

bill.klein@sfnr.com 

Attorneys for Defendant 

GreatBanc Trust Company 

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