A judge has ordered Ford Motor Co. to start discussing settlement of a lawsuit filed on behalf of employees who had company stock as a retirement investment. In a key ruling made in late December, U.S. District Judge Stephen Murphy allowed the 2006 lawsuit to go forward over Ford’s objections. Current and former non-Union workers say it was a mistake for Ford to offer company stock as an investment for retirement. From April 2000 to April 2006, the stock fell approximately 70% and now trades for under $2.20. Judge Murphy said in his ruling: “A stock can be imprudently risky for an employee savings plan even in the absence of fraud or imminent collapse.”
The lawsuit was filed under ERISA, the federal law that sets rules for pension and 401(k) plans and allows participants to sue over mismanagement. It was alleged in the lawsuit that Ford “had an obligation to protect the plan and its participants from unreasonable and entirely predictable losses,” and that the company “failed to apprise participants of the myriad of systemic, internal and marketplace problems … which threatened the viability of the company.”
Ford claimed that employees had opportunities to diversify their investments in major mutual funds. Judge Murphy wants Ford and lawyers for employees to start holding settlement talks under the supervision of U.S. Magistrate Judge Steven Pepe. A similar lawsuit involving GM employees and company stock was settled this year for $37.5 million.
Source: Associated Press
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