Tidyman’s workers recoup some savings
Former Tidyman’s employees settle part of lawsuit against company executives
Former Tidyman’s grocery workers have recouped a fraction of their retirement savings by settling part of their lawsuit against executives.
The $575,000 settlement – to be paid by insurers – was filed in U.S. District Court in Montana last month. The workers sued two years ago, alleging that executives of the now-defunct employee-owned grocery chain, which has its headquarters in Spokane, orchestrated the sale of the company that was not in the interest of its employee owners.
When Tidyman’s went out of business in 2006, the store closures eliminated hundreds of jobs. And sale of the company’s assets to repay debts effectively zeroed out the retirement funds of about 1,300 people enrolled in Tidyman’s stock ownership plan.
The grocery chain once operated 21 stores in Eastern Washington, North Idaho and Montana.
The settlement ends the lawsuit workers were pressing against former company officials Ric Odegard and Joe Custer.
The former employees are still pursuing cases against other Tidyman’s officers and directors, including Michael Davis, John Maxwell and Chris Schnug.
Court records indicate $60 million is sought at a trial beginning next month in Missoula.
In their lawsuit, workers alleged that the executives breached their fiduciary duty to the Tidyman’s Employee Stock Ownership Plan, or ESOP, by using the plan’s assets for general business purposes rather than managing the money to benefit the employee-owners.
The lawsuit focuses on allegations that executives ignored financial advisors who cautioned against entering into a failed business partnership with national grocery retailer Supervalu Inc. Workers claim executives did not disclose all relevant facts to the employee owners.
The suit also accuses executives of using retirement funds to pay corporate debts, executive bonuses, and legal costs that included a $6.2 million judgment stemming from a major gender discrimination lawsuit in the 1990s.
The settlement last month included no admission of liability by executives.
In a report to the federal judge overseeing the case, a mediator said former company executives remaining in the suit and their insurers “had a dramatically different view of the case than the plaintiffs did.”