The U.S. District Court for the Northern District of Alabama has dismissed an eight-count lawsuit filed by former employees of Radiance Technologies, an employee-owned defense contractor headquartered in Huntsville.
In an opinion issued late last week, U.S. District Judge Corey L. Maze dismissed all claims without prejudice.
Maze held that the plaintiffs lacked standing to bring certain direct fiduciary-duty claims; the remaining state-law claims were preempted by the federal Employee Retirement Income Security Act (ERISA); and the plaintiffs’ ERISA claims failed because they did not exhaust the plan’s internal administrative remedies before suing.
The suit alleged breaches of fiduciary duty under ERISA and asserted various state-law claims tied to an alleged thwarted opportunity to sell the company—an event the plaintiffs said would have produced substantial gains for their ESOP-related holdings.
The court agreed with the defendants that state-law claims “related to” the plan were barred by ERISA preemption and that the ERISA counts could not proceed due to failure to exhaust the plan’s appeals process.
The ruling closes a case filed in April 2024 and underscores recurring issues in ESOP governance at closely held companies, including how ERISA preemption and exhaustion requirements can limit state-law and ERISA remedies for plan participants.
Radiance Technology’s Chief Compliance Officer Jay Town, who is also a former U.S. Attorney, celebrated the ruling.
“[Radiance Technology] successfully countered a baseless lawsuit against our company this week, with the case being dismissed outright!” Town said on X. “This is what happens when your C-suite says ENOUGH…and fights back!”
Yaffee is a contributing writer to Yellowhammer News and hosts “The Yaffee Program” weekdays 9-11 a.m. on WVNN. You can follow him on X @Yaffee
