JOSEPH HENRY, ET AL. V. CHAMPLAIN ENTERPRISES, INC., ET AL. ERISA/ESOP LITIGATION

The following information consists only of matters of public record filed in the U.S. District Court of the Northern District of New York and the Second Circuit Court of Appeals in a case styled "Joseph Henry, et al. v. Champlain Enterprises, Inc., et al." These filings are meant to inform all of the ESOP participants of the Champlain Enterprises, Inc. d/b/a CommutAir Employee Stock Ownership Plan of the status of the litigation filed against CommutAir and the other defendants. As additional filings are made, they will be posted on this site. Nothing contained herein is intended to, or does, constitute a waiver of the attorney-client privilege.

• Summons and Verified Complaint filed on 11/01/01
• Memorandum-Decision and Order awarding damages, dated September 3, 2004
• Memorandum-Decision and Order awarding prejudgment interest and attorneys' fees, dated October 29, 2004
• Decision of Appellate Court, dated 4/26/06
• Order of Judge Hurd, dated 6/12/06
• Memorandum-Decision and Order dismissing claims, dated 1/5/2007
• Judgment dated 1/5/2007
• Motion to Alter or Amend the Judgment, 1/16/2007
• Notice of Appeal 1/29/2007
• Order dated 4/23/2007
• Decision of the US Court of Appeals dated 6/19/2009

Pursuant to Judge Hurd's June Order, the parties completed submission of revised proposed findings of fact and conclusions of law on September 11, 2006.  On January 5, 2007, Judge Hurd issued a Memorandum-Decision Order finding that as a result of a new Stock Purchase Agreement entered into by CommutAir, the owners/sellers, and the ESOP on February 28, 2006, pursuant to which CommutAir and the owners/sellers cancelled the ESOP notes due to them ($9 million and $5.5 million respectively), that the ESOP paid only $45.5 million for the convertible stock which the Court valued at $52.25 million at the time of the sale. Accordingly, the Court concluded that the ESOP paid "well below" value for the stock and any award of damages would be a "windfall." The Court ordered that the Plaintiffs' claims are dismissed and ordered the Clerk to enter judgment against the Plaintiffs.  Judgment was entered later that same day.

On January 16, 2007, Plaintiffs filed a Motion to Alter or Amend the Judgment, essentially seeking reconsideration by Judge Hurd of his windfall ruling.  On January 29, 2007, Plaintiffs filed a Notice of Appeal to the United States Court of Appeals for the Second Circuit from the January 5, 2007, windfall decision. 

On April 23, 2007,  Judge Hurd issued an Order denying Plaintiffs' Motion to Alter or Amend the Judgment. 

On June 19, 2009, the United States District Court of Appeals issued a decision reversing Judge Hurd's dismissal of Plaintiff's claims. The court ruled that when an Employee Stock Ownership Plan incurs debt to finance a purchase of shares of stock and then later sells the shares in exchange for cancellation of some of that debt, the debt cancellation in the second transaction should not be construed as having reduced the purchase price paid in the first transaction. The Court remanded the matter to the district court for further proceedings in accordance with the Court's decision.

On July 20, 2009, Judge David N. Hurd issued a Notice of Hearing for an In Chambers Conference scheduled for July 27, 2009 at 11:15 a.m.

We will keep you advised as to the ongoing status of the case.

Updated 7/23/2009