News
Rigrodsky & Long, P.A. Files Class Action Lawsuit Alleging Violations ERISA On Behalf of Current and Former Employees of Smurfit-Stone Container Corporation
Wilmington, Delaware - February 24, 2010
Rigrodsky & Long, P.A. announces it has filed a class action lawsuit on behalf of former and current employees of Smurfit-Stone Container Corporation (the “Company” or “Smurfit-Stone”) (OTC: SSCCQ.PK) who invested in the Smurfit-Stone Container Corporation Savings Plan, the Jefferson Smurfit Corporation Hourly Savings Plan, the Smurfit-Stone Container Corporation Hourly Savings Plan, and the St. Laurent Paperboard Hourly Savings Plan (collectively, the “Plans”).
The lawsuit, pending in the United States District Court for the District of Delaware, alleges that from October 29, 2003 through December 31, 2008 (the “Class Period”), the Plans' administrators breached their fiduciary duties to the Plans and Participants in violation of the Employee Retirement Income Security Act of 1974 (“ERISA”), by failing to prudently and loyally manage the Plans' investment in Company stock by, among other things: (i) continuing to offer Company stock as a retirement saving option; (ii) continuing to acquire and hold shares of Company stock in the Plans when it was imprudent to do so; (iii) failing to provide complete and accurate information to Participants regarding the Company's financial condition and the prudence of investing in Company stock; and (iv) maintaining the Plans' pre-existing investment in Company Stock when it was no longer a prudent investment for the Plans. The lawsuit further alleges that the investment in Smurfit-Stone common stock was imprudent, inter alia, because: (i) the Company failed to disclose the fact that Smurfit-Stone had decided to gamble that by cutting the nationwide supply of cartons, Smurfit-Stone could force price increases throughout the industry; (ii) failing to disclose that the planned plant closures and the workforce reductions would: (a) result in a diminished productive capacity and inefficiencies, (b) place a critical upper limit on the Company's productive capacity, (c) cause Smurfit-Stone to incur extraordinarily high labor costs (overtime) to accommodate any increase in customer product orders that might ensue, thereby lowering margin, and (d) cause a loss of customers and impede Smurfit-Stone's ability to achieve long-term growth; (iii) Smurfit-Stone had not begun to take any meaningful steps to rebuild market share; and (iv) the Company would not be focusing on improving its production efforts.
Subsequently, on January 26, 2009, Smurfit-Stone and its U.S. and Canadian subsidiaries filed for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court in Wilmington, Delaware. On that same day, its Canadian subsidiaries also filed to reorganize under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada.
