Welcome to the Tharaldson Motels, Inc. Private Employee Stock Ownership Plan Lawsuit website. This website has been established to keep class members informed about the class action lawsuit Hans, et al. v. Tharaldson, et al., Case No. 3:05-cv-115, currently pending in United States District Court, District of North Dakota.

As described in more detail in the Fourth Amended Class Action Complaint, dated May 15, 2006, this is a class action lawsuit on behalf of participants and beneficiaries in the Tharaldson Motels, Inc. Employee Stock Ownership Plan (the “TMI ESOP”), alleging violations under the Employee Retirement Income Security Act of 1974 (“ERISA”). The lawsuit alleges that Defendant Gary Tharaldson—as sole Director of TMI and the Trustee of the ESOP—breached his fiduciary duties of prudence and loyalty under ERISA, and engaged in prohibited transactions under ERISA by causing the TMI ESOP to purchase nearly 100% of the common stock of TMI from himself and members of his family at an inflated price of $500 million in two transactions in 1998 and 1999. As the Court has summarized:

Reduced to its simplest terms, the Fourth Amended Complaint alleges that the ESOP and its participants paid an excessive price for TMI stock due to misconduct on the part of the defendants and those privy to them, who are Plan fiduciaries, in particular that the valuation did not include a reduction in value due to the existence of ESOP loans and further that there was no appropriate deduction for a minority discount due to the way the shares were sold to the ESOP. The Complaint seeks to recover any losses to the ESOP resulting from those fiduciary breaches, as well as any profits made by the fiduciaries or their privies, which may have been made through use of Plan assets in which assets the Plan would have a constructive trust.

See page 5 of the Court's Order on Class Certification

On May 7, 2010, the Court certified the case as a class action with two subclasses: a class of employees and their beneficiaries who no longer work at TMI (the “Former Employee Class”); and a class of employees and their beneficiaries who currently work at TMI (the “Current Employee Class”). Keller Rohrback has been appointed by the Court to represent the Current Employee Class, while the law firm Cohen Milstein Sellers & Toll has been appointed to represent the Former Employee Class. The subclasses are defined by the Court as follows:

Former Employee Class

All persons, other than Defendants in this action, members of their immediate families, their legal representatives, heirs, successors, or assigns of any excluded party, who were participants in the Tharaldson Motels, Inc. (“TMI”) Employee Stock Ownership Plan (“ESOP”) at any time from December 30, 1998 to the present and who received an allocation of Plan assets to their accounts which they did not subsequently forfeit under the terms of the Plan and who are no longer employees of TMI (or an affiliate) and the beneficiaries of such persons.

Current Employee Class

All persons, other than Defendants in this action, members of their immediate families, their legal representatives, heirs, successors, or assigns of any excluded party, who were participants in the Tharaldson Motels, Inc. (“TMI”) Employee Stock Ownership Plan (“ESOP”) at any time from December 30, 1998 to the present and who is a present employee of TMI (or an affiliate) and the TMI ESOP beneficiaries of such persons.

The litigation was recently stayed for a short period when the Court directed North Star Trust Company (“North Star”) to assemble class members to serve as named representatives of the Current Employee Class, and to determine class counsel who would represent the class representatives. On October 22, 2010, the Court appointed Charles Berryhill, Carlos Gonzales, Donald Klain, Jolene Matheson-Godschalk, and Sidney Lien as class representatives for the Current Employee Class, and Keller Rohrback as their Class Counsel.

The stay was subsequently lifted from the case, and the Court placed the litigation back on a trial schedule. Trial is set to begin on May 1, 2012 in Fargo, North Dakota, Courtroom 1 before the Honorable Ralph R. Erickson, United States District Judge.

If you are a member of the Current Employee Class as defined above, or you have information which might assist us in the prosecution of these allegations, please contact one of the following persons:

David J. Ko, Esq. – dko@kellerrohrback.com

Keller Rohrback L.L.P.
1201 Third Avenue, Suite 3200
Seattle, WA 98101
Telephone: (206) 623-1900
Or Toll Free: 1-800-776-6044

Gary D. Greenwald, Esq. – ggreenwald@kellerrohrback.com
Gary A. Gotto, Esq. – ggotto@kellerrohrback.com
Ron Kilgard, Esq. - rkilgard@kellerrohrback.com

Keller Rohrback P.L.C.
3101 North Central Avenue, Suite 1400
Phoenix, AZ 85012
Telephone: (602) 248-0088

- Fourth Amended Class Action Complaint
- Order partially denying Motion to Dismiss
- Order Regarding Motion for Reconsideration
- Order on Class Certification
- Amended Order on Class Certification
- Order Granting Current Employee Class Reps and Class Counsel
- Summary Notice
- Summary Notice (Spanish)
- Stipulation of All Parties Regarding Schedule for Hearing on Daubert Motions
- Memorandum Opinion and Order on Summary Judgment Motions