United States District Judge David F. Hamilton has denied the Indiana Power and Light Company’s (IPALCO) motion to dismiss a class-action lawsuit on behalf of 2,000 current and former employees which claims they lost some $150 million loss from their retirement plans as the result of a stock swap which also wiped out many workers’ life savings.
The swap occurred during a 2001 merger between IPALCO and AEG Corp. when company executives raided the workers’ 401(k) plans to exchange their relatively stable IPALCO stock for far more volatile shares in AES.
The class-action claims that IPALCO executives made millions in the transaction by dumping their stock before prices plummeted.
In fact, Mitch Daniels was among the group of IPALCO officials who voted in favor of the sale and later sold shares worth $71 million. The merger became a campaign issue last year in Daniels’ successful bid for governor.
Last year, Mr. Daniels claimed that no one could foresee the stock falling so fast.
He defended his actions by stating that he voted for what he believed was in the shareholders’ best interests and only sold his shares only because he was becoming President Bush’s budget director and wanted to avoid conflicts of interest.
Judge Hamilton said that laws governing these kinds of transactions are “emerging, controversial and highly fact-sensitive” and that a trial is the fairest way to resolve the dispute.
He also denied both the workers’ motion to resolve the lawsuit in their favor and the company’s request to prevent more than 400 workers from compensation on the grounds they had forfeited their rights to sue when they accepted early retirement.
The judge announced he would meet with attorneys for both sides in order to schedule a bench (non-jury) trial.
The attorney for the plaintiffs was pleased by the fact that the court’s decision would now permit the workers to have their “day in court.”