Neil v. Zell, GreatBanc Trust, and EGI-TRB, No. 08 C 6833 (N.D. Ill., Eastern Division, Nov. 9)

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The court said that because "other Tribune stock was available for purchase on the market, the ESOP could not sell its own shares at the time of purchase."

The Tribune ESOP transaction was exceptionally complex, with multiple stages. In this transaction, the ESOP purchased $250 million worth of unregistered shares at a time when there were still 240 million shares of the Tribune Company on the public market. The company then did a tender offer to buy and retire these shares. The court concluded that because there were still publicly traded shares on the market, the ESOP could buy only these shares. ERISA requires that ESOPs buy "qualifying employer securities," defined as either publicly traded stock or, if the company is closely held, the class of stock with the highest combination of voting and dividend rights. GreatBanc argued, in effect, that this was all part of a larger transaction that would end up with all the shares being privately held, but the court did not accept this approach. The case will almost certainly be appealed.