Flat Rock Metal $1.8M ERISA Settlement, ESOP Participants Get Automatic Payments After Stock Overpayment Lawsuit—Election Deadline March 17, 2026
Flat Rock Metal Inc. agreed to pay $1.8 million to settle a class action lawsuit alleging its employee stock ownership plan overpaid for company stock in a 2020 transaction that violated ERISA fiduciary duty laws. All participants or beneficiaries in the Flat Rock Metal and Bar Processing ESOP as of November 24, 2020, or later qualify for automatic pro-rata payments based on shares held. Active ESOP account holders receive payments directly into their accounts, while former participants without active accounts must submit a payment election form by March 17, 2026, to choose their payment method.
What Is The Flat Rock Metal ESOP Lawsuit About?
The settlement resolves allegations that plan fiduciaries breached ERISA duties by allowing the ESOP to purchase SAC Ventures Inc. stock at a grossly inflated $60 million price.
On August 3, 2023, participant Richard N. Bonds filed a class action lawsuit (Case No. 2:23-cv-12045) in U.S. District Court for the Eastern District of Michigan. He claimed the Flat Rock Metal ESOP purchased 100% of SAC Ventures Inc. stock for $60 million in November 2020—despite the company being revalued just one month later at only $3.6 million.
The ERISA Violations Alleged In The Flat Rock Case
Bonds alleged multiple fiduciary breaches by ESOP trustee Capital Trustees LLC and selling shareholders. First, fiduciary imprudence for failing to conduct proper due diligence on the stock valuation. The complaint stated the $60 million price resulted from “unrealistic growth projections and comparisons” rather than fair market value.
Second, fiduciary disloyalty. Bonds claimed the trustee was financially incentivized to please selling shareholders because ongoing trustee fees and future business depended on approving the transaction.
Third, prohibited transactions under ERISA Section 406(a). The lawsuit alleged the stock purchase and seller-financed loan used to fund it violated ERISA’s prohibition against transactions between the plan and parties in interest.
The complaint noted that sellers financed the sale themselves because banks refused to provide financing—a red flag suggesting the stock was overpriced and couldn’t survive external due diligence.
How The Settlement Was Reached
Following court rulings denying most motions to dismiss in May 2024, the parties entered settlement negotiations. The settlement received preliminary approval, with final approval pending.
Flat Rock Metal, SAC Ventures, and the other defendants denied all wrongdoing but agreed to settle to avoid further litigation costs and risks. The settlement provides benefits to class members without requiring them to prove individual damages.
Who Qualifies For The Flat Rock ESOP Settlement?
All persons who were participants in or beneficiaries of the Flat Rock Metal and Bar Processing ESOP as of November 24, 2020, or later qualify as settlement class members.
This includes current Flat Rock Metal employees with ESOP accounts, former employees who left the company but still have ESOP balances, beneficiaries of deceased ESOP participants who inherited account balances, and participants already receiving ESOP distributions.
How Much Money Will You Receive From The $1.8 Million Settlement?
Payment amounts depend on your share ownership relative to all other class members.
Pro-Rata Payment Distribution Formula
After deducting attorneys’ fees, settlement administration costs, service awards for class representatives, and independent fiduciary fees, the net settlement fund is divided proportionally among class members based on shares held.
Your payment equals: (Your ESOP shares ÷ Total class member shares) × Net settlement amount. Those with larger ESOP account balances receive proportionally larger payments. The exact per-person amount depends on total deductions and the number of vested shares across all class members.
Payment Methods For Active vs. Inactive ESOP Participants
Current employees with active ESOP accounts: Receive settlement payments directly deposited into their ESOP accounts automatically. No action required.
Former employees or beneficiaries without active accounts: Must download, complete, and return the settlement payment election form by March 17, 2026, to choose their preferred payment method (lump sum check, rollover to IRA, or other qualified plan).
Failure to submit the election form by March 17, 2026, may delay or forfeit your settlement payment.
How To File Your Flat Rock ESOP Settlement Claim
Filing procedures differ based on your account status.
Where To Download The Payment Election Form
Official Settlement Website: flatrockesopsettlement.com
Settlement Administrator Contact:
Bonds v. Heeter, et al.
c/o Settlement Administrator
P.O. Box 25226
Santa Ana, CA 92799
Phone: 833-647-9010
Email: [email protected]
Visit flatrockesopsettlement.com/documents/ to access the settlement agreement, claim forms, and court approval documents.
Step-By-Step Instructions For Former Participants
Navigate to flatrockesopsettlement.com, locate and download the settlement payment election form PDF, print the form (online submission not available—paper forms only), complete all required fields including your name, Social Security number, current address, and preferred payment method, sign and date the form, and mail the completed form postmarked no later than March 17, 2026, to the settlement administrator address above.
Keep a copy of your completed form and mailing proof for your records.
What You Must Know About ESOP Stock Valuation Lawsuits
The Flat Rock settlement illustrates growing scrutiny of ESOP transactions where companies sell stock to employee plans.
Why ESOP Stock Overvaluation Violates ERISA
ERISA requires plan fiduciaries to act prudently and loyally in the exclusive interest of participants. When an ESOP purchases company stock at inflated prices, participants receive less value than their contributions deserve—effectively transferring wealth from employees to selling shareholders.
The Department of Labor has emphasized that ESOPs must pay no more than “adequate consideration”—fair market value determined by independent appraisal. Seller-financed transactions raise red flags because they bypass bank due diligence that would catch overvaluation.
How This Case Compares To Other ESOP Settlements
Flat Rock’s $1.8 million settlement falls in the typical range for ESOP fiduciary breach cases. Recent comparable settlements include settlements ranging from $1.15 million to $9.6 million depending on plan size and overvaluation severity.
The dramatic valuation drop from $60 million to $3.6 million just one month post-transaction strengthened plaintiffs’ claims of gross overvaluation. Similar to the Lehigh Valley Health Network $1.15M ERISA settlement, this case demonstrates retirement plan fiduciaries’ vulnerability when they fail to conduct adequate due diligence.
Frequently Asked Questions
Who is eligible for the Flat Rock Metal ESOP settlement?
All participants or beneficiaries of the Flat Rock Metal and Bar Processing ESOP as of November 24, 2020, or later qualify. This includes current employees with active accounts, former employees with ESOP balances, and beneficiaries of deceased participants.
Do I need to file a claim to receive payment?
Active ESOP participants receive automatic payments into their accounts—no action required. Former participants or beneficiaries without active ESOP accounts must submit a payment election form by March 17, 2026, to choose their payment method and receive benefits.
How much will I receive from the $1.8 million settlement?
Your payment is calculated pro-rata based on your ESOP shares relative to all class members’ shares. After deducting attorneys’ fees and administrative costs, the net settlement fund is divided proportionally among participants based on vested share ownership.
What was the Flat Rock Metal ESOP lawsuit about?
The lawsuit alleged Flat Rock’s ESOP trustee breached fiduciary duties by allowing the plan to purchase company stock for $60 million in November 2020 when the company was worth only $3.6 million one month later, causing participants to overpay dramatically for worthless stock.
When will settlement payments be distributed?
Payments will be distributed after the court grants final approval and all administrative tasks are completed. Former participants who submit election forms by March 17, 2026, can expect payments within 60-90 days of final approval.
Where can I find the settlement documents and claim forms?
Visit flatrockesopsettlement.com/documents/ for the settlement agreement, payment election forms, and court approval orders. You can also contact the settlement administrator at 833-647-9010 or [email protected].
Last Updated: January 26, 2026
Disclaimer: This article provides general information about the Flat Rock Metal ERISA settlement and is not legal advice—individuals seeking claim assistance or case-specific guidance should consult qualified ERISA attorneys.
Don’t miss your settlement payment—former ESOP participants must submit the payment election form by March 17, 2026, to receive their share of the $1.8 million settlement fund.
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About the Author
Sarah Klein, JD, is a licensed attorney and legal content strategist with over 12 years of experience across civil, criminal, family, and regulatory law. At All About Lawyer, she covers a wide range of legal topics — from high-profile lawsuits and courtroom stories to state traffic laws and everyday legal questions — all with a focus on accuracy, clarity, and public understanding.
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