Scott D. Thompson

Former Aerotech Inc. employees who have accused the motion control solutions company of mismanaging its employee stock ownership plan urged a Pennsylvania federal court Wednesday to certify a class of plan beneficiaries and participants, saying they easily satisfied requirements for class certification. Proposed representatives of the putative class said in a motion for class certification that there are at least 500 members of the class that, if certified, would cover all participants and beneficiaries of the Aerotech Employee Stock Ownership Plan and Trust since April 24, 2018, excluding plan fiduciaries. They said that because they lodged the lawsuit on behalf of the plan, "virtually every question of fact and law is common to the class." "This case arises from defendants' unified course of conduct that caused the ESOP to lose millions of dollars in investment earnings, with each member of the class bearing a pro rata share of that loss," the current and former plan participants wrote. They said that common questions include whether Aerotech and the plan's governing committee acted as fiduciaries, whether the committee breached its fiduciary duties by failing to prudently invest the plan's other investments, whether Aerotech violated the Employee Retirement Income Security Act by not monitoring the committee's compliance with its fiduciary duties, whether participants thus suffer injury and what the measure of the resulting losses is. Such common questions "more than suffice for commonality," they said. Former plan participants Stephanie Schultz and Chad Huffer, along with current participant Kevin Plummer, filed suit against Aerotech in April 2024, filing an amended class action complaint in July 2024. Schultz worked for Aerotech between 2016 and 2019, while Plummer and Huffer worked at the company between 2012 and 2023 and between 2008 and 2020, respectively, according to their latest complaint. The three allege that Aerotech and the plan's governing committee failed to prudently invest and monitor the plan's general investments account, which holds nonstock assets in the plan. They claim that the company, instead, intentionally made conservative investments to ensure that the plan had enough cash to satisfy the company's repurchase obligations. "Among other things, defendants appear to have failed to consider how long [other investment account] funds would be held; whether participants had accumulated sufficient assets for retirement; the differential in long-term average returns among various asset classes; or how to best manage risks such as the specific risk posed by the ESOP's concentration in Aerotech stock," they asserted in their latest complaint. They alleged that Aerotech and the committee "were guided by improper, self-serving considerations concerning [other investment account] investments." In the motion for class certification, the current and former plan participants said that because they are suing on behalf of the plan, their claims are not only typical of the claims of the class, as required for class certification, but are "identical to those of the unnamed class members." "This is a representative action asserting claims that belong not to plaintiffs, but to the ESOP," the motion states. "The ESOP's claims would be the same if asserted by any member of the putative class, resting on the same facts and legal theories." Typicality is thus "easily satisfied," according to the motion. Also met is the requirement that representative parties be able to fairly and adequately protect the class's interests, the former and current plan participants argued. They said that there aren't any conflicts of interest between them and the class they seek to represent. Proposed counsel from litigation boutique firm Engstrom Lee LLC are also qualified to represent the class, they said. Engstrom Lee specializes in ERISA class actions and was "founded by attorneys who formerly practiced at a large class action firm in its nationally recognized ERISA practice group, during which time they recovered more than $300 million for their clients," the former and current participants said in their motion. They said that the firm's attorneys have the skills and experience necessary to serve as class counsel and have collectively been appointed as class counsel in dozens of ERISA class actions. "Throughout this litigation plaintiffs' counsel has zealously represented the proposed class and dedicated substantial resources to this action and are ready to continue to do so," they said. In February, U.S. District Court Judge W. Scott Hardy largely denied a motion by Aerotech and the ESOP committee to dismiss the former and current plan participants' first amended class action. Judge Hardy referred the case to mediation in late May. The court order referring the case to alternative dispute resolution stated that the court will establish a deadline for the completion of the ADR conferences after ruling on the motion for class certification. Counsel for the proposed class declined to comment. Counsel Aerotech did not immediately respond to a request for comment late Wednesday. The proposed class is represented by Jennifer K. Lee and Carl F. Engstrom of Engstrom Lee LLC and Nicholas D. Thompson of Casey Jones Law Firm. Aerotech is represented by Andrew D. Salek-Raham, Larry M. Blocho Jr. and Lars C. Golumbic of Groom Law Group. The case is Stephanie Schultz et al. v. Aerotech Inc. et al., case number 2:24-cv-00618, in the U.S. District Court for the Western District of Pennsylvania.

Nov 12

4 min

Willkie Farr & Gallagher LLP on Tuesday was accused of aiding a $735 million fraud carried out by an investment manager to secure financing for a 2023 take-private transaction involving Franchise Group Inc., which was then used to pay off the manager's personal debts. BRC Group Holdings Inc., formerly known as B. Riley Financial Inc., and several of its subsidiaries filed a complaint in New York state court against Willkie and investment manager Brian Kahn, who recently pled guilty to securities fraud. Kahn's wife, Lauren Kahn, is also named as a defendant in the suit. According to the complaint, in May 2023, Franchise Group, a company led by Kahn, was merged with two other Kahn-controlled companies in a take-private transaction. As part of this deal, BRC committed to investing up to $560 million in the equity of FRG's new holding company, known as Topco, once the merger closed. In deciding to fund the merger, the complaint states that BRC relied on several representations made by FRG and Kahn, including that FRG had disclosed to its auditors and its board's audit committee any fraud involving FRG's management, and that there had been no governmental investigations or subpoenas of FRG since 2019. Kahn also represented to BRC that he was not in default on any obligations and that he had "full power and authority" to exchange FRG shares for equity in Topco, according to the complaint. However, BRC claims in its suit that all of these representations were false, "and Willkie knew it." In reality, according to the complaint, Kahn, at the time of the merger, was the subject of multiple criminal and civil investigations for his role as a sub-advisor in a $350 million fraud perpetrated by Prophecy Asset Management, and that FRG had received subpoenas from the SEC and DOJ relating to the Prophecy scheme. BRC also accuses the defendants of failing to disclose that a limited partnership formed for the benefit of the Prophecy Settlement Trust held 2.5 million shares of Kahn's FRG stock that were restricted from sale or transfer and that, by February 2023, Kahn had defaulted on more than $30 million of debt due to the Prophecy Settlement Trust. "Willkie was aware of all these material misrepresentations and yet allowed them to be made to BRC, a longstanding and current Willkie client," the complaint states. BRC says Willkie's misconduct was "particularly egregious" because while representing BRC as litigation counsel, the firm also knowingly prepared misleading transaction documents for Kahn, failed to disclose material conflicts of interest, and assisted Kahn in obtaining consent from the Prophecy Settlement Trust, among other things. Although not named as defendants, the complaint identifies Willkie partners Tariq Mundiya and Russell Leaf. According to BRC, Mundiya was a "trusted legal advisor" to Kahn and was listed, alongside Leaf, as a leader of the take-private deal. "As Mundiya, Leaf, and Willkie knew, Kahn needed the take-private to dramatically increase the value of his equity stake in FRG so that he could pay off hundreds of millions of dollars in personal liabilities he owed to BRC affiliates and the Prophecy Settlement Trust," the complaint says. "Willkie actively assisted and conspired with Kahn and FRG in defrauding plaintiffs to help Kahn achieve his goal and generate substantial fees for the firm." In a statement to Law360 on Tuesday, a Willkie spokesperson said: "The facts will make clear that our firm acted appropriately and with integrity at all times, consistent with our values and all ethical obligations. We look forward to defeating these meritless claims and remain committed to upholding the highest standards of ethics and professionalism." According to BRC, the truth came to light about three months after the take-private deal closed, when one of Kahn's co-conspirators in the Prophecy fraud pled guilty to securities fraud and conspiracy, and the SEC brought parallel civil securities fraud claims against the individual. At that point, Kahn's role in the fraud became public, according to the complaint. Kahn was forced to resign from Topco's board, and FRG's business plan unraveled due to "Kahn's inability to negotiate and close strategic transactions resulting from his taint as an alleged criminal co-conspirator in securities fraud," the complaint notes. BRC says that ultimately, FRG collapsed and filed for bankruptcy, causing BRC's equity interests in Topco to become "worthless." "All told, Kahn and FRG's frauds, perpetrated with Willkie's assistance, caused plaintiffs approximately $735 million in cash losses, plus additional foreseeable consequential damages," the complaint contends. Kahn pled guilty in December 2025 to one count of securities fraud in connection with his role in the Prophecy fraud. Counsel for BRC did not immediately respond to requests for comment, and Brian and Lauren Kahn could not immediately be reached. BRC is battling a related class action in California federal court from investors who claim the company made material misrepresentations about its buyout of FRG and failed to disclose risks related to its dealings with Kahn. BRC is represented by Paul R. DeFilippo, R. Scott Thompson, Lyndon M. Tretter, Benjamin A. Gianforti and Nicholas A. Servider of Wollmuth Maher & Deutsch LLP. Counsel information for the defendants was not immediately available. The case is BRC Group Holdings Inc. et al. v. Willkie Farr & Gallagher LLP et al., case number unavailable, in the Supreme Court of the State of New York, County of New York.

Jan 20

4 min

Willkie represented A-list actor Jeremy Renner in connection with his acquisition of an ownership interest in Sweet Grass Vodka. Sweet Grass Vodka is a continuously distilled potato vodka sourced locally in South Carolina with no artificial ingredients. The Willkie team was led by partner Shane Nix and included partners Sid Fohrman, Steven Hurdle and Scott Thompson and associates Hayley Silvertown and Carly Trainor.

Jul 26

1 min

A Willkie Farr & Gallagher client accused the firm in a law suit filed in New York state court Tuesday of breaching its fiduciary duty and conspiring to commit a $735 million fraud scheme related to a take-private deal for Franchise Group Inc., a retail holding company whose former CEO Brian Kahn was also a Willkie client who admitted to his role in a related federal securities fraud conspiracy last month. BRC Group Holdings accused Kahn and Willkie of repeatedly omitting crucial information from filings on the Franchise Group take-private deal before it closed mid-2023 and said that those purportedly hidden details were “fatal” to the success of the business following the deal. BRC said in its Manhattan Supreme Court complaint that Kahn and Willkie worked together to mislead it in order to make the take-private deal happen, causing BRC to lose $735 million and making Franchise Group go bankrupt in 2024. Kahn’s wife Lauren Kahn is also named as a defendant, as she was a guarantor on a $200 million loan related to the financing with BRC where she and her husband—also a guarantor—allegedly made similar false statements to those in the deal documents for the Franchise Group take-private transaction. The Kahns could not immediately be reached for comment. According to the complaint, filed by attorneys at New York litigation boutique Wollmuth Maher & Deutsch, Willkie and the Kahns hid important facts from BRC, including that Brian Kahn had committed a “massive fraud” against another now-defunct company, Prophecy Asset Management, that the U.S. Department of Justice was investigating him for that fraud and that Kahn had substantial debts related to a settlement agreement with Prophecy’s investors which precluded him from transferring 2.5 million shares in Franchise Group that were necessary for BRC’s plans after the take-private deal. In an email to Law.com, a representative for Willkie pushed back on the allegations in the complaint. “The facts will make clear that our firm acted appropriately and with integrity at all times, consistent with our values and all ethical obligations,” the representative said. “We look forward to defeating these meritless claims and remain committed to upholding the highest standards of ethics and professionalism.” During the lead up to the take-private deal, the complaint states Willkie was representing both Brian Kahn and BRC. According to the suit, that was a conflict of interest since Kahn was allegedly just using the take-private deal as a way to get money he owed to the Prophecy investor trust for their settlement agreement, while BRC was looking to profit from the success of Franchise Group. Those interests were “diametrically opposed,” the suit says, but Willkie allegedly kept representing both Kahn and BRC so it could double-dip on fees while helping Kahn make false statements to BRC in deal documents. “Each document contained representations, warranties, or covenants that Willkie knew to be false or that created obligations Willkie knew Kahn could not fulfill,” the suit says. “By drafting and negotiating these agreements on Kahn’s behalf while owing fiduciary duties to BRC, Willkie placed its own financial interest in maintaining lucrative client relationships above its ethical obligations.” Once Kahn’s fraud against Prophecy and the related investigations came to light, the suit says the business began to suffer “mainly due to Kahn’s inability to negotiate and close strategic transactions resulting from his taint as an alleged criminal coconspirator in securities fraud.” Kahn would later plead guilty to conspiring to commit securities fraud against Prophecy in New Jersey federal court in December 2025. The complaint lays out claims against Willkie for aiding and abetting fraud, civil conspiracy to defraud and breach of fiduciary duty, along with other claims against Kahn including fraudulent inducement and breach of contract, with the latter claim also being brought against Lauren Kahn. BRC is seeking at least $735 million in damages, as well as punitive damages and costs and attorney's fees. In an email to Law.com, a representative for BRC said that the company will protect the interests of its shareholders and investors, including special purpose vehicles related to the Franchise Group deal, against Willkie and the Kahns for their alleged fraud scheme. “As detailed in the complaint, material facts were concealed from BRC Group Holdings,” the representative said. “We are pursuing all possible legal remedies to ensure the losses are recovered. As this is an active legal matter, we do not intend to comment further at this time.” BRC is itself embroiled in a securities fraud suit regarding Kahn in California federal court, with a proposed class of investors alleging BRC misled them about the $200 million loan it made to Kahn as part of the Franchise Group deal, exposing them to substantial risk without proper disclosure. In December, a California federal judge declined to fully dismiss that case and ordered BRC to answer its investors’ first amended complaint by Feb. 17. A representative for BRC declined to comment on the California case. In the Manhattan Supreme Court case, BRC is represented by Paul R. DeFilippo, R. Scott Thompson, Lyndon M. Tretter, Benjamin A. Gianforti and Nicholas A. Servider of Wollmuth Maher & Deutsch. Counsel information for Willkie and the Kahns was not immediately available.

Jan 20

4 min

Willkie advised QBE on the transaction. On March 3, BRP Group, Inc. announced that it entered into an agreement to acquire all of the outstanding equity interests of Westwood Insurance Agency, a full-service personal lines agency specializing in builder-sourced homeowners insurance, from QBE Holdings, Inc. Westwood has established itself as a premier partner with leading homebuilders in the U.S., providing homeowners insurance solutions embedded in the home purchasing experience. With annual revenues of approximately $81.8 million, Westwood represents BRP Group’s largest strategic acquisition to date. BRP Group, Inc. is an independent insurance distribution firm delivering tailored insurance and risk management insights and solutions. QBE is an international insurer and reinsurer headquartered in Sydney, Australia, and operating out of 27 countries worldwide. The Willkie team was led by Michael Groll and Sean Ewen and included senior counsel Donald Henderson and partners Eugene Chang and Scott Thompson.

Mar 7

1 min