The 11th U.S. Circuit Court of Appeals has revived a lawsuit brought by former employees of Inland Foods, who claim the company used inflated values to direct money to its officers and directors while devaluing employee-owned stock.
The case has been remanded to a district court, where the employees will get another shot at convincing judges the company acted illegally in devaluing their stocks.
The case goes back a decade to when the Atlanta, Georgia, U.S.A.-based company – then operating as Inland Seafood – established an employee stock ownership plan in 2016. The plan gave employees minority ownership in the company by distributing stocks to their pension accounts. To finance that effort, the company took out a USD 92 million (EUR 79 million) loan and purchased 100,000 shares of common stock from four of its officers and directors.
Some employees, however, claim that the company overvalued the shares purchased in that deal by inflating sales projections and inventory, which in turn devalued the stocks placed in their pension accounts. In 2022, five former employees sued, alleging Inland Foods had removed tens of millions of dollars in value from their collective pension plans to increase the amount paid out to company executives and directors.
The lawsuit was initially dismissed by a district court in 2023, which determined that the employees had not exhausted all of the administrative claims procedures in the employee stock ownership plan (ESOP) before filing suit. While the 11th Circuit initially upheld that ruling in October 2025, Circuit Judge Adalberto Jordan invited the plaintiffs to challenge the legal precedent used to dismiss the case through an en banc hearing – a rare gathering of all the judges on the 11th Circuit bench typically used to consider U.S. Supreme Court precedent.
The U.S. Department of Labor sided with the plaintiffs, telling the court that the protections granted under the Employee Retirement Income Security Act (ERISA) cannot be voided by an ESOP agreement.
Now, one year later, the full 11th Circuit has sided with the plaintiffs, as well, determining that the employees did not need to exhaust the administrative procedures laid out under the ESOP.
“ERISA does not require administrative exhaustion of statutory claims, including breach of fiduciary duty claims, and the plan here did not mandate exhaustion,” the 11th Circuit ruled. “We do not think that the exhaustion language in the arbitration clause is relevant.”
The ruling overturns the court’s 1985 ruling in Mason v. Continental Group that required administrative exhaustion before any lawsuits under ERISA and brings the 11th Circuit in line with other U.S. appeals courts.
“We do not take our decision to overrule Mason lightly. But, our holding requiring administrative exhaustion in Mason was an atextual product of judicial creation based solely on policy reasons,” the 11th Circuit ruled. “That holding, moreover, has not withstood the test of time as most of our sister circuits have come to a contrary conclusion.”
