United States District Court for the Norther District of Alabama
Case No. 5:26-cv-00664- HDM
If you were a participant in the AlaTrade Foods Holdings, Inc. Employee Stock Ownership Plan any
time from the Plan’s inception to December 31, 2025, a class action lawsuit may affect your rights.
A federal lawsuit alleges that the AlaTrade Foods Holdings, Inc. Employee Stock Ownership Plan (“the Plan”) sponsored by AlaTrade Foods Holdings, Inc. and AlaTrade Foods, Inc. (together “AlaTrade”), was harmed by breaches of fiduciary duty and prohibited transactions in violation of the Employee Retirement Income Security Act (“ERISA”). Plaintiffs filed this lawsuit against (1) AlaTrade; (2) Davis Lee, Beth Lee, and Beth Lee as Trustee of the Davis Lee 2017 Irrevocable Trustee Family Trust (together, “Selling Shareholders”); and (3) Stephen C. James acting in his capacity as the trustee of the ESOP (the “Trustee”), (with AlaTrade and the Selling Shareholders, the “Defendants”), in the U.S. District Court for the Northern District of Alabama (the “Lawsuit”). The Lawsuit claims that Defendants violated ERISA in connection with the Plan’s acquisition of AlaTrade stock in June 2021 for $160 million (the “ESOP Transaction”). Specifically, Plaintiffs allege that the Trustee violated two provisions of ERISA—29 U.S.C. § 1104 and 29 U.S.C. § 1106—when he, among other things, approved the Plan’s purchase of AlaTrade stock at a price that Plaintiffs allege exceeded fair market value. Plaintiffs allege that all of the remaining Defendants (AlaTrade shareholders who sold their stock to the ESOP) had knowledge of, and benefitted from, these alleged violations of ERISA, and that Davis Lee—as an officer (CEO) of AlaTrade and AlaTrade’s sole director violated his own duties under 29 U.S.C. §§ 1104 and 1105. Defendants deny all allegations of wrongdoing, fault, liability, or damage to the Plaintiffs and the Class, and deny they engaged in any wrongdoing or violation of law or breach of fiduciary duties,
A Settlement has been reached that applies to all claims in this Lawsuit. Nothing in the Settlement is an admission or concession on Defendants part of any fault or liability whatsoever, nor is it an admission on Plaintiffs’ part that their claims lacked merit.
All participants and beneficiaries of the AlaTrade Food Holdings, Inc. Employee Stock Ownership Plan at any time from its inception until December 31, 2025. Excluded from the Class are the shareholders who sold their stock to the Plan, directly or indirectly, and their immediate families, legal representatives, successors, and assigns of any such excluded persons.
The Settlement Agreement consists of two forms of relief: (1) cash payments totaling $875,000, and (2) a $3.7 million reduction in the balance of loans to AlaTrade made by certain of the Defendants in connection with the ESOP Transaction, which will increase the value of AlaTrade stock held by Class Members who maintain Plan accounts. The $875,000 in cash will be paid into a Settlement Fund to be allocated to eligible Class Members after all Court-approved deductions, Settlement Administration Expenses (such as distributing this Notice), Class Counsel’s attorneys’ fees and costs, and other expenses. The Net Proceeds from the Settlement Fund will then be paid to the Class under the Plan of Allocation. The terms of the Settlement are in the Settlement Agreement, which is available here.
| YOUR LEGAL RIGHTS & OPTIONS IN THIS SETTLEMENT | |
| If you are a Class Member, you do not need to do anything to receive your share of the Settlement. | If you have an Active Plan Account, meaning your Plan Account has a positive balance, you will receive your share of the Net Proceeds as a direct deposit into your Plan Account. If you have withdrawn the balance from your Plan Account, you have the option to either (1) receive your share of the Net Proceeds, if any, via check sent by mail or (2) elect a rollover to a qualified plan or individual retirement account (IRA) by October 28, 2026. If you do not elect a rollover by the deadline, you will receive a check. |
| You can object to the Settlement no later than October 7, 2026. | If you want to object to any part of the Settlement, or to (i) the requested attorneys’ fees and expenses, or (ii) administrative fees, costs, and expenses, you must submit your objection and any supporting documents to the Court and Settlement Administrator by October 7, 2026. |
| You can attend a hearing on October 28, 2026 to discuss the fairness of the Settlement. | You may also attend the Fairness Hearing on October 28, 2026. If you wish to attend and speak at the hearing, you must provide the Court and Settlement Administrator with notice of your intent to appear by October 7, 2026. Please note that you may not be permitted to make an objection to the Settlement if you do not comply with the requirements for making objections. |
Your rights and the choices available to you—and the applicable deadlines to act—are explained in the Notice of Proposed Class Action Settlement
The Court has yet to decide whether to approve the Settlement. Payments under the Settlement will be made only if the Court finally approves the Settlement, and that final approval is upheld in the event of any appeal.
A Fairness Hearing will take place on October 28, 2026 at 10:00 A.M. before the Honorable Judge Harold D. Mooty, III, United States District Court for the Northern District of Alabama, located at 660 Gallatin Street, SW, Huntsville, AL 35801, to determine whether to grant final approval of the Settlement and approve (i) the requested attorneys’ fees and expenses, and (ii) administrative fees, costs, and expenses. If the Fairness Hearing is rescheduled, or if it is held by video conference or telephone, please check this website for updates.