James Hess & John Hess v. Reg-Ellen MacHine Tool Corp. And Reg Ellen MacHine Tool Corp. Employee Stock Ownership Plan

**Workers Lose Fight to Diversify Company Stock in Retirement Plan** James and John Hess worked for Reg-Ellen Machine Tool Corporation, which offered an Employee Stock Ownership Plan (ESOP) as part of their retirement benefits. The Hess brothers wanted to diversify their retirement holdings by moving some of their company stock into other investments, but the plan administrator refused their request. They also tried to inspect corporate records as company shareholders, but were denied access. The brothers sued the company, claiming it violated their rights under federal retirement law (ERISA) and state shareholder laws. However, the Court of Appeals ruled against them on both counts. The court found that the plan administrator's refusal to allow diversification was reasonable and not an abuse of power under ERISA rules. Additionally, John Hess didn't qualify as a legal shareholder under Illinois law, so he had no right to inspect company records. **What This Means for Workers:** This ruling shows that employees in company stock plans have limited power to force diversification of their retirement investments. Workers should carefully review their ESOP terms and understand that plan administrators have significant discretion in managing these accounts, even when employees prefer different investment options.