Suit Challenging Parsons Buyout Thrown Out : Litigation: A group of employees alleged that executives and directors of the engineering giant improperly profited when the firm was taken private.

A Los Angeles federal judge on Monday dismissed a class-action suit filed against Parsons Corp. by a group of disgruntled employees challenging the 1985 employee buyout of the Pasadena-based engineering and construction company.

After a five-day trial, U.S. District Judge Robert J. Kelleher ruled that the Parsons board of directors, senior executives and members of the retirement committee in no way breached their fiduciary duty or unduly influenced any participants in the $560-million transaction. “The court finds that there was on the part of the retirement committee, 100% independent actions on their part, free of any exercise or control or authority over it by the senior executives,” said Kelleher.

The lawsuit, filed in May, 1985, by 13 Parsons employees, alleged that Parsons executives and directors violated federal pension laws and improperly profited when the firm was taken private in a leveraged buyout.

The suit alleged that Parsons directors and executives received $16.9 million in the buyout for their Parsons shares, representing a 33% premium over the existing market price.

From the beginning, company officials denied any impropriety and insisted the buyout was in the best interest of employees, shareholders and customers.

“We are relieved that after all these years of litigation a United States district judge has vindicated the integrity and judgment of Parsons’ management, its board of directors and the Employee Stock Ownership Plan Committee with respect to their roles in the ESOP buyout,” said retired Parsons Chairman William E. Leonhard. “The buyout was a win-win-win situation for our employees, stockholders and customers, and it is now adjudicated in a court of law that our conduct was fair and upright.”

Leonhard retired in mid-May and was succeeded as chairman by Leonard Pieroni.

Pieroni said he was pleased with the judge’s decision. He said some of the employees who filed the lawsuit are still with the company, but he declined to elaborate.

Daniel Mason and Joseph Bell, the San Francisco attorneys who represented the plaintiffs, could not be reached for comment.

Parsons employs 8,000 people around the world and has a staff of 2,500 in Pasadena. In 1989, the company reported $880 million in revenue.