David R. Johanson | Business Lawyer

David Richard Johanson

David Richard Johanson

Cum Laude

Experience: 36 years
Language(s): English

Top Local Lawyers

About David

David assists clients in general corporate matters and in employee ownership, benefit, ERISA, and related business matters, with an emphasis on executive compensation, equity incentive plans, non-qualified deferred compensation, employee stock ownership plans (ESOPs), ESOP transactions, mergers and acquisitions (and related tax planning), and business succession and estate planning. David has served as outside general counsel to numerous corporate clients over the past 35 years. He also frequently appears on behalf of clients in business and employment-oriented defense litigation in state and federal courts throughout the country, before regulatory agencies (e.g., U.S. Department of Labor, California Labor Commissioner, and the U.S. Equal Employment Opportunity Commission), in tax controversies before the Internal Revenue Service and comparable state regulatory agencies, against felony criminal indictments in U.S. Federal Court, and in dispute resolutions of various kinds. David represents corporations in shareholder and non-competition disputes.

David has defended ERISA fiduciaries, plan sponsors, selling shareholders, and investment advisers in ERISA litigation matters involving ESOPs and business transactions in federal and state courts throughout the country in a wide range of controversies covering ERISA fiduciary responsibilities, ESOP valuation disputes, disclosure obligations, investment issues, and tax matters. He has extensive experience in negotiating ESOP, ERISA, and other issues with government regulatory agencies and in representing ERISA fiduciaries in litigation.

Recognized nationally for his experience and expertise in the ESOP and executive compensation field, David is a past chair (1993-1995 and 2005-2007) of the legislative and regulatory advisory committee of The ESOP Association. He also is a past chair of The ESOP Association’s advisory committee chairs council and is a former member of its board of directors. David was honored at the 17th annual conference of The ESOP Association as the outstanding committee chair for 1993-94. He also served for more than ten years as General Counsel to The National Center for Employee Ownership and on its board of directors.

Call today to learn more about my fee structure.

Experience

Partner-In-Charge

Hawkins Parnell & Young, LLP

Present

Napa, CA

Admission

Verified Texas

2016

Verified New York

2014

Verified California

1993

Verified Maryland

1990

Verified Minnesota

1986

Verified District of Columbia

1989

Education

University of Minnesota: Twin Cities

Bachelor of Individualized Studies Summa Cum Laude (Accounting and Political Science)

1983

Recognitions & Achievements

Associations
  • The ESOP Association
  • The National Center for Employee Ownership
  • Rocky Mountain Employee Ownership Center
  • American Bar Association
  • Southern California Mediation Association
  • Santa Monica Bar Association
  • --Panel Chair | Arbitration
  • Beverly Hills Bar Association
  • State Bar of California
  • District of Columbia Bar
  • Maryland State Bar Association
  • Minnesota State Bar Association
  • New York State Bar Association
  • State Bar of Texas
Honors / Awards
  • Bar Register of Preeminent Lawyers by Martindale-Hubbell
  • Executive Compensation and Equity Incentivization Lawyer of the Year, California, Acquisition International ()
    2019
  • Marquis Who's Who Albert Nelson Marquis Lifetime Achievement Award ()
    2017
  • Continental Who’s Who in Law ()
    2016
  • AV Preeminent® Peer Review Rated by Martindale-Hubbell®

Notable Work

Cases

Hawkins Parnell Wins Significant ERISA Trial Against U.S. Government for Bowers + Kubota Consulting, Inc. and its Founding Shareholders in ESOP Valuation and Transaction Case

On September 17, 2021, Hawkins Parnell & Young, LLP secured a complete victory for its clients Brian J. Bowers, Dexter C. Kubota, and Bowers + Kubota Consulting, Inc. (B+KC) in an Employee Retirement Income Security Act of 1974, as amended, (ERISA), action brought by the Secretary of the United States Department of Labor (DOL) following a bench trial in June 2021 in the U.S. District Court for the District of Hawai’i. This defense victory was proceeded by a seven-year DOL investigation that the Los Angeles Regional Office of the Employee Benefits Administration (EBSA) initiated allegedly in late December 2014 with respect to an ESOP transaction that closed on December 14, 2012. The DOL and EBSA investigation started after a supervisory investigator who is now a national ESOP trustee asked his subordinate to find some employee stock ownership plan and trust (ESOP) companies to investigate in Hawai’i. The DOL investigation focused on an ESOP transaction that closed in December of 2012. Before and following the opening of the investigation, the DOL and EBSA opened 16 investigations targeting the trustee and independent fiduciary who originally closed the Hawai’i ESOP transaction. That ESOP trustee died in the fall of 2018 after the Secretary of Labor filed its initial Complaint in late April of 2018. Business owners who have availed themselves of the ERISA provisions and Internal Revenue Code of 1986, as amended (Code”), tax-deferral and deduction provisions to navigate business succession through a sale to an ESOP have long been subject to the DOL routinely targeting these sales as improper and occurring at inflated values. Despite the growth of an industry dedicated to developing legally compliant transactions for ESOP purchase and sale transactions that include effective employee communications about an employee ownership culture and related topics, the DOL has attacked the sellers in dozens of cases in federal district courts throughout the United States during the last 50 years. The decision in favor of Mr. Bowers, Mr. Kubota, and B+KC by Senior Judge Susan Oki Mollway is one of the first to reject the DOL’s ESOP legislation through litigation strategy during the past four decades and hold that the selling shareholders acted in full compliance with ERISA and applicable law. The decision is virtually one of a kind during the past 50 years. Lead trial counsel David R. Johanson noted, “the tyranny of the DOL’s use of the threat of litigation to discourage business owners from establishing and selling to ESOPs in legitimate transactions designed to comply with the complex rules of ERISA has now ended. This litigation proved just how valuable the ESOP has been as a stock-based employee benefit plan for B+KC, the ESOP plan sponsor, and its employees during the past almost ten years”. The Court held that Mr. Bowers and Mr. Kubota did not inflate the projections used in the valuation process, properly monitored the institutional trustee that approved the December 2012 ESOP transaction, and did not participate in a prohibited transaction under ERISA. “The decision supports the Congressional intent to allow an appropriate path to liquidity through an ESOP sale that respects the ERISA standards for such transactions,” said Hawkins Parnell partner Rachel J. Markun, who advised Mr. Johanson and the trial team on ERISA matters. “The decision will operate to both encourage employee ownership and alter the way that ESOP cases are litigated to the benefit of business owners and companies who have been targeted unfairly by the DOL’s overreaching allegations of wrongdoing,” added Mr. Johanson. Hawkins Parnell litigators Douglas A. Rubel, Robert S. Thompson, Todd N. Wade, and Jeffrey Thayer assisted in the victory with support by local counsel William M. Harstad of Carlsmith Ball LLP. Scott Batterman of Clay Chapman Iwamura Pulice & Nervell provided independent legal advice to the ESOP plan sponsor and ESOP throughout the litigation. The DOL chose not to appeal. This decision by the DOL not to appeal underscores the strength of the federal court ruling in favor of Messrs. Bowers and Kubota and B+KC. Ongoing litigation involves the potential recovery of attorneys’ fees and costs for the defense of this DOL litigation. Future articles regarding this topic will breakdown critical legal and factual issues that resulted in the favorable ruling that occurred here.

Publications

January 11, – Video

2021


Why Consider an ESOP Exit Strategy?


June 22, – Article

2020


Will COVID-19 Spur the Use of Arbitration Clauses in ERISA Plans?


June 18, – Article

2020


Main Street Lending Program Update


June 16, – Article

2020


COVID-19: Is an ESOP Still a Viable Exit Strategy in These Uncertain Times?


May 4, – Article

2020


Fed Updates Main Street Lending Program for Businesses


Updated March 26,

2020


COVID-19 Tax and Other Business Relief and Shelter Orders


June 1, – Article

2018


A Primer on Mergers & Acquisitions Due Diligence for CPAs


Today's CPA, Texas Society of Certified Public Accountants


June – Article

2016


An Effective Defense Starts With Understanding Privilege and the Scope of Discovery


February

2016


The Pros & Cons of Employee Stock Ownership Plans


Acquisition International


– Article

2016


ESOP as a Financing Mechanism


Tax Incentives for ESOPs


Description and Purpose of an ESOP


February – Article

2015


Direct Stock Purchases in Closely Held Companies


NCEO: Equity Alternatives (13th ed.)


– Article

2014


ESOP Drafting Considerations to Reinforce the Moench Presumption


The Travelers Companies, Inc. Client Alert


– Article

2013


The Advantages of Selling to an ESOP

Hawkins Parnell & Young, LLP Highlights

Business, Employment

Firm Size: 1
Firm Locations: 1
Languages: English