August 27, 2025
B-K Lighting’s $2.5M Deal to Resolve ESOP Complaint
Above: HUME Floodlight; Image credit: B-K Lighting
Former employee alleged inflated financials and misuse of company funds by executives
In the dim corridors of lighting industry civil litigation, most settlements fade to off quietly, sealed from public view. Not this one.
After more than two years of allegations, depositions and disclosures, B-K Lighting’s legal saga over its employee stock ownership plan (ESOP) is inching toward a court-approved ending. We now have access to what’s often the most elusive part of a high-stakes corporate lawsuit: the terms.
According to recently filed court documents, Fresno-based architectural lighting maker, B-K Lighting, and a cohort of company insiders — including CEO Nathan Sloan and members of the Hagen family — have agreed to a $2.5 million package to settle class action claims brought by a former HR employee who may have known more than most about the company's inner workings. The court has not yet granted preliminary approval, and the hearing originally set for September 24 has been pushed to October 8.
B-K Lighting CEO Nathan Sloan declined to comment when reached by Inside Lighting last week.
A Recap: The Allegations Behind the Headlines
The original lawsuit, filed in April 2023, painted a portrait of corporate excess cloaked in fiduciary failure. Plaintiff Linna Chea, a former HR generalist at B-K Lighting, alleged that the company’s 2017 ESOP transaction was inflated and that executives misused company resources in the process. The complaint cited a $25.2 million stock sale to the ESOP, a $2 million consulting agreement with company founder Doug Hagen (despite his reportedly deteriorating health), and private jet flights used for personal travel — paid for by company funds.
Among the more colorful allegations: a recurring lease payment for a forklift that may not exist, benefiting Sloan and Hagen’s daughter. And despite a $5 million insurance payout following Hagen’s death, the plaintiffs claimed the funds were never allocated to the ESOP as intended.
B-K Lighting and the other defendants have denied all wrongdoing.
The Terms: Cash, Debt Relief, and a Watchdog
Under the proposed settlement:
- $1.5 million in cash will be paid into a Qualified Settlement Fund, to be allocated among roughly 200 current and former ESOP participants.
- $1 million in debt relief will be provided through a principal reduction on a seller note — an internal loan structure tied to the original ESOP transaction. This financial maneuver is expected to boost the value of the ESOP-held company stock by an estimated $750,000.
While the $2.5 million combined value may appear modest compared to the estimated $3-5 million in potential recovery, it amounts to 50% of that ceiling. According to the plaintiff’s motion, this figure compares favorably to outcomes in similar cases, where settlements have often returned 7% to 30% of estimated losses.
The settlement also includes:
- No reversion clause: Any leftover funds in the settlement pool won’t return to the defendants but will be directed to a court-approved recipient.
- Independent fiduciary review: As required by Department of Labor regulations, an independent fiduciary will assess whether the deal is reasonable and in the best interest of the ESOP. Without that stamp of approval, the deal could collapse.
- Attorney fees capped: Plaintiff’s counsel will seek no more than $500,000, or 22.2% of the settlement’s total estimated value. A service award of up to $5,000 for Chea is also requested.
HR Insider as Whistleblower
What made this case stand out wasn’t just the allegations — it was who brought them.
Linna Chea wasn’t a regional sales manager or warehouse worker. She was in HR, with visibility into personnel files, executive compensation, and internal procedures. Her complaint read like it came from someone with more than a passing familiarity with how things worked — or didn’t — at B-K Lighting.
Her position lent weight to the accusations and may have influenced both the aggressive litigation strategy from the plaintiffs and the eventual willingness to settle on the defense side.
What’s Next: Court Approval and More Scrutiny
Despite the settlement agreement, no checks are going out just yet. The court still needs to grant preliminary approval, which would trigger formal notice to class members and a public objection period.
A fairness hearing, likely later this year, would determine whether the court finds the agreement to be “fair, reasonable, and adequate.” Until then, the deal remains provisional. And given the complexity of ERISA claims and heightened judicial scrutiny, there’s still potential for delays or modifications.
For B-K Lighting, the case has already cast a long shadow over its ESOP governance and executive conduct. For industry observers, it’s a reminder that ESOPs — while powerful employee ownership tools — can also become complex, combustible vehicles for legal risk if not handled with transparency and fiduciary care.
