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Sotos v. Computershare Trust Company, N.A.

United States District Court, D. Connecticut

February 3, 2016

MARY SOTOS, in her capacity as Trustee for CHRISTINA SOTOS WEBBER, and in her capacity as Trustee for PETER SOTOS, Plaintiff,


WARREN W. EGINTON, Distict Judge.

In this action, plaintiff Mary Sotos, as Trustee for Christina Sotos Webber and Peter Sotos, has filed a complaint against Computershare Trust Company, N.A., Computershare Inc., Computershare Investor Services, LLC, and Hanesbrands Inc., for damages resulting from the alleged wrongful escheatment of shares of Hanesbrands stock. Plaintiff alleges claims of negligence, violation of the Connecticut Unfair Trade Practice Act ("CUTPA"), violation the Massachusetts General Laws Chapter 93A, breach of contract and the covenant of good faith and fair dealing, and conversion. Defendants filed a motion to dismiss, arguing that it did not owe a duty to plaintiff to invest the escrow funds as asserted.


For purposes of this ruling, the Court assumes that the facts alleged in the complaint are true.

Plaintiff is the trustee of a trust owning shares of Sara Lee Corporation for each of her three children, Christina, Cynthia and Peter.

On August 11, 2006, plaintiff received correspondence from defendants about the spin-off of Hanesbrands from Sara Lee. The spin-off shares were to be held in book entry form in the Direct Registration System ("DRS") by Computershare. Defendants had a written record of Mrs. Sotos's address, which had been the same address since before the date that the Hanesbrands shares were issued. No dividends were paid on these shares until 2013.

A Comptershare statement from September 2006 stated: "This advice is your record of the share transaction affecting your account on the books of the Company.... No action on your part is required, unless you wish to deposit your existing certificates, sell or request a certificate, or transfer your book-entry shares." Computershare also issued a brochure for shareholders that outlined the DRS and its duties. It represented that the DRS "[e]liminates your risk of loss, theft or destruction of certificates...."

A letter from Hanesbrands informed plaintiff that paper stock certificates for Hanesbrands shares would not be issued, even if requested, but that plaintiff would retain full ownership of the shares; and that the trusts would have all the traditional rights and privileges as holders of shares held in certificate form. The letter did not inform plaintiff that her shares could escheat to the state; instead, it indicated that plaintiff did "not need to do anything to retain [her] ownership of either Hanesbrands or Sara Lee shares."

In April 2010, Mrs. Sotos received by mail a "Due Diligence" form from defendants regarding Cynthia's Trust" account. On April 7, 2010, Mr. Sotos called and spoke with Computershare, and Mrs. Sotos signed and returned the Due Diligence form, indicating that she had not changed her address.

In August 2011, defendant Computershare delivered to the state of Connecticut as abandoned property the Hanesbrands shares from the trust accounts held for Christina and Peter.

Computershare had not performed a due diligence search for Mrs. Sotos prior to declaring the shares to be abandoned. To her knowledge, plaintiff did not receive any Due Diligence forms for Christina's and Peter's trust accounts.

By letter dated June 18, 2014, from Computershare to Mrs. Sotos's counsel, Computershare represented that escheatment of shares is required under state law, if (1) the mailing address is classified as "undeliverable" (the result of two or more mailings being returned to Computershare by the U.S. Postal Service); (2) shares subject to a mandatory exchange due to corporate reorganization remained outstanding for a period of time exceeding the state dormancy period; or (3) the account maintains unclaimed checks that were issued prior to the beginning of the state dormancy period. None of these conditions had occurred prior to the Computershare's transfer of the shares to the state.

After the transfer, defendants did not send any correspondence, account activity statement, or try to call Mrs. Sotos. She did not find out that the shares had escheated to the state until 2013, when she questioned why she had not received a dividend for Christina's and Peter's trusts.

On June 10, 2015, plaintiff commenced this action seeking the difference between value of the escheated shares at the time they were sold by the state and the current value of the shares, including the benefit of a ...

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