Judge P. Kevin Castel of the U.S. District Court for the Southern District of New York has reduced the fee requested in an excessive fee case.
The settlement (Richards-Donald v. Teachers Ins. & Annuity Assn. of America, S.D.N.Y., No. 1:15-cv-08040, order granting plaintiffs' application for attorneys' fees 10/20/17) notes that the plaintiffs' counsel has "expended nearly 600 hours to date to advance Plaintiffs' cause, and incurred $58,883.39 in expenses," moreover that "Class Counsel has pursued this matter since April 2015 -- over two years of diligent research, investigation, briefing and settlement efforts." Also noted was that their request for one-third of the recovery fund was "reasonable and consistent with the norms of class litigation in this circuit," and "demonstrably reasonable" in view of the projected $3 million in annual savings.
The parties had requested $1.67 million for plaintiffs' counsel and a reimbursement of that $58,883 in costs.
The Allegations
Plaintiffs in this case had alleged that TIAA breached its fiduciary duty to ensure that the fees and expenses paid out of the assets in the plans were reasonable, and that they failed to make decisions concerning the plans with the care, skill, prudence and diligence under the circumstances then prevailing that prudent fiduciaries acting in a like capacity and familiar with such matters would have used. Specifically that they allowed "excessive administrative and investment management fees" to be assessed, as well that they "imprudently and disloyally filled the Plans entirely with options managed by, and paying fees to, TIAA."
For its part, TIAA responded that: (a) the investment options were reasonable in that they included a variety of fixed and variable annuities that offer participants lifetime income opportunities; (b) the plans offered an appropriate investment mix for participants, across different asset classes, risk profiles, fee structures and outcome opportunities; (c) the fees charged by the investment options in the plans, including the fixed and variable annuities, were reasonable and often lower than the fees charged by TIAA's competitors for similar products; (d) the investment options in the plans provided participants with strong performance; (e) the recordkeeping fees charged to plan participants were reasonable based on the nature and quality of the services provided by TIAA; and (f) TIAA met the Prohibited Transaction Exemption requirements to offer its own products as investment options for the plans.
The Settlement
In May, the parties had agreed to, and moved for preliminary approval of a class settlement that called for TIAA to deposit $5,000,000 in an interest-bearing settlement account that will be used to pay the participants' recoveries as well Class Counsel's Attorneys' Fees and Costs, Administrative Expenses of the settlement, and Class Representatives' Compensation as described in the Settlement Agreement, in addition to a number of changes to the plan design and administration, which the settlement said was estimated to save the plan "over $3 million per year in fee savings."
As for the named plaintiffs in this case, they're asking for $5,000 each -- which the defendants did not oppose.
And the plaintiffs' attorneys? Their request for $1.67 million was reduced to $1,250,000.
