The suit, which had alleged that “…many managed account services merely mimic the asset allocations available through a target date fund while charging additional unnecessary fees for their services,” has announced a cash settlement.
The settlement had been announced back in September by the parties, following an August 2021 filing of the original suit that targeted the fiduciaries of the $1.4 billion 401(k) plan, claiming they “breached the duties they owed to the Plan, to Plaintiff, and to the other Participants of the Plan (there were 6,860 in 2019, according to the suit) by, among other things:
(1) authorizing the Plan to pay unreasonably high fees for retirement plan services (‘RPS’);
(2) failing to objectively, reasonably, and adequately review the Plan’s investment portfolio with due care to ensure that each investment option was prudent, in terms of cost;
(3) maintaining certain funds in the Plan despite the availability of identical or similar investment options with lower costs and/or better performance histories;
(4) authorizing the Plan to pay unreasonably high fees for managed account services; and
(5) failing to disclose to Participants necessary Plan information for them to make informed Plan investment decisions.”
The settlement (Reichert v. Juniper Networks Inc., N.D. Cal., No. 3:21-cv-06213, motion for preliminary settlement approval 11/11/22) was a straightforward $3 million in cash—according to the settlement agreement more than 11% of the plan participants’ total estimated damages of $26 million—an amount that is “on par” with settlements approved in similar ERISA lawsuits.
What This Means
Settlements don’t tell you much, except perhaps the limits of fiduciary liability insurance coverage. And perhaps a sense of the costs of litigation before you even get to court.