The parties in a suit that claimed a $7.3 billion plan “stocked the Plan’s investment menu with their own proprietary index funds”—while “participants got the short end of the stick” have come to terms with a significant recovery for the settlement class compared to the claims that were alleged.
As it turns out, the plaintiffs in this case (Rita Kohari, John Radolec and Mohani Jaikaran) only filed for class action status in June—and the parties announced that a settlement had been reached just last month with the fiduciaries of the $7.3 billion MetLife 401(k) Plan (MetLife Group, Inc., Metropolitan Life Insurance Company, the Benefit Plans Investment Advisory Committee, and “John and Jane Does 1-20”).
The Allegations
The suit charged those defendants with breaching their “fiduciary duties with respect to the Plan in violation of ERISA, to the detriment of the Plan and its participants and beneficiaries, by applying an imprudent and disloyal preference for MetLife index fund products within the Plan, despite their poor performance, high costs, and lack of traction among fiduciaries of similarly sized plans.”
The plaintiffs here are represented by Nichols Kaster PLLP—and the suit alleged that this “imprudent and disloyal conduct has cost Plan participants millions of dollars over the statutory period.” They first filed suit back in July 2021.
The Settlement
Under the proposed settlement’s terms, “Defendants will cause their insurers to pay a Gross Settlement Amount of $4,500,000 into a common fund for the Settlement Class’s benefit.”
In submitting the proposed settlement for court approval, the parties not only describe it as “a significant recovery for the Settlement Class compared to the claims that were alleged” (19-27% of $16.3-$23.5 million) but that it (among other things):
- falls well within the range of negotiated settlements in similar ERISA cases;
- is fair, reasonable, and adequate, and merits preliminary approval so that notice may be sent to the settlement class;
- was negotiated at arm’s length by experienced and capable counsel, after significant discovery including eight depositions, nine expert reports, and the production of over 47,000 documents; and
- provides for significant monetary relief and an equitable method of distribution to class members.
The settlement requires that class counsel file their motion for attorneys’ fees and costs at least 14 days before the deadline for objections to the proposed settlement, as well as the recovery of administrative expenses related to the settlement. It also calls for “service awards” up to $15,000 for each of the named plaintiffs in the case.
No ‘Prospective’ Relief
The settlement agreement comments that it does not include “prospective relief” (such as committee changes, doing an RFP, fiduciary training, as others have included) because “on January 1, 2022, several months after this case had been filed, Defendants transferred all MetLife Index Funds from group annuity contracts to collective investments trusts, thereby significantly reducing the cost of the MetLife Index Funds and eliminating the excessive group annuity contract fee, which was the primary fee at-issue in this case.”
We’ll see what the court thinks.
