The parties in another excessive fee suit have come to terms – on the day they were scheduled to go to trial.
The suit, filed in January 2016 in the District of Colorado by the law firm of Schlichter Bogard & Denton, alleged that Oracle allowed the plan’s recordkeeper (Fidelity) to be paid between $68 to $140 per participant rather than what the plaintiffs said would be a reasonable per head fee of $25 for a plan the size of Oracle’s. According to the complaint, the plan’s participant count increased from 38,000 in 2009 to about 60,000 today, and over that same time period, the plan’s assets increased from $3.6 billion to more than $11 billion.
The suit also claimed that the plan, which had Fidelity as its recordkeeper since 1993, had not been put out for bid on those services in a quarter century, and that the plan provided “at least 3 imprudent investment options,” which it says “consistently underperformed their designated benchmarks, consistently underperformed the majority of other funds of the same investment style, charged excessive fees, and paid revenue sharing to Fidelity far beyond a reasonable rate for the services provided.”
Winning Ways
That said, the Oracle defendants had enjoyed some success along the way, having prevailed on most of its claims in filing for summary judgment earlier this year, and in June persuading the court to rebuff the plaintiffs’ pursuit of a jury trial.
At this point, we only know that a settlement has been reached between the parties, not the terms of that deal. Apparently the parties were in court (Troudt v. Oracle Corp., D. Colo., No. 1:16-cv-00175, courtroom minutes 12/3/19) for all of about 5 minutes on Dec. 3 notifying the court of that fact.
What’s Next
This is not the first, nor is it likely to be the last, such case where the parties find settlement to be a more cost-effective means of resolving the issues than going through a trial – and to make that determination on the eve of trial (see On Trial Date, Schlichter Strikes Another Settlement, Invesco Strikes a Deal in Excessive Fee Suit and SEI Settles Excessive Fee Suit.
To date, a number of firms have reached settlements, including SEI ($6.8 million), MFS ($6.875 million), Eaton Vance ($3.45 million), Franklin Templeton ($4.3 million), BB&T ($24 million), Jackson National ($4.5 million), Deutsche Bank ($21.9 million), American Airlines Group Inc. ($22 million), Allianz SE ($12 million) TIAA ($5 million), and Invesco (details not yet announced).
