An excessive fee suit filed on behalf of participants by a law firm that appears to be a relative newcomer to this genre—has settled.
More specifically, in a notice of settlement filed with the court, the parties indicated they have come to an agreement, and that they are “confecting the terms of a written settlement agreement.”
The proposed class includes members of the AAA Carolinas plan, as well as Auto Club Group plan members that were previously part of the Carolinas plan. The size of that class hadn’t yet been fully fleshed out—in fact, an amendment to the original suit had acknowledged that both the timeframe and size of the class would need to be “ferreted in discovery,” though the filing noted that the plan had between 1,700 and 2,100 participants and beneficiaries at the beginning of the six-year period marking the statute of limitation under ERISA.
The Complaint(s)
Despite that “fuzziness,” the plaintiffs’ arguments—the suit was filed almost exactly a year ago—were extraordinarily detailed, and tread ground(s) not often seen in these type filings. They are represented by Fitzgerald Litigation, which, according to Bloomberg Law, is a three-attorney firm in Winston-Salem, N.C., that focuses on general civil litigation and estate planning, and that the firm filed a similar suit challenging the retirement plan of Shoe Show Inc. last fall.
The suit (Johnson v. Carolina Motor Club, Inc., W.D.N.C., No. 3:21-cv-00319, complaint 7/6/21)—filed by two former AAA Carolinas employees (Wes Johnson and Tamekia Bottoms)—claim their retirement plan is plagued by “extremely expensive, often underperforming” investment options and excessive administrative fees. Indeed, while at a high level the charges are relatively familiar, the suit covers some new ground(s), and, in the course of the 81-page filing makes some interesting allegations.
Those high-level claims? That the defendants “did not act reasonably and consistently with ERISA’s provisions, costing Plan participants and beneficiaries millions of dollars, by: (1) breaching multiple fiduciary duties owed to Plan participants, broadly expressed as incurring excessive fees that were paid by AAA’s employees who participated in the Plan; (2) failing to diversify (an independent basis of liability, separate from a breach of the general duty of prudence imposed on trustees); (3) engaging in prohibited transactions with parties in interest; and (4) failing to monitor co-fiduciaries.”
The Settlement
All that said, all we know at the moment is that the parties have come to some kind of agreement, with the exact terms still being “confected.”
Stay tuned.
