“In the interest of efficiency and to avoid wasting the resources of the Court and the parties,” just five days before their trial date, the parties in an excessive fee suit have come to terms.
This time it’s the investment advisor to the plan AON Hewitt Investment Consulting, Inc. – and their actions as part of an excessive fee suit that also involved Safeway and its recordkeeper (now Empower, by way of Great-West, by way of J.P. Morgan Retirement Plan Services). The Safeway fiduciaries had just settled two related class actions regarding its 401(k) plan; the instant case, and another class action (Lorenz v. Safeway Inc.) that had raised general concerns regarding the plan’s investments and fee structure.
In mid-April, AON Hewitt’s motion to dismiss the plaintiff’s claims had been largely (though not completely) dismissed by Judge Jon S. Tigar of the U.S. District Court for the Northern District of California. Judge Tigar had found that there were triable issues of fact with regard to:
- Whether “Aon's persistent and relatively consistent ‘advice’ was to retain the existing investments in the Plan” and Aon “recommended that the other Defendants do little or nothing to improve the investments offered by the Plan and the expenses paid by the Plan and its participants," even when those investments were significantly underperforming.
- Whether Aon met its duty of prudence to monitor the performance of the Interest Income Fund and determine whether to recommend its replacement as a plan asset, with similar questions related to the SSgA S&P 500 Index Fund, the Wells Fargo Advantage Strategic Large Cap Growth Fund, the RS Partners Fund, and the Chesapeake Core Growth Fund.
Now Plaintiff Maria Karla Terraza and defendant AON Hewitt Investment Consulting Inc. informed the court (Terraza v. Safeway Inc., N.D. Cal., No. 16-cv-03994, 5/2/19) that “they have accepted a mediator’s proposal and reached an agreement in principle for a proposed class-wide settlement,” and that they intend to seek the court’s approval of same.
In this filing, the parties requested that the court “vacate the May 7, 2019 trial date and set a Case Management Conference (CMC) for July 31, 2019 at 2:00 p.m. – the same date that the Court set for the CMC to address the proposed settlement between Plaintiff and the Safeway Defendants.”
The cases were all slated to go to trial on May 7 in the Northern District of California. The amount of the settlements weren’t disclosed.
