A little more than a year after plaintiffs alleged that their “account would have been worth more at the time it was distributed from the Plan had Defendant not violated ERISA,” the parties have come to terms.
The defendant in this case is John Hancock, which was sued by plaintiff Jennifer Baker, a participant in the John Hancock plan from 2014 until 2019. That suit, filed just ahead of the COVID-19 lockdown, alleged a breach of fiduciary duties “to the detriment of the Plan and its participants and beneficiaries, by applying an imprudent and inappropriate preference for John Hancock products within the Plan, despite their poor performance, high costs, and lack of traction among fiduciaries of similarly-sized plans”—a practice the suit claimed “…resulted in tens of millions of dollars in lost investment returns to the Plan and its participants since the start of the class period in 2014.” Specifically challenged was that the defendant “used the Plan—one of the largest 401(k) plans in the country—to promote John Hancock’s proprietary financial products and earn profits for John Hancock,” as well as the charges for recordkeeping services.
Where it Stands
About two months ago the court granted the Parties’ joint motion for a 75-day stay pending mediation—and it seems to have provided the opportunity to come to terms.
That said, all we have at this point is a filing with the court (Baker v. John Hancock Life Ins. Co., D. Mass., No. 1:20-cv-10397, notice of settlement 4/21/21) indicating that the parties “have reached a settlement in principle of the above captioned action on a class-wide basis,” and that they “…expect to be able to finalize a comprehensive settlement agreement and file a motion for preliminary approval on or before June 1, 2021.”
The plaintiffs were represented by Block & Leviton LLP and Nichols Kaster PLLP, the latter having taken on a number of these type lawsuits, including M&T Bank, MFS, SEI and Goldman Sachs, as well as suits involving Deutsche Bank Americas Holding Corp., BB&T and American Airlines.
What this Means
As noted previously, there’s only so much you can learn from a settlement—where the parties seem to basically agree to disagree, conceding that the outcome—for good or ill (depending on your perspective)—under a full adjudication (much less appeal) is uncertain at best, and as likely to wind up costing twice as much (in time and expense, if not settlement amount) as to be tossed out by a judge (though those time and expense costs remain).
However, we will (and should) wait until the particulars of the settlement are shared to see if there are, in fact, lessons to be learned from this one.
