The settlement terms in an excessive fee suit have been approved—with a $300,000 reduction in the attorney fee requested in the original agreement.
The original case, Brotherston v. Putnam Investments, LLC (2017 BL 208765, D. Mass., No. 1:15-cv-13825-WGY, 6/19/17), was filed against Putnam Investments by participants in that plan, alleging that the defendants “have loaded the Plan exclusively with Putnam’s mutual funds, without investigating whether Plan participants would be better served by investments managed by unaffiliated companies.”
It’s a case that (ultimately) made its way to the U.S. Supreme Court on the issue of which party bears the burden of proof once an ERISA plaintiff has shown a breach of fiduciary duty and loss to the plan—the plaintiff to show that loss was caused by the breach, or the defendant to establish that it wasn’t[i]—and issue that wasn’t resolved, as it turned out.
The Settlement
The settlement was for $12,500,000[ii] was described as a “…a significant monetary recovery for the Class and falls well within the range of court-approved settlements in similar ERISA case,” and was said to be “…approximately 28% of the total damages that Plaintiffs’ expert testified were associated with Defendants’ alleged fiduciary breaches.”
U.S. District Judge William G. Young, noting (Brotherston v. Putnam Invs., LLC, D. Mass., No. 1:15-cv-13825, 4/6/21) that “Class Members had the opportunity to be heard on all issues regarding the settlement agreement, and there were no objections to the settlement from any class member,” allotted $25,000 each to the two class representatives (John Brotherston and Joan Glancy). He also granted the class counsel $479,213.35 in litigation expenses, which Judge Young found “reasonable and appropriate given the nature of this action.”
However, rather than the $4.2 million requested by plaintiffs’ counsel Nichols Kaster PLLP and Block & Leviton LLP, Judge Young instead approved $3,990,262.21—one third of the settlement amount—after deduction for the expenses and service awards noted above, as he explained.
As for that split in the circuits on the burden of proof issue—well, that’s not yet settled.
[i] However, the Supreme Court ultimately said that the lower courts hadn’t really confronted the issue, though the Court acknowledged that the Second, Sixth, Seventh, Ninth, Tenth, and Eleventh Circuits have left that burden on those bringing suit. And then, having found nothing to resolve, sent the case back down to the district court where those issues of fact could be fully adjudicated.
[ii] The settlement also provided for a number of additional procedural changes to the management of the Putnam plan for at least the next two years, among other things that the defendants will:
- maintain a charter for the Putnam Benefits Oversight Committee (PBIC) that outlines the duties and fiduciary responsibilities of the PBIC and establishes its general quarterly meeting schedule;
- maintain an investment policy statement for the Plan;
- maintain a suite of low-cost third-party passive collective investment trust (“CIT”) options in the Plan; and
- arrange annual training on ERISA fiduciary duties for Plan fiduciaries.
