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Schlichter Settlement Gets Preliminary Approval—and Some Clarification

Litigation

Last week’s $40 million settlement in an excessive fee case is moving forward—but the terms weren’t exactly as presented.

The settlement arose in a case involving Reliance Trust and its role regarding the Insperity 401(k) Plan, in which the plaintiffs—represented by the law firm of Schlichter Bogard & Denton—were enrolled. The plaintiffs are four participants in this plan for Insperity clients. However, the settlement did not actually involve Insperity, but was an agreement between Reliance Trust and the plaintiffs. 

Moreover, the $39.8 million settlement claimed to include a number of additional procedural changes regarding the plans and the role of Reliance Trust—changes that the settlement agreement acknowledged “have been satisfied (or effectively satisfied) through changes that have occurred with respect to the Plan.” However, as pointed out in the Insperity Defendants’ Response to the motion, “The Insperity Defendants are not making any monetary contribution toward the Settlement Amount, and have not made any changes to the Plan as a result of the Settlement between the Settling Parties.” 

In an email commenting on the settlement, Emily Costin, an attorney at Alston & Bird LLP, which represented the Insperity defendants in the case said that, “To the extent certain changes have been made, they were made long before the settlement and are not part of, or as a result of, the settlement.”

While not a party to the settlement agreement, the Insperity Defendants indicate they have read and do not oppose it. Pending court approval of the agreement, the Insperity Defendants did agree to “fully cooperate in facilitating the administration of the Settlement by, inter alia: (1) gathering the necessary data about participants and providing such data to the Settlement Administrator; (2) hiring and monitoring the Independent Fiduciary as contemplated by Article 3 of the Settlement Agreement; (3) providing the Settling Parties and the Settlement Administrator with readily accessible data that is reasonably necessary to facilitate the administration process; and (4) working with the Settlement Administrator and the Trustee to make payments to the current participants…”

Preliminary approval has now been received—and the order, signed by U.S. District Judge Mark H. Cohen, establishes a Fairness Hearing date of March 5, 2021. 

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