The settlement terms of two fiduciary breach suits involving a 401(k) plan, its investment structure, plan consultant, and selection of target-date funds have been submitted for court approval.
The class settlement – reached between Safeway, Inc., its plan consultant (AON Hewitt Investment Consulting, Inc.) and participant-plaintiffs in its 401(k) plan – was announced in May, just ahead of the May 7 scheduled trial date.
The parties have settled on a cash payment of $8,500,000 in total – $8,000,000 to come from Safeway, and $500,000 from Aon, who served as plan consultant, and was named as a party in the case involving target-date fund selection (JPM Smartretire Passiveblend Funds) and revenue-sharing practices.
The original suit was filed in July 2016 by plaintiff Maria Karla Terraza, who alleged that the Safeway plan fiduciaries “violated ERISA by, among other things, failing to perform proper oversight of the Plan.” A separate suit filed by plan participant Dennis M. Lorenz for selecting target-date funds affiliated with its recordkeeper. The settlement agreement, assuming it’s approved by the court, would basically bring those two together.
The agreement takes pains to state that it is “made in compromise of disputed claims and are not admissions of any liability of any kind, whether legal or factual.” Moreover, they make clear that the defendants “do not agree with or in any way admit, and shall not be deemed to agree with or in any way admit, any of Plaintiffs’ or Class Counsel’s theories regarding Defendants’ liability in the Actions, including that any of Defendants’ prior or existing actions or practices are in violation of any federal or state laws, statutes, or regulations.”
The settlement will be distributed to “all Participants, Former Participants, Beneficiaries, and Alternate Payees in the Plan at any time between July 14, 2010 and July 28, 2016.”
Well, net of the “case contribution award” that will go to plaintiffs Maria Karla Terraza and Dennis M. Lorenz for their involvement in the case – “not to exceed the amount of $10,000 each.”
Moreover, the settlement acknowledges that the plaintiffs’ counsel intend to submit a Motion for Attorneys’ Fees and Expenses “seeking an award of Attorneys’ Fees not to exceed 33.33% of the Settlement Amount, plus reasonable litigation Expenses not to exceed $500,000.00, at the appropriate time.”
