The suit—brought by a $3 million plan on behalf of the 47,000 plans Voya services—has been dropped.
Specifically, in a “stipulation for dismissal with prejudice” submitted to the U.S. District Court for the District of Delaware (Goetz v. Voya Financial Inc. et al., case number 1:17-cv-01289, in the U.S. District Court for the District of Delaware) it’s noted that “Plaintiff Sharon Goetz, on behalf of the Cornerstone Pediatric Profit Sharing Plan and as a representative of a class of all other similarly situated individual account retirement plans, and Voya Financial, Inc., and Voya Retirement Insurance and Annuity Company, by and through their undersigned counsel, stipulate to dismiss this lawsuit with prejudice, with each party bearing its own costs and attorneys’ fees except as otherwise agreed. As grounds, the parties state they have reached a confidential settlement resolving all claims in this case.”
The suit (Goetz v. Voya Financial, Inc., D. Del., No. 1:17-cv-01289-UNA, complaint filed 9/8/17), had been brought by plaintiff Sharon Goetz, a participant in the (approximately) $3 million Cornerstone Pediatric Profit Sharing Plan (which has 19 participants). The suit[i] claimed that Voya Financial, and its subsidiaries violated and knowingly participated in violations of ERISA, and is seeking “the return of the undisclosed excessive and unreasonable asset-based fees charged by Voya for recordkeeping and administrative services, and to prevent Voya from charging those excessive fees in the future.”
What made this suit a potentially big deal is, of course, that the plaintiff has brought suit[i] on behalf of participants in the 47,000 plans that Voya services—and had alleged that they are charging (potentially) “over $1 billion a year in excessive compensation at the expense of the individual plans and their participants.”
In February 2020, motions to dismiss the suit by Voya met with mixed results from a federal judge, Judge Colm F. Connolly. While dismissing some of the claims, Judge Connolly noted that, “There is a substantial likelihood an employee looking at these disclosures would think the listed fees were paid only to the listed funds as opposed to the listed funds and Voya,” concluding that “Plaintiffs have at least established materiality to the degree required to survive a motion to dismiss,” and that “Goetz has sufficiently pleaded a breach of fiduciary duties claim with respect to the 404a-5 disclosures.” He did, however, grant Voya’s motion to dismiss the claim for breach of fiduciary duties for charging excessive fees, Goetz’s claim for breach of co-fiduciary duties for charging excessive fees, and Goetz’s party-in-interest claim.
What This Means
Settlements tell you little about the merits of the arguments made, and less about the defense of such claims. This one perhaps less than most since the terms of the settlement were not disclosed, or even subject to a review by the court.
[i] The suit was filed by three different law firms, including Franklin D. Azar & Associates P.C., which—in addition to filing a similar suit against a $500 million plan in 2017—has previously held itself out as a personal injury law firm that specializes in motor vehicle accidents, defective products and slip-and-fall accidents, according to its website.
