Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
Allianz Asset Management of America L.P. workers won class certification on their lawsuit challenging the allegedly high-fee, in-house mutual funds in their 401(k) plan ( Urakhchin v. Allianz Asset Mgmt. of Am., L.P. , C.D. Cal., No. 8:15-cv-01614, 6/15/17 ).
U.S. District Judge Josephine L. Staton June 15 conditionally granted the plan participants’ motion for class certification. Participants sufficiently showed they have standing to continue as a class by producing evidence suggesting that Allianz managed and selected funds for the plan based on whether the funds would benefit the company rather than the participants, Staton said.
Participants also produced evidence showing that Allianz’s management of the plan results in investment options that, on average, charge higher fees than participants otherwise would pay if Allianz were to consider and select nonproprietary funds, Staton said. Participants have met the procedural requirements to continue their challenge as a class, she found.
Financial companies that put their own investment funds in their workers’ retirement plans have been flooded by ERISA class actions. In the past year, judges have refused to dismiss similar cases against BB&T Corp., Putnam Investments,Deutsche Bank, Franklin Resources, American Century, and Edward Jones. Principal Life Insurance Co. and New York Life Insurance Co. settled cases for $3 million each, and TIAA reached a $5 million settlement last month. Last year, a federal judge in Massachusetts granted class treatment to participants raising similar challenges against Putnam.
Ruling for the participants, Staton modified the proposed class in light of the participants’ requested reliefs. She divided the class in two subclasses. The first one is composed of 4,000 current participants in the plan, and the second group includes 1,637 people who were participants in the plan during the relevant period but have since closed their accounts.
The ruling is the latest setback for Allianz in this case. Last year, Staton declined to dismiss the lawsuit, holding that the participants stated valid claims of fiduciary breach under the Employee Retirement Income Security Act.
In their request for class certification, the participants asked the court to appoint as class counsel two law firms instead of individual attorneys. Staton reserved her ruling on the adequacy of class counsel pending supplemental declarations from participants identifying the individual attorneys who will serve as class counsel in the case.
Nichols Kaster PLLP and Kabateck Brown & Kellner LLP represent the class. Goodwin Procter LLP represents Allianz.
To contact the reporter on this story: Carmen Castro-Pagan in Washington at email@example.com
To contact the editor responsible for this story: Jo-el J. Meyer at firstname.lastname@example.org
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)