Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
Nov. 5 — Boeing Co. and employees who participated in the company's 401(k) plan have asked a federal court in Illinois to approve a $57 million settlement to bring an end to a nearly decade-old class action that accused the company of paying excessive 401(k) fees.
The parties reached the settlement in August just as a trial was set to begin in the case, but they kept the terms confidential until the Nov. 5 filing of the proposed settlement agreement.
The $57 million settlement is the second-largest in 401(k) excessive-fee litigation history, according to the St. Louis-based law firm Schlichter Bogart & Denton, which represented the Boeing workers.
The case is among a dozen or so Employee Retirement Income Security Act class actions filed by the Schlichter firm against major employers. The lawsuits accuse the employers of breaching their ERISA fiduciary duties by paying excessive or unreasonable fees for 401(k) plan investments or services.
Other employers that have been sued by the Schlichter firm include Deere & Co., ABB Inc., Massachusetts Mutual Life Insurance Co., Edison International, Ameriprise Financial Inc., Lockheed Martin Corp. and Novant Health Inc. Many of the cases have ended in multimillion-dollar settlements, while one, involving Edison International, has reached the U.S. Supreme Court.
And it was the attention these cases drew to 401(k) plan fees that led the Department of Labor in 2010 and 2012 to issue rules aimed at requiring plan service providers and sponsors to give more detailed disclosures to plan fiduciaries and participants of the fees paid for investments.
In its motion asking the court to approve the settlement, the Schlichter firm said that if it's approved, most class members will automatically receive their distribution directly into tax-deferred retirement accounts. Boeing employees who have left the plan will receive their distribution in the form of a check made out to them individually or as a rollover into another tax-deferred account.
In addition to the monetary component of the settlement, Boeing has agreed to retain an independent investment consultant to review the plan's investments in the technology sector.
Boeing was represented by O'Melveny & Myers and Bryan Cave LLP.
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Text of the settlement agreement is at http://src.bna.com/V1. Text of the plaintiffs' motion in support of the settlement is at http://www.bloomberglaw.com/public/document/Spano_et_al_v_Boeing_Company_The_et_al_Docket_No_306cv00743_SD_Il/5.
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