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Edison International will pay $5.6 million in additional damages to a class of current and former employees who sued the utility company for breaching its fiduciary duties by including high-fee mutual funds in its 401(k) plan ( Tibble v. Edison Int’l , C.D. Cal., No. 2:07-cv-05359-SVW-AGRX, joint stipulation regarding methodology for plan return calculations 9/5/17 ).
The multi-million dollar amount is the result of the parties’ agreement on the calculation of the plan’s losses from 2011 through July 2017, according to a joint stipulation filed Sept. 5 in the U.S. District Court for the Central District of California.
The stipulation comes three weeks after Judge Stephen V. Wilson issued a $7.5 million judgment against Edison for its decision to include high-fee retail share mutual funds in its 401(k) plan when identical, lower-cost institutional share classes were available. The parties agreed that damages between 2001 and 2011 were about $7.5 million. Wilson ordered the parties to calculate damages from 2011 onward by comparing the returns of the disputed funds to the returns of the plan as a whole during that period.
The parties’ agreement means that Edison will pay a total of $13.16 million after being held liable for violating the Employee Retirement Income Security Act. The amount is slightly less than the $13.4 million ABB Inc. was ordered to pay after trial in a case that involved allegations of fiduciary breach under ERISA.
Once accepted by the court, the stipulation will move the decadelong litigation closer to end. The participants’ attorneys will file their motion seeking fees and costs in the next few weeks.
The long-running case has been noteworthy because of the worker-friendly decision by the U.S. Supreme Court in 2015 that made it harder for plan fiduciaries to have lawsuits over mutual fund fees dismissed as untimely. The judgment was also significant for being only the second one to be issued after trial.
Schlichter Bogard & Denton represented the participants. In the last decade, the firm has settled cases involving allegations of excessive fees in 401(k) plans against a number of major companies, including Boeing Co. ($57M), Lockheed Martin Corp. ($62M), Novant Health Inc. ($32M), International Paper ($30M),Northrop Grumman ($16.8M), and Kraft Foods Inc. ($9.5M).
Hill Farrer & Burrill LLP also represents the class. O’Melveny & Myers LLP represent Edison.
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