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July 20 — Attorneys who obtained a $62 million settlement from Lockheed Martin Corp. for participants in the company's 401(k) plan are entitled to $22.3 million in fees and costs as part of the settlement, a federal court in Illinois has ruled.
Chief Judge Michael J. Reagan of the U.S. District Court for the Southern District of Illinois awarded the fees and costs to Schlichter, Bogard & Denton LLP on July 17 for the firm's representation of Lockheed employees in their allegations that the company's 401(k) plan administrator charged them hidden and excessive fees.
This is the second multimillion-dollar fee award in a week for Schlichter, which was awarded $9.9 million by a federal judge in Minnesota on July 13 for the firm's role in a settled case involving the Ameriprise Financial Inc. 401(k) plan.
The fee award in the instant case represented approximately one-third of the $62 million settlement fund, and was warranted, according to the court, because of the firm's “exceptional commitment and perseverance in representing employees and retirees seeking to improve their retirement plans.”
According to the court, the fee request was reasonable under precedent from the U.S. Court of Appeals for the Seventh Circuit, which permits awards of up to 33 percent of a common settlement fund in cases that involve a “particularly complex area of law” such as 401(k) litigation under the Employee Retirement Income Security Act.
The court further found that the fee award only reflected approximately 20 percent of the full value of the settlement, when the settlement's non-monetary component is considered.
The settlement, which was the “largest ever for a case of this nature,” according to the joint motion for approval, included non-monetary relief to the plan participants, including an agreement by Lockheed to provide details on the fees charged and the assets held in the various funds. The agreement also required a competitive bidding process for the future record-keeping services of the plan.
The case was originally brought by Lockheed employees who alleged that the company's in-house investment manager breached its fiduciary duties by charging them hidden and excessive fees. The participants had reportedly sought $1.3 billion in damages.
After more than eight years of litigation, the parties announced that they had reached a settlement on Dec. 16, 2014, the same day that the court had scheduled a liability trial in the case.
Four months later, the court granted preliminary approval to the settlement, which also included $25,000 incentive payments for each of six class representatives and a $10,000 payment for a seventh named plaintiff.
Lockheed was represented by Dowd Bennett LLP, Mayer Brown LLP and Schulte Roth & Zabel LLP.
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