The settlements are lining up in a number of so-called excessive fee suits—including one at the 11th hour—all with plaintiffs represented by Capozzi Adler PC.
Mass General Brigham
Plaintiffs Mark Norton, Daska Louis, Caroline Mitchell, Nancy Barlett, and Azilda Cordahi and Defendants Mass General Brigham Incorporated, the Board of Directors of Mass General Brigham Incorporated, and the Investment Committee of Mass General Brigham Inc., “by and through their undersigned counsel” told the court they were involved in settlement discussions—but asked for a bit more time—noting their intention to “jointly submit a further status report on June 17, 2024.”
The suit—filed back in January 2022 against the $10 billion 403(b) plan—claimed that “defendants could not have engaged in a prudent process as it relates to evaluating investment management fees,” continuing to explain that “seven of the funds that have remained in the Plan throughout the Class Period have an expense ratio that’s 10-basis points higher than required by the fund provider,” a result the plaintiffs attributed to revenue sharing which they claim “…when left unchecked it can have devastating effects on the retirement savings of plan participants.” The plaintiffs in the case are represented by Capozzi Adler PC.
Magna International
In yet another suit with participant-plaintiffs represented by Capozzi Adler, auto-parts supplier Magna International agreed to settle a class action covering about 20,000 workers. The defendants in that case—filed in the U.S. District Court for the Eastern District of Michigan in early 2021—are the fiduciaries of the Magna Group of Companies Retirement Savings Plans, a $1.6 billion plan (at the end of 2018) with some 27,000 participants that was charged by four participants with failing to fulfill their duties as fiduciaries.
The suit alleged that Magna left its plan oversight responsibilities to plan trustee Principal Trust Co., and that in doing so, Magna essentially gave Principal the latitude “to lard the plan with funds managed by the trustee and/or its affiliates.”
More specifically, this suit alleged, as have others in this genre:
- that the defendants did not act in the best interests of the Plan participants,
- that “to the detriment of the Plan and their participants and beneficiaries, the Plan’s fiduciaries included and retained in the Plan many mutual fund investments that were more expensive than necessary and otherwise were not justified on the basis of their economic value to the Plan,”
- that they “…failed to have a proper system of review in place to ensure that participants in the Plan were being charged appropriate and reasonable fees for the Plan’s investment options,” and
- that, as nearly all of these suits charge, they “…failed to leverage the size of the Plan to negotiate for (1) lower expense ratios for certain investment options maintained and/or added to the Plan during the Class Period and (2) lower recordkeeping and administrative fees.”
Salesforce
With a trial slated to begin this past Monday, the parties in a suit filed at the onset of the COVID-19 pandemic by Tim Davis, Gregor Miguel, and Amanda Bredlow—participants in the $2 billion 401(k) plan of CRM provider (and now DJIA component) Salesforce—made a series of allegations common to excessive fee suits:
- that the plan fiduciaries “breached their fiduciary duty of prudence by selecting and retaining investment options with high costs relative to other, comparable investments,”
- that the “Committee Defendants breached their fiduciary duty of loyalty, in that some of the funds’ ‘investment managers own a portion of [Salesforce],’” and
- that the Board, Benioff, and Salesforce breached their fiduciary monitoring duty by failing to adequately monitor the Committee Defendants.
The suit was dismissed in October 2020 by U.S. District Judge Maxine M. Chesney, who gave the plaintiffs an opportunity to amend their claims—only to dismiss them again In April 2021 (Davis v. Salesforce.com, Inc., 2021 BL 138735, N.D. Cal., No. 3:20-cv-01753, 4/15/21). However, in April 2022, the Ninth Circuit revived the case, finding the workers had plausibly alleged that Salesforce spurned its financial responsibilities to plan participants. Once again, the plaintiffs here are represented by Capozzi Adler PC (and Rosman & Germain LLP).
We don’t know the terms of any of these settlements yet, of course—but that they’ve been announced—and after a considerable amount of time and energy spent in legal proceedings—well, stay tuned.
