18th Annual Workplace Class Action Report - 2022 Edition

324 Annual Workplace Class Action Litigation Report: 2022 Edition counsel, with instructions for the District Court to consider whether the fee award should be applied to Plaintiff. For these reasons, the Eleventh Circuit reversed and vacated the District Court’s ruling. Ramos, et al. v. Banner Health, 2021 U.S. Dist. LEXIS 126012 (D. Colo. July 7, 2021). Plaintiff brought a class action against Banner Health and its Benefits Committees, which alleged that the Banner Defendants breached their fiduciary duties related to the Banner Health Employees 401(k) Plan (“the Plan”) under the ERISA. Plaintiffs alleged that Defendants, as fiduciaries of the Plan, violated various provisions of the ERISA by failing to prudently monitor certain Plan offerings, retaining certain investment options for too long, using a revenue sharing model to pay for recordkeeping services (that resulted in the paying of excessive recordkeeping fees and allegedly improper payments), and impermissibly using Plan assets to pay certain Banner expenses. The case proceeded to an eight day bench trial on several claims, including: (i) breach of the duties of prudence and loyalty by allowing the Plan’s record-keeper to collect allegedly excessive recordkeeping and administrative fees (Count I); (ii) breach of the duties of prudence and loyalty by offering and failing to monitor allegedly imprudent investment options accessible to those who participated in the Plan via a Mutual Fund Window, and breach of the duties of prudence and loyalty by retaining the Fidelity Freedom Funds after they allegedly became an imprudent investment option (Count II); (iii) breach of the duty to monitor performance of other fiduciaries (Count III); (iv) prohibited transactions with a party-in-interest due to the allegedly excessive fees of the recordkeeping fee arrangement (Count IV); and (v) prohibited transactions for payment of Banner’s expenses from Plan assets (Count V). The Court entered judgment in favor of Plaintiffs on Counts I, III, and V, and judgment in favor of Defendants on Counts II and IV. Thereafter, class counsel requested an attorneys’ fee award of $5,286,413.60 and expenses of $108,564.98. Id . at *5-6. The Court found that a substantial reduction to the request was appropriate. First, the Court reviewed Plaintiffs’ billing records and determined that the requested hours were excessive and included a number of charges for redundant tasks. Further, the Court held that the billing records demonstrated that Plaintiffs’ counsel consistently tasked more expensive senior lawyers with work that could have been done by less expensive junior lawyers. Id . at *22. Further, the Court reasoned that class counsel achieved very limited success, obtaining only $3,131,081.62 – or approximately 3.68% – of their request for $85 million of damages. Id . at *23. The Court thereby decided to award 20% of Plaintiffs’ total attorneys’ fee request, finding that an 80% reduction of the claimed attorneys’ fees was a reasonable reflection of the limited success, as well as an appropriate reduction of excessive billable hours and hourly fee rates. Id . at *25. The Court extended the reasoning to the billed costs as well, and awarded $21,713, or 20% of the requested costs. Accordingly, the Court granted in part Plaintiffs’ motion for attorneys’ fees and cost. (vi) Breach Of Fiduciary Duty In ERISA Class Actions Anderson, et al. v. Intel Corp. Investment Policy Committee, 2021 U.S. Dist. LEXIS 12496 (N.D. Cal. Jan. 21, 2021). Plaintiffs, two former employees who participated in Defendants’ 401(k) Savings Plan and its Retirement Contribution Plan (collectively, “the Intel Plans”), filed a class action alleging that Defendants breached their fiduciary duties of loyalty and prudence in violation of the ERISA. Beginning in 2011, Defendants’ Investment Committee started to increasingly invest in “non-traditional investments,” such as private equity, hedge funds, and commodities. Id. at *3. According to Plaintiffs, Defendants breached the duties of prudence and loyalty by investing in these non-traditional sources, which allegedly yielded smaller returns and charged higher fees than comparable investments. Plaintiffs further alleged that this risky investment strategy deviated from prevailing allocation standards and benefitted Defendants’ own self-interest in light of the fact that the Intel Plans and Intel Capital invested in some of the same private equity funds. Defendants filed a motion to dismiss, which the Court granted. In terms of Defendants’ alleged breach of the duty of prudence, the Court held that Plaintiffs’ claim failed because they did not offer any factual support as to why the purported comparison funds were adequate benchmarks for the Intel Plans. Id. at *29. The Court also rejected Plaintiffs’ arguments concerning the alleged risks of Defendants’ investment strategy because Plaintiffs failed to cite any case law supporting the proposition that pursuing non-traditional investments amounted to a breach of the duty of prudence under the ERISA. Plaintiffs alternatively contended that Defendants’ investment strategy was one of self-interest, but the Court found that Plaintiffs’ “conclusory allegations” were “devoid of even minimal factual support.” Id. at *42. The Court likewise rejected Plaintiffs’ arguments relating to the duty of loyalty for similar reasons, i.e. , because Plaintiffs failed to show why the identified “peer” funds were actually comparable and why Defendants’ overlapping capital investments amounted to a violation of the ERISA. Id. Plaintiffs asserted identical claims against Defendants’ Administrative Committee, but as to those issues, the Court held that