18th Annual Workplace Class Action Report - 2022 Edition

Annual Workplace Class Action Litigation Report: 2022 Edition 359 reasoned that if Plaintiffs’ claims were time-barred, they would not be adequate representatives of the settlement class. Further, the Court held that the settlement notice was not sufficient because there was no mechanism in place to calculate potential payouts from the settlement, and that there was no way for a class member to opt-out of the settlement. Due to these defects in the proposed settlement, the Court denied the motion for preliminary settlement approval. Ferguson, et al. v. Ruane, Cunniff & Goldfarb, Inc., 2021 U.S. Dist. LEXIS 154930 (S.D.N.Y. Aug. 17, 2021). Plaintiffs, participants in Defendants’ 401k plan, filed a class action alleging breach of fiduciary duties and other violations of the ERISA. The parties ultimately settled the matter and Plaintiffs filed a motion for preliminary settlement approval. The Court denied the motion. The Court noted that the proposed settlement agreement contained an indemnification clause that preliminarily enjoined and bared: “(i) Plaintiff releasors, the Secretary, and any Person purporting to represent them or pursue Claims on their behalf, and (ii) any participant who has been excluded from the Settlement Class, from bringing or prosecuting in any forum any Claim that arises from, relates to, or is connected with: (iii) the conduct alleged in the Complaint.” Id . at *21-22. Plaintiffs contended that the injunction provision was commonplace provision in class action settlements. The Court, however, reasoned that the provision was far more than a common settlement bar order and could not be approved. The Court explained that the proposed injunctive provision sought to enjoin non-parties, including the U.S. Secretary of Labor, from bringing or prosecuting claims. The Court concluded that approving the settlement’s injunction provision would circumvent the Secretary’s independent and unqualified right to sue and seek redress for ERISA violations on the basis that ERISA plans significantly affect the "national public interest." Id . at *23. For these reasons, the Court denied Plaintiffs’ motion for preliminary approval of the class action settlement. Hill, et al. v. Mercy Health System Corp., Case No. 20-CV-50286 (N.D. Ill. Nov. 24, 2021). Plaintiffs, a group of participants in Defendant’s retirement plan, filed a class action alleging that Defendants breached their fiduciary duty under the ERISA by charging unreasonable broker fees and making bad investments. The parties ultimately settled the matter and Plaintiffs moved for preliminary settlement approval. The Court denied the motion. The Court reasoned that the proposed settlement agreement contained a request for the Court to enter a preliminary injunction that would bar class members and their agents form asserting any of the claims that were the subject to the settlement agreement against Defendants in any other litigation. The Court opined that it lacked authority to enter the injunction. The Court explained that as it had a fiduciary duty to class members, it would be inappropriate to enjoin them from filing other litigation that could upset the settlement simply to help ensure the case was finalized. The Court ruled that the parties provided no legal basis for that request or any facts upon which a proper injunction could be entered. For these reasons, the Court denied the motion for preliminary settlement approval and ordered the parties to submit a revised proposed preliminary approval motion for review. Karpik, et al. v. Huntington Bancshares Inc., 2021 U.S. Dist. LEXIS 38641 (S.D. Ohio Feb. 18, 2021). Plaintiffs, a group of participants in the Huntington 401(k) Retirement Plan (“the Plan”), filed a class action claiming that Defendants breached their fiduciary duties of loyalty and prudence by improperly selecting Huntington-related investments for the Plan and by allowing the Plan to be charged unreasonable recordkeeping fees in violation of the ERISA. Id. at *7. After completing discovery, the parties attended a mediation session and subsequently agreed to a settlement of $10.5 million. Thereafter, the Court granted Plaintiffs’ motion for preliminary settlement approval in October 2020. After class notice, Plaintiffs subsequently moved for final approval of the settlement, in addition to seeking attorneys’ fees, costs, and class representative service awards. The Court granted Plaintiffs’ motion for final settlement approval and granted their request for fees, costs, and service awards. In terms of the settlement itself, the Court found it to be fair, adequate, and reasonable. To that end, the Court highlighted that the parties engaged in extensive discovery that encompassed the production of over 30,000 documents, navigated a complex ERISA action for over three years, and still faced uncertain legal questions concerning class certification and damages that would have needed to be resolved through further litigation. Since Plaintiffs also received no objections from a class of over 38,000 class members, the Court held that the settlement offered a substantial benefit to the class. With regard to an award of attorneys’ fees and costs, Plaintiffs sought $3.5 million in attorneys’ fees, and neither Defendants nor any class members objected to this request. The Court determined that this fee was appropriate since Plaintiffs’ counsel demonstrated specialized skills in prosecuting this complex class action, and also because the