North Carolina Lawyers Weekly
Winston-Salem-based banking company BB&T has agreed to settle an Employee Retirement Income Security Act claim brought by its employees for $24 million, an attorney for the plaintiffs reports.
Engstrom
Jerry Schlichter of Schlichter Bogard & Denton in St. Louis, Missouri, said the claim was brought by class action representatives who are or were employed by the bank and had money in its 401(k) plan at some point since 2007. Schlichter said that he believes up to 40,000 people are eligible to claim part of the settlement funds.
Schlichter said the settlement will also allow for non-monetary relief in the form of a reformed retirement benefit plan for those affected.
The plaintiffs sued in North Carolina federal court in September 2015, alleging that BB&T breached its fiduciary duties by poorly managing the employees’ retirement funds. They alleged that the company required employees to use high-cost proprietary investment funds that it managed, allowing BB&T to pay itself millions of dollars in fees that exceeded the value of the services provided.
“The law requires that these be reasonable and that investments be prudent, and there’s a duty that employers provide this for their employees,” Schlichter said. “The lawsuit claims that they were not.”
Richter
Schlichter said that the facts of the case spoke for themselves, leading to the eventual settlement.
“It was an assessment by both sides of the likelihood of what would happen in court,” Schlichter said. “Our claim was that a large plan like this was worth a sizeable amount.”
The class action was certified in July 2017. Defendants in the case included past and current board members, the company’s employee-benefits plan committee, and two subsidiary companies.
The settlement was approved by U.S. District Court Judge Catherine Eagles on Dec. 13.
Michael Prame of Groom Law Group in Washington D.C. and Ronald Davis of Womble Bond Dickinson in Winston-Salem represented the defendants. They did not respond to requests for comment.
In settlement documents, BB&T denied liability for any of the alleged fiduciary duty breaches or ERISA violations.
Schlichter said that the $24 million will go into a settlement fund, where it will later be distributed after attorneys’ fees are taken out. Named plaintiffs in the case will also receive an additional $20,000 settlement payment, while current employees will have the reimbursement paid back into their 401(k) plans.
Schlichter said the settlement will hopefully make up for the money that employees lost.
Schlichter
“After this settlement, the employees and retirees will have a very good retirement plan to help them build their assets,” he said. “It’s not just the money, but also the changes to the plan that will allow them to build assets for the future.”
Follow Matt Chaney on Twitter @NCLWChaney
SETTLEMENT REPORT – ERISA VIOLATIONS
Amount: $24 million
Injuries alleged: Loss of retirement funds
Case Name: Sims, et al. v. BB&T Corporation, et al.
Court: U.S. District Court for the Middle District of North Carolina
Case No.: 1:15-CV-732
Judge: Catherine Eagles
Mediator: Layn Phillips of Phillips ADR in Corona Del Mar, California
Date of settlement: Dec. 13
Attorneys for plaintiff: Jerry Schlichter, Troy Doles, and Heather Lea of Schlichter, Bogard & Denton in St. Louis, Missouri; Kai Richter and Carl Engstrom of Nichols Kaster in Minneapolis, Minnesota; and David Puryear Jr. of Puryear & Lingle in Greensboro
Attorneys for defendant: Michael Prame of Groom Law Group in Washington D.C. and Ronald Davis of Womble Bond Dickinson in Winston-Salem
