Tech. Company Settles ERISA Lawsuit for $14M
Fujitsu Technology has agreed to pay $14 million to exit a lawsuit claiming the company violated the Employee Retirement Income Security Act.
Fujitsu was hit with the ERISA lawsuit in June of 2016. The plaintiff alleged that the 401(k) plan executives selected included high fee investments as well as high cost record keeping fees – all violations of their fiduciary duties under ERISA.
The ERISA lawsuit alleges that the executives “failed to utilize the least expensive share classes for many mutual funds with the plan.” Additionally, the record-keeping fees were “far in excess of what a prudent fiduciary would pay for those same services,” according to the complaint.
Under the terms of the settlement, the company will pay $14 million.
Regarding the ERISA lawsuit settlement, a Fujitsu spokesperson stated: “The reporting we have seen so far has been based almost entirely on rote repetition of allegations in the amended complaint. Those allegations are denied in the answers filed by the defendants, to which we refer anyone interested in the real posture of this case at the time of settlement.”
“We are confident that, if this case had proceeded further, we would have prevailed against many or all of the claims against us,” the statement continued. “However, the history of cases of this nature is that they are complex and expensive to litigate, and that the resolution of them can take as long as a decade. Therefore, we came to conclude that this settlement at this time is in the best interests of everyone.”
The Fujitsu 401(k) at issue in this ERISA lawsuit, the Group Defined Contribution and 401(k) Plan, had assets of $1.35 billion in 2016.
Under ERISA, workers who participate in certain pension and retirement plans, as well as insurance and disability plans, are entitled to certain protections. Those who administer ERISA covered plans must also meet certain standards regarding those plans.
ERISA requirements include:
- Providing plan participants with information about the plan features and funding
- Establishing minimum standards for participation, vesting, funding, and benefit accrual
- Establishing codes of conduct for plan fiduciaries
- Establishing methods to hold plan fiduciaries accountable
- Providing plan participants the right to sue
- Guaranteeing the payment of certain benefits if the plan is terminated
ERISA plan participants have the right to hold plan administrators accountable for failure to meet ERISA standards; however, the process can be complex. All plans are required to have a written procedure for processing claims and appealing the denial of a claim. A reason for the denial is required as well.
If the written procedure for claims processing is insufficient, a plan participant can file an ERISA lawsuit against the plan administrators for a judicial review of the denial.
Retirement plan administrators can also be held accountable if they incorrectly claim an exemption from ERISA. Certain organizations, such as churches, are exempt from the law; however, religiously-based health care systems have paid out million dollar settlements for incorrectly classifying itself as exempt from ERISA and underfunding their retirement plans.
If you are concerned about your benefits, contact the attorneys at Bradley/Grombacher to help evaluate your claim.
Note: Bradley/Grombacher is not representing the plaintiff in this lawsuit.