Capozzi Adler Lands Settlement with Land O’ Lakes

Capozzi Adler reached another excessive fee settlement with a billion-dollar plan.

This lawsuit was filed by participant-plaintiffs Craig Parmer and Mark A. Laurance against the trustees of the Land O’ Lakes Employees’ Supplemental Savings and Retirement Plan in May 2020. In particular, they claimed that the defendants trustees of the $1.4 billion plan had not used a careful process in selecting investment options in the plan (specifically that there were identical and less expensive options available), and that ‘they failed to properly monitor record keeping fees and did not use plan asset size as leverage to negotiate lower fees (specifically that these fees ranged from $32/participant to $166/ participant per year, when they claimed that a reasonable amount should not have been more than $5/participant).

The fiduciary defendants, of course, have denied any liability or wrongdoing. Additionally, during the discovery process, “defendants provided documentation showing that the Plan’s contractual recordkeeping rates with Alight were significantly lower than those alleged by plaintiffs,” according to the settlement petition.

The petition for settlement outlines a series of actions taken in the interim – the inevitable series of filings, motions to dismiss, responses to those motions, hearings on those issues, rulings that dismissed some claims, but left others alive, more motions, more answers, and more—all culminating last December 12 with an announcement in court that a settlement has been reached.

A mediation was involved – although prior to this the defendants produced over 7,200 pages of documents, including plan documents, outline plan descriptions, participant investment information, committee charters, investment policy statements, trust and record keeping agreements, fee schedules, minutes and committee meeting materials. and account statements.

The Settlement Process

On November 30, there was mediation before David Geronemus, Esq., “a neutral third-party private mediator with experience mediating ERISA class actions.” After reviewing all relevant information, plaintiffs have determined that the maximum potential damages to the plan amount to a maximum of $9,006,703.78, assuming that all income collected by the Plan Archivist and Trustee would have should have been considered fees for record keeping and administrative costs, and a reasonable annual per participant fee should have been $35 per participant. Unsurprisingly, the fiduciary defendants disagreed with plaintiffs’ calculation of damages “because the income plaintiffs alleged to have been received by the plan’s accountant far exceeded the rates contractually agreed between the plan and his accountant. But when all was said and done, the parties reached a tentative settlement, “settling this matter for $1,800,000.00”, and the final agreement was finalized and executed on February 28.

The chord (Parmer et al. vs. Land O’Lakes Inc. et al.Case Number 0:20-cv-01253, in the U.S. District Court for the District of Minnesota) also includes non-monetary terms, specifically that “within three years from the effective date of the settlement, if the Plan Trustees have not already done so, the Plan Trustees will conduct or cause to be conducted an RFP for Plan recordkeeping and administration services.

The agreement also notes that plaintiffs’ attorney “… intends to seek to recover their attorneys’ fees not to exceed $599,940.00” (this is one-third of the total settlement, although this looks like an oddly specific amount), as well as recovery of litigation costs and expenses “advanced and incurred by Class Counsel during the pendency of this litigation, not to exceed $50,000.00”. With respect to the two plaintiffs named in the lawsuit, the settlement contemplates seeking “class representative case contribution awards in an amount not to exceed $10,000 each…”

Will the court approve? We will see…

About Yvonne Lozier

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