ST. LOUIS--(BUSINESS WIRE)--Schlichter Bogard & Denton, a leading national law firm, announced today that it has reached a $55 million settlement with ABB, on behalf of the company’s employees and retirees. In this historic case, Tussey v. ABB Inc., the law firm represented a class of participants in the ABB 401(k) plans, in a suit which alleged breaches of fiduciary duty under the Employee Retirement Income Security Act (ERISA) and that ABB subsidized its corporate expenses with fees paid out of its employees’ retirement assets. Tussey v. ABB Inc. was the first 401(k) case to go to a full trial and the longest such matter, of over dozens filed since by various parties, to come to a conclusion.
Schlichter Bogard & Denton originally filed the complaint on December 29, 2006, in the U.S. District Court for the Western District of Missouri. In 2012 the plaintiffs obtained a $36.9 million judgment, which was then appealed in two separate actions to the Eighth Circuit Court of Appeals, and twice remanded to the District Court for further proceedings. The plaintiffs previously obtained a court order extensively reforming the 401(k) plan to reduce fees. In this settlement, the plaintiffs' losses will be addressed with damages.
“We’re in the thirteenth year fighting ABB’s scorched earth approach, through multiple trials and appeals, and over $50 million it spent to avoid compensating ABB employees and retirees,” said Jerry Schlichter of Schlichter Bogard & Denton, lead attorney for the plaintiffs. “We’re now pleased to bring this case to an end, for a settlement amount which is substantially more than the original judgment. In addition, they have already benefitted from reform of the company 401(k) plan, which the court ordered to eliminate excessive fees and self-dealing by ABB to also help ABB employees for the long-term future.”
The narrative of this case parallels the history of 401(k) excessive fee cases, which did not exist before this case was filed.
In 2006, when Schlichter Bogard & Denton brought this case, no law firm in the United States had ever filed a 401(k) excessive fee case; nor had the Department of Labor, which oversees 401(k) plans, in the thirty-year history of 401(k) plans. Today, Tussey v. ABB Inc., stands as the seminal legal action which defined a generation of litigation to protect the core interests of 401(k) plan savers and retirees.
Plaintiffs alleged and the court ruled, that the defendant allowed excessive recordkeeping fees and selected in the plan high cost and poor performing investments compared to available alternatives. The plaintiffs also alleged and the court held that ABB engaged in self-dealing by using Fidelity for recordkeeping both the 401(k) and corporate plans, which included a corporate pension plan, the health and welfare plan, and payroll processing, with Fidelity providing ABB’s corporate plans at a loss, while Fidelity made over a 50% profit from the employees’ 401(k) plan. Thus, the District Court found that ABB was improperly using the retirement savings of its employees and retirees to subsidize its own costs.
ABB was previously ordered by the court to use a competitive bidding process, including a request for proposals, to select a new recordkeeper, and that recordkeeper shall not provide any corporate services to ABB. ABB was also ordered to choose the share class of investments that has the lowest expense ratio, rather than more expensive retail share classes.
Schlichter Bogard & Denton, based in St. Louis, MO, pioneered excessive fee 401(k) and 403(b) litigation on behalf of employees and retirees. Since 2006, the firm has filed over 30 such complaints and secured 16 settlements on behalf of employees. The firm’s landmark Tibble v. Edison case is the first and only 401(k) excessive fee case to be argued in the Supreme Court. In that case, in 2015, the firm won a landmark unanimous 9-0 decision in which both the AARP and the Solicitor General wrote supporting briefs for the employees.
Jerry Schlichter and his firm have been referred to by federal judges as “preeminent” in the field of 401(k) fee litigation; as demonstrating “extraordinary skill and determination”; as making “a significant, national contribution,” having “educated plan administrators, the Department of Labor, [and] the courts” about fees and fiduciary obligations; and has been referred to by federal judges as a “private attorney general,” causing fees to come down by over $2 billion annually in the entire 401(k) industry.
About Schlichter Bogard & Denton, LLP
Schlichter Bogard & Denton, LLP, of St. Louis is a national law firm that represents individuals, including victims of financial abuse and 401(k) plan investors, whose plans suffer from excessive fees or imprudent investment options. Its attorneys are dedicated to helping financial abuse victims, and helping employees and retirees secure the retirement benefits they deserve.
More information can be found at:
http://www.uselaws.com or call (800)-USE-LAWS (873-5297)
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