Final approval on the long-running GE ERISA case came this morning, with Judge Indira Talwani of the U.S. District Court for the District of Massachusetts granting it for a $61 million cash settlement in the case re GE ERISA LITIGATION (Haskins, et al. v. General Electric, et al.).
“This is the largest settlement ever in an ERISA case alleging a retirement plan improperly offered proprietary funds. It is a great result for the class restoring to their accounts much-needed money for their retirement savings,” said Charles Field, Partner at Sanford Heisler Sharp and counsel for the class.
The approved Settlement Agreement provides that Defendants will pay $61,000,000 in cash to resolve all of Plaintiffs’ Released Claims against Defendants and the Released Parties.
Sanford Heisler Sharp first filed the Class Complaint in 2017. Subsequently, other firms joined and co-litigated the matter on behalf of a nationwide class for almost 8 years through hard fought litigation and settlement.
Plaintiffs alleged the GE Funds were managed by GEAM, GE’s wholly owned investment management company, and were the only actively managed options available to Plan participants. Plaintiffs claimed that the GE Funds substantially underperformed other comparable funds during the Class Period.
Plaintiffs further alleged Defendants refused to consider adding better performing comparable funds, removing any of the GE Funds, or replacing the managers, and that they thereby breached their duties of loyalty and prudence to monitor and remove them from the Plan.
Around the same time these breaches were taking place, GE was exploring the sale of GEAM, which ultimately resulted in the sale of GEAM to State Street for $485 million in 2016. Plaintiffs alleged Defendants retained the underperforming funds to elevate GEAM’s assets under management and to collect fees, inflate the sale price of GEAM and use the proceeds to pay-down debt GE owed to its underfunded defined benefit pension plan.
“This was a long and hard-fought case and illustrates that Sanford Heisler Sharp will go the distance and is in these cases for the long haul,” Field said.
The settlement, first announced on Oct. 9, 2023, culminated from nearly 6 years of litigation after full fact and expert discovery involving seven experts, and was only reached due to a mediator’s proposal shortly before summary judgment and Daubert arguments.
Plaintiffs’ damages expert calculated reasonable recoverable damages to be approximately $283,000,000, so the cash settlement amount represents approximately 21.5% of such damages, which is at the higher end of the range of settlement recoveries approved in other ERISA class action settlements.
Class Counsel gets one-third
The settlement was reviewed by an independent fiduciary, Fiduciary Counselors, who found that the $61 million settlement amount “is a fair and reasonable recovery given the percentage of reasonable recoverable damages, the defenses the Defendants would have asserted, the risks involved in proceeding to trial and the possibility of reversal on appeal of any judgment favorable to Plaintiffs.”
As a result of the settlement, GE, GEAM, and/or their respective insurers will contribute, or cause to be contributed, into an Escrow Account $61,000,000 in cash. After payment of Attorneys’ Fees and Expenses, Incentive Awards to the Plaintiffs, and Notice and Administration Costs, the amount remaining (the “Net Settlement Fund”) will be allocated among authorized members of the Class.
The Court awarded Class Counsel attorneys’ fees of one-third of the settlement amount—amounting to $21.5 million with expenses.
The Court also awarded $25,000 to each of the Plaintiffs, Maria LaTorre, Robyn Berger, Brian Sullivan, Frank Magliocca, Melinda Stubblefield, Kristi Haskins, Laura Scully, Donald J. Janak, John Slatner, and Chip Knight, to be paid from the Settlement Fund for the time they spend directly related to their representation of the Class.
The case was a certified class action on behalf of all participants in GE’s 401(k) Plan, a/k/a the GE Retirement Savings Plan and its predecessor the GE Savings and Security Program, as well as participants whose accounts were transferred from the GE Retirement Savings Plan and merged into a successor plan created in connection with the spinoff of a GE company, who invested in the GE Funds between Sept. 26, 2011 to Aug. 3, 2023 (the “Class Period”), and on behalf of the Plan, alleging breach of fiduciary duties of loyalty and prudence and prohibited transactions in violation of ERISA.
SEE ALSO:
• GE to Pay Record-Setting $61 Million to Resolve 401(k) Proprietary Funds ERISA Lawsuit