General Electric will pay $61 million in cash to resolve a 6-year-old ERISA lawsuit—a settlement being called the largest ever in an ERISA case alleging a retirement plan improperly offered proprietary funds.
The settlement in the case (Haskins, et al. v. General Electric, et al.), which was announced today via a press release from law firm Sanford Heisler Sharp, must still be approved by United States District Court for the District of Massachusetts. A preliminary hearing has been scheduled for October 17, 2023.
“We are pleased to have achieved an ERISA settlement of this magnitude, the largest ever in an ERISA case alleging a retirement plan improperly offered proprietary funds.”
Sanford Heisler Sharp’s Charles Field
“We are pleased to have achieved an ERISA settlement of this magnitude, the largest ever in an ERISA case alleging a retirement plan improperly offered proprietary funds,” said Charles Field, Chair, Financial Services Litigation Group, Sanford Heisler Sharp. “It is a great result for GE employees who had invested in the GE Funds.”
Sanford Heisler Sharp, with San Diego-based Field as lead lawyer, represented the employees in the fund.
The settlement 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. The settlement also avoids the risk of an unfavorable ruling on summary judgment or at trial, and provides an immediate recovery to the Class.
According to the settlement, Class Counsel will apply for “reasonable attorneys’ fees of up to one-third” of the $61 million settlement amount.
In September 2017, Sanford Heisler Sharp filed an individual and class action complaint against General Electric Company (“GE”) for breach of fiduciary duties under the federal Employee Retirement Income Security Act (ERISA).
Plaintiffs allege 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. The GE Funds, allegedly, substantially underperformed other comparable funds during the Class Period.
Plaintiffs further allege 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 these breaches were taking place.
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 allege Defendants retained the underperforming funds to keep GEAM’s assets under management elevated 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.
The suit said named Plaintiffs individually and the Class—some 250,000 GE employees participating in the Plan during the proposed class period of January 11, 2011 through June 30, 2016, collectively invested billions of dollars in the Plan annually.
The original complaint sought $700 million in damages. In 2017, within two months of Sanford Heisler Sharp’s filing the ERISA class action, three virtually identical putative class actions were filed against GE in Massachusetts, home to its headquarters. In December 2017, the Massachusetts District Court ordered that Haskins v. GE be consolidated with the three ERISA classes in Massachusetts, in the matter of In Re G.E. ERISA Litigation.
SEE ALSO:
• ‘Groundbreaking’ DOL Advisory Opinion for Citibank Provides ERISA Guidance
• Most ERISA Excessive Fee Cases Surviving Motions to Dismiss
• DST 401(k) Plan Fiduciaries On Hook for $125 Million in ERISA Settlement