EAST ST. LOUIS, Ill. (Legal Newsline) - Boeing, the world's largest aerospace company, has agreed to pay $57 million to settle a long-running class action lawsuit that alleges the company’s 401(k) plan charged its employees “excessive” fees.
On Thursday, the two sides in Spano et al. v. Boeing et al. filed a joint motion for preliminary approval of class settlement before Judge Nancy Rosenstengel of the U.S. District Court for the Southern District of Illinois, asking her to OK the deal.
The case was expected to go to trial in August when both sides finally reached an agreement.
“The Settlement is fundamentally fair, adequate, and reasonable in light of the circumstances of this case,” attorneys for the plaintiffs and defendants wrote in the four-page motion. “Preliminary approval of the Settlement is in the best interests of the Class Members and the members of each of the sub-classes.”
The litigation, filed in September 2006, alleges, among other things, that the fiduciaries responsible for overseeing the 401(k) plan breached their duties under the Employee Retirement Income Security Act of 1974, or ERISA, by causing the plan to pay excessive fees, “imprudently including an excessively volatile” Technology Sector Fund, and managing the plan’s Company Stock Fund in a manner inconsistent with ERISA’s duty of prudence.
After multiple court-ordered mediation and more than a year of “arm’s-length” negotiations, both sides entered into the settlement agreement Nov. 4, according to the joint motion.
Under the proposed agreement, in return for a release of the class representatives’ and class members’ claims, Boeing and the other defendants have agreed to pay a sum of $57 million into a gross settlement fund.
The amount that employees -- those who participated in the Voluntary Investment Plan -- receive will depend on the investment “mix” in their retirement accounts from 2000 to 2006.
“Despite the foregoing, Defendants expressly deny and disclaim any wrongdoing, fault or liability, and deny each and every claim asserted in this action,” the motion noted.
Boeing executives, in a statement sent to employees, called the proposed settlement a “reasonable approach” to avoid the cost of continued litigation.
According to the 65-page tentative agreement, class counsel seeks to recover no more than $19 million in attorneys’ fees and no more than $1,845,000 in litigation costs and expenses “advanced and carried by” it for the duration of the litigation.
Under the proposed agreement, those fees and costs will be recovered from the gross settlement amount.
St. Louis, Missouri, law firm Schlichter Bogard & Denton represents the plaintiffs; Bryan Cave LLP, another St. Louis firm, represents the defendants.
From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.