The law firm that helped pioneer 401(k)-fee lawsuits against big companies more than a decade ago announced a $55 million settlement on Thursday against ABB Inc., a company with U.S. headquarters in Cary, N.C., that specializes in areas including power grids and robotics.
The settlement is the largest for St. Louis-based Schlichter Bogard & Denton LLP since 2015, when it announced a $62 million agreement with Lockheed Martin Corp. and a $57 million settlement with Boeing Co.
The firm said it has secured $446 million in settlements for clients since 2010, a trend that has created anxiety for corporate and university executives about suits alleging mismanagement of employer-sponsored retirement plans.
Consumer advocates say the litigation trend has saved 401(k) participants nationwide billions of dollars by helping to push down fees, which declined 21% from 2009 to 2015, according to financial-information provider BrightScope Inc. Such fees typically include administrative charges that 401(k) participants pay to record-keepers as well as investment fees they pay on the mutual funds their plans offer.
Critics contend that the fear of litigation is encouraging employers to focus on fees at the expense of service and innovation.
ABB, which employees 24,000 in the U.S., has about $2 billion in its retirement plan, according to BrightScope. “ABB believes it is a fair and reasonable settlement and is ready to move forward. ABB values its employees and offers competitive benefits,” a spokesperson said in an emailed statement.
Filed in 2006, the case went to trial in 2010, resulting in a $36 million judgment in favor of the plaintiffs that ABB appealed. The court found, in part, that the plan paid excessive record-keeping fees and that ABB allowed the plan to subsidize other corporate services, including ABB’s payroll and record-keeping for a traditional pension plan, according to attorney Jerome Schlichter.
During the 2010 trial, one of the named plaintiffs shot and killed himself and three other employees at an ABB manufacturing facility in St. Louis, Mr. Schlichter said.
Mr. Schlichter said the court will decide how much of the $55 million settlement will go toward attorney fees. Through June 2017, his firm has earned about $90 million on settlements since 2010.
Write to Anne Tergesen at [email protected]
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