Apparently the third time’s a “charm,” at least for one excessive fee case “…after arms-length negotiations, which involved highly experienced lead attorneys who have litigated many similar cases, and neutral mediators.”
This time it’s a suit — actually three suits at different times by different groups of plaintiffs—but they’re represented by Capozzi Adler PC[1] (and Johnson Fistel LLP), which filed a similar (identical?) suit against this same Cumulus Media Inc.'s 401(k) plan in 2020.
How We Got Here
In that case, Cumulus managed to win a dismissal due to a release agreement the named plaintiff signed when he left the company. Beyond that, a previous run about a year earlier at the Cumulus 401(k) plan was dismissed on summary judgement because the claims alleged were not raised on a timely basis under terms of the plan.
But then, they rounded up a new set of plaintiffs — Demarland Dean, Kimberly Van DeCreek, Bradley Kirk, Reynolds Leutz, Tondarious Rothchild, Jason Jones and John W. Bower — arguing that the $185 million plan (as of Dec. 31, 2018) breached the duties they owed to the Plan and to the plaintiffs (as well as the other participants of the Plan by, “(1) failing to objectively and adequately review the Plan’s investment portfolio with due care to ensure that each investment option was prudent, in terms of cost; and (2) maintaining certain funds in the Plan despite the availability of identical or similar investment options with lower costs and/or better performance histories; and (3) failing to control the Plan’s recordkeeping costs.”
More specifically (Dean v. Cumulus Media, Inc., N.D. Ga., No. 1:22-cv-04956, complaint docketed 12/16/22) that “Defendants failed to utilize the lowest cost share class for many of the mutual funds within the Plan despite their lower fees” — oh, and they also have issue with the failure to consider collective trusts (at least for most of the period in question). That latter part is key — because the plan fiduciaries DID make changes. The suit alleges that in late 2019, “after purported consultation with SageView Advisory Group, almost six years into the Class Period, wholesale changes were made to the Plan.”
The Settlement
Now, the defendants strongly dispute Plaintiffs’ allegations, maintain that the Plan has been prudently managed throughout the relevant period, and deny liability for the alleged ERISA violations, according to the settlement (Dean et al. v. Cumulus Media, Inc. et al., case number 1:22-cv-04956, in the U.S. District Court for the Northern District of Georgia). It further explains that before filing this Action, “the Parties seized an opportunity to engage in substantial settlement discussions in an attempt to resolve the claims in this Action and in the Prior Action.” It notes that, “Beginning on December 27, 2021 under the auspices of Caleb Davies of the Kinnard Mediation Center, continuing with arms-length counsel to counsel negotiations, and concluding with a mediation on November 16, 2022 before Robert A. Meyer, Esquire of JAMS, a neutral, third-party private mediator with experience mediating ERISA actions, the Parties agreed to the aforementioned settlement in principle of $1,000,000.00.”
That $1,000,000 will be allocated to participants on a pro-rata basis pursuant to the proposed Plan of Allocation, and from which the participants’ recoveries, administrative expenses to facilitate the Settlement, Plaintiffs’ counsel’s attorneys’ fees and costs, and Class Representatives’ Compensation if awarded by the Court will be paid.
Beyond that, the agreement notes that the plaintiffs’ counsel “intends to seek to recover their attorneys’ fees not to exceed 33 1/3 percent of the Settlement Amount (a maximum amount of $333,300.00),” and that they also intend to seek to recover litigation costs and expenses advanced — though not to exceed $50,000.
They also plan to seek “Case Contribution Awards” on behalf of the named plaintiffs in the case — Demarland Dean, Kimberly Van DeCreek, Bradley Kirk, Reynold Leutz, Tondarius Rothchild, Jason Jones and John W. Bower, and the Former Named Plaintiffs, Daniel Alfonso and Cara Chiappa — of $5,000 each.
Oh, and the costs of an Independent Fiduciary to approve and authorize the settlement on behalf of the Plan — not to exceed $25,000 — “will be paid by Defendants and/or their insurers.”
Now we’ll see if the court approves.
Footnote
[1] Capozzi Adler PC has been one of the more active litigants of late. It had a busy 2020, in addition to the suit against LinkedIn, there were actions filed against Universal Health Services, Inc., and before that Aegis Media Americas Inc., as well as the $2 billion health technology firm Cerner Corp., as well as Pharmaceutical Product Development, LLC Retirement Savings Plan, Gerken v. ManTech Int’l Corp—and the appeal of losses at the district court in a case involving Salesforce. In May 2021, they also filed suit against the $5.3 billion Humana Retirement Savings Plan, in June against the $2.3 billion Wake Forest University Baptist Medical Center, and in August against the $1.5 billion Baptist Health South Florida, Inc. 403(b) Employee Retirement Plan.
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