Settlement Announced in Big 401(k) Proprietary Fund Suit

The parties in a suit that claimed a $7.3 billion plan “stocked the Plan’s investment menu with their own proprietary index funds”—while “participants got the short end of the stick” have come to terms.

As it turns out, the plaintiffs in this case (are Rita Kohari, John Radolec and Mohani Jaikaran) only filed for class action status in June.

The defendants? The fiduciaries of the $7.3 billion MetLife 401(k) Plan (MetLife Group, Inc., Metropolitan Life Insurance Company, the Benefit Plans Investment Advisory Committee, and “John and Jane Does 1-20”)—and they were being sued for breaching their “fiduciary duties with respect to the Plan in violation of ERISA, to the detriment of the Plan and its participants and beneficiaries, by applying an imprudent and disloyal preference for MetLife index fund products within the Plan, despite their poor performance, high costs, and lack of traction among fiduciaries of similarly sized plans.”

The plaintiffs here are represented by Nichols Kaster PLLP—and the suit alleged that this “imprudent and disloyal conduct has cost Plan participants millions of dollars over the statutory period.” They first filed suit back in July 2021.

In a letter to Judge Jennifer H. Rearden of the U.S. District Court for the Southern District of New York, the plaintiffs note that the parties “have reached a settlement-in-principle of the above-captioned matter on a class action basis.”

They further explain that “following a private mediation facilitated by Retired Judge James F. Holderman on August 31, 2023, where the parties were unable to reach a settlement, counsel for both sides continued to work toward a negotiated resolution.”

That apparently culminated in the aforementioned settlement-in-principle, and expectations “to finalize a comprehensive settlement agreement and file a motion for preliminary approval by November 6, 2023.”

The letter acknowledges that the defendants previously requested three extensions of time related to the pleading schedule, and the Parties have jointly requested three extensions of time related to the discovery schedule—and the court has granted all of these. Having noted that, the parties here are (once again) requesting an extension—to “stay this action and all current deadlines as set forth in the Court’s Order dated October 4, 2023.”

“Accordingly, the Parties respectfully request that Your Honor stay this action and all current deadlines.”

We don’t yet know the terms of that settlement, of course—but presumably we will around Nov. 6.