Citigroup 401(k) Plan Participants Poised For $6.9M Deal
Law360 (August 2, 2018, 7:54 PM EDT) — A class of Citigroup Inc. 401(k) retirement plan participants is putting the finishing touches on a $6.9 million deal to settle a long-running Employee Retirement Income Security Act suit alleging the plan’s managing committees favored Citigroup-affiliated funds over those of lower-priced competitors.
In a letter motion filed Wednesday in New York federal court, an attorney for the class of plan participants asked a federal judge to grant the parties more time to advance a motion for preliminary approval of the settlement, which would see Citigroup Inc. pay the participants $6.9 million to resolve the claims.
Citigroup has not been named as a defendant in the dispute since 2010, according to court records. At this point, the defendants are the Citigroup 401(k) Plan Investment Committee, the Benefit Plans Investment Committee of Citigroup Inc. and various individual committee members and officers.
While the parties have agreed on the settlement’s terms and executed a settlement agreement, they need an extra two weeks to move for preliminary approval of the deal so they can sort out some complications surrounding historical class member transactional data, according to the letter motion.
While U.S. District Judge Sidney H. Stein had already given them until July 31 to file for preliminary approval, the parties now want until Aug. 14, the letter motion said.
“Defendants have made progress in identifying what data they do have and providing it to plaintiffs, but the parties need additional time to assess the data and confer with potential settlement administrators regarding how best to utilize the data that exists,” the letter motion said.
The impending settlement comes nearly 11 years after the participants launched their lawsuit, which accuses the Citigroup 401(k) plan’s investment committees and their individual members and officers of putting the bank’s interests ahead of the interests of the plan’s participants.
These fiduciaries allegedly did so “by repeatedly failing to remove or replace investment products offered and managed by Citigroup subsidiaries and affiliates which had poor performance and high fees,” allowing Citigroup to receive “substantial revenues” at the expense of plan participants and their beneficiaries, according to the participants’ latest amended complaint.
In November, Judge Stein appointed participants Marya J. Leber and Sara L. Kennedy to serve as class representatives and named McTigue Law LLP and Bailey & Glasser LLP as class counsel when giving the green light for the suit to proceed as a class action covering plan participants who invested in any of nine affiliated funds from Oct. 18, 2001, to Dec. 1, 2005.
While the judge concluded that it was appropriate for the case to go ahead as a class action, the participants did not get everything they had asked for as part of their September 2015 class certification bid.
For one, a third named plaintiff, Sherri M. Harris, was not allowed to move forward as a class representative after Judge Stein found that her 2015 addition to the suit came too late for her claims to survive under ERISA’s six-year time bar.
The participants had also sought certification for a class that would have extended until Sept. 4, 2007, which was the date when most of the affiliated funds were removed from the plan. However, the judge trimmed the class period and agreed with the defendants that “none of the claims in this case are viable after Dec. 1, 2005,” which was when Citigroup sold off the division that housed the managers of the funds.
A representative for the plan participants declined to comment Thursday. Representatives for the defendants and Citigroup could not immediately be reached for comment.
The plaintiffs are represented by James A. Moore and J. Brian McTigue of McTigue Law LLP, Gregory Y. Porter of Bailey & Glasser LLP and David S. Preminger of Keller Rohrback LLP.
The defendants are represented by Lewis R. Clayton and Karen R. King of Paul Weiss Rifkind Wharton & Garrison LLP.
The case is Marya H. Leber et al. v. The Citigroup 401(k) Plan Investment Committee et al., case number 1:07-cv-09329, in the U.S. District Court for the Southern District of New York.
–Additional reporting by Jon Hill. Editing by Connor Relyea.Contact Form »