Gannett 401(k) Participants Seek Cert. In Benefits Suit
Law360 (July 16, 2018, 4:44 PM EDT) — A former Gannett Co. Inc. employee has urged a Virginia federal judge to certify a class of more than 12,000 individuals in his suit accusing the company of causing its 401(k) plan to lose roughly $135 million by keeping investments in its former parent company’s stock.
In his motion on Friday for class certification, lead plaintiff Jeffrey Quatrone sought to represent all participants and beneficiaries in the Gannett 401(k) savings plan any time from June 29, 2015 — when Tegna Inc. spun off Gannett into a separate company — who had investments in the former parent company’s stock offered in the plan. Quatrone said in his proposed class action that Gannett breached its fiduciary duties under the Employee Retirement Income Security Act by not reducing the plan’s significant holdings in Tegna common stock after the spinoff.
Quatrone asked that Christina Stegemann, who was not a plaintiff in the initial complaint, also be appointed as a class representative and that Bailey & Glasser LLP and Izard Kindall & Raabe LLP be appointed as class counsel. He and Stegemann would be adequate representatives because of the losses they suffered and the typicalness of their claims, Quatrone said.
He also argued that the proposed class is large enough to warrant certification and that the legal facts and questions in the case are common to the whole class. Proceeding as a class action makes sense to avoid contradictory rulings, Quatrone said.
“The risk of inconsistent adjudications is clear. This case’s central issue is whether it was proper for the plan to remain invested in Tegna stock after the separation,” Quatrone said. “Although the class representatives believe there is only one answer — it was not — separate lawsuits over this question could theoretically result in different outcomes, making it impossible for the plan’s administrator to treat similarly situated participants alike as required by ERISA.”
Quatrone originally sued Gannett and its benefits plan committee in March, saying the company flouted ERISA’s loyalty, prudence and diversification requirements by investing so much of its 401(k) plan’s assets into Tegna common stock — which the complaint said was more volatile than other stock — after Gannett was spun off into an independent company. Gannett failed to decrease the plan’s significant investments in Tegna even though the company said in June 2015 that it would liquidate the Tegna holdings and invest them elsewhere, according to the complaint.
In April, Gannett argued in a motion to dismiss, which Quatrone opposed, that the claims failed because the 401(k) plan offered a number of investment options from which the plan participants could choose. The participants could have uninvested from the Tegna stock whenever they desired, and the company had no duty to force them to do so, the company said.
“We are still evaluating the [class certification] motion and our response to it,” Laurin H. Mills of LeClairRyan, counsel for Gannett, told Law360 on Monday. “However, Gannett has a motion to dismiss on file, which it believes will render the motion for class certification moot.”
Counsel for Quatrone declined to comment on Monday.
Quatrone and Stegemann are represented by Robert A. Izard, Mark P. Kindall and Douglas P. Needham of Izard Kindall & Raabe LLP.
Gannett is represented by Laurin H. Mills of LeClairRyan, and Anne E. Rea, Eric S. Mattson and Lisa E. Schwartz of Sidley Austin LLP.
The case is Quatrone v. Gannett Co. Inc. et al., case number 1:18-cv-00325, in the U.S. District Court for the Eastern District of Virginia.
–Editing by Stephen Berg.Contact Form »