A joint settlement agreement motion has been filed in the Employee Retirement Income Security Act (ERISA) excessive fee lawsuit targeting Teva Pharmaceuticals USA.
News of the settlement comes nearly eight months after the U.S. District Court for the Eastern District of Pennsylvania rejected the defense’s motion to dismiss the suit. The agreement includes no admission of wrongdoing on the part of the Teva defendants, but the firm will pay $2.55 million to end the litigation. The agreement also includes an upper limit on the attorneys’ fees that can be paid to the plaintiffs’ legal representatives, set at $850,000.
In the underlying suit, the plaintiffs—three former employees of Teva Pharmaceuticals USA—claimed that the defendants breached their ERISA fiduciary duties by imprudently managing the company’s retirement plan. Distinguishing this challenge from other ongoing fiduciary breach lawsuits is the fact that the plaintiffs did not challenge the performance of any plan investment. Rather, their claims focused more on the fees paid by the plan’s participants, alleging the defendants violated ERISA’s duties of prudence and loyalty by failing to select the least expensive investment options and permitting participants to pay excessive recordkeeping fees.
As is often the case in such settlements, the agreement stipulates that the settlement administrator shall, at the written direction of class counsel, cause the settlement fund’s escrow agent to invest the money in short-term United States agency or Treasury securities (or other instruments backed by the full faith and credit of the United States government or an agency thereof). The agent is further directed to reinvest the proceeds of these investments as they mature in similar instruments at their then-current market rates.
The settlement is a victory for the increasingly well-known law firm Capozzi Adler, which has filed numerous lawsuits in the past several years that echo the claims leveled against Teva. The full texts of the settlement agreement and accompanying orders and documents are available here.