CDI Corp. Agrees to $1.8M ERISA Lawsuit Settlement

The retirement plan in question in the suit is substantially smaller than many of those that have faced or settled similar lawsuits, and thus the size of the settlement is also reduced.

The parties in an Employee Retirement Income Security Act (ERISA) lawsuit brought last July against CDI Corp. have filed a settlement agreement in the U.S. District Court for the Eastern District of Pennsylvania.

The underlying claims in the lawsuit echoed those detailed in numerous other ERISA challenges raised in recent years, but this litigation was distinguished by the relatively small size of the plan in question. Court documents show that, as of December 31, 2018, the plan had roughly $263 million in assets entrusted to the care of its fiduciaries. Those using retirement industry parlance would label this as either a “medium” or “large” plan, depending on their frame of reference, but either way it is much smaller than the $1 billion-plus retirement plans that historically have tended to be the focus of ERISA litigation.

The plaintiffs claimed that, during the proposed class period of July 7, 2014, to the present, the fiduciary defendants failed 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 performance. The complaint further alleged that the plan inappropriately maintained certain funds in the investment lineup presented to participants, despite the availability of identical or similar investment options with lower costs and/or better performance histories. Additionally, the plaintiffs claim the defendants failed to select the lowest-cost share class for many of the funds within the plan.

According to the settlement agreement, the gross settlement amount CDI will pay to the plan and its participants is $1.8 million. The company does not admit any wrongdoing in relation to the lawsuit’s claims, while the plaintiffs have agreed to enter a covenant not to bring any future related claims.

Other points of interest in the settlement agreement include the stipulation that the amount of attorneys’ fees for class counsel shall not exceed 30% of the gross settlement amount—a maximum amount of $540,000, in this case. As is typical in such cases, the settlement agreement calls for the appointment of an independent fiduciary and independent settlement administrator to oversee the distribution of CDI’s payment, according to a formula set out in the text of the settlement agreement.

The full text of the settlement agreement and its accompanying exhibits is available here.