The Coca-Cola Bottlers’ Association has agreed to settle for $3.3 million a claim brought against it by a former employee under the Employee Retirement Income Security Act in the U.S. District Court for the District of Kansas. The court has yet to approve the proposed settlement in the case, Kimario Anderson v. Coca-Cola Bottlers’ Association.
The multiple employer plan sponsored by the association is composed of 65 independent bottlers for Coca-Cola. As of 2021, it had approximately $973 million in assets under management. The initial complaint, brought in February 2021, alleged that the association had paid overpriced management and recordkeeping fees and had kept an undiversified Coca-Cola Common Stock Fund in its investment menu.
In March 2022, the majority of this claim was dismissed. The court ruled that the plaintiff could not challenge the Coca-Cola Common Stock Fund because he had not invested in it personally and the complaint that it was undiversified made it discrete from other allegations of high fees. That resulted in the plaintiff’s ineligibility to challenge it on the grounds that it was part of a broader flawed process of negotiating fees. The court also dismissed the allegation of excessive recordkeeping fees because the plaintiff did not discuss the services that the recordkeeper, Wells Fargo, had provided in its analysis of the cost.
However, the court did rule that the claim against the association for maintaining a T. Rowe Price mutual fund called the Equity Index 500 Fund, which the plaintiff alleged charged fees grossly higher than funds with similar composition, could proceed. The court upheld this in part because the plaintiff identified instances of the plan dropping overpriced funds in the past, but not this one, which is a sign of an incomplete or flawed process under ERISA and therefore more than a mere sampling of better alternatives.
On March 23, the association filed a brief in support of a settlement for $3.3 million, which will be put into a fund accessible to other, as yet undeclared, members of the class. Other expenses, such as attorneys’ fees, will be subtracted from this amount, leaving the remainder for class members. The plan also retained Gallagher Fiduciary Advisors to review the settlement.The proposed and agreed settlement must still be approved by the court before being finalized.