The US District Court for the Southern District of Ohio has approved an $11 million settlement for a class of former employees of Broadwing Inc., which sued the company for fiduciary breaches under the Employee Retirement Income Security Act (ERISA) relating to offering company stock as a retirement plan investment.
In approving the settlement, the court pointed out it was unlikely the class would win a trial on the merits of the case. “Several district court decisions favor the possibility of establishing liability in cases alleging fiduciary breaches concerning holdings of risky company stock in individual retirement accounts, however, few of these cases reached the stage of a decision based on the merits,” the opinion said.
In addition, the court said the settlement was favorable since the $11 million plus interest would provide valuable relief to all class members. The court also pointed out that the case is likely complex and a trial would take long and be expensive to litigate. The opinion said it would be more beneficial for the class members to take the settlement now, since a delayed award minus expenses could result in less relief for each class member.
According to the opinion, the plaintiffs alleged that Broadwing, its board of directors, its employee benefits committee, and the plans’ trustees breached their fiduciary duties by failing to follow the provisions of the plans, failing to ensure that Broadwing stock was a prudent investment, failing to monitor the plans’ fiduciaries, and failing to disclose material information regarding the value of Broadwing stock to the plans’ participants.
The class included more than 5,000 participants in the plans, which the court noted was almost all of current Cincinnati Bell employees who worked for Broadwing from November 9, 1999 to February 28, 2003. The court awarded the class the $11 million plus interest, less attorneys’ fees and reimbursements.
The case is In re Broadwing Inc. ERISA Litigation, S.D. Ohio, No. 1:02-cv-00857, 10/5/06.