The deal okayed by U.S. District Judge Larry J. McKinney of the U.S. District Court for the Southern District of Indiana includes $4 million to be paid out to the at least 13,000 current or former Guidant employees who invested retirement plan dollars in company stock and $3 million for attorney fees and court costs. The period covered by the case is January 1, 2003, through November 3, 2005.
The deal was hammered out in a consolidated case involving once separate claims by plaintiffs Michael Fontenot and Erica Harzewski, that the company continued to offer company stock in its retirement plans after it was no longer prudent to do so. The suits charged that the company had hidden information about defects in the company’s implantable defibrillators, which accounted for nearly half of the company’s revenues, and that Guidant’s share price was inflated because of the concealment.
The Guidant case was the subject of a federal appellate court ruling in June 2007 asserting that participants can still assert claims under the Employee Retirement Income Security Act (ERISA) even after they have left their employer and taken a full plan distribution (see Cashed-Out Participants Still Have ERISA Legal Standing).
The case is In re Guidant Corp. ERISA Litigation, S.D. Ind., No. 1:05-cv-1009-LJM-TAB.