The parties in an Employee Retirement Income Security Act lawsuit filed against L Brands, best known as the former parent company of Victoria’s Secret and Bath & Body Works, have struck a $2.75 million settlement agreement to resolve the litigation.
The plaintiffs in the case originally brought their lawsuit in November 2020 in the U.S. District Court for the Southern District of Ohio, alleging the L Brands retirement plan fiduciaries breached their duties under ERISA by allowing the payment of excessive fees for recordkeeping and investments. The plaintiffs alleged that the L Brands plan fiduciaries permitted the payment of $56 per participant for recordkeeping and administrative fees throughout the proposed class period covered by the lawsuit.
The defendants were also accused of failing to monitor the average expense ratios charged to similarly sized plans for investment management fees, which, together with the plan’s recordkeeping and administrative costs, allegedly rendered its total costs significantly above the market average for similarly sized and situated defined contribution plans. The lawsuit further accused plan fiduciaries of failing to use the least expensive share classes for mutual funds on the 401(k) plan’s investment menu.
A prior ruling in the case struck down two related dismissal motions filed by the defendants, one alleging the court lacked subject matter jurisdiction and the other suggesting the complaint failed to adequately state a claim for relief.
The payment of the settlement amount will allow L Brands to resolve the litigation without admitting wrongdoing, and it insulates the company from future lawsuits related to allegations of excessive fees paid during the class period. In addition to the monetary payment, of which as much as a third can be collected as fees by the plaintiffs’ attorneys, the settlement agreement also stipulates that the defendants will conduct a request for proposal regarding the provision of recordkeeping services for the plan within three years following the settlement’s effective date.
The text of the settlement agreement and various accompanying documents are available here.