Liberty Mutual Settles 401(k) Excessive Fee Case for $13.4M
The insurer maintains its retirement plan was managed prudently and in compliance with federal law.
A proposed $13.4 million settlement between Liberty Mutual and participants in its 401(k) retirement plan could potentially resolve years of litigation over allegations the insurer mishandled plan administration and allowed excessive fees.
The plaintiffs asked the U.S. District Court for the District of Massachusetts to grant preliminary approval of the deal, which follows extended discovery and negotiations that concluded shortly before trial was set to begin this month. If approved, the settlement would provide monetary relief to plan participants and require certain nonmonetary changes affecting plan administration going forward, according to the court filing.
The agreement does not include an admission of wrongdoing by Liberty Mutual, which maintains that the plan was managed prudently and in compliance with federal law.
Long-running Dispute
Ahmed et al. v. Liberty Mutual Group Inc. et al., originally filed in April 2020, was brought under the Employee Retirement Income Security Act by plan participants who claimed Liberty Mutual and its 401(k) plan administrative committee breached fiduciary duties in managing the company’s retirement plan.
According to the complaint, the defendants allegedly allowed plan service providers to charge excessive fees for recordkeeping and managed account services. The suit also challenged certain investment options, including the Wells Fargo U.S. Government Money Market Fund and the Sterling Mid-Cap Value Fund, which the plaintiffs contended were imprudent and should have been removed.
The plaintiffs sought to recover losses to the plan and obtain other equitable relief on behalf of participants and beneficiaries.
In 2023, the court certified a class covering plan participants and beneficiaries from April 2014 onward, and the matter proceeded through expert disputes, summary judgment rulings, multiple motions and discovery before settlement discussions succeeded earlier this year.
‘Fair’ Settlement
Under the agreement, Liberty Mutual will fund a $13.4 million settlement account for the benefit of class members.
The plaintiffs contend the settlement is “fair, adequate, and reasonable,” given the complexity of the case and the risks of continued litigation.
The parties have requested that the court schedule a final fairness hearing no earlier than July 24, after class members have an opportunity to object.
The plaintiffs are represented by Schlichter Bogard LLC and the Naumes Law Group. Liberty Mutual and the plan administrative committee are represented by Skadden, Arps, Slate, Meagher & Flom LLP.