The parties in the long-running Employee Retirement Income Security Act (ERISA) lawsuit known as Fuller v. SunTrust Banks have filed a proposed settlement agreement in federal court.
The move comes some four months after the parties announced they would enter a mediation process to try to resolve the complex litigation, and roughly five months after the U.S. District Court for the Northern District of Georgia’s Atlanta Division issued a lengthy order in the case.
The underlying lawsuit—which boasts a procedural history dating back to 2008—alleges that SunTrust Bank’s 401(k) plan engaged in corporate self-dealing at the expense of plan participants. The lead plaintiff suggests that plan officials violated their fiduciary duties of loyalty and prudence by selecting a series of proprietary funds (referred to as the STI Classic Funds) that were more expensive and performed worse than other funds they could have included in the plan—and by repeatedly failing to remove or replace the funds.
In the October ruling, the District Court granted the defendants’ motion seeking to discredit certain expert testimony generated by the plaintiffs. At the same time, the ruling denied the plaintiffs’ motion to reject the expert reporting of two pro-defense witnesses. Finally, defendants’ motion for summary judgment was granted in part and denied in part, meaning the case could proceed to discovery and trial.
As part of the settlement, SunTrust will establish a $29 million settlement account that will be distributed to the class and used to pay the sizable attorneys’ fees of nearly $10 million. The text of the settlement agreement bars future claims against the SunTrust defendants related to this matter. The agreement also stipulates that the defense continues to deny all the allegations made in the lawsuit.
One unique feature of this settlement relative to others that have been reached in similar cases is that the defendants are permitted, but not required, to retain an independent fiduciary in connection with the enactment of the settlement—seemingly because the settlement focuses on a one-time payment of monetary relief rather than on mandating specific plan design reforms or operational changes.