On what is very nearly the one-year anniversary of its filing, the parties in an excessive fee suit have come to terms.
The suit itself (Kinder v. Koch Indus. Inc., N.D. Ga., No. 1:20-cv-02973-MHC, 7/16/20) was a mere 31 pages long, most of it cookie-cutter text restatement of ERISA’s requirements of fiduciaries and the roles of various parties supporting plan administration. It took to task several “Koch-affiliated” defined contribution plans—Georgia-Pacific LLC Hourly 401(k) Plan, the Georgia-Pacific LLC 401(k) Retirement Savings Plan, and the Koch Industries Inc. Employees’ Savings Plan—some $8 billion in assets.
It claimed that “defendants failed to prudently and loyally monitor and control the Plans’ recordkeeping expenses, and instead allowed the Plans to pay up to six times more than what similarly-sized plans would have paid for such services”—and alleges that these “ERISA violations have resulted in millions of dollars in excessive fees to the Plans and their participants since the beginning of the statutory period.” The plaintiffs were represented by Austin & Sparks PC, Sanford Law Firm PLLC, and Nichols Kaster PLLP, the latter—despite the brevity of the filing—having served as counsel in a number of ERISA litigation cases.[i]
All that notwithstanding, under the terms of the proposed Settlement (Kinder v. Koch Indus., Inc., N.D. Ga., No. 1:20-cv-02973, settlement approval motion 7/12/21), the defendants will fork over $4 million in cash for some 101,000 participants in the class—and has agreed to issue a new request for proposals (RFP) for recordkeeping services for the Plans within 180 days of the Settlement Effective Date. The cash settlement amounts to “approximately 25% to 40% of the alleged excess charges paid by the Class for recordkeeping services, depending on the benchmark used for purposes of calculating a reasonable recordkeeping rate,” according to the parties.
As for the fees for the plaintiffs’ attorneys, the Settlement Agreement requires that Class Counsel file their motion for attorneys’ fees at least 30 days before the deadline for objections to the proposed Settlement—but these attorneys say they will “seek no more than one-fourth of the Gross Settlement Amount ($1,000,000) in attorneys’ fees” (somewhat less than the 28%-33% that frequently is put forward in these type class actions)—and addition to “recovery of Costs, Administrative Expenses, and Class Representative Compensation of up to $5,000 per Class Representative”—all, of course, “subject to Court approval.”