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40,000 Current and Former Xerox Workers Seek Final OK Over 401(k) Fees Deal.
A group of Xerox workers who sued the company for allegedly charging excessive fees for recordkeeping services in their 401(k) plan have reached a tentative settlement of $4.1 million, pending court approval.
The plaintiffs, represented by Nichols Kaster and Garrison, Levin-Epstein, Fitzgerald, Pirrotti, filed the class-action lawsuit in August 2021, claiming that Xerox and its plan fiduciaries violated the Employee Retirement Income Security Act (ERISA) by failing to monitor and control the fees paid to Xerox HR Benefits Services and Conduent Human Resource Services, the plan’s record keepers from 2015 to 2021.
According to the complaint, the recordkeeping fees were unreasonable and excessive compared to those charged by other record keepers in plans of similar size and complexity. The plaintiffs estimated that the plan, which had $4.7 billion in assets as of December 31, 20212, paid between $50 and $100 per participant per year, while the market rate was between $20 and $30.
The settlement, which was announced in a preliminary agreement filed on December 16, 2021, in the U.S. District Court in Hartford, Connecticut, would resolve all claims against the defendants and provide monetary and non-monetary relief to the settlement class, which consists of about 40,000 current and former participants in the Xerox Corp. Savings Plan.
Under the terms of the settlement, Xerox will pay the $4.1 million gross settlement amount into a common fund established for the benefit of the settlement class and agree to intended provisions for prospective relief to plan participants, such as retaining an independent consultant to assist with a request for proposal, fee benchmarking study, or other comparative analysis to ensure that the plan’s recordkeeping fees remain competitive in the future.
The settlement amount represents about 25% of the estimated damages suffered by the class, which is a significant recovery compared to other similar ERISA cases, according to the plaintiffs’ memorandum of law in support of motion for preliminary approval of class action settlement.
The plaintiffs also noted that the settlement was achieved after a full day of in-person mediation with mediator David Geronemus on October 11, 2021, and that it avoids the risks and uncertainty of further litigation.
Xerox, however, denies any wrongdoing or liability, and maintains that it always acted prudently and loyally when acting in any fiduciary capacity with respect to the plan.
“Xerox maintains the company acted prudently and loyally at all times when acting in any fiduciary capacity with respect to the plan,” a spokesperson wrote in an email regarding the litigation. “The settlement avoids the risk and uncertainty of further litigation for both parties.
The settlement is subject to court approval, and the plaintiffs have asked the court to enter an order that would preliminarily approve the settlement, approve the proposed notices, and authorize distribution of the settlement notices to the settlement class, certify the proposed settlement class, schedule a final approval hearing, and grant any other relief described in the proposed preliminary approval order.
AuthorJanuary 23, 2024 at 3:42 PM
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