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Becker v. Wells Fargo & Co., et al., No. 20-2016 (DWF/BRT), 2021 WL 1909632 (D. Minn. May 12, 2021) (Judge Donovan W. Frank). 

The Notable Decision this week exemplifies a recent trend in the courts to allow 401(k) participants in litigation challenging the appropriateness of certain investments to move forward on their class action complaints even where the named plaintiff is not invested in all of the funds being challenged.

In this case against Wells Fargo, Yvonne Becker, a single named plaintiff, brought this putative class action alleging breach of fiduciary duty and prohibited transactions for selecting and retaining 17 Wells Fargo proprietary funds for its own 401(k) plan. She alleges that these funds not only underperformed their benchmarks, but that the fees are higher than similar non-proprietary funds. In addition, she alleges that Wells Fargo added newly launched proprietary funds that had no historical performance to evaluate whether they were appropriate investment options for the plan. Becker claims the higher fees on the proprietary funds increases the salaries for executives who serve as the plan’s fiduciaries and were used as seed money for the newly launched funds. Becker invested her 401(k) savings in Wells Fargo/State Street Target Date Collective Trusts, one of several investment options being challenged.
Continue Reading District Court Denies Wells Fargo’s Motion to Dismiss Proprietary Funds Case

Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.

Attorneys’ Fees

Third Circuit

Cunningham v. Wawa, Inc., No. CV 18-3355, 2021 WL 1626482 (E.D. Pa. Apr. 21, 2021) (Judge Paul S. Diamond). Plaintiffs are former employees of Wawa who participated in the Company’s Employee Stock Ownership Plan (“ESOP”), by which Wawa shares are allocated to individual Plan participants. Before 2014, the ESOP’s written instrument provided that former employees were entitled to retain ownership of their Wawa stock until age 68. In 2014, Wawa amended the ESOP and instructed the Trustee to “liquidate the ESOP Stock held in the ESOP Stock Account of any Participant who terminates employment with the Company and all Affiliated Companies on or after January 1, 2015.” Wawa amended the ESOP again in 2015, directing the Trustee to liquidate shares for participants who had terminated employment or retired before January 1, 2015. Plaintiffs contend that these forced sales violated ERISA, and that Defendants undervalued the Wawa stock (which is not publicly traded) when compensating former ESOP participants for their shares. The parties now seek approval of settlement and plaintiffs’ attorney fees. The court approved both requests, ordering defendants to pay $21,612,500 to the Class (an estimated $500 per share), up to 20% of the award amount and $175,000 for litigation expenses to Class Counsel, and a $25,000 incentive award to each Class Representative. The court also approved the parties’ agreement that defendants pay settlement administration costs, including the costs of the independent fiduciary retained to review the settlement. In all, the court also awarded $4,322,500 in fees, and $153,851.05 in costs.
Continue Reading Your ERISA Watch – Week of May 5, 2021

Gustafson-Feis v. Reliance Standard Life Ins. Co., No. C20-5336 BHS, ___F Supp. ___, WL 1561690, at *1 (W.D. Wash. Apr. 21, 2021) (Judge Benjamin Settle).

This week’s notable decision is a victory for the plaintiff, represented by Kantor & Kantor, in the Western District of Washington. It revolves around how an insurer determines whether a claim is barred by a pre-existing condition.  Plaintiff Lisa Gustafson-Feis had been hit by car in 2016, breaking several bones in her pelvis and sacrum. She worked for Microsoft, contracted through different employers. Her role required regular international travel and often moving heavy displays. She had multiple surgeries in 2016 to fix her spine and pelvis, went to physical therapy, and was released by her doctor in December 2017 to work full time with no restrictions.
Continue Reading An Insurer Can’t Just Say It’s So for Purposes of a Pre-Existing Condition Exclusion