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$2.3M Fee Award in $6.9M Citigroup ERISA Class Action

January 7, 2019 | Posted in : Class Action, Expenses / Costs, Fee Award

A recent Law 360 story by Emily Brill, “Attys Get $2.3M Fee for $6.9M Citigroup ERISA Class Deal,” reports that a New York federal judge has awarded $2.3 million to the attorneys for a class of over 300,000 Citigroup Inc. 401(k) plan participants who negotiated a $6.9 million settlement in a long-running Employee Retirement Income Security Act suit in August.  U.S. District Judge Sidney Stein granted final approval to the settlement and fee award closing the book on claims that a Citigroup committee stuffed the company’s 401(k) plan with Citigroup-affiliated funds even though other funds charged lower fees.

The case has been pending since 2007, and its closure came as a relief to class attorney James A. Moore of McTigue Law LLP.   “The case was hard-fought for over a decade, and we think the result is an excellent one for plan participants,” Moore said.  “Citigroup stopped offering through its 401(k) plan the high cost proprietary funds that were the subject of the lawsuit.”  Moore added that he thinks the nearly $7 million recovery “sends a message to other employers that, under the law, they must manage retirement plans in the best interest of employees.”

The Citigroup 401(k) Plan Investment Committee and the class — a group of current and former Citigroup employees — told Judge Stein in August that they had reached a deal to end the case.  Soon, Citigroup workers, former workers and retirees who invested in certain funds in the 401(k) plan between Oct. 18, 2001, and Dec. 1, 2005, will be notified of the money headed their way.  Judge Stein signed off on the settlement notice.

He also signed an order awarding $2.3 million to the plaintiffs’ attorneys and $15,000 to each of the two class representatives.  The order also approved devoting $374,100 of the settlement to case-related expenses, leaving roughly $4.2 million left for the class after all the deductions — attorneys’ fees, class representative fees and expenses — are made.

The settlement notice tells Citigroup workers that the class’s three attorneys and two representatives “have devoted many hours to investigating the claims, bringing this case, and pursuing it for almost 11 years” and that the attorneys “have not been paid for their time and expenses while the case has been pending.”

The class sued Citigroup and its 401(k) plan committee in October 2007, accusing them of putting the bank’s interests ahead of workers’ when stocking the employee retirement plan.  The company and plan committee allegedly failed to remove or replace subpar, expensive Citigroup funds from the 401(k) plan’s lineup, allowing Citigroup to reap “substantial revenues” at plan participants’ expense while violating the Employee Retirement Income Security Act, which requires fiduciaries to make decisions in participants’ best interests, according to the complaint.

Citigroup was dropped as a defendant in 2010, leaving the 401(k) investment committee, another committee called the Benefit Plans Investment Committee of Citigroup Inc. and various individual committee members and officers to defend the suit.  The class won certification in November 2017.  Moore said Monday that the class has more than 300,000 members.

The case is Leber et al. v. The Citigroup 401(k) Plan Investment Committee et al., case number 1:07-cv-09329, in the U.S. District Court for the Southern District of New York.