August 14, 2020 – CareerBuilder Settles Individually with Plaintiff
CareerBuilder has agreed to settle the proposed class action detailed on this page on an individual basis with the plaintiff, according to an August 11 notification of docket entry submitted to the court.
Per the document, the parties have agreed in principal to an individual non-class settlement and are in the process of compiling the necessary paperwork. United States District Judge Robert M. Dow, Jr. was told that once the settlement documents are finalized, the parties intend to file a stipulation of dismissal of the lawsuit with prejudice.
CareerBuilder, LLC has been hit with a proposed class action that alleges its investment advisor and the recordkeepers of the company’s retirement plan were awarded with “excessive and unreasonable compensation” at the expense of plan members.
According to the 40-page complaint out of Illinois, CareerBuilder and its yet-to-be-identified plan committee, committee members, and other fiduciaries failed to act in the interest of plan members by imprudently allowing investment advisor Morgan Stanley and recordkeepers ADP and Empower to choose expensive and poorly performing investment options that would generate higher fees and thereby allow them to collect a higher profit for their services.
The case alleges the compensation paid to Morgan Stanley and ADP consisted of “hard dollar” fees paid by the plan as well as “soft dollar” fees, such as revenue sharing, and other indirect payments generated by the investment funds in the plan. While the lawsuit notes that such fees are not illegal, it is was the duty of the defendants to ensure that the payments made to Morgan Stanley and ADP were “reasonable.” The plaintiff claims CareerBuilder allowed its advisor and recordkeepers to intentionally choose inferior investment plan options that would generate unreasonably high fees for themselves and rob plan members of the value of their retirement plans.
Made clear in the lawsuit is what the plaintiff believes CareerBuilder and its retirement plan fiduciaries should have done to prevent alleged impropriety with regard to recordkeeping and administrative costs. From the complaint:
“Defendants should have set a limit to the amount of revenue sharing ADP and/or Morgan Stanley, and, possibly others, were permitted to make. The Defendants should have negotiated this in good faith as fiduciaries to the Plan and required that ADP and/or Morgan Stanley, and possibly others, put any revenue sharing over a reasonable limit back into the Plan. As part of this negotiation, the amount of recordkeeping and administrative fees should have been limited to a reasonable amount and as plan assets continued to grow, this amount should have been monitored to ensure that any resulting increase in asset-based compensation was no more than reasonable.”
The lawsuit alleges that the defendants’ imprudence caused the plan to overpay for administrative and advisory services by at least $1.1 million between September 30, 2013 and 2017.