On December 5, 2011, the U.S. District Court of the Western
District of Missouri preliminarily approved an agreement by the
parties to settle the putative class action claims asserted by
participants in Wal-Mart Stores Inc.'s 401(k) plan.
In Braden v. Wal-Mart Stores, Inc., et al., Case No.
6:08-cv-3109-GAF (W.D. Mo.), a plan participant asserted putative
class claims against the plan's employer-sponsor and the
plan's named fiduciary, alleging, among other things, excessive
and undisclosed fees and imprudent selection of investment options,
which included 10 retail class mutual funds, most of which were
actively managed. The plaintiff also alleged that the plan's
directed trustee and recordkeeper was a relevant ERISA fiduciary
and breached duties by offering retail mutual funds that paid it
revenue sharing, allegedly resulting in millions of dollars in
As reported in Goodwin Procter's
June 22, 2010 Financial Services Alert, in 2009, the U.S. Court
of Appeals for the Eighth Circuit had reversed the district
court's dismissal of the action under Fed. R. Civ. P. 12(b)(6),
holding that the plaintiff had adequately stated claims for breach
of fiduciary duty and prohibited transactions against the sponsor
and named fiduciary where the complaint alleged that the named
fiduciary entered an arrangement with a service provider for
"undisclosed amounts of revenue sharing payments in exchange
for services rendered to the Plan," among other allegations
addressed to investment options selected for the plan.
Under the terms of the settlement, the defendants will pay a
total of $13.5 million, the net proceeds of which (after the
payment of attorneys' fees and costs and any administrative
expenses) will be used to pay plan expenses. In addition to this
monetary payment, the defendants agreed to certain non-monetary
relief concerning fund selection and disclosures to plan
The defendants agreed that for a two-year period following the
settlement, plan fiduciaries will retain an investment advice
fiduciary to provide independent advice and recommendations on
selection and monitoring of plan investments, will continue to make
web-based investment education resources available to plan
participants, and will continue the plan's ongoing process of
removing from the plan's lineup retail mutual funds or funds
that pay 12b-1 fees or revenue sharing. Plan fiduciaries also
agreed to consider, where and when appropriate, adding low-cost,
passively managed investment vehicles to the plan in addition to
the two index funds already offered.
The defendants further agreed to comply with regulations that
govern mandated disclosures to participants, and to provide
participants access to investment cost calculation tools.
A final approval hearing is expected to take place on March 7,
Goodwin Procter LLP is one of the nation's leading law
firms, with a team of 700 attorneys and offices in Boston, Los
Angeles, New York, San Diego, San Francisco and Washington, D.C.
The firm combines in-depth legal knowledge with practical business
experience to deliver innovative solutions to complex legal
problems. We provide litigation, corporate law and real estate
services to clients ranging from start-up companies to Fortune 500
multinationals, with a focus on matters involving private equity,
technology companies, real estate capital markets, financial
services, intellectual property and products liability.
Just over a year ago, I authored a Product Liability Advocate blog entry and a Law360 article explaining appropriate methods for asserting objections under Federal Rule of Civil Procedure 34, as amended on December 1, 2015
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).