L3Harris Retirement Savings Plan fiduciaries have recently faced a lawsuit over allegedly not securing lower record-keeping fees and maintaining high-cost investment options. Accused of breaching their duties under the Employee Retirement Income Security Act of 1974 (ERISA), the fiduciaries have found themselves in legal hot water, causing significant losses for plan participants.
The plaintiffs contend that this flagrant disregard for securing lower fees has resulted in financial burdens and argue for better pricing. They claim the fiduciaries have exhibited clear negligence and outright breach of duty. Seeking compensation and reform within the plan’s administration to prevent future losses is now the plaintiffs’ number one priority.
This lawsuit marks a significant shift in how plan fiduciaries are held accountable, potentially paving the way for transparency in retirement plans’ management. It also emphasizes the importance of fiduciaries’ obligations to act in the best interests of plan participants against the economic realities of negotiation.
L3Harris, the defendant, justifies the record-keeping expenses and funds as “objectively prudent”. The firm argues that a balance must be met between cost and quality, hinting that cheaper alternatives may not necessarily offer comparative value. It stresses the importance of various factors such as value-added services and long-term benefits, which go beyond just pricing.
Despite the disagreements, both parties managed to reach a settlement, with L3Harris agreeing to pay $650,000 to class members. This amounts to roughly 22% of the estimated $3 million maximum value calculated by the plaintiffs. The settlement is undoubtedly a success for the plaintiffs, indicating a reasonable ratio and effective legal negotiation.
The Gross Settlement Amount includes a cap for attorneys’ fees at $216,645, plus an extra $80,000 expected to cover “reasonable attorney expenses”. Launched in March 2022, the lawsuit involved months of pre-trial explorations, eventually leading up to this negotiated settlement out of court.
This decision to settle ultimately saved further legal and court costs. Although the total settlement amount seems significant, considering the complexities and duration of the litigation process, it is arguably a beneficial outcome for all parties involved.
