Boeing has reportedly moved to settle Spano vs. Boeing, with news of the settlement coming a day after the long-running 401(k) fee case was slated for another round of arguments before a district court.
Earlier this month the U.S. District Court for the Southern District of Illinois said it would hear new arguments in the case August 26, but according to the law firm Schlichter, Bogard and Denton, Boeing has instead decided to settle accusations that it violated Employee Retirement Income Security Act (ERISA) provisions. Terms of the settlement were submitted to the court, but were not immediately available online or from the parties.
Jerry Schlichter, the lead plaintiffs’ attorney in the case, confirmed for PLANSPONSOR that a preliminary settlement agreement has been reached and agreed to by both parties. While subject to court approvals and potentially other restrictions, Schlichter says his clients are “pleased to have reached this provisional settlement,” and that it would be implemented “for the benefit of 190,000 employees and retirees of Boeing.”
It’s a rather abrupt conclusion to one of the original and longest-running examples of 401(k) excessive fee litigation. Plaintiffs in this particular case alleged that Boeing violated ERISA by permitting a variety of excessive fees to be charged to 401(k) plan participants. They also claimed that Boeing engaged in self-serving conflicts of interest, and permitted imprudent funds to be included in the company retirement plan.
News of the settlement closes a nearly decade-old case and comes the better part of a year after a district court denied Boeing’s request for summary judgment on the merits of Spano vs. Boeing. The court granted in part and denied in part Boeing’s motion for summary judgment based on ERISA’s six-year statute of repose. It also denied plaintiffs’ motion to strike certain reply briefs filed by Boeing—all of which could impact the terms of any settlement.
The case has already resulted in a series of important rulings, following initial class action certification in 2008. A subsequent appeals court ruling from Circuit Judge Diane Wood confirmed that situations in which a retirement plan as a whole is injured at the same time as an individual employee can arise when the entity responsible for investing the plan’s assets charges fees that are too high or when the plan has been reckless in its selection of investment options for participants—and thus that class action suits can be leveled against employers in such circumstances.