In its order , the court certified a settlement class of participants and beneficiaries estimated to number 1,900 members. Twenty-five percent of the settlement amount will go to co-lead counsel as attorneys’ fees and expense reimbursement, the court document stated.
In the suit, plaintiffs’ claimed Dynegy and members of the plan’s benefits committee breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA) by making material financial misrepresentations and failing to disclose to plan participants the risks of investing in Dynegy company stock.
Plaintiffs also alleged members of the benefits committee breached their fiduciary duties by failing to eliminate the company stock as an investment.
The net proceeds of the settlement will be allocated to plan participants, former participants, and beneficiaries by the plan’s trustee.
In October 2004, Dynegy settled with about 5,000 employees for $30.8 million in a lawsuit making similar allegations (See Dynegy Settles Employee Lawsuit for $30.8 Million ).
In April 2005, the University of California, acting as lead plaintiff in a class action suit, announced a $468 million settlement with Dynegy Inc. over the company’s stock plunge. UC lost $112 million investing in Dynegy, whose stock tumbled after a spring 2002 revelation of a questionable scheme to inflate the company’s cash flow via a natural gas deal called Project Alpha (See NewsDash – April 18, 2005).