International Paper Fee Suit Certified as Class Action

October 2, 2008 ( - The U.S. District Court for the Southern District of Illinois has granted class action certification to plaintiffs suing International Paper Co. for fiduciary breaches.

International Paper argued with the plaintiffs’ request that the class include future participants or beneficiaries because they can not be identified, suffered no injury, and lack standing. However, the Court agreed with plaintiffs and found that the inclusion of future class members is “particularly appropriate” in this case because plaintiffs request an injunction prohibiting the continuation of current practices; and this injunctive relief, if granted, would affect not just present participants, but future participants as well.

As for International’s argument that the class lacked commonality, the court pointed out that the plaintiffs have focused their claims on the excessive fees paid by the plans and the fiduciaries’ decision to maintain Company Stock Fund as an imprudent investment by forcing participants to hold company stock when the fiduciaries had dumped the stock from the pension fund. “It is this injury, rather than direct injury to their individual accounts, that the putative class members assert.

Therefore, variance in individual Plan participants’ investment patterns does not undermine commonality,” the court said.

The plaintiffs who brought the suit sought mandatory certification of the following class: “All persons, excluding the Defendants, and/or other individuals who are or may be liable for the conduct described in this Complaint, who are or were participants or beneficiaries of the Salaried Plan or the Hourly Plan and who are, were, or may have been affected by the conduct set forth in this Complaint, as well as those who will become participants or beneficiaries of either Plan in the future,” according to the court opinion.

The suit, filed in 2006 along with several similar suits (See Lawyer: Excessive Fee Suits Not an Organized Anti-Plan Campaign ), alleges that the persons identified as fiduciaries in the breached their fiduciary duties by causing unreasonable and excessive administrative fees and expenses to be charged against the assets of the plan, by maintaining the Company Stock Fund as an imprudent investment option and forcing the participants to hold company stock when Defendants had dumped it from the pension fund, by concealing and misleading participants regarding the fees charged and the risk posed by investments in the Company Stock Fund, and by assigning little to no priority to the management of the Plans.

Lawyers for International Paper claim the company did nothing wrong (See IPC: 401(k) Fees 'Not Excessive or Unreasonable' ).

In August 2007, the court denied the company's request to move the case from the Southern District of Illinois to the Western District of Tennessee since the company is headquartered in Memphis and records relevant to the case are there (See Judge Denies Venue Change for International Paper Fee Suit).