Judge Certifies Williams K Plan Company Stock Suit as Class Action

August 24, 2005 (PLANSPONSOR.com) - An Oklahoma federal judge has certified as a class action a lawsuit filed by current and former K plan participants from Williams Cos. who allege a fiduciary breach over information given employees about their company stock investments.

US District Judge Terence Kern of the US District Court for the Northern District of Oklahoma agreed with plaintiffs’ arguments that Williams’ workers had sufficient issues common to workers that the case should move forward as a class action, according to a BNA report. The class as certified includes all participants who participated in the plan between July 24, 2000, and Dec. 12, 2002.

“Here, multiple common issues exist, including but not limited to: whether Defendants acted as fiduciaries; what duties, if any, were violated by Defendants with respect to the Plan; and whether Defendants improperly withheld information from Plan participants. These issues will be present even if the Plan is found to be a 404(c) plan, or if Plaintiffs add claims based on affirmative misrepresentations,” Kern wrote in his opinion.

Participants sued Williams, its board of directors, and members of the plan’s benefits and investment committees after Williams’s stock value dropped dramatically in 2001 and 2002. The lawsuit alleged that the defendants did not provide participants with enough information about the company’s true financial condition. In particular, the participants alleged that the company did not tell them that Williams Communications Group – a broadband provider that was a subsidiary of Williams – was close to bankruptcy and that Williams would be forced to pay approximately $2.5 billion for the broadband provider’s debts.

Kern turned aside defendants’ argument that two of the three named plaintiffs could not serve as class representatives because they were former participants who received lump-sum distributions and therefore lacked standing to pursue claims under the Employee Retirement Income Security Act (ERISA).

Two years ago, Kern ruled that the Williams investment committee may have breached their duty to provide “useful and accurate information” to participants and to identify sound investment options (See  Court: Company Stock 401(k) Investment May Have Been Fiduciary No-No ).

Kern, however, dismissed Williams from the lawsuit after finding that as settlor and sponsor of the plan, the company did not qualify as an ERISA fiduciary. In that decision the court also dismissed the board of directors as defendants after concluding that, although the directors had a limited fiduciary function in selecting members of the plan’s benefits and investment committees, there was no allegation that the directors breached their duties in selecting committee members.

The case is In re Williams Cos. ERISA Litigation, N.D. Okla., No. 02-CV-153-TCK (FHM), 8/19/05.