Rite Aid Settles ERISA Breach Suit

March 18, 2003 (PLANSPONSOR.com) - A federal judge has approved a settlement worth almost $68 million in a class-action ERISA suit brought by Rite Aid workers.

The workers’ suit alleged the company imprudently allowed its pension plans to invest in Rite Aid common stock when it was not a suitable investment.  The workers said t his action constituted a breach in Rite Aid’s fiduciary duty under ERISA, according to a repot by The Legal Intelligencer.

Under the terms of the settlement, Rite Aid will pay about $10.7 million in cash and promised to maintain its current formula for matching employee contributions through 2006. Lawyers estimated that matching contributions to the 401(k) plan will exceed $25 million per year, for a total in excess of $125 million from 2002 through 2006. For class members who remain participants in the 401(k) plan and continue to contribute a portion of their pay to that plan, it is estimated that more than $30 million will flow to their benefit.

Rite Aid also agreed in the settlement that if its matching contributions for any calendar year from 2003 through 2006 are less than the matching contributions paid in 2002, the company will contribute up to $1.75 million more to the 401(k) plan.

Additionally, t he settlement calls for “structural changes” in the administration of Rite Aid’s employee benefit programs, including the appointment of an institutional trustee and an administrative committee for the plans.