Settlement Approved in Franklin Mint ERISA Violation Case

December 3, 2004 ( - A $1.125 million settlement agreement between Franklin Mint Co. and a group of workers who accused the company of breaching its fiduciary duties by classifying them as independent contractors has been approved.

>US District Judge Cynthia Rufe of the US District Court for the Eastern District of Pennsylvania approved the settlement, which will bring the 112 workers involved in the suit anywhere from $564 to $24,717 each. The two workers who spearheaded the suit will also receive an additional $20,000. Attorney fees of $375,000 will also be paid by Franklin.

>The suit alleged that Franklin, in an attempt to interfere with employees’ rights to benefits, wrongly classified some workers as independent contractors in an effort to exclude them from the company benefits plan. Brought by Richard Godshall and Steven Cusano, freelancers at Franklin who started work in the mid-1990s, the suit contended that this was a breach of the Employee Retirement Income Security Act (ERISA).

>In September of last year, the court ruled that they were not barred form bringing the claim despite the significant time period that had elapsed since they started working at the company.

>In her ruling, Rufe asserted that settlement was appropriate because in the absence of a settlement, it might take years to work through all the claims brought by the suit participants. She also noted the area of law that the suit covers was unsettled, and thus there was a risk that they claim would not succeed. She also noted that Franklin Mint, itself it poor financial condition, might not be able to pay an amount that a court would decide upon had they lost the trial.

>The text of the opinion in Godshall v. Franklin Mint Co. is available here .