According to a press release from plaintiff lead co-counsels Harwood Feffer LLP and Milberg LLP, an $8.2 million cash settlement has been proposed for a class action involving participants in the Boston Scientific Corporation 401(k) Retirement Savings Plan at any point between May 7, 2004 and January 26, 2006, inclusive.
According to the notice, plaintiffs’ law firms are “intending to move the Court to award attorneys’ fees from the Gross Settlement Fund in an amount not to exceed one-third (33⅓%) of the Gross Settlement Fund and for reimbursement of their expenses in the approximate amount of $475,000, plus interest on such expenses at the same rate as earned by the Settlement Fund.” The settlement indicates that they are also “intending to move the Court to award a payment of up to $10,000 to Named Plaintiff Edward Hazelrig, Jr. for his representation of the Proposed Class” from the settlement fund.
The settlement involved allegations made in the United States District Court for the District of Massachusetts, in Hochstadt, et al. v. Boston Scientific Corp. In that case former employee Robert Hochstadt, who had been a lead plaintiff in another suit against the firm (along with Douglas Fletcher and Michael Lowe), but dropped out of the suit before a review by U.S. District Judge Joseph L. Tauro of the U.S. District Court for the District of Massachusetts resulted in a dismissal of that case (see Boston Scientific Wins Stock Drop Lawsuit ).
In dismissing the previous case, Judge Tauro ruled that because Fletcher and Lowe sold more stock than they purchased during the time period when they claimed the company’s stock price was artificially inflated, they likely were not financially injured by any potential misdeed by the employer and therefore, lacked constitutional standing
In the Hochstadt case, it had been alleged that plan fiduciaries breached their duties under the Employee Retirement Income Security Act (ERISA) by continuing to offer company stock as an investment option from the period May 7, 2004, to January 26, 2006, when the former employees claim the stock price was artificially inflated in light of company problems. The stock price went from a high of $45 per share during the class period to $20 per share at the end of the class period, according to the complaint (see New Company Stock Suit Filed against Boston Scientific).
According to the notice, “a hearing will be held before the Honorable Douglas P. Woodlock in the John Joseph Moakley United States Courthouse, Courtroom 1, 1 Courthouse Way, Boston, Massachusetts 02210, at 2:30 p.m., on August 5, 2010 to determine whether the proposed settlement should be approved by the Court as fair, reasonable, and adequate, and to consider the proposed Plan of Allocation, the application of Plaintiffs’ Co-Lead Counsel for attorneys’ fees and reimbursement of expenses and the application for a case contribution award for the Named Plaintiff.”
Allocation of Settlement
The proposed settlement indicates that for active participants in the plan, their proportionate amount will be “allocated among the Participant’s investment options in accordance with the existing investment elections then in effect and treated thereafter for all purposes under the Plan as assets of the Plan properly credited to that Participant’s account,” noting that the participant may thereafter reallocate “his or her Final Individual Dollar Recovery if and as then permitted by the Plan”.
For former participants “who withdrew their accounts after the beginning of the Class Period but before the Effective Date of the Settlement”, terms of the settlement say that the trustee of the Plan will establish an account for each former Plan Participant, and each former Participant will be notified of such account along with further instructions.”
A copy of the proposed settlement and related materials is available at http://www.gilardi.com/BostonScientificERISA/