Wal-Mart Settles ERISA Case for $5M

August 17, 2009 (PLANSPONSOR.com) - The law firms of Berger & Montague, P.C., Keller Rohrback, LLP and Ann Miller, LLC announced that a settlement has been proposed in a class action lawsuit that alleges Wal-Mart failed to make promised employer contributions to participant accounts of the Wal-Mart Profit Sharing and 401(k) Plan and/or the Wal-Mart Puerto Rico Profit Sharing and 401(k) Plan.

The settlement for King v. Wal-Mart Stores, Inc., MDL 1735, 2:06-CV-00225-PMP-PAL (the King Case), will provide $5 million in cash, after payment of such attorney’s fees and costs and such incentive payment to plaintiffs as the court may allow, to a class of hourly employees who were participants or beneficiaries of the plans at any time from February 1, 1997, through May 26, 2009, according to the announcement. The suit alleges Wal-Mart and other defendants breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA).

The King Case stems from a number of pending class actions in which current or former Wal-Mart employees allege that Wal-Mart engaged in wage and hour violations, including improper “wage shaving” practices (see Wal-Mart Hammers Out Sweeping Wage and Hour Suits Settlement ). The plans generally provide that Wal-Mart will pay, as employer contributions, a particular percentage of wages paid to hourly workers, and the King Case asserts that, with respect to the plans, Wal-Mart was required to make employer contributions for the wage amounts that Wal-Mart should have paid, but did not pay, according to the claims advanced in the Wage Litigation.

The defendants deny all allegations of wrongdoing and contend they have substantial defenses in this lawsuit but are entering into the King Settlement for the purpose of avoiding the expense and uncertainty of litigation, the announcement said.