Capozzi Adler made the third overpayment on the 401(k) plan | Jobs Vox


Loaded with a new set of plaintiffs, a prominent plaintiffs’ attorney is taking another “go” at plan seekers in an overpayment lawsuit.

The law firm in question is none other than Capozzi Adler PC[i] (and Johnson Fistel LLP), also owned by Cumulus Media Inc. 401(k) plans are facing similar (same?) charges in 2020. In this case, Cumulus was able to win a dismissal due to a named severance agreement. Plaintiff signed when he left the company. Additionally, a run on Cumulus 401(k) plan a year ago was dismissed on summary judgment because the alleged claims were not timely filed under the plan.[ii]

However, they brought together a new set of plaintiffs—Demarland Dean, Kimberly Van DeCreek, Bradley Kirk, Reynolds Leutz, Tondarious Rothchild, Jason Jones, and John W. Bower—for a $185 million plan (as of 12/31/18) for the plan and the plaintiffs (as well as others plan participants) in breach of their obligations to, “(1) fail to objectively and adequately review the plan’s investment portfolio to ensure that each investment option; prudent, from a cost perspective, and (2) maintaining certain funds in the plan despite the availability of similar or similar investment options with lower costs and/or better performance histories, and (3) not controlling the plan’s recordkeeping costs. especially (Dean v. Cumulus Media, Inc., ND Ga., No. 1:22-cv-04956, complaint filed 12/16/22“Defendants fail to use the minimum cost share portion of the mutual funds in the plan even though they have low payouts” Oh, and also for failing to consider the mutual trust (at least usually in question).

The latter part is key—because the plan’s trustees made changes. In late 2019, the lawsuit said, “After discussions with Sageview Advisory Group, approximately 6 years after the expiration of the class period, wholesale changes were made to the plan.” In the year Around November 12, 2019, some of the investment options offered through the plan were not offered, and the share classes of four investment options offered through the plan were changed – the lawsuit said, “They offered participants the same investment strategy and risk, but the overall cost of sharing was reduced. At the same time, plan participants from December 1, 2019 Since then, they have been told that quarterly income credits “may be allocated to your account based on your investments in the previous quarter,” the suit recalled.

But, the plaintiffs said, those changes were “too little and too late because the damages suffered by plan participants up to that point were already baked in.” What’s more, the lawsuit says, even those changes “may not cure the company’s breach of fiduciary duty because at any point during the class period, there is no evidence that the company conducted a standard, routine and critical evaluation of the plan’s investment options — that is, it did not exercise due diligence in evaluating the plan’s investment options.”

No evidence as evidence?

That is, the Plaintiffs here state that “as part of the investigation into this action, Plaintiffs requested pursuant to ERISA § 104(b), operative plan administrative documents” and “the documents received by Plaintiffs do not indicate the existence of an investment policy statement or the existence of any committee appointed to periodically monitor the plan’s investment options.” And from this statement (and the lawsuits that followed), “Defendants are in breach of fiduciary duties in violation of 29 USC § 1104 by mismanaging the plan, harming participants and beneficiaries,” actions “contrary to reasonable fiduciary actions and costing the plan and participants millions.” He spent countless dollars.

The lawsuit alleges (as most do these days) that “never having attempted a plan as large as the plan, plaintiffs lacked accurate knowledge of reasonable payment levels and reasonable alternatives to plans.” Plaintiffs did not and could not present minutes of the Plan’s investment committee meetings or other defendants’ bona fide decision-making, or lack thereof—and “for purposes of this complaint, Plaintiffs have taken reasonable inferences about these proceedings…”

The plaintiffs allege that the amount of money used by the scheme was “up to 72% of median expense ratios in the same category.” will be rejected in 2020). They also took issue with the plan’s use of the “Wilmington Trust Mutual Trust Versions of BlackRock LifePath Index Retirement Fund.” Is that their case here? The plan was to go directly to BlackRock and get the same investments at a lower fee. According to the plaintiffs, the same amount was also the case for holding inferior stock units.

The plaintiffs also took issue with payments by Fidelity, the plan’s registrar. According to the lawsuit, “there is no evidence that the defendant reduced the registration costs due to the increase in registration costs during the class period” – according to the calculation presented in the table, in 2014 it was from 70 dollars / participant to 269 dollars / participant. In the year 2018, although the latter number includes the effect of “indirect payments to loyalty through revenue sharing”. Despite that trend, the plaintiffs look to the 401(k) averages book for a measure of reasonableness (5/participant, asking for a proportional plan, at $43/participant at the top).

Essentially, the claims are the same—but the allegedly injured participants may serve as named plaintiffs in the case—they are different.

Will it be a problem for the court? Follow it.

[i] Capozzi is one of the more active advocates of Adler PC of late. He had a busy 2020, in addition to the lawsuit filed against LinkedIn, Universal Health Services, Inc. And before that there were lawsuits against Aegis Media Americas Inc., as well as $2 billion health technology firm Cerner Corp. As Pharmaceutical Product Development, LLC Retirement Savings Plan; Gerken v. Mantec Intl Corp– and a bankruptcy appeal in the District Court in a case related to Salesforce. in May 2021, as well as the $5.3 billion Humana Retirement Savings Plan, the $2.3 billion Wake Forest University Baptist Medical Center in June and the $1.5 billion Baptist Health South Florida, Inc. in August. They filed a 403(b) lawsuit against the employee’s pension. Plan.

[ii] Cumulus Media Inc.’s 401(k) retirement plan contains an enforceable policy for challenging payments and other expenses, including a one-year vesting period.


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