On July 19, 2021, U.S. District Judge Jon S. Tigar granted final approval of a proposed $8.5 million settlement (the “Settlement”) in a class action lawsuit against Safeway Inc. (“Safeway”), the Safeway Benefit Plans Committee (the “Committee”), and investment advisor Aon Hewitt Investment Consulting, Inc. (“Aon”) (collectively “Defendants”). The Settlement resolves allegations that Defendants mismanaged the Safeway 401(k) defined contribution retirement plan (the “Plan”), damaging the accounts of over 30,000 employees. The Settlement amount covers monetary relief to the class members, awards to the lead plaintiffs, and attorneys’ fees and expenses.
The lawsuit, filed in the United States District Court for the Northern District of California, was vigorously litigated for almost five years. After Plaintiffs initiated the action on behalf of Plan participants, Safeway filed a motion to dismiss the complaint, arguing: (1) that the statute of limitations on the claims had already expired; (2) that Plaintiffs failed to plausibly allege that Defendants breached their fiduciary duties to the Plan under the Employee Retirement Income Security Act (“ERISA”); and (3) that Plan participants were provided adequate information about the Plan and the risks associated with the Plan’s investment options. Aon filed a separate motion to dismiss, arguing that it could not be held liable for co-fiduciary responsibility and that Plaintiffs’ claims improperly relied on hindsight data.
On March 13, 2017, the Court denied Safeway’s motion to dismiss, explaining that because the Committee had an ongoing duty to monitor the Plan’s investments, the claims were not time-barred, and also that certain of Plaintiffs’ fiduciary duty and disclosure claims were sufficient to support the inference that the Defendants’ decision-making process was flawed. In a subsequent ruling in December 2017, the Court largely denied Aon’s motion to dismiss, holding that the scope and content of Aon’s motion invoked material questions of fact that could only be resolved through further litigation.
Following the exchange of discovery documents and lengthy negotiations in front of mediator Robert A. Myer, the parties reached an agreement-in-principle to settle the lawsuit. The Court granted preliminary approval of the Settlement on September 8, 2020, finding that the Settlement: (1) resulted from informed, extensive arm’s-length and non-collusive negotiations; (2) eliminates the risks of continued litigation; (3) does not give unduly preferential treatment to Plaintiffs or to segments of the class; (4) does not provide excessive compensation to counsel; (5) has no obvious deficiencies; and (6) falls within a range of reasonableness warranting eventual final approval.
At a final approval hearing held on April 26, 2021, the Court affirmed the reasonableness of the Settlement, attorneys’ fees of 30% of the Settlement plus an estimated $451,000 in litigation expenses, and lead plaintiff awards of $10,000 for each of the two individuals who represented class members.
Plaintiffs are represented by Miller Shah LLP; Schneider, Wallace, Cottrell, Konecky, Wotkyns LLP; Olivier Schreiber & Chao LLP; and the Law Offices of Sahag Majarian II. The case caption for this matter is Terraza v. Safeway Inc. et al., Case No. 16-cv-03994-JST, filed in the United States District Court for the Northern District of California.
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