On July 5, 2023, the honorable Colleen McMahon of the United States District Court for the Southern District of New York approved a $2.45 million settlement of class action claims alleging that Omnicom Group, Inc. (“Omnicom” or the “Company”) mismanaged its defined contribution retirement plan (the “Plan”) by subjecting Plan participants to excessive fees and risky, high-cost investment options.
The class action began in 2020, when former Omnicom employees Carol Maisonette, Shane Tepper, Surfina Adams, Michael Mensack, and Daniel Dise (collectively, “Plaintiffs”) sued Omnicom under the Employee Retirement Income Security Act of 1974 (“ERISA”), a regulatory labor law that establishes standards of prudence and loyalty for retirement and health plan administrators to protect enrolled individuals and their beneficiaries. Under ERISA, plan administrators, trustees, and investment committees are deemed fiduciaries and must act on behalf of plan beneficiaries. As a component of their duties under ERISA, fiduciaries must act for the exclusive benefit of participants, choose prudent and diverse investment options to offer through a plan, and ensure that plan expenses are fair and reasonable.
Plaintiffs argued that Omnicom breached its fiduciary duties under ERISA by offering and retaining the actively managed Fidelity Freedom Funds target date suite, which Plaintiffs allege should have been replaced by less costly and better performing alternatives.
Omnicom denied wrongdoing and moved to dismiss the action, arguing that Plaintiffs lacked Article III standing to bring their claims and that their allegations failed to state a claim for breach of fiduciary duty. In August 2021, the Court largely denied Omnicom’s motion, allowing Plaintiffs’ challenge to the Fidelity Freedom Funds to proceed.
Following discovery, Omnicom moved for summary judgment, arguing that there was no material issue of fact involved in the case, entitling the Company to judgment as a matter of law. However, during a hearing on December 13, 2023, the Court identified multiple contested issues of fact regarding whether the Plan fiduciaries satisfied their fiduciary duties. The Court subsequently denied Omnicom’s motion on December 23, 2023, pushing the case forward to trial.
The settlement agreement was reached on the eve of the case’s February trial date, allowing both sides to avoid the risk of trial, which could have resulted in smaller or no recovery for the class. The $2.45 million settlement fund benefits all participants and beneficiaries in the Plan at any time between May 29, 2014 and July 5, 2023 who invested in the Fidelity Freedom Funds or paid a flat per-participant recordkeeping fee. In granting preliminary approval, the Court described the settlement as “fair, reasonable, and adequate.”
Plaintiffs and the settlement class are represented by Miller Shah LLP. Omnicom is represented by Latham & Watkins LLP.
Class members can access case-related materials and file a claim at the following link: Omnicom Group Inc. 401k Settlement – Strategic Claims Services. The case is In re Omnicom Group, Inc ERISA Litigation., No. 1:20-cv-04141, filed in the U.S. District Court for the Southern District of New York.
The legal team at Miller Shah LLP has significant experience representing ERISA matters. If you have any questions regarding this subject or this post, please contact Alec Berin (firstname.lastname@example.org) or Jonathan Dilger (email@example.com). The firm can also be reached toll-free at (866) 540-5505.
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