On July 7, 2023, Plaintiff Melina Jacobs (“Plaintiff”) filed an unopposed motion for preliminary approval of class settlement to resolve claims she brought on behalf of herself, the Verizon Savings Plan for Management Employees (the “Plan”), and other participants of the Plan against Verizon Communication, Inc., (“Verizon”), Verizon Investment Management Corp, the Verizon Employee Benefits Committee, and Marc C. Reed, Matha Delehanty, Andrew H. Nebens, Connia Nelson, Shane Sanders, Robert J. Barish, and Donna C. Chiffriller (collectively “Defendants”). The parties agreed to settle the claims for $30 million.
The Plan is a participant-directed defined contribution plan governed by the Employee Retirement Income Security Act of 1974 (“ERISA”). ERISA dictates responsibilities and standards of conduct for plan fiduciaries, including for the selection and monitoring of investments offered in a retirement plan.
The lawsuit, first filed on February 11, 2016, alleged that Defendants violated ERISA by failing to monitor the Global Opportunity Fund target date suite offered in the Plan and by neglecting to disclose investment-related returns. Specifically, Plaintiff alleged that between 2007 and 2016, Defendants failed to monitor the performance of the Global Opportunity Fund (which severely underperformed its target rate of return) and failed to take any corrective action to address this poor performance.
On September 28, 2017, the Honorable Paul G. Gardephe ruled on Defendants’ motion to dismiss the lawsuit, tossing allegations related to the investment disclosures but preserving Plaintiff’s failure to monitor claims. Subsequently, on September 29, 2020, Judge Gardephe certified a class of 160,000 participants and beneficiaries of the Plan. Finally, on April 20, 2023, the Court denied Defendants’ motion for summary judgment and motion to exclude Plaintiff’s expert testimony, reasoning that Defendants did not show, as a matter of law, that the process in place for reviewing Plan investment options “functioned as designed,” and that Defendants failed to provide a reason to maintain the Global Opportunity Fund in the Plan in light of its poor performance. A trial date was set for July 10, 2023.
In June 2023, the parties engaged in a mediation before mediator Hunter Hughes, Esquire. Over the course of two days, the parties agreed to a settlement of $30 million, with Class Members to receive their allocation of the settlement as tax-deferred additions to their Plan accounts or as a roll over into a tax-deferred individual retirement account. The parties now await Court approval of the settlement agreement.
Updates will be posted to this blog as the matter progresses. The case caption for the lawsuit is Jacobs v. Verizon Communications Inc. et al., number 1:16-cv-01082, filed in the United States District Court for the Southern District of New York.
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