Miller Shah LLP Finalizes $13 Million Settlement with Eversource

On September 27, 2023, U.S. District Judge Janet C. Hall granted final approval of a $15 million settlement reached in a class action lawsuit against Eversource Energy Services Company, the Board of Directors of Eversource Energy Services Company (“Board”), the Eversource Plan Administrative Committee (“Administrative Committee), and the Eversource Investment Management Committee (“Investment Committee”) (collectively, “Eversource”). The settlement resolves allegations that Eversource mismanaged the Eversource 401(k) Plan (“Plan”), to the detriment of over 11,000 Plan participants and beneficiaries.

Defined contribution plans like the Plan are governed by the Employee Retirement Income Security Act of 1974 (“ERISA”), a federal statute establishing standards—known as fiduciary duties—requiring plan administrators to ensure that investments offered to employees in a plan are prudently selected and monitored. Under ERISA, plan administrators, trustees, and investment committees become fiduciaries, obligated to act solely in the best interests of beneficiaries. That obligation includes offering prudent and diverse investment options, keeping expenses fair, and always prioritizing participant well-being.

In this action, Plaintiffs Kimberly Garthwait, Cumal T. Gray, Kristine T. Torrance, and Michael J. Hushion alleged that Eversource breached these fiduciary duties by (i) failing to disclose the expenses and risk of the Plan’s investment options to participants; (ii) allowing unreasonable expenses and excessively high fees to be charged to participants; and (iii) selected, retained, and otherwise ratified high-cost and poorly-performing investments instead of offering more prudent alternative investments.

This lawsuit was vigorously litigated for almost three years. On November 6, 2020, Eversource moved to dismiss the case, arguing that Plaintiffs were relying on hindsight to second-guess the Committee and could not prove any breach of fiduciary duties. After reviewing the parties’ arguments and several additional submissions, the Court denied the motion to dismiss with respect to the recordkeeping claims on September 28, 2021. The Court also heard oral arguments on the issue of class certification and certified a class of Plan participants and beneficiaries on May 25, 2022. On July 29, 2022, the Court denied summary judgment and ruled that this action would proceed.

After exchanging pre-trial memorandums and engaging in constructive discussions, including a full-day mediation and subsequent negotiations, the parties were able to reach agreement on the $15 million settlement. In light of the inherent complexity of trying ERISA cases, the reality of a unique situation where an ERISA case would be tried by a jury, and the convoluted case facts, Miller Shah and co-counsel decided that settlement was in the best interest of Plan participants and beneficiaries. In turn, Eversource agreed that it was in the company’s best interest to reach a settlement agreement rather than face the significant cost and time a jury trial in this action would require.

The settlement agreement was preliminarily approved by Judge Hall on April 27, 2023. Following the lack of substantial objections from any class members or Plan participants, the $15 million settlement was reviewed by the Court in a final approval hearing on September 26, 2023, and given final approval as a “fair, reasonable, and adequate” settlement on September 27, 2023.

The case is Garthwait v. Eversource Energy Service Company et al., case number 3:20-cv-00902, filed in the U.S. District Court for the District of Connecticut.

The legal team at Miller Shah LLP has extensive experience representing class action and ERISA matters. If you have any questions regarding this subject or this post, please contact Alec Berin (ajberin@millershah.com) or Jonathan Dilger (jadilger@millershah.com). The firm can also be reached toll-free at (866) 540-5505.