Posted November 27th, 2019.
By Katie Pohlman
Law360 (November 26, 2019, 7:10 PM EST) — A Boston federal judge signed off on an award of $1.1 million in attorney fees to Sanford Heisler Sharp LLP for the firm’s work in negotiating a $3.45 million deal for participants in the 401(k) plan for investment management firm Eaton Vance Corp.
U.S. District Judge William G. Young announced Monday he would grant the full requested amount that Sanford Heisler had argued for in a May preliminary class settlement hearing. The amount represents one-third of the negotiated deal amount, minus the expected cost of executing it, Sanford Heisler said.
The order was handed down Friday but had to be corrected Monday to include the correct amount of attorney fees. The Friday order incorrectly granted about $760,000 in attorney fees to class counsel.
Charles Field of Sanford Heisler told Law360 it seems like the attorney fee mix-up was simply a clerical error, and it was quickly corrected once he notified the court clerk.
The Sanford Heisler team argued for the $1.1 million amount in a memorandum filed earlier this year, stating the settlement amount is about 23% of the total estimated damages to the class, a figure that “compares favorably” with settlements in similar cases under the Employee Retirement Income Security Act. Their proposal would result in an approximately $900 payout for each of the 2,600 class members.
Sanford Heisler originally requested $1.15 million in fees but lowered the amount by $40,000 upon the suggestion of Judge Young. The $40,000 is expected to be paid to a settlement administrator, an independent fiduciary and an escrow case agent.
In the lawsuit filed October 2018, Price accused Eaton Vance of stuffing its own poorly performing, expensive mutual funds into its 401(k) plan even though better funds were available. The company’s own mutual funds carried investment advisory fee charges that were much higher than what outside clients had to pay, according to the suit.
The suit also claimed that “share classes of proprietary mutual funds” offered to plan participants cost more than what was available to the general public and that those funds were retained even though they had underperformed in the long run “relative to their investment benchmarks and readily available funds with comparable investment strategies.”
Plan participants suffered millions of dollars in retirement savings losses, Price said, all while the company benefited. An expert hired by class counsel estimated the damages at $14.9 million.
Eaton Vance asked the court in February to nix the prohibited transaction claims, saying that offering company-affiliated investment funds didn’t constitute a prohibited transaction under ERISA. Price fought the dismissal bid in March, saying the prohibited transaction claims and fiduciary-breach claims, which Eaton Vance didn’t fight, were linked.
Later that month, the company and Price told the court they had reached a tentative deal to end the proposed class action.
The class covers all current and former participants in Eaton Vance’s 401(k) plan who carried a positive account balance from October 2012 until the day the settlement receives final approval.
Counsel for Eaton Vance declined to comment.
Price is represented by Andrew Miller, Charles Field, David Sanford, David Tracey and Meredith Firetog of Sanford Heisler Sharp LLP.
Eaton Vance is represented by James R. Carroll, Eben P. Colby and Michael S. Hines of Skadden Arps Slate Meagher & Flom LLP.
The case is Price v. Eaton Vance Corp. et al., case number 1:18-cv-12098, in the U.S. District Court for the District of Massachusetts.
–Additional reporting by Aaron Leibowitz, Emily Brill and Adam Lidgett. Editing by Gemma Horowitz.