Transamerica Inks $5.4M Deal To Settle ERISA Class Action

Posted June 23rd, 2021.

As It Appeared On
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By Emily Brill

Law360 (June 23, 2021, 8:09 PM EDT) — Transamerica Corp. told an Iowa federal judge Wednesday that it has inked a $5.4 million deal to settle an ERISA class action in which roughly 24,500 current and former workers accused it of stuffing its 401(k) plan with underperforming proprietary investments.

The suit, which beat a motion to dismiss in 2019 and was certified as a class action last year, alleged Transamerica let the investment funds it managed and placed in its 401(k) underperform their benchmarks by as much as 30% over a 10-year period.

If approved, the settlement will require Transamerica to deposit $5.4 million into a fund that will be distributed to class members after attorney fees and expenses are deducted, according to court paperwork. The settlement also will require the life insurance and financial services company to continue training the people who manage its 401(k) plan on how to uphold their responsibilities under the Employee Retirement Income Security Act.

An attorney for the class, Charles Field of Sanford Heisler Sharp LLP, told Law360 on Wednesday that the case was “litigated vigorously” and that he is pleased a settlement has been reached.

“Now, rather than going through another two years of litigation, we can get money in the pockets of these plan participants,” Field said.

The suit arose in 2018, accusing Transamerica of abdicating its ERISA-imposed responsibility to make prudent investment decisions on workers’ behalf by letting six underperforming company-managed funds stay on its 401(k) plan’s lineup.

Transamerica asked to toss the suit, arguing that the claims had already been litigated in a previous dispute, but an Iowa federal judge refused to do so, saying the earlier court fight concerned 401(k) plan fees, not investments.

The following year, the case was certified as a class action.

Counsel for Transamerica did not immediately respond to a request for comment Wednesday.

The class is represented by Charles Field, Kevin Sharp, Robert Van Someren Greve and Shaun Rosenthal of Sanford Heisler Sharp LLP and by J. Barton Goplerud, Brandon M. Bohlman and Brian O. Marty of Shindler Anderson Goplerud & Weese PC.

Transamerica Corp. and the trustees of the Aegon USA Inc. Profit Sharing Trust are represented by Wilford H. Stone of Lynch Dallas PC and by Catalina J. Vergara and Randall W. Edwards of O’Melveny & Myers LLP.

The case is Karg et al. v. Transamerica Corp. et al., case number 1:18-cv-00134, in the U.S. District Court for the Northern District of Iowa.

–Additional reporting by Adam Lidgett and Kevin Stawicki. Editing by Leah Bennett.

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