On Friday, May 16th, plaintiff’s counsel in the Rodriguez v. Intuit Inc. case filed a motion to support a settlement of $1,995,000. The motion appears to reflect a good compromise between the parties … and as they say, a good compromise means that nobody is completely happy.
From a plaintiff’s perspective, each of the impacted participants will receive a minimum of $10 (and possibly more), and the plaintiff’s attorneys will receive up to $665,000 for their efforts. These amounts are the reward after proposing a new legal theory on forfeitures, successfully defending that theory in a motion to dismiss, undertaking discovery, and three months of negotiation. While this result can be viewed as a success, it is a modest one.
From the defendant’s perspective, they have likely expended considerable resources for defense against the claim and to respond to the plaintiff’s discovery requests. The settlement resolves the forfeiture allocation issue (which is now generally moot because the plan now provides for full vesting), but the issue is one that not many would have foreseen back in 2023 (or the applicable periods of 2018 through 2021 that were raised in the complaint).
So, where does the settlement leave the other pending cases and plans that have used forfeitures to offset employer contributions?
- The settlement helps establish the value of these types of cases. Both plaintiff’s attorneys and plans/plan fiduciaries can use this settlement to help understand future potential settlements. Plaintiff's attorneys will be able to consider if there is value in filing such a complaint, and plans will have a better sense of when it makes sense to settle.
- Even though over half a dozen of the forfeiture cases have been dismissed, because the settlement will likely encourage this line of cases to continue to be filed, plans should review/update their plan language and administrative process to mitigate the risk of future litigation.
With over two dozen cases on this topic still pending and new complaints on this topic being filed, we will continue to watch the impact of this settlement.
Take a moment to review your plan’s practices and procedures on forfeitures. Our Employee Benefits and Executive Compensation attorneys can provide guidance on establishing comprehensive practices and procedures and implementing best practices.
