ERISA class-action lawsuit likely to settle for 15 percent of alleged damages
Dallas, TX A $2.25 million settlement that, if approved, will end Seidner v. Kimberly-Clark was filed on December 2 in the Northern District of Texas. The long-running class-action ERISA lawsuit alleges that fiduciaries of the Kimberly Clark Corporation 401(k) and Profit Sharing Plan breached their legal duty under ERISA by paying higher fees ($78 per participant) than what was paid (about $30 per participant) by plans of comparable size. Excessive fees erode the ultimate value of participants’ retirement savings.
It should be noted that, when the lawsuit was filed in 2021, the Kimberly-Clark 401k plan had about $4,000,000,000 in assets and “more participants than 99.91% of the defined contribution Plans in the United States.” Very large 401k plans can often negotiate lower per participant fees.
Core allegations
The central claim in the lawsuit was that Kimberly-Clark failed to exercise the prudence and loyalty required of fiduciaries under ERISA Section 404(a) in selecting and monitoring its recordkeeping service providers. Specifically, the plaintiffs contended that:
Kimberly-Clark paid exorbitant fees to recordkeepers. This significantly reduced the returns for participants because expenses were paid directly from the individual accounts of those retirement savers.
The fiduciaries failed to diligently monitor the services provided by the recordkeepers and the fees charged, which is a continuing obligation under ERISA.
Kimberly-Clark lacked transparency in its fee disclosures, making it difficult for participants to understand the costs associated with their retirement plans. Workers had no way to police what was actually happening to their money.
But it has been a long and circuitous path from the original 2021 Complaint to today.
Twists and turns
Christina C. Seidner, a former Kimberly-Clark senior manager, and Jared Mackrory, a former marketing director, filed this lawsuit in April 2021. In March 2022 District Judge Sam Lindsay ruled that the plaintiffs had failed to make a sufficient case to proceed but gave them leave to amend their Complaint.
In March 2023, the court denied Kimberly-Clark’s subsequent motion to dismiss the Amended Complaint. In January 2024 the court ordered the parties to engage in mediation. The workers and Kimberly-Clark told the court they had reached an agreement following an August mediation session.
The $2.25 million settlement amount represents roughly 15 percent of the $14.9 million plan participants are estimated to have lost because of Kimberly-Clark's retirement plan mismanagement. As many as 25,000 current and former participants in the plan may be affected.
Three tips for retirement savers. Wallet, keys, phone -- and 401k money
Every time you sail through your door and into your day, you probably check that you have your phone, your keys and your wallet (at least). We all do the pocket-patting/bag-check dance at the door.
But don’t forget the fourth – your retirement savings. It is likely worth far more than any of the others. Here are three tips:
Guarding your retirement savings takes caution and vigilance. Do not trust the good intentions of other folks, who might also be quite happy to hold your wallet for you.
If you do not understand or receive your regular statements, ask questions. No, you’re not dumb. You are entitled, by law, to information.
Remember that a lawsuit can take years. Vigilance in the first place is a much better idea than filing a lawsuit later.
Five takeaways for plan sponsors
Assume that plan participants are watching. Here are five ways to avoid trouble:
Plan sponsors should diligently select and monitor service providers, such as recordkeepers, to ensure that they are providing high-quality services at reasonable costs.
Regular benchmarking of fees against industry standards can help fiduciaries identify potential overcharges and negotiate better deals.
Clear and concise fee disclosures are essential to help participants understand the costs associated with their retirement plans.
Offering a diverse range of investment options, including low-cost index funds, can help participants achieve their retirement goals.
Keeping abreast of ERISA litigation trends can help plan sponsors identify potential risks and take proactive steps to mitigate them.
A word about ERISA fiduciary breach litigation
The Seidner v. Kimberly-Clark case underscores the ongoing scrutiny of retirement plan fees and the potential liability for plan sponsors who fail to fulfill their fiduciary duties. By understanding the key takeaways from this case, participants can take steps to protect their interests. Plan sponsors must take affirmative action to comply with ERISA.
As a final thought, the observation that some law firms file many “cookie-cutter” ERISA breach of fiduciary duty lawsuits is a regular feature of ERISA lawsuit journalism. In many ways, it is like the regular calls for “tort reform,” which generally signal a call to limit class-action lawsuits.
An alternative view is that these are legal industry practices that allow many otherwise unrepresented workers to access the civil justice system. These are folks who might not otherwise have the protections of law.
Consider that, as you do the daily pocket pat dance.
If you or a loved one have suffered losses in this case, please click the link below and your complaint will be sent to an employment law lawyer who may evaluate your ERISA Violation claim at no cost or obligation.