Cumulus Media will settle an ERISA lawsuit for $1 million which was brought by seven former employees who claimed that investment selections in the company's 401(k) plan violated federal law.
Atlanta, GAA proposed class action claiming that Cumulus Media Inc. violated the Employee Retirement Income Security Act will settle for $1 million, subject to court approval . The complaint was filed in December 2022 against the radio broadcasting company by seven former employees who claimed the fee practices and investment selections of the company's 401(k) plan violated ERISA.
Cumulus Class Action
The Department of Labor states that employers are held to a “high standard of care and diligence” and must, among other duties, both “establish a prudent process for selecting investment options and service providers” and “monitor investment options and service providers once selected to see that they continue to be appropriate choices”.
According to court documents, Cumulus, the owner and operator of several radio stations, failed to keep its expenses in check, and used poor judgement when scrutinizing each investment option that was offered to employees. As well, Cumulus maintained certain funds in the plan despite the availability of identical or similar investment options with lower costs and better performance histories.The plaintiffs accused Cumulus of "maintaining certain funds in the plan despite the availability of identical or similar investment options with lower costs and/or better performance histories,” and it should have offered the lowest cost share class for "many of the mutual funds within the plan."
The complaints also alleged the plan maintained some funds in its lineup that it could have replaced with better-performing and less expensive options, and claimed Cumulus overpaid Fidelity Investments, the plan's record-keeper.
The plaintiffs argued in both ERISA lawsuits--the 2020 lawsuit that was dismissed and the 2022 lawsuit--that Cumulus failed to use its retirement plan's large size to bargain for lower plan fees and expenses, even though it had almost $200 million in assets.(Pensions & Investments reports that, according to the company's most recent Form 5500 filing, It had $260 million in assets as of Dec. 31, 2021.) The complaints also alleged the plan maintained some funds in its lineup that it could have replaced with better-performing and less expensive options, and claimed Cumulus overpaid Fidelity Investments, the plan's record-keeper.
Cumulus Settlement Agreement
“The amount of the Settlement – one million dollars – is fair, reasonable, and adequate, taking into account the costs, risks, and delay of trial and appeal,” says a motion filed in federal court in Atlanta. Cumulus does not admit to violating the Employment Retirement Income Security Act (ERISA) as part of the deal. According to Law360, the $1 million will be allocated evenly to the seven plaintiffs and about 5,230 current and former Cumulus employees and their beneficiaries who participated in the company's retirement plan from February 2014 through the present. Terms of the deal allocates about $330,000 toward the workers' attorneys.
The 2020 ERISA lawsuit was filed by two different plaintiffs and dismissed by the U.S. District Court in late 2021. The plaintiffs appealed in November 2021 to the 11th U.S. Circuit Court of Appeals in Atlanta and it was voluntarily dismissed in December 2022 because "the former plaintiffs' claims, which are identical to the named plaintiffs' claims, are included in the settlement of the action," the settlement document said.
The settlement agreement states that Cumulus “specifically deny any such liability and wrongdoing and state that they are entering into this settlement agreement to eliminate the burden and expense of further litigation”. The plaintiffs decided to settle due to “the inherent risks, difficulties and delays in complex ERISA litigation such as this”.
The case is Dean et al. v. Cumulus Media, Inc. et al., case number 1:22-cv-04956, in the U.S. District Court for the Northern District of Georgia.
According to the 2022 lawsuit, Cumulus “is a leading audio-first media and entertainment company delivering premium content to over a quarter billion people every month.” Further, it “engages listeners with high-quality local programming through 428 owned-and-operated stations across 87 markets; delivers nationally-syndicated sports, news, talk, and entertainment programming from iconic brands including the NFL, the NCAA, the Masters, the Olympics, the Academy of Country Music Awards, and many other world-class partners across nearly 8,000 affiliated stations through Westwood One.
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.