Summary of the Lawsuit
This lawsuit alleged that the fiduciaries of the JELD-WEN, Inc. (“JELD-WEN”) Employee Stock Ownership and Retirement Plan (“ESOP” or “Plan”) breached their fiduciary duties with respect to the administration of the Plan and the investment of its assets and by implementing an amendment to the Plan that improperly changed the manner by which benefits owed to separated employees were calculated, and deducted charges from current and former employees’ accounts improperly labeled as expenses.
Summary of the Claims
This lawsuit was filed as a class action on behalf of the participants and beneficiaries in the JELD-WEN ESOP alleging violations of the Employee Retirement Security Act of 1974 (“ERISA”), the federal law governing pension plans. The Complaint alleged that the Administrative Committee responsible for the administration of the Plan breached their fiduciary duties under ERISA to prudently invest the assets of the Plan, and failed to set aside sufficient assets of the Plan in diversified investments so that the Plan could honor its obligation to separated employees to pay promised benefits, which increased at a guaranteed rate of interest and therefore were unrelated to the value of JELD-WEN stock. The Complaint further alleged that, after the value of JELD-WEN stock declined significantly in 2008 and 2009 and the Plan’s investment in JELD-WEN stock was inadequate to fund the guaranteed benefits under the Plan, the Plan was improperly amended to change the way in which the vested accrued benefits owed to separated employees were calculated. The effect of the amendment was to (i) reduce accrued benefits under the Plan and (ii) impose new expenses on participants who had not yet retired to pay for the guaranteed benefits owed to separated and retired employees under the Plan. The reduced benefits and new expenses violated ERISA’s anti-cutback provisions and notice provisions. As a result, the lawsuit sought relief against the Administrative Committee to recover the losses suffered by the Plan that stemmed from its failure to diversify Plan investments, and sought a determination that participants were entitled to have their benefits calculated as provided under the Plan prior to the amendment.
On May 26, 2015, the Court certified the following two classes for settlement purposes:
The Terminated Employee Class consisted of (A) participants in the JELD-WEN ESOP (1) who terminated employment with JELD-WEN before November 19, 2010, (2) who were vested in the Plan at the time of their termination of employment, (3) for whom the Plan at the time of their termination provided that their benefits would be valued at the Annual Valuation Date following their termination and would accrue interest at the Local Passbook Rate and (4) to whom the 2010 ESOP Amendment was applied to their benefits; and (B) Beneficiaries of any such participants
The New Expenses Class consisted of participants in the JELD-WEN ESOP whose accounts in the ESOP were assessed the New Expenses after January 10, 2010 and their beneficiaries.
Excluded from the Settlement Classes were: (a) Defendants Ron Saxton, R. Neil Stuart, Roderick C. Wendt; (b) the members of the ESOP Administrative Committee between 2007 and 2010; (c) the members of the Board of Directors of JELD-WEN between 2007 and 2012; and (d) any person who had any beneficial interest in any of the accounts of the foregoing individuals to the extent such person was entitled to benefits under the Plan through the accounts of any of the foregoing persons as opposed to amounts in their Plan accounts based on their own employment at JELD-WEN.
History of the Litigation
The complaint was initially filed on January 30, 2013 in the District of Oregon (and consolidated with two other cases). An amended complaint was filed on July 24, 2013. On January 27, 2014, the parties entered into an Agreement in Principle to settle the litigation. After entering into the Agreement in Principle, the parties engaged in additional confirmatory discovery to resolve certain issues with the data upon which the Agreement in Principle was reached. On January 30, 2015, the parties entered into a Class Action Settlement Agreement, which was filed with the Court on March 16, 2015. On May 26, 2015, the Court granted preliminary approval of the Settlement and certified two classes for settlement purposes. Notice of the Settlement was sent to all Class Members (identified by the ESOP) by the Settlement Administrator. A Final Approval Hearing was held before the Court in Portland Oregon on October 19, 2015. The Court entered an order approving the settlement on October 19, 2015 and the settlement became final on November 20, 2015.
On December 1, 2016, the settlement funds were transferred from an escrow account to the Jeld-Wen ESOP for distribution. Under the terms of the settlement agreement, Class Members who had submitted a settlement distribution request form within 180 days prior to that date would receive their distribution within 30 days. This date passed on January 3, 2017. Class members reported that the settlement funds were placed into a Wells Fargo account that assessed fees for maintenance and distribution. Class Counsel filed a Motion to Enforce the Settlement with the Court on January 31, 2017, requesting that the Court order Defendants to comply with the terms of the settlement agreement that required distribution of the funds within thirty days of receipt by the ESOP and that prohibited charging fees to the settlement proceeds.
On March 8, 2017, the judge issued a ruling on Plaintiffs’ motion. Once Defendants send out a letter with instructions on how to access the settlement funds to class members, any class member who requests a full distribution within 60 days of when that letter is sent out will not be assessed any fees, including for distribution or account maintenance. Class members who leave money in the ESOP may still be charged fees. If you are a class member, be sure to request your distribution within 60 days to avoid being assessed these fees.
The Settlement required Defendants and JELD-WEN to provide both monetary and non-monetary relief to Class Members. A full copy of the Settlement Agreement is posted on this website, but the following is a summary of the terms of the Settlement:
Defendants paid $15.5 million which, after payment of court-approved attorneys’ fees and expenses, is to be distributed to class members through their JELD-WEN ESOP account.
In addition to the payment of money, Defendants and JELD-WEN agreed:
- The JELD-WEN ESOP would be prohibited from assessing the New Expenses to any of the grandfather employees (i.e., those to whom the 2010 Amendment was not applied) on or after January 31, 2014.
- Any distributions made to Terminated Employee Class Members after 2014 must be based on a valuation performed by a qualified independent appraiser in accordance with the requirements of DOL Proposed Regulations § 2510.3-18, and a copy of the valuation must be provided within 30 days to Class Counsel.
- Defendants or JELD-WEN would pay for the costs of administering the settlement (other than the cost of notice).
- None of the Settlement monies nor any of the expenses incurred in administering the Settlement would result in a charge or an expense to, or in any other assessment against the account of any participant in the JELD-WEN ESOP.
Whom to Contact for More Information
If you have questions about this case or are in circumstances similar to the one in this case, please contact one of the following persons:
Karen L. Handorf, Esq., firstname.lastname@example.org
Jamie L. Bowers, Esq., email@example.com
Connor Grant-Knight, Paralegal, firstname.lastname@example.org
Cohen Milstein Sellers & Toll PLLC
1100 New York Avenue, N.W., Fifth Floor
Washington, D.C. 20005
Telephone: 888-240-0775 (Toll Free) or 202-408-4600