Summary of the Lawsuit
On March 11, 2011, Participants in SunTrust Banks, Inc.’s 401(k) Plan (“Plan”) filed a class action lawsuit challenging the management of the Plan. The action is brought on behalf of all participants and beneficiaries of the SunTrust Banks, Inc. 401(k) Plan who invested in one or more of eight SunTrust proprietary funds (called “Affiliated Funds”) at any time between April 25, 2004 and December 31, 2012. The plaintiffs allege that SunTrust and its affiliates violated federal law during the Class Period by improperly selecting and retaining these Affiliated Funds as investment options in the Plan, despite the higher fees and poorer performance of these funds, which benefitted SunTrust at the expense of SunTrust’s employees.
Under the Employee Retirement Income Security Act of 1974 (“ERISA”), the federal law that sets minimum standards for retirement plans, including SunTrust’s 401(k) Plan, companies are required to act as trustees and solely in the interest of the Plan’s participants when making decisions with respect to the investment of their employees’ retirement savings in company benefit plans. The plaintiffs allege (see “Summary of the Claims,” below) that SunTrust did not, as required by law, select or retain Plan investments that were in the best interest of participants, but instead, simply chose and retained the investments that most benefited SunTrust’s bottom line.
The lawsuit alleges that SunTrust earned windfall profits at the expense of its employees, who paid millions of dollars of their retirement savings in the form of excess fees, and have suffered losses of tens of millions of dollars due to investment underperformance. The litigation seeks to compensate SunTrust employees who participated in the 401(k) Plan.
Summary of the Claims
The lawsuit alleges that SunTrust and its affiliates have violated numerous provisions of ERISA by, among other things:
- Breaching their fiduciary duties by failing to remove and prudently and loyally monitor retirement plan committee defendants;
- Breaching its fiduciary duties by failing to remove and prudently monitor those defendants who exercised authority and control over the appointment, removal, and monitoring of members of the retirement plan committee;
- Breaching their duties of loyalty and prudence by providing imprudent and self-interested investment advice to retirement plan committee defendants;
- Breaching their co-fiduciary duties;
- Breaching their duties of loyalty and prudence by failing to remove or replace the Affiliated Funds as 401(k) Plan investment vehicles during the class period, which caused losses to the 401(k) Plan;
- Failing to remedy breach of predecessor fiduciaries serving on the retirement plan committee responsible for the 401(k) Plan.
In a class action case, one or more individuals— called class representatives—file a lawsuit on behalf of themselves and other similarly situated individuals who have similar legal claims. This procedure permits the claims of a large number of people to proceed in one lawsuit and ensures that all similarly situated persons are treated consistently.
This lawsuit is brought as a class action on behalf of all participants and beneficiaries of the SunTrust Banks, Inc. 401(k) Plan who had a balance through their plan accounts in any of the Affiliated Funds at any time from April 25, 2004 to December 31, 2012.
Plaintiff Fuller, along with four other Named Plaintiffs who are now joined in a consolidated action, filed a Motion for Class Certification on January 16, 2018.
Status of the Litigation
Plaintiff Fuller filed a Class Action Complaint on March 11, 2011. Defendants moved to dismiss the Complaint on May 20, 2011. Plaintiff Fuller filed an Amended Class Action Complaint on June 6, 2011, which Defendants moved to dismiss on June 20, 2011. On March 20, 2012, the Court issued an order granting in part and denying in part Defendants’ motion, allowing several claims to proceed, including allegations that SunTrust breached its fiduciary duties in retaining STI Classic Funds; that SunTrust knowingly participated in breaches of its fiduciary duties and in prohibited transactions; and that SunTrust failed to act on its duty to remove those defendants who exercised authority and control over the appointment, removal, and monitoring of members of the retirement plan committee On April 5, 2012, Defendants filed a second motion to dismiss on the new grounds that the Court lacked subject-matter jurisdiction, resulting from an alleged limitation on Plaintiff Fuller’s standing to sue, based on the timeline of her investments in SunTrust’s plan. The Court granted Defendants’ motion on October 30, 2012, and Plaintiff appealed.
The United States Court of Appeals for the Eleventh Circuit affirmed the district court’s dismissal on February 26, 2014, but later vacated the dismissal and remanded the case to the district court, in light of a new Supreme Court decision affecting the application of ERISA’s six-year statute of limitations.
On July 29, 2015, Plaintiff filed a Motion for Relief from Judgment, for Leave to Amend the Complaint, and to Consolidate her case with two related actions. On February 24, 2016, the Court reopened the case and consolidated the cases. Plaintiff Fuller and the plaintiffs from the consolidated actions filed a First Amended Consolidated Class Action Complaint on May 19, 2016, and a Second Amended Complaint on December 19, 2017.
On May 2, 2018, the Court found that ERISA’s limitation period shortened the Class Period to run from March 11, 2005 to December 31, 2012.
On January 16, 2018, Plaintiffs filed a Motion to Certify Class, which was later granted by the Court on June 27, 2018. This decision created eight discrete classes, each associated with one of the funds under investigation. The Court also appointed Cohen Milstein and McTigue Law, LLP as Class Counsel pursuant to Rule 23(g).
The case name is: Fuller et al. v. SunTrust Banks Inc. et al., Case No. 1:11-CV-00784, U.S. District Court, Northern District of Georgia.
Whom to Contact for More Information
If you were a participant in the SunTrust Banks, Inc.’s 401(k) Plan at any time from March 11, 2005 to December 31, 2012, you may be affected by this lawsuit. If you are interested in learning more about this lawsuit, please email Scott Lempert, Of Counsel, or write or call:
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