Summary of the Lawsuit
Summary of the Claims
The lawsuit specifically alleges that T. Rowe Price and its affiliates violated ERISA, the federal law governing employee benefit plans, by, among other things:
- Imprudent and disloyal selection and monitoring of 401(k) Plan investments by giving preferential treatment to the in-house funds resulting in millions of dollars in fee income for the company at the expense of the retirement savings of 401(k) Plan participants;
- Failing to offer the lowest cost version of certain in-house funds to 401(k) Plan participants (who are/were T. Rowe Price employees);
- Failing to remove and prudently monitor the performance of 401(k) Plan Trustees, who were breaching their duties of loyalty and prudence by exclusively offering in-house funds in the 401(k) Plan, and failing to consider lower cost and better performing non-proprietary alternatives; and
- Engaging in transactions prohibited by ERISA by causing the 401(k) Plan to participate in transactions that the company and its affiliates knew or should have known constituted sales or exchanges of property between the 401(k) Plan and parties in interest, furnishing of services between the Plan and a party in interest, transfer of Plan assets to a party in interest, and transactions between a Plan and its fiduciaries.
On May 17, 2019, the Court certified a class of T. Rowe Price Plan Participants that includes all participants in the T. Rowe Price U.S. Retirement Program who had a balance in their plan account at any time from February 14, 2011 through the date of judgment [now defined as January 18, 2022]. Any individual Defendants, any members of the T. Rowe Price Board of Directors, the Management Committee, the Management Compensation Committee, and their beneficiaries and immediate families are excluded from the class.
Status of the Litigation
The original Plaintiff filed the Complaint in the United States District Court for the District of Maryland (Baltimore) on February 14, 2017. Defendants filed a motion to dismiss, contending, among other things, that Plaintiff lacked standing with respect to some of his claims.
On July 21, 2017, Plaintiff filed an Amended Complaint adding ten additional named Plaintiffs. Defendants moved to dismiss again but dropped their standing objections. One of Defendants' principal arguments for dismissal was that their actions as fiduciaries with respect to offering T. Rowe Price's own funds in the Plan were mandated by the governing Plan document. After the Defendants' second motion to dismiss was fully briefed, oral argument was held before the Hon. Judge Garbis. Judge Garbis subsequently retired; Chief U.S. District Judge James K. Bredar was assigned to the case. Judge Bredar listened to the recording of the oral argument and denied Defendants' motion to dismiss on August 20, 2018.
On May 17, 2019, Plaintiffs filed a Second Amended Complaint which modified the list of Defendants named in the case. Defendants answered the Second Amended Complaint on May 31, 2019, and the Parties continued to engage in discovery.
On February 10, 2021, the Court denied in large part the Parties' motions for summary judgment. Plaintiffs subsequently filed a motion for reconsideration and a motion for certification for interlocutory appeal to the United States Court of Appeals for the Fourth Circuit. The District Court denied both motions on March 23, 2021.A trial date of September 13, 2021 was set by the Court. The trial was subsequently postponed in light of the Parties' agreement on a settlement in principle on July 23, 2021. A full settlement agreement was finalized on December 16, 2021.
Plaintiffs filed a Motion for Preliminary Approval of Settlement on January 7, 2022, followed by an Amended Class Settlement Agreement on February 22, 2022 On February 23, 2022, the Court issued an Order Granting the Motion to Amend and Reaffirm Order Preliminarily Approving Settlement.
On April 9, 2022, Parties filed a Motion for Final Approval and a Motion for Award of Attorneys’ Fees, Reimbursement of Expenses, and Service Awards to Class Representatives.
The Settlement will provide the following relief to the Class: (i) Defendants’ payment of seven million dollars ($7,000,000), the net amount of which is to be distributed to the Class, and (ii) the addition of a Brokerage Window feature to the Plan that will allow participants, for the first time, to invest in a wide range of non-T. Rowe Price investment funds. The Court has also found that the initiation of the Action served as the catalyst for Defendants’ payment of $6.6 million (the “Special Payment”) to many Class members in January 2019. ECF No. 239.
The Court granted Plaintiffs’ Motion for Preliminary Approval of Class Action Settlement on January 18, 2022. A Notice of Proposed Settlement of Class Action Lawsuit and Settlement Fairness Hearing was sent to Class Members on March 25, 2022 (“Settlement Notice”). This Settlement Notice describes the Settlement terms and the rights of Class Members. The Class is defined in the Settlement Notice as follows:
All participants and beneficiaries in the T. Rowe Price U.S. Retirement Program (“Plan”) who had a balance in their Plan account at any time from February 14, 2011 through January 18, 2022 (the “Class Period”). (Excluded from the class are individual Defendants, members of the T. Rowe Price Board of Directors, the Management Committee, the Management Compensation Committee, and their beneficiaries and immediate families.)
A hearing on the final approval of the Settlement and for approval of Plaintiffs’ petition for Attorneys’ Fees and Expenses and for the Class Representatives’ Service Awards (“Fairness Hearing”) will take place on June 10, 2022, at 11:00 AM EDT before Chief U.S. District Court Judge James K. Bredar at the U.S. District Court for the District of Maryland, Courtroom 5A, 101 Lombard St., Baltimore, MD 21201. The Court has rescheduled the Fairness Hearing on the Proposed Settlement from May 24, 2022--the date mentioned in the Notice--to June 10, 2022 at 11 AM; other deadlines are unchanged. See order here. If finally approved, the Settlement will legally bind all members of the Class. More information about the hearing and how to appear or speak at the hearing, or object to the Settlement, is provided in the Class Notice.
Further information regarding the lawsuit and the Settlement is available on the Settlement Website, www.TRP401kSettlement.com.
You also may contact the Settlement Administrator or Class Counsel listed below.
In re T. Rowe Price 401(k) Plan Litigation c/o Rust Consulting, Inc. - 7546
PO Box 2396
Faribault, MN 55021-9096
Toll- free 1-(877) 456-1184
COHEN MILSTEIN SELLERS & TOLL PLLC
1100 New York Avenue, N.W.
Suite 500, West Tower
Washington, D.C. 20005
Tel: (202) 408-4600
Fax: (202) 408-4699