Summary of the Lawsuit
This lawsuit alleged that the Weyerhaeuser Company caused its Retirement Plans to engage in a risky investment strategy involving alternative investments and derivatives. The lawsuit alleged that this investment strategy caused the Plans’ Master Trust to fall from being overfunded by $2.1 billion at the end of 2007 to being underfunded by $450 million just one year later, thereby jeopardizing the retirement benefits of the Plans’ participants and beneficiaries.
Summary of the Claims
The Complaint alleged that Defendants breached their fiduciary duties owed to Plan participants by causing or permitting the Plans’ Master Trust to invest more than 81% of its assets in alternative investments (including 53% in hedge funds and 24% in private equity), an inherently risky, illiquid and unusual asset allocation. Compounding this allocation of assets, the Complaint alleged that Defendants magnified the portfolio’s risk with the purchase of derivatives, substantially overshooting their own target for the portfolio’s risk. The Complaint further alleged that Defendants knew or should have known that their unique strategy exposed the portfolio to undue risk while conferring no benefit on plan participants in these overfunded pension plans. Additionally, the Complaint alleged that Defendants breached their fiduciary duties by investing in a stunningly large number of alternative investments (approximately 330 different hedge funds, private equity investments, and real estate funds) making it nearly impossible to manage the portfolio’s risk and further breached their fiduciary duties by failing to perform adequate due diligence to ensure that the portfolio presented no more risk than the targeted benchmark. The Complaint alleged that the use of such an investment strategy served to enrich Weyerhaeuser and its executives and was neither prudent nor in the best interests of the participants and beneficiaries of the plan.
Class Action Allegations
This lawsuit was brought on behalf of the following persons:
All participants in the Plan from January 1, 2006 to the present who are either receiving benefits or have vested in and are entitled to future benefits under the Plan, and the beneficiaries of such participants.3 Excluded from the Class are Defendants and members of their immediate families, or any of their heirs, successors or assigns.
Plaintiff filed his initial Complaint on April 25, 2011 in the United States District Court for the Western District of Washington and a Second Amended Complaint on August 22, 2012. The Weyerhaeuser Defendants and the Morgan Stanley Defendants each filed Motions to Dismiss Plaintiffs’ Second Amended Complaint, which Plaintiffs opposed. The Morgan Stanley Defendants’ Motion was denied on April 26, 2013 and the Weyerhaeuser Defendants’ Motion was granted in part and denied in part by the Court on August 23, 2013. Plaintiffs moved to amend the Second Amended Complaint on October 17, 2013, and Plaintiff filed a Motion for Class Certification on November 21, 2013.
Michael Palmason and Judith Fiest entered into a non-class settlement of their pending claims. As part of the settlement, the Parties agreed that the Plan would engage Norman Goldberg of Evercore Trust Company as an Independent Expert to the Plan and advisor to the Weyerhaeuser Company Investment Committee for the sole purpose of: (a) reviewing and evaluating the Statement of Investment Policies and Procedures, including but not limited to the “Investment Approach,” “Types of Investments,” and “Diversification and Allocation”; (b) determining whether the compliance and determination methods employed by the Plan’s investment manager are reasonable. As part of the settlement, the parties filed a joint stipulation and order of dismissal that was entered by the Court on February 3 2014.
Whom to Contact for More Information Regarding the Litigation or Settlement
If you are a participant in the Weyerhaeuser Pension Plan and have questions about the case or the settlement, please contact one of the following persons:
R. Joseph Barton, Esq. firstname.lastname@example.org
Michelle C. Yau, Esq. email@example.com
Cohen Milstein Sellers & Toll PLLC
1100 New York Avenue, N.W., Suite 500
Washington, D.C. 20005
Telephone: 888-240-0775 (Toll Free) or 202-408-4600