Class Action Claims Walgreens Retirement Plan Shorted Employees $300 Million [UPDATE]
by Erin Shaak
Last Updated on February 22, 2022
Brown-Davis et al. v. Walgreen Co. et al.
Filed: August 9, 2019 ◆§ 1:19-cv-05392
Walgreen Co. and the respective administrators of its retirement plan and trust fund are facing a class action that claims the parties have robbed plan members of over $300 million in retirement savings by investing the money in underperforming funds.
Case Updates
February 22, 2022 – Settlement Granted Final Approval
The settlement detailed below was granted final approval on February 16 after U.S. District Judge Charles R. Norgle found that the deal provides “fair, reasonable and adequate relief” to those covered.
The judge overruled the sole objection filed by an individual who argued that the settlement amount was too low and the attorneys’ fees too high, finding that the objection was based on “an incorrect estimate of the Class’s damages; a misinterpretation of the Plan of Allocation; and an incorrect account of Class Counsel’s efforts in this case.”
Pending the resolution of any appeals, plan participants with account balances greater than $0 will have their payments deposited into their plan account and invested in accordance with their investment elections for new contributions or in the plan’s qualified default investment alternative if no elections have been made.
Beneficiaries or alternate payees entitled to payment on behalf of a plan participant, or class members who are no longer plan participants or have a $0 account balance, will receive payment in the form of a check unless they are a former plan participant who filled out a form to rollover their payment into a qualified retirement account.
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November 8, 2021 – Walgreens Retirement Plan Class Action Settled for $13.75 Million
U.S. District Judge Charles R. Norgle, Sr. has granted preliminary approval to a $13,750,000 settlement covering roughly 195,000 current and former participants in Walgreens’ profit-sharing retirement plan to end the litigation detailed on this page.
According to a memo submitted to the court, the settlement was negotiated over months at arm’s length and will provide “robust monetary and programmatic relief tailored to the alleged violations, and contains no deficiencies that prevent approval.”
In addition to paying $13.75 million, Walgreens has agreed to remove the eight Northern Trust Focus Target Retirement Trusts from the 401(k) plan for a period of three years and use an investment advisor to provide ongoing investment monitoring services. Court documents state that an independent fiduciary will also be brought in to review the proposed settlement for overall fairness.
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Walgreen Co. is at the center of a proposed class action lawsuit that claims the pharmacy and the respective administrators of its retirement plan and trust fund have robbed plan members of over $300 million in retirement savings by investing the money in a suite of historically underperforming funds.
The case alleges that despite “a market teeming with better-performing alternatives,” Walgreens and its co-defendants chose to add the Northern Trust Focus Target Retirement Funds to its employee retirement savings plan in 2013. At the time, The Northern Trust Funds “already had a history of poor performance,” the lawsuit says, and thereafter performed worse than 70 to 90 percent of peer funds for “nearly a decade.” The Northern Trust Funds, according to the complaint, now comprise nearly half of the plan’s 24 investment options and collectively represent over 30 percent of its assets, and are the plan’s default investment option for those who do not select another vehicle.
The suit argues that Walgreens neglected its fiduciary duty to plan participants by choosing and then failing to replace the underperforming funds, which the plaintiffs estimate have cost plan members more than $300 million in retirement savings since 2014. In fact, according to a leading financial information and technology company, plan participants who invest in the Northern Trust Funds could earn $193,925 less in retirement savings than employees who participate in top-rated retirement plans of a similar size, the case says.
“The $193,925 disparity translates to an additional 10 years of work per participant,” the complaint reads.
The lawsuit alleges violations of the Employee Retirement Income Security Act (ERISA), and proposes to cover a class of:
“All participants and beneficiaries of the Plan who invested in any of Northern Trust Focus Target Retirement Trusts from January 1, 2014 through the date of judgment, excluding the Walgreen Defendants, any of their directors, and any officers or employees of the Walgreen Defendants with responsibility for the Plan’s investment or administrative function.”
The lawsuit can be read below.
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