Salesforce Agrees to Settle ERISA Lawsuits

Salesforce Inc. has agreed to a last-minute settlement of a certified class action lawsuit as the bench trial was set to start on Monday morning.  

The litigation had accused Salesforce’s more than $5 billion 401(k) plan, the plan committee and company executives of violating fiduciary requirements under the Employee Retirement Income Security Act.

The lawsuit, which had been certified as a class action representing up to 50,000 plan participants, claimed the software company had breached its fiduciary duties by not replacing higher-cost investments with the lowest-fee share classes available of mutual funds offered in the plan and the plan failed to consider the use of collect investment trusts, commingled accounts or separate accounts as lower cost alternatives to mutual funds, it was alleged.

Salesforce and attorneys for the class filed court papers Monday—the day trial was scheduled to start—informing the court the counsel for the class and the company have reached a global settlement and requested all currently scheduled deadlines in the lawsuit be vacated. 

In the notice, the parties asked the court to accept the settlement in Miguel et al. v Salesforce.com et al. as well a consolidated motion, in a separate lawsuit—Villareal et al. v Salesforce.com, Inc et al., alleging the ERISA breaches by Salesforce.

“The parties are working to memorialize their agreement and prepare the appropriate papers (including a motion to consolidate the Miguel and Simonelli [Villareal et al. v. Salesforce et al.] matters for settlement purposes only) to submit to the court for preliminary approval,” says the notice.

In the Miguel lawsuit the certified class had requested more than $5 million in addition to prejudgment interest to be divided between the retirement plan participants and to be distributed proportionally based on the losses to their individual accounts, shows a joint pretrial statement the parties filed with the court in April.

This lawsuit is Miguel et al. v Salesforce.com, Inc. et al. The litigation was heard in U.S. District Court for the Northern District of California.

The Salesforce 401(k) Plan held $5.696 billion in retirement assets for 50,288 retirement plan participants as of the latest regulatory filing to the Department of Labor.

In Miguel et al v. Salesforce.com Inc et al. the initial complaint was brought in 2020. In a separate lawsuit also alleging fiduciary breaches against Salesforce—Villareal et al. v. Salesforce.com Inc, et al.—the initial complaint was filed, earlier this year.   

The accusers in both cases are represented by attorneys with the law firm Capozzi Adler P.C. Salesforce is represented by attorneys with the law firm Steptoe LLP.

Representatives of neither Salesforce’s attorneys nor attorneys with the law offices of Capozzi Adler responded to a request for comment on the settlement.