Compliance November 16, 2022

Juniper Agrees to Settle ERISA Suit for $3 million

The network hardware firm agreed to an ERISA settlement totaling $3 million to dismiss claims of fiduciary breach.

Reported by

Juniper Networks, Inc. has agreed with plaintiffs to settle for $3 million a lawsuit brought in August 2021 under the Employee Retirement Income Security Act. The settlement was submitted in September and motioned for preliminary approval last week, although it is still subject to U.S. District Court approval. Juniper, a networking hardware company based in California, admitted no fault or wrongdoing as part of the settlement.

The case, Reichert et al vs. Juniper Networks Inc. et al., was initially brought by two participants in Juniper’s sponsored 401(k) plan. They alleged Juniper did not adequately monitor the investment options in the plan and that options provided to participants had unreasonably high fees compared to reasonable alternatives. They also alleged that Juniper did not disclose enough information to allow participants to make informed investment choices.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

In November 2021, Juniper filed a motion to dismiss. The motion alleged that the plaintiffs lacked standing to sue, since the funds with the higher fees were optional and the plaintiffs did not elect those funds. In order to sue in federal court, the plaintiff must have been injured in some way, and you cannot be injured by an investment you did not make, argued the motion. Additionally, Juniper argued that the mere existence of lower cost funds does not prove imprudence and that the plaintiffs did not provide meaningful benchmarks to which the funds in question could be justly compared.

The plaintiffs responded in February 2022, arguing they can sue under ERISA on behalf of all plan participants, and the fact they did not suffer personally from the higher fees is legally immaterial. They also asserted that the plaintiffs were harmed by plan-wide decision making.

Judge James Donato, of the U.S. District Court for the Northern District of California, sided with the plaintiffs in April 2022 and denied the motion to dismiss. Donato wrote that the plaintiffs made adequate factual claims that should be adjudicated at trial, and they were correct in arguing they have standing to sue on behalf of the entire plan as a class under ERISA.

The parties submitted settlement paperwork on September 15, with the official motion for preliminary approval made public on November 11. Juniper will pay $3 million to cover all claims made by the plaintiffs. This amount covers legal fees and expenses, which could be as high as $1 million, at the discretion of the judge. It also includes a $15,000 award to the two plaintiffs that brought the suit and up to $100,000 for administrative costs and the cost of notifying class members. The remaining funds will be awarded to the affected plan participants.

The parties requested approval from the judge, which has not yet been given. They also requested a fairness hearing in the future to receive final approval for the settlement.

If the settlement is approved, the claims will be dismissed with prejudice and the participants will be barred from taking further legal action related to the plan. The proposed settlement also states that if the Department of Labor objects to the settlement, the defendants have a right to withdraw from it.

Investing November 15, 2022

Exploring ESG Investing: An ESG Path Forward

Asset allocators Zach Stein and Andrew Siwo discuss different approaches to ESG and sustainable investing .

Reported by



Rachel Alembakis, managing editor of FS Sustainability, moderated a panel on different investor approaches to environmental, social and governance and sustainable investments by large and smaller investors as part of PLANSPONSOR’s recent Exploring ESG Investing virtual conference.

Investors Zach Stein and Andrew Siwo provided varying perspectives and offered insights into how they are implementing their ESG and sustainable strategies.

Carbon Collective works with IRAs, brokerage accounts and trusts to help clients become more invested in green, sustainable stock and bond portfolios that are specifically built for solving climate change. It offers services to individual investors through a robo-adviser offering similar to Betterment or Wealthfront, with an average account size of roughly $50,000.  Stein manages a portfolio of 192 companies.

Get more!  Sign up for PLANSPONSOR newsletters.

Stein, co-founder and CIO of Carbon Collective said, “we work with one organization at a time to make sure that they get 401(k) plan options that align with their missions.”

This approach differs from Siwo, the director of sustainable investments and climate solutions at the New York State Common Retirement Fund. The $258 billion fund, which is the state’s public pension system, is 103% funded, per the comprehensive annual financial report for the last fiscal year, and has a $20 billion commitment to sustainable investments and climate solutions that he oversees as portfolio manager. In this role, he identifies investments across asset classes that are accretive to its portfolio and meet sustainability goals.

Siwo said, “we view ESG as a tool in identifying risks and opportunities; we do not view it as an asset class.”

Though it may be a tool, Siwo oversees what he calls “an asset-driven approach” in the portfolio, with allocation to real estate, opportunistic credit, private and public equity, private and public debt and real assets such as infrastructure projects.

“The approach is successful because the underlying guidelines and expectations are the same. When I began two years ago, we were at $8 billion, and now were just under $19 billion. In the past two years, we’ve put quite a lot of capital to work,” Siwo said.

According to Siwo, “the CFA institute has four ESG approaches, which include thematic, active/engagement, best in class and ESG integration. Those are four approaches that various managers use. In addition, you have SRI, ESG and impact investing, and those terms sometimes can be conflated.”

Siwo said, “our approach is a sustainable investment approach, so we have a flavor of all three of those investment styles.”

Stein engages with corporate management in pursuit of sustainable outcomes from their operations.

These efforts inform his investment strategy and how he selects the portfolio that he recommends plan sponsors put on their investment menus. Stein said he focuses on companies in which he believes shareholder pressure can maximize value.

“These are the companies we hold, because that’s where we can apply shareholder pressure,” Stein said. “Shareholder pressure is a very important tool in this toolbox, but there is an opportunity cost that exists [so holding these companies maximizes value]. And thirdly, the companies that we don’t invest in are companies whose core business could not exist in a post-carbon world. We don’t hold these companies, because we cannot adequately pressure them into making changes [towards climate ends].”

«