Advisory Firm Settles ERISA Litigation

Two of the parties in the long-running case Ramos vs. Banner Health have reached a settlement agreement—the plaintiffs and the advisory firm of Jeffrey Slocum & Associates.

The underlying litigation, filed in the U.S. District Court for the District of Colorado, arose out of alleged mismanagement of defendant Banner Health’s 401(k) plan. Plaintiff Lorraine Ramos and others brought the lawsuit against Banner Health and certain current and former employees, as well as against Jeffrey Slocum & Associates. Plaintiffs alleged that the defendants breached their fiduciary duties under the Employee Retirement Income Security Act of 1974 (ERISA).

The new settlement announcement comes after a recent ruling issued in response to Slocum’s motion for summary judgment, which was granted in part and denied in part.

“After extensive litigation, lengthy discovery, and protracted arm’s-length negotiations with the assistance of a national mediator, plaintiffs and Slocum have reached a proposed settlement that provides meaningful relief to a class of all current plan participants and beneficiaries—relief rendered all the more meaningful given the chance that most members of the settlement class would have to continue protracted litigation, including certain appellate work, in order to obtain any recovery at all from Slocum,” the settlement motion states.

Case documents show the plaintiffs, Slocum, and the Banner defendants have engaged in extensive discovery. Slocum alone produced over 25,000 pages of documents, in addition to the almost 100,000 pages the Banner defendants produced. The parties also took over 20 depositions, as well. Slocum—which ceased operations effective October 24, 2016—secured the cooperation of two former employees, plus Jeffrey Slocum, to sit for depositions. The parties also engaged in extensive expert discovery.

Up to this point, the District Court pared down claims against Slocum. First, on March 28, 2018, the Court denied plaintiffs’ motion to certify a class as to claims against Slocum—though it certified a class as to the Banner defendants. Second, on April 23, 2019, the Court granted partial summary judgment on plaintiffs’ claims against Slocum. It further granted summary judgment on plaintiffs’ recordkeeping and mutual fund window claims, finding that Slocum was not a fiduciary with regard to the commentary and advice it gave on either. Accordingly, the only claim that remains against Slocum for trial concerns the advice that it gave to the plan’s fiduciaries regarding the Fidelity Freedom Funds.

As part of the settlement, in exchange for a release of all ERISA claims against Slocum, its former owners, employers, directors, and other associated parties, Slocum will deposit $500,000 in an interest-bearing settlement account. Class Counsel will request attorneys’ fees to be paid out of the settlement fund in an amount not more than one-third of the fund, or $166,666.67, as well as reimbursement for costs incurred of no more than $56,562.40.

The full text of the consent motion for class certification and preliminary approval of class settlement is available here.