Aon, Schneider Electric Agree to $200,000 Settlement

Aon Investment Consultants and Schneider Electric Holdings Inc. have completed the terms of a settlement agreement with retirement plan plaintiffs, closing for $200,000 a 2020 fiduciary breach lawsuit, according to a judge’s order to approve the unopposed March motion from the plaintiffs.

The lawsuit was brought by participants in the Schneider Electric 401(k) Plan alleging plan fiduciaries and Aon (then known as Aon Hewitt Investment Consultants) breached their fiduciary duties and engaged in prohibited transactions in violation of the Employee Retirement Income Security Act. The plaintiffs claimed that instead of acting in the exclusive best interest of plan participants, the defendants selected and retained proprietary Aon collective investment trusts. 

U.S. District Judge Nathaniel Gorton, presiding in U.S. District Court for the District of Massachusetts, on Friday signed the order to allow the settlement agreement. in Turner et al. v. Schneider Electric Holdings Inc..   

“The settlement agreement is sufficiently fair, reasonable, and adequate to warrant sending notice of the settlement class,” Gorton wrote.

The order directed Schneider Electric or its insurer to deposit $200,000 into an interest-bearing settlement account—The Turner et al. v. Schneider Electric Holdings Inc. et al. Litigation Settlement Funds—and directed the funds be used to compensate members of the class, pay plaintiff’s attorneys’ fees and administrative expenses. Any remainder would be distributed to the plan for related expenses, the judge wrote.

The settlement amount will be spread across some 26,000 total potential class members, with deductions for legal fees, costs and to award nine named plaintiffs $500 each.

Analytics Consulting, selected as the settlement administrator, will be paid an estimated $3,845, according to the order.

Gorton wrote in the approval order that the settlement was executed after the parties engaged in substantial litigation and after settlement negotiations had continued within that period, including a full-day mediation and summary judgment briefing culminating in an order disposing of substantially all the claims adversely to the plaintiffs, he wrote.

The judge’s order appointed class representatives and class counsel; certified the settlement class as applying to all current participants and beneficiaries of the Schneider Electric 401(k) Plan with an active account as of year-end 2022, excluding the defendants; appointed the settlement administrator; defined the class period as running from May 26, 2014, through December 31, 2022; and scheduled a fairness hearing at the Massachusetts District Court on September 19, according to the filing.

At the fairness hearing, the court will consider final approval of the settlement.   

Considering the defendants’ motions for dismissal, Gorton allowed the lawsuit to proceed in March 2021, although he  ruled out several of the plaintiffs’ claims.

The plaintiffs were represented in court by attorneys from the law firm Schlichter Bogard & Denton LLP, based in St. Louis, with local counsel provided by Milton, Massachusetts-based Naumes Law Group. The defendants were represented by Washington, D.C.-based lawyers from the firms McDermott Will & Emery LLP and O’Melveny and Myers LLP.

Representatives for Aon said the firm is “pleased the court previously granted Aon’s motion for summary judgment and has now granted the motion for preliminary approval of class settlement to fully resolve this matter. We will continue serving our client to maximize [its] employees’ retirement savings.” 

Schneider Electric did not return requests for comment on the lawsuit. 

In another case involving some of the same parties, Aon and plan sponsor Astellas Pharma US Inc. have settled a complaint brought by current and former participants in the pharmaceutical company’s 401(k) plan over Aon’s selection of its own proprietary CITs in the plan, according to a Friday court filing.

Terms of the settlement were not disclosed but should be filed before June 9, according to the filing in U.S. District Court for the Northern District of Illinois, Eastern Division.

The plaintiffs in the Astellas case were also represented by the Schlichter firm. Astellas was represented by Chicago-based Morgan, Lewis & Bockius LLP and Aon was represented by New York-based O’Melveny and Myers and Chicago-based Foley and Lardner LLP.