Salesforce Inc. has settled for $1.35 million a pair of outstanding 401(k) lawsuits alleging excessive retirement plan fees. The settlement requires court approval.
The agreement brings to a close about four years of litigation across two separate lawsuits, according to a motion filed August 23 in U.S. District Court for the Northern District of California to Senior District Judge Maxine M. Chesney.
Plaintiffs had alleged in separate suits, both filed in 2020, that Salesforce’s retirement plan committee and executives overseeing a $5 billion 401(k) plan had violated their fiduciary duty by allowing relatively high fees for certain investments and retaining some poor-performing investments. Miguel et al. v. Salesforce.com Inc. et al., filed in March 2020, and Simonelli et al. v. Salesforce.com Inc. et al. [initially filed as Villareal et al. v Salesforce.com, Inc et al.], filed in February 2024, were consolidated into one suit, as they alleged similar charges.
The class action settlement will go to more than 50,000 participants and their beneficiaries, and represents 13.5% of plaintiff’s “maximum recoverable losses as calculated by plaintiffs,” according to the filing.
“The Parties agreed to the Settlement after four years of litigation and arm’s-length negotiations by experienced counsel,” attorneys wrote in the motion. “Resolving the action at this juncture allows the parties to avoid continued and costly litigation.”
The plaintiffs in both cases are represented by attorneys with the law firm Capozzi Adler PC. Salesforce is represented in both cases by attorneys with the law firm Steptoe LLP.
Judge Chesney still needs to approve the settlement.
Plaintiffs in the consolidated lawsuits had alleged that plan managers violated the Employee Retirement Income Security Act in part by failing to select lower-cost investments, did not consider cheaper options such as collective investment trusts, and charged relatively high recordkeeping fees for the size of the plan, among other allegations.
Salesforce had countered that it met its obligations under ERISA by following prudent processes for plan decisions and administration.
Miguel was initially dismissed, but the 9th Circuit Court of Appeals revived it in 2022, arguing that the plaintiffs had grounds for the lawsuit. After further litigation in U.S. District Court for the Northern District of California, it had been scheduled to go to trial this May, but the sides announced a settlement agreement was being worked out before it reached trial.
The Salesforce 401(k) Plan held $5.696 billion in retirement assets for 50,288 retirement plan participants, as of the latest Form 5500 filing.
