The settlement, which is expected to benefit a class of nearly 200,000 people, is about 40% of the $34 million in estimated damages calculated by the plan participants’ expert, the parties say. Walgreens has already removed the challenged funds from its 401(k) plan and will use an investment adviser to provide ongoing investment monitoring services for the next three years, according to the parties’ settlement motion.
Judge Charles R. Norgle Sr. of the U.S. District Court for the Northern District of Illinois granted preliminary approval to the deal on Monday. He previously denied the pharmacy’s motion to dismiss and certified the case as a class action.
Walgreens is accused of filling its retirement plan with expensive and poorly performing Northern Trust target date funds that led to steep losses. Walgreens allowed nearly 40% of its retirement plan assets to be invested in these funds, which underperformed comparable alternatives for nearly a decade, according to the Employee Retirement Income Security Act lawsuit.
Funds offered by Northern Trust, which isn’t named as a defendant, have driven several recent ERISA lawsuits. Allstate Corp. lost its bid to dismiss litigation over the Northern Trust funds in its 401(k) plan. Other cases are pending against Takeda Pharmaceuticals USA Inc. and Northern Trust itself.
Walgreens is represented by Morgan, Lewis & Bockius LLP. The class of plan participants is represented by Sanford Heisler Sharp LLP and Barnow & Associates PC, which stand to receive more than $4.5 million in attorneys’ fees if the deal is approved.
The case is Brown-Davis v. Walgreen Co., N.D. Ill., No. 1:19-cv-05392, preliminary settlement approval order 11/1/21.