Former Victoria’s Secret parent L Brands settles 401(k) class action for $2.75M

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Update:

• A federal judge in Ohio approved a $2.75 million settlement agreed to by the former parent company of Victoria’s Secret and a class of participants of its 401(k) retirement program.
• Retirement program participants argued L Brands Inc. mismanaged the plans and cost employees millions of dollars by failing to negotiate down the yearly fee participants were required to pay. 
• L Brands, which is now Bath & Body Works Inc., made several attempts to dismiss the class action lawsuit prior to coming to the settlement agreement in May 2022. 
• The judge overseeing the case determined the settlement agreement, which includes $917,000 in attorney fees, was fair and reasonable. 

L Brands 401(k) mismanagement class action lawsuit overview: 

• Who: L Brands Inc., the former parent company of Victoria’s Secret and Bath & Body Works, agreed to a $2.75 million class action settlement.
• Why: The settlement was made to resolve claims L Brands mismanaged its employees’ 401k retirement plans. 
• Where: The class action lawsuit was filed in Ohio federal court. 

(Aug. 26, 2022)

L Brands Inc., the former parent company of Bath & Body Works and Victoria’s Secret, has agreed to pay $2.75 million to resolve claims it mismanaged the 401(k) retirement plans of its employees. 

Plaintiff Donna Allison, a former employee of L Brands, claimed in a November 2020 class action lawsuit that the company failed to appropriately manage its employees’ 401(k) plans by choosing not to negotiate lower fees when it would have been able to. 

Allison asked a federal judge in Ohio last week to preliminarily approve the settlement agreement, arguing the deal reached was “fair, reasonable, adequate and in the best interests of the Settlement Class.” 

“Resolving the action at this juncture allows the parties to avoid continued and costly litigation that would deplete resources which could otherwise be used for the resolution of the action,” the motion for preliminary approval says. 

Allison had argued that L Brands cost its employees millions of dollars by not attempting to negotiate down a $56 fee its 401(k) plan participants were required to pay, Law360 reports. 

Allison claimed L Brands could have used its power and size as a $1.6 billion company to lower the fees to less than $35 per year. 

L Brands class action alleged company violated ERISA 

The settlement, if approved, will put an end to claims that L Brands failed its fiduciary duties to its employees and violated the Employee Retirement Income Security Act (ERISA). 

L Brands split Victoria’s Secret and Bath & Body Works into two distinct entities in May of last year, Law360 reports. 

The company previously made two attempts to get the L Brands class action lawsuit dismissed, arguing Allison lacked standing and had failed to make a claim. However, the judge overseeing the class action lawsuit disagreed with L Brands, ruling that Allison did indeed have standing, Law360 reports. 

L Brands agreed to a separate settlement worth $90 million in August of last year that put an end to claims from investors that the company fostered a culture of misogyny and sexual harassment at its stores.  

Do you believe L Brands could have negotiated a lower annual fee for its 401(k) retirement plan members? Let us know in the comments! 

The plaintiff is represented by James E. Miller, Kolin C. Tang, Ronald S. Kravitz, Laurie Rubinow and Alec J. Berin of Miller Shah LLP; and Jeffrey S. Goldenberg and Todd B. Naylor of Goldenberg Schneider LPA.

The L Brands 401 (k) class action lawsuit is Allison, et al. v. L Brands Inc., et al., Case No. 2:20-cv-06018, in the U.S. District Court for the Southern District of Ohio.

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