Near $14M Settlement Reached in Franklin Templeton ERISA Class Action

A group of Franklin Templeton employees are seeking approval of a $13.85 settlement reached in a class action lawsuit alleging the investment firm violated the Employee Retirement Income Security Act.

Current and former workers alleged in several class action lawsuits that Franklin Templeton violated the federal law protecting certain retirement plans and pensions by using its own products in the 401(k) it offered employees.

The Employee Retirement Income Security Act (ERISA) requires employers meet certain obligations when it comes to 401(k) and other retirement plans.

Franklin Templeton workers alleged that the financial institution breached its fiduciary duty to plan participants by offering high fee mutual funds in their 401(k) plans.

The class action lawsuits were consolidated and were set to go to trial, but the workers recently urged a federal judge to accept the $13.85 million settlement agreement.

“While this settlement comes at the time of trial, it nevertheless provides significant savings to the class,” stated the plaintiffs in their motion for approval of the settlement. “Not only are the costs of trial and appeal saved, but the class receives its recovery now instead of after protracted appeals.”

Under the terms of the settlement, Franklin Templeton will add approximately $4.3 million to their 401(k) plan each year by increasing the company match. Additionally, a nonproprietary target date fund will be added as a 401(k) option for Franklin Templeton employees.

Current Franklin Templeton employees with 401(k)s can take advantage of the increased match – a 10 percent increase.

“We believe that the plaintiffs’ allegations are without merit in light of, among other things, the extensive and considered process undertaken by the fiduciaries to the retirement plan working with an independent investment consultant and acting in the best interests of participants,” a Franklin Templeton representative told Law360 about the settlement. “In order to avoid protracted litigation, however, the company elected to enter into an agreement to resolve the litigation, which is subject to court approval.”

The plaintiffs alleged that the institutions packed its 401(k) investment options with poor performing Franklin Templeton products in order to generate additional fees.

The litigation in the Franklin Templeton class action lawsuit dragged on for two years. Before the settlement agreement, the financial institution removed the Large Cap Value Fund and Franklin Money Market Fund as offerings from the plan.

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The lead plaintiff and Class Members are represented by Mark P. Kindall and Robert A. Izard of Izard Kindall & Raabe LLP, and Gregory Y. Porter and Mark G. Boyko of Bailey & Glasser LLP.

The Franklin Templeton Class Action Lawsuit is Cryer v. Franklin Resources Inc., et al., Case No. 4:16-­cv-­04265, in the U.S. District Court for the Northern District of California.