Avon to Pay $6.25M to Settle Pension Management Class Action

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Avon has reached a settlement in a proposed class action to resolve claims brought forth by employees who alleged the cosmetics company mismanaged funds in pension accounts during a Foreign Corrupt Practices Act (FCPA) investigation.

In a memorandum to express their support of a motion to preliminarily approve the settlement, the plaintiffs in the case said that resolving the lawsuit through the settlement would help avoid litigation and its associated risk, and it also aids in recovery for the plaintiffs.

The plaintiffs said, “Resolving the case now allows the Parties to avoid continued and costly litigation that would deplete available insurance and other resources, and which could result in a recovery of less than $6,250,000, or in no recovery at all.”

The initial lawsuit against Avon was filed in December 2014 with other lawsuits that were filed shortly thereafter consolidated into a single case. The workers alleged that the company, the pension plan administrator, benefits board and several executives hid FCPA violations and kept the investments in Avon during a period when the stock plummeted, causing harm to the employees.

The lawsuits claimed that Avon’s mismanagement of employee pensions was in violation of the Employment Retirement Income Security Act (ERISA).

In 2008, Avon publicly disclosed that it was investigating its Chinese operations for potential FCPA violations. The investigation in China led to a probe by the U.S. Department of Justice and the U.S. Securities and Exchange Commission, and Avon settled with the government for $125 million in May 2014.

Avon responded to the claims by saying the lawsuit was filed too late. The company claimed that the statute of limitations for filing the ERISA lawsuit started when the company first disclosed the details of the investigation into the potential FCPA collations. Avon stated that the lawsuit should have been filed well in advance of the company’s settlement of a government probe in 2014.

Last August, Avon agreed to enter into a mediation to resolve the claims of the settlement. With both sides in agreement of the settlement, the court must then issue preliminary approval for the settlement to proceed.

If the the court grants preliminary approval, the class will be certified for the purpose of the settlement and a Settlement Administrator will be chosen. Eligible members of the Class will be notified and they can choose to enter into the settlement or they may opt out and pursue individual litigation against Avon over similar claims.

The plaintiffs are represented by Jacob H. Zamansky and Samuel E. Bonderoff of Zamransky LLC, and Michael J. Klein of Stull Stull & Brody.

The Avon Pension Management Class Action Lawsuit is In re: Avon Products Inc. ERISA Litigation, Case No. 1:14-cv-10083, in the U.S. District Court for the Southern District of New York.