Costco Class Action Reaches $5.1M Deal Over 401(k) Mismanagement

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Costco 401(k) Management Class Action Settlement Overview:

• Why: The participant alleged Costo mismanaged a 401(k) plan by allowing participants to be charged high fees and for high-cost funds, in violation of federal law. 
• Who: Costco and several company leaders reached a $5.1 million deal to settle a class action lawsuit filed by a 401(k) plan participant. 
• Where: The class action lawsuit was filed in Wisconsin federal court.

Costco has reached a preliminary $5.1 million class action settlement that will close a class action lawsuit filed by a participant of a 401(k) plan sponsored by the wholesaler.

The class action complaint, filed by Dustin Soulek in June 2020, alleged Costco mismanaged a $15.5 billion 401(k) plan by authorizing unreasonable administration fees and costs even when there were lower-cost options available, thus violating the Employee Retirement Income Security Act (ERISA). 

Soulek argued that because of Costco’s actions, participants paid more and gained much less than they should have. Soulek accused the company, as well as its board of directors and its benefit committee, of failure to adequately monitor other fiduciaries and breach of duties of loyalty and prudence.

The settlement must still be approved by the court to move forward. 

Costco 401(k) Class Action Settlement Includes More Than 250K Individuals

The settlement approval request asks the court to certify the proposed class, which includes all participants, beneficiaries and alternate payees of the Costco 401(k) Retirement Plan who have a plan account as of the date of settlement certification or those who had an account as of May 2014 with a balance of more than $1,000 for at least 12 months. This includes more than 250,000 individuals, according to the request. 

The settlement will reduce administrative fees for current plan participants and provide distributions to former participants via check. Any dissenting class members can raise objections at the final approval hearing.

Soulek also seeks an order requiring Costco to compensate plan participants for their losses, disgorgement of profits, court costs and attorney fees. 

Did you participate in Costco’s 401(k) plan? You could be a member of this settlement class!

The plaintiff is represented by James A. Walcheske, Scott S. Luzi and Paul M. Secunda of Walcheske & Luzi, LLC.

The Costco 401(k) Management Class Action Settlement is Soulek v. Costco Wholesale Corporation et al., Case No. 20-cv-937, in the U.S. District Court for the Eastern District Of Wisconsin Green Bay Division. 

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