Zachry Holdings Reaches $1.9M ERISA Class Action Settlement

Zachry Holdings ERISA Settlement Overview:

• Who: A group of plaintiffs have asked a judge to preliminarily approve a class action settlement with Zachry Holdings Inc.
• Why: Zachry Holdings agreed to pay $1.875 million to settle allegations it mismanaged a 401(k) plan by retaining imprudent investments and causing the plan to pay unreasonable fees.
• Where: The proposed class action settlement was filed in Texas federal court.

Zachry Holdings Inc. has reportedly agreed to pay $1.875 million to settle a class action lawsuit that alleges the San Antonio-based construction engineering company mismanaged a 401(k) plan in violation of the Employee Retirement Income Security Act of 1974 (ERISA).

Plaintiffs James R. Blackmon, Justin M. Rozelle, Eric A. Myers and Jered Munson filed the ERISA class action lawsuit in August 2020 on behalf of the ZHI 401(k) Retirement Savings Plan. They allege Zachry breached its fiduciary duties by selecting and retaining imprudent investments and by causing the plan to pay unreasonable investment management and administrative fees.

The plaintiffs filed an amended Zachry Holdings ERISA class action lawsuit on Dec. 14, 2020. The court denied Zachry’s motion to dismiss the case. The judge noted that other courts had decided in favor of workers who had made similar allegations and found that a failure to find cheaper investment options could violate ERISA.

Settlement is in Class Members’ Best Interest, Plaintiffs Say

On Jan. 21, the plaintiffs asked a Texas federal judge to preliminarily approve the Zachry Holdings class action settlement.

“The Parties have engaged in significant discovery efforts, including the exchange of discovery requests and production of more than 13,000 pages of documents related to Plan administration, relationships between and among fiduciaries, and Defendants’ investment and service provider monitoring processes,” according to the plaintiffs.

Zachry has denied any wrongdoing but agreed to settle the ERISA class action lawsuit to avoid the burden and expense of ongoing litigation.

“In light of the substantial Settlement payment and the risks of continued litigation, Class Counsel believe the Settlement is fair, reasonable, adequate, and in the best interests of the Settlement Class,” the plaintiffs state in their motion seeking preliminary approval of the ERISA settlement.

Zachry’s 401(k) retirement plan reportedly had nearly 17,000 participants in 2019 with account balances and assets of nearly $920 million. 

The proposed ERISA settlement will provide payment to eligible class members on a pro rata basis. The plaintiffs have asked the court to preliminarily approve the proposed ERISA class action settlement and schedule a final hearing date.

Do you think the court should approve the Zachry Holdings ERISA settlement? Tell us your thoughts in the comments below!

The workers are represented by Alec J. Berin, James E. Miller, James C. Shah, Kolin C. Tang and Laurie Rubinow of Miller Shah LLP; Dan E. Martens of the Law Office of Dan E. Martens; and Donald R. Reavey and Mark K. Gyandoh of Capozzi Adler PC.

The Zachry Holdings ERISA Class Action Lawsuit is James R. Blackmon, et al. v. Zachry Holdings Inc., et al., Case No. 5:20-cv-00988, in the U.S. District Court for the Western District of Texas.

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