Gucci Will Pay $800K To Settle ERISA Class Action

Gucci and a former employee have reached an $800,000 settlement agreement that would end claims that employees’ retirement benefits were mismanaged, in violation of the Employee Retirement Income Security Act.

The proposed deal would compensate around 8,000 Gucci employees. In addition, $395,000 would be given to the class counsel for fees.

The Gucci class action settlement was reached after seven months of mediation and “intensive arm’s-length negotiation.”

The Gucci retirement class action lawsuit was filed by Heather Janda Hay in September 2017. She claimed that the employee pension benefit plan provided by Gucci was mismanaged by investment manager Transamerica Corp., who is not a party in the class action lawsuit.

Allegedly, Transamerica Corp. invested employee funds in a way that did not best serve the employees, but instead maximized the company’s profits.

The plaintiff says Transamerica did not invest in less expensive options, and instead chose to invest employee funds in its own mutual funds though that was not the most financially advantageous option for employees.

In her Gucci employee retirement plan class action lawsuit, Hay notes that the Employee Retirement Income Security Act imposes a fiduciary duty on managers of retirement funds provided to employees, meaning that the law requires managers of retirement plans to act in the best interest of the plan recipients, and not in the best interest of the plan provider.

She argues that Gucci violated ERISA by providing a plan that did not work in the best interest of employees. She asserts that this choice financially injured employees who were enrolled in the plan because they were charged fees that were too high for a plan that did not perform as well as it could, impeding their profits from their retirement plans.

Reportedly, the proposed Gucci class action settlement deal represents “over thirty-three percent of the estimated damages without taking into account that the investments in the plan paid revenue sharing to offset record keeping expenses.”

Hay expressed approval, saying that the settlement is “an excellent one for the class.” She will receive $5,000 for her role as class representative.

Hay noted that she agreed to the settlement because she “recognizes the risk associated with complex litigation,” though she reportedly believed that she would have been successful had her Gucci ERISA class action lawsuit gone to court.

Gucci attempted to fight the ERISA plan mismanagement class action lawsuit by arguing that Hay could not claim damages when she did not invest in the plan.

However, the judge disagreed with this argument and said that Hay was nonetheless “subject to excessive fees and underperformance.” Based on this, the judge determined that Hay did indeed have constitutional standing and could pursue her claims.

Top Class Actions will post updates to this class action settlement as they become available. For the latest updates, keep checking TopClassActions.com or sign up for our free newsletter. You can also receive notifications when this article is updated by using your free Top Class Actions account and clicking the “Follow Article” button at the top of the post.

Hay is represented by James C. Shah, James E. Miller, and Laurie Rubinow of Shepherd Finkelman Miller & Shah LLP and Sahag Majarian of the Law Offices of Sahag Majarian.

The Gucci ERISA Class Action Lawsuit is Heather Janda Hay v. Gucci America Inc., et al., Case No. 2:17-cv-07148, in the U.S. District Court for the District of New Jersey.

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