SunTrust Bank 401(k) Litigation Heading to Remediation

A new joint motion has been filed in the Employee Retirement Income Security Act (ERISA) lawsuit targeting the retirement plan of SunTrust Bank, which could bring years of litigation to an end. 

The underlying lawsuit alleges that SunTrust Bank’s 401(k) plan engaged in corporate self-dealing at the expense of plan participants. The lead plaintiff suggests that plan officials violated their fiduciary duties of loyalty and prudence by selecting a series of proprietary funds (referred to as the STI Classic Funds) that were more expensive and performed worse than other funds they could have included in the plan—and by repeatedly failing to remove or replace the funds.

Back in early October, the U.S. District Court for the Northern District of Georgia’s Atlanta Division issued a lengthy order in the long-running ERISA lawsuit. In the October ruling, the District Court granted the defendants’ motion seeking to discredit certain expert testimony generated by the plaintiffs. At the same time, the ruling denied the plaintiffs’ motion to reject the expert reporting of two pro-defense witnesses. Finally, defendants’ motion for summary judgment was granted in part and denied in part. It was granted to the extent plaintiffs’ claims are premised on defendants’ conduct regarding the Short Term Bond Fund, Investment Grade Bond Fund, Small Cap Growth Fund, Capital Appreciation Fund, and Prime Quality Money Market Fund. It was denied to the extent plaintiffs’ claims are premised on defendants’ conduct regarding the Mid-Cap Equity Fund, Growth and Income Fund, and International Equity Index Fund.

Now, the plaintiffs and defendants have jointly moved under Local Rule 16.7 for entry of an order referring the case to mediation before Robert A. Meyer, Esq., of the JAMS organization. The parties have also moved for a stay of all proceedings to permit them time to pursue the resolution of this dispute, including at the mediation conference tentatively scheduled with Meyer on January 7, 2020, subject to the Court’s approval.

“The parties respectfully request that the Court refer this case to mediation and appoint Robert A. Meyer as neutral third-party mediator,” the joint remediation motion states. “The parties further respectfully request that the Court stay all proceedings and deadlines in this case pending mediation before Mr. Meyer and remove the case from the Court’s January 6, 2020 trial calendar. The parties will report to the Court on the status of the January 7 mediation and the case no later than January 31, 2020.”

In the report, the parties anticipate stating either that (i) a settlement agreement has been reached and proposing deadlines for subsequent filings seeking Court approval of the proposed settlement, or (ii) that no settlement agreement could be reached and proposing deadlines that will enable the parties to move promptly to trial, including deadlines for remaining briefing on plaintiffs’ motion for reconsideration and submission of a joint consolidated pretrial order.

The full text of the remediation motion is available here.