Parties in Asset-Based Fee Suit Against Nationwide Settle

A lawsuit that had sought the return of “excessive and unreasonable asset-based fees” charged by Nationwide for recordkeeping and administrative services, “and to prevent Nationwide from charging those excessive fees in the future,” has been dismissed “with prejudice.”

“With prejudice” in the legal sense means the case is permanently dismissed and cannot be brought back to court. According to the stipulation filed in the U.S. District Court for the Southern District of Ohio, as grounds for the dismissal, the parties say they have reached a confidential settlement resolving all claims.

The original suit called out a plan sponsor for potentially breaching the Employee Retirement Income Security Act (ERISA) by willingly entering into an arrangement with Nationwide, but it did not actually name the plan sponsor, law firm Andrus Wagstaff PC, as a defendant. Upon the court’s order, a second amended complaint was filed naming the law firm as a defendant.

The plaintiff proposed two classes for the lawsuit, which Chief U.S. District Judge Edmund A. Sargus Jr. rejected. There was a defendant class proposed to be represented by Andrus Wagstaff. It was described as all sponsors of participant-directed individual 401(k) plan accounts during the class period that had total plan assets of less than $10 million; that entered into program agreements with Nationwide for recordkeeping and other administrative services through Nationwide’s Retirement Flexible Advantage Retirement Plans Program; and that paid recordkeeping and administrative service fees to Nationwide in excess of $64 per participant.

Sargus found the defendant class members did not share a judicial link and the plaintiff did not have standing to sue each individual plaintiff. He said the plaintiff’s alleged injury—excessive fees—was not traceable to a specific provision of the shared contract. In addition, he said, the plaintiff presented no evidence to suggest that the defendants in the class acted in concert when investing the terms of their proposed plan agreements.

There also was a plaintiff class proposed of all participant-directed individual 401(k) plan accounts during the class period that had total plan assets of less than $10 million; paid Nationwide for recordkeeping and other administrative services through Nationwide’s Retirement Flexible Advantage Retirement Plans Program; and paid recordkeeping and administrative service fees to Nationwide in excess of $64 per participant. Sargus ruled that the named plaintiff had no standing to sue a class of defendants that had in no way injured her.