Proposed Settlement Would Cost Juniper Networks $3 million

Juniper Networks, Inc. has agreed with plaintiffs to settle for $3 million a lawsuit brought in August 2021 under the Employee Retirement Income Security Act. The settlement was submitted in September and motioned for preliminary approval last week, although it is still subject to U.S. District Court approval. Juniper, a networking hardware company based in California, admitted no fault or wrongdoing as part of the settlement.

The case, Reichert et al vs. Juniper Networks Inc. et al., was initially brought by two participants in Juniper’s sponsored 401(k) plan. They alleged Juniper did not adequately monitor the investment options in the plan and that options provided to participants had unreasonably high fees compared to reasonable alternatives. They also alleged that Juniper did not disclose enough information to allow participants to make informed investment choices.

In November 2021, Juniper filed a motion to dismiss. The motion alleged that the plaintiffs lacked standing to sue, since the funds with the higher fees were optional and the plaintiffs did not elect those funds. In order to sue in federal court, the plaintiff must have been injured in some way, and you cannot be injured by an investment you did not make, argued the motion. Additionally, Juniper argued that the mere existence of lower cost funds does not prove imprudence and that the plaintiffs did not provide meaningful benchmarks to which the funds in question could be justly compared.

The plaintiffs responded in February 2022, arguing they can sue under ERISA on behalf of all plan participants, and the fact they did not suffer personally from the higher fees is legally immaterial. They also asserted that the plaintiffs were harmed by plan-wide decision making.

Judge James Donato, of the U.S. District Court for the Northern District of California, sided with the plaintiffs in April 2022 and denied the motion to dismiss. Donato wrote that the plaintiffs made adequate factual claims that should be adjudicated at trial, and they were correct in arguing they have standing to sue on behalf of the entire plan as a class under ERISA.

The parties submitted settlement paperwork on September 15, with the official motion for preliminary approval made public on November 11. Juniper will pay $3 million to cover all claims made by the plaintiffs. This amount covers legal fees and expenses, which could be as high as $1 million, at the discretion of the judge. It also includes a $15,000 award to the two plaintiffs that brought the suit and up to $100,000 for administrative costs and the cost of notifying class members. The remaining funds will be awarded to the affected plan participants.

The parties requested approval from the judge, which has not yet been given. They also requested a fairness hearing in the future to receive final approval for the settlement.

If the settlement is approved, the claims will be dismissed with prejudice and the participants will be barred from taking further legal action related to the plan. The proposed settlement also states that if the Department of Labor objects to the settlement, the defendants have a right to withdraw from it.