Kimberly-Clark has reached a $2.25 million settlement with participants and beneficiaries of the company’s 401(k) plan in an ERISA suit involving excessive fees. Two former Kimberly-Clark employees, the named class members in the suit, asked a Texas federal court to preliminarily approve the settlement agreement to end the case, which has been pending for three years. The case is Seidner et al. v. Kimberly-Clark Corp. et al., case number 3:21-cv-00867, U.S. District Court for the Northern District of Texas.
The motion for preliminary approval of the parties’ settlement agreement comes about three months after they reached an agreement during mediation. The workers accepted the settlement due to the likelihood of continued litigation and appeals that could result in any damages award being years away. According to the workers’ estimate, the settlement award represents only about 15% of the plan participants’ overall losses due to mismanagement of the Kimberly-Clark retirement plan.
Each named class member will receive $10,000; their attorneys can ask for up to about $750,000 in fees and $180,000 to reimburse litigation costs. The remaining funds will be distributed among the class members, which includes about 25,000 participants and beneficiaries of the Kimberly-Clark 401(k) plan dating from April 2015.
The plaintiffs filed suit against Kimberly-Clark in April 2021. They alleged that each retirement plan participant paid about $78 annually for recordkeeping services, which amounts to about $1.36 million per year. Based on the fees of other similarly sized plans, the plaintiffs claim they should have only been paying about $30 per year for recordkeeping services.
Kimberly-Clark moved to dismiss the suit, but a district court judge rejected the dismissal motion in March 2023, finding that the plaintiffs had provided sufficiently detailed allegations in their complaint. The company then immediately asked for permission to appeal the judge’s ruling. Still, the judge denied their request, ruling that an appeal to the Fifth Circuit at that juncture would only unnecessarily delay the suit.
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