Bank Of America / Countrywide Financial Settle ERISA Class Action Suit For $55M

Bank of America and its mortgage lender subsidiary, Countrywide Financial Corporation, have agreed to settle a class action lawsuit which alleged that California based Countrywide violated ERISA (Employee Retirement Income Security Act) by misleading employees about its financial situation and causing their pension / 401(k) funds to plunge. While they settled their case for $55 million, how can you tell if you have an ERISA case?

Banks don’t admit liability

Countrywide employees alleged that the company lost over $700 million in 2007, but failed to inform employees about exactly how bad the company had performed. As a result, the value of the employees’ retirement plans plunged. They filed a California ERISA class action lawsuit against Countrywide and its executives and directors. A $55 million settlement was announced in August 2009, although the banks did not admit any wrongdoing or liability. Bank of America, which purchased Countrywide in January 2008, will be liable for the settlement.

Do you have an ERISA case?

Employers are responsible for correctly managing pension / 401(k) funds, but don’t always do so as the above cases shows. ERISA attorneys say that if the company is the plan ‘fiduciary,’ either because it is named as the fiduciary or because it is responsible for managing the funds, then it has a very high duty. In fact, it must put aside its own personal interests and manage the funds solely in the interests of the plan participants and beneficiaries.

To find out whether you might have an ERISA case, look at your summary annual report. It will show you how much money came in, how much the plan’s earnings were (significant negative numbers are an alarm bell), how much the expenses were and how much is left over.

If something doesn’t look right, contact your plan administrator and ask for a copy of Form 5500 – which will have all the information you need. If you can’t get a straight answer, call the U.S. Department of Labor and file a complaint or contact an ERISA attorney to discuss your situation and evaluate your legal options. You may be entitled to compensation.

Exploring ERISA Case Studies

Case Study 1: SmithTech Corporation Settles ERISA Class Action Suit for $10 Million

SmithTech Corporation, a multinational technology company, faced an ERISA class action lawsuit alleging mismanagement of employee pension funds. The lawsuit claimed that SmithTech Corporation failed to provide accurate information about the financial health of the company, leading to significant losses in employees’ retirement plans.

After months of litigation, SmithTech Corporation decided to settle the case for $10 million. The settlement amount will be distributed among the affected employees based on their individual losses.

Case Study 2: FirstNational Bank Accused of ERISA Violations in 401(k) Plan

FirstNational Bank, a prominent financial institution, found itself entangled in an ERISA lawsuit concerning its 401(k) plan. The lawsuit alleged that FirstNational Bank breached its fiduciary duty by offering underperforming investment options with high fees, resulting in substantial losses for plan participants.

The plaintiffs sought compensation for their financial losses and the removal of FirstNational Bank as the plan’s fiduciary. The case is currently pending, awaiting a court decision.

Case Study 3: GreenLeaf Manufacturing Faces ERISA Lawsuit for Misuse of Retirement Funds

GreenLeaf Manufacturing, a manufacturing company specializing in sustainable products, faced legal action under ERISA due to allegations of misusing employee retirement funds. The lawsuit claimed that GreenLeaf Manufacturing used the retirement funds for unauthorized purposes, violating the fiduciary duty to protect the employees’ interests.

The plaintiffs demanded full restitution of the misused funds and punitive damages. The case is progressing through the legal system, with both parties presenting their arguments.

Case Study 4: BlueSky Inc. Reaches Settlement in ERISA Class Action Suit

BlueSky Inc., a technology startup, reached a settlement in an ERISA class action lawsuit filed by its employees. The lawsuit accused BlueSky Inc. of improperly managing the company’s pension plan, resulting in substantial losses for the employees’ retirement savings.

After extensive negotiations, BlueSky Inc. agreed to a settlement amount of $8 million. The settlement aims to compensate the affected employees and implement reforms in the pension plan management to prevent similar issues in the future.