Salesforce and class counsel recently filed a motion for preliminary settlement approval in a California district court. Under the terms of the non-reversionary settlement, Salesforce will pay $1.35 million to more than 50,000 class members in two Employment Retirement Income Security Act (ERISA) cases. Employees alleged that Salesforce, its board, and its investment committee violated their fiduciary duties under ERISA to the company retirement plan and its participants by choosing expensive investment options and underperforming funds.
The cases are Miguel et al. v. Salesforce.com Inc. et al., Case Number 3:20-cv-01753, and Chris Simonelli v. Salesforce.com Inc. et al., Case Number 3:24-cv-00813, both in the U.S. District Court for the Northern District of California.
Class members claim that the defendants acted imprudently in keeping high-cost versions of certain investment funds and failing to investigate lower-cost alternatives. They also alleged that the company, its board, and its CEO breached their fiduciary duties by failing to properly monitor the 401(k) committee.
The proposed settlement includes all 401(k) plan participants from March 11, 2014, until the date the court approves the settlement. The settlement amount represents 13.5% of the maximum damages recoverable in each class action case. The motion advised that 33% of the settlement would go toward attorney’s fees, and a maximum of $150,000 would go toward expenses.
In their motion, the class counsel also asked that the court consolidate the two class action cases for the purposes of settlement, as they involve common issues of law and fact that focus on Salesforce’s alleged failure to properly monitor its 401(k) plan.
The preliminary approval motion comes four months after the parties reached a last-minute settlement in the Miguel case, just before a bench trial was to begin. The court stayed the Simonelli case pending resolution of the Miguel case.
Miguel filed his original complaint in the spring of 2020, and the next four years consisted of hotly contested litigation, including an initial dismissal, a revival by the Ninth Circuit two years later, class certification, and a denied motion for summary judgment.
HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and H.R./employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.
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