A federal court judge in Asheville, N.C., has granted preliminary approval to a $500,000 settlement by subsidiaries of AAA and participants in 401(k) plans, who alleged ERISA violations in the plans' management.
U.S. District Judge Max O. Cogburn Jr. granted preliminary approval on Monday, subject to a final hearing, in Johnson et al. vs. Carolina Motor Club (d/b/a AAA Carolinas) et al.
The parties reached an agreement on Sept. 14 in which the defendants also agreed to conduct an RFP for record keeping within two years of final court approval of the settlement.
The plaintiffs sued in July 2021 — and later amended their complaint — contending that defendants chose and retained several investments that had excessive management fees and/or poor performance compared to other investments available in the marketplace.
They alleged ERISA abuses took place in the AAA Carolinas Savings & Investment Plan, which was merged into The Auto Club Group 401(k) Plan (formerly known as The Auto Club Group Tax-Deferred Savings Plan). The plan, based in Dearborn, Mich., had. assets of $1.1 billion as of Dec. 31, 2020, according to the latest Form 5500.
The plaintiffs also alleged that the plan selected more expensive share classes of mutual funds when cheaper share classes were available, failed to diversify the plan's menu and paid excessive record-keeping and investment adviser fees.
The class-action suit settlement affects participants in the plan from July 6, 2014, through the federal court judge's preliminary approval.
"Each Defendant denies each and every allegation of wrongdoing and contends that it has no liability in the action," the settlement document said.
"Each defendant specifically denies the allegations that it breached any fiduciary duty or any other provisions of ERISA in connection with the administration of the plan, the administrative fees or expenses incurred by the plan, or the investments in the Plan, at any time."
