IBM agreed to pay $4.75 million to settle a long-running ERISA stock-drop complaint by participants in a company 401(k) plan.
The preliminary agreement for the class-action suit, which must be approved by U.S. District Judge William H. Pauley III in New York, was filed April 2 with the court by plaintiffs' attorneys.
The parties said Feb. 25 that they had reached a tentative agreement but provided no terms.
The settlement will provide "a substantial recovery" to the participants, the proposed settlement document said. "In light of the significant costs and risks of continued litigation, the proposed settlement constitutes a fair, reasonable and adequate outcome for all parties and is in the best interests of the class."
The participants maintained that plan fiduciaries should have taken corrective action to protect participants who owned company stock as part of their 401(k) savings. They said investors were harmed when the stock fell following IBM's disclosure, asset write-down and subsequent sale of a money-losing microelectronics unit.
The case, Jander et al. vs. The Retirement Plans Committee of IBM et al., has had an extensive tour of the legal system.
The initial complaint, filed in May 2015 and amended in August 2015, was dismissed by Mr. Pauley in September 2016. A second amended complaint was dismissed by Mr. Pauley in September 2017.
The plaintiffs then appealed to the 2nd U.S. Circuit Court of Appeals, New York, which reversed the lower court ruling in December 2018.
IBM petitioned the U.S. Supreme Court in June 2019, which vacated the case in January 2020 and told the appeals court to review issues that hadn't been part of the lower court rulings.
The appeals court in June 2020 reaffirmed its original decision. IBM appealed to the Supreme Court again, which, in November 2020, declined to hear the petition, thus putting the case back in Mr. Pauley's court.
"This is plainly a complex litigation," said the plaintiffs' proposed settlement document, explaining why they agreed to settle. "Simply litigating the sufficiency of plaintiffs' allegations has taken more than five years and involved every stratum of the federal courts. Class counsel believes that litigating this case through fact and expert discovery will likely necessitate, at a minimum, hundreds of thousands of pages of document production, as well as the depositions of numerous witnesses."
The document also noted that had plaintiffs pursued the case, it would be at least a year before a trial could take place. "Even if plaintiffs prevail, the decision could be appealed for years to come," the document said. "Both sides will take on enormous expense in the meantime. Thus, it could easily be several more years before class members see any recovery under the most optimistic projection."