John Hancock Life Insurance Co. (U.S.A.) agreed to settle a lawsuit filed by former and current participants in a company 401(k) plan who alleged ERISA violations in the plan's management.
Lawyers for the company and plaintiffs filed a notice April 21 in a U.S. District Court in Boston reporting an agreement in principle, adding that details will be submitted to the court by June 1 in the case of Baker et al. vs. John Hancock Life Insurance Co. (U.S.A.) et al.
The original suit was filed in February 2020, alleging among other things that the plan imposed high fees and offered proprietary John Hancock investment products to the exclusion of comparable investments that, they allege, were better-performing and less expensive than the John Hancock offerings.
The plaintiffs, seeking class-action status, alleged that the ERISA violations started in 2014.
"Throughout the class period, defendant has offered only John Hancock investment products within the plan," the complaint said. "Defendant failed to objectively evaluate the plan's options in an unbiased manner or consider whether participants would be better served by other investment alternatives in the marketplace."
John Hancock petitioned to dismiss the complaint, but U.S. District Court Richard G. Stearns denied the request in July 2020.
"In total, the long-term retention of a substantial number of underperforming funds at higher than comparable costs gives rise to the plausible inference of a subjective motive inconsistent with the plan participants' best interests," the judge wrote.
The Incentive-Investment Plan for John Hancock Employees had assets of $1.9 billion as of Dec. 31, 2019, according to the latest Form 5500.