Magna International of America will pay $2.9 million to settle a lawsuit by former 401(k) plan participants who alleged the retirement plan charged excessive record-keeping fees and retained investments that charged excessive fees, according to a preliminary settlement filed Aug. 1 in a federal court in Detroit.
If approved by U.S. District Court Judge Nancy G. Edmunds, the settlement would end a lawsuit filed in April 2020, which the judge refused to dismiss in March 2021 and also refused to declare summary judgment for Magna International in June 2023.
A motion for summary judgment is usually filed after the parties have completed discovery, giving a judge the opportunity to review details of a case. A motion to dismiss, usually requested soon after a complaint is filed, argues the plaintiff has failed to state a claim.
The settlement was achieved through mediation.
The class action settlement covers participants or beneficiaries of the plan from April 30, 2014 through initial court approval in the case of Davis et al vs. Magna International of America Inc. et al., according to the settlement document filed by plaintiffs’ attorneys. An estimated 20,000 people may be affected.
The plaintiffs accused the auto parts manufacturer and plan fiduciaries of violating ERISA by failing to investigate and choose lower-cost investments and failing to monitor or control record-keeping expenses, the settlement document said.
“Defendants deny all of these claims and deny that they ever engaged in any wrongful conduct,” the document said.
Magna International of America Inc. is a subsidiary of Canada's Magna International Inc. The Magna Group of Companies Retirement Savings Plans, Aurora, Ontario, had $2.1 billion in assets as of Dec. 31, 2022, according to the latest Form 5500.
