The Pennsylvania utility PPL has agreed to pay $8.2 million to settle claims by participants in four defined contribution plans that the plans violated federal law by retaining an allegedly poor-performing target-date series from Northern Trust.
The proposed settlement, which requires court approval, is the second ERISA settlement this year involving the Northern Trust Focus Funds. In January, Northern Trust agreed to pay $6.9 million settle a lawsuit by its own 401(k) plan participants.
The proposed class-action settlement, achieved through mediation, was filed Feb. 28 in a U.S. District Court in Philadelphia by attorneys representing plaintiffs and defendants in the case of Binder et al. vs. PPL Corp. et al.
Northern Trust isn’t a defendant.
An agreement in principle was reached in January 2025, but terms weren’t disclosed at that time.
“Defendants admit no wrongdoing or liability with respect to any of the allegations or claims in the class action,” said the document, noting that the settlement covers participants who invested in the Northern Trust target-date series between Jan. 12, 2016, and June 30, 2020.
“Defendants maintain that they are without fault or liability and are settling the class action solely to avoid litigation costs,” the document said.
Plaintiffs sued in January 2020. A federal district court judge rejected a motion to dismiss by the company and its plans’ fiduciaries in March 2024. A request for summary judgment was rejected in December 2024.
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 that the plaintiff has failed to state a claim.
The plans covered by the lawsuit are the PPL Employee Savings Plan, PPL Deferred Savings Plan, PPL Employee Stock Ownership Plan, and the LG&E and KU Savings Plan. Their plans' assets are held in the PPL Defined Contribution Master Trust, Allentown, Pa., which had combined assets of $2.1 billion as of Dec. 31, 2023, according to the latest Form 5500.
In the lawsuit involving its own 401(k) plan, Northern Trust agreed to pay $6.9 million to settle allegations its target-date series underperformed and that administrative and investments fees were excessive. Northern Trust denied wrongdoing.
Participants sued in June 2021. A federal district court judge in Chicago refused to dismiss the case in August 2022. By then, Northern Trust 401(k) plan executives had already replaced the proprietary target-date series with a BlackRock target-date series.
The Northern Trust Co. Thrift-Incentive Plan, Chicago, had $2.92 billion in assets as of Dec. 31, 2023, according to the latest Form 5500.
