Alert December 18, 2014

Insurer Agrees to $140 Million Settlement in ERISA Case Challenging Revenue Sharing Practices

Nationwide Life Insurance Co. has agreed to settle ERISA fiduciary breach claims brought on behalf of a class of retirement plan trustees that purchased annuity contracts and/or services from Nationwide for their plans.

The plaintiffs in the case have submitted to the court an unopposed motion for preliminary approval of the settlement. The case was originally filed in 2001, and has been the subject of a number of reported decisions. See, e.g., Haddock v. Nationwide Financial Services, Inc., 293 F.R.D. 272 (2013).

The claims in Haddock allege principally that Nationwide breached ERISA fiduciary duties by receiving revenue sharing payments from mutual funds offered to plans through its investment platform menu. Under the proposed settlement, Nationwide would not admit any wrongdoing, but would make a settlement payment of $140 million to be allocated among class members (net of attorneys’ fees and other costs).

In addition, under the proposed settlement, Nationwide would make certain revisions to (i) its disclosures to plans regarding its investment products and (ii) its procedures for making changes to its investment platform menu.