Marlon H. Cryer et al. v. Franklin Resources, Inc.

Lead Case No.: 4:16-cv-04265-CW

United States District Court for the Northern District of California, Oakland Division

Frequently Asked Questions

  1. What is this litigation about?

    This consolidated class action litigation is brought on behalf of participants in the Franklin Templeton 401(k) Retirement Plan (the "Plan"). Marlon H. Cryer and Nelly F. Fernandez (collectively referred to as "Plaintiffs" or "Class Representatives") are the named plaintiffs and the representatives on behalf of all members of the Class in the litigation. The Cryer lawsuit was filed in July 2016, and the Fernandez lawsuit was filed in November 2017. The Court later consolidated the cases.

    Plaintiffs sued Franklin Resources, Inc. ("Franklin") and others alleged to have served in fiduciary roles to the Plan (together, "Defendants"), alleging primarily that Defendants violated their fiduciary duties by choosing for the Plan allegedly imprudent and expensive affiliated investment funds, and by allegedly failing to negotiate lower record keeping fees with the Plan's third-party recordkeepers. Plaintiffs allege that there were superior, less expensive investment options available that Defendants should have chosen for the Plan. Plaintiffs also allege that between 2010 and 2013, Franklin engaged in transactions prohibited by the Employee Retirement Income Security Act of 1974 ("ERISA"). After the lawsuits were filed, Plaintiffs agreed voluntarily to dismiss from the litigation a claim for alleged breach of fiduciary duty relating to monitoring of the Plan fiduciaries as well as certain individual defendants, and the Court granted summary judgment to Defendants on Plaintiffs' alleged excessive recordkeeping fee claim.

    Defendants deny all allegations of wrongdoing, fault, liability or damage to the Plaintiffs and the Class and deny that they have engaged in any wrongdoing or violation of law or breach of duty. Defendants maintain that they acted in the best interests of Plan participants at all times and complied with their fiduciary obligations to the Plan and its participants. Among other things, Defendants contend that the Plan fiduciaries employed a robust and thorough process for selecting, monitoring, and removing Plan investment options and for monitoring Plan-related fees.

  2. What are the terms of the Settlement?

    To avoid the time and expense of further litigation, Plaintiffs and Defendants have agreed to resolve the consolidated litigation. The Settlement is the product of extensive negotiations between the parties, who were assisted in their negotiations by a neutral private mediator. The parties have taken into account the uncertainty and risks of litigation and have concluded that it is desirable to settle on the terms and conditions set forth in the Settlement Agreement and Release dated February 15, 2019 (the "Settlement Agreement"). If the Settlement is approved by the Court, the Class will obtain the benefits of the Settlement without the further delay and uncertainty of additional litigation. The Settlement resolves all issues regarding the Plan's investment options and fees from July 28, 2010 through such time as the Court grants final approval of the Settlement.

    The terms of the Settlement are set forth in the Settlement Agreement, which is available by clicking here. Those terms are summarized below. Nothing in the Settlement Agreement is an admission or concession on Defendants' part of any fault or liability whatsoever, nor is it an admission or concession on Plaintiffs' part that their claims lacked merit.

    1. The Class Covered by the Settlement. The Court certified a Class on July 26, 2017, and the Settlement applies to, and is binding on, that Class. The Class is defined as:

      All participants in the Franklin Templeton 401(k) Retirement Plan from July 28, 2010 to the date of judgment. Excluded from the class are Defendants, Defendants' beneficiaries, and Defendants' immediate families.

    2. Relief Provided to the Class by the Settlement.. Under the Settlement, (1) Franklin will contribute thirteen million, eight hundred fifty thousand dollars ($13,850,000) to a Settlement Fund (the "Settlement Amount"); (2) Franklin will provide an additional benefit to the Plan by increasing its existing match rate of eligible contributions to the Plan from its current rate of seventy-five percent (75%) of each participant's eligible salary deferrals to eighty-five percent (85%) of such deferrals for a period of three years (the "Increased Match"); and (3) the Investment Committee responsible for selecting investment options for the Plan will add a non-affiliated target date fund (TDF) to the Plan as an additional investment option.

      The Distributable Settlement Amount will be distributed to eligible Class Members pursuant to a Plan of Allocation to be approved by the Court. Individual benefits under the Settlement for each Class Member will be determined in accordance with that Plan of Allocation, and cannot be stated with certainty for any individual Class Member at this time. That is in part because the exact Distributable Settlement Amount and number of Class Members are not known at this time, although a preliminary review of Plan records suggests that approximately 6,900 individuals will be included in the Class. The proposed Plan of Allocation is available by clicking here.

      On a summary level, the Plan of Allocation will work as follows: The Settlement Administrator will determine the Distributable Settlement Amount to be allocated to Class Members. The Settlement Administrator will then calculate the portion of the Distributable Settlement Amount to be allocated to each Class Member, based on that Class Member's year-end account balance for each year from 2010 through 2018. Thus, a Class Member's allocation will depend on both the amount he or she maintained in the Plan over the Class Period and the number of years during the Class Period in which the Class Member maintained a balance. To ensure that no Class Member receives less than $10, any Class Member entitled to receive less than $10 will be allocated $10, and the remaining allocations will be adjusted proportionally.

      The following hypotheticals illustrate how the Plan of Allocation is designed to work. It is important to stress that these hypotheticals have been calculated using preliminary estimates of (i) the dollar amount to be distributed to Class Members, (ii) the number of Class Members, and (iii) the Class Members' Plan account data over only a portion of the Class Period (through 2017). The final allocations will depend on the final figures for each of those three factors, which will not be known until later in the settlement administration process. That said, based on these preliminary numbers:

      • Hypothetical Participant A, who had an average yearly Plan balance of $100,000 and was in the Plan for four years of the Class Period, may recover approximately $1,000.
      • Hypothetical Participant B, who had the same average yearly balance of $100,000, but was in the Plan for just two years of the Class Period, may recover approximately $500. (That is because, all things being equal, a Class Member who participated in the Plan for longer will get a larger allocation.)
      • Hypothetical Participant C, who had an average yearly Plan balance of $200,000 (double the average yearly balance of Hypothetical Participant A), but was in the Plan for the same four years as Hypothetical Participant A, may recover approximately $2,000. (That is because, all things being equal, a participant with a higher yearly Plan balances will get a larger allocation.)

      Settlement benefits will be distributed as follows: Current Plan participants with positive account balances who are no longer eligible to contribute to their accounts (generally, former employees) will receive their allocations from the Settlement Fund by electronic payment to their Plan accounts; and former participants (those who have closed out, or rolled over, their Plan accounts) will receive their allocations from the Settlement Fund by check. Current Plan participants with positive account balances who are still eligible to contribute to the Plan (generally, current employees) will receive their allocations first through the Increased Match, as described in the Plan of Allocation, and may also receive an allocation from the Settlement Fund after the conclusion of the Increased Match Period if the Increased Match received over that period was less than they would have been entitled to had they been entitled to participate in the initial settlement distribution.

      Actual allocation amounts will depend on the final Distributable Settlement Amount, the final number of Class Members, and the individual Class Member's aggregate yearly account balances and number of years in the Plan during the Class Period. It is possible that some Class Members may receive the minimum recovery of $10.

      All inquiries related to distributions should be addressed solely to the Settlement Administrator at the addresses listed below.

      Settlement Administrator
      Re: Franklin Resources, Inc.
      Settlement Administrator
      1650 Arch Street, Suite 2210
      Philadelphia, PA
      19103
      Email: info@FRI401kClassAction.com

    3. Summary of the Claims Released by the Class.In exchange for the Settlement Amount and other terms of the Settlement, all members of the Class will release any and all claims for monetary, injunctive, and all other relief against the Defendant Released Parties through the date the Court enters the Final Approval Order and Judgment (including, without limitation, any Unknown Claims) arising out of or in any way related to: (a) the conduct alleged in the operative Complaints, whether or not included as counts in the Complaints; (b) the selection, retention and monitoring of the Plan's investment options and service providers; (c) the performance, fees and other characteristics of the Plan's investment options; (d) the Plan's fees and expenses, including without limitation, its recordkeeping fees; (e) the nomination, appointment, retention, monitoring and removal of the Plan's fiduciaries; and (f) the approval by the Independent Fiduciary of the Settlement; except that the Released Claims shall not include claims to enforce the covenants or obligations set forth in the Agreement and shall not in any way bar, limit, waive, or release, any individual claim by any Class Member to vested benefits that are otherwise due under the terms of the Plan.

      Class Members will not have the right to sue the Defendants or other Defendant Released Parties, whether individually or on behalf of the Plan, for conduct pertaining to the Plan during the Class Period or conduct that the Settlement requires Defendants to undertake during its Compliance Period. The entire release is set forth in the Settlement Agreement, which can be viewed by clicking here, or requested from Class Counsel.

  3. What is the Settlement approval process?

    The Court overseeing the litigation has reviewed the Settlement and has granted preliminary approval of the proposed Settlement and approved the issuance of a Class Notice. The Settlement will not take effect, and there will be no benefits distributed under the Settlement, however, if the Court does not enter a Final Approval Order and Judgment or the Settlement otherwise does not become effective. The Court will hold a Final Approval Hearing on September 24, 2019 in Courtroom 6 at the United States District Court for the Northern District of California, Ronald V. Dellums Federal Building & United States Courthouse, 1301 Clay Street, Oakland, California. Class Counsel will attend the hearing to answer any questions the Court may have. You are not required to attend the Final Approval Hearing.

    The date and location of the Final Approval Hearing is subject to change by order of the Court without further notice to the Class. If you would like to attend the Final Approval Hearing, you should periodically check this website for updates, or the Court's online docket to confirm that the date has not been changed. Prior to the Final Approval Hearing, an Independent Fiduciary will be asked to approve the Settlement and Released Claims on behalf of the Plan, as may be required by ERISA Prohibited Transaction Exemption 2003-39 or any other applicable class or statutory exemptions. Defendants have the unilateral right not to proceed with the Settlement in the absence of such Independent Fiduciary approval.

  4. Can I object to the Settlement?

    As a Class Member, you can ask the Court to deny approval of the Settlement by filing an objection. You cannot, however, ask the Court to order settlement on different terms; the Court can only approve or reject the Settlement on the terms reached by the parties. If the Court denies approval, the Settlement Amount will not be distributed, the Increased Match will not be implemented, and the litigation will resume.

    Any objection to the proposed Settlement must be made in writing. If you file a timely written objection, you may, but are not required to, appear at the Final Approval Hearing, either in person or through your own attorney. If you appear through your own attorney, you are responsible for hiring and paying that attorney. All written objections and supporting papers must (a) clearly identify the case name and number (Cryer v. Franklin Resources, Inc., Lead Case No. 4:16-cv-04265-CW), (b) be submitted to the Court either by mailing them to the Class Action Clerk, United States District Court for the Northern District of California, Ronald V. Dellums Federal Building & United States Courthouse, 1301 Clay Street, Oakland, CA 94612, or by filing them in person at any location of the United States District Court for the Northern District of California, and (c) be filed or postmarked on or before September 10, 2019.

    Those Class Members or their attorneys intending to appear at the Final Approval Hearing must give notice of their intention to appear setting forth, among other things, the name, address, and telephone number of the Class Member (and, if applicable, the name, address, and telephone number of that Class Member's attorney) on Class Counsel and Defendants' Counsel and file it with the Court Clerk on or before September 10, 2019.

    If the Court approves the Settlement, Class Members will be bound by it and will receive whatever benefits they are entitled to under its terms. Class Members cannot exclude themselves from the Settlement. The Court certified the Class under Federal Rule of Civil Procedure 23(b)(1), which does not permit Class Members to opt out of the Class.

  5. Who represents the Settlement Class?

    The Class is represented by Class Counsel. The attorneys for the Class are as follows:

    Gregory Y. Porter
    Mark G. Boyko
    BAILEY & GLASSER LLP
    1055 Thomas Jefferson Street NW, Suite 540
    Washington, DC 20007
    mboyko@baileyglasser.com
    314-863-5446

    Robert A. Izard
    Mark P. Kindall
    Douglas P. Needham
    IZARD, KINDALL & RAABE LLP
    29 South Main Street, Suite 305
    West Hartford, CT 06107

    Class Counsel and the Class Representatives have devoted many hours to investigating the claims, bringing this litigation, and pursuing it for over two years. During that time, Class Counsel incurred litigation expenses in addition to the time spent by attorneys, paralegals, and others. Class Counsel also took the risk of litigation and have not been paid for their time and expenses while this litigation has been pending before the Court.

    Class Counsel will file a motion with the Court seeking approval of payment from the Settlement Fund of reasonable attorneys' fees and reimbursement of the expenses they incurred in prosecuting the litigation. They will request (1) attorneys' fees of $7,490,000, which represents approximately 28% of the aggregate value of the Settlement Amount and the estimated value of the three-year Increased Match, and (2) reimbursement of expenses of approximately $440,000. Plaintiffs will also request that the Court order Case Contribution Awards of $25,000 for Plaintiff Cryer and $15,000 for Plaintiff Fernandez from the Settlement Fund. Defendants have reserved the right to object to such requested amounts.

    Plaintiffs' preliminary approval motion and supporting papers were filed on February 15, 2019, and their papers in support of their fee and expense motion, as well as their papers in support of final approval of the Settlement, will be filed on or before July 30, 2019. You may review these filings on the Important Documents page of this website. Any award of Attorneys' Fees and Expenses and Case Contribution Awards approved by the Court, in addition to the Administration Costs, Independent Fiduciary Fees and Costs, and Taxes and Tax-Related Costs will be paid from the Settlement Fund

  6. How do I get more information?

    If you are a Class Member, you do not need to do anything to be a part of this Class or, if the Settlement is approved, to be eligible to receive your share of the Settlement Fund and/or Increased Match, as applicable. If you still have a Plan account with a positive balance when Settlement Fund distributions are made, your Settlement benefits will be distributed to your Plan account. If you no longer have a Plan account, a check will be mailed to you.

    The full Settlement Agreement, the Court's order granting preliminary approval, the Notice, and other relevant document are available to view on the Important Documents page of this website. If there are any changes to the deadlines identified in the Notice, the date of the Final Approval Hearing, or the Settlement Agreement, those changes will be posted to this website. Class Members will not receive an additional mailed notice with those changes, unless separately ordered by the Court. If you cannot find the information you need on the website, you may also contact 1-855-648-7266 for more information.

    These FAQ's summarize the proposed Settlement. The complete terms and conditions of the Settlement are described in the Settlement Agreement, which is available by clicking here, or by contacting class counsel, Mark G. Boyko at mboyko@baileyglasser.com or Oren Faircloth at ofaircloth@ikrlaw.com, by accessing the Court docket in this case, for a fee, through the Court's Public Access to Court Electronic Records (PACER) system at https://ecf.cand.uscourts.gov, or by visiting the office of the Clerk of the Court for the United States District Court for the Northern District of California, Ronald V. Dellums Federal Building & United States Courthouse, 1301 Clay Street, Oakland, CA 94612, between 9:00 a.m. and 4:00 p.m., Monday through Friday, excluding Court holidays.

Please do not contact the Court or counsel for Defendants to get additional information.