Xerox Class Action Lawsuit Over Breach of ERISA Duties
Xerox allegedly charged outrageously high recordkeeping fees toward its employee pension benefit participants for at least six years, extorting members of the plan out of millions of dollars every year, according to a new class action lawsuit.
Chris Carrigan, et al., v. Xerox Corporation, et al.
Plaintiffs Chris Carrigan, Michael Venti, and Sylvain Yelle — all of whom are current or former members of the Xerox Corporation Savings Plan — filed the class action lawsuit toward Xerox Corporation as well as the Xerox Corporation Plan Administrator Committee in a federal court in Connecticut on Wednesday.
In addition, plaintiffs are filing claims under the 1974 Employee Retirement Income Security Act (ERISA). They are seeking to represent all participants in the Xerox Corporation Savings Scheme between Aug. 11, 2015, and Aug. 11, 2021, when the plan changed recordkeepers.
According to the plaintiffs, Xerox recruited its own affiliate recordkeeping firm as the plan’s recordkeeper immediately after entering the retirement plan recordkeeping market in the early 2010s. It then reportedly passed on its fees to plan participants, which were far more than acceptable market rates.
The class action lawsuit alleges that defendants permitted the plan to pay up to four times what it would have spent in the open market for comparable or superior recordkeeping services.
As a result, from 2015 through 2021, members paid millions of dollars every year in unnecessary fees.
Xerox’s Alleged Violation of ERISA.
The plaintiffs assert that ERISA requires employers and other plan fiduciaries to uphold rigorous fiduciary responsibilities of loyalty and prudence in order to protect retirement plan members.
However, the class action alleges that Xerox violated these fiduciary obligations by failing to supervise the plan’s recordkeeping service provider responsibly and loyally and instead utilized the plan to advance its own business interests.
Between 2013 and 2021, when Xerox recruited its recordkeeping affiliate, Xerox HR Benefit Services, the plan’s recordkeeping expenses more than doubled — from $54 per participant in 2013 to $136 per member in 2019 — the plaintiffs assert.
According to Plaintiffs’ investigation, a prudent and loyal fiduciary of an equally sized plan — in terms of participant count — could have acquired comparable recordkeeping services of similar or superior quality for $30 to $35 per participant from recordkeepers like Fidelity, Vanguard, Alight, and Empower between 2015 and the present, the class action states.
Xerox’s employee pension benefit plan comprised all eligible Xerox Corporation employees in the United States. Between 2015 and 2019, the plan had 21,000 to 30,000 participants and around $3.6 billion to $4.3 billion in assets, according to the class action.
The plaintiffs seek class certification, attorney’s fees, and costs, monetary remedy, and a jury trial.
ERISA is a federal law that protects certain types of retirement, pension, insurance, and disability plans.
In a nutshell, ERISA safeguards employees who contribute to employer-sponsored retirement plans such as 401(k) and 403(b) plans. Additionally, the Act regulates certain welfare benefit systems, such as long-term disability insurance (LTD).
Editor’s Note on Xerox Recordkeeping Class Action Lawsuit 2021:
This article is written to inform you of the latest class action lawsuit against Xerox over alleged ERISA violations. A similar class action was filed against John Hancock over unfair retirement plans.
Case Name & No.: Chris Carrigan, et al., v. Xerox Corporation, et al., Case No. 3:21-cv-01085-RNC
Jurisdiction: US District Court for the District of Connecticut
Products/Services: Retirement Plans & Recordkeeping
Allegations: Xerox allegedly charged high recordkeeping fees to the employees’ pension, thus, violating ERISA.
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