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Class Definition in SunTrust ERISA Lawsuit

Between mid-2007 and early 2011, SunTrust Banks ("SunTrust" or the "Company") was accused of improperly handling its employees' 401(k) plan by purchasing its own common stock with the employees' retirement funds. Given the large stake in the subprime housing market (one of the main contributors to the Great Recession), SunTrust's employees filed a lawsuit in mid-2008, alleging that the Company's actions were imprudent and that it breached its Employment Retirement Income Security Act ("ERISA") fiduciary duties, which require SunTrust to act solely in the interests of the 401(k) plan members. The employees further claimed that SunTrust breached its fiduciary duties by failing to disclose how it was using the employees' retirement savings.

In order to certify a class in federal court, lawsuits must fulfill requirements in accordance with Rule 23 of the Federal Rules of Civil Procedure. Part of Rule 23 requires all members of a class to have the same interests in filing a suit. Thus, SunTrust successfully argued that, since not all 401(k) plan members were harmed by its investments and some benefited greatly, the class should not be certified.

As a result, the Plaintiff amended the class definition to only include plan members who were injured and excluded individuals who signed severance agreements that waived their right to file ERISA claims.

On August 17, 2016, U.S. District Judge Richard W. Story accepted the amended definition and certified the class for thousands of SunTrust's 401(k) plan participants. This decision has come a long way from 2010, when Judge Story dismissed the claim that SunTrust breached its fiduciary duty by investing in its own stock, but held that the Company was responsible for providing financial information and investment materials to 401(k) plan members. However, his dismissal was overturned in 2013 by the Eleventh Circuit Court of Appeals.

The legal team at SFMS has substantial experience litigating employment matters. If you have any questions regarding this subject or this posting, please contact Nick Lussier (nlussier@sfmslaw.com) or Chiharu Sekino (csekino@sfmslaw.com). We can also be reached toll-free at (866) 540-5505.

Shepherd, Finkelman, Miller & Shah, LLP, is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, Pennsylvania and Wisconsin. SFMS is an active member of Integrated Advisory Group (www.iaginternational.org), which provides our firm with the ability to provide our clients with access to excellent legal and accounting resources throughout the globe. For more information about our firm, please visit us at www.sfmslaw.com.

Sources: Kang, Y. Peter. "SunTrust Employees Win Class Cert. in ERISA Suit." Law360. Portfolio Media, Inc. 17 Aug. 2016. Web.

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