## Facts

- Participants in Coca-Cola Consolidated, Inc.’s 401(k) plan sued Coca-Cola Consolidated and related plan fiduciaries in a putative class action alleging violations of the Employee Retirement Income Security Act of 1974 (ERISA).
- The participants alleged fiduciary breaches tied to the plan’s investments and fees, including claims that fiduciaries allowed unreasonable recordkeeping and administrative expenses and retained allegedly imprudent, higher-cost investment options (including certain target-date funds) when lower-cost alternatives were available.
- After the litigation progressed and the parties exchanged significant information about the claims and defenses, the participants moved for class certification and also sought preliminary approval of a proposed class-action settlement.
- The settlement was reached after vigorous, arm’s-length negotiations that included mediation and follow-on bargaining.
- In support of preliminary approval, the parties represented that class counsel and the class representatives had sufficient information to assess the merits, risks, and settlement value based on the work completed to date.
- The parties also represented that, without settlement, they would face further litigation that would be expensive and uncertain, including continued disputes about class treatment and expert issues.
- The proposed settlement provided a method to distribute the settlement funds to class members and included terms addressing attorneys’ fees.

## Issues

1. Whether the proposed settlement class satisfied Federal Rule of Civil Procedure 23’s requirements (including Rule 23(a) and Rule 23(b)) for certification in an ERISA fiduciary-breach case.
2. Whether the proposed class-action settlement should receive preliminary approval under Rule 23(e) as fair, reasonable, and adequate, including whether the allocation/distribution approach, notice plan, and attorneys’ fee terms raised any fairness concerns.

## Decision

- The court granted the participants’ motion for class certification for settlement purposes and certified the proposed settlement class.
- The court granted the motion for preliminary approval of the class-action settlement.
- The court found the settlement resulted from vigorous, arm’s-length negotiations and showed no indication of collusion.
- The court found class counsel and the class representatives had sufficient information to evaluate the settlement because of the litigation work completed before settlement.
- The court determined that continued litigation would be costly and uncertain, making settlement a reasonable compromise.
- The court concluded the settlement amount fell within the range of recoveries obtained in similar ERISA excessive-fee and imprudent-investment cases.
- The court approved the proposed method for distributing and allocating settlement proceeds as efficient and equitable at the preliminary stage.
- The court found the provisions regarding attorneys’ fees did not, on their face, raise concerns about the fairness of the agreement.
- The court approved the notice process and set the matter on a schedule for final approval proceedings.

## Legal Principles

- A settlement class may be certified if the proposed class satisfies Rule 23(a)’s requirements of numerosity, commonality, typicality, and adequacy, and also satisfies Rule 23(b)’s requirements (including predominance and superiority where applicable).
- In ERISA fiduciary-duty cases seeking plan-wide relief, class treatment is often appropriate when the alleged misconduct arises from common plan-level investment and fee decisions affecting participants in a similar manner.
- Preliminary approval under Rule 23(e) is appropriate when the court can determine, based on the record, that the settlement is within the range of possible approval and appears fair, reasonable, and adequate.
- In assessing preliminary approval, courts consider whether negotiations were conducted at arm’s length, whether the parties had enough information to make informed decisions, and the costs, risks, and delay of continued litigation.
- Courts evaluate whether the settlement’s allocation and distribution method treats class members fairly relative to each other and provides an administratively workable way to distribute funds.
- Attorneys’ fee provisions are reviewed for indications that class relief was traded for counsel’s compensation; at the preliminary stage, courts look for facial problems suggesting unfairness to the class.

## Conclusion

In Jones v. Coca-Cola Consolidated, Inc., the court certified a settlement class and preliminarily approved an ERISA 401(k) class settlement after finding Rule 23’s certification requirements met and concluding that the negotiated settlement—reached through arm’s-length bargaining after meaningful case development—appeared fair, reasonable, and adequate, with a workable allocation and distribution plan and no apparent unfairness in the attorneys’ fee terms.


Jones v. Coca-Cola Consolidated, Inc., 2022 WL 703605 (2022)