IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA DECLARATION OF MARY ELLEN SIGNORILLE

Transcription

1 CASE 0:11-cv SRN-JSM Document 611 Filed 05/13/15 Page 1 of 7 ROGER KRUEGER, et al., IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA v. Plaintiffs, No. 11-CV (SRN/JSM) AMERIPRISE FINANCIAL, INC., et al., Defendants. DECLARATION OF MARY ELLEN SIGNORILLE I, MARY ELLEN SIGNORILLE, hereby declare that: 1. I make this declaration of my personal knowledge, and if called as a witness, I could and would testify competently to the facts stated herein. I am not being compensated for my time in providing this declaration and I do not have any financial stake in the outcome of the above-referenced litigation. 2. I am a senior staff attorney with AARP Foundation Litigation, located in Washington, D.C. I received my law degree from The Catholic University of America, Columbus School of Law, and I hold a Masters (LLM) in Labor Law from Georgetown University Law Center. I am a member in good standing of the Bars of the District of Columbia and the State of Maryland. In addition to these state bar memberships, I am admitted to practice before the U.S. District Court for the District of Columbia and Maryland, as well as the First, Third, Fourth, Fifth, Seventh, Ninth, Tenth, and Eleventh Circuit Courts of Appeals, and the U.S. Supreme Court. 3. Since 1993, I have worked at AARP and its affiliated AARP Foundation Litigation, practicing almost exclusively in the area of pension and employee benefit 1

2 CASE 0:11-cv SRN-JSM Document 611 Filed 05/13/15 Page 2 of 7 litigation under the Employee Retirement Income Security Act (ERISA). I have prepared over 100 amicus curiae briefs on employee benefits issues on behalf of AARP and its millions of members in cases before the U.S. Supreme Court, and federal and state courts. I also provide substantive and technical guidance to individuals, employers, and attorneys on complex issues arising under the ERISA and the Internal Revenue Code. I also work with AARP s Government Affairs office to prepare AARP s comments to the regulatory agencies charged with enforcing ERISA including our comments to the Department of Labor on fees. 4. In addition to my work with AARP, I was elected to the charter class of the American College of Employee Benefits Counsel in 2000 and have formerly served as its President, Vice-President and Treasurer. I am currently a representative to the American Bar Association s Joint Council on Employee Benefits and am a past Chair. I have also served as the Plaintiff s Co-Chair to the ABA s Labor and Employment Law s Employee Benefit Committee, and a Co-Chair and Steering Committee member of the District of Columbia Bar s Labor and Employment Law Section. I am currently a Senior Editor of EMPLOYEE BENEFITS LAW, a well-known treatise in the field. I was chosen as one of the top benefits lawyers in the country by THE NATIONAL LAW JOURNAL. I have also lectured on the subject of employee benefits at the George Washington School of Law, Chicago-Kent College of Law, John Marshall School of Law, and New York University. Before joining AARP, I was in private law practice where I represented national and local employee benefit plans, labor organizations and employers in litigation and other ERISA and employee benefits matters. 2

3 CASE 0:11-cv SRN-JSM Document 611 Filed 05/13/15 Page 3 of 7 5. My legal work in the pension and employee benefit plan area has included the litigation of a broad spectrum of employee benefit and ERISA issues. This has included litigation regarding preemption, benefit claims, breaches of fiduciary duty, and the scope of relief available under the different subsections of ERISA s civil enforcement provisions. At present, virtually all of my work is in the employee benefit area. 6. My duties at AARP Foundation Litigation include keeping apprised of issues that may affect the financial security of AARP members. This includes keeping apprised of trends in the retirement plan market and issues arising in ERISA litigation. Of particular importance are issues involving defined contribution plans such as 401(k) plans. These plans have become the predominant private vehicle for providing retirement income in America. As of 2011, more than 88 million Americans participated in definedcontribution plans. 1 As of 2014, those plans held an estimated $5.2 trillion Unlike traditional pension plans, which are required to provide a lifetime annuity as a distribution option, 401(k) plans do not provide a guaranteed benefit. Rather, the ultimate benefit received is dependent upon whether plan assets experience investment growth or suffer losses during the life of the account. If a plan fiduciary selects investments with poor performance or allows participants to be charged excessive fees, the value of the participants accounts may be greatly impaired. Because of the 1 Employee Benefits Sec. Admin., U.S. Dep t of Labor, Private Pension Plan Bulletin: Abstract of 2011 Form 5500 Annual Reports 3 tbl. A1 (Sept. 2014), bulletin.pdf. 2 Bd. of Governors of the Fed. Reserve Sys., Financial Accounts of the United States: Flow of Funds, Balance Sheets, and Integrated Macroeconomic Accounts 131 tbl. L.117.c (Sept. 2014), gov/releases/z1/current/z1.pdf. 3

4 CASE 0:11-cv SRN-JSM Document 611 Filed 05/13/15 Page 4 of 7 effect of compounding interest, a difference of only 1% over a 35-year career will reduce the value of the average worker s account by 28% at retirement. 3 Accordingly, the importance of ensuring that investment options are prudent and that expenses are no more than reasonable cannot be overstated. Consequently, the protections provided by ERISA s stringent fiduciary duties are more important than ever to the retirement security of millions of Americans. 8. ERISA class actions brought by private attorneys are an important vehicle for enforcing those duties and ensuring the protection of ERISA plan participants retirement savings. As the Eighth Circuit Court of Appeals has observed, the Department of Labor, which is charged with enforcing ERISA, depends in part on private litigation to ensure compliance with the statute. 4 However, this area of the law is extremely complex, and requires a willingness to risk significant resources in time and money given the uncertainty of recovery and the protracted and sharply-contested nature of ERISA litigation. In my experience consulting with attorneys involved in these cases, very few in the country have the necessary expertise, resources, and dedication necessary to effectively pursue ERISA fiduciary breach class actions on behalf of plan participants. 9. Based on my experience closely following ERISA litigation nationally, it is my assessment and well-recognized that Schlichter, Bogard, & Denton is at the forefront of 40l(k) excessive fee litigation, and has been since its attorneys first filed excessive fee 3 See, e.g., U.S. Dep t of Labor, A Look at 401(k) Plan Fees 1 2 (Aug. 2013), Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 597 n.8 (8th Cir. 2009). 4

5 CASE 0:11-cv SRN-JSM Document 611 Filed 05/13/15 Page 5 of 7 cases in Fall of In the specific area of claims of excessive fees in 401(k) plans, there were virtually no cases filed prior to September Neither private attorneys nor the Department of Labor had brought claims of excessive fees. At that point, Schlichter, Bogard & Denton filed a series of cases, alleging excessive fees and fiduciary breaches on behalf of employees and retirees. Such cases involve even more risk than other ERISA cases because the law was not developed; very significant investment of resources for document production and review was needed; the costs of expert witnesses was tremendous; and the risk was staggering. I have also observed that these cases, and those filed thereafter, have been vigorously defended by Defendants, including Ameriprise Financial, Inc. ( Ameriprise ). In fact, I know of no other firm that has invested the amount of resources in these cases that Schlichter, Bogard & Denton has. 10. Complex ERISA litigation, like that conducted by Schlichter, Bogard, & Denton in this case, is highly specialized legal work that requires class counsel to invest very large sums of money. I understand that in pursuing this case, Schlichter, Bogard, & Denton has already expended almost 28,000 attorney hours, over 2,700 legal assistant hours, and advanced over $775,000 in expenses carried for a period going back over three-and-a-half years, taking the risk of non-payment in the event of an adverse decision. If the plaintiffs are unsuccessful, they face not only the enormous loss of their own time and resources, but also the possibility of bearing the defendants costs and attorney fees under ERISA s fee-shifting provision. 5 5 See 29 U.S.C. 1132(g)(1). 5

6 CASE 0:11-cv SRN-JSM Document 611 Filed 05/13/15 Page 6 of This case and other similar cases brought by Schlichter, Bogard, & Denton have contributed to measurable reductions in fees paid by 401(k) plan participants throughout the United States, through heightened awareness and scrutiny of fees, selfdealing, and imprudent investment options in 401(k) plans. 12. In addition to the significant monetary settlement, the affirmative relief required by the Settlement Agreement will further improve the retirement benefits of Ameriprise s employees and retirees going forward. Among the highlights of this relief are requirements that Ameriprise conduct competitive request for proposals for recordkeeping services and investment consulting services, and a requirement that the fiduciaries continue to consider the use of collective investment trusts or separately managed accounts with the lowest cost of participation. 14. This substantial affirmative relief also sends an important signal to other large corporations that failure to follow similar standards may be imprudent in light of the significant reduction in participant returns on investment. 15. In connection with my amicus work on behalf of AARP, I have been engaged in litigation in courts in many judicial districts. Because of the highly specialized and technical nature of this practice and the dearth of attorneys who possess the requisite skills, experience, and willingness to undertake this type of work, every plaintiff s ERISA class action firm with whom I have worked extends its practice beyond its local district to courts throughout the United States. Therefore, the unique nature of this practice area makes the relevant market for determining reasonable attorney s rates in these cases a national one. 6

7 CASE 0:11-cv SRN-JSM Document 611 Filed 05/13/15 Page 7 of I have reviewed the Motion for Attorney s Fees submitted by Schlichter, Bogard, & Denton in connection with the firm s representation of the plaintiff classes in this case. Based on my experience both in private practice and as a senior attorney with AARP Foundation Litigation, and my knowledge of typical fee arrangements and hourly rates for ERISA attorneys of similar experience, expertise, and years of practice around the country who represent plans, employers, and individuals, I believe I am sufficiently well informed to render an opinion on the reasonableness of fees for representation of a variety of clients in ERISA matters. 17. In my opinion, this settlement provides an exceptional recovery to the Ameriprise Financial Inc. 401(k) plan, and was only made possible by Schlichter, Bogard & Denton risking tremendous sums of time and money while providing an exceptional level of professional services throughout years of litigation. 18. The firm has also committed to devote substantial additional attorney time to monitoring compliance with the prospective relief provisions over the next three years, and an enforcement process that could result in future litigation, all at no charge to plan participants. 19. Based on all of these facts, Schlichter, Bogard, & Denton s requested fee of $9,166,666.00, is well within the range of reasonableness for this extraordinary result. I declare under penalty of perjury that the foregoing is true and correct. Executed on May 11, 2015 at Washington, D.C. s/ Mary Ellen Signorille Mary Ellen Signorille 7