Proposed $43 Million Settlement in ERISA Plan Class Action

Cleveland, OHParticipants in an ERISA plan associated with National City Corporation (National City) will benefit from a proposed $43 million settlement in a class action lawsuit alleging those defendants responsible for administering the National City Savings and Investment Plan (Plan) breached their fiduciary duties under ERISA by making imprudent investments not in the best interests of Plan holders.

ERISA denotes the Employee Retirement Income Security Act of 1974, an Act designed to protect participants of investment plans and 401(k) plans by ensuring those responsible for managing such plans and investing on behalf of plan participants do so with the best interests of participants.

It was alleged that the defendants responsible for the employee stock plan allowed the investment of Plan assets in National City common stock or National City Stock Fund units during a time when they knew, or should have known that the investments they were making were imprudent. Further, according to a release from the US District Court for the Northern District of Ohio, Eastern Division, the defendants are alleged to have breached their fiduciary duties by allowing the Plan to invest in Allegiant Funds in violation of ERISA.

The defendants deny any wrongdoing.

The announced settlement of $43 million in the employee savings plan case, as proposed, will be less court-approved legal fees, various other expenses and case contribution awards to named plaintiffs. The remainder, according to the release, will then be allocated to the accounts of Plan participants who saw portions of their Plan accounts invested in National City common stock or fund units in the National City Stock Fund at any time from September 5, 2006 to December 31, 2008 and to Plan participants who held Allegiant Funds in their Plan accounts at any time from March 25, 2002 through December 31, 2009.

A hearing is scheduled for November 30th in the US District Court for the Northern District of Ohio (Eastern Division) before US District Judge Solomon Oliver, Jr.

Any employee investing in an employee 401(k) plan or other ERISA pension plan (that is, protected under ERISA provisions) does so with the hope that prudent investments and management will yield the necessary funds for a comfortable retirement. Beyond that hope is the expectation, regardless of what the market does, that the plan will be managed prudently—with the confidence that if it is not, then ERISA benefits under the 1974 ERISA Act will prevail.