During an audit performed by Empower Retirement of the recent Dudenhoeffer settlement transactions in the Fifth Third 401(k) Savings Plan (formerly “Fifth Third Bancorp Master Profit Sharing Plan”) (the “Plan”), Empower discovered that the settlement proceeds of some settlement Class Members were incorrectly calculated. Some Class Members received settlement payments in excess of the amount they were eligible to receive, and some Class Members received less than the amount they were eligible to receive.
Class Members who received settlement payments in excess of the amount they were eligible to receive fall into three groups as follows:
If the amount credited to your Plan account was in excess of the amount you were eligible to receive and the funds remained in your account, an adjustment was made to your account on December 29, 2016. Investment earnings or losses were also adjusted on January 10, 2017.
If the amount credited to your Plan account was in excess of the amount you were eligible to receive and you requested a complete distribution of your entire account balance, Empower was unable to reverse the transaction. IRS rules require the Plan to take corrective action when operation errors occur. For an error such as this, Empower requests that you return the amount of your overpayment. Please call Empower Retirement at (866) 233-6446 to find out the amount of your overpayment. Please remit the funds immediately. You may send the payment in the form of a cashier’s check or certified check made payable to “Fifth Third Bancorp 401(k) Savings Plan” with the words “Correction Payment” on the subject line to one of the following:
Regular Mail to:
PO Box 173903
Denver, CO 80217
Express Mail to:
10035 East 40th Avenue, Suite 100
PO Box 561527 DN-CO-OCLB
Denver, CO 80238
If action is not taken by February 28, 2017, your overpayment will be reclassified as a taxable distribution event which may be subject to a 10% penalty tax if you are under 59 ½ and you will receive a form 1099-R for 2016. Please note that this taxable distribution is not eligible for rollover to an IRA or other qualified retirement plan.
If the amount credited to your Plan account was in excess of the amount you were legally entitled to receive, and you requested a rollover distribution of your account balance to another qualified plan, Empower was unable to reverse the transaction. IRS rules require the Plan to take corrective action when operational errors occur. For an error such as this, we must request that you return the overpayment plus earnings; otherwise, the Plan’s tax-qualified status may be in jeopardy. The amount of the overpayment was not eligible for rollover. Empower has contacted your new provider requesting reimbursement of the overpayment.
Action Required: Please contact your new provider to facilitate the return of the overpayment amount. If repayment is not received, Empower Retirement will report the overpayment to the Internal Revenue Service as a taxable distribution to you on the appropriate Form 1099 for 2016. As such, you may be subject to additional income taxes and federal penalties for the overpayment. Should you have any questions regarding the taxation of this distribution, please consult your tax advisor for information. If you have questions regarding how to facilitate the return of the overpayment to Empower, please contact them at (866) 233-6446.
Class Members who received settlement payments less than the amount they were eligible to receive fall into two groups as follows:
If the amount credited to your Plan account was less than the amount you were eligible to receive, an additional contribution was made to your Plan account. If your Plan account had been closed previously, it was reopened to enable Empower to make the contribution. Investment earnings or losses were also adjusted. The transactions were posted to your account on December 29, 2016.
If the amount paid to you by check was less than the amount you were eligible to receive and the additional amount is less than $200, an additional check will be mailed to you. If the additional amount is greater than $200, a Plan account will be opened for you and your funds will be deposited into that account.
If you have any questions about your Fifth Third 401(k) Savings Plan account, the amount of your overpayment or underpayment, or to request distribution of funds from your Plan account, please contact Empower Retirement at (866) 233-6446 or log onto www.53retirement.com. Representatives are available weekdays 8 a.m. to 10 p.m. ET except on NYSE holidays. The TTY number is (800) 345-1833.
Class Counsel is pleased to announce that the Settlement distribution is complete. If you are a Settlement Class Member who was eligible to receive a portion of the settlement proceeds that is greater than $200 and currently maintain an account in the Fifth Third Bancorp 401(k) Savings Plan (formerly “The Fifth Third Bancorp Master Profit Sharing Plan”) (“Plan”), your Settlement payment has been deposited into your Plan account. If you have questions regarding your Plan account or want to change your investment elections, you may contact Empower Retirement at 866-233-6446 or log onto www.53retirement.com. Representatives are available weekdays 8 a.m. to 10 p.m. Eastern. The TTY number is 800-345-1833.
If you are a Settlement Class Member who is eligible for a Settlement payment and no longer have an account in the Plan, or are entitled to a Settlement payment that is less than $200, a check has been mailed to you. If you have questions regarding the terms of the Settlement or how your Settlement payment was calculated, please call 855-979-7127. Please be advised that neither Class Counsel nor RG/2 Claims may provide tax advice regarding your Settlement check. If you have questions regarding any tax implications of cashing or rolling over your Settlement check, please consult your tax advisor.
If you would like to review the Court-approved Plan of Allocation, which details the method in which your Settlement payment was calculated, click here.
Welcome to the Settlement website for Dudenhoeffer, et al. v. Fifth Third Bancorp, et al, Civil Action No. 1:08-CV-538-SSB (the “Action”). This website has been established to provide general information related to the Action and the proposed Settlement. The capitalized terms used on this website and not defined herein shall have the same meanings ascribed to them in the Settlement Agreement and Release (“Settlement Agreement”).
Background of the Litigation
This Action was litigated by the Named Plaintiffs and Class Counsel for over six years before the Parties agreed on settlement terms. The initial complaint in this matter was filed against Defendants on August 12, 2008, by Named Plaintiff John Dudenhoeffer. Named Plaintiff, Alireza Partovipanah, filed his initial complaint on September 11, 2008. On September 21, 2009, Named Plaintiffs John Dudenhoeffer and Alireza Partovipanah filed a Consolidated Complaint. Defendants filed a Motion to Dismiss the Consolidated Complaint on October 5, 2009 which remained before the Court until it was granted on November 24, 2010. The Named Plaintiffs filed a Notice of Appeal to the United States Court of Appeals for the Sixth Circuit (“Sixth Circuit”) on December 22, 2010. Following full briefing, on September 5, 2012, the Sixth Circuit issued a decision reversing the District Court’s decision and remanding the case to the District Court. Defendants petitioned the Sixth Circuit for a rehearing and rehearing en banc, which was denied on October 12, 2012. Thereafter, on December 14, 2012, Defendants petitioned for a writ of certiorari to the Supreme Court of the United States. The Supreme Court granted the petition. After full briefing by the Parties, the Supreme Court heard oral argument on the case on April 2, 2014, and on June 25, 2014, it issued a decision vacating the Sixth Circuit’s decision and remanding the Action to the Sixth Circuit. While the Action was pending before the Sixth Circuit the Parties engaged in settlement discussions, which ultimately led to the resolution of this Action.
The Class Definition is as follows:
All Persons (excluding the Defendants and their Immediate Family Members) who were participants in or beneficiaries (including alternate payees) of the Fifth Third Bancorp 401(k) Savings Plan (formerly known as the Fifth Third Bancorp Master Profit Sharing Plan) at any time between July 19, 2007 and January 15, 2016 (the “Class Period”), and whose Plan account included investments in Fifth Third Stock.
Named Plaintiffs allege that Defendants violated ERISA by, among other things, permitting the Plan to hold shares of Fifth Third Stock during the Class Period when they knew or should have known it was imprudent to do so. Named Plaintiffs allege that Defendants knew or should have known that such investment was imprudent because, as explained in more detail in the Complaint, and among other things, leading up to and during the Class Period, Fifth Third shifted significantly from its historically conservative lending practices and engaged in risky subprime lending. Plaintiffs also alleged that the Defendants failed to disclose the true state of affairs within the Company, thus causing the Company Stock to be artificially inflated in price during the Class Period. In addition, Plaintiffs alleged that by the start of the Class Period there had been a change in the risk profile and business prospects of the Company given its mismanagement and improper business practices.
The Defendants deny all of the claims made in this Action including that allowing the Plan to hold Fifth Third Stock was imprudent or that they have liability to the Plan or its participants or beneficiaries. Defendants deny all of the claims and allegations made in the Action and deny that they ever engaged in any wrongful conduct, non-disclosure, violation of law or breach of duty. If the Action were to continue, the Defendants would raise numerous defenses to liability, including that, (1) Defendants did not engage in any of the allegedly improper conduct charged in the Complaint; (2) Defendants were not fiduciaries of the Plan, or if they were fiduciaries, their fiduciary duties did not extend to the matters at issue in the Action; (3) Defendants never failed to disclose any material information regarding the Company; (4) Fifth Third Stock was at all times a prudent investment for the Plan and its participants; (5) To the extent that they were fiduciaries as to the matters at issue in the Action, Defendants fully and prudently discharged all of their fiduciary duties under ERISA; and (6) Even if a court were to determine that Defendants failed to discharge any duty under ERISA, any such breach of fiduciary duty did not cause the Plan or its participants to suffer any loss.
The proposed Settlement is the product of hard-fought, lengthy negotiations between Class Counsel and the Defendants’ counsel. Over the course of several months, beginning with an in-person mediation session on February 3, 2015, the Parties mediated under the auspices of Robert Kaiser, a mediator with the Sixth Circuit Office of the Circuit Mediators. After that initial mediation session, the Parties continued their negotiations via several periodic telephonic conferences and numerous email exchanges. Following arm’s-length negotiations and this mediation session, on November 17, 2015, Named Plaintiffs and Defendants, through their respective attorneys, reached an agreement to settle the Action on behalf of all persons, except Defendants and their Immediate Family Members, who were participants in or beneficiaries of the Plan, at any time between July 19, 2007, and January 15, 2016 (the “Class Period”) and whose Plan accounts included investments in Fifth Third Stock, subject to the execution of definitive settlement documentation.
A Settlement Fund consisting of $6,000,000 is being established in the Action. The amount of money that will be allocated among members of the Settlement Class, after the payment of any taxes and Court-approved costs, fees, and expenses, including attorneys’ fees and expenses of Class Counsel, any Court-approved Case Contribution Awards to be paid to the Named Plaintiffs, and payment of expenses incurred in calculating the Settlement payments and administering the Settlement, is called the Net Settlement Fund. The amount of the Net Settlement Fund will not be known until these amounts are quantified and deducted. The Net Settlement Fund will be allocated to members of the Settlement Class according to a Plan of Allocation to be approved by the Court. The Plan of Allocation describes how Settlement payments will be distributed to Settlement Class Members who receive a payment. Not every member of the Settlement Class will receive a Settlement payment.
The Settlement Agreement provides for certification of the Settlement Class as a non-opt-out class action under Federal Rule of Civil Procedure 23(b)(1), and the Court has preliminarily determined that the requirements of that rule have been satisfied. Thus, it is not possible for any Settlement Class Members to exclude themselves from the Settlement. As a Settlement Class Member, you will be bound by any judgments or orders that are entered in the Action for all claims that were or could have been asserted in the Action or are otherwise released under the Settlement.
The Final Approval Hearing before U.S. District Judge Sandra S. Beckwith has been scheduled for 10:00 a.m. on July 11, 2016 at the United States District Court for the Southern District of Ohio, Western Division, Potter Stewart United States Courthouse, 100 East Fifth Street, Cincinnati, Ohio 45202, or such other courtroom as the Court may designate. At that hearing, the Court will consider whether the Settlement is fair, reasonable, and adequate. If there are objections, the Court will consider them. The Court will also rule on the motions for attorneys’ fees and reimbursement of expenses and for Case Contribution Awards for the Named Plaintiffs. The Parties do not know how long these decisions will take or whether appeals will be filed. The Court may adjourn the Final Approval Hearing without further notice to the Settlement Class, so if you wish to attend, you should confirm the date and time of the Final Approval Hearing with Class Counsel before doing so.
If you have questions about the Settlement, please send an email to FifthThirdERISAsettlement@ktmc.com. A toll free number of 855-979-7127 has also been set up if you prefer to call with your questions.