Paper products manufacturing giant Kimberly-Clark, which counts Kleenex among its many brands, recently settled a class-action ERISA suit, agreeing to pay about 15% of the alleged damages. The $2.25 million cash settlement stems from litigation that began in 2021, which alleged that the company’s 401(k) and profit-sharing plan failed to uphold their fiduciary responsibilities. Plaintiffs claimed that plan administrators allowed excessive recordkeeping and administrative fees — approximately $78 per participant — despite the availability of similar services from other providers at just over one-third the price.
Although initially dismissed for lack of sufficient evidence, the case gained traction after the plaintiffs amended their complaint. U.S. District Court Judge Sam Lindsay, who had originally ruled against allowing the case to proceed, reversed course in March 2023, rejecting Kimberly-Clark’s motion to dismiss the revised complaint. From there, both parties entered a discovery process that included more than 23,000 pages of documents, expert reports, and depositions. The lawsuit was ultimately resolved through mediation, a formal settlement was filed in December 2024 in the U.S. District Court for the Northern District of Texas.
While the settlement amount is not atypical, it also cost the organization years of litigation, with prolonged uncertainty about the eventual outcome and potential financial impact. Moreover, the alternative, a lengthy trial and appeals process, could have dragged on for years, with no guarantee of a favorable outcome for the defendant.
The cost of these cases can be difficult for any organization to absorb, not just in dollars, but in time, focus, and internal resources diverted from the organization’s core mission.
As of this writing, the Kimberly-Clark settlement still requires court approval before funds are disbursed. If approved, the agreement will provide cash payments to anyone who was a participant or beneficiary of the company’s 401(k) and profit-sharing plan between April 15, 2015, and the date of preliminary approval. Kimberly-Clark and its co-defendants have taken no position on the motion for settlement approval and have indicated that they do not intend to object. The company’s 401(k) and profit-sharing plan serves approximately 25,000 current and former employees.
Although the payout represents a fraction of what was initially sought, this case highlights the increasing legal pressure on employers to rigorously monitor fees. PlanFees’ innovative suite of benchmarking tools facilitates advisors’ ability to maintain reasonable fees and meet their fiduciary responsibilities. Powered by RPAG, our robust database of more than 83,000 retirement plans across hundreds of firms provides a powerful resource for advisors looking to help ensure plan costs are reasonable for their size and services provided.
In an era of high scrutiny over retirement plan expenses, the Kimberly-Clark settlement is a reminder of the consequences of not reining in high fees, because even minor oversights can lead to consequences that are nothing to sneeze at.
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