Edison Workers’ Counsel Can’t Get $1M for 401(k) Expert Fees

Schlichter Bogard & Denton LLP, the law firm that represents Edison International workers in their 11-year litigation over excessive fees in company’s 401(k) plan, won’t be able to recoup nearly $1 million in fees for expert witnesses used during the litigation.

The workers didn’t identify which of the expert’s work was “crucial or indispensable” to their only successful claim—that the Edison plan didn’t offer the cheapest share class of certain mutual funds, Judge Stephen V. Wilson of the U.S. District Court for the Central District of California held June 27. In the absence of such evidence, and because the court didn’t rely on any particular expert’s conclusions in reaching its decision, the reimbursement fee must be denied, Wilson said.

The decision shows how much is at stake for attorneys representing workers in excessive fee cases under the Employee Retirement Income Security Act. These cases, which started more than a decade ago, include novel theories and claims that are intensely fought in court. Many of these cases usually settle in the early stages of litigation, partly because attorneys assess the risks of a successful outcome and the costs of defending their clients’ positions.

Wilson’s ruling comes months after the parties agreed on a $5.8 million award of attorneys’ fees and costs to Schlichter after more than a decade of litigation. During this time, the case saw two trials, multiple trips to the U.S. Court of Appeals for the Ninth Circuit, and a significant 2015 U.S. Supreme Court ruling making it harder for 401(k) plan fiduciaries to have lawsuits challenging particular investment funds dismissed as untimely.

Last year, Wilson issued a $7.5 million judgment against Edison for its decision to include high-fee retail share mutual funds in its 401(k) plan when identical, lower-cost institutional share classes were available. The parties later agreed that Edison would pay $5.6 million in additional damages to the class.

In his latest ruling, Wilson pointed out that the workers “succeeded minimally on only part of one of ten of their claims,” which represented only a fraction of their damages claims. He further noted that the workers also conceded that much of the expert work that was performed during the litigation was unrelated to the successful claim.

Wilson, however, granted the workers’ request that each of the six class representatives receive $25,000 in incentive awards.

Hill Farrer & Burrill LLP and Schlichter Bogard & Denton LLP represent the workers. O’Melveny & Myers LLP represents Edison.

The case is Tibble v. Edison Int’l, C.D. Cal., No. 2:07-cv-05359-SVW-AGR, order denying plaintiffs’ motion for reimbursement of expert witness fees 6/27/18.

To contact the reporter on this story: Carmen Castro-Pagan in Washington at ccastro-pagan@bloomberglaw.com

To contact the editors responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com