Taylor Corp., parent company of multiple Top 40 promotional products businesses and other print/promo firms, is settling a lawsuit former employees brought against it over the Minnesota-based organization’s 401(k) plan.

A Feb. 29 court motion filed by attorneys for Taylor and the people suing the corporation indicated that, through mediation, the parties have reached an agreement in principle to resolve the proposed class action-suit on a class-wide basis.

“The parties are presently working to finalize a written settlement agreement, and plaintiffs are preparing a motion for preliminary approval of the settlement,” the motion stated. “The parties anticipate that they can complete this process by April 5, 2024.”

Terms of the settlement were not yet detailed but would be established in the final agreed-upon written deal.

The former Taylor employees sued in February 2022. They alleged that the 401(k) plan for them from Taylor and its fiduciaries included multiple violations of the Employee Retirement Income Security Act of 1974 (ERISA), a federal law that sets in place minimum standards for most voluntarily established retirement and health plans in private industry, with the aim of protecting individuals in such plans.

In August last year, Minneapolis-based U.S. District Judge Eric C. Tostrud dismissed a number of the claims against Taylor and its fiduciaries, but allowed others to proceed.

Tostrud tossed complainant assertions that the plan charged excessive recordkeeping and management fees. “Plaintiffs do not allege facts plausibly showing that the plan’s recordkeeping fees are unreasonably high,” the federal judge wrote.

Tostrud also kiboshed claims tied to a purported underperforming investment, saying the “benchmarks alleged to support this theory are implausible.” Additionally, the judge threw out an assertion that fiduciaries placed their interests above those of employees/plan participants.

Still, Tostrud permitted the suit to proceed on claims that Taylor and its fiduciaries offered plan participants higher-cost investments when essentially the same, less expensive options were available. In effect, the judge felt the arguments in play needed deeper digging – the kind you’d perhaps get in a trial.

Cintas Set To Pay $4 Million To Settle 401(k) Plan Lawsuit https://t.co/shLrcKtxtB

— Chris Ruvo (@ChrisR_ASI) February 14, 2024

In a separate case, Top 40 distributor Cintas (asi/162167) also recently settled a 401(k)-related lawsuit with former employees.

“Accepting defendants’ proffered inference [for dismissal] — that the prudent use of revenue sharing caused the individual share classes to have a higher sticker price — would necessitate finding that the … allegations regarding the imprudent use of revenue sharing are not correct, that revenue sharing occurred in each of the individual-share-class funds at issue, and that this revenue sharing benefitted the plan,” Tostrud wrote. “It would be inappropriate to resolve these issues at the motion-to-dismiss stage.”

Because the employees expensive-share-class claim was allowed to go forward, the judge also permitted a related complaint to proceed – namely, that Taylor failed to adequately monitor fiduciaries managing the 401(k) plan.

An attorney for Taylor Corp. declined to comment. The corporation had not responded to a request for comment as of this writing.

Founded in 1975, Taylor Corporation has more than 80 subsidiaries, including Top 40 distributor Taylor Promotional Products (asi/333647) and Top 40 supplier ADG Promo Products (asi/97270).

In a separate case also involving ERISA violation claims, Top 40 distributor Cintas (asi/162167) agreed last month to a settlement that calls for the Cincinnati, OH-headquartered corporation to pay $4 million, plus fees, to end a class action lawsuit brought by former employees regarding the 401(k) plan it provided workers from December 2013 to at least December 2019.

Similar to the Taylor Corp. suit, the former Cintas employees asserted that Cintas’ plan instituted excessive recordkeeping fees and offered just actively managed mutual funds, rather than also making less expensive index funds an option, among other claims. Cintas sought to have the suit dismissed, but it was ultimately able to proceed, setting the stage for the settlement.