Class Counsel is pleased to announce
that on March 6th, 2012, the Court entered an Order and Final Judgment in favor
of the Plaintiffs. The Court also granted Plaintiffs' motion for Award of
Attorneys’ Fees, Reimbursement of Expenses and Case Contribution Awards. The
Orders are available on the Court Documents page of this website.
Background of the Litigation
The initial complaint in this matter was filed against Defendants on November 17, 2009, by Plaintiffs Eva L. Hanna and Shelley F. Whitson. In the next few months, Plaintiffs Daniel J. Cambra and Patrick M. Couch filed similar complaints against these same defendants. On March 2, 2010, the Court consolidated the three actions. On April 1, 2010, the Named Plaintiffs filed a consolidated complaint (“Complaint”) in the Action. On April 22, 2010, another analogous action was filed styled Franklin v. YRC Worldwide, Inc., et al., Case No. 10-2232-EFM-DWB (D. Kan.), which the Court consolidated with the Action on May 12, 2010. On June 1, 2010 Defendants filed a motion to dismiss Plaintiffs’ Complaint and also filed a motion to strike Plaintiffs’ jury demand. Named Plaintiffs opposed the two motions on August 6, 2010, and Defendants filed their reply motions on September 15, 2010. Further, on October 1, 2010, Named Plaintiffs filed their motion for class certification. On October 29, 2010, the Court entered an Order granting in part and denying in part Defendants’ Motion to Dismiss. On November 17, 2010, Plaintiff Franklin was dismissed from the Action. On November 29, 2010, Defendants filed an Answer to Named Plaintiffs’ Complaint, and the Court entered an Order granting Defendants’ motion to strike Named Plaintiffs’ jury demand. On January 10, 2011, Defendants filed their opposition to Named Plaintiffs’ motion for class certification. On January 28, 2011, Named Plaintiffs filed a motion to strike the affirmative defenses Defendants asserted in their Answer to the Complaint. On March 4, 2011, Named Plaintiffs filed their reply in support of their motion for class certification, and on April 6th, the Court entered an Order granting Named Plaintiffs’ class certification motion. A few days later, on April 15th, the Court entered another Order granting in part and denying in part Named Plaintiffs’ motion to strike affirmative defenses. Shortly thereafter, the Parties informed the Court of their successful settlement discussions.
Named Plaintiffs allege that Defendants violated ERISA by, among other things: (1) continuing to invest the Plans’ assets in YRCW stock when it was imprudent to do so; (2) failing to provide complete and accurate information to the Plans’ participants regarding the YRCW’s financial condition and the prudence of investing in YRCW stock; and (3) failing to adequately monitor other persons to whom management or administration of the Plans’ assets was delegated, despite the fact that certain Defendants knew or should have known that such other fiduciaries were imprudently allowing the Plans to continue offering YRCW stock as an investment option and investing the Plans’ assets in YRCW stock when it was no longer prudent to do so.
Named Plaintiffs allege that Defendants allowed the heavy imprudent investment of the Plans’ assets in YRCW stock throughout the Class Period despite the fact that they knew or should have known that such investment was imprudent because, among other things, YRCW was experiencing: (a) a deteriorating demand for trucking services and increased expenses; (b) significant difficulties securing appropriate credit facilities while YRCW was experiencing debilitating increases in operating costs; (c) an excessive increase in YRCW’s debt to equity ratio; (d) numerous downgrades of YRCW’s credit ratings; and (e) an exorbitantly high debt-default and bankruptcy risk.
Defendants deny that they have liability to the Plans or its participants or beneficiaries. If the Action were to continue, the Defendants would raise numerous defenses to liability, including, (1) Defendants did not engage in any of the allegedly improper conduct charged in the Complaint, (2) YRCW at all times fairly and accurately reported on its financial performance and prospects and on the higher risk inherent in an investment in YRCW stock, and (3) to the extent they were fiduciaries as to the matters at issue in the Action, Defendants fully and prudently discharged all of their fiduciary duties imposed on them by ERISA.
The proposed Settlement is the product of hard-fought, lengthy negotiations between Class Counsel and the Defendants’ counsel. Throughout the negotiations, Class Counsel and Defendants’ counsel were advised by individuals with expertise of the estimation of potential losses or damages in cases involving ERISA fiduciary liability.
YRCW will set up a fund in the amount of $6,500,000. As noted earlier, the Court certified a class on April 6, 2011 under Federal Rules of Civil Procedure 23(b)(1). For purposes of the Settlement, Named Plaintiffs requested that the Court modify the already certified class so that it includes an end date of June 8, 2011 for the Class Period. The Court approved this modification in granting preliminary approval of the Settlement on November 22, 2011. Because the class was certified under Federal Rules of Civil Procedure 23(b)(1) it is a non-opt-out class. Thus, it is not possible for any Class member to exclude himself or herself from the Settlement. As a Class member, you will be bound by any judgments or orders that are entered in the Litigation for all claims that were or could have been asserted in the Litigation or are otherwise released under the Settlement.
The Court will hold the Fairness Hearing at 9:00 a.m. on March 6, 2012 at the U.S. District Court for the District of Kansas, 500 State Ave., 259 U.S. Courthouse, Kansas City, Kansas 66101, in the Courtroom then occupied by United States District Judge John W. Lungstrum. 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 Class Counsel’s application for Attorneys’ Fees and costs and for the Named Plaintiffs’ Case Contribution Awards. We do not know how long these decisions will take or whether appeals will be taken.
If you have questions about the Settlement, please send an email to YRCWorldwideERISAsettlement@ktmc.com
. This e-mail will go to Class Counsel and will be directed to the individuals handling the Settlement. Class Counsel have also set up a toll free number, 1-866-797-0862, if you prefer to call with your questions.