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Uniform giant Cintas Corp. has reached a $4 million settlement to put an end to a high-stakes legal battle over alleged mismanagement of its $1 billion retirement plan. The proposed class action accused the company of breaching its fiduciary duties under the Employee Retirement Income Security Act, leaving more than 50,000 plan participants in the lurch.

Allegations Unveiled

Workers claimed Cintas opted for investment options that not only cost more but also underperformed compared to alternatives in the market. The saga, which unfolded in Ohio federal court, saw the plaintiffs accusing Cintas of neglecting its obligations under federal benefits law.

Cintas To Pay $4M To End 401(k) Mismanagement Suit: Landmark Agreement

The proposed settlement, subject to preliminary approval by an Ohio federal judge, has been hailed by the plaintiffs as a significant victory. They argue it offers swift relief to settlement class members, sparing them the uncertainties and expenses of a prolonged trial.

Terms of Resolution

Under the terms, Cintas will fork out $4 million and initiate a request for proposal process within five years to scout for a new record-keeping services provider. Legal fees are capped at one-third of the settlement fund, while litigation costs and incentive awards for named plaintiffs are also delineated.

Cintas To Pay $4M To End 401(k) Mismanagement Suit: Legal Wrangling

The legal tussle commenced in December 2019 when workers alleged Cintas failed to weed out high-cost and underperforming investment funds from their retirement plan. Cintas attempted to divert the case to arbitration, but both lower and appellate courts upheld the workers' right to litigate in court.

Denouement

Following a failed attempt to secure Supreme Court intervention, Cintas engaged in mediation and eventually struck a deal to resolve the dispute. The company, while denying the allegations, expressed contentment with ending the legal saga to avoid the toll of protracted litigation.

Cintas To Pay $4M To End 401(k) Mismanagement Suit: Final Note

Representatives for the workers declined to provide further comments on the settlement. Legal counsel for Cintas echoed satisfaction with the resolution. The case, titled Hawkins et al. v. Cintas Corp. et al., was heard in the U.S. District Court for the Southern District of Ohio.