Gerdau Ameristeel has agreed to settle a proposed class action lawsuit that alleged the steel manufacturer’s 401(k) plan burdened employees with unreasonable fees and risky investment options, according to a Wednesday filing in Florida federal court.

Plaintiff Grant Molla, who led the lawsuit, notified the court that he and Gerdau Ameristeel US Inc. reached a settlement during mediation on Tuesday. He requested two weeks to submit a motion for court approval of the agreement.

The resolution follows U.S. District Judge Virginia M. Hernandez Covington’s Jan. 25 order granting Gerdau’s motion to dismiss the lawsuit without prejudice. The judge ruled that Molla had failed to properly outline how he raised his concerns with the 401(k) plan committee before filing the lawsuit.

Allegations Against Gerdau Ameristeel’s 401(k) Plan

Molla filed the lawsuit in September 2022, targeting Gerdau Ameristeel, the U.S. subsidiary of Brazilian steel giant Gerdau. His complaint alleged that the company’s retirement plan, which had nearly 4,300 participants and $655 million in assets as of December 31, 2020, was mismanaged.

The lawsuit accused Gerdau Ameristeel of:

• Charging excessive recordkeeping fees to plan participants.
• Failing to offer the lowest-cost share class for the plan’s mutual funds.
• Selecting actively managed funds instead of safer and cheaper passively managed options.

Molla also claimed that in October 2022, he issued a $6 million settlement demand, but Gerdau did not accept the offer.

Legal Proceedings and Settlement Talks

Shortly after Molla filed the lawsuit, the court paused proceedings to allow him to formally present his claims to Gerdau’s retirement plan committee. At the time, Molla expressed doubt about the effectiveness of the process, stating that exhaustion of internal remedies was “likely excusable and/or futile.”

In November 2023, after Gerdau’s committee denied Molla’s claims and appeal, both parties sought to lift the case’s stay. However, Gerdau again moved to dismiss the lawsuit, arguing that Molla had not sufficiently demonstrated that he had exhausted administrative remedies before filing the lawsuit.

Judge Covington dismissed the case but allowed Molla to amend his complaint to document his attempts at internal resolution. Molla did so in August 2023, but Gerdau challenged the sufficiency of his pleading, claiming that he improperly introduced new claims that were never raised before the retirement plan’s committee.

Molla countered that his exhaustion history was well-documented and that any new claims would have been futile to pursue internally. However, Judge Covington ruled that these theories were not included in his amended complaint, giving him one last chance to revise his filing.

Instead of continuing litigation, both parties opted for settlement during a mediation session on Tuesday.

Awaiting Court Approval

While details of the Gerdau Ameristeel 401(k) settlement have not yet been disclosed, Molla’s attorneys have requested two weeks to finalize the agreement and seek court approval.

Neither Gerdau Ameristeel nor Molla’s attorneys have commented publicly on the settlement.

Legal Representation

• Molla is represented by:
  • Marc R. Edelman of Morgan & Morgan PA
  • Brandon J. Hill, Luis A. Cabassa, and Amanda E. Heystek of Wenzel Fenton Cabassa PA
• Gerdau Ameristeel is represented by:
  • Brett J. Preston and Fred C. Marshall of Hill Ward & Henderson PA