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In a pivotal judgment delivered on Tuesday, the U.S. District Court curtailed the attorney fees in a $4.1 million ERISA lawsuit involving nearly 40,000 Xerox employees. Judge Sarala V. Nagala sanctioned a 25% cut of the settlement amount to the plaintiffs' attorneys, contrary to the one-third initially claimed, settling on a more balanced figure exceeding $1 million.

Xerox $4.1M ERISA Deal Trimming : The Long Road to Justice

This legal showdown began when a class action was lodged against Xerox Corp. and its 401(k) retirement plan committee in August 2021. Allegations pointed to egregious mismanagement of plan fees, accusing the company of charging triple the competitive rates. The plaintiffs' team, spearheaded by Nichols Kaster PLLP and Garrison Levin-Epstein Fitzgerald & Pirrotti PC, argued that Xerox exploited its position to inflate fees and bolster its own business interests under the guise of service provision.

Despite Xerox's efforts to dismiss the case citing vague allegations in November 2021, by April 2022, the claims stood firm under Judge Nagala's scrutiny. A tentative settlement was reached after mediation on October 11, 2022, which ultimately received preliminary approval in September 2023.

Settlement Scrutiny and Attorney Fee Evaluation

The final nod came on January 22, 2024, when Judge Nagala ordered the $4.1 million settlement. The attorneys' fees, originally hovering around $1.366 million, were adjusted following a detailed assessment involving precedents and benchmarking against similar cases.

Judge Nagala utilized a methodical three-step approach, initially setting a reasonable fee baseline by comparing similar settlements in scope and complexity. Subsequent consideration of the Goldberger factors—evaluating the litigation's risks, representation quality, and potential for undue reward—further shaped the final fee determination.

Moreover, a lodestar cross-check, which takes into account the actual hours worked by the attorneys, was applied, anchoring the fees firmly at 25%. This decision reflects findings from multiple studies, which suggest that the median attorney fees for comparable ERISA cases hovered around 24.6% to 28%.

Xerox $4.1M ERISA Deal Trimming : Reaction to the Ruling

The ruling has sparked significant discourse on attorney compensation in class action settlements, especially in high-stakes ERISA litigation. While an attorney for the plaintiffs opted not to comment on the judgment, responses from Xerox's legal representatives are still pending.