Nado v. John Muir Health

Background

Conan Nado brought this putative class action under the Employee Retirement Income Security Act (ERISA) concerning the John Muir Health 403(b) Plan. He sued John Muir Health and the Board of Directors of John Muir Health, alleging that they were plan fiduciaries and breached duties owed to the Plan and its participants. The alleged breaches included paying excessive recordkeeping and administrative service fees and improperly allocating Plan forfeitures. The proposed class period ran from March 15, 2018 through the date of judgment.

The parties reached a settlement before the court certified a class, with assistance from mediator Morton Denlow, a retired magistrate judge. Nado then moved for preliminary approval of the settlement.

Settlement Terms

The proposed settlement requires the defendant to pay $950,000 into a common settlement fund. The fund includes attorneys’ fees and costs, notice and settlement-administration expenses, and a possible service award to Nado. Class counsel may request up to one-quarter of the gross settlement, capped at $237,500, plus up to $35,000 in litigation and settlement-administration costs. The court may also award Nado up to $5,000 as a case contribution award.

After deductions, the estimated net amount will be distributed among approximately 43,895 eligible class members. Current Plan participants with positive account balances will receive their shares through their Plan accounts. Former participants will receive checks, except that no distribution will be made when a share is less than $10. Uncashed-check funds will revert to the Plan for administrative expenses and the benefit of Plan participants. The settlement also requires Defendants to conduct a request for proposals for Plan recordkeeping services within two years of the settlement’s effective date. Approval of the settlement would release the claims described in the settlement agreement.

Conditional Class Certification

Because the case settled before class certification, the court first considered whether certification was appropriate for settlement purposes. The court found that Nado satisfied Rule 23’s requirements of numerosity, commonality, typicality, and adequacy, as well as Rule 23(b)(1)(A). The court found that the proposed class contained approximately 43,895 members, that the claims presented common questions about Plan fees, forfeitures, fiduciary breaches, and losses, and that Nado’s claims were typical of the class.

The court also found no conflict between Nado, his counsel, and the proposed class. It determined that separate lawsuits by individual class members could create inconsistent or varying decisions concerning Defendants’ management of the Plan. The court therefore granted Nado’s motion for conditional certification under Rule 23(b)(1), for settlement purposes only, appointed Nado as class representative, and appointed class counsel.

The settlement class includes people who participated in the Plan during the class period, beneficiaries of deceased Plan participants, and alternate payees under qualified domestic relations orders involving Plan participants. Current and former members of the John Muir Health Retirement Committee during the class period are excluded.

Preliminary Settlement Approval

The court applied the factors in Federal Rule of Civil Procedure 23(e)(2), which requires a court to protect absent class members before approving a class settlement. The court found that Nado and his counsel adequately represented the class, the settlement was negotiated at arm’s length, the relief was adequate, and class members would be treated equitably.

The court noted that counsel had experience with retirement-plan cases and that Nado had participated in the litigation by providing information and documents. It found no signs of collusion or fraud. The court also found the settlement amount and distribution method adequate in light of the litigation risks, costs, and delays. The proposed distribution uses the same formula for current and former Plan participants and does not require class members to submit claim forms.

The court therefore granted preliminary approval of the settlement. This was not a final determination that the settlement was fair, reasonable, and adequate; the court scheduled a later fairness hearing for that decision.

Notice Plan and Other Orders

The court approved the proposed notice plan. The settlement administrator must mail notice by first-class mail to class members within 45 calendar days of the order, attempt to locate updated addresses for returned notices, and resend notices when appropriate. The administrator must also establish a settlement website and telephone support line. The court found the plan reasonably calculated to inform class members about the settlement, their rights, how to object, how to receive payment, and the fairness hearing.

The court approved Analytics Consulting, LLC as the settlement administrator and approved the form of the class-action notice and the Class Action Fairness Act notice. Objections must be filed and sent to the court at least 14 calendar days before the fairness hearing. Until the court decides whether to grant final approval, class members may not bring proceedings asserting the released claims described in the settlement agreement.

The court set the fairness hearing for December 11, 2025, at 2:00 p.m. at the San Francisco courthouse of the United States District Court for the Northern District of California. The hearing will address final approval of the settlement, entry of a final approval order, and any request for attorneys’ fees, costs, administrative expenses, or a case contribution award.