Welcome to the Settlement website for In re: PFF Bancorp, Inc ERISA Litigation, Case No. CV 08-01093 SVW (PLAx) (the “Action”). This website has been established to provide general information related to this litigation and the resulting Settlement. The capitalized terms used on this website and not defined herein shall have the same meanings ascribed to them in the Class Action Stipulation and Agreement of Settlement (“Settlement Agreement” or “Agreement”).
Update: Class Counsel is pleased to announce that on April 27th, 2011, the Court entered an Order and Final Judgment in favor of the Plaintiffs. The Court also granted Plaintiffs’ motions for Award of Attorneys’ Fees, Reimbursement of Expenses and Case Contribution Awards. The orders are available on the Court Documents page of this website.
The mandatory appeal period has expired without any appeals being filed, so the Settlement is now final and effective. Please continue to visit this website for updates about the Settlement and the allocation of Settlement Funds.
Background of the Litigation
On August 8, 2008, Named Plaintiff Pauline Perez filed her initial complaint against Defendants, PFF and certain PFF executives, directors, and employees, who were fiduciaries of the PFF Bank & Trust 401(k) Plan (“401(k) Plan”) and the PFF Bank & Trust Employee Stock Ownership Plan (“ESOP”) (collectively, “Plans”), for violations under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), seeking to recover losses incurred by the Plans. On September 17, 2008, Named Plaintiff Bruce Bonanomi filed a class action complaint against similar defendants and with substantially similar allegations and requests for relief as contained in the Perez action. On January 20, 2009, the Court consolidated the Perez and Bonanomi actions into one Consolidated Action. The Court also appointed interim co-lead and liaison class counsel. A related case filed by Named Plaintiff Tiffany Woodward was later consolidated with the Consolidated Action.
On September 28, 2009, Plaintiffs filed their Amended Complaint on behalf of the Plans to recover losses to the Plans caused by alleged misconduct constituting breaches of fiduciary duty under ERISA. Plaintiffs allege that Defendants violated ERISA by, among other things, permitting the Plans to purchase and hold shares of PFF Bancorp, Inc. (“Bancorp”) Stock during the Class Period when they knew or should have known it was imprudent to do so. Participants in the Plans were able to allocate their account balances among various investment alternatives, including Bancorp Stock. Many participants in the Plans chose to have contributions to the Plans invested in Bancorp Stock during the relevant time period.
The Action claims that, under ERISA, the Defendants owed fiduciary duties of loyalty, care and prudence to the Plans, and that they violated those duties in connection with the Plans’ investments in Bancorp Stock. Specifically, Plaintiffs alleged that Defendants: (1) failed to disclose that Bancorp had adopted a new, more speculative business model without a corresponding adjustment in its credit loss provisions to account for this change; (2) understated and delayed recognition of Bancorp’s loan losses; (3) failed to adjust Bancorp’s methodology for loss provisions in a manner that took into account known changes in the credit landscape; (4) failed to maintain sufficient management controls to timely address problems as they arose; and (5) undermined Bancorp’s integrity with the investing public until it was insolvent or facing imminent insolvency and bankruptcy.
On December 2, 2009, Defendants moved to dismiss the Amended Complaint. Plaintiffs filed their Opposition to Defendants’ motion on March 5, 2010. A hearing on the motion to dismiss was set for September 13, 2010. A trial before the Judge was scheduled to begin on November 16, 2010.
Settlement Negotiations
This Action was litigated by the Named Plaintiffs and Class Counsel for more than two years before an agreement on settlement terms was reached. The case was stayed as to Bancorp, which is in bankruptcy proceedings, and the FDIC was substituted into the Action as Receiver for PFF Bank. The Named Plaintiffs and Defendants engaged in a mediation process before David Geronemus of JAMS which included a day-long, in-person mediation on August 27, 2010, at the conclusion of which an agreement in principle among the Parties was reached on certain settlement terms.
The Settlement Class
The Settlement Class is defined as follows:
All persons, excluding Individual Defendants, who were participants in or beneficiaries of the PFF Bank & Trust 401(k) Plan (“PFF 401(k) Plan”) or the PFF Bank & Trust Employee Stock Ownership Plan (“PFF ESOP”) (collectively, “Plans”) whose individual Plan accounts were invested in Bancorp Stock at any time during the period from March 1, 2003, through and including September 8, 2011.
The Settlement
The Settlement Agreement provides for certification of the Class as a non-opt-out class action under Federal Rule of Civil Procedure 23(b)(1) and/or 23(b)(2) and the Court has preliminarily determined that the requirements of those provisions have been satisfied. Thus, it is not possible for any Class members to exclude themselves from the Settlement. As a Class member, you will be bound by any judgments or orders that are entered in the Action for all claims that were or could have been asserted in the Action or are otherwise released under the Settlement.
A Settlement Fund is being established in the Action. It consists primarily of $3,000,000, but also will include the proceeds from a bankruptcy claim, which under the Settlement Agreement is an undisputed, general unsecured claim of $400,000. The bankruptcy claim was approved by the bankruptcy court where Bancorp’s assets are being liquidated on February 2, 2011. The Settlement Fund will be distributed according to the Plan of Allocation. That Plan of Allocation provides that the amount in the Settlement Fund, including interest, and after payment of, or establishment of reserves for, any taxes and Court-approved costs, fees, and expenses, including fees and expenses of Appointed Counsel, the Settlement Claims Administrator, and any Court-approved case contribution awards to be paid to the Named Plaintiffs, will be distributed according to the Plan of Allocation. If necessary, an account will be created for those members of the Class who no longer have PFF ESOP accounts. Checks will be mailed to individuals who are entitled to distributions as a result of losses they incurred through the PFF 401(k) Plan.
The Court will hold the Fairness Hearing at 1:30 p.m. on April 25, 2011, at the United States District Court for the Central District of California, Central Division, Courtroom 6, Los Angeles, CA 90012. 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 the Co-Lead Counsel’s Application for Attorneys’ Fees and Reimbursement of Expenses and case contribution awards for the Named Plaintiffs. We do not know how long these decisions will take or whether appeals will be taken.
If you have questions about the Settlement in In re: PFF Bancorp, Inc. ERISA Litigation, CASE NO. CV 08-01093 SVW (PLAx) please send an email to PFFBankERISASettlement@btkmc.com. This e-mail will go to Co-Lead Counsel and will be directed to the individuals handling the Settlement. Co-Lead Counsel have also set up a toll free number, (888) 206-3037, if you prefer to call with your questions.