Advance Auto to pay $1.7 million in retirement plan settlement (2024)

Advance Auto Parts has agreed to pay $1.7 million to settle a class action lawsuit that accused it of mismanaging a company retirement plan for its employees.

U.S. District Judge Michael Urbanski granted preliminary approval of the settlement, which will potentially cover more than 22,000 Advance employees in Western Virginia and across the country.

The lawsuit, filed in Roanoke’s federal court in 2021, asserts that Advance officials failed to adequately review the investment portfolio of the company’s 401(k) plan to ensure best performance, and subjected participants to unreasonably high fees.

In an order issued Wednesday, Urbanski found the proposed settlement to be “fair, reasonable, and adequate.” A July 19 hearing was scheduled for a final determination.

Janet Sweet of Roanoke was one of the first Advance employees to take legal action. She was joined by Safi Riaz of Michigan, Bessie McAdams of Arizona, Keith Edwards of Alabama and Peter Dargel of New Jersey.

All five claimed that they were charged excessive administrative and recordkeeping costs for participating in the plan, which they said failed to replace higher-cost and underperforming funds with better alternatives.

Urbanski broadened the filing to a class-action lawsuit in June, writing at the time that “common sense dictates” other employees should be allowed to join.

A formula will be used to determine how much each employee will receive, based on how long they participated in the 401(k) plan, the level of their financial contributions, and other factors.

The settlement covers employees and beneficiaries who were part of the plan from Oct. 20, 2015, to March 12, 2024. There is no need for individual employees to file claims. Proceeds will be distributed based on Advance’s records, but the company will not administer the settlement, according to court records.

A call and an email to Advance’s media relations department in its corporate headquarters were not returned Monday.

In a response to the lawsuit filed in 2022, attorneys for Advance denied most of the allegations and presented more than a dozen potential defenses. They wrote that the company “acted at all times and in all respects in good faith and with due care and did not engage in any conduct which would constitute a breach of fiduciary duty.”

Advance, which has more than 5,000 auto parts stores across the country, was founded in Roanoke in 1932.

The company moved its home office to Raleigh, North Carolina, in 2018, but still maintains large numbers in the Roanoke area and is listed as the 10th largest employer by the Roanoke Regional Partnership.