Given the continuing wave of ERISA litigation, this article has become a mainstay of The Speed Reader. Cases that were recently filed, settled, or for which courts issued procedural rulings are outlined below. Please note that this list is not exhaustive, however.
Enos v. Adidas America Inc. (complaint filed on July 10, 2019 in the U.S District Court for the District of Oregon): The plaintiffs in this proposed class action case, who are participants in the defendant plan sponsor’s 401(k) plan, allege that from 2013 to 2017, the plan’s administrative fees were “the highest among its comparator peers consistently, regardless whether the comparison is based on a cost per participant or a percentage of assets.” The plaintiffs also contend that the defendant selected and retained “excessive cost investments” and failed to adequately investigate the use of “superior lower-cost mutual funds” that were available. In this connection, the defendants included actively managed funds in the plan instead of lower-cost passively managed funds. Consequently, the defendant allegedly caused plan participants “to lose millions of dollars of their retirement savings through excessive fees,” and the plaintiffs seek a court order mainly requiring the defendant to restore alleged losses to the plan and to pay for the plaintiffs’ attorneys’ fees.
Fuller v. SunTrust Banks, Inc. (procedural ruling issued on July 16, 2019 by the U.S. District Court for the Northern District of Georgia): The plaintiffs here are participants in the defendant plan sponsor’s 401(k) plan, and the plaintiffs also named the plan’s committees as defendants. The plaintiffs state that the defendants improperly furthered the plan sponsor’s corporate interests over plan participants’ interests, by selecting plan investment options that were affiliated with and enriched the plan sponsor. More specifically, this phase of the case involves the plaintiffs’ following assertion: certain defendants were aware that their predecessor fiduciaries breached their duties by selecting such funds and, therefore, those defendants breached their own duties by failing to take adequate steps to remedy their predecessors’ breaches.
The court ruled that a successor fiduciary must have actual knowledge of a predecessor’s breach to be liable for failing to remedy that breach, as opposed to constructive knowledge (where the individual knows or should know of his or her predecessor’s breach but improperly permits it to continue). Applying that rule, the court opined that the successor fiduciaries did not have actual knowledge of their predecessors’ alleged breach. Although the successors familiarized themselves with the plan by reviewing certain documents, and although they spoke with other committee members upon their appointment, that does not show that they had actual knowledge of the alleged prior breach. Thus, the court dismissed this part of the plaintiffs’ case.
Stevens v. SEI Investments Company (settlement agreement submitted to the U.S. District Court for the Eastern District of Pennsylvania on July 26, 2019): The plaintiffs in this case participate in the defendant plan sponsor’s 401(k) plan, and the defendants include the plan’s committees. The plaintiffs mainly allege that the defendants arranged the plan’s investment lineup so that it “only designated investment options that generate fees for SEI and its affiliates and treat the plan as a captive customer of SEI in order to prop up SEI-affiliated investment products and advance SEI’s business objectives.” In addition, the main defendant’s investment products allegedly “are not competitive in the marketplace,” and the defendants failed to evaluate regularly those investment options in light of available alternative options. Under the settlement agreement, the defendants will pay $6,800,000 and will conduct the following acts: