On May 18, the case of Damberg v. LaMettry’s Collision, Inc. was filed in the U.S. District Court for the District of Minnesota. The plaintiffs are participants in the defendants’ 401(k) plan, and the defendants are the plan sponsor and two corporate officers who are plan fiduciaries.
The plaintiffs allege that the defendants breached their fiduciary duties under ERISA by:
Those familiar with ERISA litigation over the past few years will note that the types of allegations outlined above have been quite common in lawsuits filed against many employers with thousands of employees, or even tens of thousands of employees. However, the complaint in this case states that in 2014, the defendants’ plan only “consisted of approximately 114 active participants, and held approximately $9.2 million in total assets.” I am not aware of a lawsuit of this type being filed against an employer remotely this small in the past decade, but smaller employers could certainly become the next targets in this arena.
Employers of all sizes should compare their ERISA plan’s practices and procedures to the alleged practices and procedures outlined in this case (as well as in cases that have involved larger employers). That comparison can help employers understand whether their plans are being operated in accordance with ERISA’s complex fiduciary standards, at least with respect to the common allegations involved in this case. As the defendants in this case might be finding out for the first time, ERISA’s fiduciary standards require an extremely high level of competence, irrespective of the employer’s size.
The plaintiff’s complaint can be viewed here: http://www.investmentnews.com/assets/docs/CI105379523.PDF