We have previously blogged on the flurry of class action lawsuits challenging 401(k) plan investments in the BlackRock LifePath Index Target Date Funds. District courts around the country—seven of them in total—have granted motions to dismiss claims by 401(k) plan participants because their copy-cat allegations of underperformance were insufficient to raise a plausible inference of imprudence. That is, until now. Last week, a federal district court judge in the Eastern District of Virginia became the first to conclude that the participants’ allegations of imprudence related to the BlackRock Funds were plausible. Trauernicht v. Genworth, No. 22-cv-532, 2023 WL 5961651 (E.D. Va. Sept. 13, 2023).
Tenth Circuit Adopts “Meaningful Benchmark” Pleading Standard in Dismissing Challenges to 401(k) Plan Fees
In a case of first impression in the Tenth Circuit, the Court recently joined the chorus of circuit courts in holding that a 401(k) plan participant alleging excessive investment management or recordkeeping fees must assert a “meaningful benchmark” in order to survive a motion to dismiss. In addition to rejecting commonly pleaded “benchmarks” because they were not meaningful, the Court’s ruling is of particular significance because, unlike some other courts, it dismissed the participants’ “share-class claim”—ruling on a motion to dismiss that their allegation that cheaper share classes of the same mutual fund were available to the plan was demonstrably false. The case is Matney v. Barrick Gold, No. 22-4045, 2023 WL 5731996 (10th Cir. Sept. 6, 2023).
Two District Courts Reach Conflicting Holdings Over Excessive Recordkeeping Fee Claims
Two District Courts have reached conflicting decisions on the same day when ruling on substantially similar allegations that plan fiduciaries violated ERISA by paying too much for recordkeeping services, with one court dismissing the claims and the other court allowing the claims to move forward into the (often expensive) discovery phase of litigation. The cases
District Court Denies Employer’s “Injury-In-Fact” Challenge to Withdrawal Liability
In Holland v. Murray, No. 21-cv-567, 2023 WL 2645708 (D.D.C. Mar. 27, 2023), the court held that financial support provided by Congress to a multiemployer pension plan under the Bipartisan American Miners Act (“BAMA”) did not divest the plan of Article III standing to pursue the withdrawal liability it was owed.
District Court Holds Employer “Expelled” From Plan May Not Have Effected a “Withdrawal”
In Central States v. Wingra, No. 21-cv-3684, 2023 WL 199360 (N.D. Ill. Jan. 17, 2023), the district court held that an employer expelled from a multiemployer pension plan may not owe withdrawal liability because the permanent cessation of the employer’s obligation to contribute was not voluntary. While the court subsequently limited the decision as being for discovery purposes only (see Central States v. Wingra, No. 21-cv-3684 (N.D. Ill. Mar. 17, 2023)), the court allowed the employer to assert its challenge in the district court, rather than in arbitration, because the employer plausibly alleged that its expulsion from the plan was in bad faith.
Dismissal Streak Continues in BlackRock Target Date Fund Litigation
A third district court has dismissed with prejudice a complaint alleging that defendants breached their fiduciary duties under ERISA by offering 401(k) plan participants the option to invest in BlackRock LifePath Index Target Date Funds (the “Funds”). Beldock v. Microsoft, Case No. 22-cv-1082 (W.D. Wash. Apr. 24, 2023). Although the outcome of the court’s ruling here is consistent with earlier decisions, the rationale underlying the Beldock decision arguably goes further than in prior rulings, thus providing additional food for thought.
Northwestern University’s Alternative Explanations Not Strong Enough To Defeat ERISA Excessive Fee Claims
On remand from the U.S. Supreme Court, the Seventh Circuit issued its opinion in Hughes v. Northwestern University, concluding that participants in two Northwestern 403(b) plans plausibly pled fiduciary-breach claims based on allegations of excessive recordkeeping and investment management fees, but dismissed their claim that too many investment options caused them “decision paralysis.” In
District Courts Reach Opposite Conclusions on 401(k) Excessive Fee Claims
A district court in the Southern District of Ohio and one in the Western District of Wisconsin reached opposite conclusions on motions to dismiss claims for fiduciary breach based on allegations that recordkeeping fees were unreasonably high. Dismissal was granted in Sigetich v. The Kroger Co., No. 21-cv-697, 2023 WL 2431667 (S.D. Oh. Mar.
Industry Coalition Unites to Support Dismissal of ERISA Fiduciary-Breach Claims Related To BlackRock Target Date Funds
The filing of a new 401(k) plan “excessive fee” or “investment underperformance” complaint is hardly “news” these days given the proliferation of suits that have been filed over the past several years. In fact, hardly a week goes by when at least one new lawsuit has not been commenced. Still, plan sponsors and fiduciaries were
Wisconsin District Court Rulings Signal Potential New Trend Favoring the Defense of ERISA Fee and Investment Performance Lawsuits
In a striking reversal of approach beginning in the summer of 2022, the District Court for the Eastern District of Wisconsin went from denying, in whole or in part, virtually every motion to dismiss ERISA lawsuits targeting plan recordkeeping fees and investment fund selections to granting all of them. This nearly 180 degree pivot comes