Defense counsel frequently lament the difficulties of defending 401(k) investment and recordkeeping fee litigation when different judges render conflicting rulings on motions to dismiss seemingly indistinguishable complaints. Even when the judges purport to apply the same legal standards, the outcomes can differ. For that reason, we thought it would be interesting to track the decisions
District Court Breaks Trend and Allows Claims Challenging Prudence of BlackRock LifePath Index Target Date Funds to Proceed
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).
Pocket Guide to SECURE 2.0
SECURE 2.0 includes significant changes for retirement plan sponsors and employers, as discussed in our prior blog posts. If you are looking for a short summary organized by effective date, we have prepared a “pocket guide” chart, which can be downloaded here.