The Second Circuit recently held that in order to state a claim for a prohibited transaction pursuant to ERISA section 406(a)(1)(C), it is not enough to allege that a fiduciary caused the plan to compensate a service provider for its services.  Instead, “the complaint must plausibly allege that the services were unnecessary or involved unreasonable compensation.”  Cunningham v. Cornell Univ., 2023 WL 7504142 (2d Cir. Nov. 14, 2023).  Separately, the Second Circuit affirmed summary judgment for the defendants in connection with the plaintiffs’ fiduciary breach claims that were premised on allegations of excessive recordkeeping fees, underperforming investment funds, and the defendants’ failure to transition to lower-cost share classes of certain mutual funds.

A federal district court in Iowa dismissed a putative class action complaint brought by several 401(k) plan sponsors who alleged that Principal Life Insurance Company breached its fiduciary duties to the plans by charging excessive fees in connection with certain investment options and services provided to plan participants.  The court determined, among other things, that